Should I accept an unpaid internship? (and other musings on working for free)

September 1, 2015

unpaid-internsFrom time to time people ask my opinion on whether they should accept an unpaid internship offer. My answer to the question usually involves more questions: Is the job with a startup that is hard-pressed for cash, or rather with an established company, investment bank, or VC fund? Is the uncompensated period clearly delimited in time, or rather is it open-ended? Is there a mutual understanding that the unpaid internship could lead to a future paid role within the organization once a certain milestone is reached (e.g. a successful fundraising, certain operational objectives are met, etc.)? Albeit unpaid, could alternative compensation for the role be envisaged, such as various perks, access, job references, etc.? Would the unpaid job allow you to learn a new skill or prove your mettle in a new industry, thus serving as a springboard into a new career? Last but not least, who initially broached the topic of zero compensation: you or the employer?

In my own professional circles, there are times that I have been solicited to work for free. Excluding charitable associations and non-profit organizations, I cannot recall a single time when I accepted to work for free for a profit-oriented business.

Of course, as a venture capitalist I devote limitless time and effort to helping my portfolio companies, and I never assess a fee for that (I’m a bit of a purist to the VC model in that regard). However, in these cases I am not working for free as my compensation comes in a different form. The three startups I founded in a previous life also paid me no salary for a long time, though this didn’t mean I worked for free since I owned at least half the equity in all cases.

Proposing to work for free at your own initiative is different

There have also been several instances in which I have proposed to work pro bono for a company on my own initiative. Indeed, I submit that proactively proposing to work for free can be a great way to learn about a new industry or develop connections with whom your capabilities are unproven. I am also intrigued by Adam Grant’s research into Givers, Matchers, and Takers, and the benefits of being a Giver. Two major takeaways from his research stuck with me: i) Givers often reap rewards far beyond their expectations, and ii) if your nature is that of a Giver (a select few) or a Matcher (most of us), try to steer clear of the Takers.

A simple litmus test

When a profit-driven business approaches me to expend a non-negligible dose of energy without compensation, I usually respond with a simple innocuous suggestion: would they consider compensating me for my efforts? This serves as a good litmus test. If their response is an unequivocal ‘no’, that confirms a mismatch in appreciation of the value of my work. Time is a finite constraint, so I prefer to allocate it to projects where my contribution matters and to people whom will value it.

unpaid_intern_voucherRelying on unpaid workers can also do a disservice to the business itself. It sends the wrong signals to the owners about the viability of their business model. A company can generate a misleading profit by not paying for personnel that will evaporate once required to pay market rates for talent… unless. Unless the company can find a way to retain a volunteer workforce on a sustainable basis. There are very few examples of this, but two paragons that come to mind are RedHat (and similar open source models), and the World Triathlon Corporation.

I was reminded of the strength of WTC’s business model — the organization behind the Ironman triathlon competitions — just last week upon the acquisition announcement of WTC by Dalian Wanda Group of China for $650 million. WTC of course employs a vast staff in organizing its Ironman, half Ironman, olympic distance, and other triathlons around the world (including my two personal ordeals: the Vichy Half and the 5150 in Marseille). However, the thousands of volunteers at each race worldwide dwarf the paid workforce. The Ironman World Championship in Kona, Hawaii every October counts approximately 5,000 volunteers. I know because I’ve been one. I wasn’t paid a cent for my day-long efforts, but I absolutely loved it. The opportunity to witness up close behind the ropes some of the ironman_logoglobe’s greatest athletes (Chrissie Wellington and Craig Alexander won the year I volunteered) made it all worthwhile, even counting the substantial out-of-pocket travel and lodging expenses.

Organizations like World Triathlon Corporation and the handful of successful open-source businesses like RedHat represent rare exceptions. Most firms need to provide some form of monetary compensation, be it cash or equity, to their human talent if they wish to remain viable.

I don’t know the key to success, but the key to failure is trying to please everybody

I’ll let you in on a little secret: I’m a deep believer in what-goes-around-comes-around. I rarely refuse the first request of a favor from someone. Or the second. Or even the third. But if I sense that my efforts are not valued to the same degree that I (perhaps unreasonably) judge they’re worth, then I eventually draw a line in the sand. There are simply too few hours in the day.

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posted in venture capital by mark bivens

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