I am entering into a venture between myself and 2 other people:
A) Programmer - Me
B) Business guy 1 - long time former client and somewhat of a friend, lots of industry contacts....it was his idea initially.
C) Business guy 2 - wealthy, industry insider, MBA. I have only met once at lunch.
The application can be most simply described as a very spacialized auction site in a narrow vertical industry, involving large dollar amounts. To stay on topic, let's assume this venture is a good idea.
The company will consist of a website with very minimal supervision required. Marketing by the 2 business guys will drive customers. Outside of some marketing presentations and lunches, and some analysis sessions with myself, their time input will be minimal. I would estimate on a pure hourly basis, I will put in 80%, if not more.
When asked what share I was interested in, I asked for 30%, as that was what I estimated was the fair amount for me. I fully appreciate that even though I will be doing most of the "work", it is their connections that will ultimately determine the monetary success. I also realize that I can theoretically be swapped out for any other developer (although at much greater cost than they realize, and high risk of not finding the right person). But the same can be said of Business Guy 2...there are many people other than him who have similar money and industry contacts....so, the idea that I, as a developer, am dispensable, applies to him as well.
Long story short....my 30% equity request was countered with 25%. I still only have a small portion of the specs, and know little about Business Man 2, yet I feel like I am being pushed to agree or disagree on the proposed equity share before we go any further. On an hours worked basis, at the end of the day I think I would likely be extremely happy with my payout of 25%, based purely on $/hour, but I am quite confident that at the end of the day it will then be quite clear that success was much less a result of inside connections and moreso of a good product at the right time.
So....what should a person do in this scenario? My current thought is to just keep working on the software to bring it to beta andhold off on signing anything, as I will have more leverage the further I can drag things out. Thoughts?
No one is injecting any noteworthy amount of capital. I am donating the entire design and programming of the site (as well as administration I would imagine). We may spend $5-$10 k on a CSS person later. Other than that, it is just picking up the phone, going for lunch, maybe a few presentations. Extremely minimal capital investment is required.
As for the code....I am doing all development offsite as of now and not releasing any source code. But I definitely have a lot of thinking to do about the legal aspects of protecting myself in this regard.