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Old 12-07-2006, 04:34 PM   #1 (permalink)
pigglet pigglet
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Location: Locash
playing with my money is like playing with my emotions : start-up or not to start up?

ok, so here's a quick synopsis:

i'm a research engineer at strong second-tier southern university. for the past two years, i've been involved with what you might call "applied research" to develop a prototype, "proof of concept," device. this effort has been successful, and the results were presented at a major scientific conference quite recently. i have been working under the direction of two professors at the university, who are now wanting to launch a start-up company based on the concept (which was pre-existing to my involvement, but which i have modified/added/etc to make it work / improve). this has essentially been an underlying theme in the course of my research work for the past two years with this group.

there is a local consortium which is endeavoring, in general, to support the formation of startup companies in the area that i have been working. the professors i work with have been in negotiations for the past several months with this consortium to gain capital funding to launch the startup. one week the money is in place, the next week the deal is unacceptable. we also have a former ceo of a major company, and his wife who has also had a successful career in business management and ownership, involved in the financial direction of the company. now here's the deal:

about a month ago or so, we were in a position where the deal from the consortium was unacceptable. i am running up against the end of my current contract with the university, and so i decided to look for alternative employment. eureka!!! i interviewed with a research institution, and have been offered a research position. the title/level of the position is commiserate with what i am currently "ranked" as, but the salary would basically double what i am making now. the area of the work is not exactly what i would like to be doing, in fact - its something which i fundamentally don't want to be involved in long-term, but can rationalize into being acceptable. this institution has a retention rate of permanent job offers for the entry-level position i am considering of about 90% - so i think it would most likely lead to a permanent offer. that's another big up in the salary - something like achieving tenure, but without teaching students.

however, we have just received word, verbally, that the consortium is going to fund the startup company effort we have been looking at. there is no solid paper agreement on the terms of the financing - but the structure has been laid out, and been verbally voted on by the board of trustees. the question is what happens when the legal documents are passed around - and will another impasse be reached? regardless, the two professors, and their financial partners, are offering me a position with the startup at salary which is not as much as the offer from the research institution - it's a little bit more than i am making now; however, they are putting equity in the company as part of the offer, and possible incentives in terms of stock options and so forth as part of the agreement as well.

the problem? i am supposed to give an answer to the research institution this week? "what the fuck, you crazy ass pigglet? - its almost friday!!!" you're thinking...yes, the shit has hit the fan, and its all down to the wire. i think i can probably tell them i need the weekend to think about it - offers coming in last second and so forth, but i can't push it much further. they need to fill the position i interviewed for, and i don't want to mess them up with being able to negotiate an offer to another candidate.

i believe in the project that the startup would be working with. i believe in the area it addresses, and i know that the technology is ready to take the next step - i built the existing prototypes. the problem is that i am basically a nerd who doesn't know how to evaluate this situation. my area has been science, and i may have some inkling of ways to think about these prospects, but i've never been trained in how to evaluate them.

this is where i turn to the trusty members of ye olde tfp. i know there is a diversity of background and knowledge out here, and i'm curious as to how one normally looks at these opportunities. it may be germane to note that i am about 30, single, no family, no babies, and no serious financial obligations. i can live on the salary i'm being offered at both places, although one has the up-front larger financial return, the other has the possible long-term payout. i can get excited about either opportunity, and frankly i'm looking at other opportunities down the road as well...they just don't have much impact on my immediate move.

to rehash:

startup opportunity:


1. two years of time, effort, sweat, knowledge invested.
2. i love this school, and want to see it succeed.
3. i believe in the project's possibilities and potential.
4. i believe in the general area - philosophically speaking.
5. the job would move my official "title" to a higher level. i'd essentially be the chief engineer, maybe chief technology officer.
6. i can make enough money to live well, hand to mouth, for the near term.
7. there is a potential for long term payout, being on the ground floor of the company
8. the area is trying to develop a "research park" in the area i would be working, so other opportunities might arise if i have my foot in the door. it keeps me close to the action.


