Then before Covid they needed more work done (customers and revenue were dropping because no updates to the application) so I negotiated part ownership of the company and have been working full-time on it since to try to increase revenue.
So yes, no pay, no work. But pay doesn’t have to be a paycheck. That said, I could be getting paid more right now if I was working in a more traditional role in a more traditional and larger company.
For my agency/consultancy, if a client wants a discount on the total investment, they can book a larger chunk of hours or pay upfront. More risk for them, less cash for us in total, but more reliable cash sooner, that's worth the discount. Cashback for quick payments is another common and simple example of this.
On the other end of the spectrum, if a client wants to delay payments to a later point in time to improve their short term cashflow, that will cost them more in the long run. Company shares, VSOP, revenue share agreements, success based fees and delayed payments with interest are some of the ways to implement this.
It all comes down to how you distribute the risks and rewards between both parties. Any good negotiation isn't haggling between two hard positions, but a shared venture to find a win win model. What you did there is renegotiate a deal that didn't work for one party to find one that worked for both.
After being in your position repeatedly I learned that most cases are not this. Clients would just refuse to pay with reasoning that was sometimes legally solid even if clearly malicious. I ended up having to go to court again and again to get the invoices paid, which meant getting paid years late and with a haircut from unrecoverable court fees. Sometimes it wasn't even worth it to go to court just for a pyrrhic victory, or there was nothing left to go after.
I'm scratching my head now to remember a single case where the inability to pay was due to genuine impossibility followed by good will, rather than "because we can". They'd go to extreme lengths to not pay their debts, all the way to bankruptcy and usually reappearing a day later with a new name and a clean sheet.
"Phoenix" bankruptcies are a real problem among small businesses. It defrauds their creditors, and sometimes the public (taxman) as well. All the way up to things like Rangers (Sevco) football club.
The excellent book on the history of fraud, Lying for Money, has a chapter on this. It concludes that almost every middle class person could probably get away with a fake business bankruptcy at least once, because it's difficult to tell from the outside versus a real (extremely common) small business failure.
I expect you value that client, and you should!
It's possible, not sure how many clients you have had. But over the long run it should be less and less likely that it's always the darn client.
If you withhold services, you usually lose that client. To be honest, that's not always a bad outcome, because a bad or slow paying client is usually the noisiest, most demanding and most unreasonable one as well.
Early in your career, with no savings, working for free is just not an option.
Clearly "just have half a year's savings" wasn't an option here...
Covid was 5 years ago, was this successful?
Is this alongside the revenue sharing with the shareholder option in case this is additional liquidity?
My first thought is that this relationship with the individuals involved is too intertwined for rationality, but the first 10 years were good
Chances are your revenue sharing agreement might not hold up in court (ie veto/not approved by shareholders) or they might scam you by selling the IP for $1 to a shell P/L company and just reincorporating.
So yeah don’t jump for this option unless you think they’ll never pay you anyway… chances are if you keep the debt you can sell to a debt collector for 10% of its value (they’ll go after the director and usually succeed), or wait for liquidation and grab a bunch of their stuff. You might end up with choice pick on a few company cars or something like that you can sell.
Startups operating on unpaid invoices is a very common and real scam that you need to be aware of and avoid. I hear founders casually make comments such as “I’ll try xxx project on unpaid invoices and see if it works” all the time.
Personally it came about a year into my first job. Fortunately my wife was working, and we had minimal expenses, so we could ride it out.
In lieu of salary, the founders made me a partner. We sank or swam together. And when cash came in we paid ourselves.
Make no mistake, deciding to stay was a very risky strategy. But a few years later things took off, we got back-paid all that missing salary, and we've gotten stronger since.
I was lucky. I didn't need the immediate cash, and could take a risk. The most likely outcome was we went under. But the upside turned out to be very strong.
Suing them was out of the question. For me, as for others, it would have been international. The company was in Italy, and the contractors were all over Europe. We'd probably each spend over 10k euros on the proceedings and representation in Italian courts. And the company wasn't overdue by much more than that. Besides, even if we won and the court ruled our legal expenses were to be paid, we weren't sure the company was solvent enough. So no one sued.
