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Ask Slashdot: How To Ask For Equity In a Startup?

timothy posted more than 3 years ago | from the say-fellas-it's-about-my-passwords dept.

Businesses 349

Uncrase writes "I'm a contract software developer, and have been working for a small startup for over a year now. Not a bad position to be in of course. The company consists of a handful of people, all of which (I believe) are contractors (by their own choice), however we're doing very very well and have a very significant revenue already. Call me greedy, but I've worked hard (as the main IT guy essentially) to get the company to where it is now, and of course get paid contractor rates for this. I would like to get some kind of equity (options) in this. The company is continuing to grow its operations and I am basically indispensible for the continuation of this growth. I'm definitely not planning in any way to force a hand, but I would like to know what could be a good way to approach this. I'd essentially like to ask for a raise — being a contractor — but in the form of equity. Any experience with this? Am I completely off here?"

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you're a contractor (4, Insightful)

Anonymous Coward | more than 3 years ago | (#36223410)

...and therefore not indispensable ...
Good luck, you are greedy indeed...

On the other hand... (0)

Anonymous Coward | more than 3 years ago | (#36223442)

If you really are indispensable, then perhaps you should ask about becoming a full time employee, possibly even in a management position.

Re:On the other hand... (4, Insightful)

similar_name (1164087) | more than 3 years ago | (#36223702)

If you really are indispensable

No one except the owner is indispensable. It will completely depend on the relationship he has with them. If he's considered a "friend" or "good guy" he might be able to talk his way into something. If he's considered an asset then it's like the copier asking for a raise. A lot of people deride that this is the case or they deride that somebody thinks it's the case but I just think it's human nature and understandable.

Re:On the other hand... (1)

icebraining (1313345) | more than 3 years ago | (#36223766)

If he quits, can they hire and get up to speed someone else without losing massive revenue in the mean time? Especially considering that he's the main IT guy and therefore is probably the only person who really knows their setup well?

Re:On the other hand... (4, Informative)

Anrego (830717) | more than 3 years ago | (#36223908)

I've been amazed on more than one occasion at how quickly someone who I would have described as indispensable is quickly replaced. There are always issues and will be some lost money... but people step up and surprise you. Having seen this, I'd say very few people are _actually_ indispensable.

I have a feeling this guy thinks he's more important than he actually is. Which is fair.. most people like to think they are the main cog keeping everything running. Rarely the case. If he's not even a full time employee, chances are he could be replaced with little more than a hiccup. Management probably has a transition plan in place.

Re:On the other hand... (4, Funny)

nomadic (141991) | more than 3 years ago | (#36223982)

I have a feeling this guy thinks he's more important than he actually is.

Come on, when have you ever heard someone in IT with an inflated notion of their own importance? I mean, that is completely absurd.

Re:On the other hand... (2)

PCM2 (4486) | more than 3 years ago | (#36224008)

I've seen this attitude plenty of times. One job I had, they were using a contract IT guy for both desktop and server support. This guy claimed to be "on call," but if you did have a problem, it would have to wait until he swanned in at 3:30pm to take a look at it, and then not on Mondays (because he wasn't available). When they hired me to be a full-time IT guy, he didn't even seem phased. He seemed to feel he would be spending the next six months "training me" to do stuff he couldn't be bothered to do in the first place. Within about three weeks after I was on the job, the company stopped calling him altogether (and then it was basically just for things like passwords and settings that he hadn't documented anywhere). I felt for the guy -- I guess I basically put him out of some work. But his attitude just made him seem like a prick, and it was costing the company money in lost productivity.

Re:On the other hand... (0)

mysidia (191772) | more than 3 years ago | (#36224012)

If he quits, can they hire and get up to speed someone else without losing massive revenue in the mean time? Especially considering that he's the main IT guy and therefore is probably the only person who really knows their setup well?

If he decides to stop working without notice, they have no choice but to hire another in his place. His penalty if he ups and quits without notice will be that he gets no good reference, and his colleagues working for the co. are unlikely to recommend him to future employers. Most likely his contract has some notification requirements, which would place the contracter in breach in that case, and could lead to other penalties, such as no pay, even requirement for the contracter to pay $$$.

If a contracter quits with notice, then a manager worth his salt will already have anticipated this, and have another employee/contracter to take his place. The last 2 weeks of his employment will be spent fully briefing his replacement or a consultant whose job is to document/audit everything, and answering any questions the replacement has; if the contracter is not fully cooperative, he may not get paid for work he did not do, or may get sued, for any breach of the contract.

If the manager did not anticipate this; he will have little choice but to quickly secure a consultant, to debrief the contracter who is quitting, and assist with briefing the replacement.

Re:On the other hand... (2)

MightyMartian (840721) | more than 3 years ago | (#36224020)

If he's doing his job and documenting what he's doing, and if he's coding, he's writing passably decent code and documentation, then yes, he is replaceable. This company is in a potential nightmare situation if he isn't documenting everything, not just because he might get fired, but what if he gets hit by a bus?

I'm just putting together a company with a few partners, and part of the incorporation process that our lawyer has told us to do is succession planning; right from the share structure to how to deal with the death, departure or incapacitation of one or more partners. You see, not even the owners should be indispensable in a properly setup company.

On top of that ... (5, Interesting)

Barbara, not Barbie (721478) | more than 3 years ago | (#36223996)

Depending on his jurisdiction, he may not be a contractor, but an employee, and both him and his boss are looking at substantial tax penalties and fines.

From your current situation, it sounds like the IRS will want a word with you [irs.gov]

And no, having a written contract saying you're an independent contractor means next to nothing when compared to the rest of the evidence.

Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?

Financial: Are the business aspects of the worker's job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)

Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

If they set your hours, your workplace, your work environment, pay you weekly instead of by deliverables, there's no specific "the contract is now complete" condition, and it's a key part of the business (and you have indicated yes several of these), you're an employee, not a contractor.

Re:On the other hand... (1)

pspahn (1175617) | more than 3 years ago | (#36224034)

No one except the owner is indispensable.

I see your point, and it's pretty much true; however, if the owner is indispensable and gets hit by a bus, there are now employees who are very likely screwed and will be looking for work.

If you're an owner, and you employ people, you have to leave your ego at the door and make sure there is a plan if something should ever happen to you. Owners should not be indispensable, especially at a company with at least a half dozen employees.

Re:On the other hand... (1)

Dunbal (464142) | more than 3 years ago | (#36224036)

No one except the owner is indispensable.

Nah, corporations took care of that concept.

Re:On the other hand... (1)

RyuuzakiTetsuya (195424) | more than 3 years ago | (#36224040)

If the owner thinks that the guys who built the systems he depend on everyday are replaceable then he too is replaceable.

