Hiring your first engineer: full-time vs contract decision

Hire a contractor for your first engineer if you are pre-product-market-fit and the scope is "ship and iterate for 8 to 16 weeks." Hire full-time only once you have paying customers, a roadmap that requires ownership of a system over 12+ months, and the cash to cover a fully-loaded $180k to $260k seat for 18 months. Most first-time founders pick wrong, and the mistake costs them 12 months of runway.

The honest version of this decision is not "full-time vs contractor." It is "do I need a teammate or a hired pair of hands, and how confident am I that the work I'm describing will still exist in 6 months?"

The setup: why founders get this wrong at 11pm on a Tuesday

You raised $400k. You have a prototype that one of your advisors built in a weekend. Three pilot customers are using it. You can't write code, or you can but you're spending 60% of your time on sales, and the engineering work is piling up.

You open a Notion doc titled "Engineering Hire." You write "Senior full-stack, equity TBD." You ask your investor for intros. Two weeks later you have five conversations going, and every single candidate asks "what's the equity split?"

This is the moment the founding-engineer trap snaps shut. You feel social pressure to give someone 1% to 2% of your company because the playbook says "your first engineer is a founder." But the playbook was written for companies that already have product-market fit and need someone to architect for scale. You have neither.

The decision: 4 questions that settle it

Before you write a single offer letter or contractor MSA, answer these in writing. If you can't, you are not ready to hire either way.

1. What is the scope, in weeks of work? "Build the entire product" is not a scope. "Replace our Airtable backend with a Postgres + tRPC API, ship 3 customer-requested features, and instrument billing with Stripe" is a scope. If the answer is under 16 weeks, you do not need a full-time hire.
2. Will this person own a system long-term, or ship a project? Owning means: on-call rotation, architectural decisions that compound for 2 years, mentoring future hires. Shipping means: code that runs, with someone else picking up the keys later.
3. Do you have 18 months of runway for this seat? Not 6 months. Eighteen. Because the cost of hiring a full-timer and laying them off in month 9 is brutal: severance, morale, your reputation in a small founder network.
4. Can you actually evaluate their work? If you are non-technical, full-time hiring is a 60-day commitment to someone you cannot meaningfully manage. Contractors and weekly bookings let you find out in 2 weeks whether the output is real.

If you answered "<16 weeks, ship a project, no, kind of" then you want a contractor or a weekly booking, not a full-time hire. If you answered "12+ months, own a system, yes, yes" then full-time may be right (but read on, because most founders still over-pay on equity).

The four real paths (and what each actually costs)

Founders typically consider four options. Here is the honest version of each.

Path 1: Full-time founding engineer

Equity range: 0.5% to 2.5%. Salary range: $130k to $200k base in the US, $80k to $140k in EU/LatAm. With taxes, benefits, equipment, and software, the fully-loaded cost is roughly 1.3x base. So a $160k base costs you $208k per year, or $4,000 per week, all-in.

When this wins: Post-PMF, system ownership, 18+ months of runway, you can manage them.

When this loses: Pre-PMF, project-shaped work, under 18 months of runway. You will likely fire them by month 9, eat 3 months of severance, and regret the equity grant for the next 4 years on your cap table.

Path 2: Independent contractor (hourly or project-based)

Hourly rate: $80 to $200 per hour in the US, $40 to $100 in EU. Project-based: $15k to $80k for a typical 8-to-12-week MVP scope.

When this wins: Tight scope, you can write a clear spec, you don't need them past the project.

When this loses: Vague scope, you change your mind weekly, you need them to own production after they hand off. Contractors disappear when the project ends.

Path 3: Agency

Monthly retainer: $15k to $40k for a small US agency, $8k to $20k offshore. They give you a project manager, 1 to 3 part-time engineers, and a discovery process.

When this wins: You want zero hiring overhead, you have budget, and your scope is well-defined enough that "discovery" actually produces a spec.

When this loses: You're solving a problem you don't fully understand yet, so you spend 3 weeks paying for discovery meetings that produce a Figma file and a Trello board.

Path 4: Weekly booking platform (e.g. Cadence)

Weekly billing: $500 (junior) to $2,000 (lead) per week, no notice period, replace any week. On Cadence, every engineer is AI-native by default, vetted on Cursor, Claude Code, and Copilot fluency through a voice interview before they unlock bookings. The 48-hour free trial means you can confirm fit on actual code before you spend a dollar.

When this wins: Pre-PMF or early-PMF, scope under 6 months, you want to keep the option to scale up, scale down, or swap.

When this loses: You need someone to be on your cap table, attend board meetings, and recruit a team for the next 4 years.

