(SUGGESTION NEEDED)App almost done and almost ready to launch. How do I reward my developers

[tory]

Edit: No equity! Cash and salary. Plus stock options got it!!

Ok. Let me start this off by saying. READ THE FULL POST PLEASE Lol

The reason I say this is because I have got some rude comments before that literally make no sense within the context of my post. People just read one sentence then jump to rude and negative comments.

OK so ! Let's get started

My name is Carnell founder of the Coast 2 Coast app.

Coast 2 Coast allow your to play pickup sports and get PAID for playing. We are nearing launch (Late March early April) and i have a few questions that I would gladly like to hear multiple advice and opinions on

How much equity should I offer my developers?

A brief explanation of this would be my developers have so far worked for free 100%. They said they would discuss compensation once we launch, even after I offered to give them something of what little I had.
We started off with 3 developers and now are left with 2. One of them backed out of the project as he got a lucrative job offer from IBM in California. They are all students.

Summary - My question is how should I deal equity? A former CEO that I have been taking notes on said I should start off with 1% that could increase by 1% every year up to 3 years. Then salary would go up not equity. Is this standard practice or something to consider? To clarify they would each be paid a SALARY +1% equity each year they are with the company.
Is this fair? Or if you being a developer would feel some type of way?

I've looked up the positions that these fellow developers would be taking. Lead designer, Leading programmer so on and so forth.
My question is how should i go about presenting them with a contract? What is the best way? What is an absolute "no presentation" that would leave you you feeling insulted? Again all options are welcome and encouraged.

Future Investors - When trying to find funding for this project many redditors were adamant that I should code it myself because I had ZERO funding.

The amount of money needed to build an app to my design would have been astronomical. It was suggested that i should actually learn code and do it myself. However w/ NFL workouts and bartending I couldn't do it and release it in any feasible time so I stayed persistent and I eventually found students that believed in the project. Our relationship has been pretty healthy since as we text every few or so days and their has never been a big gap in commitment or weeks without contact.
We can only release the project on Android because of a lack of funds. However when we are ready to launch IOS and we need funding what amount of equity is fine and what's a sharp pole up my bum? (I realize there will be variations on this answer and different factors. What I'm asking is for more of a broad view.)

Developers - I have the utmost respect for my developers. They took time out their day to listen and believe in my project. They took over 6 months to work on the project for no pay and nothing more then the passion and word of a man they still have YET to meet. All our business has been via phone and SKYPE. Legal speaking they have all signed NDA's and signed a sort of contract that basically says anything related and anything they develop for the future is property of me blah blah. My question is to protect myself should I add anything else? When I say protect myself I mean as far as an attempt to takeover. A Facebook type of situation is what I'm referring to.

As a general guideline or idea of our contributions I will provide a brief summary of all our contributions to the project.

Carnell (Me) - The project idea> Funding > Marketing > Social media platforms > wireframes > graphic design > real world testing (not the app the marketing/slash practical uses > filming of the commercial > revue raised from merchandise > clothes design > Shipping.
Carnell Summary text - Of course I had the idea that much is clear. But the time I brought this idea to developers I had over 6 months of work put into the project. I went around to every major college in Florida. Ex FSU MIAMI UNF UCF UWF etc. I spent countless hours talking to real athletes and getting the nuances of the project. I've been to NFL players, NBA players Over seas pro basketball players, and investors all trying to get funding with my pitch. As far as graphic design for the app I could find nobody who could match my vision (from what I could afford) so with a little help from YouTube I did it my damn self after many failed attempts. Regarding revenue to match the app I created a hoodie designed for an athlete to rep their city. I sold the hoodies and all the current revenue from that is sitting. I didn't spend any of that because when we launch my developers are going to get that money distributed between the two of them.
In under 4 months our Facebook group is sitting at 8K+ members
Instagram is over 3K followers
Facebook page has around 3K likes

Ben Rosa > Lead developers > Head of the project > Student > Coding the app >Keeping all the team members focused and on task > Created the Github and so far has exceeded my expectations

Belal > Coding expert (Self taught) > Currently in school > Responsible for most of the back end work > Data collecting > highly reliable never leaves me on read or misses an appointment

What can I say about these two guys? They are everything that I hoped for any more. I am thankful that after many scoffs and laughs, many doubters and naysayers, after many months of searching everything from help wanted ads, to craigslist, to Reddit I found a team that I can confidently say I trust.

Ben has been amazing in the team leader role and after our first Skype conversation I knew that i had found the right guy. He keeps everyone on task and always answers my question and inquires in a timely manner.

Farouk has been excellent too. Whenever I get int contact with him and ask for an update on the app, he provides proof and details no matter what I ask for.

They are both honest, hardworking mean who put their word above all else and that's what has impressed me the most about them.

