
Ask HN: Start-up 1 – Success, Start-up 2 – Asking for too much? - PerfectClarity
A couple years ago I met a small group of experienced entrepreneurs (1 success each, key industry knowledge&#x2F;connections).<p>They were struggling to get traction with a start-up. Their outsourced webapp was buggy and messy. They had &lt;20 users at this point.<p>I came in and developed the MVP they needed. To build trust and learn the industry, I accepted a medium cash low equity deal.<p>Fast forward a couple years, I led the system to 50M+ valuation with thousands of paid users and 5 employees under my wing. I let someone else take my position and I moved on.<p>A month ago, the entrepreneurs called me for another start-up. I agreed to take a look and clean things up for a low goodwill fee. They have a trademarked business name, promotional website, and pilot program interest from major businesses. They also own a running system that provides JSON APIs to interface some key external service providers for this start-up.<p>They need a technical co-founder to lead, build, and run the product. Specifically now, they need a clean, commercially viable MVP off the ground within 4-8 weeks.<p>Trusting them, I already developed 30% of the application. If I work 60-80hr weeks, I can deliver the MVP they need within 4 weeks with confidence. But the current agreement expires soon and the tentative long-term deal on the table is &lt;5% equity vested over 2 years with 40+&#x2F;hr pay like last time.<p>My proposal is 7%+ equity with 20&#x2F;hr or no pay for X months. I prefer equity over cash this time. I value this pre-MVP start-up at 2M, max. I know I&#x27;m worth 50&#x2F;hr absolute minimum.<p>Problem. Of the entrepreneurs, half really value me and half think I&#x27;m easily replaced by someone cheaper or a 15K$ contract with a 30-person tech team for the MVP. They can&#x27;t get consensus to offer me even ~6% vested over 3 years.<p>Am I asking for too much?<p>Tech offers conditional certainty, but negotiations have always been tough for me due to the subjectivity of &quot;fair&quot;.
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kjksf
Negotiations are not about what's fair but about BATNA
([https://simplicable.com/new/batna](https://simplicable.com/new/batna)) i.e.
Best Alternative To A Negotiated Agreement.

Can you get a better offer elsewhere? If yes, then you have no reason to
accept anything less than that offer. Even if those entrepreneurs won't agree
to at least match your best other offer, you're not losing anything.

If you don't have a better offer elsewhere then your best option is to accept
whatever they offer.

If you want that job then the question is: what is their BATNA? If they can
find someone cheaper that can do the job, they have no reason to offer that
job to you.

Note: it doesn't matter if they really can do that, only if they think they
can.

Other points:

> I agreed to take a look and clean things up for a low goodwill fee.

A mistake. They apparently were in a bind. They needed a job done quickly and
you were a proven person for the job. You had leverage. You should have asked
for a high fee.

People are strange. It's possible that now they value you less because you did
something for them for less than it was worth.

> I prefer equity over cash this time

I'm surprised you're so keen on equity.

Equity is worth $0 until a business has an exit event i.e. does IPO or gets
sold to some other company.

If neither happens, the business can be very profitable for 20 years, the
owners can pay themselves whatever salary they want from profits but your
equity will be worth $0.

Exit events are extremely rare. Or to put it differently, you have a higher
chance of multiplying your money by getting max salary, 0% equity and then
going to casino and betting on black.

Betting on equity is no different than betting on black but people usually
don't think of it that way. Equity in a company that doesn't yet exist is
extremely risky.

