Hey everyone, here's where I'm at.
I had an idea for a SaaS product (currently in development), and I am the non-technical founder of it. It's just me, fully bootstrapped, with no intention of ever taking outside money, and unlikely to ever sell unless I got an offer I can't refuse. This is meant to be the primary thing I work on for the foreseeable future and make a comfortable living from.
The first thing I did was hire a freelance developer I've known for a while to build it. Months later, it's coming along very well and it's more than halfway done. We work really well together. I trust them.
Throughout this development stage, I've been considering asking this person to stop being my freelance developer and become my cofounder instead. To me this means I stop paying them hourly for their work on this, and we instead come up with some sort of profit split so this becomes the thing that provides both of us with a comfortable living going forward.
Bonus info: this SaaS product will have customers all over the world, but primarily the US. I am based in the US, and the developer is based in Canada. I don't see us hiring anyone else.
These are my questions:
1. How do I propose this to them? Is this the kind of thing freelance developers get asked all the time, or is this a rare occurrence that might surprise them? Any advice on how to ask it if you've done it before (or if you've been the one on the other side being asked)?
2. I'm assuming we need to form a new business entity together? Any advice on that?
3. We live in different countries (US and Canada). How does this affect things?
4. What about the money I've already paid them over the previous months for their freelance work on this? Is that a separate thing that's over and gone, or if they become a cofounder, does this become something like an investment I put in that should be paid back to me later on out of the profit from the business?
5. The profit split. Is suggesting anything less than 50/50 an insult? I want it to be fair to both of us. To be clear, they'd be the technical cofounder building everything. I'd be the non-technical cofounder with the idea and the entire vision (I know, ideas are worthless) doing 100% of the sales, marketing, and content, with decades of experience and success in the industry the product is for. And most importantly, I bring a very large existing target audience. To me, this is the key to everything, and it's already there. My audience is ready and eager to buy whatever I sell (I know this from experience with other products I've sold). For example, the day this thing launches, I'd expect to get our first 100 paying customers in under an hour. So, the developer will be the one who builds everything, but I'll be the one who gets 100% of its paying customers now and in the future.
6. Expenses. Up to now, the biggest expense has been paying the developer who will now (hypothetically) become the cofounder. Beyond that, it's really just server costs and a few software subscriptions. When it was just me, I intended to pay for all of this myself out of pocket until the product starts paying for itself. With a cofounder, should we now be splitting these costs until that point is reached?
Thank you in advance for any help or advice. I appreciate it.
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