Re:you're a contractor (-1)

Anonymous Coward | more than 3 years ago | (#36223932)

you'll trim your mom's wife's pubic hair

Like you said, you're asking for a raise. (0)

Anonymous Coward | more than 3 years ago | (#36223426)

I'd essentially like to ask for a raise — being a contractor — but in the form of equity

So treat the situation as such. There are lots of resources and articles online suggesting how to make your case for a raise; use them. The only difference is in what form you're asking the "raise" to be.

Don't imagine that you're indispensable. (5, Insightful)

jcr (53032) | more than 3 years ago | (#36223432)

If you're charging a rate that you're happy with, then offer to give them a discount for equity. Whatever you do, don't overplay your hand.

-jcr

Re:Don't imagine that you're indispensable. (3, Insightful)

ScrewMaster (602015) | more than 3 years ago | (#36223456)

If you're charging a rate that you're happy with, then offer to give them a discount for equity. Whatever you do, don't overplay your hand.

-jcr

Yes, because it's not really that strong a hand to begin with. People often overestimate their own value. By his own admission he's well paid already.

Re:Don't imagine that you're indispensable. (4, Insightful)

Anonymous Coward | more than 3 years ago | (#36223556)

^^ What jcr said. Also, what's wrong with simply asking how you can be a bigger part of the company?

However, you also said this:

however we're doing very very well and have a very significant revenue already.

If that's the case, you should expect the answer to equity sharing to be "no, we're happy with where the equity positions are at already."

Additionally, the "price" of equity is inversely proportional to the risk involved. If it's 3 guys just starting up and scraping the cash together month-to-month, equity can be pretty cheap - you can make an offer for a big chunk of equity because you're assuming a big part of the risk. If, as you say, they have significant revenue already, then the equity should be relatively expensive - after all, there's not much risk anymore, and any cash you offer to put in might not be much in comparison to month-to-month revenue.

As a contractor, you'd probably have to offer a pretty hefty reduction in salary/rate for equity. As a full-time employee, you could probably command more for a lesser price, as you'd essentially be assuming some of the risk - e.g. the risk of being an at-will employee getting sacked if revenue turns south vs. a fixed-length contract.

Re:Don't imagine that you're indispensable. (5, Informative)

Fluffeh (1273756) | more than 3 years ago | (#36223728)

You are going to be in a bad negotiating position. The thing with start-ups is that they generally offer a lot of options early to the first bunch that comes into the fray. If they have decided to go with contracts rather than options, you are in an even worse negotiating position. You see, if options are offered early, then the folks behind it are offering options to potential employees to negate their own risk in the venture. If these chaps have decided to gather enough funding and then simply offer contracting rates, then they have taken the risk totally upon themselves. At this point (where there is good revenue coming in ad the business is in a stable financial postition) they risk associated with the venture is all but gone.

Not to be blunt, but why on earth would they offer you equity in the venture now - especially that they have weathered all the early (and biggest) risk? It seems to me like you want the best of both worlds - contractor rates while the venture is risky, then equity when the venture looks safe and stable. Unless you have something to offer that will be worth equity to them - such as being able to greatly increase their revenue, or bring more clients to the company - or something else that is just as valuable - giving you options at this point would be a poor business act on their part.

Simply ask (0)

Anonymous Coward | more than 3 years ago | (#36223438)

"Hey, I was wondering if I could buy some options, or receive stock in lieu of payment, or something."

Offer to give something in return, show you are serious. If not then walk immediately.

Re:Simply ask (1)

religious freak (1005821) | more than 3 years ago | (#36223598)

No, don't say "hey, I was just wondering".
"Oh, you were wondering? Well, the answer is no".
You have to go in more assertive than that. Tell them you want it and offer to become an employee.

A contractor with options doesn't make sense IMHO.

Simple (2)

jcoy42 (412359) | more than 3 years ago | (#36223450)

Just tell the guy who signs your paycheck that you are interested in getting some stock options since you feel you've put a lot of effort into the company. Tell them the options would secure your long term interest in said company, so it would be in both of your best interests.

Re:Simple (0)

Anonymous Coward | more than 3 years ago | (#36223536)

Yeah. I'd go in for a meeting with the boss and say something like "hey, I've been working here a while, contributing to the company - and I feel a certain sense of ownership, you know? So now I'd like to match that with some real ownership in the company; equity of some sort. Is there any way you can make that happen?" and see what he'd be willing to come up with.

Re:Simple (1)

ldbapp (1316555) | more than 3 years ago | (#36223750)

Yes ask! But not this way. Don't ask them to make the first offer. Don't sound like you're asking them to do you a favor. And don't say you "feel" a "certain sense" of "ownership". You get paid for what you do, not what you feel. "Certain sense" is just being wishy-washy. You don't own anything. They started the company, not you. Don't be a cocky dick about anything, but be direct and confident about what you want and why it makes sense for them and you.

Should have negotiated up front (0)

Anonymous Coward | more than 3 years ago | (#36223464)

As jcr says - the right way to do this would have been to take a discount on your rate for the equity... a startup has two possible routes of compensation - equity and cash. Early enough they'll be willing to give more equity because roughly speaking they have more of it to give than they do cash. But some people can't financially take the risk associated with less equity.

If they're about to take a round or have just taken a round, it's not going to be as easy. I'd broach the subject of renegotiating soon with whoever you report to, but don't go retroactive, it's tacky and won't be received well.

Here's how (2)

Zerth (26112) | more than 3 years ago | (#36223476)

say "I wish to (1)trade large amounts of money or (2) decrease my rate of pay in exchange for equity in this company"

If you are just a contractor, you should have negotiated for for a decent rate up front and then offered a lower rate in exchange for equity. If you gave them a lower price because they were small, but didn't ask for equity then, you can either renegotiate or walk away. They might prefer to stick with you instead of finding someone new.

Good luck, though. They might feel that just because they are suddenly making more money, it doesn't mean they owe you a piece and the same fee.

equity versus salary (3, Insightful)

GreatDrok (684119) | more than 3 years ago | (#36223478)

Equity is what you get when a small company can't afford to pay you the full market rate for your skills. You're gambling your current income against a future payout in the event that the company is successful. If they're paying you well and you're happy with that, you're really not in a position to ask for an equity stake. If you believe the company is going to be successful, buy some shares like any other investor would.

Re:equity versus salary (2)

Dahamma (304068) | more than 3 years ago | (#36223738)

Exactly. You have to ask - why would the current equity holders want to give up part of their share in the company if, as you say, they are doing "very, very well"?

The answer is, you have to GIVE them a reason. You'll either have to force their hand to some degree if you want it as extra compensation, or else offer to buy stock at the current fair price.

