Stop asking companies if they accept equity
Joshua Davidson wrote this article
“If you’re good at something, never do it for free.”
Still to this day, one of my absolute favorite lines by Heath Ledger as the Joker from The Dark Knight.
You see, this line has always stuck with me, especially as Chop Dawg continues to expand.
Now, we’re incredibly fortunate to be in a position where incredible companies, inspiring and serial entrepreneurs reach out to us weekly, asking us if we could help them bring their app ideas to life. In fact, it is the most humbling thing in the world to be in this position. It truly keeps you grounded and lets you appreciate just how special of a company you’ve built when this is something that happens so often. With that said, one thing has begun to pop up more and more as so many people have reached out to us over the years… the question about accepting equity as payment.
Let’s address this question first and foremost as we begin this post… no, Chop Dawg does not accept equity, profit-sharing, joint partnership or anything of the kind. We’re compensation-based only.
Second, to follow up this question, no we don’t know of any company that accepts equity, profit-sharing, joint partnership or anything of the like either.
Third and perhaps most important… the odds are, you’re not going to find any company of quality that accepts equity, profit-sharing, joint partnership or anything of the kind.
This article isn’t meant to belittle anyone but instead, explain the rationale why and the solutions to look for if equity is the only resource at your disposal. Here is the thing. Companies like us do a terrible job of communicating why equity isn’t an option. It isn’t anyone’s fault that we are asked this question so often… except for well, ours.
Here is the biggest reason why we don’t even entertain this question. We’re not an investor. We aren’t an incubator that only takes on certain “classes” per year. We’re a company that provides a service. Perhaps the best service on the planet at what we do (a little bit biased… but I have no doubt in the world this is true), but a service nonetheless. We’re also not a single person shop. Chop Dawg hasn’t been run by just me since 2009.
We’re a team. We have payroll. We have expenses. We have hundreds of clients. We have to make a profit to keep the doors open, the company running, to grow. This isn’t an individual who can just drop anything to take the leap of faith of an app idea on the basis of ownership.
The same will be true for all companies that are asked this question. Unless it is built into their business model, they won’t even blink. Of course, the counter to this is well, Y-Combinator, Techstars, 500 Startups accept equity! True, but they aren’t providing a service. They’re acting as experts, glorified consultants, preparing you for other things vs. providing you actual development, design, and everything else that we offer our clients. You’re literally comparing apples to oranges. In fact, more like apples to a lamp.
This doesn’t mean companies like us do not care about your success. In fact, we’re insanely committed. We only work with customers that we absolutely love and ideas that we truly do support. Our clients are an extension of our families, ones we will do anything and everything for to see become successful. The same will be said for any quality company in our space. After-all, if we weren’t driven as such, no way would we have been in business for over six (almost seven) years now, with hundreds of clients worldwide, still kicking ass and being driven as ever. Quality companies will always care about their customers. It is what keeps them motivated, keeps them kicking, keeps them pouring their blood, sweat, and tears into operating. It why they have clients; clients that want to work with them.
Companies though, aren’t set up in a way to accept equity from you nor should you expect a question like that to even work at the first introduction. Just take a minute to think about how big of a question that truly is. You’re asking someone, a company in this case, to be your partner. One which, harsh but true, has significantly more leverage than you. You may be the idea person, but you’re asking a team of people who has the manpower, skills, expertise, designers, developers and everything in-between to build your product. One party holds all of the keys to bring a product to market and be successful. The other? Just the ability to see the vision come to life and perhaps connections. Awareness as an entrepreneur is key, especially early on while the foundation is being laid.
Now, this doesn’t mean equity options do not exist. They most certainly do. For example, looking to bring on a CTO (Chief Technical Officer) who can help with the programming on your end for you. Bringing on someone to help finance the idea to work with a talent company such as Chop Dawg. Bringing on an intern. So many options exist at your fingertips. Here is the biggest thing. Notice how all of these examples are individuals. Individuals who do not have a team to look after, one person dictating their entire future, one person who is able to offset income for a long-term personal investment. To be a partner. This is the right situation, not always, and still, slim to none (because remember, if you’re good at something, you never do it for free) as the most talented individuals already have a great thing going that they won’t want to just give up. With that said, your odds statistically have increased.
So, let’s put this into action. Where can you find such potential partners that will accept equity as payment? Start off by networking. Attend Meetups in your local cities. Search everywhere on social media. Ask friends, colleagues, like-minded people. Perhaps best of all, research websites such as AngelList and Founders Dating, which cater to solving the problem of connecting co-founders with one another, forming partnerships, etc. You’ll be surprised just how many options exist when looking in this direction.
Companies like us exist for a reason. We bring great products to life. We know how to build incredible brands. We understand how to create a powerful user experience. With that said, we’re a service. We’re a team. Our time, our labor, our resources… it is worth fair compensation.
Equity is an inherent risk. With that said, options do indeed exist if you need it and equity is the only resource that you have. Locate potential founders, find talented individuals, look for financing options. If you truly believe in your idea and know it needs to exist in the market, never settle. Just don’t expect a company to be your answer.