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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?

#41

Post by Dalkanon »

Most pre-Series A start-ups will offer (far) below market salary; they have to, since, generally (and as another poster said), they have only $X00,000 in the bank and no revenue. This is pretty typical.

What the 0.05% equity package indicates is that the founders probably have an unrealistic expectation about how much their venture is worth at this stage. I've seen this a few times in naïve, young (23-25 years old) first-time founders that don't have significant amounts of experience working in start-ups and/or technology in general. This trivial amount of equity is a huge red flag, not only because its present value is negligible (guess what the risk-adjusted rate of return is on a start-up run by first-time founders?), but because it indicates that the work environment will likely be unpleasant (hellish hours, frequently changing requirements, no clear vision -- common in companies run by first-time founders).

Also, keep in mind: if these founders are foolish / naïve enough to think they'll be able to hire a credible, valuable engineer with this package (they won't), they're also likely foolish / naïve to get screwed by their investors. Founders are only at the bottom-middle of the start-up hierarchy: VCs are above them and LPs are above them.

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

#42

Post by beat »

Dalkanon wrote: post #41

Most pre-Series A start-ups will offer (far) below market salary; they have to, since, generally (and as another poster said), they have only $X00,000 in the bank and no revenue. This is pretty typical. What the 0.05% equity package indicates is that the founders probably have an unrealistic expectation about how much their venture is worth at this stage. I've seen this a few times in naïve, young (23-25 years old) f…

Probably the same founders who are on Quora, asking why their programmers won't work 80 hour weeks.

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

#44

Post by Haul4ss »

snorkel wrote: post #22

Bachelors. Not as in Bachelors degree, but literally bachelors: They're young, cheap, work crazy hours, and easily seduced by free pizza - the ideal startup employee.

This is what I assumed. They're biased towards younger programmers with no life circumstances that would cause them to need a higher salary (e.g., kids).

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

#46

Post by ebiester »

7Figures2Commas wrote: post #27

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 folk…

So, why the hell would anyone leave that much money on the table? If you're asking me to do something crazy, you better be willing to pay for it.

.5% equity, especially when it will end up being diluted, is a fool's game.

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

#47

Post by im_asl »

hkarthik wrote: post #15

The target candidate for these startups largely doesn't exist. Most folks accepting such a salary in the Bay Area are recently out of college and living in small apartments with roommates. When it's all said and done, most of these startups will settle for a few offshore contractors or hire remote people who live in cheaper parts of the country where $90K goes a lot further. The tried and true "solution" to this prob…

H1's working for lower pay seems like a fallacy. Part of the visa process involves paying prevailing wages.

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

#48

Post by beat »

Are you living in the Bay area now? If you're not, and you're living in a city with any sort of active startup community at all (like any big city in the midwest, for example), try finding a startup at home. It'll be cheaper, you don't have to uproot your family, and you might get a much better deal.

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

#49

Post by thebiglebrewski »

beat wrote: post #42
Dalkanon wrote: post #41

Most pre-Series A start-ups will offer (far) below market salary; they have to, since, generally (and as another poster said), they have only $X00,000 in the bank and no revenue. This is pretty typical. What the 0.05% equity package indicates is that the founders probably have an unrealistic expectation about how much their venture is worth at this stage. I've seen this a few times in naïve, young (23-25 years old) f…

Probably the same founders who are on Quora, asking why their programmers won't work 80 hour weeks.

Can you link me to some of these so I can laugh?

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

#50

Post by untog »

In short: you know too much. These salaries are taken by fresh college grads who don't know better, and think the adventure of "a startup" is better than working for a larger company (it can be, but there's no guarantee).

Many startup CEOs would like you to believe they are the only ones doing interesting work, but there are plenty of larger organisations that are still fun to work for, and more likely to value you as an employee.

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