
Ask HN: What do developers want from an equity-only job? - JayNeely
Hey everyone,<p>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?<p>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.<p>What aspects of a similar role, team, and opportunity are important to you?  What would make you want to work for equity?
======
lbrandy
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.

~~~
swombat
_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._

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

~~~
fallen
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.

------
ryanwaggoner
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.

------
raffi
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!

------
wehriam
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.

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

~~~
vaksel
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

~~~
JayNeely
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.

~~~
ryanwaggoner
_We're looking for someone who's skilled, not necessarily experienced._

Are you sure you have the ability to differentiate between the two?

On the whole, I'm pretty skeptical of startups that have no revenue or funding
and are looking for an equity-only lead developer. It _sounds_ like a bunch of
non-technical people trying to get a code monkey for a few percent. Hopefully
I'm wrong.

------
theBobMcCormick
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.

------
mpk
"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.

~~~
kaens
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).

------
fallen
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.

~~~
tptacek
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?

~~~
fallen
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?

~~~
tptacek
I've done it once, as a favor. It went nowhere.

~~~
fallen
I think (from having tried it) that doing it as "a favor" isn't going to make
the cut. One of the reasons my first two fail is that our team simply didn't
have the dedication and wasn't able to find the sheer hour count to sink into
the project.

I think one thing a lot of people on the thread are expressing is that if you
want to join an equity project, you want to give it your all, because
otherwise its not going to work out for you. And if you "all" is being
rewarded with piddly equity (not founder status, not CTO), then ... well, you
just aren't interested or aren't really going to give anywhere as near as much
as you could.

The other crater was for other reasons.

------
jaxn
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.

------
motoko
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."

~~~
swombat
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.

------
pclark
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.

~~~
mpk
> 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.

~~~
kaens
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.

------
pclark
do you mean equity online = no pay?

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

~~~
pclark
assuming they get revenues/funding in the future.

