Advice Required.

LowBalla

I recently joined a company to impart professional services to monetise their product. The plan was to get them ready for WebSummit and find customers to provide revenue.

The original deal was that I'd bill them for my time when they started to generate revenue and now they want me to work with them full-time. There's talk of equity/wage/bonus scheme but what should I really be asking for here?

What are your thoughts on joining them as an affiliate for 50% of the revenue I provide?

Confused.com

dbran

Hi

It all depends on what is on offer and how much 50% of the revenue would be.

It seems a lot of the turnover to give away so I would be wary especially if it was their idea in the first place.

What are your chances of getting paid for the work you have already done for them. As this work is now presumably at an end you should now be getting paid. That will be the first sign of things being for real.

dbran

ironclaw

You should definitely be closing out your account for the work done and then begin on the new terms. If they are not willing to pay you for the work done to date, its a strong indicator of cash flow problems and I'd walk away. There are plenty of business's with massive turn overs but zero cash, for various reasons. Also, every single start up believes they are facebook but the reality is 99% will come to an end when the grant or investor money runs out. They are not long term, they are here and now. A good few are also riding the gravy train of loose money and I'd go as far to say we are in a start up / dot com bubble of sorts again.

The way I operate is always be covering your own costs. Ask yourself if you don't have a guaranteed wage or money at the end of the month, how much do you need to get by. This should be your bare bones salary unless you have had an expert look at the company finances and there is nigh certainty the start up is going to 'do well' in the short to medium term. There should also be cash out points for yourself in the terms so you can reduce your expose. Likewise, think about the money you will loose based on time and effort if the idea never progresses or takes off, this is your 'loss' and should be considered as well.

I have plenty of ideas that I run and mill in the background, they are personal projects and few are revenue generating, let alone profitable. But they are for my enjoyment and thats the pay off. Its quite a different mindset to when you are working with people or employing people, and very few start up founders acknowledge this. A start up is their 'baby' and they want it to do well. If it goes bang, they rarely care too much and often don't loose all that much. They got the value from it, probably some cash from investors and they had the experience. Unfortunately for those on the payroll, it can be a much bigger deal indeed especially if the terms of payment were shares & equity.