So you have an idea and you probably think that 50% of the hard work is done. Now you just need someone to build it and millions will roll through the front door. You, sir, are one of many “Ideas Founders“.
Ideas Founders believe in their idea so much that they think success is a certainty.
Well, it’s bubble bursting time – very few companies get to that point. In fact, of VC funded companies in 2023 a whole 90% went bust. Your chance of not failing, if funded, is 10%. I’d even wager that a portion of those 10% barely make enough money to pay back the investors.
And what if you’re not funded? Well the odds drop another 10 fold so we’re looking at 1%.
- Yes, I know your idea is amazing.
- Yes, I know you have a spreadsheet.
- Yes, I know you’ve paid to have a kick ass design made.
Your odds of success are still less than 1 in 20. I know this because Venture Capital makes all its returns from unicorn companies, which are 1 in a thousand. You don’t see the 999 that didn’t make it.
But YOU ARE A GENIUS and still not dissuaded. You will manifest this product into the marketplace.
The Product Creation Process
Every business product starts with an idea. Did you know that ideas are the most abundant mineral on Planet Earth? Literally millions appear in peoples heads on a daily basis.
However, your idea is unique, well researched and validated.
So now you need to build that idea. You need something that us techies call a Minimum Viable Product (MVP). Then you can go out, test it, get feedback and iterate. This might take 4 months if the stars align, but more like 6-18 months.
With total abandon you scrawl 10 lines of “specification” onto a napkin and request quotes from dev shops. Very quickly, though, you realise it’s expensive. You’ll need to part with at least 50k (but trust me you’ll always end up paying double that to get what you want).
Problem is, you don’t have 50k, or if you do, you don’t really want to part with it. (But you still 100% believe in your idea).
Of course this is not a problem as you have valuable stock to give away, right? That’s why you try to flag down a programmer whom you shall name CTO, offering him a huge chunk of your valuable company, maybe even 40%.
Now you need only sit back and wait for him to build your masterpiece, with the occasional checkup call to see how your brilliant investment is doing.
Show Me the Money
Whilst your resident geek has been toiling away in his basement you’ve been doing a lot of work. Modelling financial projections, thinking about investment rounds, valuations and more. In fact your spreadsheets are a work of art. They are so good that you could sell them to buy a mansion and Rolls Royce with plenty of change left over for a private island. You are a genius.
Then, an alarm goes off. Time to check in on your enslaved programming basement dweller Chief Technical Officer.
Progress is going really well and the app looks good so you order it to be published. 1 week later you check downloads and sales figures.
No downloads. No sales. No nothing.
Hmmm, the product must be faulty. Time to have a heart to heart with your CTO.
Despite “motivating” your CTO (another skill from your infinite stack) the masses still have not arrived…and there is still ZERO revenue. What gives?
The End of Your Company
After another 6 months of iteration there is still no revenue and you’re bored. It must be the technology that sucks. Maybe you should have had the Geek use React.js instead of Angular. Anyway, never mind, you’ve just noticed that a local coffee shop is doing amazingly well so you dream up a coffee subscription app that they could pay you for.
This shiny new thing is what will get you that yacht.
That old idea from a year ago simply didn’t have the right tech stack or CTO and that’s why it failed. Coffee is the new money maker in town.
You gleefully part ways with that awful CTO and immediately begin interviewing for another one. This new one must be passionate about coffee, subscriptions and business processes. This time, it’s different.
Why you Failed
I hope that my sarcasm was strong enough for you to realise one thing:
Sales is everything.
No matter how good your CTO and product you must still put it in front of people and push for a sale. No sales means no revenue means no company.
You may say this is obvious but many “Idea Founders” don’t realise it, wasting inordinate amounts of CTO time in return for stock that is worthless.
Why You Won’t Get a CTO for Free
The devils bargain is to hire a CTO for 40% of equity right? That way you get a competent employee for free, right?
Actually, no.
Any seasoned tech guy, be that lead dev or CTO is going to look at you very critically.
