Why founders should love the pain of giving share options to developers

This post is my reasoning why a web startup founder should make sure they feel the pain when it comes to share options with their new business and love it.

A web startup has some key ingredients for success: the quality of the development, speed of entry to market, stability and support are some of the key areas you will have to nail. So how can you make sure your developers are focused on the same deliverables ? Simple offer a good share option and lower then market rate. Its amazing how much this is a good thing for a business. I love sitting around a planning table hearing developers say “We have to get this to market” and “how does that get us more money”. These are things that helps entrepreneurs keep themselves on track as well.

A great benefit of share options is it makes you as a founder truly test the value of your ideas, its funny when you here developers say “Im not sure if this will work” but at the same time happy to send the invoice each month to get their money. I wouldnt want developers that dont believe working on my projects ever. So when a developer does take the shares it means they believe in your dream and you should be using this as the first investor pitch to test your idea. If you cant convince developers to invest then maybe you will struggle at getting angel investors at a later date or maybe you shouldnt be investing your time and money as well.

Dont forget share options can have vesting clauses, which means they will only get them when certain conditions are met such as length of employment. These clauses has two benefits, firstly it makes people stick around so you dont lose key people too early which helps with the support and stability issues we talked about earlier and second it also sounds a warning when staff has lost faith in the business. If an employee wants to leave and hence loses what you perceive as hundreds of thousands of dollars worth of shares, it sends the very strong signal they dont believe and other staff may feel the same they just never tell you.

As a developer and I own a small stake in a business, I can tell you I want the major stakeholder to make millions because then so do I. Can you say your development team thinks the same about your project ?

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An offer you cant refuse

We all remember that famous line spoken from Don Vito Corleone in the Godfather movie of “Ill make him an offer he cant refuse”. Wouldn’t that would be great if we could make a deal that nobody would refuse, I am sure a business and personal lives would benefit greatly.

So is there a way for us to make a business offer that cant be refused without resorting the the tactics of that infamous gangster ? Well the answer is well yes for some offers, the secret is making sure the offer is a win win for both parties.

Next time you put an offer forward on a potential business deal make sure you take the time to look at the deal from the other parties position first. So here is a list of questions I think you should be asking:

Is it such a sweet deal that it cant be refused ?
What parts may the party have issues with and how have you addressed them ?
Have you outlined in very clear language what the benefits will be to them ?
Have you backed your claims of benefits with facts that can be trusted ?

Put a deal with these questions answered forward and it will be become an offer that cant be refused.

Lean Startup: So you think you have a brilliant idea, yeah who else ?

One of very common mistakes a startup can make is thinking they are on a winner, we even laugh at them during shows like Dragon Den as some more sod shows of a universal baby interchanging device thingy that he has donated the last X years of their life too. The poor person always looks so surprised too when others are not blown away with excitement when the idea is placed in front of them.

So how do you know if your in that fools camp or that you do have an idea ready to explode, where everyone will be saying with envy at parties for years to come: “I could have come up with that”.

Its not asking your friends, your partner or your mum … they always lie god bless them. Instead the truth comes from one place: customers. Get your idea out there in front of customers they will tell you bluntly and quickly if they like your idea by the action of giving you money.

I will be presenting the Sydney Windows Bizspark Camp

Believe it or not you can be a startup that is not on the web or not on the iphone, so to prove that these people do exist we have created a bizspark camp to see talk about what is happening.

It should be a great afternoon of networking so why not come along and see what is happening.

The quick overview:

Join us at the Windows 7 Modern Applications BizSpark Camp on 14, June 2010.
Get an overview on how to design and incorporate key new features of Windows 7 in your applications; giving them a modern twist while incorporating resources like multi-touch interface, ribbon menus, task bar integration, external sensors like gps, WiFi Location services, accelerometers, and other features.
This half day event will be hosted at the Microsoft Sydney Office in North Ryde.

The Event will be followed by a hands on lab event on the 25th of June at the Microsoft Training Labs in the North Ryde office. Both of these events will feature MVP & BizSpark Network Partner James McCutcheon of Foundry38.

