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> Equal equity among initial founders or it's a nonstarter. I'm about to have to make a decision like this and could do with some advice. A friend of mine (3D

> Equal equity among initial founders or it's a nonstarter. I'm about to have to make a decision like this and could do with some advice. A friend of mine (3D artist / graphic designer) tells me he knows two people who want an app doing. It turns out they're just starting a new company and the app is going to be the product. They have already sold it to one customer and have others in the pipeline. I discuss the app with them, set out a specification / timeline / cost that they like. But then they start with: Can you set up our email? (yes). Can you do us a website? (yes). Can you do a webapp that the customers can use in coordination with the app? (yes). Etc. etc. So I say: look, I can do all this stuff but it's going to be a pain to keep charging all the time and then there's going to be support costs on top. I like that your sales driven and seem pretty intelligent and we've got along pretty well so far. How about instead of or as well as cash we talk equity? They think about it and get back to me yesterday and say yes, they've had a chat about it and would like to do that. We're going to meet tomorrow to discuss a package they've worked out for me. So what equity should I negotiate for? They have no technical experience and it seems to me that I will basically be doing everything at least to start with. One of them is sales and the other is going to be managing the business (which I have no experience of, I've never been a "founder" before).

p1esk 11y ago
Wait, so they're offering you cash (I'm assuming at standard $200/hr consultant's rate), and you instead are asking for a unicorn (shares of something that has a statistically tiny chance of ever generating a good profit)? That just boggles my mind.
- WoodenChair 11y ago
  I completely agree. Regardless of what your rate is, unless you super believe in the product, why are you trading cash for equity?
  - philbarr 11y ago
    Well, first off there's my ignorance and fear. I've never consulted before and every time I try and charge a rate for work people just slam the phone down, literally. I've tried £50/hr, £40/hr, and now £20/hr. In my day job I get about £25/hr. This is in the NW of the UK and not near any major cities. Secondly, I figure that if the product fails I'm likely not going to get paid anyway, so if I'm going to be taking the risk I should share in any equity reward.
    - gedrap 11y ago
      >>> I try and charge a rate for work people just slam the phone down, literally Good for you. These people aren't the ones who you'd like to work with anyway, very likely to be toxic clients. >>> I've tried £50/hr, £40/hr, and now £20/hr By lowering your requerements, you are attracting more slamming-the-phone clients. Stick to at the very least 50/hr (if I remember well, ~400/d is a common rate for contractors in North, e.g. Leeds). Raise it to 75/hr if you are not junior. It will take longer to get a gig, but it will pay off. >>> This is in the NW of the UK Damn, I miss Manchester :) sorry for getting carried away :) >>> I'm likely not going to get paid anyway Why wouldn't you? You are not a charity organization, you shouldn't be providing free work. You are providing a valuable service, so you should charge the appropriate rates. You don't owe anything to anyone. Also, if you are willing to work cheap / for free, you will be treated poorly more often than not. So raise your rates, be patient, don't let others take advantage of you and everything will be alright ;)
      - philbarr 11y ago
        I think the problem is that I have a very limited market due to my location, though? If I demand decent pay for my work I may have no work at all. Supply and demand and all that?
        zo1 11y ago
        So expand your demand market. You can work remotely, or simply travel to the clients. If they're paying you enough, no reason why you can't include travel costs, etc.

p1esk 11y ago

Wait, so they're offering you cash (I'm assuming at standard $200/hr consultant's rate), and you instead are asking for a unicorn (shares of something that has a statistically tiny chance of ever generating a good profit)? That just boggles my mind.

WoodenChair 11y ago
I completely agree. Regardless of what your rate is, unless you super believe in the product, why are you trading cash for equity?
- philbarr 11y ago
  Well, first off there's my ignorance and fear. I've never consulted before and every time I try and charge a rate for work people just slam the phone down, literally. I've tried £50/hr, £40/hr, and now £20/hr. In my day job I get about £25/hr. This is in the NW of the UK and not near any major cities. Secondly, I figure that if the product fails I'm likely not going to get paid anyway, so if I'm going to be taking the risk I should share in any equity reward.
  - gedrap 11y ago
    >>> I try and charge a rate for work people just slam the phone down, literally Good for you. These people aren't the ones who you'd like to work with anyway, very likely to be toxic clients. >>> I've tried £50/hr, £40/hr, and now £20/hr By lowering your requerements, you are attracting more slamming-the-phone clients. Stick to at the very least 50/hr (if I remember well, ~400/d is a common rate for contractors in North, e.g. Leeds). Raise it to 75/hr if you are not junior. It will take longer to get a gig, but it will pay off. >>> This is in the NW of the UK Damn, I miss Manchester :) sorry for getting carried away :) >>> I'm likely not going to get paid anyway Why wouldn't you? You are not a charity organization, you shouldn't be providing free work. You are providing a valuable service, so you should charge the appropriate rates. You don't owe anything to anyone. Also, if you are willing to work cheap / for free, you will be treated poorly more often than not. So raise your rates, be patient, don't let others take advantage of you and everything will be alright ;)
    - philbarr 11y ago
      I think the problem is that I have a very limited market due to my location, though? If I demand decent pay for my work I may have no work at all. Supply and demand and all that?
      - zo1 11y ago
        So expand your demand market. You can work remotely, or simply travel to the clients. If they're paying you enough, no reason why you can't include travel costs, etc.