[dchmiel]

Something in the article that jumped out at me was:

"But the couple still couldn’t raise money. As cash got tight, the founders asked their eight full-time employees, who are mostly in the San Francisco Bay area, to work for minimum wage, which would buy the company a few months of extra runway. The staff agreed."

The 8 employees must have drastically reduced the cash flow requirements by just being paid minimum wage. My question is, is that any different than directly investing into the company and giving the company cash outright like a VC?

The employees made an investment into the company like a VC would by giving extra runway to the company. I wonder if the employees received any equity compensation for doing so under the same terms that the Alvarez's are trying to raise financing under. Getting paid higher than minimum wage and needing financing which dilutes you or taking minimum wage reducing the need for financing but getting no equity for it seems unfair to the employees.

They never mentioned that detail in the article but it's something I always think about when founders and executives ask employees to make these sacrifices and take on added risk but without ever compensating employees like they would compensate other capital with equity for the risk they take.