skysight-inc/HackerNews huggingface dataset:
This is where the Equity Equation, and some other common sense factors should be considered for your situation.

Will your contribution grow the company by more than 2% in value? (I would guess most likely yes).

How easy it is to find someone else willing to take their deal (more competition drives the price down).

Will you be "coding to spec", or "nurturing the idea"? Having an idea, and executing an idea are 2 very different items. I personally have an idea for a startup that I am working on with a friend. To bring it to life, I'll need a couple of web developers. Those first couple of developers will be key to turning my idea into a product, BUT there are many many people I can choose from. Thus, I wouldn't expect to give them a double digit stock percentage.

You can't allocate all of the stock out on day 1 (well, you can, but it's not a good idea).

Also, IME, there is no such thing as an "unofficial" co-founder. It's like being sort of pregnant. You will either have an equal say/vote in critical areas of the company (how much money will we raise. How do we lay out the cap table. How much to we pay. When do we hire, etc). If you will not be participating in those discussions, you are not an "unofficial co-founder". You are employee #1. Big difference.

What is your 2% likely to be worth? What are the plans for the company? What's the trigger point for pay (and how much)? What can you do to get more stock at a later date? You might very well be able to come to some agreements like "If I get features X, Y, Z and 27 done by 1-Jan, then I get another 2% share.

Also, you mention 2% equity stake. Is that a stock grant or options to purchase stock.

Lot's of unanswered questions here, but I can tell you that stock isn't metered out in proportion to your employee number. It's metered out in proportion to what you are uniquely qualified to bring to the organization.
Interesting analogy, but I think it's flawed because he DIDN'T start the company. I would say "if you DID start a similar company, would you give the first random coder a double-digit stake"?

Then what do you give to the second developer? That guy is likely to do a significant amount of work also. Then you need to hire other key positions. Pretty soon you've allocated 300% of your company. Unless you're starting a hotel in Vegas, that doesn't usually work well.
Insulting? In my experience it's actually not that uncommon. The "sole tech guy" is only going to be that for a short period. Unless the company plans to create something extremely simple and boring.

I'm not sure what you're basing your statements on. But it sounds like you've gotten a very bad deal in the past. Or, you've had no deals in the past....
33%. And then what do they attract developer #2 with? A cheeze stick and a case of Ramen noodles?
Google's already done the leg work with Google custom search for your site:

http://www.google.com/coop/cse/

Although I don't know if you have to sell your soul to use it or not.
"The Company" sounds like it's worth nothing without code, though. You'd have to know more about that aspect of it prior to making more precise judgements.
I updated the document, I would appreciate your comment on my changes. Thanks
It's whatever you guys decide is fair, and that depends. There are web businesses that rely on a strong sales team and you can actually hire an off-shore team, so the dev guy is not too important. There are businesses that rely on a technologically superior product, and a great dev with special background knowledge. It all really depends on what their competitive advantage is based on.

2% does seem to be on the low side though. Will you indefinitely make 2%, or will you eventually make a salary? Yet another way to look at it is comparing what you could be making at another start up, and dividing by 2% to get what should be the present value of the company. For instance, if you could be making $50k somewhere else, then $50k/.02 = $2.5 million. If it's just an idea, I suspect it is worth much less than $2.5 million.

If you really do believe in the idea, you can always ask them how they came up with the X% figure. Do this over the phone or in person, not e-mail. This way, you can see their real time reaction.
ActionThis Launches Online Task Management Service - Free Offer for R/WW Readers
Attention to Intention to VRM - Opportunities for Entrepreneurs
Do what WordPress.com does - only show ads to people who come in from search engines AND don't have a "I've been to WordPress.com before" cookie. That way your regular users will never see an ad, but the people most likely to click on ads (external visitors in "search mode") will. Make sure your regulars know that this is going on though, or they may feel you are being dishonest with them.
Robot arm inscribes the Luther Bible around the clock
How much should things really cost? Are we being ripped off?
Is the consumer market wrong? Are prices set too high for no reason?
Why does movig house always have to be so expensive?
Is perfect skin a myth?
Can Organic Cosmetics really work?
If you know what 'the Laplacian of the Gaussian' is, definitely go for OpenCV. If you'd like to see something based on high school math, try this wiki.
There are two extremes in the equity situation. The first is where the early employee is essentially a founder. There is no security, no salary, no office. In this case, I'd think 2% is far too low.

