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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)

#161

Post by dorkitude »

rdl wrote: post #36
tptacek wrote: post #32

Earlier quoted context omitted.

I'll admit: my issue here comes down to hating sliding equity/salary scales like this one. The rough amount of skin you want a team member to have in the game should be a part of the role definition, not a detail of the comp plan. There have to be better ways to account for sub-market salary than a salary/equity scale multiple percentage points long . Ick.

I'd probably have a range for the req (based on budget), and make an offer with two points (specific to the employee). The market is weird enough now that if you wanted to hire an SSL protocol expert, you might end up hiring someone with 2-3 years of general security and dev experience who has read the book, or someone who is EAY, and even the first option might be better than no one in many roles. I've heard Palanti…

Until you're profitable (i.e. while you're still dependent on venture funding), my thinking is that equity is cash: the two are convertible quantities, with the conversion rate being based on our company's likely next valuation or cap.

If, as a founder, you give up so much equity that your option pool is totally depleted at the next funding round, then 10-20% will need to go to an option pool top-of -- and there's that much less equity to sell to the new investors, meaning less cash can flow into the coffers. Spending equity costs the company cash.

Meanwhile, if you spend double the cash of another startup in the same stage, your runway depletes doubly fast, and you need to raise sooner. Spending cash costs the company equity.

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

#162

Post by textminer »

sync wrote: post #5

Does 1.25% seem ridiculously low to anyone else? It seems to me like she should have negotiated to be a co-founder instead of employee #1.

Shit, that's what I got as a first employee at a company that has <$1m in VC/angel investment. Market-rate engineering salary, too.

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

#163

Post by narsil »

wetzler wrote: post #155
fratis wrote: post #144

Earlier quoted context omitted.

Ahh, yikes. Sorry. I should've been clearer. I didn't mean (though it certainly sounded that way) that it's necessary for the reader to know your gender. Looking back, in fact, I realize that I weakened my position by even mentioning it (especially in the vague, imprecise way that I did). I brought up gender because it was confusing (and I, along with other readers here, felt misled) when you – very casually, I might…

Cool. Do you think the intro I added resolves the confusion? "Hi, I’m Michelle. I recently left my job as a technical consulting manager and joined my best friends and my fiancé, Kyle, at Keen.io (I wrote about that here ). This is the story of how I negotiated my compensation."

This made things much clearer for me. I just read the blog post for the first time and wasn't confused.

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

#164

Post by rdl »

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.

I usually let someone else handle financial negotiations if I referred someone into a company (even if I'd otherwise be the one doing that), unless it's a totally mechanical calculation. I'm not sure how I would do that with a fiancee.

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

#165

Post by rdl »

tptacek wrote: post #30
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'm not sure what this critique has to do with the point of the article. This is, I think, a more careful (and lucrative) negotiation process than 99% of engineers are apt to us. The point of the post was to explain that process, presumably in the hopes of benefiting other startup employees. Do you disagree with the methodology? How? Let's talk about that, and not what you think about the blog author's personal life.

I think her methodology was sound, and knowing to use it at all was great. I just question the CEO/founder for low-balling to begin with, and I'm not sure if the whole thing raises the perceived awesomeness of keen.io as an employer (which is what you'd want on a corporate blog).

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

#166

Post by rdl »

dkador wrote: post #78
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.

You think because they're engaged that she was more likely to get a favorable offer?

I have seen the opposite the case sometimes, too -- people overcompensate and treat their friends/spouses worse than they'd treat an arms length employee.

I personally worked with a married couple as founders, and would never do this again (a lot had to do with them in specific, but the general failure mode of any relationship problems spilling over into business, on top of them always ganging up on others, seems general). I'd probably work at a company with siblings as founders, and maybe at a company where a couple were in different roles (founder + employee).

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

#167

Post by fratis »

wetzler wrote: post #155
fratis wrote: post #144

Earlier quoted context omitted.

Ahh, yikes. Sorry. I should've been clearer. I didn't mean (though it certainly sounded that way) that it's necessary for the reader to know your gender. Looking back, in fact, I realize that I weakened my position by even mentioning it (especially in the vague, imprecise way that I did). I brought up gender because it was confusing (and I, along with other readers here, felt misled) when you – very casually, I might…

Cool. Do you think the intro I added resolves the confusion? "Hi, I’m Michelle. I recently left my job as a technical consulting manager and joined my best friends and my fiancé, Kyle, at Keen.io (I wrote about that here ). This is the story of how I negotiated my compensation."

Totally. :)

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

#168

Post by rdl »

osxwm wrote: post #100
richcollins wrote: post #67

Another idea: Contract for $200 an hour for 6 months and make $200,000. Invest that into the company, get 5 - 10%, and join as an employee to influence the outcome of your investment. Even better idea: Do the same but invest it into your own company. Keep 99% and convince someone else to take 1% + pocket change to work for you for a few years.

Go read about investor qualification and why taking on an unqualified investor at an early stage can hurt your company.

It's different if you're actively involved in the business, vs. soliciting people for investment. It's fine for someone who makes $25k/yr as your security guard, who inherits $50k and doesn't know what to do with it, to buy an extra $5k of equity if he wants.

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

#169

Post by rdl »

osxwm wrote: post #100
richcollins wrote: post #67

Another idea: Contract for $200 an hour for 6 months and make $200,000. Invest that into the company, get 5 - 10%, and join as an employee to influence the outcome of your investment. Even better idea: Do the same but invest it into your own company. Keep 99% and convince someone else to take 1% + pocket change to work for you for a few years.

Go read about investor qualification and why taking on an unqualified investor at an early stage can hurt your company.

It's different if you're actively involved in the business, vs. soliciting people for investment. It's fine for someone who makes $25k/yr as your security guard, who inherits $50k and doesn't know what to do with it, to buy an extra $5k of equity if he wants. (this is not legal advice, I am not a lawyer)

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

#170

Post by mkopinsky »

mjn wrote: post #141
jwoah12 wrote: post #79

Earlier quoted context omitted.

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 can see it if you go out a lot, but for groceries it's fairly hard for me to spend more than $200/mo. I don't have a car, so just physically carrying $500/mo of groceries to my apartment would be quite an effort! I can't imagine how I'd do that unless I bought mainly stuff with a really high price:weight ratio, like steak or something, which I do occasionally, but don't eat as a staple food. Today, for example, I c…

> Nectarines

Cook them! Throw them in a pot with some brown sugar and spices. Or throw it in a crockpot/baking dish with {1/2 c. butter, 3/4 c. flour, 3/4 c. (brown) sugar} sprinkled on top, bake, and shazzam! Cobbler!

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