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  1. #1
    SitePoint Evangelist
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    Job offer: no pay, but stake in company

    Have been reading a couple of jobs that seem very interesting but offer no salary: instead, you can earn up to a 49% stake in the company.

    I am wondering about peoples opinions on this - have you been there, done it, got rich or got burnt? Are they scams, to get you working for "free"? What cash value is a stake in business to me, especially in regards to a monthly income? What should i look out for ie pitfalls, clauses etc?

    Interested in hearing peoples opinions on the matter.

  2. #2
    SitePoint Wizard Lil_Red's Avatar
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    It's a gamble and you may end up working for free forever. Contracts like these need to be very carefully spelled out so you know exactly what you're get involved in.

  3. #3
    I hate Spammers mobyme's Avatar
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    There is nothing inherently wrong in working for shares in lieu of a salary providing you dot the "I"s and cross the "T"s and have a route map and timetable to know where your going and when you are going to arrive there. Make sure that you have enough resources to stay the distance and one day in the future you may be sitting on shares worth a fortune in a successful company. The downside of course is you could finish up owning worthless shares in a company that has run out of steam and is going nowhere. Like Lil_Red says it's a gamble; research everything well and then decide whether or not to step up to the plate.
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  4. #4
    SitePoint Guru El Camino's Avatar
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    Quote Originally Posted by skinny monkey View Post
    no salary: instead, you can earn up to a 49% stake in the company.
    This part has me concerned. What does "earn up to" mean? Is there more than just one person working for "shares"? I'd stay away. If they break the contract, is it practical, and can you afford to take them to court in their jurisdiction?

  5. #5
    SitePoint Wizard LiquidReflex's Avatar
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    Personally I would be very leery of working for no pay. As the others said, if you were to do this, you would want to make sure you have a solid contract in place that is looked over by a lawyer. There are so many loopholes and ways to avoid paying you that you need to be very careful of that. If your pay is based on "profit" or "income", how are you to monitor this and know if you are receiving what you should be? Are they going to show you their actually monthly income reports? Do you have a say in how they advertise or market the product/service since those expenses cut into your stake at the company?

    These are all things to consider before going through with anything. I'm sure there are times that this sort of arrangement has worked, but for the most part, I think it's a way for start-ups to get the work they need done for free and without risking more funds up front. Personally I avoid those propositions.
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  6. #6
    ~unplugged Ainslie X11's Avatar
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    Quote Originally Posted by skinny monkey View Post
    Have been reading a couple of jobs that seem very interesting but offer no salary: instead, you can earn up to a 49% stake in the company.

    I am wondering about peoples opinions on this - have you been there, done it, got rich or got burnt? Are they scams, to get you working for "free"? What cash value is a stake in business to me, especially in regards to a monthly income? What should i look out for ie pitfalls, clauses etc?

    Interested in hearing peoples opinions on the matter.
    Don't do it. There's always a few try-hards floating around the web looking to pull talent without spending a cent.

    Rule number 1 in business, don't start one unless you've got money.

    Try and imagine going to BMW, and offering them the same deal, if they built a new model car for you.

    It's crazy, why your bothering to even think about it is why the free-loaders try it.

    And remember, if their not spending any money on the business, then they won't be committed to it - when the payments don't come in, you'll get a "sorry, things didn't work out" - it's constructive slavery, there should be laws against it.


    working hard is hard work

  7. #7
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    I've never seen a dime from any company that promised shares - they've all gone under before they ever made a cent. If they can't raise the funds for a start up then I doubt they have the passion to make it work in the long run.

  8. #8
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    This is very often something that dreamers will offer to entice inexperienced developers into doing free work for them. There may be a small chance that something might come of it, but in my experience I tend to avoid offers like this by a mile.

    I've had sites in the past where I've been paid for my work AND received a stake in the company. That is a good deal. Doing all your work for free for the off chance of some future money will probably work against you.

    However, it depends on what you want to get out of it and what your experience level is. If you're quite new to this, then it could actually get you some experience and might help you learn things along the way. It really depends on what you want to achieve. If money is important to you right now I'd steer clear of this kind of offer. If however experience and maybe something to show on your portfolio is of more benefit for you right now, it may be worth your while investing your time and effort.
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  9. #9
    SitePoint Wizard bronze trophy bigalreturns's Avatar
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    I did a job for low $ plus average profit %, and I'd advise against it to be honest. In my inexperience, I didn't get a contract or anything drawn up (the guy did seem pretty trustworthy). Anyway, a small PHP job of 4/5 hours quickly turned into a large PHP job of 10 times that! As I was just starting out and hoped to build some good reputation and get referrals, I decided to compromise with him, and did probably 10/15 hours over and above agreed. Delivered product, he says great, now just write me up full documentation on it, including instruction manuals on how to use it (it was all very self explanatory!). If offered to walk him through it with a screencast, or on the phone, but no, that wasn't good enough.
    Obviously I got a bit tired with the whole thing at this point, pointed out to him that I'd already worked far more than agreed, and that he was going to have to stump up a bit more if he wanted more doing. So he says fine, we'll call the profit share quits then, just take the lump sum.
    Lesson learned really! People who offer this usually fall into the category of either:
    1) Site will make no ad revenue, so any %share = 0
    2) Site makes money, but they never intend to pay you.

    Either way, it's usually people wanting something for nothing! I'm just glad I at least had already been paid the lump sum so I got something out of it!
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  10. #10
    Serial Entrepreneur
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    Don't walk, RUN to the nearest exit.

    As stated earlier: successful people know where to find seed money. Unsuccessful people figure out how to lure someone even less successful into an arrangement that doesn't involve actually paying them or giving them control over anything tangible from which they can recover money for the time spent.
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  11. #11
    SitePoint Enthusiast jt_va's Avatar
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    Just another deadbeat looking for free labor. DONT DO IT!

  12. #12
    SitePoint Evangelist asprookie's Avatar
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    I know someone who had a job for a decent salary at a reputable company, 2 years later they offered stakes in the company instead of the expected annual raise, and 2 years afterwards, they closed.

    DON'T DO IT.


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