Working For An Equity Share

Filed in archive Business on March 20, 2006

Since I've started writing this blog I've been approached a few times about working for equity at a startup company. On every occasion I felt a little off balance. Initially I'm interested in doing something exciting and the benefits of that make me want to do it. Then reality creeps in, since I'm no longer an 18 year old, and I start to think about things a little more. A few questions that circle around in my head are normally:

• What is the upside for me in all this?


• How much of my time will this take from my life?


• Who are these people are and what are they really trying to do?

On the first two occasions things didn't work out. I'm not someone that will live on bread and water alone. I need to make a living while I'm "working for equity." I talked about this once in my On Starship Troopers and Entrepreneurship post back in December.

Recently I was approached again this type of opportunity. I don't know if it is this blog that attracts these people or what but it keeps life interesting. Anyway, those same few questions started floating through my head and I procrastinated in providing a solid answer to the person asking me.

Then today I was reading the blog that Rajesh Setty writes called Life Beyond Code. He recently released a free eBook called When You Can't Earn An MBA... and I started reading some of his work. In one section he talks about "Work[ing] With A Startup For Free" and explains a few questions to ask those you will be potentially working with at a hypothetical startup:

• What exactly are you going to do for them?


• How much of their time do you need to produce the results that you plan to produce?


• What exactly will they promise in return?


• How will they assess that you were successful in this engagement?


• What are the intermediate checkpoints when you both can determine whether you should continue the relationship until completion?

So I decided to take Mr. Setty's advise and ask these types of questions. We'll see what comes of it.