7Figures2Commas

It goes to show how much the investors know these days.

I offered similar thoughts when Dating Ring first launched:

YC's public persona is all about "hyper-growth" and building "very large" companies[1]. But if you go through the list of companies it has funded, a good number would have a very difficult time making a prima facie case that they fit the profile of a business that can achieve significant growth and scale. Dating Ring is the perfect example of that.

There are numerous challenges associated with breaking into the online dating space generally. First, the costs of customer acquisition are typically quite high because there's so much competition. That makes it very difficult for new services to gain traction without significant investment in advertising. Second, there's an additional level of churn built in to this market because when a dating service works, it loses customers. That produces a constant need for investment in the aforementioned user acquisition which is so costly.

More specifically, Dating Ring seems to be positioned in no man's land (no pun intended). It can't compete with the quantity and immediate gratification of online services that cost nothing or roughly the same, and it can't compete with the quality and exclusivity of matchmaking services which generally have costs signaling much higher value.

If the OP's comment is true, Dating Ring would ironically appear to be offering the worst of both worlds by trying to package users from the former as part of a service masquerading as the latter. Even with adjustments to its model, the odds that this company ever achieves "hyper-growth" or becomes a very large business are next to nil.

[1] https://www.youtube.com/watch?v=CBYhVcO4WgI

None of this means that the founder hasn't experienced sexism, but she seems far too eager to ignore the inconvenient fact that some early traction and an impressive team don't necessarily mean you have an investable business.

What's behind the dream of colonizing Mars? Insane real estate prices on earth.

Have you done anything about this?

Second, the mainstream media tends to exaggerate when writing about financial products. A $479 million bond backed by rental payments? If you're going to lose sleep over that, are you going to lose sleep over Tesla's $2.2 billion in debt, which was rated junk by S&P in 2014?

Third, a lot of discussions around Wall Street are presented in a false us-versus-them fashion. Blackstone is publicly-traded. You can buy shares of Blackstone stock and collect a ~6% dividend if you so desire. You can invest in pure-play single family home renters like American Homes 4 Rent and Silver Bay Realty Trust, which are also publicly-traded. American Homes 4 Rent even has classes of participating preferred stock that give shareholders the ability to profit from appreciation in the value of the company's portfolio of single family residences. Too risky for your taste? You can bet on the rental trend by investing in well-established REITs like Equity Residential and Avalonbay Communities, which own lots of apartments and pay ~3% dividends.

Finally, you insinuate that Wall Street is placing risk on the American economy, but the inconvenient truth about the last real estate bubble is that many Americans were just as deserving of blame as Wall Street and government agencies. Lots of people bought houses they couldn't afford based on the assumption that prices would continue to rise. Lots of people used their home equity like a piggy bank. Liar's loans? You can't have a liar's loan without somebody willing to lie.

Bottom line: there was plenty of greed in all corners of the housing market and while people who didn't do anything wrong did suffer, it's intellectually dishonest to pretend that everybody who lost a home was a victim.

What's funny is that small and mid-size businesses that Silicon Valley looks down on can generate IPO money.

Founders, senior management and investors can make vast fortunes when companies go public, but "IPO money" for rank-and-file employees is typically in the six and seven figures, and that's in best case scenarios.

A lot of small businesses generate net profits of six and seven figures annually. My SO's uncle, for instance, makes over a million dollars a year running a services business. So every year, he's banking more than many employees will make in one-off IPO windfalls. There are tons of business owners like him in this country.

The reality is that it's difficult to be a happy employee if you're not a happy person. Unfortunately, our society is filled with people who either don't spend enough time working on their own happiness, or who pursue happiness in the wrong ways.

Employers can create great environments for their employees, but an environment is only as happy as the people in it.

The bursting of the current tech bubble will come when other, larger bubbles burst. You should be concerned about those other bubbles.

Another challenge is that true fitness requires you to push yourself in different ways. Far too many people work out in a one-dimensional fashion. It's easy to jump on a treadmill or do the same free weight exercises day in and day out. But there are real limits to what most people can achieve without a well-rounded plan. One-dimensional workouts are why, for instance, you have guys walking around with impressive biceps, pot belly stomachs and chicken legs, and who can't do 10 minutes of moderate intensity steady state cardio without huffing and puffing.

I believe this is accurate, but the cynic in me says the obvious solutions by in large aren't going to be adopted.

1. The idea that a balanced diet that largely avoids processed foods is likely to be most healthy is logical, but it's not very sexy. More extreme Diets (note the captial "D") gain mainstream popularity because they are usually based on a seemingly compelling narrative. Paleo, while hardly the worst Diet that has been popularized in the last decade, is a good example of this.

2. The reality is that most people aren't going to exercise an hour a day and maintain a healthy diet[1]. There's also the issue of how the average person exercises. While I wouldn't suggest that everybody jump into HIIT or train like a professional athlete, a lot of what you see in a typical big box gym is the fitness world's equivalent of processed foods: people aren't getting a whole lot out of what they're doing. There's not enough intensity, far too much emphasis is placed on isolated/non-functional exercises, etc.

