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Posting from throwaway so I can be very open. I joined a YC startup as engineer #1 with close to $200k salary and 2% options vesting at the usual 4 years, with

• moneywoes 2y ago
  how much effort are you putting here wrt to your previous job
• sleepingreset 2y ago
  out of college directly, would you recommend a similar position? looking for early career options
  • shortrounddev2 2y ago
    I don't think you could get hired as engineer #1 straight out of college
    • disgruntledphd2 2y ago
      And even if you could, you probably shouldn't. Go get experience with a bigger company first, so that the startup experience is more useful to you.
  • deleted 2y ago
    [deleted]
  • djbusby 2y ago
    I'd say take a startup. Those early companies don't have a lot of staff so you can try lots of things, wear lots of hats. Good experience. Take cash, don't get played by options/equity. When you find the hat you like move into a more stable role.
  • aketchum 2y ago
    i joined as founding engineer as my second job, 2 years after college. The founders were the same age which I think let them consider a young founding engineer. It worked out for me and I think if you have the opportunity then it is a great time to take the plunge. Knowing what I know now I would likely not take the same role at 30 due to lifestyle requirements (have wife and house now, back then I was paying very little for rent with roomates and had no issue with 12 hour days. I think the risk can make sense early in your career but most founders probably dont want to risk it on an untested dev with sub 3 YoE.
• cosmic_quanta 2y ago
  I've been thinking about the equity split amongst early employees. Our startup is reserving 20% of equity for early employees. How about a division by 2 every time? First employee gets 0.5 x 20%, second employee gets 0.25 * 20%, etc. Early employees are better rewarded for the risk, but later employees (e.g. #10) will get basically nothing. It's all about tradeoffs
  • romanhn 2y ago
    At 10 employees the company is still incredibly risky. With this scheme you'll never grow past that size.
    • cosmic_quanta 2y ago
      Well, the alternative (which appears to be the status quo) is to give lower % equity to the first ~50 employees. What do you think is the ideal breakdown of equity for early employees?
      • zenlikethat 2y ago
        people already do a variant of “earlier gets more, later gets less” that’s a lot smoother/linear than your scheme and can be customized and adjusted to roles (engineers get more than salespeople as an example). With what you describe, offering some exec down the line 0.5% or whatever is impossible. You need flexibility because at any moment some killer candidate might come along that you need to juice the grant for. Just being earlier doesn’t mean they contribute more to the company
        • cosmic_quanta 2y ago
          That makes sense, thanks
        • RhodesianHunter 2y ago
          > Just being earlier doesn’t mean they contribute more to the company No, but being earlier does mean taking on more risk, which is the whole argument founders and seed investors make for their cuts.
• palata 2y ago
  $200k? Do you live in a place where this is considered a bad salary?
  • CSMastermind 2y ago
    It's normally considered a bad salary in comparison to what you could be making. I won't speak for the poster but I left a ~$1m / year TC job ($300k base the rest RSUs) to join a startup. I have a good salary compared to the population at large but it's a fraction of what I could be making on the hope that my equity turns into something meaningful that makes up for it.
    • deleted 2y ago
      [deleted]
    • palata 2y ago
      I wish I knew how to get to $200k. Not even mentioning 1m/year, that seems absolutely insane to me.
      • hedora 2y ago
        The easiest way is to move to the SF area. However, you'll end up spending most of the after-tax pay on housing, food, etc. For example, rent on a 1 bedroom apartment in the suburbs is going to be $30-60K per year: https://www.zillow.com/santa-clara-ca/apartments/1-bedrooms/ https://www.zillow.com/santa-clara-ca/apartments/1-bedrooms/ The cost of pretty much everything around here reflects that cost of living. Businesses have to pay workers enough to allow them to live in the area.
        • rsanek 2y ago
          you don't have to. I lived in south bay with $30-40k in total annual expenses for years. that said, i was single and made sacrifices to save.
      • School-Cotton 2y ago
• sashank_1509 2y ago
  10% to a founding engineer almost never happens. You’re in cofounder territory. There really are 2 reasons to stay in the startup, 1. The startups reaches a great valuation. If it reaches a 1B valuation, then even assuming 50% dilution, you have 10M for 2+ years of work, almost 3-5M per year TC! Yes your founders are earning much more but comparison is the thief of joy, you just got a salary that no big tech company could match (unless you’re in C suite) 2. The startup doesn’t reach a large valuation but grows rapidly making you in charge of a large group. This too is useful, promotions in big tech have a very standard time schedule, it takes 8-9 years to reach staff (or never) and then 4-5 years for every subsequent promotion if it happens. With a startup, if as a founding engineer you gain experience leading a team of 50 people, you’re scoped for staff and above in your next job hop. Of course you need to sell this in your interviews but I’ve seen this happen and it can be worth it, if you played your cards right. If none of this is possible, you should leave.
  • darkwizard42 2y ago
    TC isn't TC if it will remain illiquid for a number of years. That is the issue described in the blog post. Founders get great secondary liquidation in each round which helps realize some of those gains. For you as the early employee you get stuck with a now more valuable potential lottery ticket, but no clarity on when it can be cashed in.
