There isn't a shortage of developers and designers. There's a surplus of founders.
The cost of starting a company has collapsed. It's now just (minimal) salaries. For entrepreneurs, desks are free, hosting is free, marketing is online, and company setup is cheap.
Raising the first $25K for product development is easy - join an incubator. Raising the next $100K is easy - investors are following the incubators with automatic notes. Building a product and launching a product are easy - develop on Open Source Stacks, host on Amazon, launch on Facebook, Android or iOS, get your early traction.*
Getting real traction is hard. Raising millions of dollars is hard. Building a sustainable, long-term company is hard.
Yammer can hire. Square can hire. Twitter can hire. These companies have achieved product / market fit. Your pre-traction company has not, and so it has a hard time hiring.
If the costs of founding a pre-traction company have gone down, then returns to pre-traction founders must go down.
Throw out the old cap tables. A founder doesn't get 30% and an early engineer shouldn't get 0.25%. Those are old numbers from when you had to raise VC capital before you could build a product. Before everyone could and did start a company.
Post-traction companies can use the old numbers - you can't. Your first two engineers? They're just late founders. Treat them as such. Expect as much.
Your next five designers and developers? Your cap table probably can't even afford them until you have traction, and the cash that follows it.
Close the equity gap, and hiring will get a lot easier.
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* Of course nothing is ever "easy" - but it's a lot easier than it used to be.
** This is just my opinion, not that of my employer. But you can see what they're doing to help at AngelList Talent. Coincidentally, the lead hacker on that project put up this related must-read post on his own blog yesterday.
This post originally appeared on Startup Boy.
Follow Naval Ravikant on Twitter: www.twitter.com/Naval
A small business. I had do a lot of work for me closed her doors after 22 years in business
Not form lack of sales of higer costs for good she used but one day about a year ago
BoA called in her loan they told her she had 30 days to find a bank to refinance to make a long story short she chould not find a bank to do (no suprize there) so she had to sell off here building
And all of the machines to get the money to pay back the loan and she did
And in the end the bank did this to get more cash on ther books so when you drive by a empty building most likely this is the cause for there closing
What is really being said is developers are far more valuable than their basic salaries and the founders drain too much cash from the system. Couple that with the old Big Tech dinosaurs who, 30 years later, still pull millions out of the pot from old options for technology that can now be downloaded for free from the web.
Ideally we should simply be paying developers salaries in the six figures like doctors or lawyers and so away with the start up business model.
So true for digital start-ups. There is also an advantage of being able to protect your intellectual property and not having to go and bleat them out before all kinds of investors before you have a chance to secure patents or build your first customer base to get ahead. I know of quite a few start-ups whose ideas get stolen from the early investor presentations. Keep the lid tight, folks.
Think -- When Bill Gates got out of Harvard Collage to do his start-up, seeking patent protection was not among the initial list of things he proceeded to do. This way an engineer can enjoy the fruits of his labor and not get trapped into giving away significant part of the company to an investor/manager so early in the game.
No one can "afford" to pay more people, or people more, until pay scales become more equitable.
Until the giant sucking sound that is money being extracted from our economy by our financial system as a whole, and executives as a reward for "cutting costs" (ie firing people), this cycle will continue.
Increase wages for people currently working, and jobs will follow due to the inherent increase in demand those increased wages will create. Job creation without addressing our stagnant wages is putting the cart before the horse.
What if we pay them less, do you need more of them now?
Untill I have more sales I refuse to hire more people. Simple as that.
Sustainable Revenue makes all the difference.
Replicating Revenue, usually gets the attention of Investors.
Not to mention residual money. But try Craigslist, but dont give your info to just anyone. Be very careful.