Ask HN: Should I continue to work for free?
The startup has received funding totalling around $600k USD over 2 rounds. Since the 1st round of funding, the full-time two co-founders and designer have been receiving a (low) salary, but a salary nonetheless. Having recently received a second round, this is likely to increase.
After my first 6m, I was entitled to options and told I would be sent the details and confirmation shortly. I chased this up last week (18m later), and was told they hadn't implemented a benefits scheme so hadn't been formally allocated anything, but that it was being worked on.
After the second round of funding, I advised them that they should get a full-time CTO. The new CTO starts in 2 weeks time and is on decent money. The intention is that I stay on in an advisory role.
Another guy in the team in a similar position (he has done unpaid work, but invested less time than I) recently enquired as to whether in light of investment, we would receive any bonuses. The CTO answered that he would like to offer us something, that the investors may not be willing, but that we should find out in the next month or so.
I am still being asked to do work. Should I do it? So far, I have received no cash or shares. They have hired a well paid CTO to do my job full-time. I feel like I have been taken advantage of, but am not sure if it's worth holding out given that I may receive some payment and be allocated options.
Seeing others being paid for their work while I am essentially working on a voluntary basis is very demotivating.
Advice would be appreciated!
59 comments
[ 3.8 ms ] story [ 132 ms ] threadLong answer: You're probably not going to get a dime. Learn from this experience and don't get suckered into this type of situation in the future.
However, if they never paid you, it means that any code you've done remains your exclusive property (i.e. the company has no right to use it without your approval, since there was no consideration under which a claim of work for hire would succeed). That's your one bit of leverage here. Make the company buy out your code. Then find a paying job that actually respects you.
Do not be afraid to speak to the lawyer. Real employers understand that you are not expected to work for free.
https://en.wikipedia.org/wiki/Betteridge's_law_of_headlines
Don't work for free. Not for a day. Not for an hour. Stop working and move on.
But for real though, don't work for free, and don't work without a contract in place unless you're doing charity work. You've been working for them forever without them paying you. What incentive do they have to pay you now?
What motivates you to invest eighteen months of free work for a commercial start-up? Friendship? Promises of a significant reward? Genuinely interested in what drives you.
OP, please take this as a lesson. For a significant portion of my career thus far I've been in consulting/advisory positions with startups between the seed and Series A stages of funding. I have never, ever worked with a company for the first time without first getting a confirmed deposit payable towards the final invoice.
In the fast and loose world of startups, rule number one is "Can they pay me?" Employees should be paid before founders, not the other way around.
Practically speaking - engage a lawyer, send a letter and sue if the economics of that equation make sense. If they don't, cut your losses and move on with a lesson. Refer to some of the other comments here echoing the legal advice.
You were taken advantage of. And forget about it, they will pay you nothing.
Move on and accept it as a life-lesson.
Most here will say "learn a life lesson and move on". The point of getting legal is investors will be very interested in why the founders have taken advantage of you like this. Naturally the founders will want to avoid risking the investor's cash/rep and getting them involved etc so will likely offer to settle.
You and your fellow free-worker have already raised the issue and have not had a satisfactory outcome. If you stop working for free, they will pull the carrot away and you will get nothing. If you keep working for free, you will get nothing since you already have nothing.
When you work for free, you are saying that your time and effort are worth nothing. Your "co-founders" got the message loud and clear and are unfortunately not "good" people so they are operating on that premise and yet they value the time and efforts of the new CTO.
http://www.shouldiworkforfree.com
I would write an e-mail to say that you are wrapping things up and at the end of this week will be done.
If they act surprised or demand you to work for the next two weeks tell them sure but you'll be billing them at a daily rate (regardless of if work takes place if you're a CTO, you're on call) and send over a standard contract.
They will never discuss your worth unless they are put in a difficult position where they have to. Do not do any more work until you have a signed contract. If they never sign it then you're done.
Don't stay on as an advisor unless it's something you really love, it will just make you mad to have put in so much effort and never have been compensated in return.
Well, he shouldn't stay especially if this is something he loves.
Furhermore, if you have any documented promises to pay, including shares, then you are owed a debt.
Try to engage a collection agency. They will cost you nothing and will be the bad cop for a while even as you get to be the good cop, or at least the cop who doesn't call them.
Unless there's more to this. How did this situation even arise in the first place? How do you earn a living?
I am a PhD Student with a (small) stipend.
Perfect. You now have no reason to do an extra minute of output. Let the founders and other C level exec's beg the investors for your help.
always.
no
ffs
no
Offer to sign one in exchange for having the stock issue resolved.
It might* help you to create the contracts. Any competent company won't want to use them but it could lower the resistance for them to agree.
*IANAL
Let's review:
- If you're helping run an early-stage company but you're not drawing a paycheck, you're a co-founder. This means you should have a significant amount of ownership, and you should be publicly acknowledged as a co-founder everywhere it's relevant.
- Let's say you're an employee and not a co-founder. If the official founders are being paid and an employee isn't, the company is operating backwards. Employees should get paid first, then founders.
- If the company is funded, then nobody should be working for free.
- It's one thing to help out a friend running a company for free. I don't agree with it, but I can understand it. But when you have an actual title, especially one as important as "CTO", that crosses a line from "helping a friend out" to "employee or co-founder of the company".
I worked for free too for a startup, for about 6 months.
They had trouble getting the right investor. Story was, they had one but then a company said they would buy them right away, so they didn't take the investors money. Instead they talked to new investors and told them about the new buying offer they received to get better conditions from the investors.
Long story short, I got my money in the end, they even paid me all sick days (I'm a contractor and in the hospital while working there) so it wasn't that bad for me.
They hired me to work remote for them, I stayed because I wanted to add more remote working experience to my resume.
Also, my thought if they really paid me in the end, they would see me as a valuable and flexible partner, who they will hire again.
Anyway, now I got almost two years of remote work experience and quite good money out of it.
But this story could also went otherwise and I would be forced to take the next best job I find, if I ran out of money before they could pay me...
edit: Was anything signed?