Having non-technical founders who failed to even outsource their project is an enormous red flag. Nobody there knew how to make the product a reality and if it is you who is doing 100% of the work, then you obviously deserve 100% of the equity. "Having an idea" is not worth equity.
If you thought the idea was great, there was an obvious golden opportunity for you, none of the people there are going to make this into a product, but you can. If the idea was bad, getting paid in equity means getting paid in something worthless.
The only situation where it is reasonable to deal with such a totally defunct organization is if they pay you a lot of money. And if there is a single missed payment you stop any work until you are paid.
Too many fantasy tales of overnight successes out there. It takes an enormous amount of work to make things look easy - in a commercial setting. Some people just pick things up and are relatively good at them but they cannot productive it. To do so you have to be able explain it and they don’t understand it, they just do it. So they can’t make a business out of it and they cannot become top of their field because they lack the fundamentals and the work ethic.
I could talk anybody to death with all of my ideas. I only get to work on very few of them. I can’t imagine how sad a life it would be to only have one. It’s great for mentoring though because there’s always something shiny on the shelf and I can let them window shop for one they like.
I certainly should have spotted this as soon as they offered me a contract that was a clumsily-reworded version of the contract for the awful overseas contractors
In fairness I think "non-technical" needs to be clarified a little. I can easily envision (and have seen) founders who are not themselves actual software engineers but who have some background in project management or otherwise managing tech teams hiring an offshore team and moving very quickly to a viable product cost efficiently.
In fact I'd bet it's at least a coin-flip that this profile would actually be more effective than a hardcore CS background engineer who hasn't ever managed teams or launched and sold a product.
Of course that's a small caveat, since that's almost never what we're talking about, like in this example. But still, seems worth noting that the outsourcing of the build isn't necessarily the red flag, the red flag is the leader of the project having no experience in building and launching useful software.
Like many, I also had an experience like this in my younger days: obviously unfit product, early prototype made by bottom-of-the-barrel contractors, co-founders who can't code, no salary, no users.
I got lucky, and spent only a few months while not working that hard.
But at the same time, this quote hits home:
>I was doing a startup. I was executing, and for the first time in my professional life I wasn’t insulated from the results. I didn’t achieve my destiny of great things, but I’d built something.
Right? I literally can't even call it a proper warning because of how much I took out of it.
My whole career was jumpstarted by my second startup (we only got to preseed but it was a great two years) and there's no way I'd have been as good a fit without this experience
>> I hope that by reading this story, I can protect some of you from 11 months of pain.
That's not how experience works. What you really did was get an 11 month business education. And again, you can tell your story, but you can't pass on that education.
I'm glad you moved on to better things. And I think you're saying that this experience prepared you for that, and you were a better overall entrepreneur because of it.
I had a similar wake-up call when I joined a startup. I had over a decade experience working in stable companies, but I learned so much in a short time.
What surprised me the most, was that I did not improve much technically, as we chose well known technologies to get the job done. Focusing on product over tech was one of the best decisions we made.I also learned to make compromises and accept some technical debt in order to get the product out in time. You get a much deeper view of the business needs when you work in a smaller group.
Currently at a startup that did the same thing wrt having their app built overseas. Protip: don't. Endless bullshit, excruciating trying to get anything out of them. We ended up with an app just like this guy's, locked aspect ratio and all.
If I find another startup whose product is an app, and they can't find a local developer to write that app, I'm running. Why outsource your core product!?
This is very common. Lofty idea folks often see developers as a commodity, so why not just outsource to the cheapest bidder? You might luck out and get a smart person who doesn't know what they're worth yet... but, 9 out of 10 times, you get what you pay for.
If you don't know the value of what you are buying you are most likely to get even less than what you payed for. In the story they basically got scammed by overseas shops who probably pocketed most of the money and farmed out the effort to minimally-skilled and minimally-paid developers who were in way over their heads.
I think there are ways to outsource too. Outsource to an international team that benefits from your success rather than viewing you as a money-making goose. Build a different incentive model, and give away some equity. Sell them the dream.
Because there are legions of people out there who want to be "entrepreneurs", so they come up with "business ideas". They can't make these ideas into reality by themselves, as they lack all technical skill. This lack of skill also means that they can not manage a project, as they lack a basic understanding of how software project works.
I can only guess, but maybe they think the product is just something you pay some of those "other people" to whip up, and the whole game is about your business and marketing and metrics etc. The app is just some necessary cost that must be minimized to check the box on their business template.
This article reminded me of the time a guy wanted to pitch his startup idea for me to develop. He wanted me to sign an NDA before telling me, as the idea was so great that I would obviously steal it, which I refused.
So all he would tell me is that it was “the next Twitter”, and from what I could gather, he would retain the majority of the equity and I would do all of the work, while he lobbed ideas at me from on high.
I passed on it, but only because the red flags were extremely obvious. I could certainly see a situation where I might have been sucked into something more subtly exploitative.
This needs to be highlighted: Everyone who does anything at all in the realm of business or tech should basically never sign an NDA unless it is already positively guaranteed they are getting something out of it. You might be required to sign an NDA once you have been hired at a W-2 job if the company handles sensitive data. Or if you have already been offered a contract. Event then, make sure it is actually necessary, and run it by your lawyer.
But if someone wants you to sign an NDA just to hear about their idea or business, or as a condition of being interviewed for a job, ALWAYS say no. VCs don't sign NDAs and neither should you. It's plain and simple uncompensated risk.
I used to get these “opportunities,” on a weekly basis.
As soon as someone hears what I do, and that I’m retired, and doing it for the fun, I hear cha-ching! in the background, somewhere, and their eyes light up.
I can't even count the number of times I've heard this pitch, complete with NDA demand. The only answer is "Thanks, but no thanks". I have never had to regret it.
