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Check out the book, "How to Get Rich" by Dennis Felix. He's the guy that owns Maxim magazine. One of his tenets is to never give up any of the ownership of your
by bprater 18y ago
Check out the book, "How to Get Rich" by Dennis Felix. He's the guy that owns Maxim magazine. One of his tenets is to never give up any of the ownership of your company. Period.
One of his stories is about the time that four key employees sat him down and told him they wanted 25% of the company or they were going to go out and compete with them. He told them to hit the road. He'd rather do all their jobs while we found replacements than give a share of his company.
Later on, he estimated that 25% share at $80 million. Oh, and the company they tried to start folded. And a couple came back to work for him.
You obviously have traction. You have a raving fan base. Don't give up a substantial portion of your company to someone you don't really know because you don't want to cut a paycheck.
If your marketing is working and you are making some money with the project, pay a hacker 100% of the profits and eat beans. You are going to win in the end.
You may "lose" a few bucks now, but those few dollars could get you your own island in 10 years.
- swivelmaster 18y agoThat strategy doesn't always work. The only thing that story proves is that Felix knows what he's doing and the employees weren't worth the equity because clearly they didn't. There are a lot of companies that just would not have made it without outside capital and experience, even if the founders got less rich after the exit than they would have if they still collectively had 100% of the company.
- mattmaroon 18y agoIt doesn't even prove either of those. He could have just been a case of right place, right time.
- jmatt 18y agoBalance this against the richest people in the world who did give away equity when it was appropriate. I guess it depends on the situation.
- mattmaroon 18y agoI'm not even sure it depends on the situation, it could be a uniformly dumb idea that he succeeded in spite of. Every business has at least one of those.
- webwright 18y agoThat's a bad rule. You just have to do the math. Does giving away n% ownership increase your chances of success (or eventual magnitude of it) by enough to justify giving it up? A lot of times, it does. A co-founder offers a lot more than free labor.
- rms 18y agosee http://www.paulgraham.com/equity.html http://www.paulgraham.com/equity.html for more detail
- bk 18y agoTwo objections: * So the difference in his net worth is between 320M and 240M - would it kill him to share some wealth (assuming the other people actually bring substantial value to the company?). * Money alone doesn't make people happy - it's also about enjoying the process of building your wealth. A great cofounder can make your life overall just damn fun, whereas being the lone general of a more or less motivated army of employees can be a substandard experience.