8 June 2010
Web App Client Questionnaire
I’m paying you in equity, so technically I’m paying you a fortune since it’ll be worth millions!
Every web designer or developer has heard a version of this from someone who is going to make ‘the next big thing’. And, if you’ve been around for a while, you have bought into a truly charming individual (who has the best intentions, they really do), and have wasted many hours working for free on something that will never go anywhere.
Should you Run for the Hills?
Everyone knows that 95% of web startups fail.
(Actually, I made up the 95% fail rate. BUT I’ve spoken to many many talented designer/developers and there are very few of them that are making profits with any web startup they’ve been involved in, so let’s say it’s most likely very very high.
62% of statistics are made up on the spot, so I apologize for misleading you, but I couldn’t actually find a good statistic on this… it turns out the internet can’t tell you everything afterall).
Web Apps = Work, Lots of It
Creating a new web application is a lot of work, and so very different from a plain corporate website: they’re often valued on their potential (and, in most cases, on the creator’s enthusiasm for its potential).
While I’ve found quite a few questionnaires for building a corporate websites, there doesn’t seem to be a questionnaire for a web application.
Ask the Questions
I am actually a designer of web applications, so I wanted a questionnaire. Here are a list of questions I think you should ask before getting involved in a new web application, whether they’re paying you in cash (hopefully), in equity (probably offered) or both (likely).
And, if I forgot anything integral, let me know, and I’ll add them in. Then maybe we’ll all stop taking stupid risks for idiotic projects.
1. What Does It Do (in 10 Words or Less)?
If they can’t explain it, it’s too complicated. No compromise.
If they haven’t focused their concept and they’re touting that it will do everything and cook you pasta, you’re probably looking at feature glut, constant revision, and low user acceptance rates. It’s a heart-ache waiting to happen.
2. What makes it Unique from Competitors (in 10 Words or Less)?
Being unique is important. Not only is it more interesting to create something unique, it’s very difficult to dislodge existing market players in a market they’re comfortable in. Especially when your benefactor has a tight budget.
3. What is your Plan for Profit?
Most businesses need to make money, even if it’s not quite profit just yet. Ask for their most modest estimate. Chances are, it’ll still be higher than the actual, but you can get a good guage of whether they’ve got their feet on the ground.
4. Who would use it?
Who are their customers? How many people total in that market segment and what penetration do you plan on having? You want to test if they have any knowledge of how products work and how they’re targeted.
You also want to test if they’ve really thought about who would use their product and why.
5. What is your Launch Plan?
Do they have a budget for marketing? Do they understand it is a full time job to make an application ‘sticky’?
Within this, you’ll need to find out how much time are they going to be spending promoting the app.
The most successful web start-upers work very hard to promote their stuff; they build their launch plan right into their software and have the staying power to make it happen.
6. When are you Planning on Launching?
Deadlines will creep up, and it’s best if they’re a little bit flexible. If the date isn’t flexible, see if the features list is. You can’t have both!
Again, you’re looking for someone who has reasonable expectation on how much work something is, and makes sure there’s time for bug fixing and quality checks. If you have other projects on, you want to make sure they understand your other responsibilities (especially if they’re not paying you).
7. What is your Growth Plan?
By how much do you plan on growing in the first year? Second? I always look for people with realistic expectations, and those that mention that, after a certain length of time they’ll re-evaluate. That is the key: it’s not whether they’re accurate, it’s whether they have realistic expectations and plan on revising their strategy as they go.
8. What is your Software Philosophy?
Everyone works in different ways. That’s good. When you work on a web app though, it’s never done. If you’re going to be working on this continually, you want to work with someone who has a similar work philosophy.
Find out if they’re perfectionists with every bell and whistle in there from the beginning. Are they more interested in simple progressive enhancement? If your style is different from theirs, it’s going to make your life miserable.
9. Do you Plan on Doing any User Testing?
Web apps are so different from a company brochure website that user testing should be required. If they don’t plan on doing some, gently push at least some informal testing within their target market.
Suggest A/B testing to improve conversion rates, decrease bounce rates and improve any metric that will make the application better!
10a. (If you’re a Designer) Who’s the Developer on this Project?
For a designer, there’s nothing that makes working on a web app more enjoyable than working with a talented developer. They can set up your environment and make your css/html slide right into their backend.
They confer with you throughout the process to make sure that your work fits with theirs, and they’re so creative when it comes to creating really amazing user experiences. They also are a wealth of ideas. If you have a great relationship with one, they can perform miracles. Dreams do come true, even with small budgets and time frames!
10b. (If you’re the Developer) Who is the Designer?
