Ask HN: What is an expected compensation for a startup yet to launch a product ? | Hacker News Reader

Ask HN: What is an expected compensation for a startup yet to launch a product ?

5 pointscode_devil8 comments

I have been in discussion with a founder of a company that is about to release an application for the web/mobile devices in a months time frame. The initial development was outsourced and the rest will be taken cared off by the founder alone. The company is in stealth mode and has no funding. They will be looking for VC money once the product is launched and gains traction to a massive user base. Since, there is no money the compensation will be in Stocks. He mentioned an initial offer of 1000 'options'(immediately vested after 2 weeks) for 2 weeks part time work, before a longer agreement be made and FT after securing VC funding. Does this sound reasonable ? Is it better if I use this time investment for working up on my own side projects

[PS: I am personally not looking for cash, as I am working Full Time, and this will be a side gig.]

1000 options out of what? If it's a pool of 10,000 that's a good deal. If it's out of 10,000,000 then probably not.

What do they plan to increase the pool to as part of the funding?

What is the estimated pre and post-money stock price?

> "once the product is launched and gains traction to a massive user base."

Don't kid yourself, this is hard to do.

Well, the launching part is fairly easy. It just happens that launching and gaining traction to a massive user base aren't quite the same thing...

Yes, I would agree with you.

find out what % that 1000 options make up.

But you should definitely look for some cash on the side. Even if its a measly 500 bucks a month

I would avoid talking about shares till it starts to take off. It might be worth getting agreement on what will happen if it takes off. Otherwise you might feel locked in to something you can't walk away from easily.

Yes, he said he wont be able to pay any cash till he gets it funded. I wouldn't really mind not getting cash, because the application indeed looked pretty useful. But like you said it's better to know an exact % of the pie if it does take off, cause otherwise I will be stuck to a binding agreement. I don't know the % yet, as this part was done over email to which I politely responded saying it somehow seems low. I am yet to hear back from him saying if its low or high, based on what the total share pool is.

Also, based on my current employment, if I calculate my wages as $75/hr, then his 1000options/40hrs come out as 25 options/hr which is like saying his options are worth $3(which is insane).

It's not low if there are only 10,000 shares. As others have mentioned, only percentage of ownership diluted matters.

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