Re:equity versus salary (0)

Anonymous Coward | more than 3 years ago | (#36223900)

offer to buy stock at the current fair price

He specified that he wanted options, not to buy stock today. I.e., he doesn't want to pay FMV today, he wants to be able to pay today's FMV at a later date iff stock has increased in value (probably over a four or five year vesting period). I.e., no actual additional risk.

Sure, he could offer to participate in the next round as an investor if he's got enough money (and the company even needs another round before a liquidation event) to make that interesting (at which time he would likely be getting the more expensive preferred shares and paying cash for something now that might be worthless by the time he can sell them).

Re:equity versus salary (1)

The Great Pretender (975978) | more than 3 years ago | (#36223878)

Ask for stock options. Basically, you get an agreement that within a certain period on time you can purchase shares at the price the shares sit at when you make the agreement. Now with a start-up they will likely make the shares available a little at a time (vesting) e.g. The shares are worth a dollar now, and they give you options for 50,000 shares. The shares are 20% vested upfront and vest 20% absolute every year for the following 4 years. That means after 4 years you have the option to buy 50,000 shares for $50,000 no matter the share price, even if they go down. BUT after 2 years you would only be able to buy 20,000 shares at $20,000 and if you leave you only get to carry your vested portion, normally for a period of time. The bottom-line is that with every golden handshake, there's a golden handcuff.

Re:equity versus salary (1)

ILongForDarkness (1134931) | more than 3 years ago | (#36223962)

I say focus on the positive. Tell them you think things are going well. That you want to move from a more casual contractor position to a true partnership. Then offer to take some salary as stock or if you can to put up some of your own money. I would suggest if you are bringing in money come up with an idea where that money can be used profitably (if you have the purse strings then you should have that more incentive to see it put to a profitable use).

No really. (0)

earls (1367951) | more than 3 years ago | (#36223494)

Tell the Feds you're Black, Eskimo, Indian or a Birdbrain and they'll hook you up with a ten year start-up grant for all sorts of software. No really.

Re:No really. (0)

Anonymous Coward | more than 3 years ago | (#36223560)

Would an under priviledged white man qualify? Tongue in cheek...

Re:No really. (0)

Anonymous Coward | more than 3 years ago | (#36223720)

Tell the Feds you're Black, Eskimo, Indian or a Birdbrain and they'll hook you up with a ten year start-up grant for all sorts of software. No really.

Dude, I so tried that and it didn't work.

Re:No really. (0)

Anonymous Coward | more than 3 years ago | (#36223834)

Tell the Feds you're Black, Eskimo, Indian or a Birdbrain and they'll hook you up with a ten year start-up grant for all sorts of software. No really.

Ah. the sweet, sweet sound of white privilege.

Think Again (0)

Anonymous Coward | more than 3 years ago | (#36223496)

IT guy claims he's indispensable...film at 11.

You are a contractor (3, Insightful)

MyLongNickName (822545) | more than 3 years ago | (#36223500)

You get paid by the hour.

Folks who stand to lose money if the company goes under get equity. Not you.

Re:You are a contractor (4, Insightful)

BasilBrush (643681) | more than 3 years ago | (#36223612)

Yes, he's a contractor, who risked nothing when the company was starting out. But got paid contractor rates for his work.

The company owes the greedy bastard nothing.

Re:You are a contractor (2)

ldbapp (1316555) | more than 3 years ago | (#36223780)

It's the other way around. Folks who have equity stand to lose money if the company goes under. That's why they have a vested interest in its success. The equity is the cause of the risk.

You were paid to do a job, right? (5, Insightful)

Anonymous Coward | more than 3 years ago | (#36223504)

You were paid (an evidently fair compensation) to do a job. Kudos for doing it well! That said, as a biz owner myself, we take all the risk which includes employment of contractors from day one when the company was deeply in the red and then pray hard that someday we'll transition to black.

Be thankful you have a good job and if they offer it, certainly jump on options...but..again, as the owner of three startups, 2 of which are tech related, we take the risk, not you, ergo we take the reward.

From your perspective, it sucks, I know....I was a contractor for 10 years. From our perspective, it sucks when you ask, because then we have to look at potentially canning you. So, it sucks all around.

Re:You were paid to do a job, right? (2)

ldbapp (1316555) | more than 3 years ago | (#36223824)

All true. However, the premise of the scenario is the guy thinks he has become indispensable. So, he is in a position of forcing the owners' hands. They should not have gotten into such a position. Now that they are, the contractor is in a good position to make this request. Of course it has to be done delicately, because, as you said, the owners will likely be defensive when put in an awkward position. But the point about the owners taking the risk is spot on. The contractor needs to frame this as him wanting to become even more committed to the company. He can't frame it as "wow, you guys might hit it big, and golly, I'd like me some of that moolah".

Re:You were paid to do a job, right? (1)

ILongForDarkness (1134931) | more than 3 years ago | (#36224018)

I disagree he is indispensable, at least if he still wants to work with professional integrity. He accepted the work at the rate he was paid. Going forward he can try to negotiate a raise but to hold the company's operations hostage to get his way would be hugely unprofessional. At the very least he should help in the transition to a new IT guy if the negotiations go south. I for one don't want to be known as that guy that left everything in confusion when he left because he was sulky he didn't get his way.

Re:You were paid to do a job, right? (1)

tftp (111690) | more than 3 years ago | (#36224072)

However, the premise of the scenario is the guy thinks he has become indispensable.

That's what he thinks. But every [successful] business owner who hires employees always has plan B for the case if the employee "gets hit by a bus" - departures of key people for all kinds of reasons are the norm, not an exception. I'm pretty sure that owners of the business took care of that possibility just as they took care of all other problems that they were facing since day zero. It's just the contractor doesn't know it yet.

So, he is in a position of forcing the owners' hands.

I don't think so. Blackmail may work with a Japanese super-giant corporation where nobody feels any particular attachment to anything, and everything is simply weighted on scales of practicality.

However owners of a small startup will not take it kindly. You need to consider that meek weaklings don't start companies. This is a risky business. Unless they are really facing an insurmountable problem they will not yield to blackmail - and the contractor's demand of stock under threat of leaving is nothing but blackmail. You can't pay the blackmailer because tomorrow he will be back, demanding even more.

Moreover, once the "proposal" is voiced in these terms, the only reasonable answer to that can be "you are fired, effective right now." Why? Because you can't trust this person anymore. If he is an IT guy you can't let him continue running your systems. It is just a mere suspicion, of course, that he will become disgruntled, but why to take the risk? Besides, he could have left for a myriad of other reasons, starting with the bus and ending with family problems; no stock offer will resurrect your IT guy who became very flat under that bus.

