Re: Work for "future revenues"

>  I have a potential "opportunity".  An individual with an idea for a
>  web-based business would like me to do web development for him. However,
>  he does not want to hire me as a consultant -- but instead is offering a
>  percentage of future revenues.

I've done this and know other consultants who have. Usually as 
options in their fledgling company but on one or two occasions, based 
on a handshake. The latter is only appropriate with the closest of 
allies, of course (and many would counsel against even that).

I think options in lieu of payment makes sense only if you can afford 
to lose. Pretend you are getting paid in cash which you are 
immediately using to buy options in the client's company. Would you 
do that? If not, insist on cash, or perhaps a percentage as cash.

The probability of success is remote. You should consider it a 
long-shot gamble. Even top venture capitalists are happy if one of 
five or ten investments pans out; are you happy with those odds? The 
client will sincerely believe he has a high probability of success -- 
they always do. But they almost always overvalue their chances. That 
is how entrepreneurs are wired. You need to be more critical. If it 
wins, is the client's gamble wired to pay you a gain higher than its 
probability of success? That probably means 20:1.

If not, you are doing some degree of pro-bono for a commercial 
entity. Better to use your time doing free consulting for a charity 
you care about.

In my case, I have done this about 8 times and four of them are still 
possible wins; one is fairly likely. I was willing to lose on all 8, 
having gambled only a percentage of my income.

Bottom line: Recognize it as the gamble that it really is.

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