- How many pre-sales do you have?
- Did you create a no-code version of your app to see if the market wanted it?
- Did you pay someone to create a basic MVP that you have signed letters of intent for?
If the answer to these questions is no then he’s going to give you a hard pass. He wants to know what you bring to the table. And no, an idea is not worth anything.
You may think that your offer of 40% equity will right this situation, and you’d be wrong. Let me show you why by asking a simple question:
Where could I sell a quarter of my 40% stock, right now, to pay my bills?
That’s right. Nowhere. Would you, the genius “Ideas Founder” even buy them? If my 40% is worth 400 million in the future then I’ll give you 10% now for a bargain price of 100 thousand! Let me guess, you won’t take that deal.
AND YET, Ideas Founders expect us tech people to take worthless equity in return for a year of hard work building a product.
Equity value is built, not dreamed into existence by your ideas.
No-one serious is going to sign on to your company by the strength of your idea alone. 12 months of hard work in return for nothing – or I could build 25 of my own mini products on the web and float them to see what sticks. One of those could be worth 100k / year for 10 years. That’s a cool million in my pocket (for a few weeks of work).
How does your 40% of nothing compare to that?
Don’t believe me? Just have a look at Indie Hackers or Product Hunt to see all kinds of one man band success.
So How do You Get a CTO?
So far I have taken a big steaming dump on your dreams of getting a free engineer. Now let’s see how you can actually attract and keep one.
1. An Engineer is not a Nerd, He is an Artist
You may see Matrix code when you walk into an engineers office but he sees pure art. There’s something amazing about creating the perfect code that just gets us going. The ONLY way you get this out of someone is to not make them feel pressured.
And can you guess how to get average output from an engineering rockstar?
Easy. Simply treat him like an employee, one you don’t even pay. Order him around all the time and interrupt him continuously asking what he’s working on now.
How far would Leonardo Da Vinci have gotten if his boss has been looking over his shoulder every 30 minutes?
When you take on a CTO, he is your partner, and not your employee.
Your CTO has a skillset that you do not possess so let him use it according to his best judgement. Never order him around. If you want something built then communicating that is fine (notice I said communicate and not order).
Ultimately you’re taking him on to build the product and make sure it runs. Your technology views should be checked at his door or only brought up as though you were talking to your wife on Valentine’s day, and not your dog who won’t drop the ball.
In short, he’s the f****** CTO so he decides technical things. Do not interfere and you’ll get the best from him.
2. WTF do You Bring?
Yes, you. And no an “idea” is not a thing. The 2 things you must bring are:
- Funding, or a solid route to funding (without sucking up CTO time before that)
- Sales ahead of time or gold star sales experience from your past
If you only come with Option 1, then that is acceptable if you will pay for your CTO’s time, at least partially. If you also come with Option 2 then you are an A star candidate and CTO’s will throw themselves at you like you’re an A list celebrity.
Personally I can count on one hand those I’ve met with Option 1 and am yet to meet someone who also has Option 2.
You may look at this list and think you have neither but you’ll plough ahead anyway. Well, for that let me refer you to this Reddit thread (there are many more like it). Tech people are wise to your tricks. Offering us nothing for work doesn’t go so well when places like Facebook will pay you 150k starting salaries (plus stock).
If you really believe in your idea then you can make an investor believe, and he will part with the cash you should pay the CTO to actually make your product.
Who the F*** Are You to P*** on my Dreams?
Hey, I get it. You’re angry reading this article. Your first reaction is to assassinate my character then I have no standing. So here’s my character for you:
I’m just an average tech guy, building stuff I think will work. Every single day. Whatever I build I keep 100% equity in. I haven’t needed a job in 10 years, and probably never will. I’m not rich or poor but happy every single day because I love building – and I get to do it every day.
Ps:
If this article has offended you then please tell everyone on social media and link to it so they can be enraged too. All those free backlinks will sure teach me a lesson.