[jordanb]

I would think he would invest the $60k towards things needed to make his idea into a business. For an internet company, software development is going to be a major component, although there are others, like design.

Point is, there are people structured to accept risk. These people include investors and entrepreneurs. There are other people who provide services that businesses need, including designers, lawyers, programmers, etc. These people generally aren't structured to accept risk, they need an hour's pay for an hour's work.

Because programmers can often be confused as to what role they play in a business through fast-talk, there's this notion that has developed that there are lots of programmer/investors available, who are willing and able to accept risk in lieu of payment.

There are clearly programmers who will accept that arrangement at least once due to their naivety, but they they generally learn pretty quickly, and I think it's becoming more common knowledge in the programmer community that it's an arrangement best avoided.

[noduerme]

I think the notion of programmer/investors, as you put it, is mostly wishful thinking fueled by a basic lack of experience. Until people get burned, they don't realize that what you can get for $1500 on elance.com will, when it fails, end up costing you more than what you'd get for $15k from a skilled developer. If you flip the equation, you could say it's the clients who are naive until they've actually managed developers a few times and seen what they can expect for their money.