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Ask HN: How much is sweat equity worth?

2 points by jtesp ↗ HN
I've been working on my start up by myself for nearly 2 years and there's been some interest from a handful of potential advertisers to finally start bringing me some revenue. I'm at the point where I can't do it all myself and need to bring on some partners. I've got well over 4,000 hours into this and over $25,000 personally invested but I still own 100% of nothing at this point. Can I even put a valuation on the company yet? How do I determine how much % to give to new partners?

My question is, if I bring on some partners how do I measure the amount of work required by them and for how long? Say I give a programmer 5% in return for 25 hours a week minimum to start with. How many weeks does he have to work to earn that 5%? And what happens when that time is up? He owns 5% but doesn't have to do anything more? I'm assuming if someone is invested in a business that much, they will work beyond the minimum...is that common? Perhaps a sliding scale would work in this case.

I plan on bringing in a couple people to take this to the next level and just want to know what I'm in for. I know this subject can go on for ages, but I'm hoping to get some insight from seasoned people.

Thanks!

6 comments

[ 5.1 ms ] story [ 18.3 ms ] thread
redredraider
As a programmer I don't get involved unless there's money to pay me. I like the idea of getting paid up front for my work and keeping the 5% share and the "owner" of the project recouping my up front pay when the money starts rolling in. There's not a project you could show me that would convince me to work for equity only. Just my opinion
redredraider
Another thing. If you're the technical guy then you should only hire sales people. Make money then hire programmers. I doubt the project has grown so large you can't maintain it. If you haven't made any money then your 4000 hour/25000 dollar project is just code. No one cares until it makes money.
jtesp
Sorry if I wasn't clear, but there's hardware and software involved. I can't possibly program, build, manage, sell, market by myself anymore. I'm a jack of all trades, not necessarily a programmer or server admin, so that's where I need help along with sales.
redredraider
If you really need technical people you're going to have to pay them unless you've got something amazing built so far. Or you're going to have to bring in cofounders and give them a more even split. That will be hard if you've got all of the time in it. In my situation I have put a lot of time and effort into my project and I will need to bring someone on board soon but it irks me to think I will have to give up more that 20% to someone who hasn't put the time and risk in.
binarysoul
I think most programmers only work for money. Now if there's a combination of equity, and some pay, that's something that warrants discussion.

You might consider trying to get one of your friends to help out for equity. I'm working on a project (unpaid, but ownership of part of it) with some friends at the moment. But we are all ok if it doesn't end up making money.

jtesp
Yeah this whole startup business stuff is a serious maze. Seems almost paradoxical. I've got a working product that people really like, just don't have enough sales.