Great. Now try this: write an iPhone app and put it on the App Store. What will you learn? Marketing, customer support, economics, PR.

By the time you graduate with your CS degree, that little App Store adventure may well be what sets you ahead of all the other candidates to land your dream job.

What does it cost you? You need to pay $99 to Apple to become a registered iPhone developer. And you may even recoup some of that investment if someone buys your app.

Strike that. You will know that you passed the class when you recoup that investment tenfold. How many other classes you took offer such direct, undisputable grades?

What you will learn:

• Marketing: How do users hear about your app? How can you create some buzz to attract more people? You will learn that having an amazing technical product is nothing if you can’t communicate its value.
• Customer support: You will be forced to look at your product with the eyes of your end user. Is the app really intuitive? How come every user seems to be making the same usability mistake? You will learn to respect your end user and project yourself to code for what they need, not what you think is neat.
• Economics: By now you should be having fun. Some money is coming in. You’d want more. How can you manage that? Maybe it’s time to bring on board another student to help with support or graphics. How much will that cost you? Is that a good return on investment? You will learn to make your own business decisions.

Granted, an MBA teaches more than what I just listed above. But nothing beats hands-on experience and the App Store today is the quickest way for a CS student to get it.

His gut feeling was that as the main developer, he of course should keep most of the revenue.

There are two ways to approach this question. You should use both. If they lead you to similar numbers, you have your answer. If not, something is wrong and you need to understand why before you proceed with a revenue sharing deal.

Be Realistic About Who Needs Who

Everyone tends to have a high opinion of their work. That’s a problem when trying to reach a fair deal.

As a developer, you know how tough it is to write good code. To you, English writing doesn’t seem like a big deal – although you are not willing to do it yourself.

Well, the writer on the other side thinks the same way. It all goes down to negotiations and who can walk away from the deal.

Ask yourself this question: if the writer was to quit when the first version of the app is out, would it be a problem or not? Or will you need them to stay around and improve the product?

This is the key question that tells you the difference between a co-founder and a contractor.

Obviously co-founders deserve a significant amount of shares. Contractors want to be paid, but they can be replaced.

Be realistic about the fact that you indeed need a good writer. Your app’s quality may depend on it.

At the car dealership, you must be willing to walk out three times to get a good deal. Equity negotiations work the same way, except that once you reach a deal, you need to actually spend time with the other person. So you can’t burn bridges.

Discounted Value of Future Revenue

The second exercise is to look at the potential income and check whether it’s in line with compensation. If the writer is expected to put about a month of work full-time and you offer 1% of an app that may make $20,000, that’s a total compensation of $200 for the month. It just doesn’t compute.

No need to go back to business school and run a fancy analysis about discounted values and risk factors, but it’s clear that anyone who works for revenue share is taking a risk. So even the $200 above is a best case scenario.

In reality, there is a possibility that the app never makes it to the market, so the writer makes $0. The app could do ok and generate a few thousand dollars. The writers makes less than $20 (the price of a dinner).

The Number

So what is the right number? In the case of that developer, the amount of work expected of the writer was significant (a month, probably more with updates, changes and what-not). The job was more that of a co-founder, not a hired gun. My recommendation: anywhere from 25% to 40%.

What do you think? Is that the right number? Is too much or too little?