Over the many years as an app development consultant, I’ve gotten plenty of requests to implement someone’s “great” app idea for payment of a share of the app’s revenue, often proposed to be 50-50. Furthermore, many times the idea person wants me to sign an NDA and even a non-compete which would prevent working on any app in a related industry.
Once I had someone who shared an app idea with me and offered an equity split based on company contribution. They would start out at $1M for their idea and I’d be able to work for equity based on a reasonable hourly rate of my choosing. With such an offer, it would take me working at full-time for two years at $250/hour, to reach their initial equity. Crazy.
They seemed taken aback when I laughed in their face. I was truly insulted by their asinine offer.
As a developer, such requests and offers are for fools.
The problem is that having an idea and implementing and executing on that idea are completely different animals: idea generation is quite easy, whereas idea implementation is extremely hard. The amount of effort to get the idea execution right (which involves, for an app, getting the software working) tremendously outweights the cost of coming up with the idea.
Would it make sense for you if I told you that I have an idea to put a new form of lemonade stand on the corner, but instead of using lemons, we’ll use mangoes? Since it’s such a great idea that nobody’s done before, you can go right ahead and build that mango-ade stand and we’ll share the profits.
Of course, this makes no sense. You would be doing all the work and I’d probably be sitting back and letting you figure out the hard parts:
1. the mango-ade recipe that has been tested out to see what the market would like (if any) 2. the look and design of the stand, including colors, material types, and signage 3. the procedures for the mango-ade makers and front-end servers so each customer transaction is repeatable and scalable
In a similar way, software development takes a lot of time and energy.
There are oodles of intricacies that add complexity, and many of these are often not completely known until after development has started. Developers are constantly making micro-decisions about the software implementation that affect the app. The building of great software requires someone who can understand the big picture viewed from many angles: from the user’s perspective, from what the software languages and tools can do, from what the computer is capable of doing, and from what can actually be built in the allotted schedule.
An app idea that is developed without the experience of attempting to implement it is literally worthless. It’s through the iterations of finding out the limits of the tools, languages, machine, and even the user that ideas can converted into reality.
So, ultimately, idea-based equity offers are asking the developers to shoulder the implementation risk by using up their time to solve the hard parts and figuring out the execution when they could be billing out their time to paying customers.
Please consider the above points the next time your chat with an app developer about your next awesome idea. And, don’t be shocked if the developer says no.