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I ... earn only slightly more than "market" I am 22 years old ... I have no options and no equity in the company. So, you're getting an awful deal, but at le

I ... earn only slightly more than "market" I am 22 years old ... I have no options and no equity in the company. So, you're getting an awful deal, but at least you have time to learn from your mistake.

mst 18y ago
If he's 22 and is earning slightly -more- than market value ... why is a lack of equity an awful deal? I could have made more per hour delivering pizza than I did in my first technical job as a fresh grad, but it was fun, it paid my rent, I learned stuff and it put the experience on my CV to get a better job when I got bored of it - and management there well knew that that was my plan, and had no problem at all with that. There's no employee equity at Shadowcat (the company I co-founded) either. Myself and the other founder hold one share each, which pay no dividends, and which we never intend to sell - they exist to give us the authority to build the company we want to work for for the forseeable future, the way we think it should be built. There's more than one way to do things; not all of them are wrong.
- abstractbill 18y ago
  It's not a bad deal compared to delivering pizza. It is a crappy deal compared to most developer positions though. Putting "I worked at a startup you've never heard of" on your resume isn't a good thing, unless you can say you were a founder. He should either be getting paid a lot more than market, or he should have equity, to compensate for this.
  - cstejerean 18y ago
    Depends on where you want to work next. Generally having a wide range of interesting things you've done that you can discuss during an interview for every position on your resume is far more important than the companies you worked for.
- prospero 18y ago
  As the company's only technical hire, there's an expectation that he would be exceptional regardless of his age. There's also a question of how much he has to offer to the founders, and how much the founders have to offer him. If these two biz dev guys can make the company successful no matter what the quality of the product, then he's not very valuable. If that's not true, though, then his work has a very direct impact on the value of the company, which generally means that he would have equity. The former case seems unlikely, so it seems like he's getting a raw deal.
- dcurtis 18y ago
  The reason equity grants are so popular at startups is because they work. When employees own a physical piece of the work they are creating, and when they have a definite vested interest in making things to the best of their ability, you (as the founder) get a good culture and hardworking people. That ends up increasing the value your own equity in the company. Without equity grants, you have to give employees monetary incentives. Those are usually capped and generally don't have much upside. They're also almost impossible to calculate on a single-person basis. Equity has essentially an unlimited upside and its worth is easily measured. Why don't you give your employees equity?
  - mst 18y ago
    No dividend. Not intended to be sold. The company is held only by the founders so we can control its progress and ensure it becomes the company we envisaged. Our employees believe in that dream. Since there's no monetary value to having equity, they don't care that they don't have any. They do, however, make more than I do. As for "well give it out anyway, they could always sell it" I refer to the point of "becomes the company we envisaged" and what happened to craigslist. I never said our model was common. I never said it was wise for the majority of companies, or even viable. But it -does- work for us.
blader 18y ago
Wow, so they're selecting for people who don't mind a shit deal, and the crazy thing is that it look like it's working.
webwright 18y ago
Wait... WHAT?! 22, earning slightly more than market is a "awful" deal how? Do you think a 22 year old deserves more than market and a mess of equity to boot?
- axod 18y ago
  As the first tech/hacker hell yes.
  - webwright 18y ago
    Why, exactly? Equity ain't free (I actually have a blog post on this: http://www.tonywright.com/2008/a-newbies-guide-to-startup-compensation-or-stock-options-will-make-me-rich/ http://www.tonywright.com/2008/a-newbies-guide-to-startup-co... ). You "buy" equity with risk and lower/no compensation. What is this guy risking? They are funded, so really the only risk is that the owners lose interest or run out of money (a risk you have working ANY small business-- or any business at all in this economy). Here's some guidelines on what you can expect if you're getting paid roughly market rates: http://venturehacks.com/articles/option-pool-shuffle#market http://venturehacks.com/articles/option-pool-shuffle#market
    - axod 18y ago
      If you are the main technical force behind making a product, you should be properly reimbursed for that. It's like a record label "employing" a solo artist singer for an average wage, and then pocketing all the profits from their music and passing none of it on. It's just a pretty raw deal.
    - strlen 18y ago
      If he's taking market compensation, shouldn't he at least receive a lower equity stake vs. no equity whatsoever? Start-ups will ask you 'do you prefer more shares, or more equity". You can take "market rate, little equity" as an option. "They're funded" is also mis-leading, as they're still in the process of getting an angel round. The guidelines and the post you've written (which are excellent, by the way) are more for "post series A, pre series B" stage rather "angel round, forming the core team by signing on the first technical person" stage.

