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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?

#51

Post by [deleted] »

im_asl wrote: post #47
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.

[deleted]

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

#53

Post by jacquesm »

ConfuciusSay wrote: post #38
brudgers wrote: post #26

Earlier quoted context omitted.

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 an…

Or getting "let go" 24 hours before vesting date.

Accelerated vesting upon termination is your friend here. Have your lawyer look over the contracts.

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

#54

Post by commentereleven »

joezydeco wrote: post #36
brudgers wrote: post #26

Earlier quoted context omitted.

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 an…

10% chance of a $100,000,000 exit in five years That seems highly optimistic.

That's exactly the point.

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

#55

Post by hyperbot »

If the pay is not high enough for your needs, you shouldn't bother looking at startups, or at least you shouldn't be looking at pre-series-A startups. Everybody has their own motivations for why they choose to work somewhere, and money/compensation isn't always the top consideration. At early-stage startups where money is tight, salary will usually be difficult to negotiate too much, but equity can be negotiated more easily.

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

#56

Post by jacquesm »

brudgers wrote: post #26
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 an…

It depends on how far below market you will get, but you're right, for plenty of the offers out there 1% would be (way) low. But 0.05% is to be laughed at (politely, of course), no more than that and then simply counter with an offer that you'd be happy with.

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

#57

Post by patio11 »

Joel Spolsky had a really interesting insight [+] once about hiring pools: they're disproportionately filled with people who you don't want working for you, because if you're hireable, you exit the hiring pool fairly quickly, and the dynamics of this system quickly mean that the pool is filled full of people who aren't even FizzBuzz qualified.

I think the other side of the market is isomorphic to this: any publicly available list of jobs is disproportionately filled with positions which qualified talent has seen, evaluated, and rejected as unsuitable.

[+] Citation: http://www.joelonsoftware.com/articles/FindingGreatDeveloper...

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

#58

Post by jacquesm »

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.

No, you're not being greedy. They are being greedy. Being reasonable in return and walking away when you don't get what you want are the valid responses. Lots of good advise elsewhere in this thread regarding vesting and making sure that you don't end up with 'B' class shares.

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

#59

Post by hkarthik »

im_asl wrote: post #47
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.

Last I checked, the metrics around prevailing wages to hire an H1B are not adjusted based on the local market. So you can get away with paying an H1B the same in the Bay Area as you would in suburban Iowa.

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

#60

Post by [deleted] »

im_asl wrote: post #47
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.

[deleted]
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