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Hello,

I would like to ask other entrepreneurs for advice on a delicate situation. This is kinda long and all over the place....

 I am a Web Developer and beginning of the year I joined an internet startup as employee number #4 to do their web application development. I responded to a job ad of theirs on craigslist and met with one of the founders the next day. They have a very compelling product / service, which was the main reason I joined them. I am always out looking to work on new exciting projects and technology.

Anyways, the current team is made up of the 2 founders, both business guys (MBAs from ivy league), and 2 developers (including me). We developers are "only" employees with salaries at 50-60% of typical market rates (no benefits) and in the beginning we received 1% each in stock options. We both will receive full salaries once the company gets funded (series A) The 2 founders don`t pay themselves. However one of them is still full time employed at a large corporation and is still waiting for his green card to come through. Until then he is bound to his current employer due to Hb1 work visa. So he can only work on this after hours and remotely.

In the past 6 months we build basically a prototype that allows the founders to go out and seek funding (significantly more angel funding or series A). In 2 months we will have beta release ready for public launch.

Beginning of the year, they received $100k angel money from a rich family friend of theirs, and this person promised another $100k in fall to keep us floating.
The founders have had meetings including second and thirds meetings with a dozen or so VC firms in the SF Bay Area, NYC and Boston, but ultimately got passed on. Now they are saying that they will try again end of the year, beginning of next year.

In the beginning they `assured` us that they are well on their way to get fully funded by June, the main reason I even accepted the offer. As mentioned above that hasn`t happened.

Things that have happened that make me think about leaving this startup:

- They lied to me. During the interview process / when making the offer they said that they just got angel funding (mentioned above). I told them I needed a couple of days to think about it, since I had another job offer pending. They pressured me into making a decision within 24-48 hours, because they needed to get started. I accepted the offer the next day and told them I will give my current employer a 2 weeks notice. I get an email reply from one of the founders saying that I should wait with that for a few more days, because they don`t actually have the money in the bank yet. I was furious as you can imagine, and should have told them that I will not work for people like that.

- They completely disregard my advice as a web developer. They treat us like code monkeys. For example, without consulting with us they hired an outside design firm to create a web design for the application we are working on. This design firm completely ruined the job, and I knew it from the very beginning on. I had to fix it of course.

- The current web design for the product is very bad and nowhere near other competing websites. But all my suggestions and advice is being ignored. I mean that`s my job... I am the web developer not them. Just because he owns a Macbook and bought himself a HTML book doesn`t make him a web design expert.

- They failed to secure funding for the company. That`s their main job. But they micromanage the company, get involved in things they have no clue about and just waste time.

- They have no startup background at all. They only worked for large corporations before. They don`t "get" the work and team culture that needs to exist at startups in order to pull it off.

- The founder working with us in the office is very condescending. He also likes to talk on the phone to his friends (right in front of us) and praise himself and how HE build this cool product and how great HIS startup is.

- After 6 months of working for them, I think they have no clue about running an internet startup. I think they just want to "try out something cool".

If the other developer leaves, I will leave too. If I leave, he will leave as well. So basically if I decide to leave, it means the company is out of developers which is going to be a very hard hit.

I don`t blame the founders, they are the way they are. I am blaming myself for putting myself into this position. I should have researched more their background and make sure that the know what they are doing.

Any advice?

Well, things like a certain level of funding by a certain date is not anything anyone can promise.  Entrepreneurs are often positive hopefuls and I am sure they believed they would have the money.  But these are part of the gambles of starting a business, whether you are a founder or getting in as a hired developer.  I don`t think you can blame them for things related to stalled progress.  It happens.

On the other hand, it seems like a lot of your concerns revolve around integrity and being appreciated.  Not everyone knows how to be a great boss and often for first time entrepreneurs, they are figuring it out as they go along.  They (and their egos) may not realize they are doing things that bother you, such as talking on the phone in front of you or being micromanagers.

My suggestion is to open up dialog.  Sit down with these guys and explain to them your concerns.  Let them know it is serious enough that you are considering jumping ship but don`t make it sound like a threat.  They may or may not see everything from your perspective but they should know what is going on.  Working with reality is the best way to run a business and maybe they just need a good dose of it from you.

Do you think they know you are upset with how things are going?

Wow - what a tough call you have.  Being in your shoes in the past, here are the some of the quick questions I would ask myself:

1.  Do you believe the owners will be able to support your salary?

2.  Do you feel comfortable voicing your concerns and communicating what is and isn`t working for you and the firm?

3.  Do you like what you are doing?

4.  Is the investment in lower salary now for potential gold mine later something you are willing and able to undertake?

I agree w/ Steve in that not all people know how to be good bosses.  And lets face it, you have to have some level of ego to be an entrepreneur.  With that ego, they tend to rub people the wrong way, especially those that might not be the happiest of campers.