mst 18y ago

If he's 22 and is earning slightly -more- than market value ... why is a lack of equity an awful deal? I could have made more per hour delivering pizza than I did in my first technical job as a fresh grad, but it was fun, it paid my rent, I learned stuff and it put the experience on my CV to get a better job when I got bored of it - and management there well knew that that was my plan, and had no problem at all with that. There's no employee equity at Shadowcat (the company I co-founded) either. Myself and the other founder hold one share each, which pay no dividends, and which we never intend to sell - they exist to give us the authority to build the company we want to work for for the forseeable future, the way we think it should be built. There's more than one way to do things; not all of them are wrong.

abstractbill 18y ago
It's not a bad deal compared to delivering pizza. It is a crappy deal compared to most developer positions though. Putting "I worked at a startup you've never heard of" on your resume isn't a good thing, unless you can say you were a founder. He should either be getting paid a lot more than market, or he should have equity, to compensate for this.
- cstejerean 18y ago
  Depends on where you want to work next. Generally having a wide range of interesting things you've done that you can discuss during an interview for every position on your resume is far more important than the companies you worked for.
prospero 18y ago
As the company's only technical hire, there's an expectation that he would be exceptional regardless of his age. There's also a question of how much he has to offer to the founders, and how much the founders have to offer him. If these two biz dev guys can make the company successful no matter what the quality of the product, then he's not very valuable. If that's not true, though, then his work has a very direct impact on the value of the company, which generally means that he would have equity. The former case seems unlikely, so it seems like he's getting a raw deal.
dcurtis 18y ago
The reason equity grants are so popular at startups is because they work. When employees own a physical piece of the work they are creating, and when they have a definite vested interest in making things to the best of their ability, you (as the founder) get a good culture and hardworking people. That ends up increasing the value your own equity in the company. Without equity grants, you have to give employees monetary incentives. Those are usually capped and generally don't have much upside. They're also almost impossible to calculate on a single-person basis. Equity has essentially an unlimited upside and its worth is easily measured. Why don't you give your employees equity?
- mst 18y ago
  No dividend. Not intended to be sold. The company is held only by the founders so we can control its progress and ensure it becomes the company we envisaged. Our employees believe in that dream. Since there's no monetary value to having equity, they don't care that they don't have any. They do, however, make more than I do. As for "well give it out anyway, they could always sell it" I refer to the point of "becomes the company we envisaged" and what happened to craigslist. I never said our model was common. I never said it was wise for the majority of companies, or even viable. But it -does- work for us.

blader 18y ago

Wow, so they're selecting for people who don't mind a shit deal, and the crazy thing is that it look like it's working.

webwright 18y ago

Wait... WHAT?! 22, earning slightly more than market is a "awful" deal how? Do you think a 22 year old deserves more than market and a mess of equity to boot?

axod 18y ago
As the first tech/hacker hell yes.
- webwright 18y ago
  Why, exactly? Equity ain't free (I actually have a blog post on this: http://www.tonywright.com/2008/a-newbies-guide-to-startup-compensation-or-stock-options-will-make-me-rich/ http://www.tonywright.com/2008/a-newbies-guide-to-startup-co... ). You "buy" equity with risk and lower/no compensation. What is this guy risking? They are funded, so really the only risk is that the owners lose interest or run out of money (a risk you have working ANY small business-- or any business at all in this economy). Here's some guidelines on what you can expect if you're getting paid roughly market rates: http://venturehacks.com/articles/option-pool-shuffle#market http://venturehacks.com/articles/option-pool-shuffle#market
  - axod 18y ago
    If you are the main technical force behind making a product, you should be properly reimbursed for that. It's like a record label "employing" a solo artist singer for an average wage, and then pocketing all the profits from their music and passing none of it on. It's just a pretty raw deal.
  - strlen 18y ago
    If he's taking market compensation, shouldn't he at least receive a lower equity stake vs. no equity whatsoever? Start-ups will ask you 'do you prefer more shares, or more equity". You can take "market rate, little equity" as an option. "They're funded" is also mis-leading, as they're still in the process of getting an angel round. The guidelines and the post you've written (which are excellent, by the way) are more for "post series A, pre series B" stage rather "angel round, forming the core team by signing on the first technical person" stage.