I believe it was their modus operandi. The company continued firing their contractors when it got into arrears before a lawsuit made sense. Sometimes, it's just their business plan.
I agree with the article's author—no pay, no work. Before starting contract work, one should think about the line they won't cross regarding late payments. For me, it's when an invoice becomes overdue, and it's plainly a breach of contract. I will never again cross that line and keep working.
We agreed upfront to get about 600$ each, which was woefully little for the ordeal we had to go through. The place was a mess of DOS PCs, AIX workstations and ancient early macs. The backups were a cardboard box of unlabeled 5 1/4 inch floppies. We even had to solder our own cables to get some ancient serial printers to work and get the new IP network talking to stuff that wasn't built for it at all.
The owner was paranoid about security so we passworded everything that could be and compiled a long list of passwords.
When everything was working we sat with him to get our money, and then he said he had understood that the deal was $600 shared between us. He didn't budge, so we got nothing and he didn't get the password list.
Same thing, although in my career as an electrician: sidework realtor had both me and a random plumber (i.e. unrelated to me) out to make repairs on her properties. End of day arrives, my work is completed.
Realtor: "I will pay you when the plumber is done with that bathroom."
Me: "But I am done in that bathroom [installed GFCI outlet], so here is your total for electric work."
Realtor: [feigned?] "I thought the estimate you gave me was for ALL the work, electric AND plumbing..!"
Me: "That doesn't make any sense — you called me for electric work, and this other guy for plumbing work."
Realtor: "That seems unfair."
Me: "Cool well here's the total [again]; if you don't want to pay it I can just throw a lien on the property and mess up the entire sale."
Realtor: [writes me a check, sourpuss] "I guess that makes sense."
She actually called me again for work, but I was never ~hurtin~for~honest~clients... so I declined.
Towards the end of my electrical contracting career, my few clients were all on retainer. The initial months of pandemic helped me to confidently fire everybody else.
But early in my career I was too afraid to use liens/small-claims; I'd only give a single warning, at this point in my life.
My anecdote: During my second job in the games industry, in London, back in the late 90s — I was working for a dev-house that had just finished its first game (I joined halfway through the project).
The lead engine programmer got an offer to work in San Francisco and left the company and I took over his role as I was the only person in the company that could develop a 3D graphics engine (and had done so at my previous job).
They were desperately trying to get two games titles funded, but were having no luck, because it was in the awkward period between the PlayStation 1 and PlayStation 2 where the publishers were not committing.
Eventually they just ran out of money. I was asked to work for nothing whilst they tried to land a deal. Which I did. If I’d have left them there was no way they would’ve got a deal, because they wouldn’t have anybody with experience capable of developing the 3D engine. Selling the team is an important part of the deal.
It still failed, the business went under, and we all went our separate ways. The CEO (and founder) who had asked me to stay and work gratis went on to run a major studio. I went contracting for a while.
Then dotcom happened. My contracts dried up. I needed a job.
I called up my former boss and said “have you got any jobs?”.
His reply: “you start Monday”.
I traded away some of my cash, yes. But I gained loyalty and an ally in the industry. Obviously, most situations where someone isn’t paying you isn’t like this, just don’t fall into the “no pay, no work” dogmatic position by default.
I'm happy it worked out for you, and maybe the 90s was a different time. But now, to go for the same deal would be foolish. And come to think of it, people were raising hell about it in games, even in the late 90s.
I'd say this practice today needs to die out. I'm sure 80% of companies with a temporary cash crunch (but a legitimate business model) can get bank credit to cover salaries. It's not even a big hassle - the business banking app usually approves the line of credit automatically in a few seconds, anyways. Depending on the regular cashflow, it can be up to small five figures - enough to pay a month or two of salaries. If they don't want to pay, that's a different matter.
I believed in what we were doing. I’d built a new game engine for the Dreamcast (the only nextgen console available at that point), we’d created two good game demos, the team was full of industry veterans and I liked and respected everyone I worked with. I also saw the lengths my boss was going to to make it work (including remortgaging his house to finance the short term).
