6 ms·

Ask YC: Hiring without pay

16 points by PStamatiou 19y ago

Lets say your startup needs talent to work part-time (maybe even just 10 hours a week) in exchange for shares. How do you find people to accept that? Everyone seems to just want money instead or in addition to shares, which is understandable. Also, assume that no one else on the team gets paid as it's all bootstrapped.

extantproject 19y ago
It probably helps for them to be interested in what you're making; if they're not, then hiring them is a bad decision.
aneesh 19y ago
Are you working on a really interesting problem? Either that, or you better have traction by the truckload.
DaniFong 19y ago
They basically have to be close friends, or unusually naive.
- brlewis 19y ago
  Yeah, finding those naive people can be tough. Here's one, but it might be hard to get him to do it again: http://paulbuchheit.blogspot.com/2007/12/is-there-more-to-life-than-money.html http://paulbuchheit.blogspot.com/2007/12/is-there-more-to-li...
sharpshoot 19y ago
all comes down to if you can convince them. the founder of siebel systems got the first 20 employees to work for free initially.
- dbreunig 19y ago
  Can you convince them you're going to make money? Cause that's what makes those shares worth more than the paper they're printed on.
ardit33 19y ago
If what you working is interesting, if you are giving good and fair amount of equity (i.e. as a starting founder). If you looking for an "employee", without willing to pay, then good luck finding a sucker.
- rguzman 19y ago
  No matter what you don't want to hire someone who would take a bad deal. So you should make sure you aren't offering one. So, suckers are ruled out.
zenlinux 19y ago
You need to have something really compelling - a product that really excites people and/or a high liklihood of success in the near future. I know someone who is about to start some sw development work for a local startup for equity. The company is getting ready to sell their first product, and he told me that his plan is to try working for them for eight weeks and see if they can actually sell their product. If not, he's planning to quit. He's been totally up-front about this with the founders and they're ok with that. So a creative strategy like that might work.
tptacek 19y ago
People who work without pay for equity at the beginning of the company are founders. See: every other post on YC about "how to recruit cofounders". The risks involved in seed-stage, pre-revenue private company shares are spectacular. Management can and usually will drastically reduce the value of early shares throughout the life of the company. That risk is over and above the fact that your company will, like all startups, likely fail. You didn't say this, but let's assume you're talking about developers: they bill $100/hr. You're trying to sell them shares for "maybe as little as" $1000 a week. The answer to that problem is: "give them a lot of shares". The easier answer, which will work better than equity, is to open source.
- edw519 19y ago
  "The easier answer, which will work better than equity, is to open source." Explain, please.
  - Prrometheus 19y ago
    The argument is made in "The Cathedral and the Bazaar". Basically, the open source development method allows you to use the labor of many other developers, as long as they continue to find the software useful. There may be a version online, ESR is pretty free with his work.
webwright 19y ago
Yeah, this doesn't work-- more trouble than it's worth. Co-founders are better. Or get a loan. Or funding.
noodle 19y ago
you need to do even more legwork to prove out the business model and plan than you would for a company like YC. i'd be willing to do work for shares if i believed in the model. hell, i AM working on a startup with someone i didn't know beforehand because i personally believe that the project will become extremely profitable.
wheels 19y ago
A prototype works wonders. We've actually had a couple friends that were interested in getting in on things after they saw in non-vapory-ways where we were going. The way that I got my cofounder on board was to draft a presentation for potential investors and to present it to him. Two days later he was in.
lyime 19y ago
Thats actually not true. Not everyone wants money. My gf works for a startup (online picture editing site) and she currently only works for shares and no pay. I think many college students would be willing to work for shares. Especially if you have a decent startup and viable idea.
subwindow 19y ago
Interesting idea, interesting people with enthusiasm. The challenge is convincing people of those three facts without coming across as an overbearing asshole. Generally, you're going to have a hard time recruiting people that are going to be doing more work initially than you are going to be doing. I.E. a non-hacker trying to recruit a hacker to do some coding will have a tough time.
icky 19y ago
> Lets say your startup needs talent to work part-time (maybe even just 10 hours a week) in exchange for shares. How do you find people to accept that? That's easy. Just make sure the the "shares" you're offering them are shares in Google! ;-)
chollida1 19y ago
Well it's been said here a few times but if I try to look at your request from the perspective of a developer you're trying to hire, I'd probably expect alot more equity than you're willing to give. For example, consider you work 40 hrs a week and you want me to work 10 hours a week, for simplicity sake. Since I'm working 25% as much as you I'd expect 25% the equity that you have. So if its you and a partner with 50% stakes working 40 hrs each ontop of my 10 hrs then I'd expect 9% of the company because that's how much of the effort I'm contributing.
anamax 19y ago
Let's say that someone else had a startup and they needed your talent under those conditions. What would it take to convince you to join them? If you're not willing to offer that, why should someone else accept it? BTW - Part-time isn't necessarily attractive. It only works for folks who have a hole in their schedule. You might get more takers for temp than part-time.
bayareaguy 19y ago
I think the answer is different depending on who really stands to gain from being part of it. Does it help a community to the point where they will want to lend a hand to keep it going (e.g. Wikipedia) or will only founders and investors benefit from it?
brianlash 19y ago
I'm late to this conversation but thought I'd weigh in anyway because I found myself in a similar predicament recently. I was able to recruit a talented developer-partner on the grounds that he'd receive 40% of the sale price of the application. Maybe my experience can help you. When it comes to recruiting, I think the answer lies in speaking candidates' language (if it's a business guy, remind him that startup experience looks great on a resume; for developers, make sure they know you appreciate the importance of their role to the success of your project). I think it's most important for the latter that they believe they'll do important work and feel appreciated... it's regretable so many of them have had bad experiences with crappy employers, but you can use that history to your advantage by setting yourself apart from it. The rest is details: Write up a job description using your best Ogilvyian copy (reference copyblogger.com). Headlines matter. I also suggest you use a triangulation strategy when you talk about compensation. I approached it by offering candidates their option of 1) $2500, 2) $1500 + 8% equity, or 3) 40% equity. On its own the 40% arrangement wouldn't have stirred much interest, but set against the backdrop of the other two options it looked like a great opportunity. I designed it that way deliberately with favorable results. Hope this helps.