1. the whole thing could potentially evaporate if the deal falls through when the paperwork comes through. legal issues and whatnot. i sincerely believe that the company will take off at some point, but a pigglet's got to equip his sty, at least a little bit. i'd be back to job hunting.
2. reduced annual salary, at least at first.
3. x% of nothing is nothing; ie, the equity and stock options don't mean shit if the company doesn't generate revenue. the company could go to crap. i mean, its a startup. normal risk issues.
4. the startup currently exists on paper only - the immediate offices and laboratories would be within the university system. this means that distractions are bound to occur. i have close relationships with the graduate students, and will end up helping a lot of people. i love that - but it takes away from "company time." these kids will need my help.
5. there will be a lot of uncertainty in how to proceed. this job is very open-ended. everyone here is basically feeling their way through this for the first time. there's no cookie cutter pattern to follow, at least that i'm aware of.
6. i won't have the extra money to pay off debts, invest, etc.
7. did i mention number 1?

research institution opportunity:


1. well established institution, with a definite solid offer.
2. higher up front salary, with very good prospect of increased salary and benefits in the coming two years+.
3. not too far from the university, so i could keep my pulse on the events i am currently involved with.
4. some free time to work on outside projects.
5. area that i can rationalize in the short-term, with possibility to migrate to an area that more closely aligns with what i actually want to do. this institution has work i'm interested in - that's just not the job offer i received.
6. safer opportunity.
7. institution is growing in acclaim and rank. they just switched acredidations, so there's some growth possibility available.
8. project is fairly well-established and supported - i'd have a pretty good chance of having success with my work.


1. i don't really love the project. in fact, when i don't rationalize it - i don't have any interest in it. i recognize that its important, and mabye i'm just ignorant about its opportunties...but i'd rather someone else make it happen.
2. i don't like the area i'd have to live in as much. its a very remote locale, and i'm not commuting 2 hours a day, roundtrip, to/from work.
3. the potential long-term payout isn't as high. you become a well-payed researcher, but you don't have that much flexibility in what you do.
4. The pay-scale tops out, unless you migrate to other outside opportunities. I think this is somewhat improbable. they sort of own your ass - and there's only 24 hours in a day.

allright - so i realize that's a marathon post. if you read all this, i sincerely thank you for the effort. i'm not looking for answers, but perspectives. if nothing else, typing this out has helped me in my analysis. i've done some other things, but to put it forth for "peer review," so to speak helps too. i'd love to hear what y'all think.
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Old 12-07-2006, 05:02 PM   #2 (permalink)
Darth Papa
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Location: Yonder
Given that short-term gigs VERY OFTEN turn into long-term engagements, these two things are the clincher for me:

Originally Posted by pigglet
the area of the work is not exactly what i would like to be doing, in fact - its something which i fundamentally don't want to be involved in long-term

i believe in the project that the startup would be working with. i believe in the area it addresses
Without knowing more than your NDA will likely allow you to say, I can't estimate the potential upside of the market for your product. But my gut says, provided the startup pays you enough to keep you at least a little better than afloat, go with what you love.
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Old 12-07-2006, 05:55 PM   #3 (permalink)
pigglet pigglet
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Location: Locash
yeah, rat, that's where i'm leaning. its just a question of having the finances fall through in two weeks because someone tries to sneak a clause in or something. i can play the "i wish these people had their story straight 3 months ago," song, but its all timing. i think i can get some temporary quasi-stability deal worked out. ie., if shit completely falls apart, then get temporary funding lasting through a second job search...but making that phone call and knowing that i'm turning down a sure thing...scary. what's worse is the people at the institution were super nice during my interview / visit. i have a feeling that they didn't like a lot of the other candidates - but that's just because i have this little softy inside me that likes to make everyone happy if i can.

the area could potentially be huge. i don't think this is putting anything near confidentiality issues: start-up is alternative energy, institution is a secondary process for nuclear bombs. i lean to the hippy with a work ethic and hygiene angle....so - i can look at the nuclear bomb issue as waste disposal / treatment...and i know its vital to have this equipment and its vital not to release things into the environment. its just that in the world inside my head, i don't like the idea of assisting in the process which maintains nuclear weapons.

thanks for the reply. i'll post back when i make my final call.
You don't love me, you just love my piggy style
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Old 12-07-2006, 06:10 PM   #4 (permalink)
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Location: Reykjavik, Iceland
I agree with ratbastid. You mention that the company has a high retention rate, but you don't want to work in that line for long. So that's not much of an advantage in the end.