If I were in this contractor's shoes and that desperate for stock, I would announce that I'm leaving for a greener pasture, but if they want they can match that offer and then I will gladly stay. You have to have a real offer, of course, from another company; bluff is likely to be insufficient. Contractors are so safe in their little niches, they often don't have the business sense that many business owners pick up early on. Anyway, then if the company wants to pay him more they will do that without fear, and if they don't then the guy departs as promised, all on good terms.

However the amount of stock I would get this way would be ridiculously small. It may be easier to just buy that stock, if you can (sometimes you have to be an accredited investor; startups often fall under that law [wikipedia.org] .)

ask (0)

Anonymous Coward | more than 3 years ago | (#36223510)

Ask. The worst they can say is no. No respectable company would punish you for (respectfully) asking for a raise.

That said, minority ownership shares in startups end up being worthless far more often than they end up being worth anything at all. Beware of taking too much of you compensation as equity.

Re:ask (1)

ldbapp (1316555) | more than 3 years ago | (#36223846)

Yes, there are any number of ways to structure a sale so that those in power get a lot and those not in power get little if anything. A sale rarely is so simple as "we'll pay you $X and you have N shares and options outstanding".

grounding (0)

Anonymous Coward | more than 3 years ago | (#36223520)

1) you are not indispensable, that is a fantasy
2) if you are contracting, you are presumably building equity in your own company. you have been paid. eof...
3) if you want equity in the future, then re-negotiate, but don't confuse the past with the future.

If you are indeed valuable, and the people are reasonable they may well cut you a (very small) slice of pie. You are just a hired gun. That puts you at the bottom of the food chain. There are plenty more (like me) waiting to step in if you blow it.

Re:grounding (1)

ldbapp (1316555) | more than 3 years ago | (#36223714)

Nothing of what parent said is wrong, per se, but it also does not follow that any of that precludes you from asking. There is no independent answer for "what do you deserve". You only deserve what you can negotiate. Often your negotiations are constrained by what others do (e.g. salaries are constrained by what others are willing to work for), but ultimately you won't get more if you don't ask/negotiate for it.

founders stock (1)

Anonymous Coward | more than 3 years ago | (#36223530)

dont take anything except for preferred founders stock .. its what I did in similar circumstances...

Re:founders stock (1)

ldbapp (1316555) | more than 3 years ago | (#36223694)

I can't second that strongly enough, though it may not be achievable. You should hire a lawyer to advise you on the various kinds of stock and which you really want, and what the tax consequences are. And don't take the company's word on the company's valuation (which will affect how much stock/options you get and at what price), unless there has been a recent large investment which carries its own implicit or explicit valuation. Do your own due diligence. Again, if you don't know how to value the company, find someone who can.

I was just wondering.... (1)

HotNeedleOfInquiry (598897) | more than 3 years ago | (#36223548)

How much of your money you invested in the company. You see, that's usually what separates the "owners" from the "employees". In the few (these days) cases where an employee becomes a shareholder, it is usually worked out before they are hired. Oh, I forgot, you weren't hired, you're a contractor.

Buy shares like everyone else (2)

drfreak (303147) | more than 3 years ago | (#36223562)

with the money you just got from your raise, you greedy bastard!

Switch to permanent employee (4, Insightful)

LynnwoodRooster (966895) | more than 3 years ago | (#36223570)

And give up the higher contractor wage. That's the deal you make: permanent employee who earns less per hour, but gets a long-term stake in the company, or contractor who makes bigger bucks but nothing in the way of ownership.

Re:Switch to permanent employee (1)

durdur (252098) | more than 3 years ago | (#36223764)

It is not unheard-of for a consultant to receive options or restricted stock in a startup, in return for less cash compensation. I've been offered that kind of deal. It's less cash out the door for them to pay you this way. So you can certainly ask for that. But they can say no.

Re:Switch to permanent employee (0)

Anonymous Coward | more than 3 years ago | (#36224046)

I work at a startup, we've made similar offers to consultants who we thought would bring considerable, additional value to the company, beyond what we already had in-house. Of course, or cash flow is purely one-directional at the moment... I doubt we would make that offer once we had "significant revenue", without said consultant bringing _significant_ additional value to the company.

Don't forget the PITA factor (1)

evenmoreconfused (451154) | more than 3 years ago | (#36223572)

Having more than once been in your boss's role, you mustn't forget the costs involved with doing what you ask. Since (we assume) the company is not yet public, then depending on the current structure, this could involve significant legal fees to set up. In my experience, which is limited, this has ranged from $5,000 to $30,000. Of course, this doesn't apply if the company already has a mechanism to provide equity to its employees.

In addition to the other suggestions, be sensitive to whether or not they can easily make this change.

Measure of Worth (1)

hackus (159037) | more than 3 years ago | (#36223578)

Which will depend on a number of things:

Is your idea of being "owed" equity your idea, or did others approach you and say: "You have contributed work and skill sets that would have been extremely difficult to find for us during the execution of the startup. We would like you to stay in some sort of equity arrangement."

I got approached by two gents after two years and got equity and CIO status because back in 1994, building IP networks was not a widely known skill. Also, putting a internet connection in a company was a significant engineering under taking. Sure they could have found someone else, but not very easily and it would have been a big risk.

If this doesn't apply to you, I would not ask as you will be told no first of all and they will think you are a future risk as you didn't get something you asked for.

-Hack

-

Simply... ask (1)

c0lo (1497653) | more than 3 years ago | (#36223582)

Raise the point with them and be prepared to negotiate in good faith...

If they agree with the idea, expect that they may require you to drop from the current "contractor" rate or some other advantages you currently have or take over some new responsibilities; it would be only fair, since it is you that switched your mind in regards with a previous agreement and choose now to "bet" on the future of the company - so, what are you prepared to "pay" for it?
Note: yes, you "paying" now somehow for the options IS fair - the guys involved in startup took (and continue to take) the risks inherent to a startup until crossing the chasm [wikipedia.org] .

As in any negotiation, the success depends on many factors - I can't say more on this track (other than "stay opened to understand their point of view")... but in any case, the negotiation may succeed (a win-win solution, hopefully) or it may fail. What are you prepared to do if it fails? (hint: twisting their arms is barely an ethical or long-term-prospects choice).

Not that indispensable ... (1)

Jagungal (36053) | more than 3 years ago | (#36223588)

But if you are then the company is doing itself a dis service if it is allowing you into a position where you think you are indispensible. Many information hiding IT people do try to do it though - or at least get into their heads that they are.

The people who put forward the ideas and the risk get the equity, you just get your contract rates no matter how the company goes good or bad.

