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Ask HN: Should I join startup for less-than-expected equity?

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Re: Ask HN: Should I join startup for less-than-expected equity?

#31

Post by garry »

meritt wrote: post #15

The salary is low and the equity is hella low too. You'd do better to negotiate some sort of bonus structure instead of equity. What do you want outside of financial incentive? Is it something you're excited about? What's your background? A lot of us are hiring.

For a seed funded startup, that's a nontrivially high salary. It's common for Series A companies to pay market, but a little unusual this early in the company's life.

Bonus structures are great for cash generating businesses, but have limited upside for startups that have the potential to grow 100X to 1000X.

Re: Ask HN: Should I join startup for less-than-expected equity?

#32

Post by habosa »

garry wrote: post #25
habosa wrote: post #18

I've never worked at an early-stage company, so I have more questions than answers. Isn't 0.2% basically nothing? Even if GoogleSoftBook buys the company right now for $100M, you get (at best) $200k. And that's not going to happen. Probably more money will be raised, your 0.2% will be diluted, and a $100M exit is rare. So you'll end up with less than 1yr of salary for all that risk and lost salary/benefits in the mea…

I was employee #10 at Palantir and received and accepted an offer in this ballpark. I'm pretty happy with it at this point. Frankly it was absolutely life changing, both from a learning perspective and a compensation perspective. Of course that's an outlier — but this is why you should treat what company you join the way investors think about investments. Only they get to diversify and your choice is even more import…

Very true, although Palantir is probably one of the top 10 most valuable and technologically interesting startups of the last 10 years so you made a great choice.

$130k is a lot of money and, like you said, being in the first few employees is a great opportunity for personal development. I just feel like you have to consider the 0.2% to be a lottery ticket because most of the time it will end up being worth nothing or very little.

Re: Ask HN: Should I join startup for less-than-expected equity?

#33

Post by Domenic_S »

cuca_de_chumbo wrote: post #19
omgitstom wrote: post #8

Talk to them about it. Are you excited to join the company? Do you believe in their vision? Do you find excitement in the problems that they are helping their customer's solve? Do you feel good cohesion with the founders and the engineering team? Answering those questions are far more valuable in deciding to join a startup vs compensation. The compensation piece, if you feel is low, research and negotiate for it. If…

Their vision is great. They don't do rocket-science and they're not involved in social. Their market is positively boring, and it's something everyone needs, and nobody seems to have updated software addressing this market. Their approach requires a good core and also a lot of reliable peripheral development. I don't think there are any technical misgivings on their part toward me (I've proven my ability, programming…

They were right to give you the offer they did looking at your reaction.

$130k is not lowball. 0.2% is not lowball. Both are on the mid-to-low side of appropriate if we take you at your word for skill and fit.

More than that, respect has nothing to do with it. Just rm -rf that whole train of thought from your head. Compensation negotiations are negotiations, which means this is a conversation. Conversations go two ways. If you're not happy with the offer, counter.

Re: Ask HN: Should I join startup for less-than-expected equity?

#34

Post by btilly »

mbesto wrote: post #24
Domenic_S wrote: post #11

Earlier quoted context omitted.

> (note - $130k is comfortably livable in pretty much anywhere in the SF Bay area) That depends on a ton of things.

Care to elaborate?

Here is an example.

Do you have children and an ex-wife?

Re: Ask HN: Should I join startup for less-than-expected equity?

#35

Post by mauricemir »

wheaties wrote: post #5

Assuming a $100M exit, no dilution, $150k/yr elsewhere, no gains from investing the salary difference, same salary raises per year, no additional equity. after 5 years, you net even. Anything longer than that you lose out. Anything shorter, you make more (sans taxes.) Seems like a risky bet to me.

I agree you need a decent multiplier for the given up salery 5-10 minimum.

Re: Ask HN: Should I join startup for less-than-expected equity?

#36

Post by _b »

The offer isn't generous but it is reasonable.

Sam Altman estimated that employees 10 through 30 combined should get at least 5% of the equity, That implies an average of 0.25%, which is fairly close to 0.2%.

http://blog.samaltman.com/employee-equity

If you want to work for the company, equity is important to you, and you think the offer is below was your contribution to the company will be, then negotiate for the right amount of equity.

