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>First, the likelihood of anyone besides me being here for four years is pretty small... That is the point. If your employee leaves before they have vested th

>First, the likelihood of anyone besides me being here for four years is pretty small... That is the point. If your employee leaves before they have vested their shares they don't get to keep them. >but it's still very likely a company death, if someone with 50% of the company leaves. No, not necessarily. Founders of successful companies leave after several years of service all the time (happened recently with Xobni, for example). >Do you have a link where I can read up on what profit sharing means and how that differs from equity? I do not know these things. There are lots of resources if you just do a quick Google search. The basic idea is that your employees would get a % of profits you generate in a given year rather than equity. >If you could get a job on the open market that paid $130K in salary and benefits, would you instead work for some crazy guy for $30K cash plus another twenty grand in equity? No. Not because I wouldn't want to work for equity (I have done that before) but because there doesn't be a clear path to liquidity of those options. You've described this as a lifestyle business which typical means no imminent source of liquidity for shareholders. This is why I suggested exploring a profit sharing structure. If you are saying that this is a business that can't support livable compensation for employees for the foreseeable future, then I think there are bigger issues though. Sorry if I am not fully understanding what you are getting at.

lsc 16y ago
>No. Not because I wouldn't want to work for equity (I have done that before) but because there doesn't be a clear path to liquidity of those options. You've described this as a lifestyle business which typical means no imminent source of liquidity for shareholders. Assuming the liquidity issue was solved to your satisfaction, would you work for equity in a company where the valuation of the percentage of the company you were earning plus the salary you were earning was 1/3rd of your fair market value?
- answerly 16y ago
  All things being equal between this theoretical opportunity and another with a more attractive compensation structure, no. If I believed that there was a longer term value to the equity that could make up for the shortfall in cash compensation, maybe. But, the specific case you've laid out leads me to believe that there isn't significant growth potential in this business. Am I interpreting that wrong?
  - lsc 16y ago
    >But, the specific case you've laid out leads me to believe that there isn't significant growth potential in this business. Am I interpreting that wrong? It depends on what you call 'significant' - If we did everything right, we could be bigger than slicehost and linode. Now, it's a long ways from here to there, and the competition is tough, but that's the market. My thought is just that, well, I've only managed to get this to a "it supports me and only me" level, and while I think we can sustain 10%+ growth a month if we don't screw it up (we sustain 10%+ growth on months when we don't screw it up, and I strongly believe that if we quit screwing it up, we could sustainability grow at that level for quite some time.) I'd like the option of continuing even if we only end up with 30% a year growth, you know? because we do screw it up. I went three months without adding new servers (I'm slowly working through the waiting list right now) not only did I loose a bunch of revenue, I hurt my reputation. I Look like some kind of amateur. edit: I think part of what you are hearing is that I don't show "business guy" confidence in places where my customers will see me. (Nerds, as a general rule, hate that shit. Talking big means nothing. Show me.) Obviously, I think the thing has potential for growth. I'm living off $30K year when I could fairly easily be making 4x that working for someone else. I mean, the business guy promoting this would have said we could go after amazon. (which, I admit, is something of a stretch; at a minimum we'd need a giant wad of investment capital.) But my real question here was this: If your time is worth $130K per year, and the company is valued at $200K (and you assume that's a fair valuation) are you going to go work for that company for a year for $30K plus 5% of the company (valued at $10K)? I mean, I guess you can take issue with the valuation. (I mean, I've refused to sell, more than once at what I think the market value of my company is. With this growth potential, I think it'd be stupid to sell at 1x earning) but still, this idea of giving a key employee 5% and expecting them to work for dramatically below market wages seems kinda silly unless you think you have 'emerging social network' valuations.
deleted 16y ago
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lsc 16y ago

>No. Not because I wouldn't want to work for equity (I have done that before) but because there doesn't be a clear path to liquidity of those options. You've described this as a lifestyle business which typical means no imminent source of liquidity for shareholders. Assuming the liquidity issue was solved to your satisfaction, would you work for equity in a company where the valuation of the percentage of the company you were earning plus the salary you were earning was 1/3rd of your fair market value?

answerly 16y ago
All things being equal between this theoretical opportunity and another with a more attractive compensation structure, no. If I believed that there was a longer term value to the equity that could make up for the shortfall in cash compensation, maybe. But, the specific case you've laid out leads me to believe that there isn't significant growth potential in this business. Am I interpreting that wrong?
- lsc 16y ago
  >But, the specific case you've laid out leads me to believe that there isn't significant growth potential in this business. Am I interpreting that wrong? It depends on what you call 'significant' - If we did everything right, we could be bigger than slicehost and linode. Now, it's a long ways from here to there, and the competition is tough, but that's the market. My thought is just that, well, I've only managed to get this to a "it supports me and only me" level, and while I think we can sustain 10%+ growth a month if we don't screw it up (we sustain 10%+ growth on months when we don't screw it up, and I strongly believe that if we quit screwing it up, we could sustainability grow at that level for quite some time.) I'd like the option of continuing even if we only end up with 30% a year growth, you know? because we do screw it up. I went three months without adding new servers (I'm slowly working through the waiting list right now) not only did I loose a bunch of revenue, I hurt my reputation. I Look like some kind of amateur. edit: I think part of what you are hearing is that I don't show "business guy" confidence in places where my customers will see me. (Nerds, as a general rule, hate that shit. Talking big means nothing. Show me.) Obviously, I think the thing has potential for growth. I'm living off $30K year when I could fairly easily be making 4x that working for someone else. I mean, the business guy promoting this would have said we could go after amazon. (which, I admit, is something of a stretch; at a minimum we'd need a giant wad of investment capital.) But my real question here was this: If your time is worth $130K per year, and the company is valued at $200K (and you assume that's a fair valuation) are you going to go work for that company for a year for $30K plus 5% of the company (valued at $10K)? I mean, I guess you can take issue with the valuation. (I mean, I've refused to sell, more than once at what I think the market value of my company is. With this growth potential, I think it'd be stupid to sell at 1x earning) but still, this idea of giving a key employee 5% and expecting them to work for dramatically below market wages seems kinda silly unless you think you have 'emerging social network' valuations.

deleted 16y ago

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