In hindsight it was obvious where it was going. But I wasn’t being manipulated or abused. And I will argue vigorously and vehemently that we weren’t being taken advantage of. We were fighting to save what we felt was a good thing.
> I'm sure 80% of companies with a temporary cash crunch (but a legitimate business model) can get bank credit to cover salaries
This wouldn’t be an option in the situation I describe. You would need orders and evidence of delayed payments that can be used to cover the loans once they arrive.
That kind of finance is actually quite hard to get in the UK.
You justify working for free, and I get it. Sometimes, I worked for free in my companies, but it built my equity value. I can also somewhat get it if it’s for a good cause—if you personally want a change that your labor effects in the world.
Working for free for someone else without anything of value in return is a different matter. Even if, in the end, you became friends and got a job. Some people in the games industry will say this is normal, but it’s not (and by law in some cases). For example, the UK's living wage is where society decided to draw the line between fair labour relations and abuse.
When it comes to working for free or almost free, I think whether you'd get much better labor conditions elsewhere matters. In many cases, the answer is yes. That's a good litmus test for unfair compensation.
Yes. There was a great need for anyone with IT knowledge, and the demand was far greater than the available labour.
I remember in 98 I got a job in a (financial) brokerage, and the required skills were:
show up on time
don't leave before stock exchange closed
wear a clean shirt
be a nice to customers (all were affluent)
know how to use conditional formatting in Excel
know how to connect a PC to multiple screens
know how to place different spreadsheets/windows in those different screens
In the 20's, that's all been torn down. Gifting isn't only commonplace but are being busted out at untold scales these days. There's no sense of community, networks are weaker than ever, and workers have less right than ever, so everyone's struggling. This is all doubly true for the games industry.
It's probable that your experience was successful because you already had personal trust on behalf of your company.
You never owe free work. You can choose to do it anyway because you trust someone, but nobody is entitled to act as if you owe them any loyalty.
Yes, absolutely, I’m merely stating that it doesn’t make sense to make ‘no pay, no work’ a dogmatic position.
Given current times, I understand not having time for hobby projects while trying to survive.
It wasn't that I was expecting to make a wage on a commission job, its that during the training portion I was expected to comp my sales back to the company and then on top of that, my trainer put his name down on my sales anyway.
Ultimately I learned that they handed new people territory that had been walked twice already in the previous 2 months.
The whole hierarchy of the business was designed to suck value out of new starters, and the winning move was to just drop it and leave.
If a company is truly making a good faith effort to pay, I try to cut them slack, especially if they level with me about why they're having a cash flow issue. This requires having insight into the people making the decisions, as well as being willing to take a leap of faith that I won't get screwed. I have a pretty good track record: I come out ahead (i.e. get paid) most of the time, and have rarely been left holding the bag.
I once ran the tech side of a small startup where money was always tight and we were paying low wages in exchange for equity. But we always made sure to pay our employees first so they could eat and pay rent and keep working. One time one of our more expensive employees quit to take a better paying job. I'm ashamed to say it took us multiple months to finally pay him out his final paycheck - but once he left he was no longer the priority. I remember a few conversations with him where I stated that I was paying the office and server bills on my personal credit card and, no, I wouldn't take a cash advance to pay him his last 2 weeks in arrears. He did eventually get paid.
Also, I might've misunderstood a lawyer, but it sounded like a business failing to make payroll would threaten its legal right to operate.
Paying him was legally no less a priority than paying any other owed employee wage. Maybe it was indeed a major priority to him.
>and, no, I wouldn't take a cash advance to pay him his last 2 weeks in arrears. He did eventually get paid.
So al though there were options available to you that would have caused you some temporary economic pain, you did indeed decide to fuck him over for a long while anyhow.
It doesn't make it legally or morally right, but that's the way it goes.
> ...caused you some temporary economic pain
Not only them, but potentially all the other people who rely on the business.
A friend got stiffed at a tech job, a government contractor, I think. I'm not sure whether it was for a month, or for a bit more. Fortunately for him, his expenses were low and his partner was working.
