Is Software (profit)-share a red flag?

Question

My Background

I am just finished and started looking for a (junior) developer position. I have about 2 years experience with web development (plain PHP, JS, HTML, CSS, jQuery). Of course a couple of headhunters wanted me as a client, so I let them give me offers and sometimes the offer was for a job that required way more experience. But I still gave those a shot but clarified that I am inexperienced (especially with OOP)

The Job Offer

At some point a Headhunter got me an interview with a company that produces animal food for cattle and such. It was about 4 hour drive but they offered 100% remote. It was an offer for a PHP developer. What they wanted me to do was built a web application for them, in which you basically can see the current production state. It was meant for the sellers, so they always know how much they can sell, how much is left, how long it would take for the next charge and so on.

Here is the thing though: I would be the ONLY developer, my superior would be a guy who studied computer economics and just finished like a year ago and he doesn't know anything about development. They offered an okay pay, more than the startup offered me where I learned about web development but less than most other companies. They also offered that I get like 5% or so from the app, because IF it works well, they want to sell it to others in the industry.

Question

Is it normal to offer a small percentage of profit from an app to a developer? Might this be a red flag?

Personal Opinion

I am way to inexperienced to take the job. I would be afraid that security won't suffice and it could end up in a disaster. It is also not good for me that there is NO ONE with any development experience. And they also asked for rather shady things, like telling the headhunter I wont take the job but talk to them behind the headhunters back, so they wont have to pay them. The CEO was very old-school and he told me very often that getting along on a personal level is much more important than knowledge.

But apart from this, for the future, I was wondering if this is normal or if this could be actually dangerous. I was thinking about taking this very briefly because of the share and to extend my portfolio so professionally I would look better to new employers. Disadvantage would be of course that I would just do it my way and not learn proper techniques and such.

I am really curious if in the future I should consider such an offer or not.

Answer 1

The profit share is unusual, but I don't see it as a problem.

Think of it like this. If the pay without the 5% bonus is decent, then the pay with the 5% can't be worse, right? Think of the pay as what you are probably going to get, and everything else is gravy.

Be careful about what the 5% is of. 5% of the app revenue? If the app really takes off then could be a significant amount of money. 5% of profit? That's not a well-defined amount and will probably end up being nothing, even if the app does well.

On the other hand, the attempt to go behind the headhunter's back is a major red flag. That's a big deceit, cheating someone who did work for them out of their pay. It probably violates their contract with the headhunter. Have nothing to do with a scheme like that, and I would probably steer clear of the company. If someone is willing to cheat a headhunter they will be willing to cheat you too.

As for whether you think you can do or want to do the job - that's entirely up to you.

Answer 2

You’re mixing up a lot of things.

If you don’t feel like you’re ready to be a one man team, that’s fine. Some people like that some people don’t, especially early career, but that’s nothing to do with them.

Software profit sharing is not standard but is not uncommon in startups and small situations like this. It’s a variant on getting stock options and can be a better deal (shares don’t always pay off, on average they end up worthless). It’s only a red flag when it’s offered instead of pay, which it was not in this case. You’d want clarity on how it’s going to get measured in writing.

The only red flag here is them trying to rip off the recruiter. A 25% cut of a year of salary is a big hit for a small company but then they shouldn’t have gone with a recruiter in the first place. If they’ll rip him off then the chance you’ll get your fair profit sharing checks is questionable.

Answer 3

Anything abnormal is a red flag. Not necessarily a show stopper but it should always make you pause and look at the bigger picture.

5% is normal when trying to talk someone inexperienced into something. But 5% of pie in the sky is nothing, and if it does become profitable 5% is just slightly more than nothing. In this case it's very unlikely they would sell it to their competition, and even more unlikely that their competition would purchase it from them. Inventory and tracking software can be had for free.

Answer 4

It sounds like you are offered a Startup job. It is normal for these to be different.

That being said: Try to be cofounder, instead of an employee. Bargain for owning a part of the company, or at least more % of the app.

In total, do a honest analysis of how much you could earn, and at how much you value whatever % you get. Most startups fail. So if you have a 1% chance of getting 5% of 100k €, that's bad. If you think the company could sell for 10€, it's now up to you to estimate the gamble. Note: The 1% is a made up number to illustrate the principle ;)

The Headhunter thing is a red flag: They have a contract, if you sign they would benefit from it and would need to pay. But they want to lie and ask you to lie for them! Are you sure you won't be screwed sometime down the line? I wouldn't work for somebody who shows questionable ethics before I even sign. But I would be grateful for dodging the bullet, usually questionable ethis are way harder to spot.