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Startup jobs with low salary and negligible equity, what gives?

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Re: Startup jobs with low salary and negligible equity, what gives?

#21

Post by lambda9009 »

4k wrote: post #12
jacquesm wrote: post #6

> Who would take these deals? People that are insecure about what they bring to the table. Pre series-A the risks are still huge and the stock should be priced accordingly. Say the founders think a pre series-A company is worth $2M and they offer 0.05% equity you could enter negotiations asking for 1% more if you feel like it (and walk away if it goes below 75% of your counter opening bid) if you can defend the posit…

This is definitely a great negotiation advice. I probably could negotiate better terms. But still it'd still start us (employee and employer) on the wrong foot. They'd think I am being greedy and I'd think this is a place where founders would always try to screw me over - breaking mutual trust - effectively ruining the positive spirit of working together.

> But still it'd still start us (employee and employer) on the wrong foot.

Absolutely false. I hear VPs all the time speak about trying to "close a candidate" during negotiations, like a car sale. If you are a tough negotiator you will only earn their respect.

Re: Startup jobs with low salary and negligible equity, what gives?

#23

Post by 4k »

bryanlarsen wrote: post #13

Equity positions are very negotiable. Ask for more equity, a lot more, like 1 or 2 percent.

To be honest, I am half-scared of taking equity instead of cash pay. The reason is, I don't understand it as well as I should. It always scares me to think that through some VC-magic, whatever equity I have could end up nearly worthless (possibly an irrational fear since I don't understand the whole mechanism).

Re: Startup jobs with low salary and negligible equity, what gives?

#24

Post by otoburb »

4k wrote: post #23
bryanlarsen wrote: post #13

Equity positions are very negotiable. Ask for more equity, a lot more, like 1 or 2 percent.

To be honest, I am half-scared of taking equity instead of cash pay. The reason is, I don't understand it as well as I should. It always scares me to think that through some VC-magic, whatever equity I have could end up nearly worthless (possibly an irrational fear since I don't understand the whole mechanism).

This article[1] may help you to understand why you (rightly) have a justified fear of equity dilution as the company grows and (probably) raises additional capital through future funding rounds. The relevant quote: "When you are issued employee equity, be prepared for dilution. It is not a bad thing. It is a normal part of the value creation exercise that a startup is."

The article tries to explain how equity dilution (for both founders and employees) pans out. It is worth a read.

[1] http://avc.com/2010/10/employee-equity-dilution/

Re: Startup jobs with low salary and negligible equity, what gives?

#26

Post by brudgers »

jacquesm wrote: post #6

> Who would take these deals? People that are insecure about what they bring to the table. Pre series-A the risks are still huge and the stock should be priced accordingly. Say the founders think a pre series-A company is worth $2M and they offer 0.05% equity you could enter negotiations asking for 1% more if you feel like it (and walk away if it goes below 75% of your counter opening bid) if you can defend the posit…

1% isn't enough equity to justify a below market salary for something with a 10% chance of a $100,000,000 exit in five years...and if only the outlook were that good and imagining no dilution and benevolent actions by controlling shareholders.

If the equity is important, then it should have some chance of producing fuck-you-money at liquidation. 0.05% is only fuck-you-money if there's a Google IPO size liquidation and there's been no dilution ($11,500,000 @ $23billion). That ain't significantly more likely to happen to a software developer than a chef.

Re: Startup jobs with low salary and negligible equity, what gives?

#27

Post by 7Figures2Commas »

What are you expecting from pre-Series A startups? There are lots of pre-Series A startups with six figures in funding and little to no revenue. For obvious reasons, most of them are not going to be paying $140,000/year and if they are, you might not be comfortable with the runway risk.

In terms of equity, since you mentioned that you are the breadwinner for your family, why are you sweating the equity? A lot of folks here will no doubt suggest that you negotiate for more equity, but equity won't pay your bills. If cash is your biggest concern, negotiating around equity is pointless.

It sounds like you want a very early-stage startup job with BigCo-like pay, meaningful equity and reasonable hours. For the most part, this is a dream.

Re: Startup jobs with low salary and negligible equity, what gives?

#28

Post by eternalban »

kordless wrote: post #3
UK-AL wrote: post #2

You'd think developers would be good with numbers. But put $ signs in front of those numbers, and suddenly they're not very good. Trading away hard cash for gimmicks, and a tiny amount of equity in early stage startups.

Did I mention we have free lunch AND dinner brought in each day?

A strong desire to keep geeks infantile.

Can you imagine pitching this sort of 'perks' to professionals in science, medicine, or engineering?

[follow up from another HN link ;)]:

"... to provide for their care and feeding. It is probably no accident that the relationship between dogs and their owners mirrors the attachment relationship between parents and their children, behaviorally and physiologically."

Re: Startup jobs with low salary and negligible equity, what gives?

#30

Post by jordanthoms »

4k wrote: post #23
bryanlarsen wrote: post #13

Equity positions are very negotiable. Ask for more equity, a lot more, like 1 or 2 percent.

To be honest, I am half-scared of taking equity instead of cash pay. The reason is, I don't understand it as well as I should. It always scares me to think that through some VC-magic, whatever equity I have could end up nearly worthless (possibly an irrational fear since I don't understand the whole mechanism).

Not irrational at all, the equity is most likely worthless. If you are young and want to roll the dice then it's OK.
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