The founding engineer trap: paying 1% equity for a glorified contractor

Here is the math nobody runs at the time, and everyone regrets in year 3.

You are pre-seed, raised $500k at a $4M post-money. You give your "founding engineer" 1.5% equity over a 4-year vest, plus $140k base. After taxes and benefits the seat costs you about $182k per year, or $3,500 per week.

You believe the company will be worth $200M in five years. If that happens, 1.5% is $3M to them (before taxes). Sounds fair, right?

Now check what actually happened to comparable companies. Of every 100 pre-seed startups, roughly 1 hits a $200M+ outcome. The other 99 either fail, get acqui-hired for $5M to $20M, or end up as small profitable businesses. In an acqui-hire at $10M, 1.5% is $150k to them. In failure, it's zero.

But the real cost is on your side. If you let them go at month 9 because the work dried up or they weren't the right culture fit, you eat:

• 3 to 4 months of severance ($45k to $60k)
• The cap table dilution of their vested 0.375% (forever)
• The time cost of replacing them (12 weeks of founder attention)

A weekly booking at $1,500/week (senior tier) for 9 months costs $58,500 with zero severance, zero cap table impact, and zero notice period. If they're not working out, you swap them at the end of the week. We have seen founders run this math after the fact and realize the contractor route would have saved them $200k and 2% on the cap table.

This is the trap: founders give equity to a teammate they actually wanted as a contractor, because the social script in YC threads says your first engineer should be a founder. Sometimes that's right. Most of the time, it's not.

12-month TCO comparison: full-time + equity vs. contractor vs. Cadence

We modeled three realistic scenarios for a US-based pre-seed founder hiring their first engineer for 12 months of mid-to-senior level work. All-in cost includes salary, benefits, taxes, equipment, software, equity grant (valued at expected outcome math), and turnover risk.

Approach	Cash cost (12mo)	Equity given	Notice / swap	All-in including equity expected value (favorable scenario)	All-in (failure scenario)
Full-time founding engineer ($150k base + 1.5% equity)	$195,000	1.5% over 4 years	30-60 day severance norm	$195k cash + $30k expected equity dilution cost	$195k cash + $50k severance + cap table loss
US contractor at $100/hr, 30 hrs/wk	$156,000	0%	End of project	$156k	$156k
Offshore contractor at $50/hr, 30 hrs/wk	$78,000	0%	End of project	$78k	$78k
Small agency ($18k/mo retainer)	$216,000	0%	30 day notice	$216k	$216k
Cadence mid tier, 52 weeks at $1,000/wk	$52,000	0%	Replace any week	$52k	$52k
Cadence senior tier, 52 weeks at $1,500/wk	$78,000	0%	Replace any week	$78k	$78k
Cadence lead tier, 26 weeks at $2,000/wk (for system design, then drop to mid)	$78,000 (lead) + $26,000 (mid) = $104,000	0%	Replace any week	$104k	$104k

The number that should stop you cold: a Cadence mid-tier engineer for an entire year costs less than 4 months of a full-time founding engineer's loaded salary, and you still own all your equity. The trade-off is real: a Cadence engineer is not going to architect your next 4 years of platform decisions or attend your board meetings. They are going to ship the work in front of them, weekly, until you don't need them or you upgrade to a full-time hire when PMF lands.

When to actually go full-time

We're not anti-full-time. We're anti-prematurely-full-time. The clearest signals it's time:

• You have $40k+ MRR and customers are pulling features out of you. This is the moment "ownership" becomes worth something.
• Your roadmap is locked for 6+ months. You're no longer pivoting weekly. The work is clearly going to keep existing.
• You can fund 18 months of runway for the seat at current burn. Don't hire someone you can fire in 6 months.
• You can evaluate engineering work, or you have an advisor who can. If you can't tell good code from bad, full-time hiring is a coin flip with a 6-month cooldown.

If three of those four are true, write the offer. If fewer are true, run the weekly model until they are.

The recommended path for most pre-seed founders

1. Write the scope as a 6-week project, not a job description. "Ship Stripe billing, replace Airtable with Postgres, fix the 7 customer-reported bugs." Concrete and time-boxed.
2. Pick the stack your existing prototype uses. This is not the moment to migrate to Rust. Stick with whatever Vercel or Supabase or Rails app is already deployed.
3. Book or hire weekly. If you're using a platform like Cadence, the 48-hour free trial means you confirm fit on actual code before the first invoice. If you're going contractor, ask for a 1-week paid trial with a defined deliverable.
4. Rate the work daily, retro weekly. What got shipped, what got blocked, what's the next week's scope? Founders who skip the weekly retro discover at month 4 that the project drifted, and they're $40k in.
5. Decide at week 8 whether to convert. If the work is now system-shaped (on-call, architecture, roadmap ownership) and you have the runway, convert your favorite weekly engineer into a full-time founding engineer with appropriate equity (which is now informed by 8 weeks of real performance data, not a 90-minute interview).

