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Old 03-28-2019, 04:35 PM
 
2,067 posts, read 599,290 times
Reputation: 2931

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Not taking much stock in it since it's only the first interaction. But a reasonably known start-up in the NY tech scene has reached out to setup some time with me to discuss a new product they are venturing out on.

They have under $10M in funding and are still listed as Series A on crunchbase. No position has been advertised. I am currently looking more for a board advisory position if it's a start-up. I would not at all be looking to quit my F500 to go there full-time. (They wouldn't be able to afford me full-time) I would need an extremely healthy sign on bonus (think 50k POST-tax) to jump ship and work for them full-time. (I'd be fine signing a contract for that amount)

Anyway regarding the specific niche they are looking into I would be able to advise on product/marketing and the full P&L as I have full insight into their target market and the category of the service they are looking to grow. They have a modestly successful iteration of it right now just another variation they are looking to create in a separate niche.

So my question to those with deep experience in their respective fields (who have preferably consulted with tech start-ups in the past) - How do you navigate the waters of negotiating with Start-ups that are presumably cash strapped and want big help on a little budget? I'm not interested in equity because this will not be the next Uber or Snapchat. At minimum I'd like to setup some consulting hours so I can show revenue against my S-Corp. I need at least 10k preferably to show appreciation on my K-1 this year.

A) Should I view it as a networking opportunity, tread lightly to avoid being taken advantage of for free insight and information

B) Should I show a high level of interest and give them a lot of useful insight and information initially with the chance of them thinking "We should find money to get him a contract so we can continue leveraging his expertise" (my time is not free of course)

They may be getting investment that has not been disclosed, but not sure. Overall I'm wondering if I should focus on the short term and get as much cash from them as possible and get out, or the long term but that could potentially lead to complications. Basically hardball vs softball.

I am leaning towards A and taking more of the hardball approach because whether they know consciously themselves or not, a lot of start-up people are highly disorganized and discombobulated and enjoy chaos. I am the complete opposite in many ways. Ambiguity can be fine at times but not regarding everything. I can find them a 20 year old kid to work for peanuts if that's what they need a grunt worker to handle the day-to-day but I'd rather keep my interaction with them strategic and high level.
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Old 03-28-2019, 08:15 PM
 
2,425 posts, read 691,725 times
Reputation: 3407
a) is my choice.

under $10M is not that much, especially in NYC. The rent alone is millions.

I'm sure you know that startups work their people to death, 100 hour weeks is common.
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Old 03-28-2019, 08:52 PM
 
1,690 posts, read 553,258 times
Reputation: 3572
Did they approach you asking to bring you on in some way, or did they just say they want to talk?

If you're not interested in equity and not good with ambiguity, getting involved in a startup isn't the thing for you. Why would you be against equity?

My background, I work in the investment field (on the public side right now), but I know people who work in venture capital, and I've been involved in a few startup incubators over the years. My advise, be honest with them. Don't play games, don't waste your and their time. Just talk to them, 9/10 nothing comes out of conversations like that, but they are good to get to know people. Your goal right now is to build some sort of relationship and rapport with them.

Giving "free insight" isn't a bad thing, if you're building relationships with people. Helping other people is how you build your network. That, and ideas are easy. Everyone has ideas. You latch onto a startup if you believe in the people running it, more than the idea, honestly. Talk to them for a few hours, get to know them, then take it from there. If their idea is interesting, then maybe talk about equity/cash compensation for consultation. You won't know that until you meet with them a few times.

Last edited by Lekrii; 03-28-2019 at 09:44 PM..
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Old 03-29-2019, 06:30 AM
 
2,067 posts, read 599,290 times
Reputation: 2931
Quote:
Originally Posted by bobsell View Post
a) is my choice.

under $10M is not that much, especially in NYC. The rent alone is millions.