If I were you & could answer yes to the questions above, I would have a sit down w/ both parties, air the issues, and decide how to proceed.  If the owners aren`t open to doing this, perhaps you have your answer the easy way.  If they are, things could get better.  If they don`t, you know where you stand & can make a decision at that point.

Good luck to you & I am interested to hear how you handle it & what transpires.

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Denise Armstrong, President - Intelligence & Investigative Solutions, Inc.
www.iis-fl.com ~ darm@iis-fl.com

I can partly only echo what has been said here.

I have worked for a few startups. With one, they acted like everything was great until the bottom fell out and suddenly half of us were out of a job. I didn`t even know until after I was given walking papers that the top people weren`t collecting a salary there. It wasn`t too bad though ... I left on good terms and had full pay while I was there. It just would have been nice to know that I should be polishing off my resume while they were blowing through all their capital. The company never made it.

With another ... everything was fine until they had some growing pains and were having trouble paying me on time. I walked from that one. They did eventually make it - I just didn`t want to be in that situation.

With another ... I could just see the product was a drowning ship and I bowed out. I knew the guy wasn`t going to listen to me about how incredibly complicated the system was for the user (I guess he just wanted a PHP codemonkey too) ... so I just made a run for it.

Reading your story, I think you have already reached your conclusion ... you`re just worried about that next leap. I totally can`t say this for sure, but I get the feeling that you guys are being strung along to serve a purpose. (When things are going well, those "MBA types" are quick to brag about their funding. When they are not, the communication stops. This is exactly what happened in my first example above.) If you don`t believe in the product or the people you are working with, it`s time to drop some resumes, pack up, and leave.

You seem like a smart person, and you seem to know a lot about application development and a good product. Maybe it`s time to Start it up! with your own venture.

A few other thoughts:

Are you secure enough to handle being without a job? That is, when you have a talk with them (and you should) they may ask you to leave...are you ok with that? have another job to go to?

Did you sign any contract or agreement about your employment arrangement? Does it specify wages, options, or a promise of future wages? with any conditions? Define your role, job duties?

Did you sign a noncompete agreement? Is the code you`ve developed copyrighted / protected?

Re: your talk... you should have it. Certainly express your view of what your role in the company is... your job responsibilities. Ask if your view is correct? Point out the flaws in the web design and ask why others were hired to do that job, if it was supposed to be your responsibility.

What you consider a lie (about funding) may not be an intentional deception on their part. So, be careful not to label their actions as such. You should express your concern about funding and suggest all employees should be kept up to date on how that is going.

You got stock options? I`m sure this company is not publicly traded. So, esentially you have a promise (option) to own a piece of the company (through shares of stock) correct? This also supports a reason for you to talk with them... you have or may have an ownership interest in the company.

~Roland

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Y`know, all sorts of things seem really complicated on the surface, but they ultimately come down to pretty simple questions. Have you ever read that book, "Everything I ever need to know I learned in kindergarten?" It makes the same point.

I read your story above, which I think was really helpful. It gave the background, but also the undercurrents and "backstory."

Based on what you`ve written, I think your key "plot" matrix centers on whether or not the owners did indeed lie to you. If they did, then leave the company as soon as you have some other work to pay your bills.

Anything you do that`s founded on a flawed foundation will ultimately cave in, leaving you buried.

Everything else is just dramatic color. Life, after all, is like a dramatic novel. ;-) Pressure on the main character----you----is that you`re being paid well below market value. Secondary pressure is whether or not your local area is flooded with Web developers. I don`t see how, what with everyone looking for a good, honorable developer.

At the detail level, you`re sort of "pretending" (no disrespect) to be an investor. But with only 1% equity, what`s that even mean? How much do you really think the final product will generate in revenue, and do you expect your fractional percent to make up the X years of market salary you invested?

That`s your ROI---whether or not the equity will equal or surpass the missing half of your current salary.

Hi optimusprime,

 

If you have doubts about the viability of the company, now might be the time to secure a more stable job.  I’ve worked for a number of companies that failed or cut staff.  There were indictors each time this happened.  So before the ax falls, get your resume’ out.  Don’t wait for the pink slip and then try to finance a job search.  It’s really difficult to search for a new job with little or no money.

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The older we get, the more excuses we make for not chasing after our dreams. But truth is, goals are attainable at any age.

Nevada makes the telling point, I think. There usually are signs in the wind before a change comes into play. If a company is causing this much anxiety at this point in the startup, do you think it`ll magically get comfortable and happy later?

A business is a reflection of the personality of the owner(s). I saw Arthur Anderson having real problems years ago, but my father told me I was wrong. Being so low on the totem pole, he said I couldn`t have the data to make that judgement. But I was in the IT sector, and the publishing division, fixing the written materials done by the high-level folks.

High or low position isn`t all that important. After all, the birds in the trees know the weather just as surely as the 6-figure weather expert in Washington.