Ask HN: What do developers want from an equity-only job?

https://news.ycombinator.com/item?id=483605

by JayNeely • 17 years ago

33 43 17 years ago

news.ycombinator.com

Hey everyone,

The startup I do marketing for is looking for a Ruby developer, to take the lead from our freelance team that wrote the alpha. What aspects of the work, the team, and the opportunity should we be emphasizing the most to overcome hesitancy about taking an equity-only job?

As lead developer, it's a core team position with strong influence on tech decisions and a say in who else we hire. It's challenging, important work at a still-young Boston startup (one with a strong core team and advisory board where every member is working only for equity for the next six months). We know that the right person is out there, but what should we be saying to attract them to this opportunity? You can see our current job post at http://bit.ly/oEKO if you want, but we're thinking about completely re-writing it.

What aspects of a similar role, team, and opportunity are important to you? What would make you want to work for equity?

tptacek6• 17 years ago

The other word for "equity-only job" is "founder".

vaksel• 17 years ago

not with the requirements they are asking, which tells you that the equity stake will be some measly amount

    * Have at least 1 year of experience with Ruby / Rails.
    * Have experience with MySQL and JavaScript
    * Enjoy working in a startup environment

tptacek6• 17 years ago

Oh. The other title they might be looking for is "sucker".

JayNeely2• 17 years ago

The requirements aren't an indication of equity, at all. We're looking for someone who's skilled, not necessarily experienced. Room to grow and a chance to prove yourself is one of the opportunities a startup offers, after all.

pclark3• 17 years ago

do you mean equity online = no pay?

fallen6• 17 years ago

pretty sure he means equity = no pay now = partial ownership of the company = more pay, more control later

pclark3• 17 years ago

assuming they get revenues/funding in the future.

pclark3• 17 years ago

err,

# Have at least 1 year of experience with Ruby / Rails. # Have experience with MySQL and JavaScript

If you're really seeking a lead developer - I'd change that to at least 5 years of developing web apps, with around 3 in ruby.

fallen6• 17 years ago

maybe my mistake, i went from engineering founder to "lead developer" as that is my role in my 9-5. i imagine that they are looking for a founder who runs the engineering side of the house, not just a lead dev. the positions are probably similar, but not he same.

gaius• 17 years ago

There are people around now who can legitimately claim 15 years professional web experience. This isn't the 1990s - the bar to claim to be "experienced" is as high as it ever was in the pre-web development world.

mpk2• 17 years ago

> If you're really seeking a lead developer - I'd change that to at least 5 years of developing web apps, with around 3 in ruby.

Oh pfffff, I say.

If you're hiring someone to do something they've already done before, you're missing the point.

We took on a Haskell programmer to lead our C# development side, a network hacker to lead our JavaScript work and a (CS) student to lead our Java application server side.

I strongly suggest you re-define what you're looking for in a 'lead developer'. Ability, talent, enthusiasm and team-management are high on my list.

kaens2• 17 years ago

Well sure, but it seems to me that if someone is already competent in haskell, or has done some serious networking work on their own, then they've already demonstrated that they're worth hiring, and that they'll probably be able to work with whatever you need them to.

This is different than looking for someone with 1 year of experience in ruby. The combination of short amount of time and some conflation of ruby and ruby-on-rails in the general populace could lead to a whole lot of incompetent (or inexperienced enough that it would drag the whole project down) devs being attracted to the job.

That is not to say that I think that 5 years of experience developing web apps and 3 in ruby is much of a better metric - as you said, (demonstrated) ability, talent, and enthusiasm are much more important than x years in y.

fallen6• 17 years ago

i am a lead developer on both projects on which i get paid a salary (my 9-5) and on a number of projects that i work for equity (the rest of the time).

for me, between the two positions, as a lead developer, my roles and responsibilities are pretty similar. i have influence over the hiring, the design, technologies used, engineering, timelines and deliverables.

therefore, the things that would attract me to an equity position is an inspiring team, an inspiring team leader, and a strong sense that we will succeed after having met and talked to the team. and not just success ten years later, but success within the stated timeline of startup. i hate release delays like i hate long meetings.

tptacek6• 17 years ago

Curious: has any part-time project you took for equity ever come close to panning out? Have any of them totally cratered? Have you ever gotten screwed over?

fallen6• 17 years ago

two have cratered, two are in the process of "working-out" and look promising if slow. one happens to be my own pet-project of many years, so i am the equity. never been screwed. you?

ryanwaggoner3• 17 years ago

When I was doing freelance development, I had about one pitch per week for an opportunity like this. I never accepted, even though a lot of the ideas and even teams sounded solid. There were usually several reasons, but they boiled down them not offering enough equity. These "startups" were almost always pretty-non-technical founders offering 1-2% premoney for a "lead developer" position. In my view, the very fact that they felt that the technical development of a web startup was only worth a couple percent spoke volumes.