[1] http://www.washingtonpost.com/posteverything/wp/2015/05/15/t...

Or it could be that he really does want to spend more time with his family. Gasp.

As for the salary, ask yourself: how long will this company be able to make payroll with nothing more than "car money"? The all-in burn on you alone will be in excess of $11,000/month. Even if you assume that the four other roles are filled with folks who will work for peanuts (not likely), it doesn't sound like the company currently has more than a half a year of runway, and that's probably being generous. For all you know, the founders, who you say have full-time jobs, might be putting money into the company on an ad hoc basis and could bail after a month if they lose interest.

Frankly, in my opinion, barring some major details you've omitted, this offer sounds like you're being told you won the lottery but have an incurable illness and two months to live. The fact that the founders are still employed elsewhere, aren't being forthcoming and have audacious, unrealistic expectations about valuations and exits before they even have a product are huge red flags.

That's not entirely fair. If the investor had been told there was a team in place, and relied on this in making an investment decision, a co-founder leaving is a material event that the OP has an ethical if not legal duty to disclose. This is especially true since none of the money has apparently been spent.

> Going from original 4k/month 1099 towards 11k/month W2. 1% equity on both offers.

> Equity vests fully at the end of the 3 month contract, they claim it's not common stock. Company believes in valuation of 30 to 150 million (I am unsure).

1. Adding your $11,000/month salary on to exiting burn, how much runway will the seed funding last assuming no additional funding? Your salary means nothing if the company is at risk of not being able to make payroll in 3 months. If you think that startups don't take on financial obligations they're not sure they'll be able to meet in order to get something they need now, think again. It happens all the time.

2. A company with seed funding talking about a valuation of $30 to $150 million is insane. You would be wise to ask what the company's last 409A valuation was. That's the only valuation that really matters to you at this point.

3. I would be wary of a company offering 1% equity vesting fully in 3 months, especially to a contractor or employee earning market rate. It's not typical and will be looked at very unfavorably by prospective investors.

4. It would be highly unusual for a company to offer you anything other than standard options. Not only would an outright grant of stock likely create tax implications for you, such a grant would likely be seen by investors as hair on the deal in future financings.

A lot of what you've stated is atypical and you should ask for an offer in writing so that you can confirm the terms and review them with trusted counsel.

"Fire lit under your ass" doesn't mean "work 16 hours a day." If you want to succeed, you should be focused on producing and maximizing the right outputs, not measuring time worked, which is simply an input.

> I am always of the opinion that if you're not willing to put in a ton of hours, there's someone just as smart and focused at you that is.

That might be true, but can you recruit and retain those smart and focused people? In today's market, the talented and experienced have options. Unless you're offering top-notch salary and benefits, chances are you're not going to be able to retain and recruit the best people while demanding they live in a constant crunch mode. They don't have to subject themselves to this to earn a good living.

> Both my employee and I feel incredibly lucky to be working on something that we both really believe has a chance to succeed greatly, and it is so much a part of our lives that when we're not at work we're thinking of more ways we can improve our product. When you're that deep into an idea, be it a business, hobby, love interest, etc., the amount of time you spend on it always seems like not enough. I think people bristling about long work hours are doing so because they haven't found something that makes them feel this way.

Is it not possible that people bristling about long work hours are doing so because they have other interests in life besides work?

While your earliest employees should drink a little bit of kool aid, as you scale a company you can't reasonably expect your employees to be as invested as you are. And you should be mindful of the fact that the people who provide the level of dedication you seem to be looking for are often the ones who burn out and become the most disillusioned and resentful when you hit the inevitable bumps in the road.

Apple, Google, Amazon, Samsung and Visa can't develop their own variable rewards systems?

While there absolutely are startups offering unreasonably low wages, there are also a good number of startups where relatively young engineers with just a few years of professional experience are being paid well into the six figures annually.

A lot of the complaints about "poor compensation" are misguided and based on unrealistic salary comparisons. Just because Company A has salaries 50% higher than Company B doesn't necessarily mean that Company B is offering "poor compensation."

> Based on the recruiting contacts I get, there are some startups with massive amounts of cash in the bank that are still stingy on the salaries but will go on and on about equity even when they've raised several rounds at ever-higher valuations.

So you'd prefer to go to work for a company that isn't increasing its valuation?

If you think that a company's valuation is far too rich, by all means discount the equity you're offered. But also consider that your ability to predict a company's future value might not be very good. How many people claimed companies like Facebook and Twitter were already overvalued years before they went public? I'll readily admit that I'm guilty of this.

> But, fortunately, there are also others that are starting to be willing to pay more cash at earlier stages. I'm far from convinced that this is a bad thing.

That's great, but be mindful of how this affects runway. Such startups, if they don't hit the milestones required to get to the next round of funding, may not be able to continue paying you for very long.

Notwithstanding the fact there are companies that under-invest in their employees, you make it sound like engineers are being forced to try to maximize compensation.

The reality is that compensation varies, and the differences can be quite pronounced in the technology industry. A startup with minimal revenue and $1 million in funding probably isn't going to be able to compete with Facebook or Google on salary and benefits. Expecting it to is like trying to get blood from a stone.