The second is where the employee isn't a founder at all. This usually happens once the company is stable enough to be around at least for a year or two. The job comes with a normal, market salary. In this case 2% probably wouldn't be too objectionable - the equity is a nice perk, but really you're hired to do a job.

It sounds like these guys are trying to pay a category 1 salary and a category 2 equity package. If that's the case, I'd walk. Not only are these guys being unfair, they sound pretty clueless.
Interview with Dan Lyons (the blogger behind "The Secret Diary of Steve Jobs")
I couldn't speak intelligently to your question without knowing the particulars. Is there an existing codebase? Are the other people working full-time while you're merely working part-time? Generally, how much skin will they have in the game versus yours? Are you "Employee #1" or really a co-founder? In particular, are you the first of, say, 10 other employees being hired?

There are a lot of people here making big statements about your situation, but most of them don't seem to know what they don't know. Why don't you give us more info so that you can get better informed feedback?
Yeah, but he could ask the questions in any order!
The Future of the Internet Is Your Desktop
When Google Strikes: The Story Of EnjoyPerth.net
Me too. I'm much more productive when I can focus on just one kind of task.
You could also think of other ways to monetize your site/idea. Can you sell an enterprise version to businesses? (i.e. Google Enterprise Search) Do you have valuable information that hedge funds or someone else might want to buy? (some of the specialized social networks do this.) Or anything else you can think of... definitely more work than putting up ads, but it could be where the real money is.
Yes it is absolutely legal. Unless you signed a non disclosure agreement or they have a rock solid series of patents you can go right ahead and build it yourself.

You don't owe these mba clowns a damn thing. They are trying to cheat you. I wouldn't lose any sleep over it.

That said, these people sound pretty stupid. If I had to bet, I would say the idea is dumb.
Amazon Payments is set up for this kind of thing, so I would look there for answers.
That looks like it would be useful for typesetting, but it seems way more heavy than necessary. Do you use it, and have you found it to actually be helpful?
Please tell them to read this message thread. You'll be doing them a favor.
Other measures of brevity:

The original ruby definition is 15 tokens, the .to_proc version is 13 tokens.

Orthogonality:

to_proc

3 variables (foo, n, x)
1 method call (to_proc)
1 type of separator (')
2 assignment ops (=, +=)
2 binary operators (->, .)

9 different kinds of tokens, in 5 (arbitrary) categories.

Original:

3 keywords (def, lambda, end)
3 variables (foo, n, i)
5 Separators (|, {, }, (, ))
1 assignment (+=)

12 different kinds of tokens, in 4 categories.

So the only way the original ruby version comes out ahead by these measures is that it has "fewer categories" of token types that are required. Also I think that with the 'def foo' declaration, 'foo' is not technically a variable. I don't really know ruby well enough. But you get the idea.
drop a line if you need your first sponsor. breck at breckyunits.com
Works for YC!
"golf is a very pleasant way to pass the time!"

Golf is a good walk spoiled => Golf is good code spoiled.
>you are not an "unofficial co-founder". You are employee #1. Big difference.

If you're not getting paid, how are you an employee? If your only compensation is equity, that means that you're putting as much on the line as the co-founders, with an equal level of odds of getting a return on your commitment. In that case, your payout on the gamble should be, if not the same, at least comparable. If they're unwilling to offer that, then there needs to be a fair salary from day 1.
Angel financing - What angels look for in a company: Product and pain
The valleywag article seems to be saying that all Facebook employees (700?) have easy access to this information, that it's considered a perk of working there. That's different from 2 or 3 sysadmins with log access.
Thanks! Amazon Payments looks really great and I was excited when it came out but unfortunately it's only open to US companies so it's no use to me right now.
I've seen more rounds raised with no code than I've seen raised with lots of code and no business plan/idea.