  • user_7832 2y ago
    What seems weird/odd to me is (assuming I got it correct) OP seemed quite important/essential to the working of the company, if not the most important technical person. 10M is nothing to laugh at, but I'd much rather get 500k from a company valued at 5M than 10M from a 1B corp if I was the largest contributor.
  • kelnos 2y ago
    > 10% to a founding engineer almost never happens. You’re in cofounder territory. Morally/ethically, if you're building everything single-handedly from the start, you are a cofounder. Obviously the original founders have no legal obligation to compensate you as such, of course.
• mrkurt 2y ago
  This sounds like a bad job and you should find another. At some point you were happy with $200k and 2%. Now you aren't. I don't think there's a bump that they could give you at this point that would make you want to tolerate the shit that's bad about the job. Note that this is a bad job. Startups are more prone to creating bad jobs. The math for employee #1 at a startup is almost never ideal if you're being completely rational about expected value. That is, I think, a separate problem than you're dealing with.
  • zenlikethat 2y ago
    The ideal reason to be engineer number one tbh is if you want a playground (for lack of a better way of putting it) to build the system out the way you want. That will be of high value to specific people (Architects, not the LinkedIn kind) and low value to most of the population who just sees a job as a means to an end. But for some people, direct access to an AWS account and license to build as they please is intoxicating.
• stevesthrowaway 2y ago
  throwaway acct here. I left a flagship tech company with $500k total comp and joined a startup as engineer #1 with 5% options over 4 years. My salary is current $120k and I'm losing money each month, although I've been promised that will changed as soon as we raise more. We are going to raise a Series A in the next few months. I know a little bit about this stuff, but not enough that I'm confident in exactly what to expect over the next few years, nor enough to know that I've negotiated properly (thought I did lol) and are protecting myself enough. This thread is scaring the shit out of me. I have a good relationship with the two founders and not afraid of being candid with them. Would appreciate any advice.
  • moneywoes 2y ago
    hate to blow your bubble but this sounds like a bad deal. do you even know the denominator on equity? look at liquidation
  • gen220 2y ago
    You should be candid with them that you're uncomfortable with the cash portion of your comp. 5% is an unusually high % of equity, the founders likely assumed you were happy to trade-off cash for equity. Series A is usually a dilutive round and it's normal to grant people like yourself more options to compensate for the dilution (i.e. to keep you at 5% of the new cap table). My 2¢: I know people in your position who have ~$200k cash comp in addition to meaningful equity. Don't feel bad about asking for more cash, if your founders have a good relationship with you and you're providing value for the company, they'd rather invest the marginal cash in you and keep you happy + comfortable.
    • RhodesianHunter 2y ago
      > I know people in your position who have ~$200k cash comp in addition to meaningful equity. That's great, so long as its taken within the context of "200k is way more than the average US engineer makes without any equity"
    • stevesthrowaway 2y ago
      Thanks, I feel a little better about the situation. I pushed pretty hard for the equity. One of the founders knew me and sought me out, so I leveraged that a bit. When I signed on, the plan was to raise a new round within a 2 months, which would be accompanied by a bump. But for reasons not worth getting into, we waited about 9 months. I padded my bank account in preparation, and I'm just about to tap into savings, which I really want to avoid. I just told them I need around 200 to be comfortable. And that's the truth. Response was good, and they can't match that now, but they will. I'm working for good people I trust. And we are building some pretty awesome tech that are much needed in our industry.
• aeyes 2y ago
  What I don't get is that you are engineer #1 but you say the vibe and culture are bad. Why didn't you build a better culture? I very much doubt that the management team took all the hiring decisions on their own after they got you on board. I'd say the most important part of my job as #1 was to hire and build the team.
• zenlikethat 2y ago
  Compensation wise, that’s a great startup job, especially with such an insanely generous exercise window. Where I think you maybe went wrong is, if you are building everything, it’s not a collaboration with the founders, which is half of the fun of everything. I suspect it’s more about the culture than the numbers. You say on one hand, oh I’d probably stay for 3% more, yet, you don’t see the point to earn another 1%. Your salary is pretty good man. Meanwhile they are burning $250K every month into smoke 10% is not realistic. That’s the whole employee options pool. I mean imagine if at your current job, someone worked there for a year before you, then walked away with more than your entire current equity grant, never to be heard from again. That’s what you’re describing.
• VHRanger 2y ago
  If you're building everything singlehandedly, then you have leverage over your employer and investors. You should use that leverage to renegotiate your pay. You'd lose nothing because you're considering quitting anyways.
• modestygrime 2y ago
  I'm in a really similar position to you. I'm currently engineer #1 at a seed stage startup making $155k with 1.5% equity. But a year in I'm realizing I've built their entire product from scratch while they do sales and outreach. Obviously those things are important but I'm a leg of a tripod holding the whole thing up and yet I have a fraction of the equity they have. Makes no sense.