Re:Not that indispensable ... (0)

Anonymous Coward | more than 3 years ago | (#36223810)

A developer, even a contractor CAN be themselves indispensable. Ideas are cheap. Funding the project gets you a shit ton of equity, certainly - but the last thing you want, is for someone who is the only guy who actually understands some core piece of the system that needs to scale to fuel your growth to leave. It might take 3-6 months for someone else to get fully up to speed, based on complexity. If your growth is crippled in the meantime, there's a DEFINITE opportunity cost involved. Toss -some- equity his way. Otherwise he doesn't give a flying fuck whether or not you succeed - as long as he's doing his "job", he's earned his pay. Equity is an incentive to do make things work.

Re:Not that indispensable ... (1)

PCM2 (4486) | more than 3 years ago | (#36223884)

I also tend to think you're doing yourself a disservice if you allow yourself to become truly indispensable in a specific role. Companies never sleep, but most folks like to take vacations every once in a while. And if they have any ambition at all, most folks eventually get tired of doing the same work for years. Good luck getting a promotion or a transfer to another role if you're literally indispensable at what you're doing now.

If I was the submitter, I might actually be thinking more along those lines: "Hey guys, it's come to my attention that I've become kind of indispensable, which could be a bad thing for the company. How about bringing someone on board as my direct report, who can take up some of the routine tasks and gives us a backup plan if I get sick or something?" If they agree, voila! He doesn't just get extra compensation, he gets made a manager, which is probably a step on the most practical route to getting him the equity stake he wants.

There are problems with this approach, of course. The first is that people who fancy themselves indispensable don't tend to be the type who can delegate responsibility; they'll complain, but they're also the kind of people who guard their responsibilities the most jealously.

The second problem is that in my experience, most companies don't pay managers as contractors. This should be obvious: You don't build departments around people who have no stake in the company, and who might walk away at any time. The submitter points out that he prefers to work under a contractor arrangement. He's basically already told the company that he doesn't want a management stake and prefers to work outside a normal employer/employee arrangement, so I doubt his asking for an enhanced role in the operations of the company would be met with any more favor than his request for a financial stake in the company. As plenty of others have already suggested, it sounds like he's asking for hand-outs. What is he putting on offer that would convince the company to give him anything outside his current arrangement?

good luck (0)

Anonymous Coward | more than 3 years ago | (#36223590)

I think it can be appropriate to indicate that you would prefer to be compensated with equity. From my experience in small business, most people would prefer cash-in-hand. Saying that you are looking for equity is essentially a signal that you believe in the company enough to risk your own money.

Realize, of course, that you will effectively be making an investment in the company at the (probably fuzzily defined) present market value. If you do believe in the company, this could be a great decision.

Vesting and hiring (1)

francium de neobie (590783) | more than 3 years ago | (#36223618)

Shares aren't given out for free - even for the founders themselves they almost always have a vesting schedule which means they don't actually own all the shares up-front - they need to vest for e.g. 4 years before they actually own the shares allocated for them. If you're asking for shares from founders at an early stage company, it'll almost always imply they'll need to hire you or the startup's capital structure will feel sketchy to investors.

Also, you need to make sure the founders can be trusted. Whoever with majority control of the company can decide to dilute only "someone else's" shares at the next fund raising.

Options imply a long-term commitment (0)

Anonymous Coward | more than 3 years ago | (#36223640)

Start ups give out stock options to folk who are in it to the long haul.
They are an incentive to ensure the long-term loyalty of folk key to the company.
Now if you're indispensable (or at very least painful to replace) and you
believe this company has a bright future, you should offer to go perm.
Most startups have a 1 year cliff built-in to any offer of equity they make -
what this means is, if you leave before a year's up you don't get any options
but after a year you'll get a 1/4 of your options and thereafter 1/48 each month thereafter.
So if they offer you 48,000 options over four years, you vest
(i.e. can purchase at your option price) 12,000 at the end of the
first year and 1000 options each month thereafter.
By going perm, you'll take a cut in pay in return for options.
If you can, find out at what valuation they took their most recent
round of funding. That gives you the $ value each investor put on the stock.
Now calculate how many shares would compensate for a 25-30% cut in income
(the typical difference between perm and contract) - that's a ballpark of where to start negotiating.
My $0.02,
A former contractor and current startup junkie

OK, you're greedy (2)

DerekLyons (302214) | more than 3 years ago | (#36223642)

Call me greedy, but I've worked hard (as the main IT guy essentially) to get the company to where it is now, and of course get paid contractor rates for this.

OK, you're greedy. You're also not irreplaceable.
 
You've taken none of the risk, and have no reason to ask for any portion of the reward. You've gotten what you contacted for.

Stand up for yourself; no one else will. (1)

ldbapp (1316555) | more than 3 years ago | (#36223650)

You are under no ethical obligation not to ask for what you want. So you should ask. You do need to be careful, as other mentioned, not to overplay your hand. You don't want to sour your relationship, no matter what the answer is. Being in a position of being important to continuing operations is something you should definitely make use of (again, as other said, to the extent that it really is true). It may feel slimy because you generally wouldn't do it to your friends, but this is business. Your friends look out for you in a reciprocal way. In business, the only one looking out for you is you. I behooves you to do a dry run of your request and reasoning with a friend before heading to the "main office". Also, don't assume the answer is no. That will be self-fulfilling and puts you on adversarial terms right away. Assume in your language and tone that you are asking for something that makes sense for both parties.

Your compensation is already adjusted (2)

joeflies (529536) | more than 3 years ago | (#36223658)

you made a deal up front to get paid well to do your job, because at the time, you thought the options were not worth much. They paid you accordingly.

Now that you see the company is doing well, you want to get paid and get options too. Pretty raw deal that you present to the company, you basically didn't take any of the risk and want all the reward.

You are not indespensible. (0)

Anonymous Coward | more than 3 years ago | (#36223666)

Valued ... yes. Indispensable .. No.

You likely aren't as indispensible at you think (1)

enjar (249223) | more than 3 years ago | (#36223670)

So are you a software developer or the IT guy? You say both. You don't know if people are contractors or not. Do you not talk with your co-workers?

Revenue does not equal "doing well". "Doing well" means making a profit, which means that revenues exceed expenses. It doesn't sound like you have a handle on that.

From what it sounds like, you are likely seen as "the hired help". If you want to get off the "hired help" roll, you should have a talk with the people who have the power to make it happen. They may tell you "no", so be prepared for it. But you'll never succeed if you don't take risks. Be prepared to give a detailed explanation as to why you deserve equity and what you have done to earn it. Also, be prepared to have to show that you are serious.

