Hey fellow fastlaners. I have a dilemma and would like some advice.
As some of you may know, my partners and I have been developing a product for the past year. We are very close to launch. Probably less than 6 weeks away. Our manufacturer is in the process of making the mold for our product then he is shipping us a sample and if we approve, we're in business.
The problem I'm having is with my Web Developer, which is a close friend of mine. The problem is not that he is slacking on building our site. The problem is that since this is our first product and we're already putting most of our savings into it, we're trying to get him on board as a partner. We're doing anything we can to save money in the beginning. I feel for the site he's building us, the packaging and logo design he has done for us and building our social media pages, if we had to go to someone on the outside to get it done we would have 3 problems: a) they probably won't be as good as he is (he's been doing this his whole life, great at graphic design, builds web sites for fortune 500 companies, was webmaster for Con Edison and now is webmaster for Bank of Tokyo) b) They won't be reliable, which I hear is a problem with many web developers. c) It would be way too expensive in the beginning, especially when we could be using the money for other things such as advertising and marketing.
I know there are going to be a bunch of you that call me crazy. So be it. I'm not a greedy person. This is a close friend of mine (In my bridal party) and we've talked about doing something like this together since we were kids. I finally grew the balls to start it!
Here's what we offered (for those of you that don't know, I have 2 partners already - We all bring our own set of skills to the table that make us so much stronger together and it makes it a lot easier financially) :
Option A) We offered him a 5% share in the company. He would be responsible for 5% of the expenses and his duties would be to develop the website, build our social media pages (but not control them), help us build our brand with packaging and design. We will pay him all expenses necessary to build the site such as shopping cart/hosting. He will just do it for an extremely discounted rate. He would also be included in all of our future products, which we have a long list of after the first one gets rolling.
Option B) We offered him 3% of NET sales along with a sliding scale for Internet sales based on dollar amount sold through the website, maxing out at 10%. He would have same responsibility except he would not be responsible for expenses. We would also have to compensate him a little more for building the site.
We thought we had 2 great offers on the table for him but he came back to us with what we think is an absurd offer and even an insult. He wants 3% of GROSS sales. A sliding scale on Internet sales Maxing out at 8% but based on pieces sold (also and extremely low amount to hit max) and 3% of the company if it is sold. He will also be giving us a discounted rate for the website (About half of what it would cost us on the outside) and he would be responsible for hosting fees.
Before I say what I think, I'd like to get some opinions from someone on the outside. Thanks in advance!
As some of you may know, my partners and I have been developing a product for the past year. We are very close to launch. Probably less than 6 weeks away. Our manufacturer is in the process of making the mold for our product then he is shipping us a sample and if we approve, we're in business.
The problem I'm having is with my Web Developer, which is a close friend of mine. The problem is not that he is slacking on building our site. The problem is that since this is our first product and we're already putting most of our savings into it, we're trying to get him on board as a partner. We're doing anything we can to save money in the beginning. I feel for the site he's building us, the packaging and logo design he has done for us and building our social media pages, if we had to go to someone on the outside to get it done we would have 3 problems: a) they probably won't be as good as he is (he's been doing this his whole life, great at graphic design, builds web sites for fortune 500 companies, was webmaster for Con Edison and now is webmaster for Bank of Tokyo) b) They won't be reliable, which I hear is a problem with many web developers. c) It would be way too expensive in the beginning, especially when we could be using the money for other things such as advertising and marketing.
I know there are going to be a bunch of you that call me crazy. So be it. I'm not a greedy person. This is a close friend of mine (In my bridal party) and we've talked about doing something like this together since we were kids. I finally grew the balls to start it!
Here's what we offered (for those of you that don't know, I have 2 partners already - We all bring our own set of skills to the table that make us so much stronger together and it makes it a lot easier financially) :
Option A) We offered him a 5% share in the company. He would be responsible for 5% of the expenses and his duties would be to develop the website, build our social media pages (but not control them), help us build our brand with packaging and design. We will pay him all expenses necessary to build the site such as shopping cart/hosting. He will just do it for an extremely discounted rate. He would also be included in all of our future products, which we have a long list of after the first one gets rolling.
Option B) We offered him 3% of NET sales along with a sliding scale for Internet sales based on dollar amount sold through the website, maxing out at 10%. He would have same responsibility except he would not be responsible for expenses. We would also have to compensate him a little more for building the site.
We thought we had 2 great offers on the table for him but he came back to us with what we think is an absurd offer and even an insult. He wants 3% of GROSS sales. A sliding scale on Internet sales Maxing out at 8% but based on pieces sold (also and extremely low amount to hit max) and 3% of the company if it is sold. He will also be giving us a discounted rate for the website (About half of what it would cost us on the outside) and he would be responsible for hosting fees.
Before I say what I think, I'd like to get some opinions from someone on the outside. Thanks in advance!
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