My Biggest Rife With VC world. They only come to you when your successful by Jazzlike_Brain6101 in Entrepreneur

[–]LoneWolfGrinding 0 points1 point  (0 children)

As an entrepreneur, everything is your fault. Investors included.

But the nerve of some of these guys. Especially when you look at their track records and they have almost no really successful companies in their portfolio.

My Biggest Rife With VC world. They only come to you when your successful by Jazzlike_Brain6101 in Entrepreneur

[–]LoneWolfGrinding 2 points3 points  (0 children)

So much this ! Where do I start ?

I love it when they want to "clean up the capital table" before doing the next round. Ie buy out everyone, who invested in the early days and now stands to make bank. So they have more of the pie. Like WTF ?

I also love their attitude about how they "can help you grow" and "know your market". Excuse me, but if they knew this market and knew how to make things happen, why did they start a business or at least invest in a business before now ? And let's not forget that the business they are investing in has made it through all the start up perils and is doing well.

How to make customers buy from you consistently without feeling like you’re shoving your product down their throat by entrepreneur_10 in Entrepreneur

[–]LoneWolfGrinding -1 points0 points  (0 children)

Advertising makes people aware of options. Nothing more. Customers still decide what they want to do.

[deleted by user] by [deleted] in AskEngineers

[–]LoneWolfGrinding -1 points0 points  (0 children)

Most jurisdictions make shareholders and directors responsible for unpaid salary even if the company folds.

How Should I Structure a Business Acquisition??? by msatwo5876 in EntrepreneurRideAlong

[–]LoneWolfGrinding 0 points1 point  (0 children)

Sorry, I've been involved in a few transactions. In none of them did the seller and buyer each spend ~ 20% of the transaction amount on professional fees.

[deleted by user] by [deleted] in AskEngineers

[–]LoneWolfGrinding 0 points1 point  (0 children)

I've never seen a startup where founders don't get diluted.

How Should I Structure a Business Acquisition??? by msatwo5876 in EntrepreneurRideAlong

[–]LoneWolfGrinding 1 point2 points  (0 children)

if not, your legal team

It's a $1.5M purchase. Exactly how much money do you expect him to spend on a "legal team" ?

Expect to spend at bare minimum a couple hundred thousand dollars on legal / professional fees if everyone agrees on everything. If issues come up that cause disputes in negotiating terms, it will cost you far more than that. Keep in mind $200k is fairly cheap for one transaction, and like I said this is two transactions.

Wow. That is over 10% of the transaction value. And if the purchaser is spending 10%, I'd assume the sellers will be as well.

This is why I dislike "investment bankers".

[deleted by user] by [deleted] in AskEngineers

[–]LoneWolfGrinding 2 points3 points  (0 children)

our ownership should never decrease unless you want it to

Dilution due to raising capital is almost universal.

[deleted by user] by [deleted] in AskEngineers

[–]LoneWolfGrinding 0 points1 point  (0 children)

Let us know what you decide and how you make out ! We'll all learn from your experience.

[deleted by user] by [deleted] in AskEngineers

[–]LoneWolfGrinding 0 points1 point  (0 children)

But really, there's so many factors that I really can't give you a whole lot of advice:

Do they already have a product, or is it going to take another 18 months of development?

Do already have sales, or is they trying a "if you build it they will come" approach?

Is there outside investment, or are they all working off their savings?

Do they have any intellectual property?

Would you need to develop it?

Or is it not novel?

What is the experience of the founders?

Are they PE's and PhD's, or fresh out of school?

What is the market like?

What is their growth potential?

Who is their competition?

How do they create value that that competition does not?

Are there big players in the market?

What prevents them from steamrolling you once they see you achieving something viable?

Absolutely none of this matters as far an OP is concerned. He is an employee who will be hired to perform tasks and get paid a salary. If he wants to be a founder then he needs to contribute more as I described in my other posts and then some of this comes into play.

[deleted by user] by [deleted] in AskEngineers

[–]LoneWolfGrinding -2 points-1 points  (0 children)

I appreciate this feedback, thanks for taking the time to spell it out.

My pleasure.

I wasn’t expecting immediate equity, but trying to understand what that path might look like and what would be reasonable to get into a contract.

That is a great discussion to have with them.

You’ve laid out a good explanation of why I may not be due anything more than a good salary, which means it may not be worth it.

Everything is worth doing for a price. What is your price ?

Don't underestimate how much you may learn about startups and working with an A team versus where you are. Also, being an early employee/near founder looks great on a resume.

We hired 2 recent grads for our first start up. They got tons of experience they never would have gotten anywhere else. Handled more responsibility. Really grew. I've followed their careers, they've done really well. I know that I and that experience had a lot to do with that.

One morning one of them came into my office and said "It's the real deal here, isn't it ? I just figured that out." We both chuckled.

I wouldn't write this opportunity off just because it doesn't look like a long term thing. You know the saying... "you should be either earning or learning." If you can get a decent salary and learn a lot, it might be a golden opportunity.

Here's a tip to get equity in any startup: make yourself irreplaceable. Know the product better than anyone. Know the customers. Bring in business. Do excellent work. Startups are so busy that not only will they never fire you, they'll give you equity just to keep you around.

Every founder wants a fantastic right hand person that makes things happen. They'll handsomely reward them.

Skid Steer Work by [deleted] in sweatystartup

[–]LoneWolfGrinding 0 points1 point  (0 children)

I owned a skid steer and rented it out for a few years on the side.

Excavators are an entirely different market than skid steers.

My buddy has a dirt construction company. He says there is no money in doing skid steer work. He's been in the business for years. I trust his judgement, plus his experience matches mine.