My advice: if you're looking for a skilled lead developer for a software startup, consider them an equal founder and split the pie accordingly.

lbrandy• 17 years ago

Here's my initial concerns, reading your post and reading your posting on craigslist. You need avoid looking like a business guy with an idea (and without a clue) looking for a coder. I'd work very, very hard to avoid that because technical people will avoid you like the plague.

1. How many other team members are there? This is a website we are building, right? What are all these other people doing to earn their equity? Am I the only technical person? Be honest, how much would I -really- need your non-technical staff to build and run this site on my own?

2. Why am I not a founder? Why is this a "job"? Do I have a boss? Who is it? Why do I need one? Can I be fired?

3. If I am the only technical person, do I have full control of the technology? If I tell you that going with Ruby was an awful idea, are you going to listen? If you are, I really should be the CTO. If you aren't, then it sounds like I have a boss.

4. How much equity are we talking about? Do you think you can get a "coder" to build your website and add your features for a few % equity? Do you guys really understand how much you need a technical person? Or am I going to be viewed like an employee by a bunch of business guys with an "idea"? Are coders a commodity to you?

5. If I was taking an equity-only job, it would be for founder-level only. Anything else, in my mind, would be silly. If this is -not- the case, you need to make it extremely compelling and work very hard at avoiding all the pitfalls, because you are already fighting the most difficult uphill battle there is.

ETA: it took me awhile to write this, but even now, you'll see alot of posts by devs already "raging" against this concept as a bunch of "business guys" who appear to be severely underestimating and undervaluing technical contributes whilst simultaneously overvaluing their own contributions. If this is -not- the case, you have to work extremely hard because that's going to be the default position all technical people take.

swombat5• 17 years ago

And that boss is the CTO. If they're not qualified to be a CTO, then I would run.

fallen6• 17 years ago

if that is the case, then it should be clear in the job posting whether you are the CTO, software architect, lead developer or just an unfortunate code monkey at the bottom of the heap.

netcan• 17 years ago

The points made above are the common ones when relating to these sorts of issues. What is often missing (it seems to me) is any points relating to scale.

How old the company is. What are there chances of success? Have they taken investors? If so, wouldn't there be a valuation of some sort?

I know that these are not easy questions to answer. But none of those above questions really allow you to equate a salary to this job. Maybe another question is appropriate: "If this was a salary only job, how much would I be paid?" I guess you value that in equity somehow. multiply by something to account for the risk. Employees are at more risk then investors.

Actually it's very interesting reading the reactions on this thread. (a) We have hostility to the very concept. Seems that just considering it is a sign of disrespect. (b) We have a lot of accusatory questions relating to the respect & prestige of the position. Even questions of equity seem like a proxy to respect. 'Why am I not a founder?'

In the absence of a salary, they are not concerned with receiving a fair substitute for salary. They are concerned with the other issues.

swombat5• 17 years ago

In the absence of a salary, they are not concerned with receiving a fair substitute for salary. They are concerned with the other issues.

That's because "working for equity" is exactly the same as "working for free". Equity has no value until the company has proven itself. If you were working for a company that said that you have a 95% chance of not getting your salary, and a 5% chance of getting your salary 2 years later, you would consider that working for free.

If you accept the idea of working for free (which many of us founders do), then it's the other things that matter.

raffi• 17 years ago

I worked with one startup on an equity only basis, and it didn't even finish getting started.

Here are some of my thoughts on what you're asking:

1. You are a startup that isn't even started yet. No matter how many pieces are in place, there are many opportunities for it to go wrong. Remember this when you expect someone else to invest into your vision. The risk/reward should be there.

2. Consider starting someone out working in a low commitment/low risk way. i.e. take someone with potential and pay them to do some stuff. This will make it easier to recruit this someone and give them a chance to find out how they like working with you and if they buy into your vision.

The startup I did some consulting for consisted of people I already knew and I felt they had a pretty solid model. Overall though it hasn't "started up" yet because they got in their own way.

3. Consider giving away equity for a very well scoped deliverable. With the startup I worked with, I took a small slice of equity in exchange for working with them to create a product functional specification and to deliver on that spec as-is. I liked this arrangement because it limited my commitment to them and they liked it because it tied my slice to a deliverable.

Overall it comes down to this: let them date you before deciding they want to marry you. Don't go on a first date expecting it to turn into marriage.

P.S. for your job ad, this analogy carries over there as well. Emphasize what you bring to the relationship and less about the expectations you have from them.

Good luck!

theBobMcCormick• 17 years ago

IMHO, the thing to consider is that anyone worth bringing in as the technical lead for a startup that's in as early a phase as your seems to be would ALSO be someone who's quite capable of starting their own startup. You need to be able to explain to your candidate why they should bust their butt without pay on your startup, instead of working on their own startup. As many others on this thread have pointed out, offering a full founder/CTO position should do it.

wehriam• 17 years ago

There are two types of people who would attempt to work full time for six months without a salary:

1) A well established developer (read: savings and connections) who would likely request a "founder" level of equity, perhaps even a plurality of shares.

