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Ask HN: Typical Startup or Abuse?
Over the past year I have been working for a local startup, in the United States, as the Jack-of-all-trades. We offer a product specialized to a fairly niche industry that is doing fairly well. In the past year we haven gone from 2 to 75 clients, gaining around 3 clients per week in the past two months. The product typically nets $5,000/yr per client. The product itself is web-based running off of an opensource CMS.
For the first 10 months I was the only person in the office doing work ~9 hours a day. From client setup, to design, to code and deployment I did it all. Twice a week I would be joined by the other 3 part-time guys who would do what they could in their 4 hours they had. Besides myself and the other team members the founder would do sales two to three days a week part time. Now a year in we have eight full time team members (5 Dev, 1 Sales, 1 CS). My role in the company has now taken on the Jack-Of-All-Trades plus the management of these other team members. Which I consider to be a great accomplishment for myself and I am proud of. However one factor in all of this has not changed in the past twelve months: compensation.
I was never a fussy person about money, especially when it came to startups. (I was in two other startups prior to this one.) I understand that you must bootstrap and try to be as frugal and agile as possible in the start. However a year in, and I am still making around $500/week. Which, in the beginning was great. However over the past year I have moved out, bought a car (out of need, the other died), gotten married, and have had a child. (With a second one on the way.) The other two major factors are: no benefits, and the founder seems to refuse to officially employ me (or anyone else in the company.). He still gives all of us a 1099. Yet, he treats us like employees. We have required working times, usually 8AM - 6PM, we only get a half hour lunch with no other breaks, and are on-call 24-7. Honestly, those items don't even bother me that much. However what does is that if I am one minute late from my 30 minute lunch, the founder will immediately call me asking where I am. If I happen to arrive at work a minute or two late I get a lecture. If I don't answer a call, on a weekend, I get a talk about availability. And if I am sick, I am required to work from home for the day. (I was in the hospital and still required to work.) That is what really gets me upset about this situation. I am fairly sure what he is doing is illegal with the 1099 issue. But it really upsets me that for all of the work and dedication that I have put in, that I can't get cut a break once or twice.
I am unsure how many of you are in a similar situation or even care. I honestly am not looking for any sympathy on this however I am seeking advice. Two weeks ago a new-hire and I went out for lunch and he asked me about the 1099 situation and asked what he should do. I told him to take some of the money out of his check to save for taxes. He said something to the degree of "But I only make $500/week!". I am not exactly sure why that made me lose my cool. Ever since then I have felt that the founder has not only been using me, but also the rest of the team. And I am letting this issue get to me. I spend each day now hating what I am doing because I have this feeling. I know the easiest answer may be: Well why not just talk to the founder? And I have.
The response is always the same: "We can't do that right now."(Benefits/Employ) "Remember I haven't even paid myself yet for any of this!"(Compensation) "It's cheaper for you if we do it this way!" (1099) And he won't budge.
I have been doing web work since I was nine. This is my passion in life. I spend all the time I can perfecting my craft and trying the best I can to stay current. I've never cared about money in the past, but the time has come where I have to. I hate myself for letting this job get to me to the point where it makes me burnt out on my passion.
This leaves me in the position of asking myself what to do now. My gut, and my wife, is telling me to begin looking for other jobs. Any advice?
(And thank you for taking the time to read this over, I deeply appreciate it.)
I realize that feelings of loyalty to an employer can skew one's perspective on things. (Oh boy, do I.) You need to hear someone say this, so I'll be a bit blunt:
1) You are being drastically underpaid relative to your market worth.
2) The fact of you being underpaid will cause material hardship for your wife and children.
3) Your boss is exploiting you. Illegally, to boot.
4) Your boss will not stop exploiting you.
5) You are being used as a tool to justify the exploitation of other people.
