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How I negotiated my startup compensation (with numbers)

blog.keen.io

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Re: How I negotiated my startup compensation (with numbers)

#111

Post by wetzler »

gadders wrote: post #96

It must be very strange negotiating salary with your fiance. 1) Supposing they low-balled you, and you found out. Awkward.. 2) Presumably at some stage, your finances will be joint, or at least interlinked. Does that not mean it is in your fiance's best interest to make sure you get as much as possible? Is that not a conflict with what's best for the company? //edit// Not being mean, btw, I hope they do really well a…

Totally strange. I did most of the negotiation with Dan, our CTO, though Kyle (my fiance) is the person who gave everyone the first verbal offers. I just updated the blog post to make that more clear.

I think in the end being friends made the negotiation much easier. I am confident we all wanted what was fair for the business and each individual, and were able to talk at length about that until everyone felt comfortable.

Re: How I negotiated my startup compensation (with numbers)

#112

Post by rm999 »

rdl wrote: post #99
rm999 wrote: post #77

Earlier quoted context omitted.

Agreed. My theory is that people irrationally value free stuff. I spend about 3,000 dollars a year on work-time food (250 work days * 12 dollars for lunch/an afternoon snack). The way people talk about free food at some tech companies you'd think it's worth way more than a few percent of a typical developer's post-tax income.

Food onsite is a special case. It's tax-advantaged for the employer (if offering meals onsite is "for the convenience of the employer, and for a business purpose"), and food has a high search/storage/etc. cost. Similarly, I'd value a 30" monitor at about $1k/yr salary.

> Food onsite is a special case. It's tax-advantaged for the employer (if offering meals onsite is "for the convenience of the employer, and for a business purpose"),

Interesting, I read somewhere that Google pays taxes on their free food. How do they argue the free food is for their convenience when their employees can just go out and purchase food and eat at their desk? Especially non-essential foods like snacks, smoothies, etc? Either way, I still think people overvalue free food.

>Similarly, I'd value a 30" monitor at about $1k/yr salary.

Why? Buy a 30 inch monitor for 1200 dollars with your own money, write it off on your taxes, and you've spent less than 1000 dollars of income on a one-time payment. And now you own a 30 inch monitor!

Re: How I negotiated my startup compensation (with numbers)

#113

Post by heretohelp »

nutjob123 wrote: post #31
Simucal wrote: post #8

Earlier quoted context omitted.

That bit of information about them being engaged was just kind of sprinkled into the middle of the article as if it was of no significance.

Yeah, it completely changes the dynamic of the situation. I can't imagine many other people are really going through a salary negotiation with their fiance as the other party.

The whole post/situation was fucking bizarre.

Re: How I negotiated my startup compensation (with numbers)

#114

Post by tomkarlo »

dkador wrote: post #93
rprasad wrote: post #87

Earlier quoted context omitted.

Well, yes. Being engaged to the CEO usually has that effect, especially when the CEO himself is handling the negotiations. It would be different if someone else who she was not friends with (and who was not friends with the CEO) was handling the negotiation, but not much. In the end, being the CEO's future wife plays a substantial role in her situation.

I think that's a fair thing to assume. Full disclosure: I'm Dan, one of the other co-founders of Keen. I actually did the negotiation with Michelle - Kyle delivered our original offer. But she's one of my best friends as well. As is Kyle. As is our other co-founder and the two other people on our team. The negotiation was awkward, but I'm personally convinced that we're a stronger team because of our close personal b…

Did the team contemplate in making this offer that if something went sour in that relationship, you'd end up with a CEO who has both personal drama and potentially a very difficult situation in the office, given that she'd be reporting to him? How did your corporate counsel feel about this? Your board?

If she's not reporting to the CEO, how does her new manager feel about having a team member who's his bosses' fiancee? Would he be comfortable firing her if she fails to perform?

I know this seems hypothetical, but I think anyone who's been around startup has seen some variant of this play out multiple times. It's bad enough when it's friends; it's even more treacherous when it's a fiancee/wife.

Re: How I negotiated my startup compensation (with numbers)

#115

Post by smackfu »

tptacek wrote: post #101
rprasad wrote: post #57

Earlier quoted context omitted.

His point is that the methodology is flawed because of the unique circumstances of the author being engaged to the CEO. This skews the inputs upward in her favor.

Do you think the negotiating framework she wrote about here is unlikely to yield good results for normal startup people?

I feel like people put more weight on advice with personal experience behind it. That weight is understandably lowered when the circumstances turn out to be unique and odd and not really generally applicable.

