Sent by Jonathan Stark on September 5th, 2016
When presented with a price that seems high to them, a prospect will sometimes propose the idea of paying you in equity, a percentage of profits, or just outright hiring you as an internal employee.
I lump these sorts of requests into the following category:
How About We Treat You Like An Employee? - Client tries to entice you into some sort of employment or employment related arrangement.
I’ll tackle the equity question first.
1. Can we pay you with equity?
If I wanted to take on massive amounts of risk, I’d found my own startup. The idea of betting on someone else’s gamble is almost laughable. Here’s what I’d say:
“I believe in what you guys are doing but I’m pretty conservative business-wise. My risk tolerance is much lower than yours, so equity isn’t a good fit for me.”
The message I’m trying to send is:
“I’m sure I’ll regret not taking the offer when you’re acquired for billions, but I’m just not a gambler.”
In other words, it’s not that I think they’re going to fail - it’s that I’m risk averse. (“it’s not you, it’s me”)
2. Can we hire you full-time?
After years of being my own boss, I doubt I’d last two weeks in a traditional job. Plus, I’d have to spin down a bunch of client, student, and partner relationships. It would take too much time, even if I wanted to do it. There’s just no feasible salary that could make me take on a 9-5 so it’s not even worth discussing the details with them. Here’s what I’d say:
“Wow, I’m flattered by the offer! Unfortunately, I’m just not at a place in my life where I’d be prepared to make such an enormous change.”
Like the previous line, this one takes the stance of “it’s not you, it’s me” - i.e., “You guys have an amazing company and I’d be proud to call myself an employee, but I’m set in my ways and it’s too big a change for me.”
P.S. If you bill by the hour, you’re acting like an employee. Stop selling your hands and start selling your head -> Hourly Billing Is Nuts