Can't we negotiate?

October 27, 2006 4:34 PM

After only a week or so of job search, I've been offered a software development position at a little startup that does almost exactly what I want to do. Seriously, I cannot imagine a more ideal group to work for. I'm supposed to contact them next week to discuss terms and salary. However, during the interview, some of the statements seemed to imply that they didn't have the budget to satisfy my requested salary. I really want to work for these folks, but don't want to sell myself short. Can you think of creative suggestions I might make during negotiations to make up the difference?

This is my first Job, although I have a good deal of non-industrial experience in what I'm doing. I asked for $50k, set a minimum of $40k, and suspect an offer in the low 40's. The benefits aren't great (nor comprehensive), since the company is still so small.

Equity isn't an option at this point. They apparently aren't set up to offer it currently. There was some talk of the possibility of stock options when they go public, but it didn't sound like it would help me pay the bills in the short run.

A friend of mine suggested profit sharing. Since I'd be responsible for a defined, and new, product for them, it seems reasonable that I ask for a percentage of profit made on that until they go public and I can buy into the company.

Any ideas? I don't want to have to walk away just because I couldn't offer alternatives during negotiation. Also, I realize that I may be borrowing trouble, but I just want to have some ideas to offers if it turns out suboptimally.

(And, if you're from the company in question, take this as a sign that I want to work for you and that I'm seeking a mutually beneficial situation.)

posted by Netzapper to work & money (19 answers total)

A startup and they aren't offering stock options? Sounds iffy. The whole point of working for startups is to swap low salaries for a small bit of the company.

I would ask for a small peice of the pie. Maybe options on .001 percent of the existing shares. If they say they're not set up to do it now, get it in writing that they'll do it as soon as they are set up.

On the other hand if this is simply where you want to be and what you want to be working on, I would just take the money and enjoy the job. You'll have plenty of time to make a lot more money later in your career, and at your present level experience will be a lot more valuable to you then a few extra thousand a year.
posted by tkolar at 4:47 PM on October 27, 2006

Equity isn't an option at this point. They apparently aren't set up to offer it currently.

My little bs detector pings a bit on this one. If they are planning on going public eventually, the company is almost certainly structured in such a way that they *could* give you some equity, but perhaps their funders have made it a condition that there is no dilution pre-IPO. There have to be some creative ways around this, and options might be one.

Speaking of which, equity is where the money is really at, if the company is a success. It's a gamble, but a winning company pays off handsomely, so if you can tighten the belt and forego some cash now, it's worth considering.

Since it's a small company and you've indicated the benefits leave something to be desired, it sounds like you still have title and vacation to bargain for.

And in my experience, the way a company treats you during the hiring/negotiation process is the best it will ever get, so if they nickel and dime you and try to put the screws to you, watch out.
posted by ambrosia at 4:49 PM on October 27, 2006

1. $50k is rather poor for an entry level software development position in the United States. Amazon.com pays kids fresh out of school about $100k (salary plus bonuses).

2. Profit sharing, equity, etc. don't mean a thing until the company becomes profitable. Most likely, the company is taking on some debt to get started, so the breakeven point is likely to be in the future, the distant future.

3. Startups are risky - this company could go under next month and leave you looking for a new job. If you are going to go with a startup, you should *always* look for a larger wage than at a more established company. If local companies are paying $50k for the role you are looking at, don't take less than $55k-$60k (depending on how much job security is worth to you) from the startup. The vast majority of startups fail, but you only hear about the ones that are wildly successful.
posted by b1tr0t at 5:21 PM on October 27, 2006

Some notes:

1) It's not that no equity was offered, it's that the equity wouldn't exist until they are ready to go public (who knows when that is). Written into the contract, at that point would be some sort of stock option setup. They were rather vague during the interview, so I want to see the contract before I can decide if the equity situation is worth it. It may turn out that my fears aren't an issue, and they're ready to give me 5% of the company. Who knows?

2) They already have a live product. And it's fucking slick, from the demo I saw. I actually think they may be profitable now, although I'm not sure. I do know that it's privately funded by the founders. I can't imagine this company failing next month. Perhaps next year if they don't hire me, but I'm not concerned if I'm involved. (Yes, hubris; yes, arrogance; I'm good, I assure you.)

