Yeah I will only take cash -or- cash and equity. One success story does not a model make...
That is what is stated in the article, yes. Workers can take 0% to 80% of their compensation as equity, they are still paid at least 20% as cash.
Paying freelancers in equity and dividends
31–39 of 39 posts
Re: Paying freelancers in equity and dividends
#32> It wasn’t always this way; from 2015-2019, everyone at Gumroad was paid cash, no equity. No one wanted any. Gumroad started in 2011 and raised $8 million. The reason "no one wanted" any equity in 2015 was because they laid most employees off, replaced them with contractors, and the investors wrote their equity down to $1 as a gift to the founder. The founder got to keep the IP, ditch the founding employees, and con…
> him, and I don't know what became of the employees' equity. Probably nothing, given that the company had to be written down to nearly $0 for this transfer. It is somewhat addressed (without specifics) in the article: > We also gave a token amount of equity to alumni who worked on Gumroad from 2011-2015, without whom you wouldn’t be reading any of this. Thank you!
Yeah the math on what, 300k in equity on a 100MM “valuation” by retail investors is… hey it ain’t nothing. 0.3% of 5MM dividends is 15K.
For a dude who’s only alive because his investors decided to walk away from their 8MM investment, that’s kinda tight. But freelancers just want the cash, so if he’s paying cash, this is just some weirdo being weird in tolerable ways.
The whole performance here is off putting to me though. You got gifted a huge amount of money and kept almost all of it for yourself. Alright man. You got the right. Everybody is a big boy and agreed to the deal.
But let’s not play around about how you got rich, or how much of the pie goes in your own pocket versus everybody else’s.
Re: Paying freelancers in equity and dividends
#33Earlier quoted context omitted.
Everything you wrote was par for the course for a private equity company (note that venture capital is a tiny subclass of private equity) The founder kept everything because investors expect that their relationship with this person is going to continue and eventually this person is going to “make the fund” in a future venture That’s the key thing here, as a CEO/founder if you have gotten the stamp of approval from ve…
I'm not sure that VC's will be investing in the company of a failed entrepreneur. At least something should have changed to make the company "better". In Gumroads case the truth was that the money would be pretty much gone, the company is not going to be valuable. He didn't raise this time from VC's, but from clueless retail investors, which is quite a different thing.
> I'm not sure that VC's will be investing in the company of a failed entrepreneur
Andreessen Horowitz has entered the chat with a $350M check for Adam Neumann
Re: Paying freelancers in equity and dividends
#34I wish you addressed your original hypothesis with concrete examples (is this fair, does being early matter, is it clear) Eg, you gave equity to early contributors, how much and what did that translate to? If those same people work as freelance now, are they paid the same relative equity? Same class? How long would someone allocating to equity need to work before they see the equivalent in dividends? Calculator seems…
why would this platform need to have the answers to those questions? i would guess that all of those questions should be left up to each individual company. that is something to be figured out by the company, not the platform. it seems like flexile is simply a platform for facilitating those types of labor agreements. i doubt they want to be opinionated about all of that, and i think they shouldn't be. the platform i…
oh wait i misread your questions. thought you were like, "how does this work at the cap table" or whatever
Re: Paying freelancers in equity and dividends
#35> It wasn’t always this way; from 2015-2019, everyone at Gumroad was paid cash, no equity. No one wanted any. Gumroad started in 2011 and raised $8 million. The reason "no one wanted" any equity in 2015 was because they laid most employees off, replaced them with contractors, and the investors wrote their equity down to $1 as a gift to the founder. The founder got to keep the IP, ditch the founding employees, and con…
> The founder got to keep the IP, ditch the founding employees
What kind of ungodly sh*t is that...
Re: Paying freelancers in equity and dividends
#36I invested $1,000 in Gumroad back when they did the public fundraise, and I got back ~$70 so far. At this rate it'll take multiple years to break even, much less earn a multiplier. But oh well, I liked the Gumroad team so I wasn't looking for much of a profit anyway. Related, I thought it was hilarious how so many creators on Twitter publicly stated they were leaving Gumroad when the 10% fee change was enacted, only…
Sorry, but to confirm, they charge a 10% flat fee and that's it? That's insanely good compared to every other platform I've seen for any type of commerce. Sure, Amazon, Apple, and the like also help offer exposure and some other services, but 10% flat seems completely worth it until you hit a critical mass where it makes sense to handle things yourself. I imagine that number is very high though.
> That's insanely good compared to every other platform I've seen for any type of commerce
I think Patreon has better rates and now they have commerce.
Re: Paying freelancers in equity and dividends
#37I think Flexile is a great concept, and there's tremendous value in simplifying things like equity & dividends. I'd like to see dividends become the norm for other companies!
Extraordinarily more difficult to get rich that way vs cashing out in the public markets. A 10x revenue multiple vs whatever share of profits your equity gets you after your nvestment terms are satisfied?
Re: Paying freelancers in equity and dividends
#38Earlier quoted context omitted.
Everything you wrote was par for the course for a private equity company (note that venture capital is a tiny subclass of private equity) The founder kept everything because investors expect that their relationship with this person is going to continue and eventually this person is going to “make the fund” in a future venture That’s the key thing here, as a CEO/founder if you have gotten the stamp of approval from ve…
I'm not sure that VC's will be investing in the company of a failed entrepreneur. At least something should have changed to make the company "better". In Gumroads case the truth was that the money would be pretty much gone, the company is not going to be valuable. He didn't raise this time from VC's, but from clueless retail investors, which is quite a different thing.
As a strong counterpoint, Adam Neumann lost $16B of Softbank's money and walked away with almost a billion of it himself personally. [0]
He later raised 350m from A16Z[1], so this is not universally true and in fact is a pretty big counterpoint. Adam Neumann is about the worst founder you can fund (Maybe SBF is worse) and can still command vast sums from top tier VCs.
[0]https://www.calcalistech.com/ctechnews/article/a8vuka5hj [1] https://www.google.com/search?q=adam+newman+new+company+fund...
Re: Paying freelancers in equity and dividends
#39I invested $1,000 in Gumroad back when they did the public fundraise, and I got back ~$70 so far. At this rate it'll take multiple years to break even, much less earn a multiplier. But oh well, I liked the Gumroad team so I wasn't looking for much of a profit anyway. Related, I thought it was hilarious how so many creators on Twitter publicly stated they were leaving Gumroad when the 10% fee change was enacted, only…
Sorry, but to confirm, they charge a 10% flat fee and that's it? That's insanely good compared to every other platform I've seen for any type of commerce. Sure, Amazon, Apple, and the like also help offer exposure and some other services, but 10% flat seems completely worth it until you hit a critical mass where it makes sense to handle things yourself. I imagine that number is very high though.
10% flat fee + payment processing fee (2.9% + .30c IIRC) - it works out to about 16% for a $10 product. That is still better than comparable ebook platform like Leanpub which charges 20%.