Should I say "more money please"?
August 18, 2010 10:41 PM   Subscribe

Offered a job at a start-up. Salary decent but not amazing, no benefits. Should i start negotiating, if so how so?

I interviewed with this company last week who seemed...pretty good. It's a start up, there's only one guy, so it would be just the two of us, but it's in a field I'm trying to break into (iPhone app development), he seems nice, down to earth and on the same wavelength.

So he made me an offer via email today and it's...not bad. More than i was making at my previous job although possibly a bit below industry average, 2 weeks vacation, 5 sick days, all legal holidays off. 10—6. Hour lunch break. No benefits mentioned but that's probably not on the table.

But in his last sentence it says "please do not hesitate to ask any questions, share comments OR REVISION REQUESTS" emphasis mine. I would certainly like a higher salary, but as it's a start up i don't know if it's even possible and don't want to strain a relationship before it begins. Would it be best to just take the livable salary he offered or to start negotiations—which is obviously something I'm not completely comfortable with since I'm asking the Internet for advice. While I'd love to bargain up to benefits, is something that's almost unreasonable to ask of a two-man start up?

And of course, this offer comes in while I'm on vacation so I have to do all of this on my relaxation time. Although after a summer of looking, just having an offer i could live off of IS relaxing.
posted by Brainy to Work & Money (19 answers total) 2 users marked this as a favorite
You always ask for more. He can always say no.
posted by orthogonality at 10:43 PM on August 18, 2010 [1 favorite]

Well. How bad do you need a job?

I have at times just signed the first offer without haggling at all. Because I was out of work, and desperate for a job. I had to face the facts of the situation, and where the leverage was in the negotiations: They undoubtedly had many candidates; I only had the one offer.

Haggle if you want, but know there is a chance he may just go down the line to the next candidate. It does happen. Sure he said the thing about revisions, but you never know what someone's thought process is, especially in a one-man operation.
posted by drjimmy11 at 10:49 PM on August 18, 2010 [2 favorites]

Depending on where you live a company may not be required to provide benefits for its two employees.
posted by dfriedman at 10:57 PM on August 18, 2010

Best answer: Consider how much experience this guy has in business and running start ups. If he has done lots of hiring in the past, he will not be at all taken aback by a counter-offer. And btw, if you don't know his past experience, that is something you should ask before accepting the offer so you know what kind of ride this will be. Also consider how the start-up is being funded. Does he have VC or angel investments that make the negotiation more palatable for him or is this a company he's funding from his own savings? Does the offer include stock or any part of the success in the business if it is successful?

While I'd love to bargain up to benefits
If it's really benefits you are looking for, not just a bigger salary for the sake of a bigger salary, then you could calculate what it would cost you to pay for the benefits you want to have and present that amount as what you'd like on top of the salary, and how you came up with it. That also sets you up if those benefit payments go up next year and you've never gotten a raise. You can go back and nicely ask for a cost of living adjustment.

Another btw for the future and other interested readers: in most established tech companies, while it is certainly possible to bargain up your starting salary, it is usually a lot easier to ask for a signing bonus because that is a one-time thing that is easier to deal with than bringing someone in at higher salary level that you have to sustain and base raises and bonuses on. Of course if the signing bonus isn't what floats your boat and you really want that higher salary, then give that a try. But at a two-person start-up with no VC funding, nothing's easy to bargain for. And you'll probably have to supply your own caffeine.
posted by girlhacker at 11:07 PM on August 18, 2010

You want a small percentage of the company in addition to your salary.
posted by JohnnyGunn at 11:16 PM on August 18, 2010 [8 favorites]

You always ask for more. He can always say no.

Yep. Always ask for the more. Worst case: the offer stays the same. All other cases: it goes up.
posted by pompomtom at 11:23 PM on August 18, 2010

You want a small percentage of the company in addition to your salary.

Yea, being employee number 2 at a startup, I think I'd want not just a small percentage, but a moderately large percentage of the company....
posted by raf at 11:46 PM on August 18, 2010

Yep. Always ask for the more. Worst case: the offer stays the same. All other cases: it goes up.

Sorry but this is emphatically, absolutely, wrong.

Worst case: HE YANKS THE OFFER AND GIVES IT TO THE NEXT GUY IN LINE. I have personally witnessed companies do it any number of times.

I'm not saying don't negotiate, but absolutely, positively know the possible consequences of your actions.
posted by drjimmy11 at 11:49 PM on August 18, 2010 [1 favorite]

Startup lesson #1: everything is negotiable. Get comfortable with it now.
Startup lesson #2: the boss is making it up as he goes along. You will get to help.

As employee #2 it would be typical to get somewhere from 1-5% equity (stock) in the company. Depends on how much you are bringing to the table in terms of experience, expected amount of commitment, connections, etc. You absolutely need to ask for equity if he didn't offer. Don't count on it adding up to much in the long run, but you may end up feeling seriously ripped off if you don't get any and the company takes off.

Hiring that first employee is a huge step for a new company, and your prospective employer is probably just as unsure as you are. Make sure you both are very clear about what you expect from each other, and for the company as a whole. You need to be as honest and open as you possibly can.

Benefits are a gigantic pain to set up, especially for two people, so it makes sense to do those out of your own pocket for now -- but if they are important to you, make sure that the founder has a plan for when, and how, it will make sense to pay for them.

