Interesting. If I were in your position I would consider
- How much effort I've put into the project (in income opportunity cost)
- The capital they are bringing to the new company. Or, how much capital they are the capable of bringing in with their contacts.
I would base determining whether 10% amounts to a fair price on that.
If the site is simple enough to implement, I would also consider how much it would cost them to get someone else to do it. I.e. if I demand 50%, they might say "Thanks, but not thanks. we'll just pay someone else to write this for us.".
10% of something is better than 100% of nothing, but you don't want to be taken advantage of...
Well, if they only have an idea, and they're not bringing any money to the table, then I would refer to the following from the 37 Signals book "Getting Real" (free to read online)
It's so funny when I hear people being so protective of ideas. (People who want me to sign an nda to tell me the simplest idea.)
To me, ideas are worth nothing unless executed. They are just a multiplier. Execution is worth millions.
Explanation:
* Awful idea = -1
* Weak idea = 1
* So-so idea = 5
* Good idea = 10
* Great idea = 15
* Brilliant idea = 20
* No execution = $1
* Weak execution = $1000
* So-so execution = $10,000
* Good execution = $100,000
* Great execution = $1,000,000
* Brilliant execution = $10,000,000
To make a business, you need to multiply the two.
The most brilliant idea, with no execution, is worth $20. The most brilliant idea takes great execution to be worth $20,000,000.
That's why I don't want to hear people's ideas. I'm not interested until I see their execution.
—Derek Sivers, president and programmer, CD Baby and HostBaby
Consider this: it's not just the cost of making the site these guys would have to swallow if they go with another developer, it's the cost of developing the customer base. This means that there will be a several month period during which they're not able to monetize.
Demand 100%. They haven't offered you anything.
Monetization? Micro-transactions, or subscriptions (i.e., ad-free access). Hm...For that, I think I deserve 90% of your company now. :)
Comments
Interesting. If I were in your position I would consider - How much effort I've put into the project (in income opportunity cost) - The capital they are bringing to the new company. Or, how much capital they are the capable of bringing in with their contacts.
I would base determining whether 10% amounts to a fair price on that.
If the site is simple enough to implement, I would also consider how much it would cost them to get someone else to do it. I.e. if I demand 50%, they might say "Thanks, but not thanks. we'll just pay someone else to write this for us.".
10% of something is better than 100% of nothing, but you don't want to be taken advantage of...
I certainly agree that 10% of something is better than nothing but the problem is at the moment I'm getting 10% of nothing as they only have an idea.
They could pay someone to build a site but then mine would still be around which would be competition for them.
Well, if they only have an idea, and they're not bringing any money to the table, then I would refer to the following from the 37 Signals book "Getting Real" (free to read online)
http://gettingreal.37signals.com/ch06_Done.php
Be An Executioner
It's so funny when I hear people being so protective of ideas. (People who want me to sign an nda to tell me the simplest idea.)
To me, ideas are worth nothing unless executed. They are just a multiplier. Execution is worth millions.
Explanation:
To make a business, you need to multiply the two.The most brilliant idea, with no execution, is worth $20. The most brilliant idea takes great execution to be worth $20,000,000.
That's why I don't want to hear people's ideas. I'm not interested until I see their execution. —Derek Sivers, president and programmer, CD Baby and HostBaby
Consider this: it's not just the cost of making the site these guys would have to swallow if they go with another developer, it's the cost of developing the customer base. This means that there will be a several month period during which they're not able to monetize.
Demand 100%. They haven't offered you anything. Monetization? Micro-transactions, or subscriptions (i.e., ad-free access). Hm...For that, I think I deserve 90% of your company now. :)