Hey ! Thanks for the time to answer my questions. Rude comments will be responded to because they always happen BUT I would like for you to be more informative. If I've made mistakes tell me but racial slurs and name calling ....i never understood that.
If i'm on Reddit asking for advice and help I'm obviously not an expert. So unless I'm being COMPLETELY unreasonable and snide why criticize me on the merit that i don't know what I'm talking about?

I DON'T !

That's why I'm on here.

To summarize my questions are these:

How should I reward my developers?
Whats a fair share of equity in addition to salary?
When new investors come on what a typical equity split?
Any additional advice before we launch?
After we launch?
Any general advice?
In regards to business and "Thank You". Besides your word what is the strongest gesture of appreciation that you can extend to someone?

THANKS !

 

[lyssarae83]

@tory Okay that’s a lot of text and I appreciate your thoroughness, it sounds like you’ve put a lot of thought , care, and likely stress into this scenario. You’re not alone, many many people have been where you are.

I know you’re in a rush for solutions, and feel like it’s an emergency, but I guarantee you it isn’t.

What I would recommend to you as a first step, is to beef up your reading list. As an entrepreneur , you stand on the shoulders of giants. Which is a great thing. Most importantly, your employees are going to NEED and DESERVE someone who is well versed and an expert in finding out how to do these things.

Some books I can recommend as strong first reads ( in order of reading) :
* the Founders Dilemas by Noam Wasserman
* The Hard thing about Hard things by Ben Horowitz
* Startupland by Mikkel Svane

And use :
The Startup Owner's Manual: The Step-by-Step Guide for Building a Great Company by Bob Dworf and Steve Blank as a reference bible if you will.

Next: Find other founders ! Meet ups, Facebook groups , learn from their advice and experience

Third: remember you won’t get everything right, but you will learn something from it. It’s not about making the perfect decision, but understanding the trade-offs of your decisions.

For example: pay your employees highly and they’ll be happier and you may retain more top talent , but you could run out of runway faster which puts the business out of business. Ben Horowitz talks about finding the right ambition, and The founders Dilemas talks more specifics . Equity is another challenge , if you give too much to employees, investors will be less keen on investing, and you will retain less control of the company.

Lastly, while I can’t tell you specifically on pay and the exact details, but know that many capable reasonable people will accept a scaled payment. I.e. we all accept this much pay until we make this much money (something that they can live on). Once the company had more money we re-evaluate and give ourselves all raises.

That is a lot to handle so focus on these few things now. You don’t have to boil the ocean . I hope this helps, and I wish you luck.

 

[tory]

@lyssarae83 ha ! Thanks man. This answer is what I've been looking for ! For the past few days I literally wanted an in depth answer about the do's and don'ts.

Paying employees
Pay scale
Stock options
Equity

Thats all. I literally highlight in my post EVERYTHING these guys have done and how appreciative I am of their hard work. I even stress that I want to reward them in the best way possible and promise not to short change them.

Then the first comments I get is from some a-hole telling me I'm lazy, Then others attacking me saying I'm no good.

HOW

I literally made a post DETAILING that I wanted to do right by these guys. How these people made it past jr. high reading comprehension is beyond me smh.

But thanks I already highlighted those books in my notes and i plan on researching that to the fullest as soon as possible.

As we get closer and closer to launch I feel like I owe these guys more because they constantly answer my questions an are real helpful in my pursuits. I actually been learning code for about 1 month now to try and catchup to these guys

 

[pinkdaisy007]

@tory

Then the first comments I get is from some a-hole telling me I'm lazy, Then others attacking me saying I'm no good.

HOW

I make no judgement on you, but the reason your post upsets people is probably: Because you open by talking about giving away 1% increments, from something that you - in reality - earned only about 10% yourself, should be giving away 50%+ minimum.

For fun, you can research what happens in these situations ifyou failed to get a fully watertight legal contract (which I'm sure doesn't apply here, but is useful as a reference). Hint: you, as the non-developer, tend to lose everything. Courts tend to take the view that the developers did all the work and hence own it. All of it!

 

[tory]

@pinkdaisy007 I don't believe that I'm wrong.

BUT

As I scram my girlfriend, you don't have to be wrong to apologize (most of the time she is wrong -_-) but I'm sorry

I shouldn't have responded to you in the manner that I did even if I felt wrong.

I felt some type of way when you said I seem bossy or I sat on my ass for 6 months when the exact opposite was true. I put alot of hard work and effort into this. All the money a broke college student has, time, effort, all that.

So i felt some type of way. But I didn't need to lose my cool about it no matter how I feel. I assume your an adult and if I said out loud what I typed no matter my age my dad would have punched me in my S***t (Marines don't play, mom & dad)
So I do apologize.