Don't "begin looking for other jobs." Mentally commit yourself to quitting, and to negotiating (you CAN negotiate, it isn't evil) a salary commensurate with your worth at your next position. You are a working professional. It is standard to receive fairly generous benefits, including but not limited to healthcare. Should you not receive benefits, you get paid an absurd amount of money to purchase them yourself. $2,000 a month does not even approach the ballpark of what employees like that cost.
I have to agree, dude you are making 26k a year. Starting salary for a fresh junior is 40k and that is just someone who know HTML, CSS and Photoshop let alone if they actually know a server side language.
He is lying about the 1099 being cheaper, that is only true if you are an S-Corporation, right now you are responsible for a little over 15% for social security, something that you are not if you are W2 or a corp. $500 is chump change to put up with Type-A personality bullshit like be here on the spot and no sick days. That is fast food management, you need to bail as fast as you can you have a wife and kids that rely on you to seek as much as you can.
As for the "he has not taken any pay" crap, he has equity, you do not your only reward is your pay check in that situation.
"As for the "he has not taken any pay" crap, he has equity, you do not your only reward is your pay check in that situation."
Very correct. On several occasions I have been promised equity. At first as a compensation for my pay, and then as vested. However none of this ever came into existence. Every time I brought it up again he would keep putting it off. But then in any discussions for a raise or anything to that degree he would use it against me saying something to the degree of: "Well, you know you are going to get equity in this!" I called him on it once. Saying that I wouldn't want equity if my pay was increased. The conversation ended right there.
Just as a tangent, because I didn't want to bother with my own Ask HN:
> Starting salary for a fresh junior is 40k and that is just someone who know HTML, CSS and Photoshop let alone if they actually know a server side language.
I know, like the back of my hand: HTML, CSS, Photoshop (and Illustrator/InDesign/Premiere/etc), Javascript, PHP, Ruby (not specialized to Rails, but with a year or two of experience in it), and C/C++. I've had more than a year's experience in: Java, Lua, IA32 and ARM assembler, Haskell and Clojure. On top of that, I have years of Windows and Linux sysadmining, DBA, and tech support/computer repair knowledge.
...but I'm only in my first year of University, and have literally zero measurable work experience with any of this stuff (no previous employers in any sort of technical field, no references, no portfolio..) In short, I have no proof that I can do any of the stuff I can do... what should I do?
I don't have an answer to your question. I am suspicious that you have zero measurable experience. Are you sure? You are familiar with multiple web stacks, but don't have a single website you can point people to? You were a sysadmin for years and don't have a reference? You have zero contributions open source projects (others or your own)?
I think you might be able to find something that hints at your experience.
> You are familiar with multiple web stacks, but don't have a single website you can point people to?
Only my own homepage, which isn't proof of anything at all, since it's about as visibly complex as an FTP directory (despite doing some neat things with Heroku, Sinatra, and a makeshift Dropbox API underneath.) It used to be a byzantine mess with its own forums and wiki and project hosting—and utterly no reason for anyone to use any of it, but for the fact that I wanted to have those things, and so I made them. Now it's just pages.
I've built web-apps as personal projects, but have long taken them all down or thrown them out due to loss of momentum (I had no users, ergo no one cared, ergo no reason to develop in any particular direction...) The few that I've held onto, I would never want to be publicly viewable, as they have absolutely horrible graphic design (by me, who is most definitely not a designer.)
> You were a sysadmin for years and don't have a reference?
I have sysadminning skills—but I was never a sysadmin (except for a non-profit community center, in a volunteer capacity, as an unofficial side-job to the normal duties of tutoring old folks in Internet skills, and which shut down soon after I left....) I read articles and books about it, I download and figure out how to use $20k/seat software that is utterly useless on the single computer I install it onto, I figure out solutions to problems posted online by people who seemingly have 100x the experience I do, I tinker with machines and networks that aren't my own... but no one's ever paid me for doing any of that. I see it as a hobby.
> You have zero contributions open source projects (others or your own)?
Yup, absolutely nothing. I probably have twenty or thirty things I could declare open-source, but none of which I'm proud of—in fact, the amount of technical debt in each is enough to make me ashamed that they have my name on them (though I doubt others would see it that way—I'm somewhere between perfectionism and extreme social anxiety when it comes to work done as anything other than a direct request.)
