Help me write my own ticket!

June 9, 2005 9:01 AM

I've been recruited to help start a company. Help me write my own ticket.

A friend/former colleague of mine has been working for a biotech/pharma consultancy in Boston, and has been working with the CEO to spin off a NYC-based (where I live) software company serving that industry. This company has done custom development, and wants to start selling standardized products, which is where I come in. He's asked me to come abord and basically run the technology end (handle initial development personally and then build out infrastructure). I'm basically paid employee #1. He's also asked me to write my own ticket.

I'm very familiar with that market and we all see eye-to-eye on the opportunity, and this is something I have experience in. The CEO of the "parent" company has deep pockets and is basically angel-investing the new one until VC funding is secured. There's going to be some overlap with the parent company in terms of leveraging resources, but their priority is going to be fulfilling project-level obligations. The exit strategy is that we turn into the NYC arm of the parent company and keep doing gun-for-hire work. The preferred outcome is that the company/product portfolio gets bought.

I currently work in technology for a large non-software company, making a good (low six-figure) salary at a place where I'm respected, work closely with executive management on key decisions, and work on reasonably interesting, challenging projects. There's not much more advancement I can do here other than annual salary increases, but there are certainly enough projects to keep me busy for a long time, and I'm not currently feeling bored or boxed in. I figure that, even if I don't do this startup, I'm probably going to start exploring my options in another year.

Given that I have nothing to lose if this deal falls through, what should I ask for, within reason? My inclination is $current+30%, plus health benefits from the parent company. Am I being reasonable/not aggressive enough? What about equity? All things considered, I'm at a point in my life where cash-in-hand is much more preferable to potential windfalls, but I do expect a stake.

I realize that there's a certain amount of "you'll never get what you don't ask for" at work, and that everything requires negotiation, but I don't want to come across like a dipshit by asking for something reasonable.

Anything else I should be asking for? Also, any input on the current state of the VC world in NYC would be appreciated. Is it sane to start a software company these days?

posted by anonymous to work & money (4 comments total)

I think it's sane to do this, and I think you have the basics figured out. Only two things I would add:

1. Ask for more than +30%. Remember, you're risking a hell of a lot more than anyone else is in this whole deal, and given the big picture and potential numbers involved, you're not asking for all that much.

2. Ask for equity both in the startup and in the "parent" company. You cover yourself better this way.
posted by NotMyselfRightNow at 11:24 AM on June 9, 2005

Be ready with specifics, be ready to be flexible, and be ready to be creative. And go for it... passion wins.

Suggestion #1: Get a quote for individual healthcare coverage. It might be difficult for the parent company to include you on its policy. If so, you want to be ready with a specific dollar figure that will cover your out-of-pocket expenses.

Suggestion #2: Bone up on equity and options. It may not be feasible to offer equity in the parent, and equity in the startup will be difficult to value properly. Be ready to ask for total option pool, valuation of parent company, specifics on vesting, option classes, etc.

Suggestion #3: Ask for a specific no-fault severance package. If your services are no longer needed for any reason, you should ask to get X months pay. Also, include $$ for healthcare in that severance package.
posted by sgarst at 1:58 PM on June 9, 2005

I've been through this sort of problem several times. It is perfectly sane to do, but has been a large pile of work in my experience.

Startups have equity but (usually) not piles of money. The deal I would make would involve a few percent equity and a salary/benefits package that was comparable to market. In practice, many startups have ok (but not great benefits) and probably pay less in salary than your current gig.

Good luck!
posted by ctdean at 4:20 PM on June 9, 2005

I agree, the expectation of a raise is probably unrealistic, deep pockets or not. Startups typically share risk by sharing equity with early employees.

Besides, what risk are you really taking? That you might have to find another job in 12-18 months if the thing doesn't fly? That sounds annoying, but it doesn't sound like a big risk, besides it may well be mitigated by being able to say that you were the top technical guy at an aggressive startup. Which does suggest that you should be sure to secure yourself an appropriate title.
posted by Good Brain at 10:58 PM on June 10, 2005