2) A junior developer (read: recent graduate) who may not have the technical acumen to "understand the big-picture, make strategic recommendations for technology decisions, and guide other developers." Further, he may not have the resources to live for six months without a salary.

I don't think these are necessarily bad situations, just that your goals seem unrealistically high.

To answer your question, I would work for equity if I had an expectation of a market rate salary within a year and a large payout (5-10x yearly salary) within three years. The idea would have to be stellar with a dream team of co-workers. In particular I'd look for access to capital and marketing prowess.

mpk2• 17 years ago

"Equity only" sounds like "work for nothing".

Everybody has to live off of something.

Offer a salary that'll cover rent + noodle money and you'll see a lot of positive responses if you throw in some equity. Or maybe even if you don't.

A lot of developers are willing to live on the absolute minimum for a while if you pay them enough to cover rent and food.

Equity is a strong motivator, but it's not even half as strong as the need for food or the fear of losing the roof over your head.

If you want a talented developer to hop on board you have to make sure you can cover his/her basics.

kaens2• 17 years ago

This is exactly the reason that I turned down equity-only offers while I was freelancing after being on the down-and-out for a while. I was not in a financial situation where I could work for equity, I had bills to pay, and barely enough money to do so.

I eventually found a very good client with a very good idea, and am now working for a "pay the bills and save a little as well" salary + (a fair amount of) equity, which should work out really well - but before that, every offer for equity that I got was from someone that either couldn't afford to pay my bills while waiting for their idea to come to fruition, or just had a "ooh like a myspace/twitter mashup!!" flop of an idea.

If your idea is good, there are a lot of competent programmers who will work on it if you can keep a roof over their head and food in their stomach. Hell, I would live on someones couch or spare room (hence just food costs) while working on their idea if it was a really good one and I got along with them (I imagine I'm in the minority here).

motoko• 17 years ago

Jay,

What people are trying to communicate is that they don't judge that you are offering value. It's a possible and valid answer to your question that you have to consider: that you ad is good, but your opportunity is bad.

That doesn't help you launch your business, so how about this:

What you seem to need to do is pay a contractor to build you a web application you have designed.

Think of this as building out an empty strip mall unit into a cafe for fulfill your dream of owning a coffee house. You have a general idea, and with your good credit, you can lease the space, but you need somebody with skills and experience to do the build out: build a bar, install coffee machines, plumbing, electric, internet, interior design, funishing... etc.

Assume you have plenty of cash and some rudimentary experience outfitting commercial real estate. Then this is straightforward: you request bids, hire a contractor, they do everything you want, you pay them, and cafe business is entirely owned by you. When the contractors are done, they are gone, though you are always welcome to repeat the process of you paying them for new work to maintain or expand your business. You will probably learn something about negotiating contracts based on over-optimistic sales projections, but oh well, that's life.

So, this will be your general experience if you hire a web application contracting firm.

But what if you don't have the money to hire somebody to do the work, and you can't do the work yourself? Now you are in troubled territory for which there is no MBA formula...

This seems to be you. Here are some example scenarios, still following the cafe analogy, that could work and have respectable expectations of success:

* You work with your family or very best friend who can help you do the work because they love you. They get some equity, but it's "your" business, and they respect that. Maybe the cafe goes on to be part of the family business.

* You save your money until you can pay somebody to do the work.

* You get a small business loan from the bank to do the work. (PS: off-topic, but please do not allow your friends and family to co-sign your small business loan if you really care about them...)

Now you can't do any of the above... and now we're getting into shady territory of almost certain failure:

* Reminded of stories of people who seemingly helped each other for free (see above), you convince "some guy / some kid" who "worked in construction / seems really handy" that the two of you will finally Achieve the American Dream and that together you have a shot at making TONS of money by him doing your work. You can't pay him, but you give him some "equity," and "that's ok, you'll be rich when this gets huge if we all work really hard."

swombat5• 17 years ago

I'd add that the "hire a contractor to build things out" thing works well for an easily defined thing like a cafe, but much less so for a web application. If the contractor is honest, the first thing they'll say when you try to fix the price is:

"I don't know what you're trying to build (even though we've spent an hour talking about it). That's in great part because you don't know what you're trying to build. We'll find that out as we go along, once we get some users in front of it and figure out what they really want. Therefore, it would be dishonest of me to quote a likely cost. I can timebox it for you: It will take less than two years, and more than a month. But that's all the accuracy I can give you. I can also tell you how long it's likely to take to build the first iteration - but not how many more iterations there will be after that."

Unfortunately, most contractors won't do that and so you'll find yourself with an ever increasing bill or with a piece of useless code.

jaxn• 17 years ago

I find it ironic that you are building a business to help people know they are getting paid what they are worth and most of the people commenting here are questioning your understanding of what the "lead developer" is worth. That does give me a little pause as to your domain knowledge.

Ask HN: What do developers want from an equity-only job?

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