HACKER Q&A
📣 goostavos

How much equity for first engineer when there is no salary involved?


How much equity should you ask for if you're an engineer joining a company for exclusively equity? I would be the first engineer and present from day one (though not a founder).

This would be a part-time moonlighting thing for all involved. Still though, having no salary obviously puts me in a much more risky position. I'll be trading life / hobbies / free-time for a large "maybe." That risk should be reflected in the equity, right?

Going off Paul Graham's Equity Equation, the small skunk works aspect of project, and the fact that it doesn't get built without an engineer means that I'd expect to ask in the high range, like, 30-40%. However, it's really tough from reading around online to tell if this is reasonable or not.

What are the reasonable equity ranges for this situation?


  👤 davismwfl Accepted Answer ✓
I get the idea, but in reality there is no fair equity position unless you are considered a co-founder. If you are considered a co-founder then this is workable, but basically you need to have an equal say in all things, otherwise the company needs to find a way to pay you.

To be clear, equity is a promise that is broken in all but a few percentage of cases, and even when it isn't broken entirely many times it is nowhere near what you were promised or believed would be the outcome.

I say you must be considered and treated as a co-founder because you are taking the same risk the founders are and you need to be treated equally and be able to have unrestricted equity, full voting etc. This mostly prevents them from creating a share class now or later to minimize your payout, or to dilute you first before their shares are diluted.

Whatever you do, don't do a deal like this without a lawyer helping you get it all in writing correctly to protect you. If they object to that then you should run away from this deal.

To be fair, I have done this type of deal once, where I took only equity for work (and I had most of these protections but not all and not co-founder "status") but I will never do it again without being a founder/co-founder. There are just so many ways to be screwed, even by well meaning founders who just are naive to how investors and business works. It is also easy for people to speak about being fair when a multi-million dollar payout is just a dream, but people change when the money is really there and they see themselves "losing" millions to "non-founders". Not saying all people are like this, many are great and wouldn't be douches, but you have to protect yourself from those situations no matter what. And good founders won't object to you having those protections in place because they were never going to be the ones that tried to screw you in the first place. Lots of lawsuits and insane amounts of money gets paid to lawyers because people don't protect themselves up front and get things clear and in writing.


👤 gus_massa
Remember to get the % of equity in written. An oral agreement isn't worth the paper it's written on. Get your lawyer to read the written agreement.

How many other founders? How long is the other people working in this? How much magic does their equity have? Do they get salary?

Do they have some MVP? What happened with the previous developer?


👤 dylanjha
Everyone is part-time moonlighting, but how many others are involved?

If only 2 or 3 of you then I think the range you're asking for makes sense.