I just joined my first startup. The contract I signed said X number of days at X amount. When I submitted my invoice, the owner freaked. I was told I was trying to “money grab” and that no one actually submits for their whole time. Was basically told to reduce it to X% below. I went even lower and was still told I was too high. Basically going to be 50% of contract. Is this a common practice? I’m being told high numbers regarding the future but I’m concerned. Am I naive or being played?
Questions
Joined my first startup. Am I naive or being played?
22 answers from the community
A· Jul 8, 2014
Being Played.
And this behavior also says a lot about the specific startup...
A· Jul 8, 2014
How are you "joining" a startup if you're a contractor?
Startups normally have little money and depending on the personality of the CEO they may play hardball but that is not the norm. Basically the key is to bill weekly/bi-weekly and have them pay you in 15 days. That way there won't be surprises.
A· Jul 8, 2014
Hi,
The contract is short to "get to know each other" said I will be perm at end of contract. Being given grand amounts when going live. Concerned because the offer in contract is not what they are wanting to pay now. Sort of a "test" that I am willing to accept little pay to show my "commitment" to the company and future vision. Proving myself by not asking for whole amount in contract. This is my first startup and I don't know if these things are normal. Can you help answer this?
A· Jul 8, 2014
Are you promised equity when you finally join? If not there's no upside and you should walk away. If you are and the equity is tiny, also walk away.
At the end of the day are you joining for startup experience or do you like the product or company? Ask yourself the question and you should find the answer in you.
A· Jul 8, 2014
Hi,
Thanks for talking with me. Supposed to get equity when join in August but do not know amount. Concerned with that if they are not honoring the rate they set now. Joined for experience and think product could be successful. Do companies normally "test" employees like this?
A· Jul 9, 2014
Startups are very diverse so you can be "tested" many ways. This sounds like a "chinaman" company (not being racist - I'm asian). I would say if he's expecting you to lower your rates by 50% you're not seeing eye to eye. There's a good chance you won't get much upside equity wise from the way they are going with it. So if you like the company/product/experience - do it. But expect to be low balled and worked very hard and not being appreciated.
A· Jul 8, 2014
If he didn't want to pay what was agreed in the contract, why did he sign the contract?
A· Jul 8, 2014
That's what I don't understand. Why present me w/a contract and amount and then only want to pay me half of it?
A· Jul 10, 2014
Take the difference in equity if he can't pay and then quit.
A· Jul 8, 2014
Sounds like you are overhead. Overhead does not make the cash register ring. Either bring in customers, help close customers, or step away until there are customers.
This is experience talking...
A· Jul 8, 2014
Overhead might get cut, but overhead gets paid.
This is the law talking.
A· Jul 8, 2014
What do you think I should do to ensure that? Seems they violated contract already by asking me to reduce hours I worked. It is normal to "test" employees to see commitment by not asking for full contract pay? Being told it'll be perm soon and get equity but doesn't feel right. Not engineer but technical, not in sales position.
A· Jul 9, 2014
Depends on where you are. If you are interested in joining, you have to work it out with them - maybe ask them where they get the idea they can arbitrarily refuse to pay you. Otherwise you can take them to small claims court if its less than 6K and with the contract you can expect and easy win.
A· Jul 8, 2014
You are being played. My company does that. They don't say anything when your staying late, working weekends but when it's time to pay they freak at the hours. When my company told me they wouldn't pay me overtime hours, I stopped working extra time.
If you are working just full-time 40 hours a week and they still want you to reduce your hours on the invoice, they are playing you.
My company has the belief that you have to pay your dues. I used to believe that. But now I just see it leaves our employees unpaid or underpaid and that is not fair.
A· Jul 9, 2014
If you're working an hourly wage, you are not important.
A· Jul 8, 2014
I've been asked to accept 50% less than agreed to in contract. Told I'm earning favor and will be rewarded when perm with equity (no idea of how much). They let someone go who wanted full amount in contract. Afraid to believe in future if they don't want to pay contract amount they came up with.
A· Jul 8, 2014
That sounds like BS. They have no right to penalize you for wanting the full amount of the contract! That has nothing to do with how much you believe in their future. Sounds like they have a lawsuit in the future. They are idiots for even drafting a contract they didn't want to keep. Any disgruntled employee could just take them to court and sue.
A· Jul 9, 2014
+5
A· Jul 8, 2014
Bill the hours that you worked. If they don't pay, walk away, and continue to bill them for late payments.
A· Jul 10, 2014
Absolutely. It's a contract and they signed. Take their broke entrepreneurial asses to court.
A· Jul 10, 2014
I've never been 'tested' like this.. It is unethical to test people this way, and unlawful to actually carry it out (unless you're a contractor I guess...). If the CEO doesn't want to pay the money, then next step is to make a new contract including a timeline to pay either cash or a FAIR amount of equity in their company (if you think the company is worth getting into).
Remember, always initiate bids high if you know he's going to try to talk you down..
If you're being paid as a contractor, it's all about whether or not you feel comfortable going through the same things over and over again with this startup.. Since, in reality, the bill amount IS up to you. If you don't want to work in this environment again, stand firm and unshakable. If you want to continue in this startup, waiver a little and tell him it is a "lot to ask", or a "big favor" you're doing them, and ensure you're in on the next round in a financially beneficial way.
A· Jul 14, 2014
Obviously the guy is a liar and not someone you should work with a minute longer. Cut your losses now and move on. If he's saying you are trying to "money grab" when you are being honest about your time worked then he is an unethical a-hole.
He also could be breaking the law if the work relationship does not meet the rules required for being a contractor. It depends on your state but usually it's things like the contractor supplies his own work tools and has the ability (and does) work with other organizations and just solely the one company.
Be thankful that you've had the opportunity to see what kind of people you would have been working for.