Everyone is virtous when things are good. When the chips are down is when things get ugly. I think the vast majority of people lack empathy given the right circumstance. They'll do much worse things than try and manipulate someone into free labour.
Without a contract, either party is free to prey on the other: the client can try to guilt the worker into working longer before they get paid, but the worker can also try to ask the client for money up front (yes, that's a thing).
That's why a contract is so important: it describes what happens when a client pays late, and presumably sets terms to either make it worthwhile for the worker, or gives the worker an easy way out of the contract.
I deal with this a lot, some clients are talking payment, equity, and other sharing right out the gate.
Other clients are thanking me for working for free an hour into an intro call where that assumption wasn't warranted. And then acting like I’m not into their vision enough, when even the future % compensation hasn't been detailed, offered, or considered at all.
Had a call yesterday like that where I pointed out that every founder’s idea are fairly interesting software problems and they also pay to retain me so there is competition for my time. This founder needs capital or to drop the idea until they do, like everyone else.
It's OK to accept lower compensation at the beginning, and it is always OK to do charity work if you want to help, but unpaid internships are never to your advantage in my opinion.
So yea, probably don't take an unpaid internship if you're not already a rich kid and don't have a family member telling you it's a good idea.
In Germany it was like that for BMW and Siemens.
Management often would choose the candidates who were young because they didn't ask questions, they followed directions, they didn't know their rights, and they were desperate for experience to kickstart their careers. They also would require legalese that would steal any potential competing ideas they ended up making outside of work through inventions agreements, and this trend still occurs today.
I've walked away from several MSP jobs in the past because they took approaches like this and was grateful for my past experience and sticking to my principles.
The hard sell pressure, requirements to agree before they'll send you the paperwork (which require conditional agreement pending review), and unwillingness to be reasonable (i.e. your given it on a saturday and it must be agreed to by Monday (few lawyers can review things over the weekend in that timeframe), followed by a withdrawal of any prospective offer for simply asking if parts of the employment contract were negotiable given valid concerns are just a few major red flags I regularly look for in employers today.
If the employer is going to rescind an offer because you ask questions, for me its not just them doing that. Its them triggering a revocation of my conditional acceptance and its mutually rescinded, and I make that clear in my final communication and never apply for those companies again.
Eventually the lack of talent available at these places, through their own actions, will have an impact and drive them towards insolvency.
How common is unpaid intern work?
Why should big, wealthy companies expect young people to work for free?
Is this a deliberate form of gate keeping so that only people from wealthy families can get a foot in the door?
On the contrary in the US, I often see young people take jobs which pay around minimum wage and will not count as industry experience in their field - when they have enough qualifications to execute usefully on much higher paying jobs (even if the employer would still be underpaying them compared to the usual hires). My business would have used them - but couldn't find them easily. The job market is a mess.
However, previous governments set up ""welfare-to-work"" schemes, effectively a government subsidy to employers, where people were required to work for free: https://www.recruiter.co.uk/news/2012/03/no-end-controversy-...
(absurdly huge controversy, the government tried to legislate the outcome of this specific lawsuit through retroactive legislation, in violation of ECHR https://ukhumanrightsblog.com/2014/07/08/retrospective-legis... )
Heck it is even hard to get companies to onboard experienced developers with no experience in the stack already used in the company.
Most companies don't expect young people to work for free, they just don't hire them. What you are left is companies who expect young people to work for free, which obviously are not good companies.
It has always been the case that new hire are a net negative to start with. Even experienced people are probably a net negative for a few weeks. Inexperienced people are more of a long term investment.
The law requires employers to pay minimum wage to anyone who is a worker (i.e. is doing work for the company) - but "sitting in" doesn't have to be paid. Exceptions are also made for volunteering, and placements as part of a university course (these can be unpaid).
Enforcement isn't consistently applied so some smaller outfits get away with it. The big FAANGs and other major companies pay.
If contractor, you have a lot less options, but still you can also report them, and it will show on their credit score. It's not public, but other companies are using services to show credit score and they will see that. Or you can sell your financial claim to other companies.
I'm interested, how this works in US?