To keep with this I haven't been lazy

I had this plan about a year ago (middle of March) before I presented it I read the do's and don'ts of attracting investors. I learned that your idea isn't the best in the world. your not going to be the next FACEBOOK. Your NOT going to be Snapchat.

So I did my homework, I presented the app to a couple people then see what they were excited about and what they kind of dismissed. I dropped and added features that I thought were essiental but nobody responded too.

Step two was testing the market. I went to every college in Florida. (FSU MIAMI, FSU, FAU.UCF.UNH FSCJ, VALENCIA, MIAMI DADE)
I played RB at UCF so this was easier to accomplish.

I talked to students and athletes, I went on basketball courts, NCAA practices, rec centers, local parks, and YMCA's.

In doing this I found out what features stuck and didn't and in those 4-5 months I compiled an email list of 15,000+ people who will download the app AS SOON as it drops.

Step 3 was finding investors (or so I thought)

Long story short it went like this

App devs needed money>didn't have it> went to investors> wanted an MVP> went back tp App devs> said they needed SOMETHING> Went back to investors> wanted prototype before ANYTHING>

And around and round we go.

So long story short step 3 turned into finding devs who I could share my COMPLETE vision with. I did and since around NOVEMBER (with a break for the holidays) they started coding

Step 4. Revenue, Long story short (again) i made hoodies each with a unique name that I could trademarked, the hoodies were customizable and I make 30$ profit off of each hoodie. I sold out the complete order and I was estatic (12 were friends and family) the rest were legit sales.

I created social media handles on twitter facebook instagram and snapchat

I paid for advertising nothing over 200$ Just local pages that are either meme pages or stand up comedians

Haha davis
daquan
black twitter
spoken reasons.

After that I made a 18+ page business plan, wrote up some number (Not mentioning days of research, well..months)
I contacted a few pro athletes
including: Fred Taylor Terrance Plummer Van Wilder

I have the personal number of Fred Taylor (He's in wait and see mode)

So after that we are all kind of caught up. I have business cards, around 20 more hoodies for sale, social media handles. I'm recruiting high school and college marketers and I'm doing the design myself because nobody can capture the vision I have for it

AGAIN , sorry for the way I responded I need to keep my cool ! But thats most of the work I've done while my coders have coded.

Feel free to leave any suggestions

 

[johnpereless]

@tory Equity is not a payment for services - it represents you giving away decision-making power in your company.

If you want to reward them, do it with cash, or with a tiny tiny allocation of stock which they earn over time.

 

[tory]

@johnpereless Ok got you . As far as smart is that the kind of compensation you're referring to

 

[johnpereless]

@tory Look up employee stock options, and the concept of vesting.

 

[pinkdaisy007]

@tory Rule of thumb (having worked for, run, and founded, many such apps):

• 15%-25% equity = you
• 75%-85% equity = your developers

Golden rule: if you're not paying developers, you should expect to lose most of the company. They have done ALL the hard work (Statistically + market wages, development costs are typically 90% of a new app - marketing, ideation, etc, is a tiny fraction. You get a bigger stake here because you said you did the graphical design - but graphical design is very cheap in this world).

From your starting numbers it seems clear you have no intention of doing such an allocation, and you see it that the idea is worth something (which is very rare, but does sometimes happen), so here's what you can probably get away with (it's not necessarily "fair" but it's not exploitative, and happens often enough in theses situations, and is considered a "learning point" for the developers - they should learn from this and never be taken advantage of again, but at least they got a decent recompense):

• 50% of company AND all future profit = you
• 50% of company AND all future profit = your developers

For reference, I've launched million-user apps, I've run tech teams from 1 to 40 people, and I've shipped more than 40 mobile apps. In your situation, I'd have advised the 50/50 split up-front - it takes very little effort to negotiate, and although it's never "fair", it's good enough. It tends to work out OK in the long-run.

 

[tory]

@pinkdaisy007 Would you mind if I email you my reply (Email, Text, Skype) the only reason I ask for one of those are we people don't like giving their personal info out which I get

(Btw. I'm not a weird dude or creep lol)

But if not ok.

So I did the wireframes and design the other two developers did the coding and the back end. So I should be looking at a 50/50 split and that's what's fair?

(Btw no disrespect I said the 1% equity because that is what I was TOLD by a dude. Like that's why I came on Reddit to ask. Because that seems low)

Which is why I said I'm ASKING. I have no idea why I would get attacked for asking a question! But lmk if I can email call or text you sir.

Thanks.

 

[pinkdaisy007]

@tory Wireframes + design is a tiny fraction of the work.

Typical app development budget:

• 2-4 months coding, for 1-3 people
• 1-2 weeks design + wireframes, for 1-2 people

...so the coding is typically 8-12x more work than the design + wireframes.

If you want to know why this is the case, or don't believe it ... try writing the code yourself .

 

[tory]

@pinkdaisy007 MAKES SENSE! THANKS