Advice needed - do I or don't I?

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Advice needed - do I or don't I?

Postby georgeoc » Wed Jan 17, 2007 7:26 pm

Hi all,

I would love to hear some wise words from the collective wisdom of the DevNet community. I have been approached about a web project with promises of large vaults of gold bullion at the end of it, and I need to think very carefully about whether or not to get involved.

A guy I know only via the internet (I hate admitting that, it's so sad really!) has given me various bits of work over the years, doing a few websites and system maintenance on his server. A friend of his has dreamt up a fantastic new project, and is looking for a web developer. My 'colleague' forwarded his request to me (in fact, he's kind of acting as an agent between us so far, although he won't be making any money from it).

I've exchanged a few emails with this new guy, and he interested me enough in what he had to say to make me sign a Confidential Disclosure Agreement that he sent by post. Although I'm no legal expert, it is short and understandable, simply preventing me from knowingly disclosing the 'secret idea' that the guy has had.

Anyway, what he wants is a site such as YouTube or MySpace, but with an important twist (therein lies the secret ;)). So: a community-based site, with multimedia uploads, forum, blogs, etc. Although it's a bigger project that I've done before, I think I can do it, despite the possible areas of concern like security, internationalisation, etc. His idea, naturally, is that it will become an overnight sensation, and he (we?) can sell it for mega-bucks. The core 'secret' is a nice concept; possibly original, but who knows. Done well, it's just the sort of thing which might grab headlines.

So, my question is how I should proceed. I've signed the agreement, and only a few hours ago did I read the 'secret' for the first time. He provides very few details, but we'll chat over the next few days. His initial proposal mentioned a 33% partnership in the profits (he is working with another person on the 'concept'), which instantly worried me. What if, when the site goes live after hundreds of hours work from me, the whole thing is a flop? So, I will propose to him tomorrow that on top of a percentage of the profits (I guess less than 33% in this case), they pay me a flat fee for the design and coding. They have ruled out a professional company to do it as they are too expensive, but if I ask for something like £1000-2000 (UK Sterling), then at least I won't go hungry. Bear in mind that web development is almost a hobby for me really - I'm a freelance musician so I use web work to fill in the gaps in my diary (and my bank balance).

The other thing I want to ask is about setting up a small team, rather than working alone. I thought that another PHP guy with a similar skill level as myself, plus a graphic designer in the later stages, would really give the project the professional edge it needs, and of course speed up delivery. I'd like to ask the 'boss' if he would consider two or three of us working on the same pay arrangement. However, I don't know any other PHP developers personally, so I'd have to resort to placing an ad (here, or on some of the dedicated sites), listing the budget and what skills I'd require.

I feel very green on this issue. I'd rather pack it in now than waste huge amounts of time on it. However, the thought of a nice long dev project is always enticing, and this concept is intriguing. The suggestion of 'big money' is genuinely right at the back of my mind.

Please post any advice you have. I know it's awfully vague, but I'll try and answer any questions you have.


Thanks!
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Postby feyd » Wed Jan 17, 2007 9:26 pm

Lower front end (directly pay) means higher back end (share) for projects such as these.

Personally, I'd suggest open sourcing it. But that's not for everyone. Before you set out completely, I'd suggest getting a lawyer for yourself just to make sure all your bases are covered and you can't get too screwed if it goes south.
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Postby georgeoc » Wed Jan 17, 2007 9:33 pm

Could you just briefly describe what you mean by open-sourcing in this case? The concept, the site, my code, what? How do we still make money from it?

Re. the lawyer. I'm sure it's a good idea, but it's the kind of thing I'd never imagine myself doing. "Get yourself a lawyer" suddenly makes the whole business seem a bit distasteful. I believe you that it's a necessary step though. Providing these guys are true to their word, how much would I pay a lawyer, and to do what exactly? Just read/draw up the contract we make?
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Postby feyd » Wed Jan 17, 2007 10:14 pm

Open sourcing the code. The concept goes with it, the site, while it could be apart of the code, could be separate too. http://www.google.com/search?q=making+money+open+source

It's hard to say how much to pay the lawyer, but as long as you get one that knows and understands software and IP related law it should be all good. Remember, do your homework on the lawyer first. Possibly even consulting a different lawyer either to verify the quality of the first or duplicate it.
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Postby georgeoc » Wed Jan 17, 2007 10:20 pm

I'm confused about your advice. Perhaps I'm just being dumb.

This site will be a one-off, just like YouTube or MySpace. I don't see any reason for any of the PHP code to be public. It's not a CMS-like application that I want to distribute (for that, I would certainly choose OS). The site will generate revenue through advertising, and possibly some kind of subscription (I'm guessing).
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Re: Advice needed - do I or don't I?

Postby timvw » Thu Jan 18, 2007 4:31 am

georgeoc wrote:So, my question is how I should proceed.


Walk away and never look back...

georgeoc wrote:They have ruled out a professional company to do it as they are too expensive, but if I ask for something like £1000-2000 (UK Sterling), then at least I won't go hungry.


What? I'm sure they don't want professional hosting either? If they really believed that their idea is going to return lots of $$$ the investment would be futile...

georgeoc wrote:Bear in mind that web development is almost a hobby for me really - I'm a freelance musician so I use web work to fill in the gaps in my diary (and my bank balance).The other thing I want to ask is about setting up a small team, rather than working alone. I thought that another PHP guy with a similar skill level as myself, plus a graphic designer in the later stages, would really give the project the professional edge it needs, and of course speed up delivery.


