It is not often that I start a company, I have only done it once: GetListed.org . I started it with David Mihm.
This blog post is somewhat long, but I feel it asks an important question.
Should developers get a stake in the company that they helped create?
We are a good crew, me and David. He is the consummate professional, I am the kinda crazy guy with ideas (not that David doesn’t – he does, I am just more flexible [goofy] in identifying and communicating them).
We both were horrified by what the search engines and other platforms expected from a business owner, and we both had some great concepts of how to simplify the process a business owner must go through to replace the old (paper yellow pages) with the new (a balanced set of entries on the web that allowed the business to be shown in local results of places like Google and Yahoo). We both recognized the need to improve and simplify the process of a small business owner must take to be listed effectively on the web.
We will soon unveil some new things about GetListed that are quite simply, amazing.
Getlisted.org will soon be providing some impressive and logical things that are centered upon the business owner, rather than one platform or another platform. David and I have discussed for over a year how to solve some of the basic problems a small business owner faces. We have created some great solutions, which we will announce soon.
None of these solutions would be possible with out our development leader.
Long story short, we want every business on earth to understand the importance of online listings. We want small business owners not to get screwed or be made to pay ridiculous amounts of money for things that should be free, or damn near free. We also wanted to create a way for a business owner to submit their business information once, and have that one time commitment of the business owner to count for something by having their correct and current business info displayed across all platforms, where ever they may be found. We wanted it to be free or very economical. We wanted to show that the new “yellow pages” was the internet, and show that the internet is not only often more effective, but also often cheaper than print media choices.
Some of the next announcements from GetListed.org will show how we have identified, and solved, many of the basic problems that face a small business owner (or hospitals, police stations. or humane societies).
Until then, I just want to highlight a third person in the GetListed.org equation.
He is our developer lead.
In my several years on the internet, I have only overtly highlighted one particular person (Lisa Barone) for their individual merit.
Today I am going to highlight another person, he is our development lead.
He has successfully taken the dreams of David Mihm and I and made them reality. I wouldn’t mention him or waste your time is he was nothing less than a miracle worker. This is not just a “hire this person” post. Trust me. I don’t want you to hire him. I want him all to myself.
But I do want to highlight an issue that I have, it is my rather strong opinion that people who bring value to a project should be justly rewarded. I do not like that developers are seen as a “one time expense” or a contracted person.
The reason that Daid Mihm is a great ying to my yang is because he is so incredibly professional.
I am not professional. I get crazy, see solutions and then draw them up. I seek ways to implement my solutions, I do not give a rats ass about professionalism. I care about solving problems. I see things a bit un-bussiness like.
Yet I want to highlight ur development lead not only as an incredible developer (which he is, you would drool if you knew his full development history), but as a pleasant and incredibly important part of our team.
I want to highlight the importance of developers here. I want to crush the all too common assumption that developers are some sort of “hire by project” person.
A good developer can make or break a project, and an extraordinary developer can literally change the entire reality of what can or can not be accomplished.
Ours is one such developer. He is now, and to every extent that I can make possible, will always be part of GetListed.org.
He has not only over come every technical barrier we (me and David) have faced, but he has also extended our knowledge of what is possible.
I am the CEO of GetListed.org and I can tell you, he will always be part of GetListed.org if I have a say so.
Which brings me to an interesting question. As regular readers of SEOish know, I do not often present questions, or ask opinions. But I hope to hear opinions on this…
Should developers get a stake in the company they are essentially creating?
My answer is yes, but I want to know what others think.
I see it as a common sense thing, but I have been surprised by some opinions I have heard (even from developers) about this issue.
I see it like this. You have a goal, but perhaps limited ability to reach that goal. Yet you move on. As you jump the hurdles, you find people along the way who can help. You and these people collectively combine your strengths and weaknesses and head towards that goal. If someone has joined my team, then they are part of the team. Period.
This means they should have the benefits.
I do not like what I see out there, where developers are being paid “x” amount of dollars and then forgotten.
It seems stupid to me.
I would recommend sharing the wealth with your developers, every one of them. I am simple in my ways and thoughts, and perhaps this isn’t the wisest thing, but to my gut, it is the wisest thing.
I am extremely fortunate that I have David Mihm as a partner, as many of you know, I am an utter failure when talking about prices or details. I just don’t care. I care about solving problems, and if the person who is solving the lions share of the problems is a developer, then why the hell should they not receive the benefits?
Back to our Development lead now.
He has indeed solved the lions share of our difficulties and he will absolutely receive an on going, recurring, and lifetime long reward for it. I also want to highlight that he is one of the most professional people I have dealt with and his capacity to solve problems is amazing. His website would not wow you. It is in text, and simple, but his abilities are anything but simple. I can not recommend you to this person enough (and again, just to be clear, I do not want to recommend him since I want him all for myself). I want him with me ten years from now, and I want to pay him, a [gasp] developer, equity in our company.
Am I dumb for this? I don’t think so, but how often do we think our decisions are dumb?
If you have read this whole post, thank you. I appreciate it and know this is a longer post than normal.
