Equity contracts · Designers

How to find/convince people to contract for equity--specifically designers and media production?

Jesse Hamburger

March 16th, 2015

My startup has been talking to some video production companies about creating high quality videos and other media for our product. The quotes are coming back upwards of $80k for a pretty typical video (we're not renting fighter jets or hiring celebrities or anything). As with most early startups, cash is an extremely valuable resource for us, so those estimates aren't really realistic for us. That said, I understand that high quality media production is an expensive affair, and we're really not willing to compromise on quality.

So my questions are:
  1. where/how do you recommend looking for professional media producers who are willing to work with us in exchange for a cash/equity deal or purely for equity? And,

  2. How would you recommend I convince a professional media producer to work with us in exchange for equity?
I have the same question about CAD/industrial designers and artists, although the issue is less pressing as the costs are nowhere near as high for our situation.

Michael Conaway CEO Storyworks, CEO Ncite

March 16th, 2015

Jesse, As a 20+ year owner of a small agency who does all of our own production, I can tell you that equity is a hard sell for companies like mine. The thing about a film is that it always takes a good number of people to produce the thing and they all have to be paid. In the cases where we have accepted equity, what I have done is given my services as a creative up for free and then charged for the rest of the crew and post team at cost + 10%. So on a 80K project you could possibly look to shave 40% off the price. That would put you at $56K for the budget on the project depending on the amount of live action and animation. If you need to get lower than that number, the place to look is in reducing the scope of the project. If you'd like for us to look at the project, let me know.   Cheers, Michael Shaun

Julien Fruchier Founder at Republic of Change

March 17th, 2015

I suggest you first educate yourself on the consequences of handing out equity like it's candy in exchange for services. Equity early on is only for founders, investors and maybe, maybe absolutely necessary talent invested in your long term success. The idea of dispensing equity to contractors is completely ridiculous. Sorry to be blunt. Thank me later.

The idea of paying $80k for a video is only superseded by your idea of paying for it with equity. Plenty of quality videos have been shot with a fraction of your purposed budget and no company should be spending that kind of cash on a video unless you are no longer a startup and have the cash flow to support it.

I really hope you think this through a little better. If you're hoping to attract investors, I can tell you that no investor in the right mind will give you a dime when they learn that you spent $80k on a video and that you paid for it with equity no less. 

Frankly, this level of decision-making shows a complete lack of ingenuity and understanding about what startups are all about, not to mention laziness. You need to be creative and hustle to get your first few paying customers under your belt and prove up your idea while bootstrapping.

I'm sorry for the bluntness and hope this it's helpful. We all have stupid ideas. I've had (and continue to have) my share when I was starting out and was lucky enough to have smart advisors who kicked my ass when I did.

Good luck

Leena MBA Content & Publication Manager at NetApp

March 17th, 2015

Why do you need to spend that much money? You could spend around $6-7k and go with a company that makes great explainer videos, like Epipheo.  If NBC and GE aren't too big to go with Epipheo, then you should check them out too.

Kate Hiscox

March 16th, 2015

Hi Jesse! Why do you need this?

Kent Nichols CEO at Content Startup in Stealth

March 16th, 2015

Equity is a medium to long-term payoff. It could take years to see any upside from the project, or none at all. So from a media production perspective, equity is pure speculation and comes off as if they are doing it for free, so either you'll get very green folks, or you'll get people that are more into it as a hobby if there's zero cash involved. I would use equity more as a kicker in addition to cash. -K

Shingai Samudzi

March 16th, 2015

Your options are: Provide them convincing evidence that your startup is on a path to success, the same way you would attempt to convince an investor (which is what they are, essentially) or Negotiate a deferred compensation plan, rather than equity, in which you pay them the invoiced amount if and only if you raise over a certain amount of money via funding round or client booking (ie revenue) or Some combination of cash up front and equity+deferred compensation

Vijay MD Founder Chefalytics, Co-owner Bite Catering Couture, Independent consultant (ex-McKinsey)

March 16th, 2015

What do you want them to do? Best way to get the price down is to limit the scope and break down the work required.

If you have footage and a storyboard lined up, you can reduce a lot of the "pad" based on time to figure out what the client wants and generally get things done with more junior resources. The more ambiguity, the more senior support required.  The more you want a blanket quote where they figure out everything themselves, the higher the price tag.  Just like every other process in your business.

Steve Owens

March 16th, 2015

I think you have to find the right company. We do equity deals, but I do not know a single competitor of mine that would touch it with a 10 foot pole. Keep calling companies until you find one that has done it before. Do not try to convince someone who has not done it and does not want to do it. There are a lot of video company out there. Steve Owens - Finish Line PDS A Better Way for Small Companies to Develop Products e | Steve.Owens@FinishLinePDS.com p | 603 880 8484 w | www.FinishLinePDS.com 94 River Rd | Hudson, NH | 03051 Click for Product Development White Papers ---- On Mon, 16 Mar 2015 16:42:45 -0400 Jesse Hamburger<reply+dsc+2505@founderdating.com> wrote ---- FD:Discuss New Discussion on How to find/convince people to contract for equity--specifically designers and media production? Started by Jesse Hamburger Current: EiR Studio 9+ & ToySpark Founder. Former: Data Manager, Absolute Travel; Director, Westeros Project; My startup has been talking to some video production companies about creating high quality videos and other media for our product. The quotes are coming back upwards of $80k for a pretty typical video (we're not renting fighter jets or hiring celebrities or anything). As with most early startups, cash is an extremely valuable resource for us, so those estimates aren't really realistic for us. That said, I understand that high quality media production is an expensive affair, and we're really not willing to compromise on quality. So my questions are: where/how do you recommend looking for professional media producers who are willing to work with us in exchange for a cash/equity deal or purely for equity? And, How would you recommend I convince a professional media producer to work with us in exchange for equity? I have the same question about CAD/industrial designers and artists, although the issue is less pressing as the costs are nowhere near as high for our situation. FOLLOW DISCUSSION or Reply Directly to this email to participate in the discussion Manage your email notifications

Jay Schweid Seasoned Entrepreneur | Producer | Executive Producer | Mentor | Advisor | Dad

March 16th, 2015

Happy to chat and see how we might be able to work together. Without knowing the scope it's hard to figure out a realistic budget.

Chris Carruth VP/Director. Strategy | Business Development | Operations | Product | Solutions

March 16th, 2015

Another option, assuming that it is better to have some quality as a beginning point versus trying to persuade a top producer, who probably has too much work anyway, that is paid.

Check out college MBA film students..they typically have some experience and need a project as part of their capstone requirement.

Not the best, but much better than Uncle Charley..