---
An aside:
Now, I'm not saying that, with a year or so of work, I couldn't build a really damn awesome portfolio, something I could be proud of and that would show off every one of my skills. But is that what I'm supposed to do? Is that better than just working my way up from an entry-level job, pretending I have no skills? I honestly have no idea; that's what I've been doing up until now.
I should mention that currently, I'm unemployed, and very quickly running out of money. Obviously, I don't have a year to put in right at the moment, even though I do have the skills right now :)
I ask my parents what to do, and they tell me to get a job for minimum wage in a grocery store. They're simply happy that I'll be able to make $50k/yr once I graduate (they've made that much, combined, for their entire lives.) In school, every class I'm allowed to register for, I pass without having to learn anything; and all the classes I'm interested in, I've learned by the time I qualify for them. Basically, I'm coasting, and I've gotten really good at it. I don't have any mentors or role-models to pull me forward, so I just drift.
---
Sorry, that became more therapeutic than technical near the end—but the answer is yes: right now, I'm quite sure that I have no proof of anything.
For what it's worth, having single server sysadmin skills is not the same thing as actually being a sysadmin. It might be enough to hire you as a junior admin, but certainly nothing more.
As for the web-dev skills, that's a fixable problem with a relatively small level of effort. If you started using your free time to start shitting out web applications with small, well-defined scopes, you'd have a portfolio in no time flat. It wouldn't take a year.
If you need them shined up, maybe you can try to meet a graphic designer who needs a portfolio as well, and work together to create a showcase for your skills.
If your classes don't challenge you, perhaps you're taking the wrong classes. This might be something that fixes itself as you get further into your degree, or maybe you want to consider getting a degree in something where you're currently weaker.
No matter what though, and this is going to sound harsh, you probably aren't nearly as great as you think you are. Nothing personal there, it's just that it's really, really hard to get great at something without spending a decade doing it full-time.
Hi. I am a freelance web designer, and I am looking for a web developer to partner with.
You will need to create websites and web apps for local clients, which will give you the experience and the references. At the same time you'll be able to make some money.
And the flexible hours you get as a freelancer means it wont interfere with you studies like a regular job might.
If you are interested, email me at alexwyser@gmail.com
You really should consider releasing your work. It's a great motivator to do more and release often.
I agree with mnemonik.
You wouldn't be able to gain experience in those listed skills without using them for something. There has to be some work of yours out there somewhere. And if not, start doing some freelance work or launching some of your own ideas/projects onto the web. It's a great way to get real experience out there and extra rewarding when you see users interacting with your work!
Look more closely at what you've done - for the sake of a resume, almost anything can be turned into 'experience' (I believe I spun 'computer lab monitor' pretty well once upon a time). In addition, take what you know and do projects with them. Something you can point a potential employer to (github repos, open-source project contributions, etc). What I want to see is initiative and creativity and, if possible, cooperative projects, because I know that someone coming out of uni isn't necessarily going to have team-coordination skills (communication, consideration, etc), but those can be developed.
Please understand that I intend this as honest and helpful: you are completely, wildly deluding yourself.
It is unlikely that someone with your background really knows even one or two of the tools you mentioned "like the back of your hand" by professional standards. It is completely implausible that even the most gifted and enthusiastic geek on the planet knows all of them to that standard at your stage in your career.
The world is, however, full of people (usually students with little or no professional experience) who think they have these skills. It just comes across to experienced professionals as arrogant, ill-informed, lacking in perspective... amateurish and risky, basically. Would you hire (or even interview) someone you thought was like that?
My advice to you is this: decide which skills you want to highlight at the start of your career, and if you really have no demonstrable experience with those skills, make something. Build a simple game in C++. Write a simple but well presented CRUD application to show your web skills. Write an interactive symbolic calculator in Haskell. Make sure the code is clean and you have some respectable documentation to go with it. You presumably have several years to go at uni, so you have plenty of time to develop your skills. Just keep the example programs you develop along the way.
