4 ms·

I'm sorry but this approach infuriates me. I am constantly approached by people asking me for discounts for equity, low salaries etc because of the idea that I'

I'm sorry but this approach infuriates me. I am constantly approached by people asking me for discounts for equity, low salaries etc because of the idea that I'd get paid out at an exit event. And every time I take the deal, I end up paying their bills when the company fails. The founders walk away having not only left the investors empty handed, but now I'm in worse debt than when I started. Founders, please stop having the people who work for you assume the financial risk of your venture. It is a completely f'd up practice, because 9 times out of 10 they end up paying your bills when the company goes bunk. An investor is well aware of the risks involved, but often times employees and contractors are subject to falling for hype and don't have enough information to make an educated assessment. I think its great to reward people at a successful exit, but its another thing to take money out of their pockets because you were able to use your hype powers to lure them into working for you at a discount. Just know that for all your will power and positive thinking the magical successful exit is a very rare event, even for people with previous success. This means that when you ask a non-investor to essentially commit personal wealth to your vision there is a high probability that person will pay for it in the end. /rant

Apreche 16y ago
I'm 100% with you. This is the #1 reason I have not yet worked at a startup. Unlike some people who are already loaded, I have to pay rent. If you pay me in lottery tickets, and I lose, I'm homeless. Whenever a startup sends me a job offer, which is quite often, I tell them I accept cash only. I'm still waiting for one to say OK. Maybe you can convince some naive college kids to work for peanuts, but good luck with that.
kareemm 16y ago
Why don't you just say no to non-cash offers if you don't like them?
- rwhitman 16y ago
  hey kareem... heh well i do now ;)
  - kareemm 16y ago
    grin, good decision ron. i hear your rant, but someday you may be that CEO using your reality distortion field to get people to work for less than market to make your startup go big :)
    - rwhitman 16y ago
      Yea I was just thinking about that.. And the fact I've definitely gotten people to work for me for free with no real agreement at all based entirely on hype... Guess I've been on the receiving end more than the hype end these days :)
tibbon 16y ago
One thing you touch on here that's rather important is disclosure of information honestly to potential employees. Whereas investors (hopefully) have done their diligence on the company and are privy to the full financial situation of the company, employees quite often aren't. Employees generally don't get a copy of the term sheet, or know much about their options beyond the "40,000 shares valued at .03 each with an outstanding number of shares being 10mm". When you ask investors to take risk, that's one thing. They have the most to gain (due to more favorable terms) and aren't actually having to put in the sweat equity to make it happen, and they also get the best information. Employees however often have no idea what the burn rate of the company even is or what the current equity structure of the company looks like.
- rwhitman 16y ago
  Yes. Exactly. When a potential client or employer offers you equity, you can't sit there and ask them for their financials. And for the most part, employees and contractors aren't very well educated in the risks involved with investing in a startup either.
  - Daniel_Newby 16y ago
    > When a potential client or employer offers you equity, you can't sit there and ask them for their financials. Why not? If they flip out and don't hire you, hurrah! People who are allergic to financial details don't make good business partners. (Bernie Madoff being the asymptotic example. He was famously hostile to questions about the financials.)
mgkimsal 16y ago
The only time I've been left owing bills was when it my was gig. I'm not sure I'd be willing to come in to a situation with someone else where I'm signing my name to something where I'm in a position to be personally responsible. Why is the other person (the original founder) not being required to pay on the debt? Maybe you're meaning something else by 'paying their bills' - do you have some example(s) you can share?
- rwhitman 16y ago
  Sorry, I think I phrased that wrong. I mean "paying their bills" in the sense that I discounted my work to help fund their company
  - mgkimsal 16y ago
    OK - that puts a totally different perspective on your post.
TooSmugToFail 16y ago
Well, by asking you to do that, your employer is actually asking you to invest in his business, so you should treat such offers with same scrutiny. Now, if you were an investor, you wouldn't normally bitch about somebody pitching an investment proposal to you. You would inspect the business plan, get to know the team and make an informed decision.

Apreche 16y ago

I'm 100% with you. This is the #1 reason I have not yet worked at a startup. Unlike some people who are already loaded, I have to pay rent. If you pay me in lottery tickets, and I lose, I'm homeless. Whenever a startup sends me a job offer, which is quite often, I tell them I accept cash only. I'm still waiting for one to say OK. Maybe you can convince some naive college kids to work for peanuts, but good luck with that.

kareemm 16y ago

Why don't you just say no to non-cash offers if you don't like them?

rwhitman 16y ago
hey kareem... heh well i do now ;)
- kareemm 16y ago
  grin, good decision ron. i hear your rant, but someday you may be that CEO using your reality distortion field to get people to work for less than market to make your startup go big :)
  - rwhitman 16y ago
    Yea I was just thinking about that.. And the fact I've definitely gotten people to work for me for free with no real agreement at all based entirely on hype... Guess I've been on the receiving end more than the hype end these days :)

tibbon 16y ago

One thing you touch on here that's rather important is disclosure of information honestly to potential employees. Whereas investors (hopefully) have done their diligence on the company and are privy to the full financial situation of the company, employees quite often aren't. Employees generally don't get a copy of the term sheet, or know much about their options beyond the "40,000 shares valued at .03 each with an outstanding number of shares being 10mm". When you ask investors to take risk, that's one thing. They have the most to gain (due to more favorable terms) and aren't actually having to put in the sweat equity to make it happen, and they also get the best information. Employees however often have no idea what the burn rate of the company even is or what the current equity structure of the company looks like.

rwhitman 16y ago
Yes. Exactly. When a potential client or employer offers you equity, you can't sit there and ask them for their financials. And for the most part, employees and contractors aren't very well educated in the risks involved with investing in a startup either.
- Daniel_Newby 16y ago
  > When a potential client or employer offers you equity, you can't sit there and ask them for their financials. Why not? If they flip out and don't hire you, hurrah! People who are allergic to financial details don't make good business partners. (Bernie Madoff being the asymptotic example. He was famously hostile to questions about the financials.)

mgkimsal 16y ago

The only time I've been left owing bills was when it my was gig. I'm not sure I'd be willing to come in to a situation with someone else where I'm signing my name to something where I'm in a position to be personally responsible. Why is the other person (the original founder) not being required to pay on the debt? Maybe you're meaning something else by 'paying their bills' - do you have some example(s) you can share?

rwhitman 16y ago
Sorry, I think I phrased that wrong. I mean "paying their bills" in the sense that I discounted my work to help fund their company
- mgkimsal 16y ago
  OK - that puts a totally different perspective on your post.

TooSmugToFail 16y ago

Well, by asking you to do that, your employer is actually asking you to invest in his business, so you should treat such offers with same scrutiny. Now, if you were an investor, you wouldn't normally bitch about somebody pitching an investment proposal to you. You would inspect the business plan, get to know the team and make an informed decision.