Comment by carleverett | Hacker News Reader

Comment by carleverett | Hacker News Reader

I am in a very similar situation right now. Near graduation in the spring I joined a start-up I was really excited about as a sort of unpaid intern - I basically offered to help them out free of charge. Unlike the article though, I was not friends with the founders beforehand, I found out about them online. I was their first "employee" however. The two founders and I worked hard towards our product launch in July and it was a great success. Everyone loved the product, and it was obvious that I was now a vital part of the company, even though my title at that point was unpaid intern. Afterwards I brought up compensation for the first time. Knowing they wouldn't be able to afford a salary, I pitched 2% a month of equity for a year, ending with 24%. The problem thus far is that our product is a small airplane (gasp not tech!), which costs $55,000. Despite the tremendous positive feedback we've gotten on the plane, no one has pulled the trigger in the month since our launch (not a huge surprise since our financials have us starting out at 1 sale a month for our first year). It is enough however to make the two founders wary of how much equity to give as they have absolutely no clue what the current value of the company is.

Our current deal is that I'm given a monthly stipend for a few months while we process some sales and get a better idea of what the company is worth, so that I can be compensated accordingly.

I've been wary so far of considering myself a Co-Founder, since I took no part in the original idea or the funding for the company. From what this article is telling me though, I should absolutely be considering myself a co-founder.

If this is the case, how much should I push for in terms of compensation? Is 24% a reasonable number to go after considering the facts? I'm trying to look out for my best interests but honestly just have no idea what I'm doing. Any advice from HN would be greatly appreciated.

Thanks for the article.

Ouch. I hate to say this, but your co-founders are scr~~ing you. They're putting you in a holding pattern waiting for the company value to inflate, and starting to give you a pseudo-salary to muddy the water, so that they can claim that you're just an intern-turned-employee whose salary is lagging given the slow sales.

Why did you pitch a 2% equity per month deal? You clearly don't have anything left to prove - you've already demonstrated your value and commitment to the project, not least by working unpaid.

I would negotiate hard for 33%. It's on your co-founders to give reasons why your share should be less - and here I would only accept hard contributions from them (e.g. cash they contributed to the business, additional months they spent on the concept), not soft contributions like "ideas" or "contacts".

Good luck!

Given he started later - only in the Spring (he found them when they already existed and they launched in July so they must have made it quite a long way before he arrived) a lesser share seems reasonable especially as to make something someone will have needed to put up real cash in addition to free effort.

But you are right that he should push for a response.

The other thing that seems to be missing from all these founder/first employee discussions is the level of influence over business direction and strategy. Some people may not want these responsibilities but others would relish the involvement.

If you joined before the prototype of the product was built, and you worked full-time, you are a cofounder.

Also, what's this company? Small aeroplane sounds exciting compared to HN's usual "next best todo app".

http://www.skycraftairplanes.com - we're just selling kits now but we're pushing on being certified to sell ready to fly by this winter.

What does a late-coming co-founder expect then in terms of equity in a typical company? Clearly I don't deserve 1/3, but I'll be my salary will be restricted to whatever minimal amount the other founders and I can survive off of until the company grows up.

No offense but I'm not sure posting this on HN under your own name is the best approach. You are, after all, discussing intimate business details. Maybe you could get it anonymized?

CEO's join companies after they've been around for years to earn valuable sums of money for the skilled work and long hours they put in. It motivates them to turn around the company. It's not about the % they earn it's about the return they get.

You deserve just as much motivation as they do for the sacrifice you're making and asking less than 1/3 is wasting your time. The worst they can do is fire you so you can make more money. That's when you start your own clone if you didn't sign a non-compete contract. And if you did, work for what you deserve elsewhere until it ends and then invest all your newly earned savings into building the better product.

I don't think you know nearly enough to make that claim. You don't know what value each party is bringing, or their roles, and you don't know how much was done before OP joined. You don't know if the business has any particular strengths.

Assuming significant work was done before OP joined, equal equity is not realistic (or fair). Also, are the others taking any money out (i'm guessing not?). There can of course be some value in ideas and traction (although AFAICT there isn't a lot unique nor is there a lot of traction). Moreover, i'm guessing most big decisions are not made by OP since he seems to be relegated to employee. Only if OP feels they are crucial and replaceable should he go for 1/3 (or more). From the little i know, 20%+ would be a good aim. If you think you can do better elsewhere (that is, you don't believe the business has unique strengths) then consider that.

wow there are a lot of things i'd do on a budget but flying isn't one of them (i'm very risk averse by nature)!

It really is refreshing to see a non-web start-up mentioned here on hn. Well done to you guys and I hope the negotiations pan out for you.

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