Without more data, it's hard to know what the actual situation is here.
Employee is a pretty loose term. He is doing some work (coding) in return for something of assumed value (stock or options). Just because he is not getting an actual paycheck does not necessarily mean that is not an employee of sorts.

There is also no mention of how much of a track record the OP has in terms of creating success. Everyone is going on about how this is such a raw deal for him. If he has no real wins on his resume, this could be a huge opportunity to create something that he can take a lot of credit for, and leverage that to either co-found his next venture, or join an early stage startup with the ability to demand a good overall package.

Sometimes you have to actually take a less-than-optimal deal to build up a platform under yourself from which you can shout your next requirements from.
That seems accurate to me. There is also another class of postponement you can apply for if you don't get a deferment, which is called a forbearance. Generally it involves calling the loan servicer and asking nicely. The main difference is that interest will still accrue with a forbearance.

Here's an example: https://www.acs-education.com/CS/Jsp/loanoptions/ffelForbear...

That one even has an online application form for the "Financial hardship" forbearance which is basically the "I just don't feel like paying my loan right now" option.
Another way to think about it: let $x be the salary you could earn elsewhere, and N be the number of years you'd wind up working for free. It doesn't matter who you are, $Nx is a pretty substantial amount of money.

You're basically being asked to pay $Nx for 2% of a company at the "two guys and an idea" stage. That doesn't sound like much of a deal. If I were an angel investor I'd be wanting a much more substantial stake in the company for that kind of money. Even YC usually winds up with at least three times that, and they generally put in a lot less than whatever $Nx is.
Could Google Be Vulnerable?
You should value how much equity you deserve based upon your expected future value. Sure - you can crank out a prototype, but can you scale a development team, speak at a conference, provide 'non-obvious' contributions to the product? Can you hire other developers, make wide-ranging decisions about which technology platform to use or are you a sockpuppet? If you are hell bent on proving your value - what is your expected future value.
It looks like he only owned 2.3% of PayPal, so he 'only' made $34 million dollars.

http://en.wikipedia.org/wiki/Max_Levchin
Good points. But keep in mind that YC and typical Angel's bring some things of value like:

- Other high-level industry contacts
- Experience
- Proven track record.

How does the OP compare in those regards, because that is (IMO) what establishes value more than what your head count is in proportion to the rest of the company.
The World Bank (as well as the IMF), and the CIA (and British and French intelligence) have a long, public history of nonsense like this. I think it is more of a conspiracy than a conspiracy theory.
I have to disagree with you, while C is a powerful language, many people just don't need it, my advice is, if you're trying to build a webapp, you should learn first HTML, CSS and JavaScript (or maybe Flash), then jump into ruby, python or pearl, or whatever language you feel comfortable with.

Good luck.
"Is it afternoon already? I'm afraid I don't have a good sense of time."

You're telling me that "she" didn't know what time it was?
Been trying to access for the last fifteen minutes with no luck.
Anyone here using S3 or EC2 to power their startup?
Yeah, you are right. I think his $34 million stake was in eBay so it grew overtime. That's my guess.
Wasn't "utility computing" good enough? Why do we need to rename it to "HaaS"?
"six people have my cell phone #"

is that something to be proud of?
I have some experience in this area. I currently get 2% of a 7 year old startup along with market pay. I used to have my own company too.

If I were you, I would give them options. Option 1. 2% is great if you can get it along with market rate in salary. The other option is to get maybe 10% with half of your market rate in salary. The final option might be 20% with third of your market rate in salary. You get the idea.

This way you will find out if they are serious and maybe something will work out.

I don't think you should take 2% with no salary under any circumstances.
Spammer :| (submissions: http://news.ycombinator.com/submitted?id=bobsmith12345)
Another so-and-so-is-dead rant.
If I were Google, I would start buying stakes in new search start-ups. That way, if one of these new engines end being so profoundly awesome that it beats Google's engine, Google can have some control over it.

