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I've had a few unsuccessful negotiations with series B startups who balk at paying market rate even though they have piles of cash. I believe it often comes do

I've had a few unsuccessful negotiations with series B startups who balk at paying market rate even though they have piles of cash. I believe it often comes down the the fact that they have grown headcount relatively slowly at the same time market rates for competent developers have risen quickly. The veteran engineers from the company's earlier days are often true-believers in the company/product, and probably joined for below-market at a time when market rates were lower. As a result the comp structure at these companies gets into a really weird state where a new market-rate junior hire cost about as much or more than the seasoned technical staff they already have on payroll. That's a tough pill for companies to swallow, and even if you do manage to hire you'll have a mutiny on your hands if you don't do something quickly to close the 40+% gap between the comp your existing employees are getting and the market.

Iftheshoefits 12y ago
That's why companies who have raised any serious funding in B-round or later or have revenues to justify it ought to raise early engineers' salaries to bring them (closer) to marker rate on a continuous basis. There is no good reason not to do that.
suhail 12y ago
That's true, this can happen. At Mixpanel, we proactively true people up throughout the year, each year. It's not that hard of a pill to swallow when you weigh the decision of that person leaving vs paying them $10-20K more.
- pacaro 12y ago
  This is the real insight that to few companies understand. Possibly because of relative lack of experience of management and/or HR department. If you're in SF and your rent is rising by 10% p/a then your salary needs to be keeping track unless you already have FU money. Or you work a couple of years to get a little vested, then jump ship using your unvested equity as a bargaining chip in your next negotiation "I'd be leaving so much on the table..." I guess that there's a reason that the average tenure is ~2 years
ryan-allen 12y ago
This mindset with the "top developers getting paid grad rates" type deal doesn't last very long when the company gets serious and actually needs to hire good people. If the top devs are getting screwed you're just as likely to have an exodus as a mutiny.

Iftheshoefits 12y ago

That's why companies who have raised any serious funding in B-round or later or have revenues to justify it ought to raise early engineers' salaries to bring them (closer) to marker rate on a continuous basis. There is no good reason not to do that.

suhail 12y ago

That's true, this can happen. At Mixpanel, we proactively true people up throughout the year, each year. It's not that hard of a pill to swallow when you weigh the decision of that person leaving vs paying them $10-20K more.

pacaro 12y ago
This is the real insight that to few companies understand. Possibly because of relative lack of experience of management and/or HR department. If you're in SF and your rent is rising by 10% p/a then your salary needs to be keeping track unless you already have FU money. Or you work a couple of years to get a little vested, then jump ship using your unvested equity as a bargaining chip in your next negotiation "I'd be leaving so much on the table..." I guess that there's a reason that the average tenure is ~2 years

ryan-allen 12y ago

This mindset with the "top developers getting paid grad rates" type deal doesn't last very long when the company gets serious and actually needs to hire good people. If the top devs are getting screwed you're just as likely to have an exodus as a mutiny.