Joining a startup: high salary, no equity OR "startup salary" with equity?
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Re: Joining a startup: high salary, no equity OR "startup salary" with equity?
#2Most likely, the startup will go bust and you won't get anything. Even if it doesn't, I don't think they can possibly give you enough (unless it's Facebook or you are getting 50% of the company) which equates to months or years of your life that you can't ever get back.
My solution? Salary only and I take the salary and fund my own startup.
Re: Joining a startup: high salary, no equity OR "startup salary" with equity?
#3It depends on what the difference between high and startup salary is. Some startups which are well funded are offering generous salaries to start with. It is difficult to predict if a startup with be successful or not, but if you really believe in the idea, are excited to join the startup because of the problem they are solving, I suggest take a salary and some equity. If you are not really excited about the startup's idea or their product and just want to work there as a job, then take the high salary
Re: Joining a startup: high salary, no equity OR "startup salary" with equity?
#4Hard question. A rational decision would lead to high salary w/o equity:
- Probability that startup fails > 95%
- You will get usually about 0,5-2% vested over 3 to 4 years with a cliff, you'd get more if you joined before a funding and took the entire risk and had no salary for some time
=> So working at least 3yrs for max 2% (rather 1%) with an exit probability of less than 5% yields too high opportunity costs; as a talented developer you could miss many other opportunities
Re: Joining a startup: high salary, no equity OR "startup salary" with equity?
#5Most likely, the startup will go bust and you won't get anything. Even if it doesn't, I don't think they can possibly give you enough (unless it's Facebook or you are getting 50% of the company) which equates to months or years of your life that you can't ever get back. My solution? Salary only and I take the salary and fund my own startup.
I wouldn't go so far as demanding only salary because it kind of implies that you are certain that the startup will go bust rather than _might go bust_. However, I definitely prefer as competitive salary as possible; I don't know about the rest of the country but working long hours in SF gets expensive (apartments, eating out, laundry services etc).
Re: Joining a startup: high salary, no equity OR "startup salary" with equity?
#6Depends on definition of high, and what the startup is (if I think it will work). With no other info I go high salary every time though.
Re: Joining a startup: high salary, no equity OR "startup salary" with equity?
#7I've come to realize that equity is really just a proxy payment for the risk that the company will not continue to exist / how much influence and impact you may have on the continued existence and success of the company.
Likewise, the salary offer is about the combination of your negotiation skills, expected marginal utility of your work, and the current state of the company
Re: Joining a startup: high salary, no equity OR "startup salary" with equity?
#8Most likely, the startup will go bust and you won't get anything. Even if it doesn't, I don't think they can possibly give you enough (unless it's Facebook or you are getting 50% of the company) which equates to months or years of your life that you can't ever get back. My solution? Salary only and I take the salary and fund my own startup.
I wouldn't go so far as demanding only salary because it kind of implies that you are certain that the startup will go bust rather than _might go bust_. However, I definitely prefer as competitive salary as possible; I don't know about the rest of the country but working long hours in SF gets expensive (apartments, eating out, laundry services etc).
Easy: Ask for too much salary and too much equity at the same time. When negotiating compromise just on equity.
Re: Joining a startup: high salary, no equity OR "startup salary" with equity?
#9If the CEO has been a success before at a level you want to be: consider equity.
If there's no track record, the equity isn't worth the paper it's printed on.
You'll come out ahead with the high salary until you are really on an all star team with a track record.
Re: Joining a startup: high salary, no equity OR "startup salary" with equity?
#10This seems like a really clever social hack, but I'm not sure it holds true. It certainly stands to reason that people are more willing to give away the things they don't value, but does it really make any sense that a founders willingness to share equity is automatically an indicator of success probability?
I tend to favor sharing of equity, because I want commitment from my core team members. It's not that I don't value equity in my company. I do. I value it in the higest regard, which is why I don't offer it to any stragler who comes along. You can rest assured that if I do offer you equity in my venture, I hold you in high regard.
It's very hard to tell if you want to be in business with someone. I'm fortunate to have had an opportunity to work with some of my co-founders in a normal business relationship prior to becoming co-founders. Had I not had that experience, I'm not sure how I'd evaluate that decision, but I can tell you it wouldn't be based on whether I was offered a high-salary or stock options.