Last: if you want to be successful, read about startups. Take a few weeks to read blogs, books, anything you can find about your particular startup niche. You'll inevitably get exposed to it anyway, but it helps to find out ahead of time that you're not in a unique situation -- there are thousands of startups every year, and there are some pretty well-known patterns for how they succeed or fail (or, typically, oscillate between both).

Most important: be glad you aren't the guy who's waking up at 4 AM worrying about the company! Enjoy the role you've got and learn as much as you can.
posted by xil at 12:06 AM on August 19, 2010

I think the rule of thumb (I may stand corrected) is that you trade about 20% salary/benefits for equity. That's the whole point of working at a startup.
posted by sockpup at 1:38 AM on August 19, 2010

I think it would be good if you also asked your question on Hacker News: Ask.
posted by devnull at 2:37 AM on August 19, 2010

Some advice specific to negotiating job offers with startups:

I have a job offer at a startup, am I getting a good deal?

Seven Questions Employees Should Ask Before Joining a Startup

Nine Questions to Ask a Startup

A couple of posters have suggested negotiating for equity. While this is standard playbook stuff and is addressed in all three of the links above, you'll want to understand what your prospective employer's exit strategy is, or whether this is intended to be a lifestyle company.

You don't mention the business model, but did say "iPhone". I have three data points around iPhone development: an indy developer who has turned his iPhone gig into a lifestyle company, just big enough to support him; an indy developer who found after two years that he is not quite making a living and has gone back to traditional database-backed website development; and a venture backed company that is transforming itself from a one-app wonder business model (which has been a roller coaster from a revenue point of view) to a professional services model, providing white label app development services to a specific industry. I don't know that I would want equity in any of those.

Good luck!
posted by kovacs at 3:42 AM on August 19, 2010 [2 favorites]

iPhone app development is only a sustainable small business model if you're doing it for someone else, e.g. contract development. There's enormous price pressure in that marketplace, and enormous turnover in apps and media favour. An app can only make more than two or three times par (and that if you're really good) if you a) are the blog flavour of the week, b) have the best marketing team ever and/or c) sell something else with your app, not just the app itself.

I say this as a successful app store developer not because I am not interested in competition, but because it's a fucking meat grinder in here and I wouldn't wish it on anyone. Do something reliable and fun instead, like slice off pieces of your genitals and fry them in fish oil.
posted by seanmpuckett at 5:31 AM on August 19, 2010 [3 favorites]

"Vacation" and "sick days" are largely meaningless in the context of a startup. Especially as employee #2, you're going to be very, very busy for quite some time.
posted by bitterpants at 6:12 AM on August 19, 2010

My policy is always negotiate an offer. There are caveats however.

I would most likely ask for a percentage of equity that vests over the first four years, probably 1% a year, even though it is, you know, probably a worthless thing. That being said, entrepreneurs are loathe to give up equity, which is why they're in business for themselves, so you could actually start with that and then backpedal to something that's technically "smaller" but more relevant to you. (i would imagine that an equity request is a counteroffer that he would expect.)

I can't imagine he's going to be situated to actually *provide* health insurance (that's a pain in the neck! It's a two-person company!) but he might be willing to pay a stipend of half your insurance costs.

I would go into this negotiation extremely friendly and would say "This is a great offer, thank you," etc., so as to ward off getting, you know, dumped.

I can't remember the last time I saw a startup where there was vacation time offered and also they were willing to hire someone who actually didn't have direct experience, to let them "break into the field," so.... I'm a little torn.

One other thing you could request in a counteroffer is flex time, coding from home time, and the like. To me that's a lot more valuable than $175 a month for health insurance or whatever. And at a two-person startup, that has a lot of value.

Good luck!
posted by RJ Reynolds at 6:51 AM on August 19, 2010

There are so many things about a job that make it a good, valuable, and productive experience or not. Salary, especially if you are talking about negotiating a very small difference, may fall further down on that scale of importance.

You will be working, for the time being with one other guy. What do you envision that relationship to be like? No salary or benefits are going to be worth much if you are trying to find new employment within a year.

I would weigh all the other factors as better indicators of job satisfaction. What are the expectations of you? How will your success be measured? What role can you expect to have in 2 years, 5 years? What do his past partners say about him? What are the working conditions/style? Will you have flexibility with where/when you work? Is there a commute that takes big bites out of your day?

Basically, I would give considerable weight to all of the non-salary issues in your negotiation. You may be happier in the long run if these other issues are worked out to your satisfaction ahead of time.
posted by nickjadlowe at 8:54 AM on August 19, 2010

You don't have benefits in a two person company. He likely pays for health insurance if he has it out of pocket. So expect that to come from your pocket too, so either compensate with a higher wage. Vacation time is a worthless measure at a two person startup because you will be too busy to take it. And you will not take it because if the startup goes under you have no money (see how that works?) Ask for equity or don't take the job.
posted by An algorithmic dog at 10:36 AM on August 19, 2010

Response by poster: I know this is way late but I was up in Maine where the internet was out so I could only use the tiny bit of cell service I had to send the negotiation emails—which I'm very proud to say worked out great. I got a bit of a salary increase and health insurance and it's a deal I'm much more comfortable taking.

Now, to read all about start-ups and what sort of a situation I got myself into! Thanks Mefi!
posted by Brainy at 8:27 AM on August 22, 2010

Response by poster: Also, I did talk about equity and he said we could discuss it a bit further down the road, which is fine with me since I'd like to sit down with him and talk more about the company to know if I actually want any equity.
posted by Brainy at 8:36 AM on August 22, 2010

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