If they're offering you shares in the company instead of pay, they're asking you to become an investor, and pay for your investment with your scarcest resource, time. That's a Big Hairy Audacious Ask.
So, respond in kind. Ask to see their investor pitch (the same slide deck they're carrying around on the Sand Hill Road Shuffle to VCs). Ask pointed questions. For example, ask each person you interview "why is this project worth the next ten years of your life?" And ask, "what are the critical success factors for this business?" And ask to see the capitalization table (the list of shareholders) so you can evaluate whether they're offering you enough to make it worth your while.
Now, obviously Warren Buffett would be able to ask more sophisticated questions than you will. But if they're ready for Mr. Buffett's questions, they should be ready for yours.
If they get irritated at these questions, pass on the deal.
If you think the company's worth your investment, go for it. If you don't, pass on it.
If they're asking you to work without pay until an investment comes in, at which point they'll give you your back pay, they're asking you to lend them money. Same deal about asking pointed questions.
- Who else is working without pay?
- How many dollars in back pay do you already owe to those people?
- Do you have a term sheet from an investor yet? If not when do you expect it?.
- How will the investor feel about some of their investment coming off the top to pay outstanding debts to founders and employees? (Investors are sometimes reluctant to have their money go into paying off debt.)
Again, if you think it's worth it go for it. But don't hesitate to pass on the deal if you don't think it's a good risk.
Avoid signing anything (nondisclosure agreements, intellectual property agreements, etc) until you start working with them, if in fact you decide to sign on. (VCs don't sign NDAs.)