Our current startup is running out of money and wants to convert the current team into founders (~10% ownership) and withhold salary for the next few months.
1) Is this legal? 2) Is this a stupid option as a developer?
Ask HN: Working for 100% equity and no salary
1–10 of 17 posts
Re: Ask HN: Working for 100% equity and no salary
#2This is a stupid option as a developer.
Re: Ask HN: Working for 100% equity and no salary
#32) Is this a stupid option as a developer?
It will most likely go bust. 10% of 0 is zero. Leave.
Re: Ask HN: Working for 100% equity and no salary
#4"running out of money"...."withhold salary"
Run.
Re: Ask HN: Working for 100% equity and no salary
#5[deleted]
Re: Ask HN: Working for 100% equity and no salary
#61) Yes as long as you sign the papers
2) Yes - you are effectively being strong armed into becoming an investor.
Would you invest $[your salary / year] into a company that is running out of money and not paying employees? I sure wouldn't.
Without knowing the situation, the likely truth is that the VC's passed, the angel investors passed, so now you and your coworkers are being turned into the unwilling bottom-of-the-barrel investors.
Re: Ask HN: Working for 100% equity and no salary
#71) Can't Comment
2) Well, if you're no longer getting paid a salary, as far as I'm concerned its no longer a job. Its now akin to your own personal project. Most of us not born to money aren't in a position where we can quit our jobs and decide to work on our own personal projects. So really, the decision is somewhat analogous. Is it a personal project that you think it makes sense to be working on despite not getting paid? If you can't survive without getting paid, well, time to look for your new job. (in all seriousness, without knowing anything else about it, run is probably the correct option :P).
Re: Ask HN: Working for 100% equity and no salary
#8I was at a presentation once about this.
Yes it is legal if the agreement is made mutually.
However! If one of them wants to leave and go somewhere else, they still own that part of the company. This dead weight is not good in the eyes of future investors.
Re: Ask HN: Working for 100% equity and no salary
#9[deleted]
Re: Ask HN: Working for 100% equity and no salary
#10The company is looking for triple-f investment. Maybe one of the founders was in your fraternity. Or maybe one of the founders is your cousin.
But probably not.
Unless the founders are offering the employees more than 50% of the company in aggregate, people who will ask others to work for no pay and with any future reward solely at their discretion are still in control.