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I think she made a "douche-move" by upping her equity forcefully while still taking $6,900/mo - To be honest no matter the turn out your better without her caus
by redorb 18y ago
I think she made a "douche-move" by upping her equity forcefully while still taking $6,900/mo - To be honest no matter the turn out your better without her cause she is lacking integrity.
- tptacek 18y agoWhy? Even at 35%, she's got much less equity than the original founder. If her market value is 80k, and they're taking salaries, what do you expect her to do? Talent is a marketplace. It isn't owed to anybody.
- redorb 18y agobecause she agreed to 6% and $6,900/mo (a lot more than the founder) ... I think loyalty means something, be loyal to what you agree to; or quit... but don't hold the whole company hostage being selfish. I still stick with the "better off without her" mantra here.
- dangoldin 18y agoAccidentally downed instead of upped you. Sorry. Will boost up another two of your posts.
- tomh 18y agoI think 6% is actually pretty sweet, I built a 1.0 for a startup from scratch while in grad school, and got all of a 0.5% stake, plus consulting fees. Usually a large slice of the equity pie assumes that you are taking a hit in the wallet now for something better down the road. I believe your developer felt like she was getting the best of both worlds.
- tptacek 18y agoThat totally depends on the app, doesn't it?
- tomh 18y agoNot only that, but the market it's based in - our poster's app happens to be in healthcare, which has its own 800-lb gorillas (large hospitals and pharmas) and its own smaller players too. Obviously the poster thought that the app would become lucrative enough to justify a $160k investment. If the payoff looked really huge, you could justify being a little more stingy with the options. Just sayin'. (From the guy who doesn't have a lot of options because his app is in healthcare too)
- bigtoga 18y agoI think it depends less on the app and more on the negotiating power/experience of each party.
- tptacek 18y agoHow did she hold the company hostage? She did quit.
- redorb 18y ago"threatened to quit and raise her own funding" unless equity was raised to 35%, that is very very hostile. - she only quit once they ran out of money., actions just speak louder than words for me.
- tptacek 18y agoI don't get it. This isn't MTV's The Real World: Tulsa Edition. She didn't like the deal she had. She told the founder, whose stake dwarfed hers, what her issue was. It didn't work out. She left. What are you asking her to do? Stay on in an untenable situation? News flash for you: when you make a mistake signing on with a company, you aren't "honor-bound" to stay there until the situation plays itself out. If your situation sucks, leave. She did. There's another unfortunate lesson here. When people threaten to quit, counteroffers are often a waste of time. People with MBAs will tell you not to make them at all. I've learned this the hard way; I got a really good offer in the middle of my last PM job, brought it up with my current company, and they upped my stake. But for the next 2 years, they were constantly on the defensive assuming I was going to quit again; it damaged the working relationship severely. If you're a solid company, and someone gives you an ultimatum, a no-foul clean break is often going to be the right move. I wish it wasn't like that (I had no intention of quitting), but some political situations are untenable.
- redorb 18y agoJust smells wrong, to take $6,900/mo + 6% (and agree to it) then for no reason demand more equity (which can't pay your bills) so basically the only reason to demand more equity is selfish-ness and you realize the founder is in a bad spot. - She only left cause they were out of money, I suspect she would have rode that horse to death. -I'm done debating; it was really fun, I got work to do; Im sure you do too... .rb
- aonic 18y agoIf you are a paying your developer a market value salary, you are basically paying to have your idea developed. Unless you were paying the developer very little, or nothing, that is when equity should be used as payment 35% is a LOT with $6900/m
- tptacek 18y agoWhat was the nurse doing? Ideas aren't worth 65% of the company alone. I don't know if it's intentional but it seems like a lot of people here are talking as if there were "rules", like "x% is fair, y% is unreasonable". There are rules of thumb. But compensation is a marketplace. If the founder has no leverage, taking a lower stake in exchange for salary isn't honorable. It's just stupid. Both parties need to feel like they're getting a square deal. If either of them don't, it doesn't work.
- aonic 18y agoIt doesn't matter what the nurse was doing, the developer was getting paid a good amount of money. If I was hired to do a project, and my payment was inline with my market value, I wouldn't care what my employer is doing as long as I kept getting my money. $6900/m sounds like market value to me. If I was in the nurses position, I would have offered 1% equity on top of $6900/m
- alex_c 18y agoIt doesn't matter what the nurse was doing OR how much the developer was getting paid. The developer agreed to the terms upfront (and I'm hoping there was some kind of contract involved). Renegotiating or asking for a raise is one thing, but this sounds a bit too much like blackmail to me. Of course, there are two sides to every story.
- tptacek 18y agoBlackmail?! She didn't take the company hostage. She quit it. You can always quit. I can always fire you. If you make a mistake when you negotiate a position, you are not ethically required to "ride it out" to some foreordained date.
- drinko 18y agoI had to take a salary, because I am 32 yr old experienced nurse and have monthly fixed costs that I can't get away from.
- run4yourlives 18y agoShe's taking a full salary, which by itself negatively affects the startup's chances for success. She's not taking enough risk to get anything close to 35% in my opinion. It doesn't get more sweetheart that that. Too bad she was too dumb to realize that her good position could have been very good later on.
- tptacek 18y agoIf her work makes or breaks the company, and she's worth more than 80k on the open market, and she isn't "65% stake confident" in the founder, it's not a "sweetheart deal". It's a sucker's bet. Again, it seems like you're talking as if there were "rules" about equity participation. You would have to have an absolutely awesome idea to make, for instance, a security researcher participate in a startup for no salary. Even if you pay one $50k, and that $50k cripples the startup and maxes out hardship for everyone else in the company, it's still a sucker deal for the researcher. I'm using a familiar example to illustrate a point. It's a marketplace, not a secret society.
- run4yourlives 18y agoIt is a marketplace. A marketplace where I know that good people exist that will not draw a standard salary and demand equity at the same time. (at least not in the levels we're using here) And I don't care what you're doing, if it takes 12 months to get a prototype in django, you aren't worth 80K.
- tptacek 18y agoYou're totally right about that. Sounds like there's a consensus that this project needed milestones.
- Xichekolas 18y agoI think there is also consensus that this dev wasn't very good. Not sure I have seen a site so complicated that you couldn't at least roughly approximate it in 12 months with django. Whole deal sounds to me like she didn't give a crap about long term future of the company, she just wanted to ride the funding into the ground through her paycheck. I'd bet she demanded more equity in a moment of faith, but by that point they were doomed.
- drinko 18y agoThe investment round was 20%, and I have a 45% stake.