16 points by PStamatiou 19y ago

extantproject 19y ago

It probably helps for them to be interested in what you're making; if they're not, then hiring them is a bad decision.

aneesh 19y ago

Are you working on a really interesting problem? Either that, or you better have traction by the truckload.

DaniFong 19y ago

They basically have to be close friends, or unusually naive.

brlewis 19y ago
Yeah, finding those naive people can be tough. Here's one, but it might be hard to get him to do it again: http://paulbuchheit.blogspot.com/2007/12/is-there-more-to-life-than-money.html http://paulbuchheit.blogspot.com/2007/12/is-there-more-to-li...

sharpshoot 19y ago

all comes down to if you can convince them. the founder of siebel systems got the first 20 employees to work for free initially.

dbreunig 19y ago
Can you convince them you're going to make money? Cause that's what makes those shares worth more than the paper they're printed on.

ardit33 19y ago

If what you working is interesting, if you are giving good and fair amount of equity (i.e. as a starting founder). If you looking for an "employee", without willing to pay, then good luck finding a sucker.

rguzman 19y ago
No matter what you don't want to hire someone who would take a bad deal. So you should make sure you aren't offering one. So, suckers are ruled out.

zenlinux 19y ago

You need to have something really compelling - a product that really excites people and/or a high liklihood of success in the near future. I know someone who is about to start some sw development work for a local startup for equity. The company is getting ready to sell their first product, and he told me that his plan is to try working for them for eight weeks and see if they can actually sell their product. If not, he's planning to quit. He's been totally up-front about this with the founders and they're ok with that. So a creative strategy like that might work.