Oof. Sorry. Missed in this story because Jacob is in Europe/UK is that this level of absolute incompetence in a launch team is, in my experience, extra common on that side of the pond.
There are of course some fantastic startups launched out of the UK and Europe. Spotify, Deepmind and Raspberry Pi come to mind. But, as a rule on the investment side, I'm always super skeptical. Inevitably cap tables are worse, investors have a very different view of their roles than they do in US or Asia, and there's so much less startup infrastructure than in SV or say Singapore or Shanghai that it's a very different world. Ironically, it's self-feeding -- investors think startups are shitty business, they charge more, high quality founders head for greener pastures -- rinse and repeat.
Haha to be fair I have been adjacent to lots of startups like this. I also spent a few months attending weekly zoom calls for a side hustle that was effectively some mid level bored corporate people blowing off steam. They were a few steps behind getting a bankloan.
I’ve been running an outsourcing business for a while and can confirm - 99% of people paying for development have no idea what they are doing and how to sell it. They are destined for failure unless the outsourcing team builds a product that is 3x better than a competitor with 100x funding.
Success stories I’ve seen always involved extremely active customer. They become part of the team, helping devs to build good product. Also it always took much more time and money. If you think you can build marketable product with fix-cost-scope contract - think twice.
Rather than being a cautionary tale, I actually think this is the kind of misadventure that everybody should have. You learn so much about the real world from a failed startup where nothing is done right (at least I did). Your early 20s are the perfect time to do it with little risk. Lots of painful memories I laugh at later. Highly recommended.
Yep this is exactly my summary at the end! I'm glad I sat on this story a few years to let it develop and let the positive career consequences play out.
It's an entertaining and well-written story. After reading it I momentarily entertained writing up my own similar misadventure, but even 15 years on, I think I'd find it too difficult to write about. I'm glad you were able to pull it off though!
An additional red flag - if your company lists "being SEIS registered" as a point of traction, run a mile. Literally every newly registered UK company can get this by spending 60 minutes filling out a form that says "my company is risky, I intend to raise money from VCs".
Readit News
If you thought the idea was great, there was an obvious golden opportunity for you, none of the people there are going to make this into a product, but you can. If the idea was bad, getting paid in equity means getting paid in something worthless.
The only situation where it is reasonable to deal with such a totally defunct organization is if they pay you a lot of money. And if there is a single missed payment you stop any work until you are paid.
I could talk anybody to death with all of my ideas. I only get to work on very few of them. I can’t imagine how sad a life it would be to only have one. It’s great for mentoring though because there’s always something shiny on the shelf and I can let them window shop for one they like.
In fact I'd bet it's at least a coin-flip that this profile would actually be more effective than a hardcore CS background engineer who hasn't ever managed teams or launched and sold a product.
Of course that's a small caveat, since that's almost never what we're talking about, like in this example. But still, seems worth noting that the outsourcing of the build isn't necessarily the red flag, the red flag is the leader of the project having no experience in building and launching useful software.
> non-technical founders who failed to even outsource their project
I got lucky, and spent only a few months while not working that hard.
But at the same time, this quote hits home:
>I was doing a startup. I was executing, and for the first time in my professional life I wasn’t insulated from the results. I didn’t achieve my destiny of great things, but I’d built something.
My whole career was jumpstarted by my second startup (we only got to preseed but it was a great two years) and there's no way I'd have been as good a fit without this experience
>> I hope that by reading this story, I can protect some of you from 11 months of pain.
That's not how experience works. What you really did was get an 11 month business education. And again, you can tell your story, but you can't pass on that education.
I'm glad you moved on to better things. And I think you're saying that this experience prepared you for that, and you were a better overall entrepreneur because of it.
Thats how experience works.
What surprised me the most, was that I did not improve much technically, as we chose well known technologies to get the job done. Focusing on product over tech was one of the best decisions we made.I also learned to make compromises and accept some technical debt in order to get the product out in time. You get a much deeper view of the business needs when you work in a smaller group.
If I find another startup whose product is an app, and they can't find a local developer to write that app, I'm running. Why outsource your core product!?
So all he would tell me is that it was “the next Twitter”, and from what I could gather, he would retain the majority of the equity and I would do all of the work, while he lobbed ideas at me from on high.
I passed on it, but only because the red flags were extremely obvious. I could certainly see a situation where I might have been sucked into something more subtly exploitative.
But if someone wants you to sign an NDA just to hear about their idea or business, or as a condition of being interviewed for a job, ALWAYS say no. VCs don't sign NDAs and neither should you. It's plain and simple uncompensated risk.
https://blog.jpl-consulting.com/2012/04/why-i-wont-sign-your...
https://www.markwelchblog.com/2009/08/26/why-i-dont-sign-nda...
https://blog.hartleybrody.com/wont-sign-nda/
As soon as someone hears what I do, and that I’m retired, and doing it for the fun, I hear cha-ching! in the background, somewhere, and their eyes light up.
But yeah, we’re a dime a dozen.
It reads like a parody but it was serious.
There are of course some fantastic startups launched out of the UK and Europe. Spotify, Deepmind and Raspberry Pi come to mind. But, as a rule on the investment side, I'm always super skeptical. Inevitably cap tables are worse, investors have a very different view of their roles than they do in US or Asia, and there's so much less startup infrastructure than in SV or say Singapore or Shanghai that it's a very different world. Ironically, it's self-feeding -- investors think startups are shitty business, they charge more, high quality founders head for greener pastures -- rinse and repeat.
Success stories I’ve seen always involved extremely active customer. They become part of the team, helping devs to build good product. Also it always took much more time and money. If you think you can build marketable product with fix-cost-scope contract - think twice.