I mean, would you take advice about how to move up in a company the same from the son of the founder?

Re: How I negotiated my startup compensation (with numbers)

#116

Post by wetzler »

chasing wrote: post #12

Wait, what? Firstly: She's engaged to the founder. Secondly: This is on the company blog (which indicates she might not be 100% forthright). (And what am I supposed to learn about Keen.io, here?) Finally (and most importantly): Did she run the numbers about what that 1.25% might realistically be worth? She compared the offer to her current position and (without the equity) there's a ~$55,000 difference. That's a shit…

I modeled the cap table and various financial outcomes to figure out what 1.25% might be worth. In fact, we reviewed those numbers as a team (this was in my post).

The founders also set expectations that we'd adjust salaries to market value in the event of a Series A, though that isn't something I relied on as a part of my decision.

Re: How I negotiated my startup compensation (with numbers)

#117

Post by wetzler »

joezydeco wrote: post #70

I'd like to hear more about the insanely vague "Health Insurance" on both sides of that spreadsheet. Looks like a complete match and no problem, right? I went from an established company that offered an awesome family PPO plan ($0 monthly premiums, 95/5 coverage, $750 family deductible, paid vision/dental) to a startup that offers a way worse one: ($780 monthly premiums, 90/10 coverage, $3000 family deductible, no vi…

I authored the post and you're absolutely right. It was a lazy approximation. My healthcare in the startup isn't quite as good now, but I'm also very fortunate in that I don't have any healthcare-related expenses.

Thank you for bringing it up here, it could be a significant differentiator for some folks.

Re: How I negotiated my startup compensation (with numbers)

#118

Post by dorkitude »

rdl wrote: post #25

Rent subsidy makes no sense to me. It's a fully taxable fringe benefit (at least in the US, if it's not for the benefit of the employer like at a mine), and basically the same as salary, but people don't include it in the salary calculation. It's just stupid for the employer to offer it instead of the same amount of extra income.

I'd like to clarify a bit here. Inside Keen (I'm the CEO), our name for this (what Michelle's spreadsheet terms "rent subsidy") is the "proximate living bonus". To qualify, you have to be within a short commute of the office.

Our reasoning:

All else being equal, people often choose a longer daily commute, usually to save money. But, as research* has shown time and time again, once basic needs are met by compensation, the factor which correlates most strongly and consistently with unhappiness is commute time.

What we're attempting to do with the proximate living bonus, then, is to incentivize happiness: We're intentionally designing our bonus structure to incentivize the better decision, which employees might otherwise neglect for a number of (irrational) reasons.

*Here's a good intro into the research on this topic: http://www.huffingtonpost.com/kirsten-dirksen/happiness-rese...

Re: How I negotiated my startup compensation (with numbers)

#119

Post by jrockway »

jwoah12 wrote: post #79
nicolethenerd wrote: post #72

Earlier quoted context omitted.

Where do you live?!?! I spend around $200/mo on food, $250 tops, in Manhattan. Mostly yummy healthy stuff from Trader Joe's. Or did you mean $500/mo for two people?

That's about $8/day. I probably spend close to 10x that on food living in Manhattan. Granted I go out a lot and that's including drinks at dinner, but even not going out to eat at all and fasting every other day I have no idea how I'd only spend that much.

I agree here. I get my meals for free and I still spend almost that much on edibles.

Re: How I negotiated my startup compensation (with numbers)

#120

Post by dorkitude »

corin_ wrote: post #68
kine wrote: post #16

Some great advice I got when someone comes back to you and says "We'll give you 16,000 shares" is essentially to ask "shares of what?" One of the best questions to ask is "What percentage of the total outstanding shares does this represent?" Since 16,000 shares could be out of 100K, 1M, etc.

I read that in the article (she mentioned learning that same lesson), and can't believe anyone would ever not do this. Would you really not have thought of finding that out had you not been given this advice?

(Full Disclosure: I'm Kyle, the CEO mentioned in the OP)

I actually had this issue bite me in the ass at my first startup, where I was offered a flat # of shares.

I was pretty much fresh out of college, but for the record, I did realize it was important to find out what percentage I was actually getting. When I asked what the total # of shares outstanding was, the company snaked its way out of answering the question directly. The job had a lot of perks (a big title, very respectable pay, work-from-home, greenfield development), so I took the offer rather than press the issue.

Eight months later, we were acquired. I was the only engineer. You could say I was a bit peeved to learn how little of the company I really owned.

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