Actual demos of real projects that you have personally completed are just about the best advert there is for your programming skills. Even if those projects are just small demos, they still beat beautiful but empty CVs any day for getting noticed and attracting the right kind of attention from prospective employers.
My advice to you is this: decide which skills you want to highlight at the start of your career
I think this part of Silhouette's advice is more critical than its brevity suggests.
I can only say this in hindsight but it's critical for you to only highlight a few of your skills (or even just one, in some cases) even if you have many. Saying you can do HTML, CSS, Photoshop, assembler, Ruby, and 101 other things is not going to floor the sort of people you need to impressive. I didn't know or understand this at 20. At nearly 30, I know enough people and have had enough experience to know that even if you're not a specialist, appearing to be one and then pulling out your jack-of-all-trades card is the most powerful way in to some great situations.
Sign up for a free account at elance.com and spend a day taking their tests. It's the fastest way I can think of to demonstrate that you know something. Even if you don't take any work through the site, you'll have some evidence of your skillset that you'll be able to show potential employers.
Hi nfriedly, this is Nicole from vWorker (formerly known as Rentacoder).
The tests available at Elance are the same tests available at many websites, including ours. As a vWorker, you can get ExpertRating certified with one or more skill tests available at http://www.vWorker.com/RentACoder/ExpertRating/ExpertRatingTestList.aspx http://www.vWorker.com/RentACoder/ExpertRating/ExpertRatingT... at no cost.
If you have any questions, please let me know. You can also call in to talk to a facilitator 7 days a week, or email us.
Nicole
vWorker.com
Not to discredit you, but I get very suspicious when people merge C and C++ to C/C++. There really not the same language, you know. And I'm yet to physically meet someone who actually gets Haskell.
I'm not very experienced, but more often than not, the devil lies in the details. Reading K & R is one thing, but being able to track down why your code sometimes gets a SIGILL is an important, perpendicular skill. Perhaps you could try patching some open-source software? If you really know all that you claim to, you'd be invaluable in any project.
You say:
> I know, like the back of my hand: Javascript, PHP, Ruby, and C/C++. I've had more than a year's experience in: Java, Lua, IA32 and ARM assembler, Haskell and Clojure.
And:
> I have no proof that I can do any of the stuff I can do.
I don't see how both these statements can be true. If you know some language "like the back of your hand", you'll have written significant amounts of code in it, at a bare minimum I'd say a few thousand lines.
You're claiming to have done significant work in 9 languages, and have no code to show for it? That's a bit odd, isn't it?
I mean no offense when I say this, but you're a great example of a "smart but clueless" employee dishonest startup founders prey on. At $500/week, you are making $26,000/year. Assuming you're a good developer (and now manager), you could probably pull in $120,000 working for Google or Facebook, which means you're losing $94,000/year (!) in opportunity cost (not even counting health benefits or other minor perks). You said nothing about equity, but assuming you will own 1% of the company after four years, and assuming the company exits for $50mil, your equity will be worth $500k, while you could have earned $376k working a stable job (again not counting health insurance, plus Facebook gives equity too). Considering that a potential exit opportunity is associated with large risk, the expected value of working for such a startup is miniscule, compared to opportunity cost.
You are not acting to your own advantage financially or emotionally. One option you have is to renegotiate your salary with the founder, and considering how hard it is to find great people, and how little he pays you, I have a strong feeling he'll budge. But if you have options (and it's your market now), do you really want to work for someone who has no ethical standards?
BTW, we're hiring: www.rethinkdb.com/jobs.
EDIT: just read your comment that you do not have any equity. Run, don't walk.
I thing renegotiation is out of the question. I feel even if I renegotiated and it ended up being the perfect compensation/benefits position the day-to-day work environment would become hostile -- and that is something I do not want to happen.