You will very likely be able to interview again in the future for research positions similar to the one you are offered. However the start-up where you get to be chief engineer seems to be a less frequent proposition, and yes it's a gamble.. But it could pay off big; in the worst case you can always use your experience and get another job if this doesn't work out.

But I certainly understand your doubts, with the funding being flaky. It's a tough one. Good luck.
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Old 12-07-2006, 06:22 PM   #5 (permalink)
pigglet pigglet
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Location: Locash
y'all are awesome - this is what i've been telling myself...i'm so good at playing with my imagination that i can imagine taking over the world from either position...etc. the institution job has a lot of possibilities, and since i'm partial to the start-up opportunity, i realize i may be selling the institution job short. but...these kinds of chances are pretty rare - particulary given that all i have in my track record is academic success...but not business or self-funding success. i'm looking at other opportunities that may give me more ownership - but they're much more virginal in nature.

i trust the people i'm working with - but at the same time they're not risking nearly as much as i am. there's the time value of money angle to consider - the salaries are such that the gap between the two could mean paying off student loans pronto, or drifting along and basically paying off interest. life won't suck if i don't take the higher salary...but as juvenile as it is - i'd like to be making more than i am at present. money isn't the biggest thing to me, and i'd say i'm fairly non-materialistic...but i like nice things.

thanks for the perspectives and the thoughts - i don't know if i need advice or reassurance, you know? i guess both - sometimes you need the advice of others coupled with a sounding board. thanks again.
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Old 12-07-2006, 07:18 PM   #6 (permalink)
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Location: essex ma
i generally stay away from finance threads because--well--when i get up in the morning, i apparently douse myself liberally with cash repellent--maybe it is something that happens or i do before coffee--and so, like everything else that happens before coffee, it is something of a mystery.
but that cash repellent is a commodity like few others: the anti-musk, working on a hormone register that only cash can sense.
works like a charm.
o yes, it does.

i feel like one of those testimonials you see in advertisements.

anyway, what i wondered is: can you defer the research appointment for a semester or longer?
you can sometimes work it in academicland, but it takes a bit of finesse---the "wrapping up a major project, what can i do?" sorta thing.
being a court society, it is best to feel this sorta thing out on the dl, if you have an ally in the other school/place.

but it may not matter in the end.

my perspective on this is: i am not good at doing things i am not committed to. i get irritable. i stay irritable. it's not good. and i am not that committed to cash, for better or worse--but given that what is most important to me is making stuff, i have to have infrastructure in place, so i'm not cavalier about it either. but if it came down to the kind of choice you outline above, i would do what i'll make into a sentence aimed at you:

go for what makes you happiest.
someone--i cant remember who--someone i know tells me from time to time that this life isn't a dress rehearsal.
i think it's my brother, actually.
anyway, i dont pay attention to much of his advice (he's a bluegrass musician, for gods sake...) but that koan of his i kinda like.
a gramophone its corrugated trumpet silver handle
spinning dog. such faithfulness it hear

it make you sick.

-kamau brathwaite

Last edited by roachboy; 12-07-2006 at 07:25 PM..
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Old 12-08-2006, 02:16 PM   #7 (permalink)
Location: Sarasota
Well pigglet, it's 5pm on Friday, what say ye?

I say go for the equity. You will regret it for the rest of your life if all 'your' sweat and brains goes on to make someone else rich.

Like he old finance saying goes 'Do you want to sleep well or eat well?'

Good Luck my man. These are exciting times.
I am just a simple man trying to make my way in the universe...