Having a good designer is equally important. One that knows UX and can integrate a lot of those standards we all care about into their original designs. This means less restructuring for a developer later.
When you have a good relationship with the designer you can easily negotiate changes that make your life easier as often there’s multiple design solutions to a problem.
They’ll also often stem off feature creep. In essence, with designer and developer in cohorts, it’s now 2 against 1, and while you’re not going to win every battle, your odds have gone up!
11. How much Time do you Need From Me?
It’s an interesting one: When you’re involved in start-ups, it’s ongoing. It will always be ongoing if things are going well. Have they planned for an ongoing dev/design schedule?
12. Let’s Talk Money
Money is always a problem with start ups. There actually isn’t any money yet, so often with small projects they have very tight budgets (and often funded by the same individual who is hiring you), but you should still demand what you’re worth.
Even if it is an interesting project, you have to weigh that against taking on full-paid work. Your time is not free, so make sure you calculate your ‘opportunity-to-do-other-work’ costs alongside what you are charging them.
Sometimes if I find it to be a really exciting project, I’ll give them a lower rate, but never lower your prices out of pressure from them.
Another warning bell is the ‘salesman’ who constantly tries to lower your quotes. After a few bad experiences, I now never lower my rates from what I give as my original quote.
If they don’t like it, they can go elsewhere (of course, occasionally you’re gutted that you missed out on something cool, but I guarantee that most of the time they’ll accept, as long as you’re being reasonable and have explained where your numbers have come from).
13. (If they want to Pay you in Equity) Would they Consider a Split?
Most in our industry know that 95% of startups never turn a profit. So you are actually often times shouldering all the risk by working for free. The thing is: it’s their project so shouldn’t they be the ones taking the risk?
By asking to be paid a portion upfront, it shows that they are now monetarily committed to working hard on this too. That’s a big thing– now they are invested and will value your work.
Some people suggest you set it up so that if, after a certain length of time without profit, you’ll get paid. This is interesting, in concept at least. Setting it up so that when there’s no profit after a year, you get paid, is tricky– you’d have to have a very frank, open relationship.
Do you have access to their books? What will stop them from just disappearing? If they didn’t have any money to start off with and haven’t made any money in the last year, what makes you think they’ll then have money to pay you?
14. Why do you Think I am Best for this Job?
I would love to ask this question: why have you approached me? Is it because 20 other designers have turned you down? Is it because something I’ve done has inspired you? Is it because you have heard great things about working with me?
15. Why do you Think you are the Best for this App?
I want to hear that a) it’s a problem they’ve had that they’d like to solve, b) they’re absolutely passionate about the subject, and c) it’s not just about ‘something to do’ or ‘a quick way to get rich’.
I like to work with people who love what they do (shameless plug: I’m working with a triathelete sports enthusiast who wants to make it easy to find other people that like the same sports. And really, he wants this platform to work because he wants to use it).
Final Thoughts
Some of these questions are hard to ask.
No one likes asking hard questions, but working on a web app is hard too. Having a frank and direct relationship with a client from the start is immensely valuable.
I have found that when you start your relationship honestly, you’re much more capable of working towards the betterment of the app, having valuable arguments rather than catering to the egos of the individuals involved.
While I believe these are important questions, they’re also things you are better off talking directly to them about, integrating them into your discussions.
Good luck to all of you in your web app endeavours!
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George Coltart
# June 8, 2010 - 11:51 am
Great post Kat, Im going to go through this very soon as the client and Im already having trouble as to how to approach it.
Would be interesting to hear a post from the other side, eg. “How to approach early stage web app partners/employees”
Ivan
# June 8, 2010 - 12:14 pm
When asking for VC money on of the question is “What is your Plan for Profit?”. Saying $1.000.000 from 100.000 customers IS an acceptable answer :-)
Felipe Barone
# June 8, 2010 - 12:20 pm
Great post! i’ve been in this situation, and luckly, ive asked some of those question and took off before start!! Im not quite sure your 62% rate is correct, i would guess around 84.5%!
kat neville
# June 8, 2010 - 1:18 pm
It probably depends on how you aggregate your statistics :)
ilyas bakouch
# June 8, 2010 - 2:13 pm
Im going to translate the questions into french, and then use them as a template for my next projects.
Leo
# June 8, 2010 - 2:51 pm
Excellent article. I’ve been there, and the questions really show insight and are well thought out! Thanks for a useful post!
Nathan
# June 8, 2010 - 3:15 pm
Ha. I’ve been through almost every scenerio. 14 y/o kid is so true.