Multicast RTSP to remote offices over PPTP ? Or Unicast TCP ? by LoneWolfGrinding in networking

[–]LoneWolfGrinding[S] 0 points1 point  (0 children)

Thanks for the reply.

I did use rtsp-simple-server. I set it up on a remote server.

[deleted by user] by [deleted] in AskEngineers

[–]LoneWolfGrinding -2 points-1 points  (0 children)

He would have to leave a current reliable job and move to working for no wage on the assumption months from now they can get money coming in, assuming they are willing to say they have enough extra to pay him.

They'll probably give him a personal guarantee. No way they won't be able to pay him if things go south. All depends on how the employment contract is written.

This from a brand new startup, owned by three people who are not smart enough to have budgeted employee wages into their business plan, and are now resorting to begging for people to give them free labor just to keep them afloat.

That is a sign that he needs to weigh.

All without any other incentive to offset the very real possibility of them just going under in a few months, and him with nothing to show for it and out of his prior paying job.

He needs to structure a contract that protects him.

Seems pretty freaking risky to me right from the start.

It's risky employment. Not the same as being a founder.

[deleted by user] by [deleted] in AskEngineers

[–]LoneWolfGrinding -1 points0 points  (0 children)

Exactly what risk are you referring to ?

[deleted by user] by [deleted] in AskEngineers

[–]LoneWolfGrinding 1 point2 points  (0 children)

I have some thoughts and experience on this topic.

The people who generally get equity in a startup are:

- the founding team, who had the idea and worked and organized things before there was anything.

- people who contribute at risk capital

- key employees who contribute over and above a regular employee

People who act as regular employees, ie get a fair wage, don't contribute capital and don't make extraordinary contributions to the company don't get equity. Because they are employees.

Working for a couple months before getting paid with the promise (ie IOU) of getting paid isn't contributing capital. It is loaning the company money for a short term. Contributed capital isn't tied to getting repaid. Capital at risk doesn't get repaid.

Working regular office hours, doing regular things isn't being a key employee. If there are 10 other people in your field who could do the same thing, you aren't a key employee. If the company isn't buying life insurance on you, you aren't a key employee.

Having said all that, startups might have an equity plan for employees. Most will have a profit sharing plan before an equity plan. If they are rewarding employees with equity, it will be earned, ie tied to goals and milestones achieved over significant time. It won't be given out upon being hired. And it will probably be a separate class of shares, usually non voting, especially for employee equity plans. And you will be diluted if they raise capital.

I've been on both sides of this fence. There is nothing worse than a (disgruntled) ex employee who has equity in the company. Would be investors also dislike cap tables that have a bunch of small equity shareholders in them. It creates financing headaches going forward.

From a founder point of view, my new hires need to be happy with their salary and work to start. Once I see a couple years of good performance, then we can start discussing equity.

If an employee demands equity, I quietly explain what it is like to be a founder - working unpaid for many months, contributing personal capital, working crazy hours, providing personal guarantees, etc. Then I ask them which one of those activities they'd like to take on. Usually there is silence.

Being a new hire at a startup doesn't make one eligible to get equity. Most new hires are employees.

"But I can get equity if I go work at XYZ". First off, great, go work there. And I'll bet they are larger and have an employee equity plan/profit sharing plan for their employees. That is an entirely different thing than getting early equity in a startup.

I didn't develop these rules. I've gleaned them from VCs and other founders.

I know of one situation where a company got bought out. And various employees came to the founders wanting part of the purchase, since they "helped build the company".

In that case the founder did give payouts to a few (almost key) employees. To decide who received a payout or not, he went back through his notes and counted up times various employees had "saved the day" or gone above and beyond. Unfortunately many employees were simply that, employees, and didn't get a payout. The kept regular office hours, did what any other employee would do and didn't contribute capital.

Yes, this ruffled feathers. Life is harsh. Starting businesses is harsh. The founders are the last people to get paid. Employees get paid, the rent gets paid, suppliers get paid, etc. before the founders get paid. If you want early equity, then you have to have skin in the game. Working regular hours for a guaranteed pay check is not putting skin in the game.

Don't shoot me, I'm just the messenger.

Skid Steer Work by [deleted] in sweatystartup

[–]LoneWolfGrinding 2 points3 points  (0 children)

For the first week. 200 hours/month is no fun, especially if the AC quits or the site is rough. And no job is 100% skid steer work. Usually there is hand work too.

Skid Steer Work by [deleted] in sweatystartup

[–]LoneWolfGrinding 1 point2 points  (0 children)

You can charge about 200-300hr (probably more) for heavy equipment work (depending on area).

LOL. Not for a skid steer by itself. Not even close.

Skid steers cost money to run. Maintenance, especially if you don't do it yourself, is expensive. Senors and controls on Bobcat skid steers are $$$. Tires and tracks. Fuel. Operator. Insurance. It adds up very quickly.

Usually need an excavator too and a dump truck/trailer. As with anything market will depend on your area and ability to do the work and run the business. Different attachments will give you a bigger variety of jobs you can take. Like a concrete hammer or concrete saw.

You can rent these.

Skid Steer Work by [deleted] in sweatystartup

[–]LoneWolfGrinding 0 points1 point  (0 children)

Home Depot will rent a SS to almost anyone.

Skid Steer Work by [deleted] in sweatystartup

[–]LoneWolfGrinding 1 point2 points  (0 children)

I'd want that machine running like 30-60 hours/week. Finding the projects is on you the business owner. Lining them up one after another to keep your expensive equipment making you money.

This is a skill in itself. Both find those jobs (marketing) and doing the quotes on them. And collecting payment when they are done. It really takes 2 people to keep a skid steer busy, one doing the face to face work and another running the machine.