Freelance for % ownership?
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- joeth
I'd appreciate a little freelance advice here.
I'm discussing doing some design work for a friend of a friend. The work is for a new product that has the potential to do very well, but since they are new at it, it could just as well flop. They said that since they are not yet selling the product, they'd like to compensate me with a percent ownership in the company. This will allow them to pay me only after they begin making money, and could potentially pay me annually if the product does well. It will also provide an added incentive for me to do a good job. The better the marketing, the more they sell, and the more money I make.
Has anyone here made a deal like this before? Any suggestions on how to make sure I don't get screwed?
- Horp0
Buy the company, call a shareholders meeting, explain to them its worth more in a composites sell-off than as a going concern. Let Gregory Peck whitter on for a bit, then close the deal and walk away smiling you short fat cunt.
Wait, no... that's Other People's Money starring Danny De Vito.
- I, Cuntfordshire?magnificent_ruin
- I have the whole of series one on C90 audio cassette.Horp
- juskin0
deoends.... if your young, need work for your book, and have YOUR OWN gut feeling that this product will do well, by all means go for it, however, if the bills are piling up, you got a mouth to feed, I wouldnt bank on it, and that is really only if you really feel that this product is something that is like amazing or really needed.
- arthur0
you should be prepared for the fact that this thing will make no money and you will get paid nothing for this.
- Melanie0
It's a tough call. I think every designer has fallen for this at some point. I know I have and it never amounted to anything. I was out my time and effort, and the client didn't have to put their money where there mouth is.
The chance of the product selling phenominally well is probably fairly slim so my advice would be to negotiate with them. Get paid some cash so you can pay your bills, and work out a deal % for the remainder of services rendered. Maybe 60% cash 40% shares in company...- AND if you do go for it. Have them write up a LEGAL contract spelling everything out.Melanie
- b_magallanes0
These kind of deals usually don't end up well in my experience.
- Horp0
I too have never heard anyone come out of this sort of offer breaking even. Tell them to go and get the funds to get the thing going, then hire you for your skills, not for your free labour.
- GetRefresh0
It took me 4 deals like yours to make money. LOT'S OF PITFALLS. LOT'S TO LEARN. Too much to explain here. Happy to chat by tele if you wan to look me up. Otherwise, give it 100% at all times until you win/lose. And learn from the experience.
- I read this and immediately thought "He's lonely, he's slightly disfunctional, he is disfigured in some way"Horp
- (I'm joking of course)Horp
- it's true though. How did you know?GetRefresh
- statik0
Will it be one job or ongoing jobs?
Really depends if you need the money, how long it would take you etc
If it was just one or a couple of jobs...I'd do it, but make sure that the agreement for % ownership is solid as a rock, so if it does do well, you get something out of it..
if not, you've only spent a few hours our of your day, more portfolio work out of it etc...can't really loose unless you really need the money now.
- johndiggity0
i think it's a huge red flag that they offered you ownership in the company. they either are not real sure of what they are doing, or do not have much faith in their venture. keep in mind as a partner you'd also be responsible for a whole host of liabilities and risks as well.
the principle of the agreement sounds nice in theory, but i think it'd be difficult to enforce. who determines when you get paid? how long are the intervals? what accounting method are they using to calculate sales?
unless you are 100% behind whatever they are doing i'd say ask for a normal fee or walk away.
- joeth0
yeah, it seems pretty risky. It doesn't sound like a ton of work, mostly some up-front stuff to get it going. I don't need the money right now, and it would be nice portfolio stuff, so I may still do it.
I'll see if I can still work out a standard payment though.
thanks everyone
- gung_hoek0
what everybody said. and I don´t see why anyone would want to be involved in a start up as compensation. being a shareholder is like another job you take on for no money in the foreseeable future, even if you´re a silent partner, there´s still all kinds of legal stuff to consider, liability, etc. if you take your role seriously, you will put endless hours into the thing, for years, until the baby gets profitable. major trouble without solid money.
- pr20
I get that often. People can't afford my full rate so they try to throw in some % points. I usually try to raise the rate and normally don't care about the point why? Well, i can sell you % point i have from 2 feature-length films i shot (including one with an Oscar nominated actress) for a good steak diner.
- SimpleIrony0
I say this type of arrangement would reflect the quality of the people running the firm. Just to hand out ownership means that they either a) don't know what they are doing, or b) don't expect it to be worth all that much. Also be careful about dilution if you do take it. They can give you 25% of the firm and then up the total share count afterwards so you have a smaller piece.
- tparsons0
Been there done that and learned a few lessons. If the company doesn't have enough money to pay a qualified marketing team, they won't have enough money to execute any of your work. Meaning they won't be able to pay for certain thing that are needed to make the work you do a true success.
You'd also need to talk to an attorney and get written into the company. Compensation should be at least quarterly, not yearly.
- monNom0
it sounds like a great opportunity to earn nothing (and possibly less).
- Cptn_Uncanny0
Haven't read all the posts here but just to throw in my ten cents...
I jumped into a deal similar to the above (exciting project, fun ideas, creative freedom...), and turned out getting burned. In my opinion friends are the hardest people to work with. Make sure you have a good solid contract and don't cut corners (make exceptions) just because you're friends... In the end, if they don't have the money to pay you they probably won't respect you. Royalties and percentages can be tricky.
- marchelo0
I smell the fire on this one, bring out the shmores.
- letters20
No. Don't do it. Almost always, the answer is no to this.
There is a 1% of 1% of 1% chance that these situations pan out. They do sometimes, but think about the number of start-ups out there, then take the number that get funding, then take the number that achieve monetary success. The probability is small.
So unless you truly believe in it, has a kick ass business plan and has significant funding backing it – don't do it.
- VectorMasked0
Oh noes!!
Don't do it. Doooooon't!You'll get pwned big time.