Ask HN: Should I quit my startup journey for now?

[lkuebler]

One year ago I started as an intern at a start-up. Things evolved and we are now a team of two-founders and one developer (me).

We are running out of money and so my bosses chose to not pay themselves and myself a salary. What can I do to get reimbursed for my work at the startup? Currently there's not much work for me but if the other two guys manage to close the ongoing funding round in approx. 3 months they want to hire me full-time.

Can I demand equity from them in advance to assure my piece of the cake once the money has arrived? The answer they gave me to this was they would give me the shares once the round is closed. But this is only good for them, not for me. Right?

I am very new to start-up things and really don't know how to act.

Feel free to share your experiences with getting shares as one of the first employees in a start-up.

EDIT: I really like the idea of the company and I'm very interested to getting the idea to market. ... But not at my cost! Already having a start-up like salary is harsh sometimes. And then still being bargained down to a minimum, hearing promises I know for sure will not be made real after the round is completed, is just annoying. If I would not like the idea that much I would have already quit today.

[codegeek]

"my bosses chose to not pay themselves and myself a salary"

This may be illegal depending on your location. If you are hired as a paid employee/contractor, you must get paid.

"they would give me the shares once the round is closed"

The round is probably never closing. Most startups like these go bust and the promise of "we will pay you once we close a round" is wishful thinking at best and dishonest at worst.

"Currently there's not much work for me" "I am very new to start-up things and really don't know how to act."

Leave. There is not much there. The 2 founders will most likely quit on this in the next few weeks or couple of months max. They are at a dead end. If they could have raised money, they would have already. Only reason you possibly stay is if you truly believe in this idea and love the product and founders. Highly unlikely based on your post and level of experience.

[lkuebler]

You are right!

[ok_dad]

At several companies I have worked for, they have run out of money. At one of them, the executive staff stopped taking pay, but at every single company the business closed and every single staff member otherwise was paid for every minute worked, and every earned hour of PTO. There is no other way for this to work, and clearly these two "entrepreneurs" are taking advantage of you.

Don't fret, just quit and find other work. I am sure plenty here on HN have open positions, click the "jobs" link at the top and try that out (https://news.ycombinator.com/jobs).

[lkuebler]

Thanks for your reply. I will not let them take advantage of me anymore.

[throww1243]

After reading this message I want you to write an email to say that you quit effective immediately. Never talk to these people again, it's important that you cut these unproductive, mentally draining relationships as soon as possible.

If you don't do it as soon as you can it will take a mental toll on you (self-esteem issues e.g. how could I be so gullible etc...) In a sense you already know, but you are still lingering for the very low probability of high return, equivalent to betting prime Tyson losing against Hasbulla, it could technically happen but it will not. It's time to start ONLY listening to that part that ALREADY KNOWS and follow its advice.

QUIT, bitch

[tdeck]

As a non-throwaway account I completely agree. These founders are thinking of what's good for them, even if it screws you over. It's time to take what you learned as an intern and head for the exit. If they try to guilt you, remember that you don't owe them anything and they literally owe you a paycheck.

[lkuebler]

I think they already did. It took me so much mental energy. Even though I kind of expected this situation to happen a few weeks ago already.

[aintmeit]

Namaste. Nah, I'mma stay.

[toast0]

> What can I do to get reimbursed for my work at the startup?

Contact whoever does wage theft prosecutions in your area if you've done work and haven't been paid.

If you've been paid until now, and are otherwise happy, tell them to let you know when they've got money and you'll consider coming back. But, don't promise to come back, and don't accept any promises from them. If they ran out of money before they got funding to continue, then any funding they get isn't going to be on good terms, and they may not be able to keep any promises they make.

[lkuebler]

They will not get the funding for good terms, I know that almost for sure now.

[masukomi]

I wouldn't bother seeking legal means to recover your money. The problem with that strategy is that it only works if there is a company remaining with money to pay you. They will go out of business. the company will have no money. In the best case scenario you pay legal fees to sue them, you win, the judge says they have to pay you, and they have no money to pay you so... you just loose more money.

Don't bother. The money is never coming. Move on to something else quickly.

[toast0]

I wouldn't bother with filing a law suit, but it may be worthwhile contacting the appropriate government agency; in California, you can file a claim online [1]. It likely won't be quick, and they might not be able to get any money out of a stone, but it shouldn't cost you any money, and it shouldn't take a lot of your time.

