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Have you actually been an early employee, or are you just speculating? I can tell you that in a lot of cases the paperwork you love so much often simply doesn'

by cmccabe 13y ago

Have you actually been an early employee, or are you just speculating? I can tell you that in a lot of cases the paperwork you love so much often simply doesn't exist. Even if it did, it might not be worth the paper it was written on. There are a lot of ways to lose out. If you're not a lawyer, there is almost certainly something in the contract you overlooked. The contract might not even be valid if two non-lawyers came up with it after a few beers. You could be fired right before your options vest. (This happened to a lot of people at Skype, for example.) Or you could be diluted down to nothing after a few rounds of financing. Sure, you can sue, but is that really going to help? If the company goes out of business you're trying to get blood from a stone. If the company succeeds, they'll have a legal budget 1000x yours. Ultimately, the founders are going to set the direction of the company. You have to trust them, and also trust that you will be useful to them over the long term. Any other strategy is just a losing bet.

logicallee 13y ago
Hi, I'm specifically comparing to the trust required to be a cofounder. I've been both an early employee and a cofounder. The level of trust I needed in my cofounder to enter the business on the terms we did is simply 1000x bigger than the level of trust I needed to start working as an early employee. I mean think about it: you're talking about losing out on the upside as an early-employee, but the salary still comes (or you just leave after 2 weeks) and so does the experience. As a cofounder, nothing "comes". There IS no business. Your assertion that a salary agreement isn't worth the paper it's written on is ridiculous. Even paper isn't necessary: if an early employee didn't get paid at all they would leave almost immediately. it just doesn't require anywhere near the same amt of trust.
- cmccabe 13y ago
  Well, first of all, your assertion that "if an early employee didn't get paid at all they would leave almost immediately" is just false. I mean if you read the post that started this thread, it's about a guy who went without any salary for 18 months. Admittedly, he did have another source of income at the time from the college, but that's still a long time to go. Personally, I have known employees to go a few months without pay in the hope of seeing the company through a rough time. If you read the article itself, it talks about pilots using their own credit cards to pay for landing fees in a pinch, and couriers selling their watches to pay for fuel. So basically, I would urge you to read the article and the posts you're replying to. I admit that co-founders usually put more money into the business than early employees. But time is also worth money, and early employees put a lot of that in, for not much money up front. I agree with you that the experienced gained as an early employee is valuable. Some of that experience might be getting a better idea for whom to trust in the future :) And with that, I think we've come full circle...
  - logicallee 13y ago
    well, you're not ''wrong''. I hope you will agree though that working for 18 months without pay at a startup very much stretches the definition of "employee". (as opposed to "cofounder" or "unpaid intern"). most people who can claim the title of "early employee but not cofounder" here at HN would not say they have gone 18 months without pay in that title or would do so. so yes it's a data point but it's a pathological one. On the other hand, 18 months without pay doesn't scratch the surface of what a cofounder can expect: it's one of the best-case scenarios that anyone could possibly expect! A cofounder would jump at a chance to see liquidity within 18 months of founding a new startup. More typical is more like 24 months absolute minimum, 36-72 months average, and often longer is the norm. And during that time you don't just hock a watch or pay for fuel: most cofounders pay tens of thousands of dollars of their own money, often every month and putting every source of liquidity they can into the business as it ramps up. and more often than not, as sad as all this is, most cofounders do lose 100% of their investment and have nobody to blame, nobody to even ask for a break. they have cliffs, and CANNOT jump ship. WHen a cofounder jumps ship they lose 100% of the entire equity they have in the company. But at the same time, most startups simply don't go anywhere. I would be hard-pressed to find a metric by which the average early employee gets absolutely nothing for his time and has to pay for all the infrastructure used to employ him. it's just not the same planet. of course there are pathological cases that are the worst of both worlds: early employees who should be called cofounders, are paid nothing, and do not get meaningful equity. you don't need much trust to be an unpaid intern though.
deleted 13y ago
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by cmccabe 13y ago

logicallee 13y ago

Hi, I'm specifically comparing to the trust required to be a cofounder. I've been both an early employee and a cofounder. The level of trust I needed in my cofounder to enter the business on the terms we did is simply 1000x bigger than the level of trust I needed to start working as an early employee. I mean think about it: you're talking about losing out on the upside as an early-employee, but the salary still comes (or you just leave after 2 weeks) and so does the experience. As a cofounder, nothing "comes". There IS no business. Your assertion that a salary agreement isn't worth the paper it's written on is ridiculous. Even paper isn't necessary: if an early employee didn't get paid at all they would leave almost immediately. it just doesn't require anywhere near the same amt of trust.

cmccabe 13y ago
Well, first of all, your assertion that "if an early employee didn't get paid at all they would leave almost immediately" is just false. I mean if you read the post that started this thread, it's about a guy who went without any salary for 18 months. Admittedly, he did have another source of income at the time from the college, but that's still a long time to go. Personally, I have known employees to go a few months without pay in the hope of seeing the company through a rough time. If you read the article itself, it talks about pilots using their own credit cards to pay for landing fees in a pinch, and couriers selling their watches to pay for fuel. So basically, I would urge you to read the article and the posts you're replying to. I admit that co-founders usually put more money into the business than early employees. But time is also worth money, and early employees put a lot of that in, for not much money up front. I agree with you that the experienced gained as an early employee is valuable. Some of that experience might be getting a better idea for whom to trust in the future :) And with that, I think we've come full circle...
- logicallee 13y ago
  well, you're not ''wrong''. I hope you will agree though that working for 18 months without pay at a startup very much stretches the definition of "employee". (as opposed to "cofounder" or "unpaid intern"). most people who can claim the title of "early employee but not cofounder" here at HN would not say they have gone 18 months without pay in that title or would do so. so yes it's a data point but it's a pathological one. On the other hand, 18 months without pay doesn't scratch the surface of what a cofounder can expect: it's one of the best-case scenarios that anyone could possibly expect! A cofounder would jump at a chance to see liquidity within 18 months of founding a new startup. More typical is more like 24 months absolute minimum, 36-72 months average, and often longer is the norm. And during that time you don't just hock a watch or pay for fuel: most cofounders pay tens of thousands of dollars of their own money, often every month and putting every source of liquidity they can into the business as it ramps up. and more often than not, as sad as all this is, most cofounders do lose 100% of their investment and have nobody to blame, nobody to even ask for a break. they have cliffs, and CANNOT jump ship. WHen a cofounder jumps ship they lose 100% of the entire equity they have in the company. But at the same time, most startups simply don't go anywhere. I would be hard-pressed to find a metric by which the average early employee gets absolutely nothing for his time and has to pay for all the infrastructure used to employ him. it's just not the same planet. of course there are pathological cases that are the worst of both worlds: early employees who should be called cofounders, are paid nothing, and do not get meaningful equity. you don't need much trust to be an unpaid intern though.

deleted 13y ago

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