WhoTF joins a dotcom startup in 2009?

[Koyaanisqatsi]

Well, possibly, me.

So this guy I know wants me to join on with a startup he's putting together...it looks like it could be an interesting service by the time it's running, but the way these things work, who knows. He originally wanted me to come in as one of the primary developers, but with existing commitments there's no way I have the time to do that so it's looking now like I'd be more of a designer/architecture consultant.

My issue is that I have only a general idea of how compensation works for a startup. Particularly since I wouldn't be a full-time employee...I know he's got somebody providing minimal funding right now, but I'm not sure I like it when terms like "sweat-equity" start getting thrown around. In this case it makes me more nervous since, historically, this person has what might be nicely described as a healthy sense of self-interest. So I'm mostly willing to participate just for the experience of having done so, but I'd still like to avoid getting screwed over. What should I be watching out for, either positive or negative? As anybody who's been following along knows, I don't like dealing with business/money management in general, so small words are better in this case. Or even just an idea of what resources I can look at since half of what I've found online contradicts the other half.

Beyond just the compensation issue though, anybody have general thoughts on working with a startup? I know at least a few people here have, and I'd be interested to hear what they have to say.

[DanS]

At a minimum, I'd make sure that "sweat equity" means actual equity or stock options.

Is there an exit contemplated (going public, selling out to a bigger company)? If the application is successful, is this going to be a small company or a big company?

Working with a startup is a lot of work -- sometimes all-consuming. If you are young and have nothing to lose, then it can be rewarding, even if you don't make a ton of money.

[Koyaanisqatsi]

I haven't heard all of their plans yet as far as the exit strategy...realistically, I'd say their best option is flipping it to Google or something. I'm waiting on seeing his business plan before I go any further with it.

It could be pretty major if it hits, but the hit rate in this area is not exactly high.

[SlowwHand]

Roll the dice.

[Zkribbler]

"Sweat equity" means you don't put in any money. Rather, you put in your sweat -- i.e. your work effort. My question would be, how much equity, i.e. ownership, do you get back for your sweat.

The Great Zkribblo predicts that this company will end in complete failure. It will matter not if you're owner of 5%, 15%, or 25%. It'll be worth $0 because the company will be bankrupt. IIRC, 3/4 of all new companies go bankrupt within the 1st year. On the other hand, if it suceeds, you will be rich, rich, rich! You will have gotten in the elevator while it was still in the basement and will ride it all the way to the penthouse.