4 ms·

Again, where do you get the "same risk" from? Edit: and I know we are both comparing anecdotal experiences, not asking for a repeat of that, I'm asking specific

by wdewind 12y ago

Again, where do you get the "same risk" from? Edit: and I know we are both comparing anecdotal experiences, not asking for a repeat of that, I'm asking specifically for yours (or an expansion on your point of view). > It's simple math: the equity a founder gets is paid for with less cash than your salary downside as an early hire. I'm not sure why that matters. To me the only thing that matters is my salary downside vs. interest I could be making on a larger salary else where. I might be misunderstanding what you mean though.

jacquesm 12y ago
The risk that the company folds hits the early employees just as hard as it hits the founders. Founders don't typically provide a whole lot of capital. Three guys meet in a room somewhere, hash out an idea, assign themselves CEO, CFO and COO, plunk $1000 on the table each, call each other 'founder', then get some funding and then hire you to implement their vision. Their risk is just about the same as yours, only you get to share - if you're lucky - maybe in 1% or so of the success (assuming you don't get screwed somewhere along the line) and in 100% of the failure. And if you're in for a profit share the odds are even worse. If you're good enough to be engineer #1 you're good enough to be a co-founder.
- wiredfool 12y ago
  On the other hand, as engineer #1, I didn't personally guarantee any debits of the founder, nor was I the one the IRS was after for years for not paying payroll tax when money was tight.
  - jacquesm 12y ago
    That sounds like a very bad company to work for. Debts of founders are not guaranteed by the employees for a good reason (even more risk without upside), founders that go into debt in order to finance their start-up and put up personal guarantees are obviously in a different class than founders that externalize all or most of the risk. If the IRS goes after founders for not paying payroll taxes when money is tight then they more than likely have a reasonable cause to do so. I've seen one such case up close and I didn't fault the local tax arm one bit when they decided to go after the founders. After all, if you allow founders enough leeway to pass the risk of their business on to society then they will take even more risk. Better to fold than to not pay payroll tax, or, alternatively, talk to the tax man and see if you can work out some kind of a deal. Simply not paying is illegal and will get you in seriously hot water. As an employee you are insulated from that but that's simply bad business and bad management and nobody forces anybody to do such things.

by wdewind 12y ago

jacquesm 12y ago

The risk that the company folds hits the early employees just as hard as it hits the founders. Founders don't typically provide a whole lot of capital. Three guys meet in a room somewhere, hash out an idea, assign themselves CEO, CFO and COO, plunk $1000 on the table each, call each other 'founder', then get some funding and then hire you to implement their vision. Their risk is just about the same as yours, only you get to share - if you're lucky - maybe in 1% or so of the success (assuming you don't get screwed somewhere along the line) and in 100% of the failure. And if you're in for a profit share the odds are even worse. If you're good enough to be engineer #1 you're good enough to be a co-founder.

wiredfool 12y ago
On the other hand, as engineer #1, I didn't personally guarantee any debits of the founder, nor was I the one the IRS was after for years for not paying payroll tax when money was tight.
- jacquesm 12y ago
  That sounds like a very bad company to work for. Debts of founders are not guaranteed by the employees for a good reason (even more risk without upside), founders that go into debt in order to finance their start-up and put up personal guarantees are obviously in a different class than founders that externalize all or most of the risk. If the IRS goes after founders for not paying payroll taxes when money is tight then they more than likely have a reasonable cause to do so. I've seen one such case up close and I didn't fault the local tax arm one bit when they decided to go after the founders. After all, if you allow founders enough leeway to pass the risk of their business on to society then they will take even more risk. Better to fold than to not pay payroll tax, or, alternatively, talk to the tax man and see if you can work out some kind of a deal. Simply not paying is illegal and will get you in seriously hot water. As an employee you are insulated from that but that's simply bad business and bad management and nobody forces anybody to do such things.