Manage Your Risk –> Don’t Get Taken for a Ride

I’ve been doing freelance iPhone development for over 2 years now, but I’ve also survived the .com boom and bust. When technologies like the iPhone heat up the market, it seems like every one and their dog has an idea for an App. If you’ve survived the .com era, you should be having flashbacks at this point. Everyone has the million dollar idea that going to make everyone rich right? Wrong.

Here’s the deal, ideas are worth just about nothing unless you have the experience, know how and resources to implement them.

So here is a situation I see played out almost every day.  You the developer get a call from “potential” new client telling you that the need an experienced developer to work on some “amazing” project that is sure to make a lot of money. There are already of course “several investors” who are interested at this point, but not interested enough to actually lay down their own hard earned money.

So the ring leader of this amazing idea approaches the developer and tries to sell them on their project, but there’s just one catch…they don’t have any money to actually pay you, the developer.

Not to worry right, after all this is sure to make money and with the potential investors already waiting at the gate, your the missing piece to the puzzle. You’ll get compensated with the investors jump in or even better, you’ll have the opportunity to take on shares in the “company”.

What this essentially comes down to, is you the developer are going to more less shoulder most of the risk on the project and will most likely never see the promised land. If it’s really such a sure thing after all, why on earth would they let you have shares in a company that will be worth millions?

Now I’m not saying that every situation you run into like this is a mirage, but what I am saying is that you really need to take steps to minimize your risk before you even think about taking on a project like this.

1. First off, you need to do your due diligence and really investigate the idea being proposed and the people behind it.  Has the idea been done before? Is the idea or process patented? Who are these supposed investors? What is their business experience? Are there any competing technologies or applications?

2. You need to get a retainer up front. Their is no way you should take on a project without getting some financial reassurance up front.

3. Get it in writing. Verbal agreements are no good. If they are promising you something, get it in writing. A contract/service agreement is a must.

4. Be clear about what your commitment is. Are you providing your services for a period of time, or until a certain milestone is met, of a certain number of hours per week? What happens once you’re finished?

5. Go with your gut. If your “Spidey Sense” tells you this could go south…it probably will, so don’t get involved in anything that feels sketchy.

The bottom line is this, don’t go into things with your eyes closed. Do your homework and cut your risk. Don’t get taken for a ride.

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3 Responses to “Manage Your Risk –> Don’t Get Taken for a Ride”

  1. wadevondoom Says:

    Good post. I think that every developer at some point has been led astray by the promise of untold millions.

    All promise outruns performance. ~Ralph Waldo Emerson

    When I started your class last semester I had people coming out of the wood work who really had no idea what the mobile development space is about or the marketing or the work involved. But they all had these great ideas for Apps that would make us both rich. All but the serious pretty much stopped asking as soon as I laid out retainer terms. Funny thing was most were surprised that I would not foolhardily jump on the bandwagon and do the work for promises of riches.

    This is not scientific but I find the more excited someone is who is calling you to make their ideas reality will also likely be the most blind to the faults in their millions making logic.

  2. Saqib Saud Says:

    Haaha! seems like my story.

  3. Pavel Says:

    Great style!
    Thanks!

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