tptacek 19y ago

People who work without pay for equity at the beginning of the company are founders. See: every other post on YC about "how to recruit cofounders". The risks involved in seed-stage, pre-revenue private company shares are spectacular. Management can and usually will drastically reduce the value of early shares throughout the life of the company. That risk is over and above the fact that your company will, like all startups, likely fail. You didn't say this, but let's assume you're talking about developers: they bill $100/hr. You're trying to sell them shares for "maybe as little as" $1000 a week. The answer to that problem is: "give them a lot of shares". The easier answer, which will work better than equity, is to open source.

edw519 19y ago
"The easier answer, which will work better than equity, is to open source." Explain, please.
- Prrometheus 19y ago
  The argument is made in "The Cathedral and the Bazaar". Basically, the open source development method allows you to use the labor of many other developers, as long as they continue to find the software useful. There may be a version online, ESR is pretty free with his work.

webwright 19y ago

Yeah, this doesn't work-- more trouble than it's worth. Co-founders are better. Or get a loan. Or funding.

noodle 19y ago

you need to do even more legwork to prove out the business model and plan than you would for a company like YC. i'd be willing to do work for shares if i believed in the model. hell, i AM working on a startup with someone i didn't know beforehand because i personally believe that the project will become extremely profitable.

wheels 19y ago

A prototype works wonders. We've actually had a couple friends that were interested in getting in on things after they saw in non-vapory-ways where we were going. The way that I got my cofounder on board was to draft a presentation for potential investors and to present it to him. Two days later he was in.

lyime 19y ago

Thats actually not true. Not everyone wants money. My gf works for a startup (online picture editing site) and she currently only works for shares and no pay. I think many college students would be willing to work for shares. Especially if you have a decent startup and viable idea.

subwindow 19y ago

Interesting idea, interesting people with enthusiasm. The challenge is convincing people of those three facts without coming across as an overbearing asshole. Generally, you're going to have a hard time recruiting people that are going to be doing more work initially than you are going to be doing. I.E. a non-hacker trying to recruit a hacker to do some coding will have a tough time.

icky 19y ago

> Lets say your startup needs talent to work part-time (maybe even just 10 hours a week) in exchange for shares. How do you find people to accept that? That's easy. Just make sure the the "shares" you're offering them are shares in Google! ;-)

chollida1 19y ago

Well it's been said here a few times but if I try to look at your request from the perspective of a developer you're trying to hire, I'd probably expect alot more equity than you're willing to give. For example, consider you work 40 hrs a week and you want me to work 10 hours a week, for simplicity sake. Since I'm working 25% as much as you I'd expect 25% the equity that you have. So if its you and a partner with 50% stakes working 40 hrs each ontop of my 10 hrs then I'd expect 9% of the company because that's how much of the effort I'm contributing.

anamax 19y ago

Let's say that someone else had a startup and they needed your talent under those conditions. What would it take to convince you to join them? If you're not willing to offer that, why should someone else accept it? BTW - Part-time isn't necessarily attractive. It only works for folks who have a hole in their schedule. You might get more takers for temp than part-time.

bayareaguy 19y ago

I think the answer is different depending on who really stands to gain from being part of it. Does it help a community to the point where they will want to lend a hand to keep it going (e.g. Wikipedia) or will only founders and investors benefit from it?

brianlash 19y ago

I'm late to this conversation but thought I'd weigh in anyway because I found myself in a similar predicament recently. I was able to recruit a talented developer-partner on the grounds that he'd receive 40% of the sale price of the application. Maybe my experience can help you. When it comes to recruiting, I think the answer lies in speaking candidates' language (if it's a business guy, remind him that startup experience looks great on a resume; for developers, make sure they know you appreciate the importance of their role to the success of your project). I think it's most important for the latter that they believe they'll do important work and feel appreciated... it's regretable so many of them have had bad experiences with crappy employers, but you can use that history to your advantage by setting yourself apart from it. The rest is details: Write up a job description using your best Ogilvyian copy (reference copyblogger.com). Headlines matter. I also suggest you use a triangulation strategy when you talk about compensation. I approached it by offering candidates their option of 1) $2500, 2) $1500 + 8% equity, or 3) 40% equity. On its own the 40% arrangement wouldn't have stirred much interest, but set against the backdrop of the other two options it looked like a great opportunity. I designed it that way deliberately with favorable results. Hope this helps.