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What if they give 1-2% and good market rate salary (~200k/y) to a founding engineer? Is that still a bad deal?
by xandrius 2y ago
What if they give 1-2% and good market rate salary (~200k/y) to a founding engineer? Is that still a bad deal?
- halgir 2y agoIf the salary is market rate for that person, I suppose it's by definition a fair deal. I've seen startups hire "founding xyz" two years after they started. Looks to be a vanity title in many cases.
- dchftcs 2y agoTotal comp needs to be market rate, not just salary. And non-preferred shares should be valued lower than preferred stock. Lumping non-preferred shares with prefereed shares is one of the bigger lies startups tell employees.
- jonathankoren 2y agoYes. Because you’re literally the same as the founder, but getting waaaay less equity. First employee is always a sucker
- xandrius 2y agoBut you're getting paid a good salary for many while they probably might not. Also I'd be sleeping well at night as I can jump ship the second I'm not happy, my reputation won't be tarnished by that. So I am not sure it's that easy. Of course, the idea is to keep the same work/life balance one would have at a more established company.
- jonathankoren 2y agoIt is that easy. Employee 1 is getting paid below market. That’s why they offer 0.9% equity. Meanwhile, the founders are also getting paid. No one is working for free. One of the first things VCs tell you is to make yourself comfortable so you can concentrate on the company. That’s literally one of the reasons why VCs tell founders to sell equity early, to make up for lost income, while Employees 1+ has to ride the rocket into the ground. It’s Baby’s First Labor Exploitation.
- nevir 2y agoHaving been in this exact position multiple times now (once quite successful, others not), you should probably consider it a wash. Unless the company hits unicorn AND your shares become liquid (secondaries don't count—you generally won't be able to sell enough shares to make a meaningful dent), you'd make just as much or more at a FAANG firm with way less risk. Of course, I say this while not at a FAANG firm, because I prefer startup type work.
- xandrius 2y agoYeah but I don't think it's fair to compare salaries to FAANG firms, as they are extreme outliers (and not really good companies). So you would get paid like at another company but get equity on top and it's not a good deal? How comes?
- jjav 2y ago> So you would get paid like at another company but get equity on top and it's not a good deal? How comes? If it were truly market rate (total comp not just base salary) then sure, it's a good deal. How likely are you to find that in an early startup? It must be pretty close to zero percent chance. But if you find it, sure, it's good. You'll still work harder and be more stressed but it'll be a different learning experience which is always nice.
- eschneider 2y agoA lot of it comes down to management/team quality. Do you want to spend an awful lot of time with these folks? Do you think you'll learn from each other? Do these folks seem to know what they're doing and are the building a product that interests you? If you can say yes to most (all?) of those questions, then all-in-all, it's probably a wash. If not, run.
- zaptheimpaler 2y agoDepends on the options available to the candidate. Typically someone joining a startup very early probably has the skill to get FAANG salaries with less stress and more free time. There are also hundreds or thousands of mid size companies that pay very well nowadays, its not just FAANG.
- petesergeant 2y agoMarket salary with stock upside plus the chance to level up a job title has potential to be a great deal
- xandrius 2y agoYeah, that's my thought too. Many companies give ~$200/y for way less upward mobility, impact and voice, and without any equity. Maybe you'd lose our on some tiny perk/benefit but that's not always the case. So I'm not seeing what's wrong with this deal with the only caveat that the engineer has the experience not to overwork/burn out.
- lumost 2y agoIt depends on the role and company, if you want to get paid 200k per year for the opportunity to do X - then sure. In practice, you may end up doing basic work at a lower quality than a large firm. Such experience doesn't translate the up-leveled title to a more standard position.
- geepeeyoudata 2y ago>> So I'm not seeing what's wrong with this deal with the only caveat that the engineer has the experience not to overwork/burn out. The startup can go bankrupt any moment, thats a big deal. You get crappy perks, often poor benefits.
- cruffle_duffle 2y agoAnd at a large corp you can get laid off just as easily. Any business can toss you out at a moments notice. It's not unique to startups. At least with a startup you are going into it knowing that you have a higher probability of thing going south financially. With a big company, you might not get any warning at all.
- closeparen 2y agoLeveling up seems like a good reason for someone who’s stagnating at a bigger company. My experience is startup people want to recruit their most respected former colleagues, who by virtue of being respected are also getting promoted in place. Titles obviously don’t transfer back to big companies, we had plenty of ex-cofounders and CTOs hired into the same junior roles as anyone else who could LeetCode.
- extr 2y agoI was recently faced with this exact offer at seed stage vs a series B with a similar salary. YMMV but what I found when I ran the numbers is the series B offer had a lottery ticket with a similar risk/reward profile to the seed stage. Of course I got less total equity, but it was way more likely to ever actually materialize. Plus being employee 80 at a Series B is a lot easier.
- geepeeyoudata 2y ago>> What if they give 1-2% and good market rate salary (~200k/y) to a founding engineer? Is that still a bad deal? OR....you could just become a founding engineer by actually founding and keep 90% of the equity. You can get that salary with an equity raise, its worth not being the low-person on the totem pole.