I’ve been bumping around the startup world for a while, and most startups I’ve seen seem to have (amongst other things) two things in common:
- A lack of money
- An inability to, reliably, hire good quality developers
This means that, for startups, the ideal hire is someone who is free – where they can wait until they’ve both raised money and found out that the hire is worth his price tag.
When (if ever) is this a win win situation? For you, as a programmer or software developer, when would this make sense?
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When (if ever) is this a win win situation?
About the only time when it would make sense is when all of the following is true:
- You are a co-owner with a double-digit percentage stake in the equity of the company
- You have other means to sustain yourself and your family for at least a couple of years
- You love the idea behind the start-up, and you see a clear path to its profitability
In all other cases, reading a good book is a better way to spend your time.
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Working for free is OK if the purpose is for charity.
If the purpose to is to make someone else wealthy then it’s never OK.
If you are being paid with ownership of the company, then I don’t consider that working for free. Despite the high chance you won’t make any money.
“When (if ever) is this a win win situation?”
Never. Never, ever, ever, ever, ever.
Your time and skills are worth cold, hard cash. Odds are, you and your coworkers will spend way too many hours writing a bunch of crap code “just to get it out the door”.
Once it’s out the door, the company is in make it or break it mode.
Once its in that mode, it’ll most likely break.
If it breaks, you’re SOL for payment.
If it makes, you could still be SOL for payment.
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The only reason to do that is if you are one of the founders (or are getting as much out of the deal as a founder).
You are taking the same risk you need to be in a position to get compensated appropriately for that risk high risk high reward.
Your ability to live off oatmeal may affect your ability to do this effectively though 🙂
Yes, I would do that if
- I could live by other means.
- Would give me some experience that I could cash it out later (internship mode).
- Could not find any other employment.
- most important: Got equity.
If you cannot be paid, or compensated, then the startup founders should give you equity. Also in order for this to be meaningful (because first employees can make or break a company), you have to be fully aligned with their vision and strategy.
Never work for free.
As previously mentioned, make sure you get equity – real equity, not options.
My conditions for working for equity only:
- I can support my lifestyle without cash from this job
- Will I be learning anything that will be useful to me later in my career (not just technical skills, but soft skills too)?
- Do I believe in the founders? Make sure you fully check-out their backgrounds. Meet them at least three times before committing. I’ve met plenty of these dreamers who can talk a good game up front, but generally within three meetings I’ve been able to tell the ones who are legit from the talkers.
- Do I believe in the product?
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Of course, this is very subjective, each of us will have a different opinion. This is mine. The only situation I find that you will be in a win win situation is when you feel the project as yours too, and this means that you like the idea, you like the company, you like its values, but also you participate on decisions, on defining the company, its strategies etc. At last, that means that you are a partner, and that you probably own part of the company. At last, you are not working for free, because you are paid with shares of that company, that if it is succeful, might be worthwhile.
If you work for free, just to get the opportunity to get a job in the future, I don’t think that is fair to you, even if you just want to build portfolio.
When you are accepted, treated and empowered in a comparable way to one of the original founders.
I’d probably expect an ownership share of no less than half of the largest shareholder.
When (if ever) is this a win win situation?
I would like to add-up to already suggested reasons when it is reasonable to work for start-up:
It would make sense to work on a start-up only if you have clear understanding of business model and want to gain experience how to run such start-up.
In another words, learning for free while being partially engaged with this project is also something that you would only gain.
However, this advice is only for a relatively newbie developer and may not work for everyone.