Wage theft is also a crime, and you can go through the police and district attorney to pursue that, if you can get them interested.

It's possible that the wages may be recoverable from the individuals even if the corporation is bankrupt, although how much time and effort you want to invest in that, I dunno. Would depend on the amount owed, I would think; I've not been in the situation, but I'd like to think I would stop working at a place where a paycheck bounced or went missing until that was resolved; with maybe some amount of flexibility for a paycheck a couple days late, or a really convincing explanation about why what happened happened, and how it was going to be resolved. Anyway, I don't think I'd be willing to make a big fuss about one or two paychecks, but I'd certainly file a report.

[1] https://www.dir.ca.gov/dlse/HowToFileWageClaim.htm

[tlb]

That sounds pretty grim. 3 months is a looong time to raise the first money. And the CEO should have started fundraising 3-6 months before running out of money.

It's reasonable for people with founder stock to decide to not pay themselves when money is tight, but not reasonable to stop paying employees (= without founder stock).

If you think the company has a future, insist on founder stock now. Otherwise, there are lots of other promising startups with adequate funding.

[lkuebler]

The reasons for not getting founder stock (at least it was for them) are:

I don't have any titles or smth. similar.

It takes 15 days to sign the contracts which is somehow to long for them

This is just f** up. I should have left a long time before. But - you always learn it the hard way.

[web99]

Unless they make you a founder and give you say 5% to 33% of the company, quit.

It makes no sense to get a 1% equity when you are making the same sacrifices and taking the same risk as them. They may say they are able to raise money, but you are able to build the product. And unless the product reaches product-market fit, there is no business and no company.

You could be working at 100 other well-funded or established companies and learning a lot and making a lot. Do not underestimate yourself.

[icedchai]

I've been in a similar situation where pay checks were a month or so late. Eventually they showed up. Eventually we got more equity, but that equity was worth nothing in the end, as the company was "acquired" in a fire sale. I should've left and looked for a new job at the first sign of trouble (if not the second sign!)

Once you stop getting paid, forget about it: look for another job. It takes gross negligence to get into that situation in the first place.

[lkuebler]

I will. I just abstract it to a normal job now. And NOBODY is doing a work for free right ;)

[jasonkester]

Employment is defined as the exchange of labor for money. If they’re not paying you, you’re not an employee anymore. You definitely should not be doing more work for them.

As founders, they do have the option to not pay themselves. But they still need to pay you. Make sure they pay for every hour of your time, out of their own personal savings if necessary.

And look for a job in the meantime. You are, after all, unemployed. Whether you realize it or not.

[Minor49er]

The company's out of money and you're not getting paid? Time to leave

[PaulHoule]

This.

[al2o3cr]

    What can I do to get reimbursed for my work at the startup?

Is there any office furniture that's easy to move? :P

    The answer they gave me to this was they would give me the
    shares once the round is closed. 

LOL they should take up comedy instead, because this has got to be a joke. They won't ever give you a share...

[Merciernmon]

Don't underestimate the value of your own time. You could keep working for a floundering startup... or you could sue for lost wages... or you could move on. I'd guess that there's more value in politely quitting and trying something new.

[lkuebler]

You are right, there are so many fascinating ideas and start-ups are getting built around them. Why stay on the sinking boat then...

[Merciernmon]

Exactly. Beware the sunk-cost fallacy! If you weren't already at this company, then would you join it as an unpaid developer? Many other opportunities are out there. Do something that excites you.

[lkuebler]

One thing I didn't consider but should have already this morning. I would not join it at this stage even in my worst dream. So there is really no reason to continue for me... I'm done

[codingdave]

If you are taking on the same risk as the founders (not getting paid unless the startup works), then you should have the same equity. If you have less equity, you should be getting paid.

Your personal risk tolerance is up to you, but the founders cannot have it both ways. They must compensate you in cash or equity, not just set up promises for the future. There may be legit reasons they cannot give you equity or cash - but in that case, walk out with dignity and tell them to call you when they are able to give you fair compensation.

[lkuebler]

Leaving without going back is probably smarter. If they tried to betray me one time they will do it a second time.

[ben-gy]

IMHO it’s a corrupt line of thinking for a founder to not pay their employees. Even if they do raise the round (chances are they won’t) then you won’t want to work for these founders anyway as they’ve shown they are not capable of treating their employees fairly.

[joshxyz]

Lol jump ships you are an employee with bills not a founder with extra cash, do you need a smack on the head or what? X% of nothing is nothing.