I'm sure you know that startups work their people to death, 100 hour weeks is common.
Thanks, hoping the other Bob(NJ), BusinessManIT and Pitt can weigh in as well...
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Old 03-29-2019, 07:35 AM
 
4,069 posts, read 5,468,567 times
Reputation: 4920
Quote:
Originally Posted by Tencent View Post
Not taking much stock in it since it's only the first interaction. But a reasonably known start-up in the NY tech scene has reached out to setup some time with me to discuss a new product they are venturing out on.

They have under $10M in funding and are still listed as Series A on crunchbase. No position has been advertised. I am currently looking more for a board advisory position if it's a start-up. I would not at all be looking to quit my F500 to go there full-time. (They wouldn't be able to afford me full-time) I would need an extremely healthy sign on bonus (think 50k POST-tax) to jump ship and work for them full-time. (I'd be fine signing a contract for that amount)

Anyway regarding the specific niche they are looking into I would be able to advise on product/marketing and the full P&L as I have full insight into their target market and the category of the service they are looking to grow. They have a modestly successful iteration of it right now just another variation they are looking to create in a separate niche.

So my question to those with deep experience in their respective fields (who have preferably consulted with tech start-ups in the past) - How do you navigate the waters of negotiating with Start-ups that are presumably cash strapped and want big help on a little budget? I'm not interested in equity because this will not be the next Uber or Snapchat. At minimum I'd like to setup some consulting hours so I can show revenue against my S-Corp. I need at least 10k preferably to show appreciation on my K-1 this year.

A) Should I view it as a networking opportunity, tread lightly to avoid being taken advantage of for free insight and information

B) Should I show a high level of interest and give them a lot of useful insight and information initially with the chance of them thinking "We should find money to get him a contract so we can continue leveraging his expertise" (my time is not free of course)

They may be getting investment that has not been disclosed, but not sure. Overall I'm wondering if I should focus on the short term and get as much cash from them as possible and get out, or the long term but that could potentially lead to complications. Basically hardball vs softball.

I am leaning towards A and taking more of the hardball approach because whether they know consciously themselves or not, a lot of start-up people are highly disorganized and discombobulated and enjoy chaos. I am the complete opposite in many ways. Ambiguity can be fine at times but not regarding everything. I can find them a 20 year old kid to work for peanuts if that's what they need a grunt worker to handle the day-to-day but I'd rather keep my interaction with them strategic and high level.
You stuck in a bad job? Too bad. Forget that start-up and follow this post by Tencent: Bad Job? Too Bad. You're Stuck! The REAL Job Market = The REAL Economy
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Old 03-29-2019, 08:00 AM
 
6,330 posts, read 3,470,141 times
Reputation: 5734
Quote:
Originally Posted by Tencent View Post
Not taking much stock in it since it's only the first interaction. But a reasonably known start-up in the NY tech scene has reached out to setup some time with me to discuss a new product they are venturing out on.

They have under $10M in funding and are still listed as Series A on crunchbase. No position has been advertised. I am currently looking more for a board advisory position if it's a start-up. I would not at all be looking to quit my F500 to go there full-time. (They wouldn't be able to afford me full-time) I would need an extremely healthy sign on bonus (think 50k POST-tax) to jump ship and work for them full-time. (I'd be fine signing a contract for that amount)

Anyway regarding the specific niche they are looking into I would be able to advise on product/marketing and the full P&L as I have full insight into their target market and the category of the service they are looking to grow. They have a modestly successful iteration of it right now just another variation they are looking to create in a separate niche.

So my question to those with deep experience in their respective fields (who have preferably consulted with tech start-ups in the past) - How do you navigate the waters of negotiating with Start-ups that are presumably cash strapped and want big help on a little budget? I'm not interested in equity because this will not be the next Uber or Snapchat. At minimum I'd like to setup some consulting hours so I can show revenue against my S-Corp. I need at least 10k preferably to show appreciation on my K-1 this year.