I honestly don't know what I was thinking. -- Well actually I do:
Back in 2008, a year and a half into college, I won a local business plan competition and dropped out. (The competition gave office space and some startup capital.) The college I was in was a small community college and the classes weren't that great for the IT field. Going into college I thought everyone would have the same passion I did. Into the first semester I was helping teach my major related courses.
Unfortunately, not having any sense about business and being somewhat misguided by my other founders, the business flopped. I started a second business which did slightly better, and again won the business plan competition again. However our overhead was too high compared to the cashflow coming in. We started working with the company mentioned in this post and I was basically made an initial offer to work exclusively for them. (Mistake.)
Going back to my reasoning: I felt that if this company did go somewhere, that there would no longer be a need or a way to get roadblocked by not having a degree. I am a strong believer in work and passion than a piece of paper. I know I would have never hired any of my classmates from that college.
Although the justification is/was not sound at all. Getting out know is the only way for me to continue to seize my potential. I know continuing down this path will only lead to my own destruction.
You sound like a smart guy. Your failure thus far is an amazing and truly educational amount of experience that will benefit you short- and long-term. You really have a great deal more experience than many, and clearly you have drive and passion.
You're valuable and hardworking, so get the hell out of that shithole.
With your experience, you should be able to make some incredible contributions to any other startup that has a good product/service and actually cares about their employees.
$26,000 a year is ridiculously low... absurdly low. Hard-to-fathom low. If you feel like renegotiating would create hostility then that is far and away the biggest alarm that you need to get out of there.
As coffeemug said, "run, don't walk."
Going into college I thought everyone would have the same passion I did. Into the first semester I was helping teach my major related courses
Don't you hate when you come to that realization, it is even worse when you get out in the real world and find that these people make up a good portion of your technical peers. IT is one of the reasons so many IT projects fail. Crappy people make crappy products when it comes to software.
Don't fall into the education trap. I know that it chews on you and can give you an inferiority complex but unless that degree has MIT or Stanford it's crap. I fell into that trap and spent 40k to get no further than I already was. But I started thinking in my mind, I will get passed up for other people. This was after my first CTO position. Imagine that, I had made CTO, went on to sell the company, was wildly successful and yet the education trap was chewing on my mind. I realize now that the only person that ever cared was myself. We are in an industry where actions speak volumes and anyone you would want to surround yourself with as a peer, knows that a degree does not a good developer make.
The really unfortunate things about your situation are:
1. You're probably legally misclassified as a contractor rather than a full-time employee. You should read IRS Rule 87-41 to understand why that is, but the really telling part is that you're carefully managed as to work down to the minute. Dead giveaway - you're an employee.
2. Since you're clearly an employee, you're subject to the protections of FMLA. My favorite nickname for FMLA is the "F*ing Leave Me Alone" Act. If you're hospitalized and your employer knows it, it's really unnecessary to invoke FMLA to receive its protections. Your employer violated it by requiring you to work while incapacitated.
3. Because you're misclassified, you're probably paying self-employment tax, so you're getting screwed coming and going.
4. Your employer is too lazy to figure out how to get benefits for small firms. Going to a trade association like the AeA would easily get you access to insurance at a good rate. I assume he's covered through his spouse, and, as such, doesn't need coverage. So he's letting you hang.
IANAL, but I've been an exec who has had to walk in and clean up quite a few shops doing illegal things like this. Here are some options.
A) Just leave. Easier said than done, obviously. Also, he almost certainly owes you back overtime as well as back taxes that he didn't deposit consistent with the IRC.
B) Contact your state's version of the Labor Board. Explain the situation, and see if they're able to take administrative action on your behalf. This might be a good option for you, because these actions are usually sealed, and they'll order the employer to provide null references in the future.
C) Get a lawyer and sue. This can get very messy very quickly, and the real downside of it is that since your pay rate is only about $12.50/hr, even if a court awarded you a year's salary, an attorney on contingency would take half of it, and you'd still be boned. Also, future employers have a way of finding out about employee lawsuits, and it makes you somewhat more unemployable since there's nothing that says they can't discriminate against you based on your past history of litigating against employers.
