[off-topic] work for equity

24 Jun 2008 - 7:16pm
6 years ago
3 replies
536 reads
gabefriedman
2007

Hi -

Sorry for the slightly off-topic posting, but the quality of this list
makes it my first choice; and I expect some of you have experience with
this question.

I may have a chance to work for a small (3-person) startup. They have
seed capital, a good idea, a wireframe, and are now looking to design a
working prototype. My role would be designer/UI/UX guy.

I'm impressed with the team and the idea, and would like to negotiate
for equity rather than pay (it's a freelance position). I'm not sure
where to start, or how to value my contribution.

Any thoughts on how to approach this question?

Thanks,
Gabe Friedman

Comments

25 Jun 2008 - 6:26am
Todd Warfel
2003

On Jun 24, 2008, at 9:16 PM, Gabriel Friedman wrote:

> would like to negotiate for equity rather than pay[...]

Why not get both?

Cheers!

Todd Zaki Warfel
President, Design Researcher
Messagefirst | Designing Information. Beautifully.
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25 Jun 2008 - 8:24am
Jef Lippiatt
2008

I am actually doing this at the moment. I have been working for a
small start up company that I felt would be a great experience. They
had some capital, but I negociated with them to find what will work
best for both parties.

Part of what they are doing is selling apparel, so basically I get
free merchandise of most of the pieces and can request any others I
would like. I also am in discussions with them as to on going
royalties, as I help manage the online store and have done some
designs for the apparel as well.

The deal will still involve the free merchandise as well as a
percentage of their monthly online sales profits.

But I would be interested in hearing anyone elses experiences doing
similar things like this.
I really enjoy working with startups and non-profits.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Posted from the new ixda.org
http://www.ixda.org/discuss?post=30708

25 Jun 2008 - 2:12pm
Jay Morgan
2006

Hi Gabriel,

Use a sliding scale weighted towards pay in the present and towards equity
in the future. Get the agreement in writing.

A bit more detail:
It's a new venture, so you want to realize some short-term value now and as
you progress. Getting paid today means that if they have to close the doors
on short notice, you've used your time wisely. After all, you could be doing
something else with your time that has pay and benefits.

If the company, its revenues, and your role develop as time goes on, then
your remuneration would shift to some pay plus some equity. Use milestones
as clear markers for when and how to shift. Milestones could be revenues,
amount of time in operations, or client portfolio, or a combination. For
example, you get 100% pay until they reach $1M quarterly revenue, and then
it shifts to 75% pay 25% equity. (You should work out the dollar value of
that equity so you know it's 25% of your total. This could mean you stay at
the same pay amount and add equity on top.) Or, if you bring on new
business, then your equity is balanced to how much that new business
increases the overall portfolio. This way, at any end point, you'll have
been paid and friends can stay friends.

In the distant future, your remuneration could shift to something like 10%
pay and 90% equity, which should reflect your role maturing to something
more like a managing partner than a billable resource.

It worries me to see something like, "i work for them now for pay, but we're
talking about me getting equity." Really? What's your confidence level? Get
it in writing. Better, put it in writing and take it to them. When it
requires action on their part, you'll start to see their intentions and they
will see yours. (it's just like any other client - you only have a deal when
the contract is signed.)

I hope this helps.
-Jay

On Tue, Jun 24, 2008 at 8:16 PM, Gabriel Friedman <
gabefriedman at earthlink.net> wrote:

> Hi -
>
> Sorry for the slightly off-topic posting, but the quality of this list
> makes it my first choice; and I expect some of you have experience with this
> question.
>
> I may have a chance to work for a small (3-person) startup. They have seed
> capital, a good idea, a wireframe, and are now looking to design a working
> prototype. My role would be designer/UI/UX guy.
>
> I'm impressed with the team and the idea, and would like to negotiate for
> equity rather than pay (it's a freelance position). I'm not sure where to
> start, or how to value my contribution.
>
> Any thoughts on how to approach this question?
>
> Thanks,
> Gabe Friedman
>
> ________________________________________________________________
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--
Jay A. Morgan

Information Architecture & Scenario-based design.
Design Patterns & Mental Models.

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