- You are working for a promise of future payment. Can the startup actually follow through on that promise? Or is this just a matter of them saying to themselves "We get the kid working without paying them and if it all falls through it didn't cost us anything"? That leaves you shouldering the cost of possible failure - would that hurt you?
- Who owns copyright? Normally software copyright belongs to the person who paid for development. However, if you're being paid in shares, then they receive copyright without spending a single penny. Are you happy with that? And what if it goes pear-shaped, will you be able to develop the software further or will you be hampered because you don't own copyright?
- How long will it take to see a return on your investment? A year? Two years? Five years? How long can you afford to work without being paid?
- Do you need them? Is your website the product? If the other founders were killed in a car accident today (God forbid), could you carry on regardless tomorrow. If you could then their offer is actually saying "You do all the work and we'll cut you in for a little of the profit that comes from your hard work"
- Brilliant advice given to me by a much older and wiser person when I was a young buck has proved invaluable throughout my business life. He said "If you don't own the majority of shares, you don't own anything". He was right. If the large equity deal isn't 51%, it's worthless. If the majority of shareholders choose not to declare dividends, you earn nothing unless you sell them and there may even be restrictions on who you can sell them to and how much for.
- What about continued development? If your work is any good, it will open up possibilities that your client hadn't thought of which will grow the business and then your software will have to grow to accommodate it. This cycle can be very profitable for the developer - except where he has equity because all of that extra work is also unpaid for.
- Then what is stopping them "firing" you when you are finished?
Of
course, all of that is irrelevant if you think that this startup is
going to be the next Google or Apple and you would sell your own
grandmother to get a piece if it hadn't been dropped in your lap like
this. Then go ahead. Don't let me or anyone else talk you out of it.
There's a sad video on Youtube about someone whose dad talked him out
of investing in Facebook. Don't be that person. If you think that
this opportunity is amazing, go for it with everything you've got.
My
suggestion is that you accept the equity deal for your managing
website operations but make it clear in writing that that doesn't
creating the website. You will provide a licence to use the software
to them for free but retain copyright at all times so that you are
always free to make whatever changes you feel are right. Then, in the
worst case scenario, you will have built an asset that you could sell
elsewhere. That way, if they ever decide to get rid of you in the
future, they will have to deal with the fact that you can walk out of
the door with a copy of their business to sell it o the highest
bidder.
Decision Making
Credit:
The header image is available as wallpaper from Wall.alphacoders.com
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