A somewhat interesting take on the situation, but is (obviously) looking only from one angle. Yes, in Ellen's situation, she's 'investing' lost earnings in to that company. But that 'investment' doesn't mean the same thing to the company, and probably shouldn't be rewarded with the same equity value given to someone putting in hard cash.
Still, it's good for people to think through these issues with real numbers before making commitments. I am approached every so often to come in to situations like the one described, but have yet to find one where I believed in the idea/company/team enough to jump in.
On the contrary, lost earning are cash-flow too. They deserve the same (or more) equity than 'hard cash'.
The arrogance of folks with money in their pockets is astounding. We don't need to add to that by buying into the fantasy.
Sort of agree, except for the time value of money. Someone who puts cash in is putting it in up front. Whereas someone who forgoes earnings is foregoing a smaller amount periodically over time.
Of course the time value of money is near zero right now anyway.
It might feel that way to you (or me) but you can do quite a lot with cash - such as bring in different devs with different skills. I could say I'm worth $120k and my contribution should be worth that, but I only have so many skills. Taking $120k and bringing in 2-3 people with various skills for different stages of a project has a different strategic value - in most cases it's a greater value than the contributions of one person. Obviously not always, but probably in most cases.
Still, it's good for people to think through these issues with real numbers before making commitments. I am approached every so often to come in to situations like the one described, but have yet to find one where I believed in the idea/company/team enough to jump in.