Matt Goldman
# June 8, 2010 - 3:24 pm
Great post! I hadn’t thought of some of these questions and although I haven’t worked on any web apps for clients, I can see how important it would be to collect answers to these questions and others. How about asking them how familiar they are with the industry surrounding the web app and how much they know about the current competitor landscape.
Jim
# June 8, 2010 - 6:06 pm
A whole lot of paper money does not guarantee you will get a quality product. I have worked on .net projects that had the monopoly men money available. I noticed the employees had no work ambition. Look out for corporate sabotage. A lot of greedy old men at the top that work like the mafia in business. Also, great idea to belong to a secret society these days or your buddy money man network will be thin. Competition is good and monopolies are bad for consumers. Develop away and don’t let the monopoly men scare you with their way to do things. True innovation is from hard work and creativity.
Max Cameron
# June 8, 2010 - 8:28 pm
You wrote, ” If they give a deadline for 2 weeks from now for a project that should take 3 months to build properly, you probably already know that they don’t understand the complexity of what they’re asking.”
I actually think the opposite. If someone wants to plan and build for a year long release, then run for the hills. If someone is ok with building and releasing as they go, for sure let’s launch in 3 weeks. Then we’ll get some feedback and make the app better.
kat neville
# June 9, 2010 - 10:06 am
I agree with you: developing a few features at a time is the best way to do it. What I meant was to avoid people with very unrealistic expectations on how much work something is.
Also agreed; a year long plan is scary too. But at the same time I like to know that they’ve planned to work on this project for the long haul.
Kate
# June 8, 2010 - 11:04 pm
Excellent advice from someone who’s obviously been down that long, difficult web app road before. Your questions are insightful and the warning signs spot on. Will definitely put these into practice. Thanks!
Sam Dalton
# June 9, 2010 - 5:06 am
Fantastic set of questions! Some of those warning bells definitely sound familiar. I shall endeavour to consult this list for each new project.
Kevin
# June 9, 2010 - 7:25 am
A very topical post Kat. What do you think of potential clients who have done an enormous amount of work already in designing the functionality of their app at a high level, already have detailed wireframes, already have a test plan, already have a launch/marketing, have no pie in the sky projections and are now looking to make their web app a reality, but have limited resources (self funded). That’s me in case you haven’t already guessed :)
I’ve thought about offering equity to a developer (and pay the UX designer cash), but frankly I thought that suggestion would be met with scorn from most decent developers, so I was heartened that you even mentioned it. However, when I got to item 13 found that you didn’t really explore the question in any depth.
I’m a little puzzled by your comment that you would be shouldering all the risk, this implies that (a) you really don’t have any faith in the business and don’t actually expect to get anything out of it, and (b) the client isn’t actually working on/in the business or is being paid by someone else (meaning that the client is also taking a risk by ploughing their own time and money into the business – clients don’t live on fresh air either :) )
If you are risk averse then you should work for wages. If you have an entrepreneurial spirit then cut a good equity deal that’s going to make you serious money if the business is a success, but don’t expect both.
A word of warning – “profit” can easily be kept at zero of thereabouts for years, even if the business is pulling in good revenue. So whatever you do don’t do an equity deal which simply gives you a share of the “profit”.
If you were really serious about working for equity, there’s an important question you should ask your future business partner – “What’s your exit plan?”
kat neville
# June 9, 2010 - 10:19 am
Good questions, Kevin.
I think most developers have been burned by these projects where they put in 100+ hours and get nothing out of it. I would suggest a monetary compensation anyway: if you’re not paying your developer, what makes you think your work will be a priority? Every good developer I know is extraordinarily busy… if you want a truly good application, it’s worth making yourself one of their priorities.
I like the idea of a combination of wages and equity; it makes the person feel involved, but also makes you their priority. A bit of now and later. But maybe it’s just personal preference.
BTW, while I always think having a designer from the beginning is so very helpful in wireframing and user interface, I have recently joined a project where they had done wireframes and the development called playnice.ly and it has been an absolute joy to work on.
I like your exit plan question… to be honest, exit plans are not my forté! Good luck with your project!
Arun Agrawal - Ebizindia
# June 9, 2010 - 7:58 am
I was offered to do development for a (famous US university) graduate on 50-50 basis who wanted to try out web startup business before going ahead with a plush MNC job. I politely declined because I was the only one to take all the risks. Both of us are quite happy with the decision today.
You really need the promoter to make a commitment, like putting a great job on line before you will work for FREE (future rewards only).
Nice article! Bookmarked.
