Bootstrapping. Building a business from scratch without external funding. A praiseworthy pursuit for any budding entrepreneur. In fact, if you have the excitement and drive to see your mission through to successful business then you deserve all the kudos that comes your way. Frugality is the rule of law for starting lean and bootstrapping but should you also expect others to sacrifice current and future earnings to build your dream?

Is it ok to pay less for labour just because an employee believes in what you want to do with your startup and has some excitement about working on the idea? Is it just and fair (and in some countries even legal) to pay a fraction of the market rate for employees to build your business? Should enthusiastic employees be "totally up for it?" (as in getting paid sweet f a, not, you know, "up for it" in the colloquial sense... either way it still sounds wrong!) just becaue you have a cool product?



Hire People Who Dig Your Mission

The headline above was pulled from a Forbes article by Erica Swallow. The story, titled “How One Startup Grew a $100M Business Without Spending Venture Capital”, features some less than savoury advice about hiring.

Chabot says that you can tell during interviews who will be a fit for your bootstrapped startup. The right people thrive in low-cost environments and are totally up for working at a fraction of the market rate for their given position if it means working on a cool product they are excited by. If the discussion feels like a struggle, though, that’s a bad sign, he says, especially when it comes to the money talk. For those money-interested candidates who weren’t going to work out, he recalls saying, “If you want to make a market rate, you should probably go to a company that has a product in a market, because we don’t yet.” Zing!R. Christian Chabot, CEO and co-founder of Tableau Software1.

Excuse me? Zing? The interviewee didn’t want to work for a pittance and the best you’ve got is “Zing”? Wow that is some really delusional and twisted logic there, Christian Chabot.

Don’t, under any circumstances work for less than market rate in order to build other people’s fortunes. Simply don’t do it. Cool product that excites you so in-turn you’ll work for a fraction of the market rate? Call that crap out for what it is. A CEO of a company asking you to help build his fortune while at the same time returning you squat2. Zing!

“If the discussion feels like a struggle, though, that’s a bad sign, he says, especially when it comes to money talk”.

Too right it’s a bad sign. It’s a bad sign for the employee. It’s a sign that this CEO is deliberately taking advantage of enthusiastic people to line his own pockets. And “money talk”?, give us a break, this isn’t pre-school, I think the term he’s looking for here is “fair remuneration”. After all, let’s face facts here, if it is a bootstrapped company and you’ve graduated from University in the last decade, you could well have more debt to your name than the supposed CEO.

Step Away From the Kool-Aid

Early stage employees may indeed be more valuable than market rate because they are building that market for the bootstrapped company. If you are willing to work for little remuneration on something that excites you, bootstrap your own company, not someone else’s. Don’t be fooled or sweet talked into being paid less than you are worth. Don’t drink the Kool-Aid.

Notes

  1. http://www.urbandictionary.com/define.php?term=zing

  2. There was no mention of equity or stock in the article so for the purpose of this article, and to highlight the general case where this does happen (and it does), I will presume that no equity or stock was involved.





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© Ben Howell 2014