So back in the dotcom days there was this thing where Startup A would give Startup B some product or service "valued at" some number in exchange for Startup B giving them some product or service "valued at" and equivalent kind of amount. They did this because both A and B could report "sales" of $x revenue with a moderately straight face, even though no money changed hands and it was entirely unclear if either A or B would have paid $X for the service/product they got if they were actually exchanging real money. So for example the startup I was working at got a $120,000 data base installation in exchange for $120,000 worth of banner ads on our site.
There were two problems with that, first the investors were somewhat misled (seeing only the 'sales' numbers and not the actual dollars in the bank number) and two the IRS went after folks who were saying "millions in revenues" for taxes on those revenues which, since they were in trade goods rather than dollars, the companies didn't actually have money to pay the taxes.
Its this latter bit that worries me about this idea. If you give equity for work you have to provide a value for it. You have to give the person a 1099 form (if its over $600) and they may end up owing income tax on an illiquid asset.
Interesting idea but think there will be a huge adverse selection problem here. Any startup giving out equity for tasks but which as no cash to pay may not be all that valuable to have equity in.
And I wonder if the same can be said of the job seekers who use this. Really great people get paid for their work and perhaps get equity as well.
Part of me hopes I'm wrong about this as it is an interesting idea.
We agree with you, however, this is a way to turn an idea into a minimum viable product without spending money. This may not be the best way to build a full product, but our philosophy is the more hypotheses you can test without spending cash the better off you are. Thoughts?
With this comment, I lost any faith in this idea as it's clear this is not about both sides deriving value in the process. In your scheme, startup "founders" or really wantrapreneurs get to try out half-baked ideas by giving away worthless equity to folks that are ultimately being duped while idea guys ultimately talk about their MVP and pivots and other bs that people who fancy themselves as startup founders think they should talk about.
On a related note, the "founders" participating in sites like these give a bad name to business people with legitimate biz building skills.
I'm curious about why you think that? Most of the startups that have used our service so far have been started by engineers (including myself) that need help building a product they actually believe in... not just idea people going after the first thing that comes to mind.
Also, when equity has been issued it was typically in the 10-30% range. Essentially, businesses are using this as a way to find partners - not to dupe engineers.
Why would I want to build that product in exchange for equity, which will probably be worthless?
If you don't want to spend money on your idea, chances are it is even more likely to fail than an average startup. This feels like a way to exploit talented and gullible people who want to work at startups.
Why would you ever agree to work for a company that builds useless products, regardless of pay?
In our experience, founders have spent money on their ideas. However, many bootstrapped startups (particularly the hardware engineering companies we have helped) don't have enough for talent and prototyping. When equity is issued these companies are bringing on partners, not gullible engineers. Just my two cents, please let me know if you see it differently.
this. I recently spent 4 months coding nights for a startup and got told it's going to be "hours for equity" - where they were giving themselves a high valuation and me effectively a "market rate converted to shares". I quickly ran off.
So far my opinion is that you need to increase your rate at 10x if it's for equity on the table, and the startup is bootstrapping. You're essentially a part-time cofounder in some ways because the product/business model can rapidly change depending on who you're working with, and you have essentially zero guarantee as to how you will know about the success of the business later on.
I also saw someone at a startup weekend earlier this year do the same idea, although he came off as a shady businessperson in the process, and had a very hard time explaining how it all worked.
Overall, I'm tired of business folks making this idea. Unless someone else outside the business does an official valuation, this doesn't really make sense. Also, business folks tend to think "hey, i'll rent a coder as 'hours for equity' then build just enough to pitch to investors, then find 'real people' while i have tons of leverage". Airbnb may be the rare exception where this worked out well, but that guy was paid in cash.
What kind of job seeker is this looking to attract?
Equity's great if that equity turns out to be worth something, but it doesn't pay today's bills. If I've got money saved up and I'm looking to take on a labor of passion, chances are really good it's going to be with one or two other people I already know, respect, and trust. If I don't have money saved up then I need cash now, not equity with an uncertain payday.
I get why entrepreneurs would love this, but what's the use case for job seekers? What am I missing?
The problem with most recruiting sites is the lack of (competent) candidates.
And this is because highly competent candidates are never deliberately looking for a job. They get recruited to a pretty good job before they have even started thinking of jobs from college, and then get recruited to other companies by an old friend. It's extremely rare that they are ever considering themselves to be a "job seeker" at all.
These people don't bother reading recruitment-only sites in their free time. And they certainly don't want to create a job-seeking profile, and get in trouble with their boss who thinks they may be leaving.
But what they are very interested in is reading about their field of speciality. When I was sourcing candidates, the only online places where I found qualified engineers were the StackOverflow and 37signals job boards. These two are successful because they built the community and content that competent candidates want to visit daily first, and added a job board second. I have no expertise in mechanical engineering, but GrabCad seems to be doing it well in that area.