"Go confidently in the direction of your dreams. Live the life you have imagined." - Thoreau

"Nothing great was ever accomplished without enthusiasm" - Emerson
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Old 12-08-2006, 03:18 PM   #8 (permalink)
pigglet pigglet
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Location: Locash
well, its been a pretty busy day - at present it looks like its going to be a mix of the two. the financing for the startup has run into some legal issues in the red-tape...essentially, the consortium wants to retain an exhorbitant amount of control in relation to the amount of $$$ that they are offering. particularly as its not a grant, per say, but a loan with could be traded in for non-diluted stock depending on the cash flow situation with the company after a period of a year and a half. the primary principals are not interested in signing the company away on these terms - an action which i fully endorse. i've got royalties and equity in the company at stake as well.

so, as it stand i will likely be going to the research institution for a period of time (obstensibly 1 year), while we put the company together on terms that we can live with. with everything hitting the fan at the last second, no one wants to rush. we're negotiating a deal that would leave me on retainer with the company until its ready to push off - in the meantime, we're going to be writing proposals to outside sources of funding. i have some flex time in the position that i would be taking with the institution, and we'll just have to play it as it goes. there are other opportunities that i am looking into as well, so what it breaks down to is that el pigglet is going to be more busy than he's been up to this point. can you say time management?

i think this route probably works out for everyone in the long term - the principals indicated that they would stomach a deal they were uncertain of, if i pushed for it to go through. that's pretty awesome - but its not worth it, for any of us. i'm not looking at this development as a short-term prospect, but as an opportunity that has real growth potential. not only financially, but also in terms of real impact. if we have a setback of a few months to iron out the finances, then that's what we have to do. its not the direction i'd necessarily like to be taking at this point in time, but pragmatically speaking its what needs to happen. i'm quite excited about the opportunities that i'm working on for future developments, but for now i've got to have a salary that allows me to exist in the meantime.

roach - i'm the same way. i'm not very good at working on assignments that i can't develop some level of personal attachment to. this is going to be a challenge in the position that i will likely be taking. there are fundamental technological aspects that i am very interested in - but as i've said, i have to focus on the environmental aspects of the job and not the actual long-term project. it puts me in a bit of a bind - but i guess we're going to see how it pans out. at this point, its not really within my hands - when you cut through all the crap and get to the reality of the situation at hand. i'm a little upset at this turn of events, but it was not completely unexpected...obviously.

DDDave - that's exactly my concern. its going to be "interesting" if the company gets the funding in place two months from now and wants to move forward. i'll essentially be in a position of resigning my post prematurely at the institution, which i would feel pretty bad about - or letting someone else pick up my gravy. i fucking like my gravy. i may be able to negotiate a deal to do the work for the company while i'm still at the institution - and i'm going to try to work these eventualities into my contract with the startup. at this time, i'm the guy...but if i can't extricate myself from the work i would be taking on, and they have to move...well, its going to be tricky figuring out how to be an effective part of the team. regardless, that will have to be dealt with when it happens, because given the landscape of events, i don't really have much of a choice.

thanks for the replies. i don't do this whole "new thread" thing very often - so its nice to see how others view the situation.
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Old 12-08-2006, 07:25 PM   #9 (permalink)
Location: Sarasota
Sounds like you have some smart (obviously) partners. Don't take a deal until it's the one you want. Say no until your tongue bleeds.

The older and more experienced you get in business, the more you realize that raising money is never the problem. There is always plenty of money if you have the right idea. You guys sound like you have a true new idea. Decide the financial deal that you want and do not settle until you get it. And as you already know, it is not always about cash.

Writing down the scenarios as you have here is cathartic. Read what you have written and you will say 'That guy is pretty smart'.

To thine own self be true. Illegitimi non carborundum.
I am just a simple man trying to make my way in the universe...

"Go confidently in the direction of your dreams. Live the life you have imagined." - Thoreau

"Nothing great was ever accomplished without enthusiasm" - Emerson
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emotions, money, playing, start, startup

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