Today I declined an offer at a company. It was an equity compensation offer, which I’m open to but the short story is that it has too much risk for not enough reward.
Risks
Like all Startups have theres a ton of risk involved. I spent days trying to learn as much about it to see what I could bring and what they needed.
1. Non-Technical Founders
Perhaps its a bias of mine, but having a Tech founder is ideal, they understand all the processes along with low and high level concepts encountered. Its a bonus if they are also understand business.
2. LLC Startup
Next, as I was interviewing with other tech companies they asked me about compensation so I asked about dilluted vs undiluted stock. He laughed and asked where I got that from. I explained about how I read online its good to get undilluted. he said stocks don’t have that so I told him about the LLC. Unknown to me at the time, startups is not a type of organization, but just a short term word that implies varying things.
I looked into the wide differences and an LLC startup is different from the traditional Corporation (What I thought a startup meant) in that there are extra taxes for each court based on the earnings are divided by the shares but losses are split evenly among members. Reading that line scared me for a bit. Its goes futher to explain, thats why LLCs are hard to grow and find investors as there are many harms, in terms of taxation and entities. I’m not interested in learning how to fill a K-1 form nor do I want to if I can help it.
3. 24 Month NDA
Basically you cannot work anywhere else that can be interpreted as the same field or a competitors. It’s implicitly defined so it can be applied to multiple future companies or industries which means a 2 year contract.
4. Lack of Organization
This is one of my biggest factors when deciding to accept an offer. Do they follow Scrum? How are meetings structured
Rewards
- Equity. I guess? In the contract, its called “Membership Unit”, which is seperate from having a say (vote) “Management Unit”. It was dilluted and the rates were 500 shares (0.5%) after first three months, decaying as time passes. But after to get another 500, I would need to work for longer duration, Cap to 6 years for 5% of the current value.
Major Tasks
- Set up AWS infrastructure and Integration
- Migrate Git Repo
- Rewrite Django API to Flask API
- Mentor others in Scum
- Help out across React and React Native at times.
Reflection
This was a difficult choice to make. For others they said it should be easy not to accept the offer. I declined it today and felt bad about the amount of time spent. I don’t think they were trying to scam me so I keep contact with them, they seemed genuine and are a kind team. Shortly after, I heard back from a company where I thought I failed, but it wasn’t over. More about that next week!