If you're a software developer, you've probably been approached by a great number of startups or by business owners offering you a new job but wanting you to work for free for a certain amount of time in exchange of something.
In this case, this guy that emailed me said that he was approached by a startup to work for free for a year, in exchange for a 50/50 split in the next year.
He got a job. He won't be paid for a year. He will work for free.
What should he do? Should he get the job? Will it pay off?
Watch this video and find out!
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Transcript Of The Video
John Sonmez: Hey, what's up? John Sonmez here from simpleprogrammer.com. I got a question about joining a company and not getting paid for a year. It was actually called Accept the Job with No Pay for a Whole Year. Before you think this is a little bit crazy, let me read you the question. This is from Semi or Semi. I think it's probably Semi and he says, “Does it make sense to work for a startup that will not pay me anything for a whole year but promises equity? I would be the only technical founder.” A nice short and sweet question. See, you guys, when you ask me questions, you should ask a nice simple question that I could read easily and then you're more likely do get a response or a video created.
This is definitely one of those things where I have a pretty strong opinion on. Well, first of all, you got to think about joining a startup sort of like a lottery ticket. There's a high probability that you're going to lose. More than likely, you're going to lose. When you think about it, if you were, let's say, an investment banker or venture capitalist, you would not put all your money into one startup. Why? Because you know that you're probably going to lose the money. That's why it's a highly risky thing to do.
What do VCs do? Besides picking good companies, I mean they go through that process. They take—maybe they have $10 million to invest and they put 1 million in 10 different companies because they're expecting that one of those companies, when it hits big, it's going to return them $100 million or $50 million, but they're expecting to lose $9 million on the other ones. Sometimes they lose all 10.
If you think about it, always think about it from the perspective of the wisest guys in the industry or the person who either has the most to risk or most to lose. That's the person who is bankrolling the operation. They got the money. What are they doing and what are they betting on? If they don't think that any particular company is going to survive, if they're never so sure. Have you heard of a VC just taking $100 million investing in one company? That’s it and they're just betting it all on that everything they got. It doesn’t happen
If they don’t think that it's a good idea, you shouldn’t either. That doesn’t mean you shouldn’t necessarily take this job. Here's the thing. This is what I'm talking about here. Don’t take the deal on the promise of equity and don’t assume that what's going to happen is that you're going to work for a year, you're going to build up equity in this company, you're not going to get paid and it's going to be this huge great investment and then you're going to make millions of dollars. Chances of that happening, maybe less than 1%. I mean let's be honest here. Maybe you think it's more. It doesn’t matter. It's not even close to 50%. Let's put it that way. It's not even close to 50%. You can execute correctly. You can do everything right. You can have a perfect team and still fail in the business world. There's a certain matter of luck involved as well in a company doing while a startup really going crazy.
Too many people have lost their dreams in hopes on that, but, again, I'm not going to say that you shouldn't take the job. If you do take the job, here's why you take the job for the experience. For the apprenticeship. You need to evaluate this not in terms of what am I going to make. How much money am I going to make? Am I going to become rich? Because there's no such thing as get rich quick. It's not going to happen. You're not going to work this one job and then assume that you're going to become rich from this. That's the wrong attitude to have and you'll be shooting for—you'll be not getting the best of the experience.
Here's the thing. If this is a good opportunity, if this is something where you want to see what it's like to work for startup. You want to get that experience and maybe you want to start your own startup someday, or this is your dream. You want to keep on working for startups and maybe you're going to work for them for a year at a time, or whatever it is or even this specific technology. Maybe then you want to take the job.
Again, we have to separate the two as far as like, “Should you join a startup in order to get equity because you're going to make a big payday later on?” No. Absolutely not. Not a good investment. It doesn’t make sense at all. If you were a VC and you could invest in 10, that's fine but there's only one of you. That's one decision. It's on the company and the lottery ticket there. The second decision is the job itself. That's why I'd say like, “I would take a job.” For example, I've said this multiple times in videos. If Warren Buffett says hey or some billionaire says, “Hey, John. You know what? I'm not going to pay you anything, but you can't hang around with me all day and you can get me coffee.” I'll be like, “Fuck that.” I'm going to drop everything I'm doing and I'm going to go and I'm going to go do it. I'm going to camp out on Warren Buffett's lawn and say—and bring him coffee.
You know what I'm saying like—because I'll learn so much because the experience is so valuable. That's the thing. You got to separate and say, “Okay. Is the experience valuable?” I'm not saying never take a job that doesn’t pay you anything. You should do that if the experience is worth it. It's just got to be really worth it to you. If it's not, then yeah. I will offer negotiating.
In my book, The Complete Software Developer's Career Guide, you can check it out here, I talk about how to negotiate a job, how to get your best salary. I don’t want you to think that I'm talking about working pro bono and I don’t think you should get paid for your work, but you got to weigh it out. You want to always play the long game. What's always going to benefit you the most in the long term? That's what you want to think about.
My opinion is unless this is just a great job and just a great opportunity and you're willing to work with that pay and not get equity. Assume that the company is going to go to bust. If you assume that the company is going to bust and that year would worth it for your career and for experience or getting close to someone who has been really successful that you're going to learn a lot from, then do it. If not, then skip this. Don't be so desperate as to just take a job on equity. It's a crazy move.
It might work, I mean you might be the one that proves me wrong, but 99% of the time, more than 99% of the time, you're just going to lose everything and lose a year and not get paid for it. That's my opinion on that.
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