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A person I have been working for as a contractor has at one point entitled me his "CIO". He has been wanting to be his full-time developer for sometime, and I believe would be willing to make me a co-founder if I asked for it. Some explanation, hopefully this will be general enough to be helpful to others.

A little background, I seem to be in the opposing situation to what many are seeking on Hacker News and here OnStartups. I'm the technical get-things-done contractor guy. I wear a lot of hats, so am a good go to guy for a startup. However, I work a full-time job that I don't intend to give up any time soon. This precludes me from working more than perhaps 15 hours/week for this client (working 45-50 hours/week at main job, 10 hours/week for other clients, and 15 for this guy, plus my own side projects of course).

At first, I rebuffed the client's overtures, asking to be merely a technical contact as he transitioned to finding a full-time developer. However, after going through 3 other developers with both good and bad results (but mostly bad, especially from the Indian team he tried outsourcing to), he has convinced me to take up the reigns again. The startup consists solely of him at this point, though he is full-time on it, and has been consulting with influential people and has a vast marketing background.

So, my question is, taking into account that I will not be giving up my full-time job, but will continue to work for him, should I be trying to negotiate equity or other positions in the company? Or is a startup an inappropriate place to take on these kind of responsibilities when knowing full well that I can never devote >20 hours/week to it, and he could really use a full-time person. If the answer is yes, to go into this, what amount of equity should I be asking for?

And as a side note, though it perhaps deserves a separate question, if you were the technical contractor in a startup that wanted you full-time, what state would the startup have to be in before you would be willing to give up a lucrative job for it?

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You sound like you might be looking for an objective answer to your question which probably doesn't exist.

Any early participant in a startup who is putting resources of any kind in return for equity should think just like an investor would. Whether you should ask for equity or whether you might want to leave your full-time job really are the same question, just at a different scale.

Essentially any investment comes down to trading resources you have now (money or time) into a greater amount of money later. So, you should be asking:

  • Do you believe the idea will actually make money? This is the biggest question. Is it viable?
  • What does the business plan look like? Does the founder have a good plan so that when you make a commitment, you'll actually have work to do that will contribute to bringing in cash?
  • What are the near-term prospects of the business? Will the business be profitable in a year? Will you be eating ramen for dinner (or living off savings) for 5 years, or 3 months?
  • What are the long-term prospects? Say this does work out for a year or two. Then what? Will it last long term? Or, will you be able to retire? Will it have helped your resume so you can go back to a full time regular employment? Will you work on a new startup?
  • If you do believe in it, are you interested in it? If all the other questions check out, does the work interest you?
  • Can you work with the founder as a partner? Being a co-founder will essentially be like a marriage. Are you compatible?

I wouldn't work for equity for anyone that I don't believe will actually turn that work into a money-making machine. And I wouldn't work for equity part-time for any company that I wouldn't be willing to go full-time for, unless they are every bit as viable, but just working at a smaller scale at the time.

Given that you've already resisted jumping with both feet in with this guy (and you said you "don't intend to leave your full time job anytime soon"), I'd say you don't really believe in it. If that's the case, your answer is obvious. However, maybe you just haven't looked at it as a possible investment before. If you are interested in it as an investment of your time, read some startup books (from authors like Guy Kawasaki, Michael Masterson, etc.) and see if they give you a feeling for what you should be looking for.

As a side note, a title such as "CIO" is worthless if it's not full time. "Co-founder" might be valuable, if the company makes it big. And if you are getting paid for your work anyway, getting the founder to acknowledge you as a co-founder certainly won't cost you anything.

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Thanks, these are exactly the kind of questions I should be asking myself, and now I need to take some time to figure out the answers to them. – nowarninglabel Oct 6 '10 at 16:07
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In my world, co-founders are full time. Same with C-level execs. Focus on the business and whether you want to make a change with your job as the high order bit. Everyone has their own level of comfort in these things. If you can strip down your monthly burn and can absorb losing a lot of money, go for it. If you need a steady income, the company needs $ from investors or customers before you can join.

Otherwise, what Renesis said.

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