So my theory for running a successful recruiting site is:
1. Choose a single profession, skill, or field.
2. Create seed content yourself to attract initial experts in that field.
3. Add community features to let these initial experts contribute more content.
4. When you have become a well-known site for most experts in the field, add job boards.
I will be graduating college soon and getting paid in equity is the last thing I want, regardless of the job market.
I need money to pay off student loans, rent, food, gas, etc... Equity in startups is highly illiquid and turns out to be worthless more often than not; I can't take that risk.
I'm not sure exactly what the sweet spot demographic for this site is, but I don't see it being me or my peers.
Yeah, I'm in the same boat, and I can't stand startups that advertise for unpaid internships (which is what this would be). My guess is that they are either totally unaware, or deliberately flaunting the laws against unpaid internships (where the intern is getting paid nothing for doing substantive work). I've seen ads like this all the time on craigslist. Pretty much the only people who can afford to apply are wealthy kids who just graduated, need experience, and can have mom and dad pay the bills. Not paying interns makes me think even less of startup culture than I already do.
So would you prefer a combination of equity and cash? We are always open to ideas and would consider including that functionality. Lots of people seem to be mentioning that concern.
Interesting idea but I would have a huge aversion to giving anyone equity who I haven't had some experience working with in the past or I don't see as having a long term role in my company.
Would anything change your mind about that? If you wanted to test a hypothesis for a risky business idea and didn't want to sink cash into it, would it be worth it?
Would you prefer a method to pay cash for labor instead?
I think in any potential business venture the team is so critical that I'd go out to people I know to help, even for early prototyping. Admittedly I might not be your target demographic because I can code myself.
If your company's "most precious resource" is capital and not equity, that's indicating that you are expecting to fail. Equity is already far more risky than a salary in companies that think they'll succeed. I hope you are successful, but I think you might need a pivot or two on this idea.
What did you have in mind? We hear from the community that some combination of equity and cash would be helpful, but I'm curious what other ideas you had?
The website look and feel is good.But I would like to see if you have talked to few startups interested to work with you. Put their logo at the bottom of your sites mentioning that these are the top startups hiring job seekers.
That way you can attract more user(job seekers) to your site.
The video on the home page is surprisingly polished and professionally produced but the script is an obvious piss-take. The home page on the other side is a quick & dirty job - looks like it's been thrown together in a couple of hours using some free website template.
I vote for an end-of-year project by media students made for fun.
If you guys are actually real, then here is why my first impression was this was a piss-take / joke project:
- The presentation video is slick and has obviously been professionally produced. First impression of the home page on the other side is that it's a very quick & dirty job based on some generic website template. At first sight, it also looks like the site is just the home page and nothing else (tried to fill in the registration form on the home page and it didn't do anything).
So first impression is that you've spent an awful lot of time, energy and money into creating a fancy presentation video but haven't spent any time or resources into the product itself. Which is strange and doesn't give a great deal of confidence.
And then there's those really weird clips of the founder playing guitar or browsing records in a record shop that don't really make any sense. I can only interpret them as taking the piss out of the stereotypical startup founder, who sees himself as a rock star and spends his time faffing around, bullshiting about how he's building the next Facebook, while expecting people to work for him for free / equity.
If this is a real project, then the way to improve this would simply be to focus completely on the product. At the stage you're at, the product is the one and only thing that matters. Fancy videos and big promises only come when you have a product that matches and delivers. Otherwise, it comes across as bullshit. (my personal opinion obviously - others may differ).
Thanks for sharing your opinion. We made the video by creating a listing on our site, issuing alternative compensation, and working with someone to develop it. Our founders are all engineers and designers who work solely on the product, which we admit is not perfect (our product is less than 6 weeks old). We look forward to (hopefully) changing your mind about us in the future.
I think you should state clearly before the "Register" step / button that it's only available in the US at the moment. I looked around, I liked the idea, I wanted to see more so I signed up and ended up having to chose a location in the States (which I can't, obviously, being in Europe).
Very interesting! A friend and I chatted about building something like this due to the fact that the JOBS act makes it much more feasible legally. I was thinking about crowd-building entire companies, though. I think your execution is much more practical.
So... I've tried to sign up as a 'job seeker' 3 times in the last hour and it simply doesn't work. The sidebar targeting arrow just jumps down to the 'startups' tab after clicking 'register'.
You need to add error info on your "Add a Resume" form. Just wanted to check things out, but couldn't get past that page (presumably because I omitted a field for personal reasons).
There were two problems with that, first the investors were somewhat misled (seeing only the 'sales' numbers and not the actual dollars in the bank number) and two the IRS went after folks who were saying "millions in revenues" for taxes on those revenues which, since they were in trade goods rather than dollars, the companies didn't actually have money to pay the taxes.
Its this latter bit that worries me about this idea. If you give equity for work you have to provide a value for it. You have to give the person a 1099 form (if its over $600) and they may end up owing income tax on an illiquid asset.