Considering employment (1)

cm613 (1493893) | more than 3 years ago | (#36223672)

I have worked for startups and I think directors either give high hourly (and overtime) pay to contractors or employee pay with a stock-option plan issued every year and awarded on a five year term or something like that to keep you employed there long term. In other words, you are either investing a portion of your time and will share in the success or not. Don't be surprised if they only have those two scenarios available. Don't take this the wrong way but it's worth pointing out that nobody is indispensable. Jobs, Gates, Obama, etc, will all be dispensed one way or another and it won't spell the end of their respective organizations.

sign on bonus (4, Insightful)

wmbetts (1306001) | more than 3 years ago | (#36223674)

Ask to be moved to a full time employee and tell them you want this because you believe in the company and see it being a huge success. Stroke their ego, but don't lie. They already know what you're worth and there for you're less of a gamble than bringing someone else on and you can still ask for a good market rate. The bonus to this is if you work it right you'll be able to get almost as much as you are now and have taxes taken out and get stock as a sign on bonus. Tell them you're wanting to take a pay cut (because you will have too) in order to get stock as a sign on bonus. It basically costs them nothing and they will save money by paying you a slightly lower hourly rate.

Re:sign on bonus (1)

DerekLyons (302214) | more than 3 years ago | (#36223926)

The bonus to this is if you work it right you'll be able to get almost as much as you are now and have taxes taken out and get stock as a sign on bonus.

Bonuses are given to people who you want to convince to come aboard - not to people desperate to come aboard.
 

Tell them you're wanting to take a pay cut (because you will have too) in order to get stock as a sign on bonus. It basically costs them nothing and they will save money by paying you a slightly lower hourly rate.

On the contrary - having an employee is more expensive than hiring a contractor, the company now has to pay taxes and benefits on top of the take home. That's why companies hire contractors in the first place.

Re:sign on bonus (1)

wmbetts (1306001) | more than 3 years ago | (#36223970)

Which is why I said he'd have to take a pay cut. If he's really valuable to the company they'd want him to come on board, because in a start up contractors are basically temps to help get it off the ground.

Re:sign on bonus (1)

Antique Geekmeister (740220) | more than 3 years ago | (#36223972)

Contractors charge typically higher hourly or salaried rates than employees. If someone wants shares, vacation time, parking privileges, health insurance, and other employee benefits, that person needs to be prepared to surrender salary. It's a great question to discuss at contract renewal time, or when you've just completed a major project and they're looking to expand your responsibilities.

If you've just completed a major project, it's also good to have that on your resume as you look for new work, because if they won't give you the new employee role with benefits, it's time to leave. This is especially true if you're getting jealous of the vested employees.

Have another option (1)

DingoTango (623217) | more than 3 years ago | (#36223688)

You only get what you negotiate, not what you deserve or desire. The best way to negotiate is be willing to walk away.

So, you should find another one or two companies willing to pay you what you want in terms of money and options. Then go to your existing employer and say "With the economy picking back up, I'm looking to find a company that will allow me to grow with them. Do you think AbcCorp could be that company for me?" "yeah, sure, excuse me while I fix my pointy hair, ummhmm..." "I've tried to figure out where that puts me, and found that a comparable position at XyzCorp offers 25 scooby snacks plus the opportunity to drive the mystery machine. Do you think my value to AbcCorp puts me in that range at this company?"

Don't use overly confrontational terminology, like "match their rate", "if I stay", etc. Treat it as a fact-finding mission and at the end of the day, you must be OK leaving if you and your employer don't agree on what the facts are.

Additionally, if you don't find other companies willing to pay more, or if you determine in your heart that you wouldn't really want to move companies, then at the end of this process you will be happier even if you stay. That is just as important to discover.

If you are so vital (2)

Kagetsuki (1620613) | more than 3 years ago | (#36223690)

Then your boss should know that. The thing is in small companies the developers are often directly involved with their bosses but it seems you are not. If you can't trust him enough to simply ask about it then I doubt he trusts you that much.

Also getting equity is usually something that is reserved to people who have a high interest in seeing the company succeed. As a contractor it is sort of assumed you don't. Think about it from your bosses standpoint, he's put in money and taken risks and the profits he's seeing will help him expand and develop his company into what he wants it to be - and if the company fails he looses everything. You just get paid by the hour, if the company fails you find a new job and you don't loose anything, and the vision of how the company will develop is not your own vision. If you are willing to believe in the company vision and stick with it - even if the company were to go into the red and you had to work without pay for a year - then equity could be on the table.

And never think you are vital. You could be the best programmer in the world but if you have a crappy attitude you're out.

Probably asking this question on the wrong site (1)

ya really (1257084) | more than 3 years ago | (#36223704)

Just in my experience and opinion, you would be better off asking that on ycombinator [ycombinator.com] that deals with tech startups and has many from that community, not on slashdot.

Re:Probably asking this question on the wrong site (1)

Cigarra (652458) | more than 3 years ago | (#36223876)

Exactly. I can't believe how incredibly un-helpful most of the answers here are so far. "You're not irreplaceable", "you missed your chance", "get off your high horse".

The guy would've even found better advice in Youtube comments, given the current level here.

Re:Probably asking this question on the wrong site (1)

Son of Byrne (1458629) | more than 3 years ago | (#36223898)

The guy would've even found better advice in Youtube comments, given the current level here.

Well, I'd disagree. Just because the comments are negative does not necessarily mean that they're wrong.

I believe the phrase is: "Asked and answered."

The big question that both sides need to ask... (1)

Anonymous Coward | more than 3 years ago | (#36223712)

,,. is what are you going to get out of this distribution of equity? Will the company benefit greatly in term of profit by doing this? If not, why would they do it? Giving you equity mean taking it away from someone else.

Less risk at this stage, but maybe... (0)

Anonymous Coward | more than 3 years ago | (#36223724)

If you are getting market rates as a contractor you might not get as much equity; the founders took the early risk that they'd have to pay you and go without salary themselves.Now the risk is lower so the payoff should be lower too.

That said, if you are indespensible, you can demand options. Frame it as being committed to the company and wanting to double down on the future, and wanting feel that you have a key financial interest in the company's success. Otherwise, you can go get contractor rates somewhere else just as easily. Assuming you are really indispensable, of course. Point out that options and a vesting schedule will align your interests (waiting for options, working for success) with the company's (keeping you around).

You missed your opportunity (1)

Jaime2 (824950) | more than 3 years ago | (#36223732)

The time to ask for equity instead of pay was back when there was risk.

Ask, Politely (5, Interesting)

Anonymous Coward | more than 3 years ago | (#36223760)

As a CEO of a startup (I've done a few, before), I EXPECT contractors to ask to be included in the group of founders. If they're savvy enough, I concur, sometimes converting them to employee status.