Should developers be a “pay per project” deal or be shareholders of a company’s future?
Let me know what you think. I am genuinely interested in what your opinion is here.
Thanks.
{ 6 comments… read them below or add one }
I don’t believe there is a “one size fits all” answer here.
You have to ask yourself this question first.
“Will the developer be committed to the ongoing success of the project?” “Will he offer new ideas and concepts that will help grow the company?” “Will he be willing to invest time into an idea that may not pay him?” If the answer is “No” to any of these questions, equity is probably a bad idea.
It’s easy for you to say now that you will him to be a part of the project for the long haul, but is this what he wants – today as well as tomorrow.
Rather than equity, why not consider some predefined incentive bonus structure that hinge on his individual performance as well as the overall performance of the company?
It should be an option. Developers might want to negotiate for that sort of arrangement.
Personally – I don’t like that arrangement very much. I’ve worked with several people who had great ideas and offered me a % of revenue but in the end, things didn’t work out and there was no revenue or very little. In those situations, I was happy that I got paid by the hour.
I might be more willing to take a risk for cool projects that have a real potential for success but I have a wife, a kid, a mortgage to pay, etc… I need to be paid for my time regardless of future success or lack of success.
Also – (Besides stock photography & Affiliate marketing) I’ve never been offered “Royalties” or residual or passive income generated by past work that I am no longer working on.
Every percent of revenue partnership or project that I’ve been offered relied on me doing some sort of ongoing maintenance or other kind of work to help generate the ongoing revenue.
No thanks – Please pay me by the hour. (If it’s a success I’ll demand a raise)
Maybe if I could shut the door on a finished project and walk away from it to pursue other projects but still get paid a percent of the revenue it generates, well into the future, I might think more seriously about it.
BTW – My signature is linked to a good article that Seth Godin wrote a while back on the subject of partnerships.
Thanks for the responses, they are good points.
@hawaiiseo – I will check out that article.
I’ve had the privilege of working in IT for several companies over the years with a small/start up environment. I absolutely loved it. Before the IT “bust”, folk were given bonuses, and stock options, if available. You were paid for results, and based on the value you bring. I am now a contractor for a large company, and have an hourly wage that many would view enviously. However, the “lock-step, fall in place” environment I am in devalues its people. A lot of young people fresh out of college, have left not long after being hired, because they are punished by older employees for having ideas. Sitting at your desk is more important, it seems, than results. I am surrounded by loud, non-development people who distract me all day long. I’ve been refused the basic tool, a laptop, so that I can have some flexibility (moving to a quiet conference room to design/develop). It’s impacted my morale, productivity and attendance.
So, to your question – a lifelong stake? I don’t know. I do know the two ends of the spectrum, and fairly compensating someone for results AND a bonus/bonuses/residuals are good ways to show appreciation. The problem with an hourly wage is that you are trapped in “worker” mode and will never get ahead that way. Entering into an ongoing arrangement may be problematic though, down the road.
It really just depends. I know some developers who couldn’t care less about the big picture. They want their project and they want to code it to perfection, get finished, and move to the next project. Paycheck please.
There is also another type of developer who dabbles and gets involved in the nuance of user experience, conversion rates and the multiple factors that contribute to the bottom line. They think about sales, leads, exposure and findability. This type of developer often tries to connect A to B to C and understand the fundamentals of the business.
The second type of developer can offer more than just a coding solution to the current problem. Giving them equity not only makes them happy but it makes sense from an economic standpoint as it keeps them from moving when a better offer is given to them. And sooner or later, that will happen so you want to do all you can to keep them dedicated to your business.
I think it is progressive of you to seriously consider giving a stake to the companies they create!
While this isn’t unheard=of at all, the stake that most companies provide typically is rather tiny. “Stock Options”, for instance, are only worth something if the company stock goes up. Contrasted with actual money, actual money or actual ownership may ultimately be more worthwhile.
Giving some sort of stake in the game really encourages innovation, because, otherwise, an individual has zero incentive to come up with new, productizable ideas beyond the quarterly bonus thing.
I’ve worked in a megacorporation that gave nothing to inventors when their work resulted in patents or further income for the company. That structure is not a good formula for longterm employee retention, nor for encouraging innovation.
I also once worked for a university where inventors were provided 50% of all future from their invention. This model seems to be a gold standard for what you’re considering, but it’s also maybe a whole lot more generous than really reasonable from a business sense, considering the speculative investment the business must absorb before an investment may pan out.
One of the best arrangements I’ve seen was where a company provided “ghost stock” — this didn’t require the company to bite off heavy administrative expenses in order to promise some stake in company futures if the company was sold off or IPOed.
I personally would be less likely to stay with a company if I’m not receiving a significant stake. Companies today lay off longterm employees in a heartbeat, yet expect high degrees of personal sacrifice in terms of time, stress, and innovation. It’s really time for the pendulum to swing back towards progressive companies engineering mutually-beneficial relationships with employees. Create win-win situations and I believe the company stands to gain far more than the actual monetary cost.