This sequence flips the founding engineer trap on its head. Instead of betting 1.5% of your company on a 90-minute call and a take-home, you bet $12k on 8 weeks of real work, then make an equity offer to someone you actually know.

If you want help shortlisting that weekly engineer, book your first engineer on Cadence and run the 48-hour trial. Worst case, you spend 2 days seeing whether the output is real.

Common founder mistakes when hiring the first engineer

• Hiring senior when mid handles it. Most pre-seed engineering work is feature-shipping with reasonable judgment. Mid tier ($1,000/wk on Cadence, or $90k to $120k base full-time) is the right level. Senior is for architecture and ownership, not feature lists.
• Giving equity before performance is proven. Equity is a 4-year bet. Performance proof takes 8 weeks. Sequence matters.
• Skipping the trial. Whether it's a contractor's 1-week paid trial or Cadence's 48-hour free one, the trial catches 80% of bad fits before they become a $30k mistake.
• Building auth, billing, or admin from scratch. Use Clerk for auth, Stripe for billing, Retool for admin. A first engineer should not spend their first 3 weeks rebuilding what a $99/mo SaaS already does. Treat this like scope creep you need to manage before it starts.
• Not having a technical advisor. If you cannot evaluate engineering work yourself, you need someone who can read the PRs. This is doable in 2 to 5 hours a week, and it's the difference between catching problems in week 3 vs week 13. Here's how to find a technical advisor for your startup if you don't already have one.

How Cadence fits this decision

We built Cadence for exactly the pre-PMF / early-PMF moment where founders historically over-commit. The weekly model means you can run a senior engineer for 6 weeks ($9k), then drop to a mid for the next 4 months ($16k), then upgrade back to a lead for an architecture sprint. No notice periods, no severance, no cap table.

Every engineer on Cadence is AI-native by default, vetted on Cursor, Claude Code, and Copilot fluency through a voice interview before they unlock bookings. That matters because the speed of weekly delivery only works if the engineer ships at the rate AI tooling enables. Our median time-to-first-commit is under 30 hours from booking, which is the speed the weekly model needs to actually pay off.

We're not the right answer when you need someone on your cap table. If you've hit PMF, raised your seed, and you need a real founding engineer to own the platform for the next 4 years, full-time hiring is correct and we'll tell you that. If you're still figuring out what to build, or whether you have a real business, weekly booking is the financially sane path. You should also read about whether you need a fractional CTO vs a full-time CTO before you over-commit on senior leadership too.

Pre-PMF or early-PMF? Try Cadence's 48-hour free trial before you commit to a full-time hire. You'll learn more about the engineer in 2 days of real code than in 4 rounds of interviews.

FAQ

Is my first engineer always supposed to be a co-founder?

No. The "first engineer = founder" rule was written for companies that had product-market fit and needed someone to own a system for 4+ years. Pre-PMF, your first engineer is almost always better as a contractor or weekly booking, because the work hasn't stabilized into something worth long-term ownership.

How much equity should a first engineer get?

If they're truly a founder-level hire (you have PMF, they own a system, they recruit the next 5 engineers), 1% to 2.5% over a 4-year vest with a 1-year cliff. If they're shipping a defined scope without team or system ownership, the right answer is 0% equity and a fair cash rate. Mixing the two (giving 1.5% to a glorified contractor) is the founding engineer trap.

Should I hire a full-time engineer at $200/hr or 4 contractors at $50/hr?

Neither, usually. One full-time engineer at $200/hr is $416k/year fully loaded, which is unrealistic for pre-seed. Four contractors at $50/hr cost $416k/year too and you'll spend 30% of your week coordinating them. The right answer is usually 1 mid or senior contractor (or weekly booking) at a defined scope, with help from no-code tools where it makes sense.

How long should I trial a contractor before going full-time?

8 weeks of real shipping work is enough to know. After 8 weekly sprints you've seen them at their best, their worst, under deadline pressure, on a vague spec, and on a clear one. If the data supports a full-time conversion, make the offer. If not, you've spent $12k to $16k learning something you couldn't have learned in any number of interviews.

Can I hire a fractional engineer instead?

You can, and "weekly booking" is essentially fractional engineering with the scheduling locked in. The difference is that Cadence weekly engineers commit to one client at a time for the week, so you get focused attention rather than the context-switching tax of true 10-hour-a-week fractional work.