For that matter, that would be my strategy if I were Microsoft or Yahoo too. No matter how many people or how much money you have at your company, you pretty much have one bet on what the next big thing in search is going to be. Multiple competing products within a company is hard to manage and forcing them to cooperate somehow could quickly kill them all off. Investing in other SEs allows you to hedge your bet.
I don't understand why you're in college at the first place. College educates you to make a good decision and you're not sucking any of those information obviously.

I'm surprised you stayed THAT long (with 150k debt) at school. Obviously you're not into "schedules", "rules", and "disciplines".
Startup Success Story: The Trunk Club
Wrong way to look at it. They aren't looking for developers... that requires paying a salary. By offering no salary they're looking for another founder, which means full share. If they want more founders, they all contribute shares to bring then next on board as well.
Are these arbitrage opportunities?
See http://finance.yahoo.com/q/op?s=MS&m=2008-01

For example, http://finance.yahoo.com/q?s=MQSAG.X and http://finance.yahoo.com/q?s=MSAG.X

Are these arbitrage opportunities?
Vint Cerf to Step Down from ICANN
It really depends upon a number of factors, though 2% does seem a bit low. In my startup, the development end is receiving 50% of the total equity stake. The other 50% is shared by those working on the business end (currently 1), in addition to those contributing the initial capital contributions. I think this is fair overall, since we currently have three developers, each receiving 16.67%
Silicon Valley's $200 million electric car battery startup
The Fastest Way to Find New Customers
I personally think Prism is a bad idea. I thought cross browser incompatibilities were already headache enough for developers. This will pale in comparison when AIR, Silverlight, and Prism all become prevalent and developers are forced to support wildly different implementations.

Its never as simple as saying "if the client doesnt have whats necessary to view my site, then tough luck"
That's ridiculous.... Assuming it's really in "idea" stage, you should shoot for close to equal partnership OR a decent salary PLUS 2%, unless:

-the business is extremely capital-intensive (which a web business usually isn't). If these guys need to dump their time AND millions of dollars into it, it devalues what you have to offer.

-they're far along in the process. Sounds like they aren't, but if they've got months of value ploughed into the business, you don't deserve an equal cut.

-they have tons of strategic value. If the business is selling toys on the internet and these guys have decades of relationships in the industry, that might skew the value.

Do the math on what 2% works out to in various exit events and do a bit of research about dilution if you think this idea might get financing some day. If you DO get a better deal, make sure to understand dilution and have a decent buy/sell agreement that keeps you from getting screwed.
you can do it for federal loans for 3 years

private loans usually have a 6 or 12 month limit

call your lenders

it's a simple process, especially for federal.
That's why people have vesting schedules. And that's why companies issue more stock (and dilute the early folks).
Possibly, but probably not in the way you're thinking.

Morgan Stanley is spinning off Discover Financial Services. The MS options are for 100 shares of Morgan Stanley only. The MQS options are for 100 shares of MS + 50 shares of Discover. Hence the higher price for MQS calls (right to buy) and lower price for MQS puts (right to sell).

Whether this is an arbitrage opportunity depends on what you think the relative volatilities of Morgan Stanley vs. Discover Financial will be. I'd advise not getting involved unless you know what you're doing. (I certainly don't.)

http://www.optionsclearing.com/market/infomemos/2007/jun/231...
Click through 17 pages, or become a "premier subscriber" and download the PDF.
They're also going to bring in more suits later and yet the first suits don't see that as an argument against giving them substantial equity.

We can argue about how much the superstar VP of marketing is worth, but we both know that the question doesn't come up if the first few tech guys don't hit a home run.
I live in Silicon Valley. My spending is actually down slightly from 2003 - that mostly appears due to minor lifestyle changes (eating out less, turned off cable) but is certainly incompatible with rampant inflation. Cost-of-living looks basically flat. I shop at the same grocery store (Draegers .... Mmmmmm) that I did in 2003.