3) Experience is nice, but they require a 12-month non-compete. This cuts down significantly on the value of the experience.

4) $50k may be less than Amazon offers, but in my area it's about par for the course. I can't relocate right now, due to love for my SO, so I can't seek out really lucrative positions.
posted by Netzapper at 5:52 PM on October 27, 2006

Salary is really about what you need to live on, and $50k is perfectly reasonable in that sense. I lived on $50k for a year in San Jose when I got of college, and I did fine. I was offered $75k at a much larger, established company, but I decided that the quality and type of work I would be doing was worth the pay cut. I was right, and 2 years in I'm glad I made that decision.

However, the company I ended up working for was a few years old and had decent benefits, so it was a bit easier decision. Still, if you're right out of college, without many financial burdens, and like the job, go for it. If they do successful, you can stay there the whole way. If they fail, a year or 2 at a failed startup is about equivalent to spending a year or 2 at any other company and then leaving to go work somewhere else. Now's the time to give a risky job a try.
posted by JZig at 5:57 PM on October 27, 2006

That one-year noncompete sounds a bit onerous. You need to find out how specific that is (only direct competitors? anything related?) and any ways out of it before you make a decision.
posted by JZig at 5:59 PM on October 27, 2006

Amazon.com pays kids fresh out of school about $100k (salary plus bonuses).

I love how you can extrapolate this to all software development jobs, as if there aren't huge gradations in types of software and types of jobs in the development field.
posted by Big Fat Tycoon at 6:57 PM on October 27, 2006

Ask for more time off.

Personally, an extra two weeks of vacation is worth quite a bit more than the face value of my time.
posted by ottereroticist at 7:11 PM on October 27, 2006

What do ya'll think of the quintessential Google perk: 20% of my time at work to spend on personally-chosen projects?
posted by Netzapper at 7:35 PM on October 27, 2006

Ask for more time off. Ask for paid parking if that makes a difference where you live. Ask for them to pay more of your health insurance. Ask for an accelerated vesting schedule. You should work this out before any m&a and/or plans for going public. A good equity/options agreement will vest automagically if the company is acquired.

Additionally, the noncompete can be a pain in the butt, but many states are at-will work states as well as right to work states, so if they let you go/lay you off, the trade off is that your non compete probably has less weight behind it since you have a right to work. I am, however, not an attorney, much less a labor attorney.
posted by wildeepdotorg at 7:38 PM on October 27, 2006

Sounds fishy to me. I haven't been at a startup that didn't have a stock program and I've been at lots of them. It sounds to me like the founders don't want to go public and will keep all the profit for themselves. As much as you might like this opportunity, I advise you to stay away.

Keep in mind not all startups go public. The most common successful exit strategy for startups is a buy out by a bigger fish. The equity program in that case determines what everyone gets. I'm oversimplifying but what I'm saying is no stake in the company means you literally have no stake, no matter what the outcome: profitable private company, buy out, or going public.

On top of that, not having a stake in a startup that also asks you to take a salary cut is just crazy. Oh yeah, vacation is nice but if it's a real startup, don't expect there to ever be a good time to take it.
posted by chairface at 7:50 PM on October 27, 2006

Unlimited soda.
Make them buy you a home computer system or laptop, and make them upgrade it every year.
Have them pay for your cellphone/internet access.
More flexible hours, 35 hour work week, etc.
More vacation time.
1 trip per year to industry conferences out of state.
Personal license for a copy of any of the software you use at work (including OS and dev tools).
Increased 401k matching.
An extra long-weekend every month.
Telecommuting privileges a few days a week.
Make sure you contract indicates that anything you do outside of work belongs to you and not to them.
They pay for certification exams and study materials.
Quarterly performance reviews with preplanned salary increases (start low, but as time goes on, rate goes up up up)
Company car.
Low interest loans so you can buy your own car/house.
posted by blue_beetle at 8:22 PM on October 27, 2006 [1 favorite]

Maybe the industry has changed, but ten years ago I regularly saw 7-year non competes. (They were pretty heavily restricted though.)

