I was not too long ago told by a business guy that it was generous of him to offer me even a small fraction of 1% of some web-based service I would be building. Because he had cash, connections, etc. The problem with that logic (which was not completely without merit) is that while I could build the entire site/service 100% by myself without him, he could NOT do the equivalent by himself. So he needed me more than I needed him. (He didn't need me, literally, but he'd need somebody else to build it for him. So he would have to give that somebody something in exchange.) And you don't actually need a lot of cash or connections to get the particular service in question off the ground. Cash always helps, sure. And connections help, sure. But in theory I could build the entire thing myself, start with 100% equity and control and 0 politics, and then only later when it became useful to leverage industry connections to do bizdev and land sales and affiliate deals, would he become useful to me, and thus at that point it could make sense for me to grant him some equity in compensation.
In fact, I feel increasingly we live in a world now where a hacker/entrepreneur hybrid can just go build some web technology or SaaS by themselves in relative stealth mode, retain 100% equity, and then later maybe give up 10% to a designer to make it look purty and another 10% to a bizdev guy, and maybe maybe another 10-20% to a cash investor (and outside cash may not always be necessary or desirable anyway), and the hacker/entrepreneur still retains the largest share and majority control. There are 2 secret ingrediants here, which is probably why it doesn't happen more: 1. the hacker must be really good and talented not just average Joe code monkey; and 2. he must also have business/entrepreneur skills/knowledge. If he lacks either or both of these things he's not going to have the capability and leverage to pull this scenario off. But for those that do, watch out.
In fact, I feel increasingly we live in a world now where a hacker/entrepreneur hybrid can just go build some web technology or SaaS by themselves in relative stealth mode, retain 100% equity, and then later maybe give up 10% to a designer to make it look purty and another 10% to a bizdev guy, and maybe maybe another 10-20% to a cash investor (and outside cash may not always be necessary or desirable anyway), and the hacker/entrepreneur still retains the largest share and majority control. There are 2 secret ingrediants here, which is probably why it doesn't happen more: 1. the hacker must be really good and talented not just average Joe code monkey; and 2. he must also have business/entrepreneur skills/knowledge. If he lacks either or both of these things he's not going to have the capability and leverage to pull this scenario off. But for those that do, watch out.