We are a small C# product company that creates web-based productivity tools. I have a friend who does not have job currently and would like to do some development work in our product for future payment, profit sharing or ownership (maybe on the product or company).
I was wondering if anybody has done this before or have some creative ideas regarding compensating developers this way.
Thanks
SK
Can you afford to pay the guy money? I would have a hard time giving up ownership in my company to someone who is just going to "do some development work". I think treating him as a contractor would be a good way to go from a business point of view, that way there is more flexibility for him to work his own hours and for you to avoid paying benefits, taxes, etc.
Giving some partial ownership in the profits of your individual project that he is working on may be a good way to benefit you both, but if he doesn't have a job do you think he'd want to wait that long before he finally got a check?
Unless of course, you want to make him a full blown part of the company, but it sounds like he just needs some temporary coding work for a short time and you guys could just use some help.
I think it is admirable that you are looking to take care of your friend and I think a flat hourly rate is probably best in this situation. It could be win/win for the both of you.
just my $0.02, I don't own a company.
Sure, this type of work is relatively common and is usually referred to as "working on spec" (or on speculation). A contract is generally drawn up that specifies how the developer will be compensated in the future (e.g. royalties, flat fee, hourly rate, stock, ownership stake) and under what circumstances the compensation will be disbursed (e.g. when the company turns a profit, when the product sells n copies). In my own experience, this kind of contract is pretty slippery and should be reviewed by a lawyer both to protect the company from having to pay more than it can afford at disbursement time and to protect the developer from not getting paid.
Of course, there is always the possibility that the disbursement conditions will not be met, which makes this kind of arrangement a bit riskier for the developer.