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Ask HN: How much equity to give to developer (pseudo-founding)?

8 points by fsethi ↗ HN
Hey Guys,

About to begin production on a project, and rather than take cash I offered, the developer I am working with would like an equity stake. Currently, there are two founders who are putting in money, and one doing all practical (management) and creative (customer facing, UI/UX/collateral and so on) things.

Still uncertain if developer will be a founding CTO or just a contract developer. Perhaps you guys can help me with an answer for both scenarios?

Many thanks.

5 comments

[ 3.9 ms ] story [ 20.6 ms ] thread
SkyMarshal
The prevailing sentiment here seems to be that in a case like yours, where the developer is clearly part of the founding tripod (business, UI/UX, backend), be prepared to treat him like a co-founder if that's what he wants. Which it sounds like he does. If you trust him enough, make him the third co-founder and split the equity evenly.
fsethi
Sounds good. Happy to share in equity. Will confirm if he wants to be a founder and go from there. Cheers!
kenn
Validate if he/she's a good fit for your team first. Usually it takes time. Equity has a permanent effect and you don't want to make a decision in haste.
rpwilcox
Ok, let me drill down into to a little bit. You say, "equity has a peramanent effect". But don't most equity contracts have a vesting period, and thus if you fire the engineer before the vesting period is up well the person forfeits that equity?

... seems like this is not so peramanent. Unless I'm misunderstanding something and need some education in this (and if I am, please let me know, as I've had this happen to me on at least one occasion and maybe I'm owed some compensation after all)

sharemywin
I would add a vesting period based on him reaching milestones. Don't fight over the details. Fair exchange of value.