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Interesting analogy, but I think it's flawed because he DIDN'T start the company. I would say "if you DID start a similar company, would you give the first ran
by brk 19y ago
Interesting analogy, but I think it's flawed because he DIDN'T start the company. I would say "if you DID start a similar company, would you give the first random coder a double-digit stake"?
Then what do you give to the second developer? That guy is likely to do a significant amount of work also. Then you need to hire other key positions. Pretty soon you've allocated 300% of your company. Unless you're starting a hotel in Vegas, that doesn't usually work well.
- davidw 19y ago"The Company" sounds like it's worth nothing without code, though. You'd have to know more about that aspect of it prior to making more precise judgements.
- brk 19y agoI've seen more rounds raised with no code than I've seen raised with lots of code and no business plan/idea. Without more data, it's hard to know what the actual situation is here.
- blader 19y agoWe have enough data to know that the company can't even pay their first employee.
- brk 19y agoTechnically we have enough data to know that the company PREFERS not to pay their first employee.
- sbraford 19y agobrk - while it's sometimes nice to have varied opinions here on News.YC, I can tell yours will be modded down quite a bit. This isn't "Suits News" or "B-school Guy News", it's Hacker News. I would view reading this as more of a learning experience to see how hackers view the world of startups, than trying to convert us to your viewpoint. Just my $.02, and welcome to News.YC!
- brk 19y agoThanks for the info. I hack a fair bit (mostly LAMP, where P = perl). I've created a few apps, both web and desktop, and have built a few various departments for companies, and have hired hackers in the past to work for me. I've been on both sides of this 2% equity "problem". If you guys all want to rally around the idea that the first developer in any startup is worth a double-digit stake based on nothing other than a spirit of camaraderie, that's fine with me, and I'm not offended by being modded down. If you look at my various posts, I never said this guy WASN'T worth more than 2%, but I did say that there are more factors to consider. Anyway, thanks for the info.
- anamax 19y agoIt's not the title, it's the reward for risk and contribution. Right now, it's an unfundable idea. If his contribution makes it fundable, that's significant.
- sbraford 19y agobrk - yup, there very well indeed may be more factors to consider. I'm with several other posters on this one: - 2% + a modest first-developer salary is totally reasonable (some would even consider 2% high here) - 2% + $0 is a fool's bargain indeed Any remotely successful entrepreneur could scrape up at the very least $5-10k to get a prototype working. These potential co-founders sound more like guys with an idea who just want someone to develop it for them (do much of the hard work), while paying / cutting in equity wise very little. These guys don't sound like they can be bargained with, but the developer could ask for $200k in cash compensation if/when the startup gets funded. (doubtful they'd go for this)
- webwright 19y agoThat's why people have vesting schedules. And that's why companies issue more stock (and dilute the early folks).