Arun
Johan
# June 9, 2010 - 9:09 pm
I have read the article and on a lot of points you are very much right, but I think it is a bit unfortunate though that your story is so much of one big red light, showing that you are entering a swamp. We are in the middle of building applications for the web and it is hard hard work. I come from the IBM AS/400 environment and a lot of the “old” rules don’t apply anymore. One of the major ones is that companies (and people) have hard time paying for software. We have calculated that the carpenter or painter is more likely able to proof that he is worth his money (he probably is) than the software developer. But you are right on the issue that too great optimism and the cold reality are the biggest killers on the lure. Just become good in what you do and stay modest in your achievements. We also see still a lot of bad software at customers, so there is always hope that something can be achieved on maybe lower scale than in your ambition, but not giving less satisfaction.
Regards,
Johan
sorry that I wrote such a long story, but the world need both enthusiastic developers as well as paying customers.
Kevin
# June 10, 2010 - 2:08 pm
Kat, the exit plan is crucial, because that’s where the money will be made. All VC’s want to know what the exit plan is, because that’s where they get their ROI. It’s usually an IPO or a sale to the likes of Google or Microsoft.
If you’re a developer or a designer and you’re on an equity deal, presumably you want to see a pay day, and you don’t want to work in the business for the next 10 years and get paid by way of dividends.
However, companies can be worth a LOT of money before they show a profit, Just look at Facebook, they could have sold for $1Billion before they made a profit. If you were an developer or designer on that and they sold for $1billion, I’m sure just 1% equity would have compensated you for your efforts :)
I know Facebook is an extreme example, but take a more down to earth example like trademe.co.nz, they sold for over NZ$700 million a few years ago. Again, 1% would have made it all worthwhile.
Just as a matter of interest, you say “I think most developers have been burned by these projects where they put in 100+ hours and get nothing out of it.” – has this happened to you? Is that why you wrote the post?
Have you, or anyone else who has commented worked on a project in return for equity?
Just how common is that scenario?
Also, if you are getting paid your hourly full rate, or the fixed amount you quote, and no one has asked you to work for free, do you have to completely believe in the idea to do a good job?
Adam Smith
# June 12, 2010 - 8:35 am
I think the stats are about right, most web start ups fail. However this is figure is much higher for web start ups created on a shoe string. Can anyone think of a recent successful application that’s making good money, that only required one entrepreneur, one developer and one designer?
I’m approached all the time with these types of offers, and my approach is very similar to Kat’s – even if I 100% believe in the project, the maximum I would ever go in a ‘profit = reward’ model is 25% of the development cost. I’d always want 75% paid for development, but leave 25% open to risk. This 25% I do not put into the cashflow, and I do not plan on that payment, but see it more as an insentivised bonus when the project is a success. That’s because I’m going to to a good job anyway, and the success of the project is far more influenced by the idea in the first place (out of my control), and the promotion and marketing spend (out of my control).
This is a far compromise and the foundations of a good relationship between development team and entrepreneur. It shows a shared respect, and I believe is the best for both parties, with the client getting the best value for their investment.
An idea on it’s own isn’t worth much – development time for any successful application these days would run into months. Let’s assume the development cost is £30k, even if the entrepreneur offers 10%, and we make the assumption they are putting 30k also into promotion and advertising, they’ve valued their ‘idea’ at £260k.
For most web startups, the application IS the business – and if an ‘ideas man’ can’t afford to fund their idea, then anyone that’s prepared to do it for equity isn’t going to be good enough to make it a success anyway – no one wins.
Patrick
# June 15, 2010 - 3:26 pm
“Designers are notoriously self-righteous and moody.”
So are developers.
Kevin
# June 17, 2010 - 1:47 pm
Adam, you asked;
Can anyone think of a recent successful application that’s making good money, that only required one entrepreneur, one developer and one designer?
I can – https://www.1form.com.au/
There are two guys behind it, +1 developer (not on staff) and I think they designed it themselves :) but it’s working for them.
Adam you said “they’ve valued their ‘idea’ at £260k”
Is that a problem?
It’s easy to scoff at an “idea” being worth anything, but thankfully not everyone thinks like that, because that’s how most products and some of the most valuable companies in the world are born, as an “idea”.
My view is that many ideas have value, in some cases significant value, that’s why patents and the term “intellectual property” exist. How an idea is developed determines whether the full value of the idea is realised.
People who do not value ideas really shouldn’t even entertain the prospect of working for equity, they should just spend their life working for wages.
Adam, Kat, or anyone else reading this – have you ever actually worked for equity?
Do you speak from experience?
Rani
# July 6, 2010 - 11:15 am
Nice Article. I am Definitely fallow this.
Thanks