Over on the employment side, I got a summer job pitch in college from a hot new startup building some kind of app to help turn activity tracker output in actionable info. A startup of four people.
"This sounds interesting, but I'm wondering why you're looking for a fifth employee who's only going to be around for a few months instead of someone committed?" "We don't want to shorten our runway with salaried hires too fast, but we're expecting to close funding within the next year, so we can bring back the summer hires full-time after graduation and you'll already be ramped up."
"So you have some runway now, and you're negotiating more funding - you've raised angel funds and are working out Series A?" "Well, we're still at 'friends and family' and we haven't pitched VCs yet, we don't want to dilute the company too quickly. But we're starting to sound out investors and we've had a lot of interest!"
"So if you're that early on, are you looking at hiring purely in stock? How will that work with the temporary role?" "Obviously we can't give people shares just for a summer of work, and we don't want to plan too far into the future since we don't know our timeline yet. But once we close this funding we'll of course be making very competitive salary hires with stock grants."
"So it's contract work with the potential to become an early startup employee later? I don't mean to obsess about salary, but I see it's in New York City and I'm going to need to pay rent." "Well it's not contract work as such, we want people more dedicated to our mission than that. But I guess I could talk to the other founders about putting together some sort of housing stipend."
"So, it's an unpaid internship in NYC, and you're not willing to put anything beyond that in writing?" "..."
Just for fun, I kept talking for long enough to find out the top-secret details of what the app actually did, which took some doing. It was going to assess your activity level and "holistic well-being" to present a "supportive audiovisual experience". They'd stapled a 2000-era WMP music visualizer to a mood ring.
I’m glad you were aware enough to ask the right questions. However, I will add that whatever poor judgements people make there is just this line that is crossed with actual falsehoods that is hard to undo.
Whatever mistakes these would be employers made, at least they told the truth.
Very true - I don't think I was told anything factually false, and that's hugely to the founders' credit. It's the distinction between caveat emptor and fraud, I suppose, and since some friends had gotten suckered by similar offers I knew what to beware.
Perhaps this story fits better under the other thread here of legitimate arrangements with scam-like effects on their partners. The pitch I got reminded me more of a doomed restaurant than an MLM: the founders seemed sincere about the merits of their idea at least (they demanded an [now-expired] NDA, even!), and I really don't know if their optimism about the company's prospects and the job's quality was faked. They knew something was wrong well enough to bury the problems, but an outright work-for-free scam would probably have been pitched more smoothly, maybe as a "take-home interview assignment". As is, they might well have followed through on the promises if they had somehow gotten their millions. They didn't exactly have my best interests at heart, but like many people overselling failing projects, I think they were aiming at a wildly unlikely success rather than pushing a strictly negative deal.
Thanks! I can't exactly take credit for being insightful, but perhaps well-read - a friend and several people on HN had stories getting jobs with essentially hopeless startups, and I figured that "what would a VC ask about this situation?" was a good starting point for due diligence.
"This sounds interesting, but I'm wondering why you're looking for a fifth employee who's only going to be around for a few months instead of someone committed?" "We don't want to shorten our runway with salaried hires too fast, but we're expecting to close funding within the next year, so we can bring back the summer hires full-time after graduation and you'll already be ramped up."
"So you have some runway now, and you're negotiating more funding - you've raised angel funds and are working out Series A?" "Well, we're still at 'friends and family' and we haven't pitched VCs yet, we don't want to dilute the company too quickly. But we're starting to sound out investors and we've had a lot of interest!"
"So if you're that early on, are you looking at hiring purely in stock? How will that work with the temporary role?" "Obviously we can't give people shares just for a summer of work, and we don't want to plan too far into the future since we don't know our timeline yet. But once we close this funding we'll of course be making very competitive salary hires with stock grants."
"So it's contract work with the potential to become an early startup employee later? I don't mean to obsess about salary, but I see it's in New York City and I'm going to need to pay rent." "Well it's not contract work as such, we want people more dedicated to our mission than that. But I guess I could talk to the other founders about putting together some sort of housing stipend."
"So, it's an unpaid internship in NYC, and you're not willing to put anything beyond that in writing?" "..."
Just for fun, I kept talking for long enough to find out the top-secret details of what the app actually did, which took some doing. It was going to assess your activity level and "holistic well-being" to present a "supportive audiovisual experience". They'd stapled a 2000-era WMP music visualizer to a mood ring.