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Ask HN: Me(dev) and a marketer want to go 50/50 on a business. Is this fair?

5 points by rfnslyr ↗ HN
Hey guys, I'd like your advice.

I just met up with a dude that seems to me, has a lot of business and marketing/consulting knowledge. It sounds like he knows what he's talking about but I can't be sure because I know NOTHING about that field.

Our idea was to get a studio together and work on projects 50/50. However he's not a developer at all so I'm trying to gauge the worth of his 50%.

Our immediate goals are a studio and work. He can bring in the work, freelance projects (he claims) that will bring in like $3000 which doesn't sound bad to me. We want to move on and start an agency like Playground Inc eventually. Our goal is to work on freelance projects for the beginning, and invest money in a professional designer down the line and begin our agency.

I'm having a difficult time assessing the situation. I'm offput by the 50% but honestly, I'm okay with it. I'm okay with it if he truly does bring in work and isn't just dicking around all day.

11 comments

[ 3.4 ms ] story [ 40.7 ms ] thread
livestyle
Before you go down that road.. why don't you do a couple of jobs together as a trial?
rfnslyr
I'm currently working full-time and studying on my off-time (stanford startup engineering course) + working on my project and my own clients so I don't have time until the end of August. Come that time, I'll have money for a few months rent and food.
livestyle
That still doesn't stop you from testing the waters with each other. Do one project together then reassess.
ameister14
Are marketing and sales equal to engineering? Yes.

Should you jump into this without a prior relationship, particularly a business relationship? No.

gesman
Start with going with 50/50 on business he brings to the table. This way you can work with 10 guys like him and evolve accordingly.

If he insists on 50/50 legal contract upfront (which is not unreasonable if he's the star), add the minimal yearly dollar amount clause of the business he brings in.

snaveint
"I'm okay with it if he truly does bring in work and isn't just dicking around all day"

I think if that is the attitude you're taking going into this, partnering is a bad idea. You will constantly be judging & nit picking his every action.

pyoung
If you are doing freelance and consulting work, and not product development, then you should set up some type of hourly billing system, or consider setting up some type of'finders fee' for the work he brings in. It should be noted, that most freelancers/consultancies do not need a full time bizdev guy until they have at least a handful of employees and are working on a few projects concurrently. With that said, if he can bring in enough work, it may be worth it (and it should be noted that you will need a lot more than $3000 to keep you both afloat).

Also worth noting, equity in freelance/consulting companies is relatively worthless. Billable hours do not scale, so your revenue will be directly tied to the number of hours you and your employees can work. Because of this, you need to focus on making sure you get a decent salary/hourly wage as soon as possible.

UK-AL
"Also worth noting, equity in freelance/consulting companies is relatively worthless" - Generally true, but not entirely true. Accenture, Capgemini etc are all consultancies/contracting type business, yet their equity is worth something. However it took decades to build these companies, because of the scaling problem.

Other agencies/consultancies/ may buy other agencies/consultancies because client lists, and reputation and so on.

However there tons, and tons of agency type business that never get anywhere.

dylancole
I'm a designer and I'm looking to collaborate with a developer. I have an idea which can outcome to a monthly income regardless clients.

Would you be interested? Email me: dylancole101@gmail.com

viennacoder
What is his track record? Past successes?

If he doesn't have any serious wins already (e.g., ran a successful division or business), run.

Be sure to check his references.

If he is a proven former CEO, though, 50/50 sounds plenty fair.

raarts
Whatever work he brings in, it cannot sustain both of you, so either he needs to make billable hours, or you both need to seek employees to bring in more money.

Also whatever you do, really try to seek help from someone older you can trust, who has experience doing business. You need someone to assist you in setting up the terms between you and your future business partner.