A former colleague has founded an Uber for X startup. They want me to join without salary to build their software from scratch. After having worked there for free for a almost year (or even longer if I don't work full time) I would get stocks worth the salary I never got, to become co-owner.<p>Do you think this a good deal to consider? I think becoming stake in an Uber for X business sounds like fun but I am afraid I can't get by on savings and I would lose most of my current job security and salary. Risk/reward, opportunity cost? I'm really hesitant to work for free in return for stocks...
Heck no.<p>I'm going to ignore the whole "working for free" question for a second, and how you will almost certainly never be compensated.<p>The issue I take with this is: If you're working for free then stock should be given to you from day #1, not suddenly given to you in a lump sum after a year. The way you describe this, the owner can fire you after 364 days, and you aren't entitled to stock or financial compensation. And frankly, some of the people I've met in the startup world are sociopaths and will happily fire someone after 364 to keep a large % stakehold in their company, then will rationalise it, and sleep like a baby.<p>Now taking stock over a salary is a bad idea in general as stock in startups rarely pays out. And if you're taking stocks in lieu of salary they should be worth MORE than salary given the levels of risk and the relative values to you (stock is worthless even for years after you receive it). Plus stock's value is subjective anyway, are they going to get a valuation by an independant organisation, or just declare the company's value arbitrarily?<p>Honestly the whole thing sounds like a great deal for them, and a terrible deal for you.<p>You better be best buddies with this guy to consider this since trust is key here. If they're taking a salary then run away. I'd also re-negotiate so some stock is given earlier so less lump-summing occurs.
Startups are great - you get a ton of ownership and the chance to see a business grow. Even if it fails it'll be a huge educational experience.<p>However, this sounds fishy for a couple of reasons - but maybe the guy just doesn't know how to structure this.<p>With one year vesting, he wants to protect himself from the scenario where you work for 3 months and own a big chunk of the company. That's legitimate. However, get the amount of equity on paper. You are taking a risk here too so it should be far in excess of just covering your salary at an arbitrary valuation. The general advice is that if you are not getting paid, you are a founder - your equity take should be a double digit percent of the company (typically vesting over 4 years with a 1 year cliff).<p>The other thing to consider is what he is bringing to the table. If it's just the idea of Uber for X it's not worth much. If he has business contacts though - for example he's well connected to the industry X then maybe he's bringing a lot more.<p>Don't be a sucker though, and don't work for free or for vague promises. Get agreements on paper now. And don't undersell yourself.
Don't listen to the naysayers! This is a good learning opportunity. For example, you'll learn why you shouldn't spend a year (or more) working for free on a former colleague's Uber for X startup.
It sounds as though the company has no product, no traction, and no investment. So, to work for stock alone you should insist on being an equal co-founder -- especially if you are crucial to building the software and taking on identical risk. If he claims you are a co-founder, he should also share the cap table with you for verification and to show he trusts you as a co-founder.
If you're working for free to build something that's starting out, then you should have an equal share of the business to the other founders, with same break clauses they have.
In the US, working for free is illegal and hence a minefield when the company goes to attract outside investment. If that weren't enough, everyone should be on a multi-year vesting schedule including the founder [you work for a year, get 20,000,000 shares and the founder stops working, and then what?] Finally, the stocks are only worth your salary if you can sell them, but who will buy them at face value? If the company can buy them, then they can pay your salary.<p>To put it another way, if you're going to work for a year for no salary, and you are capable of building the software for an Uber for X from scratch, why not just build your own Uber for Y? And to put it a third way, suppose your former colleague was asking you to give him the next year's worth of paychecks from your current job in exchange for equity a year from now. Would that be a good deal to consider?<p>Good luck.
He hasn't presented the offer to me yet. Just wanted to know if I was interested in joining them. The offer might be that I would get stocks immediately but no salary until after so many months. He hasn't accepted any investments yet to build the software and add value before sharing ownership.<p>But I'm on you people's side that I don't want to work for free. Just wanted to hear pros and cons on joining a startup and defer a potential reward. I've long wanted to do something of my own that I feel passionate about instead and get investors aboard early enough that I can get salary.