Now, an interesting side option is that I suspect that you don't have an ironclad Intellectual Property and Inventions Assignment agreement with the company, given that he's a management slob. Odds are that it's buried in your contractor agreement which is, itself, a piece of fiction. There might be a severability clause in it, but I bet a judge would vacate the entire agreement if given the chance. That means that you possibly OWN the intellectual property of the company. Which is to say, in effect, that you own the core asset of the company since the IP and the client list are probably its only assets.
I can't speak for you to say whether you WANT to own this company's core asset, and certainly if you owned the IP and licensed it back to the founder, you'd have the joy of having to continue working with him for as long as that went on. But since the company is successfully signing customers and is turning over about $400k a year, that may well be a lucrative path to pursue.
Anyhow, the way you'd look into that is to contact the local branch of the nearest major municipality's bar association. Almost all of them have a referral service, and it's usually cheap or free. An attorney will probably give you an hour or so to go over the case and figure out if it's a good idea to act or just jump ship.
I wish you luck, and I hope your next employer appreciates you more than your current one does.
kochbeck,
I think your heart is in the right place, but if this guy sues his boss (from what we've read) his boss will fight him until time ends, he'll be broke, and his lawyer will be driving around his new car.
Suing always sounds great on paper until you actually do it, and if it's for any serious amount of money you start to see the nasty side of the legal system.
Don't waste the energy on it, just run away. Call into work and tell them you have Legionnaire Disease and never come back :)
The Family Medical Leave Act only applies to companies with 50 or more employees.
http://www.dol.gov/dol/allcfr/Title_29/Part_825/29CFR825.111.htm http://www.dol.gov/dol/allcfr/Title_29/Part_825/29CFR825.111...
I agree with all of your sentiments, however.
The 1099 versus W-2 gambit is dangerous. He could, in principle, claw back the entirety of the 1099 payments, including whatever you paid on as taxes, then adjust them to a W-2 and pay you back less W-2 taxes. You'd then have to wait until the next tax cycle to get a government refund on the 1099 taxes. Retroactive reclassification of money is a dangerous game unless you have big cash reserves and lawyers of steel.
The IP gambit is potentially career ending. All he has to do is take out a press release that insinuates you may have destroyed his business with lawyers out of purest spite. That press release will hang around on background checks forever.
If you need leverage, go after unemployment insurance. If you were watching the clock, then he should have been paying unemployment insurance on your behalf. The state unemployment bureaucrats are remarkably bitchy and tenacious about it, but the worst case expenses to the company are not enough to start a legal war over. They are, however, enough to get the attention of a paranoid tightwad.
Actually, the IRS has been cracking down on 1099 abuse. So, he doesn't necessarily need to get a lawyer, he could possibly just notify the IRS and let them come in with lawyers.
I agree with you that using the law is always a bit of a gamble. But the mere threat of calling in the IRS might be useful.
To chime in - get out. What the owner is doing is illegal as well as unfair.
As for not wanting his business to fail, I agree taking intentional actions to cause harm would be bad, but I suspect they'll cause themselves enough harm simply by you not being there soon after you leave.
From the other side of the table, I employed a handful of people in the early 2000s. We had a couple good years, and then a couple bad years. Got the point where the money wasn't coming in regularly, and I had some people stay well past the point where it was good for their own financial well-being. While I appreciated the loyalty (whether to me or solely to the clients, I'm not 100% sure) but I did tell them to leave if they could find something else, or take side work, or something.
I would never want to be in a position where I was doing what's happening to you to someone else. I've been in situations where I've been exploited, but not to this level, and it sucked, and I got the heck out as fast as possible once the reality set in.
I would suggest expanding the freelancing. You don't have much time right now cause you're working 50+ hours per week for someone else. It should not be hard to replace what is effectively a $10/hour job with some extra freelancing work. I've had a friend of mine recently jump from 'job' to fulltime freelance, and while he's not booked up 100% of the time, he's increased that hourly rate, so just to keep up with where he was before he doesn't need to bill full time.
