Ask HN: Passive income as a dev?

[enders]

Hi!

Lately, I have been on the fence about going back to the freelancing adventure - I'm currently a dev. (also called a "CTO"). I had a fair success with it on oDesk and could imagine living from it if push came to shove; however, I'm very interested by the 'passive income' type of online businesses.

How could I, a competent full-stack developer, work toward creating passive income, a little bit at a time, so that in a few years, I can start living the dream of taking freelancing jobs only when I want to, rather than when I need to :)

Usual passive income strategies (based on producing content) aren’t very attractive to me. What seems to be up my alley, is to help startups with little or no technical skills to build their MVP, get it from rough idea to a working, deployed, product then let them deal with the actual work of selling it, in exchange for a small equity/share of the profit (the passive income) and a low flat rate based on requirements. I think that overall, it's a good deal for people currently struggling to find the right technical partner or having issues with finding reliable developers with experience taking 'vague requirements' and turn it into 'something marketable'.

Does this approach make sense or do you think nobody will ever go through the hassle of onboarding a ‘technical partner’ they don’t know and isn’t interested to stay in the long term? If you put it like that, it sure sounds like a silly idea :) But my hunch is that while yes, it’s not an ideal situation, the alternative, for some startups, is even worse: never getting a working product out of the door, spending weeks in dead ends due to lack of experience, or paying a freelancer 100$/h for 2 weeks, pay the bill, and then never sell the product.

I’d love to know the thoughts of this community on this, and how you’d get started on this? Other ideas are welcome!

Thank you!

[jlees]

People won't onboard a freelance developer for a short project unless they are desperate (and startups can often be desperate in different ways), but they will onboard advisors and consultant leaders to get them through tough periods. The difference in actual day-to-day can be minimal, but it's how you present yourself. "I'm a CTO", not "I'm a dev (also a CTO)".

You could become a consulting CTO for hire. Talk to some of the startups in your target group, and to non-technical founders, to understand more about what they would pay for, and what results they would want to see in order to pay the bill. For example, selling the product might not be the goal; raising investment is more likely.

For some, it may simply be coming in, assessing the state of things, making a list of recommendations, and hooking them up with full-time CTO candidates.

For others, having a technical advisor who can screen, interview and hire their future tech team is incredibly valuable.

For MVP building in the specific stage you refer to, as others have said, profit sharing isn't a particularly reliable model. The MVP may never take off, and by the time it does, they may have built a whole team and rewritten your code.

Other than content, here's one thought. What if you built up a set of talented developers who need your skills too - junior folks looking for exposure to portfolio projects, senior devs happy with a 9-5 but wanting some intellectual stimulation and to learn new techniques and technologies. Then effectively set up a MVP shop, where you manage the first stage of the 'idea to code' pipeline, but hand off the bulk of the implementation to others. Perhaps these others bill hourly and you get a cut. You can even be a broker for just introducing the two and still get a cut, though smaller.

One thought, I think that this pattern of work can be detrimental sometimes. An engineer joining a startup doesn't want to see a bunch of spaghetti code written by some consultant who is no longer around. It's often the case that she has to deal with it, but it can be a red flag of sorts. There's a whole second set of consulting needs around transforming a messy MVP which has started to show traction into a scalable, reliable product. It's uglier, harder, and therefore probably harder to find people who are truly good at it. But a lot of that may be relationship-based -- understanding what the startup leaders really want and what's working, translating that into new requirements, and keeping them happy if the work required to make it scalable is a lot more complex than it seems from the outside.

[rayalez]

There's a great book that can help you - "Start Small, Stay Small". It is exactly for that kind of people, developers looking to create some passive income.

Usually passive income is either content(like udemy videos or books), or apps. Because you don't want to create content - it's probably best to come up with a product idea and develop it.

I think that building MVP product for startups is, first of all, much closer to freelansing than to passive income, and second - if you have skills and resources necessary for building a product - why not build one for yourself? If it will be profitable - you'll start having a real passive income, instead of trading your time for money.

Also, in my opinion, this is way more fun, because you control all the aspects of the product, from idea to execution and selling.

[johnny99]

To me part of the allure of a passive income project is being able to control more than just the technical aspects--to be able to define the customer-facing and business pieces too.

Perhaps more importantly, your chance of producing meaningful income goes up exponentially if it's a one-person show. A small startup has the overhead of at least ramen-level salaries for a few people, possibly an office or shared space. If they've taken seed money their investors will be pushing for growth over profitability or possibly even revenue. If you're doing a profit share, even in the best of cases it may be a looong time before there's any profit, even if there is meaningful revenue.

Every startup is a longshot. It's an even longer shot if you're taking a sliver of profit from people whose interests may not be well-aligned with yours.

[enders]

I guess the delusion I'm under is that it's possible to have the cake and eat it :) Large startups with seed money won't probably be needing my service under the conditions I described in the OP, and small startups will be struggling for so long that unless it blows up to become the next big thing (probably won't), the actual passive income I could get wouldn't be meaningful. Thanks for your input!

[unsquare]

It is possible - It's just difficult.

You have to set yourself realistic expectations of what you'll get out of it in the end.

I've recently bought a dev's app and kept him on board with a % share of ad revenue. ( + cash milestones until the advertising revenue is significant enough )

Just need to find the right person.

[enders]

Interesting! Can you share a bit on how you met this dev? Did you come up with this way of compensation upfront, or is it a deal you struck after some time working on it with him/her?

[unsquare]

He contacted me trough one of my websites and offered me his services. I already knew him before he contacted me ( through his app ) so i offered him to buy out his application that wasn't doing so well.

We made an initial call, I've pitched him several different structures of compensation and let him come up with a price for his app that he was happy with, then struck a deal the following day.

There's a few reasons the reason it got done so quickly, we both had worked with the same people within the niche.

I've also explained to him my strategy upfront to get the app back on the road, so that probably helped.

You just need to find the right match.