A) Should I view it as a networking opportunity, tread lightly to avoid being taken advantage of for free insight and information

B) Should I show a high level of interest and give them a lot of useful insight and information initially with the chance of them thinking "We should find money to get him a contract so we can continue leveraging his expertise" (my time is not free of course)

They may be getting investment that has not been disclosed, but not sure. Overall I'm wondering if I should focus on the short term and get as much cash from them as possible and get out, or the long term but that could potentially lead to complications. Basically hardball vs softball.

I am leaning towards A and taking more of the hardball approach because whether they know consciously themselves or not, a lot of start-up people are highly disorganized and discombobulated and enjoy chaos. I am the complete opposite in many ways. Ambiguity can be fine at times but not regarding everything. I can find them a 20 year old kid to work for peanuts if that's what they need a grunt worker to handle the day-to-day but I'd rather keep my interaction with them strategic and high level.
Have a conversation, see what they offer. That’s what I did for a Startup CEO offer I received last year. I ended up passing because we couldn’t make the cash compensation work for my needs.

The fact that they got their A round means they’re at least credible. You can always offer to sign a NDA and then ask them specific questions about their cash burn rate, their next funding round and see their financials.
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Old 03-29-2019, 08:12 AM
 
2,067 posts, read 599,290 times
Reputation: 2931
Quote:
Originally Posted by move4ward View Post
You stuck in a bad job? Too bad. Forget that start-up and follow this post by Tencent: Bad Job? Too Bad. You're Stuck! The REAL Job Market = The REAL Economy
LOL

Quote:
Originally Posted by markjames68 View Post
Have a conversation, see what they offer. That’s what I did for a Startup CEO offer I received last year. I ended up passing because we couldn’t make the cash compensation work for my needs.

The fact that they got their A round means they’re at least credible. You can always offer to sign a NDA and then ask them specific questions about their cash burn rate, their next funding round and see their financials.
I don't need to see their books I already know the business model bleeds cash like a stuck pig in the beginning at least. But if they work it right going towards content development, gamification and implementing an ad ecosystem they can still continue to get Investment and eventually become profitable. But this will not be a billion dollar platform.

I will go into it with the assumption that they won't be able to pay my rate. However, if they magically got an all star line up of rising B list celebrities on board for free that changes everything.
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Old 03-29-2019, 10:04 AM
 
6,330 posts, read 3,470,141 times
Reputation: 5734
Quote:
Originally Posted by Tencent View Post
LOL



I don't need to see their books I already know the business model bleeds cash like a stuck pig in the beginning at least. But if they work it right going towards content development, gamification and implementing an ad ecosystem they can still continue to get Investment and eventually become profitable. But this will not be a billion dollar platform.

I will go into it with the assumption that they won't be able to pay my rate. However, if they magically got an all star line up of rising B list celebrities on board for free that changes everything.
OK, you know the cash flow for the business model. Just not the business itself, but if you're sure then have a go at it.
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Old 03-29-2019, 03:10 PM
 
2,220 posts, read 541,738 times
Reputation: 3840
Quote:
Originally Posted by Tencent View Post
I am currently looking more for a board advisory position if it's a start-up.
Are you more interested in board advisor, board observer, or board membership?

I've been all 3. Depending how formal the board is being run, the roles are quite different. My guess is a startup will not on the formal end of things.

*****

Here is a bit of insight into how a few name brand Silicon Valley new venture law firms sometimes approach it. They say (simplified), "OK, we'll do your corporate legal work for you and introduce you to VCs, which in turn jumps you to the front of the line, and because we introduced you, your odds of funding go from 1 in 1000 up to 1 in 20. The rest is on you. We'll send you bills, but don't bother to pay them. We'll take a board seat. We'll take some equity.

If, somewhere down the line, there is a liquidity event (IPO, merger, acquisition, etc), then you'll pay us our unpaid bills plus interest.
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Old 03-29-2019, 03:59 PM
 
10,060 posts, read 4,662,763 times
Reputation: 15296
How does a <10M startup even have a formal board to begin with?

Isn't that evaluation for a startup something like, you might be around for another 6-18 months? If they last 2 years, then they can come back and get things rolling
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