[LRUG] [JOBS] Ruby developer for new startup

[Paul Robinson]

On 11 Jul 2012, at 18:21, David Burrows wrote:

> The difference between an employee taking equity and other gamblers (like VC's) is that you can only make one bet every few years - VC's overall are looking for a decent return on their overall portfolio, most companies they fund will fail to have any return at all, but a few big wins like Instagram make up for the rest. 


I think this is an outdated perception, because failure is so expensive, one of two routes is now being preferred:

1. If you're going to fail, fail quickly. Lean, MVP, Agile, whatever: do things quick to get to a product/customer fit.

2. Because IPOs are rare and dangerous beasts and merger/buy-outs are hard to get to at a certain scale unless you're in a niche industry, people seem to be talking a lot more about dividends to de-risk investment

That means if you're joining a company that has achieved customer/product fit, and is planning on dividends, you can actually make a very healthy tax-beneficial income from dividends whilst also retaining a capital asset that is ever increasing in value and could well be worth a considerable amount one day.

This concept of it being nothing but a gamble is something that I think only applies if you're there on day one of the company or the CEO is going to hold out for Google or Facebook knocking at the door whilst locking the cash up in the company to increase the valuation. 

If you're there on day one of the company, there is probably no salary. There's nothing to replace with equity: you're going to get sweat equity to get involved. If your CEO is as mad as the one I have described, well you've got another problem there that has nothing to do with whether it's wise to take equity or not, but whether it's wise to work for somebody with poor leadership and business development skills: that CEO isn't somebody you should want to work for even if you're getting market rate.

I simply don't recognise the World you guys are talking about where equity is so often worth zero, it may as well always be considered worth zero. Sorry, it just doesn't make sense economically, logically, intuitively or based on my experiences and observations within the industry.

Paul

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.lrug.org/pipermail/chat-lrug.org/attachments/20120711/94f95cbf/attachment.html>