Basically, web development wouldn't be a hobby anymore, but a fulltime profession...


If they're going to take 67% of the profits, why aren't they willing to pay for 67% of the costs? I've seen way too many dreamers like these the last decade.. I simply don't believe in these projects anymore.
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Postby Kieran Huggins » Thu Jan 18, 2007 6:25 am

I have an awesome idea - if you do all the work I'll cut you in for a few percent.... I wouldn't personally invest the time/money to have it built professionally, but it's worth at least one billion dollars to Google or Yahoo... so your ten percent will be worth 100 Million Dollars!


Sound familiar to many of you? I thought so.

Building a startup requires serious commitment. They're not displaying any.
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Postby georgeoc » Thu Jan 18, 2007 6:44 am

I understand your scepticism totally. But are you saying that because they're asking me rather than a pro company, that makes them amateur dreamers?

I don't have the details of their commitment to me because there aren't any yet. I haven't chatted to the guy yet. 33% of the profits is the figure suggested by my friend, my 'agent' in this deal. And the £1000-2000 was a figure I plucked out of the air - something more than £0 which would make lots of work somewhat worthwhile, but nothing near what they'd have to pay a company.

If you are a dreamer with little or no capital behind you, why must you pay top prices for web design in order to be legitimate? As it's the concept that matters, I think a fairly basic CMS would actually suffice for the early stages, and it could be extended as we need later.

timvw wrote:Basically, web development wouldn't be a hobby anymore, but a fulltime profession...

What, just because I want to set up a team? I don't understand this rationale. It will only ever be a part-time job because of the necessity of my 'real' work as a musician. If I deliver the website they want but over a longer time period, what's wrong with that?


Kieran - I absolutely understand your point. In fact I've often browsed threads in this forum thinking "No! Don't do it - it's a scam!". But understand that I spend a lot of my free time now doing PHP projects for free - it really is a hobby. So what harm is there is taking this on, with a contract that guarantees me both some compensation for development time and a cut of the profits if it does well?


I don't mean to argue with you - I really respect the advice. I'm really just trying to get my thoughts in order.
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Postby Kieran Huggins » Thu Jan 18, 2007 6:47 am

meh - if you'd do it for free anyway, go for it. If you come out ahead, good on you!
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Postby georgeoc » Thu Jan 18, 2007 6:49 am

I have very little business sense. I can't work out if I'm being stupid or not.
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Postby timvw » Thu Jan 18, 2007 7:16 am

georgeoc wrote:If you are a dreamer with little or no capital behind you, why must you pay top prices for web design in order to be legitimate? As it's the concept that matters, I think a fairly basic CMS would actually suffice for the early stages, and it could be extended as we need later.


The point i was trying to make is that they seem to shift the 'cost' part to you..

georgeoc wrote:Kieran - I absolutely understand your point. In fact I've often browsed threads in this forum thinking "No! Don't do it - it's a scam!". But understand that I spend a lot of my free time now doing PHP projects for free - it really is a hobby. So what harm is there is taking this on, with a contract that guarantees me both some compensation for development time and a cut of the profits if it does well?


The difference is that for your previous projects you probably didn't sign Non-Disclosure (and other) contracts.. Right now it seems that the only party commiting to something is you... Which is (imho) and odd situation for a partnership...

Anyway, i believe you're aware of the (many) dreams that didn't come through (And where webdevelopers ended up in financial difficult situations).. So i can wish you only the best from now on :)
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Postby Kieran Huggins » Thu Jan 18, 2007 7:18 am

Try to call this one from your gut: all promises of money aside, how do you feel about your potential partner? Do you feel uneasy at all? You shouldn't.

If you feel like you're "missing your opportunity" or something, search these forums for similar offers.
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Postby Skittlewidth » Thu Jan 18, 2007 7:45 am

This sounds eerily similar to a client I have been dealing with for over 6 months, for the full rant see my post here.

How convinced are you that this project will be a success and make money?

The clients I have had to deal with are absolutely certain they're on to a winner, and even claim to have done some market research, but personally I can't see the concept really taking off (especially with the subscription prices they're charging, and not with the site in it's current form anyway).

This client also set off trying to do the site without a "professional company" to save money and originally wanted the thing to launch in November 2005, but they have since probably spent more than double getting me to fix what they were too cheap to do properly in the first place, and even then they are still cutting corners in a big way. Would you believe they sent me an email this week saying "if this modification isn't too major could you do it for free?". You don't want to be dealing with anyone who takes that approach to a business idea.

My opinion is that people who see the dollar (or pound) signs and aren't prepared to make a proper investment into their idea probably don't have full enough faith in their concept.
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Postby Nathaniel » Thu Jan 18, 2007 1:36 pm

Economically speaking, the guy with this "secret idea" is responsible for risking his resources. In more concrete terms, for paying the designers and programmers. In return for risking his resources, he reaps all of the benefits if the project does well.

What he wants you to do is take the majority of the risk by putting hours and hours into his idea without compensation. This way, he doesn't have to risk his money, and he won't lose much if the project flops. You're the one who would lose out.

Yet you aren't set to reap all of the benefits if the project does well. If you agree to follow through with this project, you are deciding that all of the hours you put in are only worth 33% of the profits, and his "secret idea" is worth the other two-thirds.

That's nuts.

Ideas are cheap.

Execution is what matters.

Cheers mate, here's to a wise decision!
- Nathaniel
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Postby daedalus__ » Thu Jan 18, 2007 1:59 pm

/amen
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