The department of labor, in theory, investigates the complaint and you'll likely get paid: https://www.dol.gov/agencies/whd/contact/complaints
Unfortunately, the reality is much different, since the US is largely under "at-will" employment (so "full-time employee" means almost nothing), it's generally easiest for an employer to simply fire the employee and immediately shoot them under castle-doctrine for trespassing.
Also, the current government won't increase DoL funding, and wage-theft complaints already often take over a year to process, with a lot of them never making it because a year is simply too long to deal with (not to mention the plaintiff has usually been shot by then).
Just make sure you can still pay your bills.
I was gone when they got back and so was their business.
Pre-email ubiquity. So I resigned by email. Which he didn’t see until 2 weeks later.
Mike Monteiro: Fuck you, pay me.
Any chance you get to trade some capital for a better relationship or network, you should seriously consider it.
Being completely inflexible with others regarding direct and immediate exchange of value for labor is not a good way to get in deep with revenue sharing and ownership agreements. This is also colloquially known as "being an asshole".
Building a reputation sometimes means doing great things for free.
That Subway restaurant wouldn't accept to be payed in two months.
Maybe you can accept a delayed payment if you have some money and the company can somehow prove they will be able to pay later. Otherwise it's better to go.
Later some of my coworkers sent an article to me mentioning that the owner was under investigation by the SEC for (allegedly) embezzling funds from investors. I think I figured out where everyone's paychecks were going.
Every company, client just wanted their own app. App for medicine sales people, internal company Android launcher, an app to adjust your window blinds, fitness app, bible/Muslim apps, timer. All these random stuffs.
Comparing it from the past several years, majority of the projects didn't even make it to MVP because of the cost is just too much for them.
The “loyalty card” is a pretty familiar refrain; especially wrt to startups. Founders work their asses off, and often make huge sacrifices, but also seem to have a difficult time, understanding people that don’t feel the same way (and don’t have as much to gain). They take it personally, when someone “doesn’t love my baby.”
> Firebug
Remember when we didn’t have right-click-console? Firebug was a miracle.
That’s the kind of response that gives you confidence you made the right choice by not giving in.
Like when a man hits on a woman, gets a polite refusal, and then lashes out with “you were ugly anyway, bitch”. Instant confirmation of a dodged bullet.
Often, the interviewing manager is explicitly instructed not to discuss pay, and HR negotiates it. The managers aren't trusted to do so.
https://bible.usccb.org/bible/leviticus/19?13
https://bible.usccb.org/bible/deuteronomy/24?14
I discovered not long ago that it's actually considered "an abomination unto the LORD", so imagine the ancient world equating homosexual buggery with failure to pay wages. If only we still adhered to such moral standards. But seriously, it's true, the USA seems to have strong protections about this sort of abomination, and I am thankful that I've always worked W-2 and never 1099 or under-table for reputable corporations who were always above-board with their payrolls.
Of course I've also donated thousands of hours to my church, including genuinely skilled, high-level sort of labor, and it took me several decades to figure out that I really need to expect nothing at all in return for that kind of service!
Once wage theft is eradicated, if not earlier, we should bring back jubilees.
Government is currently chock-a-block with Catholics, Jews, and mainline Protestants who understand exactly how wide justice works in a Jubilee context, and they’re providentially positioned to make it a reality. They are implicitly following the lead of the Holy See and the Holy Father, having declared an Ordinary Jubilee Year of Hope.
The fact that many people hate what’s coming down is a clear indicator that Jubilees work, especially in terms the principles of justice for all, wealth redistribution, freeing slaves and servants, fallow fields, and returning foreigners to their ancestral lands, but when these ideals are set into motion and made reality, some very comfortable and spoiled people whine about how horrible things are...
Somehow a clever person like yourself has been fooled.
They can make a lot of money, but often, their base salary is 0.
It's about the hustle. Founders are like that. When times are tough, they don't get squat, but when times are good, they get a new indoor swimming pool.
Most regular employees aren't like the above. They want some basic assurances. They don't get the huge rewards, but they also don't take the huge risks.
It's rather disappointing to see founders treat regular schlubs with disdain. Not everyone is a hustler, and that's OK.