1. Start with a question: Ask for a formal review, just like other employees get (usually annually). They'll be surprised, because most people don't WANT a review. But, it helps to know if you're held in low or high regard by the decision-makers. It might not be a formal process in a start-up, but even getting senior folk to commend you for what you've done is a starting point.

2. Later, (so it doesn't seem so obvious) ask to attend the strategic meetings, so you can do a better job (e.g., Strategy/planning sessions, Board meetings).

3. After you've assessed your "cred," and shown you're ready to move beyond simple following of instructions, THEN it's time to ask the critical question: "How could I become a more valuable member of your team?" If they brush you off with a short, "You're doing fine as you are," you've got more work to do. If they offer you the opportunity to "become a more valuable member of your team," the door is now open for negotiation: Ask for fair compensation (salary or fees), and offer to take SOME of it in equity. Now the burden is on THEM to turn you down. But, if you've gotten them to admit you're valuable, and they want you in the inner circle, it's going to be hard for them to reject you.

Advice from an old hand who's both gotten and granted equity in starts-up...

Indispensible? (0)

Anonymous Coward | more than 3 years ago | (#36223772)

Rule #1 - No one is indispensible. Take that into account in what ever action you decide to take. And, being generous, probably 1 in 1000 (probably 1 in 10000) equity deals ever make it to a significant vesting. It's usually not the product or service - it's the ability of the founders/directors/management to grow a startup. Given those odds, my Rule #2 - take the cash while its there.

indispensable (2, Insightful)

home-electro.com (1284676) | more than 3 years ago | (#36223776)

>> and I am basically indispensable for the continuation of this growth.

That is funny. You must be new to the industry. One of the first things anyone in employee/contractor position learns (should learn) in their first 5 or so years is that EVERYONE is replaceable. Well ok, Steve Jobs turned out to be not so replaceable, but that's Steve Jobs. In all likelihood, you are flattering yourself - you are very much dispensable.

Presently I do a lot of contract work for one customer, and I too would not mind getting a royalty from every unit they ship. And yes, I'm kind of 'indispensable' - several products developed for them, a couple of them are fairly complex. But I know full well that if the push comes to shove they will find a replacement for me. Just the same as they've found me to replace the other guy who was with them for like 10 years before that :)

Re:indispensable (0)

Anonymous Coward | more than 3 years ago | (#36224030)

Or, as Charles de Gaulle once phrased it: “The cemeteries of the world are full of indispensable men.”

Be prepared (1)

Son of Byrne (1458629) | more than 3 years ago | (#36223786)

You should understand that while you think that you're an indispensable part of the equation, odds are pretty heavily stacked against that notion

Give your employer some credit: they took the risk and they deserve to benefit for that (including the ideas behind the company). However, bear in mind that most employers are not opposed to paying someone more, but you will need to justify it. If you want an equity stake, then tell them why it would benefit them to do that for you. Why should they make a partial owner? Break it down into simple math.

Trust me when I say, this is the best way because this is the way I'd want this proposal presented to me (I own a small biz myself)

Don't tell ... *ask* (2)

MoanNGroan (1050288) | more than 3 years ago | (#36223788)

First, you are asking the wrong crowd. You'd be better off asking entrepreneurs and start-up dudes.

Second, don't start the conversation by making an offer. That puts you in the worst position because now you are setting the bar, be it too low or (worse) too high, and they have to react to that. You are better off just asking "So, is there a way that I can start earning equity in the company, rather than just straight compensation?" That way they can evaluate the question itself rather than whether or not they want to accept your offer, and in return you will get to evaluate the deal they are prepared to offer (assuming there is one).

The equity is a red herring. (2)

Perp Atuitie (919967) | more than 3 years ago | (#36223794)

If you're as essential as you think, raise your rates -- you're the seller, after all. If they seem ready to consider going with a price hike, offer to take it in the form of equity (because you believe in the company's future and want to be part of it, blablabla. Asking for options in lieu of a rate hike or straight equity would be an easier sell, as it gives them a stronger hold on you and gives you more motivation to work at the top of your game. But the real question is, are you getting paid less than you deserve, and are you willing to demand more. The form of the increase is secondary.

Ask, but don't act like they owe it to you (0)

Anonymous Coward | more than 3 years ago | (#36223832)

Prepare to find out what they really think of you. If they are impressed by you, they may jump at the chance to bring you onboard. The fact that you asked for it will be a point in your favor. If they don't think you are partner or even long-term employee material then the answer will be "no" and if you want to ride the job out as long as you can, you should just leave it at that.

The best way to approach them is not to talk about yourself, and especially not about the work you've already put in. Instead talk about the company and the future. You go in and say: "The more time I spend working for this company the more excited I get about where it's capable of going in the future. I want to be a part of that. I'd like to be a full-time employee with a path to vested equity. I realize I may need to sacrifice time or money in the meantime, but I want onboard."

i like to snuggle (0)

Anonymous Coward | more than 3 years ago | (#36223842)

i wish i had a fleshlight pillow

just ask (2)

mamble (893405) | more than 3 years ago | (#36223854)

Honestly, don't overcomplicate this or it could turn out for the worse. It's a small startup so I assume you know the owners, just sit down with them and ask how you can get onboard with some equity options. Most small startups would have considered equity options in their planning and you should get a simple response either way. I've been on both sides of this situation and in my experience it's always better to be honest, open and direct. Do it now, waiting will just decrease your upside if the company is growing already and there could be external timing constraints which may mean you miss a window of opportunity. Just be prepared that you may not get the response you want, but you should definitely ask the question all the same.

Here's a plan.... (1)

mswhippingboy (754599) | more than 3 years ago | (#36223858)

1) Tell them if they don't give you a raise you won't give them the passwords to their servers.
2) Make the news when they bring you up on criminal charges,
3) Write a book about your story.
4) PROFIT!!!

You are a contracter (0)

mysidia (191772) | more than 3 years ago | (#36223888)

You are only as indispensible as your employer wants you to be. If they decide they wish to get rid of you, they can find a replacement, and decide to make adjustments to their business so that the replacement will meet their needs. Even if it seems to you that might not be worth their while --- what is (or is not) worth it, is a business decision, they make, not you. If you continue to be indispensable, that is only the case because they choose to continue to allow it.

Some businesses have a philosophy that as soon as some contracter becomes "unreplaceable"; that means they must be replaced, fired, or moved to a different area of the company, to help mitigate the threat to the business created by a problematic situation.

If you wanted to be an owner, you should have sought equity as compensation before the company started to succeed.

Now that it is starting to succeed, if you demand equity, you will start to look like a greedy vendor trying to get a piece of the pie.

