Hey All,
First off, thank you for any help. I would appreciate some feedback on my proposed structure for introducing a new partner to my business. I set off to create a "Create your own intranet" software last year that was showing HUGE demand, however I have 2 problems: I coded it terribly, and I tailored the service to my two biggest clients needs, which ended up making it a bit un-scalable and difficult to use for clients who just signed up via the internet - I am bringing on a ton of trial customers but losing them hand over fist because it is not as easy as advertised.
I have determined the software needs to be rebuilt from scratch and placed in a separate legal entity. I want to bring in a coder I've known for years who would be absolutely perfect, and is interested. However, he's not just interested in money, he wants some skin the game and to be part of something significant but lacks the marketing/business skills. Here's my proposed offer:
- Offer him $5,000 to recode the basics from scratch so I can get it back on the market. (200 hrs at $25/hr).
- I'll continue to sell the new service as part of my current legal entity, however once we achieve $1000/month, I will place the service in a new business entity and give him 7.5% equity and I will look after all marketing, legal, incorporation, accounting, etc. This allows me to run the experiment of seeing if the new version will sell, without having to commit anything.
- Once we hit $3,000/month I will hire him as CTO at around $30,000/year which I don't believe he is making much more than now as a coder.
Any feedback, things I am missing? Can these stipulations be even added into an agreement he signs? If it is relevant, my current version of the software is netting $130,000 per year, however only among 4 large customers.
First off, thank you for any help. I would appreciate some feedback on my proposed structure for introducing a new partner to my business. I set off to create a "Create your own intranet" software last year that was showing HUGE demand, however I have 2 problems: I coded it terribly, and I tailored the service to my two biggest clients needs, which ended up making it a bit un-scalable and difficult to use for clients who just signed up via the internet - I am bringing on a ton of trial customers but losing them hand over fist because it is not as easy as advertised.
I have determined the software needs to be rebuilt from scratch and placed in a separate legal entity. I want to bring in a coder I've known for years who would be absolutely perfect, and is interested. However, he's not just interested in money, he wants some skin the game and to be part of something significant but lacks the marketing/business skills. Here's my proposed offer:
- Offer him $5,000 to recode the basics from scratch so I can get it back on the market. (200 hrs at $25/hr).
- I'll continue to sell the new service as part of my current legal entity, however once we achieve $1000/month, I will place the service in a new business entity and give him 7.5% equity and I will look after all marketing, legal, incorporation, accounting, etc. This allows me to run the experiment of seeing if the new version will sell, without having to commit anything.
- Once we hit $3,000/month I will hire him as CTO at around $30,000/year which I don't believe he is making much more than now as a coder.
Any feedback, things I am missing? Can these stipulations be even added into an agreement he signs? If it is relevant, my current version of the software is netting $130,000 per year, however only among 4 large customers.
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