Startups · Cofounder

A venture wants to hire me with founder status- the catch no salary or benefits for two years. How?

Mike Krim Digital Media Production Engineering & Broadcast Operations

May 10th, 2016

A venture wants to hire me with founder status- the catch no salary or benefits for two years.  How does one survive?
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Brian McConnell

May 10th, 2016

There is a super simple answer to this. Companies don't hire founders. They hire employees. Employees get paid. They can't afford to pay you at all. Therefore they can't afford to hire you (or anybody else). Stock is nice, but most likely worthless, so unless there is cash compensation in the job offer, show yourself the door. While there is a < 0.1% chance you are missing the next Google, there is a 99.9% chance you'll be sparing yourself a lot of hardship for nothing by

Bobbie Carlton Founder, Innovation Nights, Innovation Women & Carlton PR & Marketing

May 10th, 2016

Agree with the answer above, "hire" is not the right word here - you don't hire a founder.  Typically, you hear people talk about "bringing in" a founder.  But that's not the question.  The question is, how do startup founders survive when the startup is pre-revenue or all the money is going back into the company.  There are many answers:
  • Be independently wealthy to begin with.  You made your fortune previously.
  • Live off savings, your retirement fund or max out those credit cards.
  • Have a non-entrepreneurial spouse or partner who covers your expenses
  • Work a second (and sometimes a third) job.  You wouldn't be the first startup founder driving for Uber.  I know a lot of startup founders who do consulting jobs while building their startups
  • Get funding fast - find a VC to drop bags of money at your feet and give yourself a salary. Or Angel or Friends and Family funding.
  • Find a customer to fund the company and pay for you to build out your product
  • Cut your expenses to almost nothing.  I know a startup CEO who secretly slept under his desk at the startup incubator he was participating in. He lived on the snack food at the coworking space (and frequented the many events.) His expenses were very very low.
  • Sell the vacation house, lakefront property, race horse, family silver -- or even take out a second mortgage or line of credit on your house.
Now you know why startups  are seen as a rich person's game...few people who need a weekly paycheck can afford to not get one daily.

Michael Feder Founder and CEO at PrayerSpark; Finalist: Global Business & Interfaith Peace Award

May 10th, 2016

To answer the question, "how does one survive?":  (1) you take small side projects--  your cofounders will understand, since there is no money in the company for you yet;  (2) you take a line of credit on your house-  now, before you have no income to show the bank---   you do this as a founder, not as an employee, because you believe in the business enough to ask others to invest their money in it; (3) you sell off your valuable things on ebay-  you do this as a founder, not as an employee, because you believe in the business enough to ask others to invest their money in it.  Obviously, you are only becoming a founder because you bleed the business-  you'd be willing to ask your friends and family for money, knowing they could lose it, and you'd have to face them after the loss. Founders put themselves on the line-  including the prospect of having to sell their home, rent, and start again. Otherwise, becoming a founder, and asking others for money, is unwise.

Matthew Stroul IT Business Analyst & Support Engineer helping people, processes and tools be more awesome versions of themselves.

May 10th, 2016

Mike,
It is GREAT you are wanted. I am wanted too. Ask anyone over 30 on this site how many times they were courted with "You are brilliant! You do 100% of the work and I will split it with you 50/50!"

Not everything is about money until it is about money so I will focus on the BIG questions to help steer you.

First - is this something you are SO passionate about that money - even the smallest amount is trivial?

Second - does the team you are forming have enough mastery of their roles with proven foundations of success to accomplish the goal?

Third - timing of two years until capitalization is a MASSIVE red flag. MASSIVE. Like Godzilla showing up at Chili's for Taco Tuesday red flag. Seed capital is EVERYWHERE for the right solutions, a fully vetted Bplan and mockup/working demo. If you are a even a medium level disruptor active angels will pounce with enough to pay core team for a year.

Fourth - if the title does not help you in the future then ignore it so focus on the core business functions and how much time you need to facilitate them.

Fifth - time - I have been on 3 founder boards at once AND had a day job that had me in and out of shop after shop evaluating business or product market readiness. It is not about time management but about time investment.

Here is a formula I use to determine yay or nay:
Will the investment TIME [Application of Wisdom + Effort] = REWARD [a small basket of gold coins + preferred stock (actual stock NOT options) + personal brand/career advancement]?

EVERY problem has a solution my friend, but are these requestors of your excellence capable of suspending ego to obtain the solution? Are you willing to risk their words as down payments on your future without them risking capital?

Good luck, and stay awesome!
Mateo

Rodger Cravens

May 10th, 2016

Does a Founder not also get to choose how they spend their time? Maybe engaging during off hours (nights and weekends) to make a living to bridge the gap is the intent?

Anonymous

May 10th, 2016

If one can't survive without a salary, one ought to decline the offer and stick with the day job.

Sarah Stefaniuk Localist and Founder LocalMotiv

December 30th, 2016

Hi there,


Wow, you are all really making me feel like participating in a start up is a terrible decision. Some very disheartening responses indeed!


I was was reading this string because I am a brand spanking new founder and I was looking for insight on how to find critical team members/co-founders. No doubt, I am naive but by reading most of these answers it seems start ups will go nowhere, founders have unrealistic expectations, and you will suffer through the development of the company and product. Not to mention that it is almost never worth becoming a cofounder...


Should I even pursue my idea? Well, the good news is that I will start my search for our third cofounder soon. But we are nowhere near getting funding yet. We need our Tech Cofounder first. For me it seems like a catch 22 - you can't get funding til you have the right people in place to bring the plan to life but... You can't get the good people til you can pay top dollar.


Here is how I am going to approach it:

- Mindset that the Tech Cofounder is key to the success and has valuable insight, expertise to make it a great success

- It is a mission driven idea and all have to believe in the mission and have a mindset that for profit does not have to be destructive profit

- We will all collaborate to map out each phase of the project and when we will be able to reach out to get funding

- We will determine our roles and responsibilities for each Founder and how much time it will take to get each task done

- We will determine if/when we need to be full-time on the project. Maybe one founder has to devote full time during one stage v the others... How can we compensate in those scenarios?

- Using the above to determine equity stakes

- We will all determine how far we can get without outside funding - so as to keep control over the company

- We will work through scenarios if one founder needs pay and how it impacts equity...

- Keep the conversation going and anticipate changes/new scenarios


If if after that plan does not work... Then onto plan B but my belief is getting the right cofounder up front is critical. Get the business of the ground with the right people in place.


But I would never ask anyone to forego salary for 2 years... That seems crazy to me.





kraig from idea to MVP APP. Low rates. Full stack.

February 17th, 2017

Unless you have savings you can live off or they will pay all your expenses, you don't. That's why they struggle to find technical co-founders.

Michael Leeds CEO & Founder

May 10th, 2016

Ask for another option that includes salary, and compare the two. Via mobile

Benson John Clinical Program Manager at Express Scripts

May 10th, 2016

Ditto Mathew Stroul - I want to empasize the business plan portion.  Do they have one, have you received a copy, does it make sense to you.  Too often pie in sky ideas sound great but are not implementable.  Two years seems like an awful long time with no VC funding which would/should provide reasonable salary.