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Lots of variables being guessed at there. But for the sake of argument, say you're receiving equity valued by the market at $4500 for 3 months work. That make

Lots of variables being guessed at there. But for the sake of argument, say you're receiving equity valued by the market at $4500 for 3 months work. That makes you fairly desperate. If they were really the "hottest startup" in town a month ago, why are they skimping on talent? Equity makes sense as a form of compensation for someone who believes in the company more than the market, or to tie someone's interests to those of the company. But this position is explicitly being sold as a potential stepping stone to something else. That incentive structure is all wrong. You pay cash for stepping stone jobs.

ChuckMcM 16y ago
Hmm, I think you missed my point. If the company is pre-Series A then the market value of the company is unknown. If, as a developer, you can arbitrage risk/time for money exactly like a VC does, but rather than cash equity you invest sweat equity. So in the pre-Series A scenario, one would value the company the same way a investor would. Do you think this team can execute? What is the available market for their product? How much could they reasonably expect to capture? What is the upside if they capture more? What might be their valuation in a post-execution scenario (which is to say they've delivered their product into production). And, like a VC your risk is that they will not be able to execute and they will go under. On a related note, I met a number of consultants in the dot com era who were operating like this. They were offering to take a portion of their fees in stock. This way, if they consulted at 10 different companies they have 10 chips in the game in case one of them 'wins.' The size of the stake they ended up with in various companies wasn't VC class (not millions of shares, more like thousands of shares) but it added upside down the road for them. The larger point I was trying to make was that there are many variables that are unknown about this particular arrangement, one can posit values for the unknowns that would make it a 'good' deal and one can posit values that would make it a 'dumb' deal. Its an interesting Rorschach test to see how different people immediately jump to one side or the other. I think that can help people understand their own internal biases which they may, or may not, be aware of.

ChuckMcM 16y ago

Hmm, I think you missed my point. If the company is pre-Series A then the market value of the company is unknown. If, as a developer, you can arbitrage risk/time for money exactly like a VC does, but rather than cash equity you invest sweat equity. So in the pre-Series A scenario, one would value the company the same way a investor would. Do you think this team can execute? What is the available market for their product? How much could they reasonably expect to capture? What is the upside if they capture more? What might be their valuation in a post-execution scenario (which is to say they've delivered their product into production). And, like a VC your risk is that they will not be able to execute and they will go under. On a related note, I met a number of consultants in the dot com era who were operating like this. They were offering to take a portion of their fees in stock. This way, if they consulted at 10 different companies they have 10 chips in the game in case one of them 'wins.' The size of the stake they ended up with in various companies wasn't VC class (not millions of shares, more like thousands of shares) but it added upside down the road for them. The larger point I was trying to make was that there are many variables that are unknown about this particular arrangement, one can posit values for the unknowns that would make it a 'good' deal and one can posit values that would make it a 'dumb' deal. Its an interesting Rorschach test to see how different people immediately jump to one side or the other. I think that can help people understand their own internal biases which they may, or may not, be aware of.