If these two events inspire you further, and you think you have what it takes to build a Proof of concept around your Windows 7 Modern Application idea, you will be invited to participate in a three day intensive Proof Of Concept development program which includes Technical & Business experts on hand to help guide your development. This is also being held at the Microsoft Office on 28th, 29th, and 30th June 2010. On hand to help with your development will be Dr Neil Roodyn, Microsoft Regional Director & MVP.

Event Agenda

14 June Event

12:30 pm – 1:00 PM Registration
1:00 pm – 1:15 PM Keynote Speech
1:15 PM – 1:45 PM Windows 7 Modern Applications and the Business Opportunity for Startups
1:45 PM – 2:30 PM Building Modern Windows Applications (Session 1)
2:30 PM – 3:00 PM Afternoon Tea
3:00PM – 5:00 PM Building Modern Windows Applications (Session 2)

More information and registration can be found here

I will be judging you at Bizspark Startup Camp

I will be judging you … well if you are entered into the Bizspark Azure Startup camp that is on the weekend of 10th/11th April.

I hope to see lots of great ideas and then see someone walk away with a cool $5000 that can help them bring their idea to market.

Windows Phone 7 Series Developer Story in Sydney

I will be speaking at this months Sydney Mobile User Group meeting about what is new for developers in the Windows Phone 7, and believe me there is lots.

Everyone is welcome so come along and have a beer and a lively discussion about all things mobile. Simply RSVP at http://bit.ly/bHR9sx

My visit to MIX10

I was lucky enough to get an invite to this years Microsoft MIX10 conference, one of the great things about attending US conferences is the ability to listen to some of the best IT people in the world. In this day, the ability to watch the sessions over web of course reduces this but there is nothing like after the sessions catching up and chatting one on one with these great people.

The big news at the conference and the reason for the invite was to learn all about Windows Phone 7 Series, its great to see Microsoft getting its mojo back in this space. Although there is some nice to have limitations with the device, all in all its a great device and puts Microsoft back in the mobility space.

There has been some complaints from developers about the sandboxing of the applications but honestly this is a good thing to give the consumer control over their device and a good user experience. I am sorry Mr developer but its not up to you to say which app should be in control of the device so play fair in the sandpit.

Looking forward to catching up with lots of people back in Australia and sharing this information as we roll out Metro training and other events like ReMix and TechEd. If you want access to some free training then watch this space as we will soon will announce the ability to join the Metro training.

Hope your excited about the 7 Series device as much as I am

Getting to know … Performance Design

I had a chat with Mark Pickering from Performance Design (www.performancedesign.com.au), which is a company that builds performance tools for RX-8.

Mark talked about the importance of finding a suitable business partner and setting suitable goals for people involved and the affect that had on his business.

It is important that your able to set clear goals to people, in the standard work world its easy you turn up to work do your defined task and then you will get paid, but in the startup world these rules are flexible. Make sure before you start a project you have sat down with the person and both of you can answer : you will do W by X and if you do then you get Y if not then Z will happen. If you can do that then

The business lesson of the week was the art of judging when you should keep at something and when you shouldnt. Are you the crazy old miner that is seeking gold when its all over or are you the inch away from the jackpot seam ?

Mark is looking for people who can help him with some marketing strategy, can you help him or know somebody who can ? Why not drop a line to me @jamesmcc and we can record an interview about what advice you would give.

Getting to know … Designerholic

Here is the first in a series of videos of some Bizspark partners, hopefully we can all learn some pointers about getting our startups to succeed from other startups.

The interview is with Dale Cameron from Designerholic, which is a great Australian site for getting design work built at a low cost.

Got a question about your startup then please feel free to send it through or leave a message below. I look forward to your questions.

Example Content from Teched

A few people have approached me to give them the sample code that I demoed at teched, I finally found some spare time this weekend to zip things up and place them here on my blog.

DEV310 Make Some Magic! Shake, Flip and Flick Your Application for Windows Mobile 6.5!
Sensor Examples Code
More Sensor Examples

DEV370 Channelling your inner sexiness and other developer tricks for Windows Mobile
Example Alpha Blending (Includes free photo of Loke Uei Tan)

Hope it helps some people.

Disclaimer: All code provided as an example only and is only intended for use a learning tool.