The only (and I mean the only) reason to work for a startup is if they're cutting you in on the pie. Otherwise you're just getting taken advantage of.

You're marked blue_beetles post as best answer, but the list made me laugh. Sure it's all great things to ask for, but ... those things either cost money, or are promises of future behavior. Both money and prommisises of money are something a startup can not give.

If you get them to agree to, say, preplanned salary increases, and they don't deliver, what do you do? Will you walk? Sue a company with no resources for what they owe you?

You've only been looking for a week. Keep looking.

And not being set up to share either profit or shares can be a large warning sign. It could mean they don't have any formal structure for the company. If you really want to go forward with it ask them about how the company is structured (Corporation, LLC, partnership, etc.) and if there is room for you to participate. If they don't have solid answers that they understand fully, you need to walk, if not run away.
posted by Ookseer at 9:22 PM on October 27, 2006

If this is the company that's doing on the ground rollout for the Mountain View wi-fi project, you might want to unblock your AIM long enough for me to tell you a little story.
posted by ikkyu2 at 11:06 PM on October 27, 2006

b1tr0t wrote...
Amazon.com pays kids fresh out of school about $100k (salary plus bonuses).

I'd love to know where you got that from. $70k would be high for a fresh graduate. If Amazon really is paying that, they're wasting their money.
posted by tkolar at 11:15 PM on October 27, 2006

At this point in your career, you really want to find a position where you can learn your skills from a really smart team. The faster you learn, the better a programmer you'll become. So, if the team and company's a good fit, and you think the product's going places, you should join then.

Keep in mind that all big companies were startups once. As long as you keep contributing you should be able to wrangle larger and larger positions in the company, and the stock options, bonuses and salary that goes along with it. Just give it a few years.

They could give you stock right now, but for most companies, that's an extremely risky venture. You don't want to give out equity until you're sure the person is going to stick around as long as possible; at least until the entire team gets the big reward when the company sells or goes public.

I would just trust your instincts. If you think the company's going places, get on board. A few thousand $$ doesn't really matter at this point in your career.

This is a risk, but sometimes it can pay off huge down the road, pushing you a decade ahead in your career.
posted by fcain at 8:22 AM on October 28, 2006

I'd love to know where you got that from. $70k would be high for a fresh graduate. If Amazon really is paying that, they're wasting their money.

Probably depends on how it's calculated-- 5 years ago amazon was offering base salaries in the 70-80+ range to new graduates from top CS schools. Depending on how you count "bonuses" (stock grants? 401k matches? starting bonus?) it could easily have totalled close to 100K even then. Amazon might have to pay slightly more because it is competiting with MS and Google for the same group of programmers and does not have the cachet or cool projects to entice them.
None of this is relevant if you're talking about someone that isn't in that pool of candidates, though. Most new CS graduates that go to small companies make far less.
posted by ch1x0r at 8:59 AM on October 28, 2006

What do ya'll think of the quintessential Google perk: 20% of my time at work to spend on personally-chosen projects?

I think "allowing" people to spend a day a week working on a personal project that the company still owns all of the rights to is more a benefit for the company.
posted by Caviar at 10:24 PM on October 28, 2006

Never accept options in lieu of direct compensation (which includes salary, vacation time, and 401k matching, primarily). Spend $1/wk on lottery tickets instead. If the options pay off, it's gravy.

If you don't have experience, then getting this position will give you that experience. Non-compete generally says you won't develop a on a directly competing product within a year. These are only followed up on if a competitor is preying upon talent from your company. Casual churn isn't the target.

Work hard, learn a lot about how commercial sw dev is done, and build a network of colleagues by going to user groups etc. After a year, ask for a raise and start looking about for another job. The fastest way to raise your salary is changing jobs.

The worst thing you can do is slack off because you think you're making less bank than others. Work harder, get involved in product discussions, etc. Take an interest in things and management will see this.

You can also play games with the current negotiation, though this is risky. When making an appointment to discuss the offer, reject the first time proposed because "I have another appointment then." You can also reject the offer, and see if they counter.
posted by jimfl at 8:51 AM on October 29, 2006