Go back to your current freelancing clients, and explain that you'll be on the market soon. Ask if they have any extra work they need doing, ask them for referrals to other colleagues they may have who need what you do, and then ask them to be a reference. Preferably something in writing - a predone text file that you can use on your website and to include in your email marketing for new work.
Update your linkedin.com page, and hit up your network there for more work.
Finding work, especially as a freelancer, is very much about your network, and you have to curate that aspect of your life with intention and purpose. Happenstance and serendipity are great - they've brought some great things in to my life - but it's not enough. Hope is not a strategy. :) Start (re)developing your professional network outside of your current employment situation, and watch your freelancing grow.
Maybe freelancing only tides you over for a few months, and you manage to land another f/t job. Don't ever forget that you're still in charge of your own career and life. Your current situation should help drive that home for a long time, but don't dwell on it. Use it as motivation to build your professional network so that you never have all your eggs in someone else's basket again. Own multiple baskets. Even if you don't put eggs in any for long stretches, they're still your basket.
Best of luck to you, and I hope things turn around very quickly for you.
The other comments have covered almost all of what I'd say with these exceptions:
This company will stay alive until someone drops a dime to the IRS, at which point they'll reclassify everyone as a W-2 employee and demand income tax and FICA withholding from the boss, with interest and penalties. Unless he's put a lot in the bank from his exploitation of you all, he's not going to be able pay this (pity that he's personally liable for this; whatever the corporate structure is, this pierces the corporate veil).
You want to get out before this happens or before the IRS figures it out in some other way.
When you give notice he will almost certainly threaten you; it would be by far the best to ignore it (don't escalate, who knows how crazy he might get, ADDED: and it's best to keep in reserve, e.g. see the next paragraph), but if you can't ignore it you could always say "Be grateful I'm not reporting you to the IRS...."
If he seriously threatens you WRT to your non-compete, point out his vulnerability WRT the IRS. Unless and until he converts his employees to W-2 status (and I suppose pays his back due withholding), he's exquisitely vulnerable there.
As some have noted, don't bother to sue. At best you'd receive a pittance, per the above you might end up trying trying to collect from a bankrupt company/the owner. What you really need is closure, getting away from this bad situation which is no doubt slowly poisoning your attitudes towards work, upper management, etc.
ABUSE. Here's how it works in a /real/ startup (I know, because I just went through this):
At hire, I ask founder "what do you think your exit looks like?" He puts it in terms of equity meaning for employees, "I am aiming for at least enough for each employee to purchase a nice home in this area."
A month after hire, at the first scheduled board meeting, I am granted options worth 0.5% of equity in the company, vesting over 4 years (I'm around the 12th employee). I am paid a salary commensurate with the rest of the industry in the area, as well as given full health coverage.
After about 2 years, the company is sold, making my 0.5% worth almost exactly what he said it would be worth, enough to purchase a nice home with cash outright.
Your founder is exploiting you. Don't dawdle dealing with this until you are no longer essential. You should lay it out for him, exactly as-is: you get your equity grant and a pay raise immediately, or you are walking.
Keep in mind, your founder might be trying to exploit you another way, too: he may not be planning an exit at all, or for a very long time. Meaning, equity is worthless (as long as he retains ownership). If he's making a lifestyle business out of this, equity is a big 0. Don't let him grant you equity but keep your wages at stupid levels.
You're right, of course. I would never list any of these skills on my resume, or tell any interviewer that I could do them. I would never try to get a freelance contract that requires these skills. They're completely self-taught, completely untested, and I have zero confidence that I really "know" any of them. When I said I have no proof—I meant I have no proof for myself, either, as an empiricist.
