The Arianna Effect
Posted at 8:01h, 23 May 2017 in Advice by Bonnie Halper No Comments 135 Likes Share

We all know the Three Big Lies, although the third is changeable, depending on the audience/circumstances:

  1. The check is in the mail
  2. Of course I’ll still respect you in the morning
  3. I’ll make it up to you in the IPO

Of course, not many companies are going public these days, and tech founders have pivoted on the third point. What company doesn’t do a pivot or two after all, and the new talking point is a bit fluid, as always: We’ll make it up to you on the backend, or We can’t commit right now, but of course we’ll make it up to you.

In case you missed it, New York City enacted a new freelancer law -the “Freelance Isn’t Free Act” (FIFA) – that is now in effect, and it applies to businesses outside of New York that hire New York workers, too. According to Entrepreneur, “If a business hires a freelancer for $800 or more worth of work over six months (for either one project or a cumulative series of projects), a written agreement must be put in place. The term “freelancer” covers an independent contractor or any other worker not in a traditional employee-employer relationship” – which we assume applies to consultants as well. You can find more information here.

As the article points out, laws do tend to have unintended consequences, and being a scrappy lot, many a founder has already seemingly sussed this out.

Go to angelist and you will find no shortage of open positions, especially when it comes to marketing. We wish we had a dollar for every marketing person who told us that they had responded to an opportunity that they had found posted on the site, and after some discussion with the founder or founders, were asked to submit a sample marketing plan – based on the specific needs of that company and on spec, of course – as a requisite to get to the next level. Note to self: this is a request for a free marketing plan/free work and proceed:

  1. With caution
  2. At your own peril
  3. If you’re independently wealthy and feel that doing free work is personally rewarding.

You will not be remunerated/pass go/collect $200 or whatever the going rate is, and it is north of $200. The same requests are made of writers, designers and business development professionals as well. Marketers should not feel singled out.

Back to our story and founders being a scrappy lot. In an attempt to circumvent the law/extract free work from consultants, enter the ‘Success Fee’ and here’s how it works: terms will be set – orally – but not committed in writing of any form.

  1. Proceed only with extreme prejudice, or
  2. If you’re independently wealthy and feel that doing free work is personally rewarding

And note to self: we’re not talking about work that you’re doing in exchange for equity. That’s quite another matter. ‘Success fee’ is quite a loose term and predicated more or less on the whim of the first party, and we do hear that it’s quite widely accepted practice in tech. Then again, just because a practice reaches a tipping point, that doesn’t make it right, or acceptable on an ethical level. Trust us: there was fine print in that oral contract that, again, was not committed to paper, real or virtual and if you’ve agreed to work for free or for some promise of being made whole on the back end, your time and expertise is not being valued as you’ve already attached a number to it: zero.

Even interns have to be paid, in case you didn’t know, and look at it this way: once you’ve implemented a freemium model, how difficult is it to convert your audience into paying customers?

Never mind that the founders/company couldn’t have gotten from A to B without your contribution. In internet time, things move quickly and they’re already at D. Those were early days and you’re yesterday’s news and thanks for playing.

If you always do what you’ve always done, you’ll always get what you’ve always gotten and as we all well know at this point, hubris pays: Facebook was found to have broken data privacy laws in three European countries, and is being investigated in two more. Fine levied: $164K. Facebook revenues in 2016: $27.6B.

We like refer to this new wrinkle in the freeconomy as the Arianna Effect, hearkening back to the “class-action lawsuit (against the Huffington Post,) claiming the website denied thousands of bloggers just compensation despite profiting from their content.”

“As we’ve said before, our bloggers use our platform — as well as other unpaid group blogs across the web — to connect and help their work be seen by as many people as possible,” said Huffington Post spokesman Mario Ruiz.

The bloggers lost, the check is never in the mail, and if you’re doing it for the exposure, all the while having an agenda in mind/a specific reason for doing so, all well and good, but if you believe that it will bring you future compensation once your value is realized, again, a number has already been attached to your work: zero.

Make sure you’re on the right side of the equation and that you’re adequately compensated for your time and expertise. If you hear the term ‘success fee,’ make sure that they also include the term, ‘kill fee’ to ensure that your time is valued. Anyone who practices this form of remuneration without including a kill fee has a clear agenda and remember this above all: this is an industry based on zeros and wons. Onward and forward.