joined:Oct 15, 2003
Personally I don't see the difference because TIME is MONEY.
You can either write a check to buy someone else's TIME or use your TIME in lieu of money.
Time is only money when you have time and don't have money. When I was younger I would do everything myself for that reason. Deals like this came along all the time, I had my pick of them. Now that things are reversed (more money than time) my perspective is a little different and it makes a lot more sense to pay someone to do what needs to be done than take time away from other (already profitable) projects to do it myself. I can always make more money. I can't make more time.
FWIW, I've been in bootstrapped businesses and bootstrapped myself and I'd do it again in a heartbeat just because it's way more fun when you don't have institutional investors breathing down your neck and asking lots of questions.
I can agree with that, I've done the same thing - but only when it's MY OWN business I'm starting. I wouldn't allocate unpaid time to someone else's
business that maybe, if
it's successful, I'll get a small piece of.
That's kind of the reason I brought this point up. So many startups try this same method and most of them fail, and it's more than a little frustrating for the guy who put in all of that time with the promise of future riches and never got it back. All I'm saying is that this proposal should be reconsidered. If you are successful in this venture, you're likely giving away a huge piece of the company to someone who only contributed a few grand in labor. It can be problematic in the future... say two years from now business is booming and you need to raise a few hundred grand or a few million in outside capital to expand. You make your pitch to a company like mine and I see that you only own 70% of the business because you gave 30% to someone else, we can't do a deal because you would have to give up your majority share to get the money you needed. Then you're in the situation of having to ask your 'partner' to relinquish some of their
ownership to get the capital you need, and it just gets messy.
Maybe you'll never be in that situation, but most people I've worked with who are
in that situation didn't ever think they would be. They all thought their business would grow naturally, and that money for expansion would always be there from steadily increasing revenue. It doesn't always work that way, so really think it through before making this kind of proposal. If you really believe in this business and don't have to startup cash, I'd rather see you max out a credit card to pay someone to do the required development than turn over a piece of the company. In the long run, free labor is WAY more expensive than paid labor.