There is nothing wrong with trying to maximize your compensation at the cost of everything else, but if that's your approach, you need to live with the fact that you will almost always have better opportunities somewhere else. Constantly lamenting the fact that your current employer can't pay you as much as another employer can is no way to live life.

Incidentally, in my experience, a lot of people who allow their job satisfaction to be based entirely on a perception of relative compensation are never happy no matter how much they make. They constantly find ways to convince themselves that they could and should be making more.

Answer: trying to get a real product to market successfully requires a lot more than small scripts that automate processes.

It's not that automation and the like doesn't have value, but ask the average developer to get on the phone and sell something, or to have a meaningful conversation with a customer, and you might start to understand why other people in an organization (salespeople, product managers, etc.) have some sway too.

If you simply put a bunch of talented developers in a room, chances are you're not going to end up with a successful business.

If the OP now believes he's underpaid and wants to look for greener pastures, he should consider that he doesn't need to join the client company to find them.

[1] http://www.theiplawblog.com/2007/12/articles/trade-secrets/c...

That's the everyday misconception. Nobody produces wealth just by typing at a keyboard. Products don't design and sell themselves and it's arrogant to pretend that product people and salespeople aren't a huge part of the value creation process in tech.

There are of course developers who are capable of identifying a market opportunity, conceptualizing a product to exploit the opportunity, building the actual product and getting it into market successfully.

But if this is common, why are so many talented developers sitting at desks in open office spaces working 10-12 hours a day for low six figure salaries?

[1] http://www.marieclaire.com/sex-love/advice/a5380/millionaire...

There are a number of perfectly reasonable questions prospective startup employees can and should ask that will give them the information needed to run their own exit scenarios. For instance, "What percentage of the fully-diluted outstanding shares does my option grant represent?" is always a good question to ask.

A prospective employee who demands that the company guesstimate how much he or she might make under random acquisition scenarios occurring at some unknown date in the future will stand out as being inexperienced at best and unreasonable at worst. Furthermore, no hiring manager can ethically meet such a demand.

In this case, the OP is already employed by the company he's negotiating with and it sounds like he's the one asking for equity. To request equity that hasn't been offered and then demand that the company prove it has value is a particularly awkward negotiating stance. Ostensibly he's asking for equity in the first place because he thinks it might have some value.

As a prospective employee, if you fundamentally believe that the company's latest 409A valuation is already too rich and equity is important to you, don't join the company.

Here's a different perspective for you to consider: most founders or hiring managers at early-stage startups don't have the ability to convince a reasonably skeptical person why the company's equity will ever be worth anything. It's basically a matter of faith. Most startups aren't going to have an outcome that delivers wealth to employee shareholders. You either believe that the company has the opportunity to defy the odds or not.

You say you are learning a lot, will have a good deal of responsibility and like your co-workers. In other words, it sounds like you're pretty happy and pleased with the prospect of continuing your employment with the company. A lot of people, even those who have maximized their compensation, are unhappy in their jobs, so you have something money can't buy.

This doesn't mean you shouldn't protect your financial interests and ensure that you're fairly compensated. But ask yourself what you stand to gain or lose from taking negotiations down a path that will ask your employer to convince you that whatever equity it offers you could be worth something.

The most important part of any negotiation is to determine what it is you want and need. Far too many people fail at negotiations because they don't do this. As a result, negotiations become focused on things that don't matter. You might win such a negotiation, but still come out a loser.

You like the idea of minor equity stake, ostensibly because you want to feel invested in a business that you're excited to be working for. If that's the case, you could do a lot worse than to pick a number, and tell your bosses you're really excited about the company's prospects and want to feel invested in its success. Chances are you'll have a far better outcome than putting your bosses on the spot and demanding that they predict the future.

First, very few startups can accurately tell you "If we're acquired for $50MM, your options would be worth $Y." Heck, for fun, ask a founder of a typical angel or venture-backed startup how many shares it has outstanding fully-diluted.

If tons of startups struggle to describe what their capital structure looks like today, why should prospective employees rely on them to make estimates based on what their capital structure will look like months or years from now? Dilution, liquidation preferences, the option pool, acceleration terms. There's so much that can't be predicted or controlled, so asking a company to come up with exit scenarios for specific employees is like asking a blind man to read tea leaves.

> The other way to do this is just to value equity at $0.

At most early-stage startups, this is the correct approach to dealing with equity. There are very good reasons most vested employee options are never exercised.

This doesn't mean that the OP shouldn't ask for some equity, but focusing negotiations around basis points of equity and trying to assign a future dollar amount to equity is generally a bad idea for the average employee because it opens the door for treating equity as a 1:1 (or close to 1:1) substitute for salary, which at early-stage startups it is not.

If an early-stage startup wants to offset your cash salary with equity, try this: ask for $50 to $100 worth of equity for every $1 of salary offset. How the company responds will likely tell you a lot more about its future than if you ask what it guesses 1 option will be worth 4 years from now.

Be careful what you wish for. A company without management is like a boat without a captain. You might appear to be fine for some time, but eventually you'll be hopelessly adrift at sea.