Really, what it amounts to is that when I come home, I spend twelve hours (that is, 4PM-4AM) "studying": reading programming books, testing out bits of code, writing scripts and hanging out in places like /r/coding and LtU. It's basically my sole hobby, and I started when I was 11 (with a website run on a scrounged Pentium Pro off a Slackware LAMP stack.) I'v continued teaching myself various skills since then, never producing useful output, just reading and testing myself. I don't have confidence that my skills are anything more than a bunch of academic knowledge.
If I recall, these are the most code I've ever actually written:
* Stargazer, an interactive galaxy creation program in SDL/Ruby (you plot and name stars, create flight/jump/trade paths, and classify arbitrary three-dimensional regions with arbitrary metadata; it's for sci-fi writers.)
* Persona, a webapp where you create a user, that user creates several fictional characters (personas), and then, as a specific character, you answer questions out of a user-generated pool in order to flesh out your individual character. It's sort of like OKCupid in reverse—you specify the "factors" your graph of characters should display in advance (love, hate, admiration, apathy, etc.) and then the service helps you answer questions in a way that will conform to those pre-ordained relationships.
* Nameclasser, a Bayesian classifier trained on the details of individual words (sound, length, derivation, etc.) You feed it a dictionary; it spits back a subset of it usable as "interesting" character names.
* Folio, a mark-up language (and reference parser) similar to markdown, but intended for fiction (distinguishes pages, has footnotes, does neat things when it recognizes sections of screenplay-like dialogue, etc.)
* Christmas, a graph adventure (it's a text adventure, but with the interface being clickable words in bubbles—basically an ever-expanding tree of circle-menus.) It's two-player, networked: the client(s) are in C with Lua extensions, server in Clojure. It also features something I've never seen before: network-transparent undo. (Only works under certain world-model-specific conditions, of course.)
* SMS Importer, a little tool to sanitize a copy of your SMS database, copied from your iPhone's backup folder (SMS data has always been stored in 3d0d7e5fb2ce288813306e4d4636395e047a3d28.mddata, if you're curious), and present it as a folder of formatted-text chat logs. (It also keeps its own gateway database, just merging in previously-unseen texts, so you can delete an SMS record on your iPhone—it makes it a might bit faster—and still keep the record after re-importing.)
* An unnamed, unfinished project involving editing timelines of narratives and meta-narratives in time-travel stories.
* Nodepad, a hierarchical outliner (where every "node" was a folder+rtf file underneath, so you could make any node the working root), and Sponge, a visual to-do list (all the tags were importable 16x16 icons), both in C#.
* Wikirei, a wiki designed from the top-down to look as clean, presentable, and non-wiki-ish as possible when you don't have editing rights, and elegantly expose editing features when you do.
And each and every one of those is crap, in my opinion, and I would never release any of them. ...Having said that, and looking at that list, my problem might more be anxiety at releasing my work, than actually producing it. I've been working in a silo for so long, with no feedback as to whether my code has any quality (except what books say) that I have no idea what others will say when they see mine.
It's true as a general principle of negotiation that the person who states a number first is at a disadvantage. However, someone has to budge sooner or later, and as long as you're being realistic there isn't really much to lose by giving the target. If it's out of range of what they're willing to pay, you might as well all know that up front and not waste each other's time.
Sure, if it may not get the optimal deal that might have been available. However, the original poster here is (a) in a relatively weak bargaining position because he's under pressure to move, and (b) so badly paid at the moment that any reasonable offer is still going to be a huge improvement in both money and working conditions.
For what it's worth, I agree with the earlier comment about not disclosing current salary. It's fine for them to ask what you're looking for, and it's fine to have negotiation, but there is no legitimate reason a prospective employer would ever need to know what you've been working on already. I have never accepted a job from a company that asked me for that information during an interview and persisted when I politely declined to give it, and if I were still working as an employee today I would consider it a huge red flag if interviewers (particularly management/HR types) stuck to their guns on that one. Also, in this case, disclosing the absurdly low compensation at present would make the poster look very weak and undermine any otherwise reasonable and honest story about outgrowing the company and looking for somewhere their improving skills will be better utilised.