If you believe in the company you will BUY equity with cash, or take a pay cut in exchange for receiving that amount as equity.

No-one is indispensible (1)

jklovanc (1603149) | more than 3 years ago | (#36223912)

Unless you are producing novel, patentable ideas you are not indispensable; there is someone out there who can do your job. The "irreplaceable" attitude will bite you in the ass. When I hear someone say they are indispensable the phrase "pompous ass" comes to mind.

If you want a raise, make a case for it based on what you are doing now and how it is different that what you were doing before. If you were being underpaid before you need to make the case as to why you stayed.

For small business equity is a very complex issue. It is not like a small private company can just hand you some stock. They may need to make you a partner which is not simple. I you believe you should be a partner then make that case.

Write it down. You look more serious and organized. It allows you to look over your words and polish your presentation. It also allows your boss to re-read it and gain more clarity on your position.

The thing that many people do not understand about business is risk. Yes you contributed to the growth of the company but you did not risk your house, savings and credits rating to get there. What if things went bad? You could walk away but your boss could not. Since you are not the accountant, how do you know they are doing so well? You see the income but you don't see the outlay. There is a lot of overhead that goes into running a business; taxes, accounting, insurance, clerical staff, etc. You bosses may have taken out loans to start the business and they may not be paid off yet.

only the original investors get the equity (1)

esseffe (1203628) | more than 3 years ago | (#36223946)

did you put forward the capital needed to get the company off the ground? If not, then you missed your chance to have any claim to equity in the company. The original investors took all the risk, they get to take home all the reward. If the company needed money to expand and was looking for new investment, then perhaps you might have a chance. But you would have to have large sums of cash on hand, and be willing to risk it. Since you said the company has a very significant revenue already, I'm afraid you'll have to be happy with your contractor rates.

Tough to say (4, Informative)

Anonymous Coward | more than 3 years ago | (#36223958)

As someone who is running a startup with a partner, I am trrying to think of a good way for someone to approach me would be. I pay anyone I have doing contractor work very well. In fact, between expenses of the business, hours myself and my partner put in, and startup costs, the contractors make an hourly rate far beyond anything we take out. The majority of the money is re-invested back into the business to make it grow. That and the endless hours working on the business is what will continue to make it grow.

So the question is why would I share the gains? And under what circumstances would I share the gains? I honestly cannot think of any compelling reason that a contractor I pay could come to me and justify any shares of equity. How long was the company in business before you were brought in? How long before the business was actually incorporated was it being worked on before becoming real? And that is where, if someone I pay very very well came to me asking for equity I would probably stop using them. It shows a complete lack of understanding of the amount of time and effort the partners / owners put into the business and in all honesty, I would be insulted.

IF and this is a huge IF, I had a contractor that went so far above and beyond what was expected I would consider it. If that contractor was with me in the beginning and did countless hours of work, not always counting the pennies in the check, then I have something to work with. I know when someone puts in 40 hours of work in a time sheet and did 20 - 25 hours worth of work. I know the opposite as well when someone puts in a timesheet for 40 hours and clearly did 60 hours or more of work. That contractor is bleeding with me and is regarded above others. If you have not put in serious blood, time, and your own skin into the game you have absolutely zero right to ask for any equity. Where I am in my startup, there are only two people who have done the time: myself and my partner. So unless you are putting up money to buy in or working for free, you are on the outside of the circle. I am on a 3 - 5 year outlooks, expecting to break even on the amount of work invested after 7 years of hard work. What that means in that in year 7 or so I expect to finally stop reinvesting all profits back into the business and finally start taking out some for myself and my partner. So yeah, after 7 years I may start driving a really nice car, buy a nice new house, or have a nice retirement fund setup, but trust me I earned every last cent. You got paid for the work you performed.

You are replaceable, no matter what you think. You may be good, even great, but trust me, in my position I would let you go without a thought. Then again like I said I pay very well, so if you are making $50-$75 / hr, ok I may be a bit more lenient. But what I pay my contractors, I pay because they are good and I expect to get things done and I know few can go out and make more. You also are naive. You have no idea what goes in to running a business. I cannot even describe the hours spent doing things like collecting on payments due, finding and maintaining insurance, state / federal filings, evaluating and implementing new systems for the business. Sales and marketing, closing new business, etc. On top of all of that I still do day-to-day programming, just to get more money to reinvest back into the business. You want equity and not want to be laughed at? Offer to come aboard and put in no less than 80 hours a week making less than you did as a contractor. It may be worth the bunch of hours and the couple of thousands of dollars to work it out, figure out workers comp, insurance and other stuff.

LOL, the programming is maybe 30% of the business after it is all said and done. And quite frankly is the easiest by far to deal with. Talk to me when you have the state breathing down your back questioning your business on the use of contractors. Now do it when states are hurting for cash and want everyone on payroll to get their taxes each month or quarter. I could go on, but the point is simple: A business takes a lot of time and effort to run. You are a tiny tiny part of it.

TLDR;

Don't ask unless you put in as much skin into the game as the owners. If you think programming is a huge part of the business, just be happy you get paid and stay quiet. Or start your own business and learn.

Risk... (0)

Anonymous Coward | more than 3 years ago | (#36223978)

You're risking nothing. No really, you're risking nothing. You're not indispensable, so stop saying that. I'm sure there are hundreds of non-idiots that could come in and do your job as well if not better than you. You're an IT guy. You're not developing a new laser beam for the company. You're not the mind that had the idea, nor are you the person who fronted the money, you don't deserve anything more than the salary they're paying you. While it would be great to get rich off someone else's risk, it's not going to happen. You will be, and should be,laughed at if you try.

Dear King (0)

Anonymous Coward | more than 3 years ago | (#36223992)

Your Majesty the King,

I wash your horse and clean your castle every day.
Please include me in your will or I will quit tomorrow.

Thanks,
Your humble well paid servant

P.S. Remember that I'm irreplaceable!

Disagree (1)

lucm (889690) | more than 3 years ago | (#36224044)

Equity in a company should reward those who take a risk (such as putting in some VC or working unpaid hours until the business is mature), not those who get paid by the hour, even if they work hard. Especially as a contractor you are expected to work hard and you (should) get good money for that commitment.

IMO if you think you are a valuable asset then you should request a higher rate - if you are right they will agree, and if you are not right then better find somewhere else to shine.

Also if you have been working there for a while and you bring up the question of options once they start to have good revenues, then it could suggest that you are in mostly for the money.

First of all (0)

Anonymous Coward | more than 3 years ago | (#36224054)

When "How do i get money for a startup?" is an ask.slashdot, i KNOW we're in a bubble.

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