Re: Ask HN: Should I join startup for less-than-expected equity?

#37

Post by hluska »

cuca_de_chumbo wrote: post #29
Domenic_S wrote: post #17

Earlier quoted context omitted.

Are you there for the money or for the love? If money, stay and suck it up. If work represents a large portion of your happiness, bail. 2 years is not really a long time to live in suck-it-up mode, although your perspective will depend on which side of 30 you're on.

On the way-later side of 30! The current company is legacy-land as far as development tools goes (though they're reliable and in the right hands do very well). The prospective startup would involve new tools I need to "keep up-to-date". I did a short (paid) project for them involving some popular scripting significantly-hipper-than-Perl language and delivered it in serviceable, idiomatic form that I know they were ve…

Honest (but uncomfortable) question. You wrote:

I feel I need that experience and exposure to maintain my longevity in the SW market. Sticking with the current company is 2 more years I become more of a dinosaur.

Is the new company aware that you feel like this, both about their tools and about your career?? If so, I wonder if they're compensating you as a more junior developer, simply because it sounds like you think that you need them!

Re: Ask HN: Should I join startup for less-than-expected equity?

#38

Post by copsarebastards »

0.2% equity isn't worth considering. At best it's maybe a years' pay 5 years from now, and the best is not likely to happen. A $20K increase in salary would make you that with much more certainty in 6 years.

I'd look at salaries for your skillset and location on GlassDoor, compare that to the $130K, and make your decision based on that.

In any case, I'd go back to them with a counteroffer. If you want more equity, I'd ask for 2% and hope for something like 1.2%. But unless you're very confident in the direction of the company, I'd choose salary over equity any day.

Re: Ask HN: Should I join startup for less-than-expected equity?

#39

Post by lawnchair_larry »

Domenic_S wrote: post #33
cuca_de_chumbo wrote: post #19

Earlier quoted context omitted.

Their vision is great. They don't do rocket-science and they're not involved in social. Their market is positively boring, and it's something everyone needs, and nobody seems to have updated software addressing this market. Their approach requires a good core and also a lot of reliable peripheral development. I don't think there are any technical misgivings on their part toward me (I've proven my ability, programming…

They were right to give you the offer they did looking at your reaction. $130k is not lowball. 0.2% is not lowball. Both are on the mid-to-low side of appropriate if we take you at your word for skill and fit. More than that, respect has nothing to do with it. Just rm -rf that whole train of thought from your head. Compensation negotiations are negotiations , which means this is a conversation. Conversations go two w…

Lowball is a strong word, but it's below market. If startups can't compete on total comp, they have to pad it with equity. OP is getting worst of both worlds. 0.2% of a pre-VC company is absolutely nothing, and there are several engineers ahead of him for seniority, so he won't even get title inflation in the end.

It's not that it's an insulting offer, it's just that they can't afford you. For a fresh grad, it would be a pretty sweet deal.

Re: Ask HN: Should I join startup for less-than-expected equity?

#40

Post by Domenic_S »

mbesto wrote: post #24
Domenic_S wrote: post #11

Earlier quoted context omitted.

> (note - $130k is comfortably livable in pretty much anywhere in the SF Bay area) That depends on a ton of things.

Care to elaborate?

Sure.

People have wildly differing opinions of what "comfortably livable" means.

To me, sharing an apartment without a dishwasher is not comfortably livable. A decent apartment anywhere between SF & SJ will run ~$3k or more, and $130k is ~$6k/mo after tax (this is assuming single, no mortgage, no kids). Minus another probably $1k for student loans, another $1k for retirement or home purchase savings, that leaves $1k/month to live on.

The numbers are rough, but my point is you can either "live comfortably" and spend everything, or live like a spartan and save money.

To someone without attachments (no spouse, no kids, young) this probably is living comfortably and it's a boatload of money. To someone else paying for childcare for a couple kids and trying to get into a good school district, it's not so comfortable.

There are certainly ways to hack the system, most notably to live somewhere outside the RBA (Morgan Hill, Petaluma, Concord/Antioch/etc). The Bay Area can be your oyster at $130k, but only if you have no monthly obligations but your own breath.

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