On the other hand, I have noticed a spike in the office vending machine snack prices (to $.80/item!) and, of course, gas looks to have roughly doubled. But neither of those are big expenses for me.

At the risk of engaging of contradiction, that 30% number doesn't jibe with my data whatsoever.

Have to disagree that current mortgage rates have little to do with current inflation rates. Additionally, inflation is such a tricky thing to measure (because the prices of different things fluctuate with respect to one another, and through time, all the time - I can give you a (bad) argument that we're experiencing massive deflation by looking only at the prices of 100GB HDs) that it seems entirely fair to me to point out that someone's inflation statistic is incompatible with the behaviour of many, many people who are paid to get this sort of thing right.
> Employee is a pretty loose term. He is doing some work (coding) in return for something of assumed value (stock or options). Just because he is not getting an actual paycheck does not necessarily mean that is not an employee of sorts.

That's true of them as well.
But strictly economically speaking, it (the "corporatocracy") actually isn't nonsense. Perhaps it is politically and morally wrong;nonetheless it remains extremely profitable. Further, Perkins doesn't offer a viable alternative for the world, besides urging people to consume less, which isn't going to happen just because some fancy economists want it to.
or write a quick script to scrape the pages and output a PDF
How the hell does everyone equate no-salary == founder?

An employee (that's what this guy can be) can do work for whatever compensation model both parties mutually agree on.

The founders of this company are offering him employment terms. It's difficult to say if those terms are truly fair or not because none of us have enough info to judge fully.

I've known people who have worked for stock, "expenses" (leased apartment, etc), product trade (I'll write your docs if you'll host my server farm), and all sorts of other arrangements.

I think that too many people here are getting hung up on trying to achieve "founder" titles.

In this case, they are looking for a developer, not another founder.
Live visualization of who edits Wikipedia around the world
This actually sounds like it doesn't sucks as a business model.
Interview with Atari founder Nolan Bushnell
Google's Response to Facebook: Maka-Maka
Lets calculate. Assuming u work for $70k/year usually .. the expected payout shud be $3.5m after 1 year for the offer to be reasonable. This is an expected payout .. assuming a 33% chances of success given that its a "good" idea .. the company shud be worth at least $10.5m a year later. Given that u are taking such a risk .. and will do lots of the work .. u want 3-5 times that money at the very least .. so do u think the company might be worth $50m one year down the road with a proability of 33%?

Hmm .. the calculation is really slightly orthogonal to ur question perhaps
2% "and no compensation at this point" is not a good idea. My first startup with a couple of friends asking me to build them a site for 3% equity and some percentage of the sales. They valued their idea wayyyy too much. Half year later, they raised it to 15%.

If you can build it yourself and like the idea. You should do it. Their 2% with no salary is insulting.
I've used it on some sites and it usually... sucks.
HAH. I had it on a site that got hundreds of thousands of searches and it made maybe a dollar, total ever. What a joke.
I must disagree in this case.
While there are many ways to skin this cat, it seems like the right way to approach it is to consider the offer from your POV, not from an obscure universal concept of fairness.

Assuming you believe in the idea and in the ability of the two people to execute, what do you think the valuation will be at the time of acquisition? I know it's black magic, but suppose you arrive at a number of ten million. Once you arrive at this number, make an estimate for the time frame of the project. Suppose you decide the acquisition will happen in two years. Is 2% of ten million ($200,000) after two years of work for no pay acceptable to you given the high risk of the enterprise? If so, and you feel you won't be able to make more money elsewhere, take the opportunity. If not, look for something else.

The valuation and time frame estimation is voodoo, but figuring that out is a whole separate issue.
Not to mention that it's still only accepting a limited number of companies now. How annoying.
Are Unoriginal Ideas Bad?
OMG! The moment you "stumble upon" a competitor
ditto...I think I would actually use something like that...
The Way It Woz: Steve Wozniak on All Things Apple
Serial entrepreneurs and today's Silicon Valley