Thursday, October 29, 2009

Getting Work For Free Ain't Worth It

Here in San Francisco there are quite possibly more startups with no money than there are people. Would be entrepreneurs run around looking for magical equity only employees to help them build a product. I have certainly tried this route a few times, and I have to say I learned a lot about why it's worth paying for help.

When I first started working on my Captain Recruiter web project, I didn't know a damn thing about writing software. All I knew was that anyone with the right knowledge and a laptop could build a website with a few keystrokes and a bit of time. My brother is a great web developer and I've seen him pump out websites really fast, so I figured I could get someone to do a really good job in no time at all for equity instead of cash (um, yeah, that didn't happen).

Before I go any further, let me be clear that there's a difference between people contributing knowledge and contributing work. Contributing knowledge is what advisors do, and I think it's important to make sure you have access to people who know more than you do when starting a company. I worked with a couple of advisors who helped me a TON in exchange for LOT of equity, which is still compensation. And if I ever become even modestly successful, they'll do very well for themselves. Still, I learned that advisors are there largely to contribute advice (surprise!) and don't do much work to actually help you build the company, especially when you're not paying in cash.

    There's a ton of reasons you don't want to have someone work for free. Here's a list:

  • You don't know what you ultimately need. Seriously. You're going to build something, the need will change as you learn, and then your cashless help will wonder what all of the work was for. Even nonprofits working with volunteers give the free help clear direction (i.e. we're building this house on that lot). Can you imagine Habitat For Humanity getting any results by saying "We're going to put up some timber in random shapes, rip them down, redesign the house, or maybe we'll turn it into a bus stop."

  • Your idea doesn't have legs. Unless you can raise money, no one believes in you that much at that time (but keep working on it!) Anyone contributing help to your idea without cash payment is either a visionary like you (unlikely), is bored, want so to work with you for practice so they can get a "real" job, or can't land a regular job. Are these people you'd hire if you had actual cash? Probably not.

  • You offer them a role as a cofounder and they turn you down, but for some reason they still want to work with you. I smell serious commitment issues here. There are probably a lot of companies that have been started without money, but the people working together probably know each other pretty well.

  • The person contributing the work has ALL the power. Try getting someone working for free to do it your way instead of their way. Good luck with that!

In the end, work on the things you can work on with no money. Eventually you'll either save enough money, be polished enough to raise money, or just decide the whole thing isn't worth it. However, sticking with an unfunded project well past the point at which it is comfortable to do so will teach you a lot. You're ideas will become very focused, people will see your passion, and you'll learn a ton. As you refine your goals, the amount of money you need will probably decrease because you'll know what's really important and what is just a luxury.

Seriously, just pay for it. If you hesitate to even open your own wallet, keep working on your idea until it's worth outside investment. When someone offers to invest, you know you're onto something (and you don't actually have to take the money).

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