Advice 4 non-monetary compensation 4 upcoming job offer from start-up
May 4, 2018 8:17 PM Subscribe
I'll be receiving a job offer that I want to accept from a start-up soon. The company is less than 6 months old, has ~25 employees including 2 co-founders and they just put a President in place this week that I will report to. I know that salary cash is not in great abundance now and am looking for ideas they can offer to augment my earnings.
I am not savvy in accepting stock equity, but I will push for that to be part of the plan. Advice on this welcome.
The company is primarily officed virtually, and I will be based from home with reasonable flexibility on working hours.
I am thinking about future cash bonus incentives, senior job title, enhanced PTO...what else should I be thinking about seeking?
TIA
I am not savvy in accepting stock equity, but I will push for that to be part of the plan. Advice on this welcome.
The company is primarily officed virtually, and I will be based from home with reasonable flexibility on working hours.
I am thinking about future cash bonus incentives, senior job title, enhanced PTO...what else should I be thinking about seeking?
TIA
Among other things, with a company this tenuous I’d seek full privileges of viewing all company accounts, including all revenues, debts, capital funds etc etc. At least then you’ll be well informed of how soon it (likely) busts.
posted by SaltySalticid at 9:32 PM on May 4, 2018 [2 favorites]
posted by SaltySalticid at 9:32 PM on May 4, 2018 [2 favorites]
Regarding accepting equity in lieu of pay, don't let yourself be flattered with financial instruments that sound great, but are almost assuredly worthless, even if the company becomes the next Apple/Google/Amazon/Facebook. There's preferred stock vs. common stock, stock vs. options, vesting periods, liquidation preferences, liquidation overhang, accelerated vesting, ISO's, NQO's, etc. I'm tempted to give a bunch of links, but I'd say now is not the time to fill your head with a bunch of enticing financial stuff. Say "I'll look it over with my lawyer", and either go home and google, or actually pay a lawyer to look it over.
Assume that the person you're negotiating with, even the new president, has no power to grant to any upgrades that'll threaten the stakeholders who are already in line for any future payouts.
I wouldn't put any value in the title. The world is full of senior VP's, and associate this'es and thats. Ask to make up your own title.
Sounds like an interesting position, but I'd look at it like: I'm accepting below-market wages to go do something interesting. I'll gain great experience from it and have some good stories to tell.
posted by at at 3:28 AM on May 5, 2018 [3 favorites]
Assume that the person you're negotiating with, even the new president, has no power to grant to any upgrades that'll threaten the stakeholders who are already in line for any future payouts.
I wouldn't put any value in the title. The world is full of senior VP's, and associate this'es and thats. Ask to make up your own title.
Sounds like an interesting position, but I'd look at it like: I'm accepting below-market wages to go do something interesting. I'll gain great experience from it and have some good stories to tell.
posted by at at 3:28 AM on May 5, 2018 [3 favorites]
You don't mention if you are single or are supporting a family.
How are the other benefits? Is there health insurance? Do they provide computers, phones, equipment, etc? Do you get an allowance for supporting remote work?
I've been through a small startup wringer and I'll take a more cynical view about equity in lieu of salary. Given there's 25 employees already and you're probably due a few more rounds of funding, I wouldn't put too much value into any shares or options that are involved. Like bigplugin says, learn about liquidation because that will definitely be a downside to any equity play here.
If your employer offered you a stack of lottery tickets in lieu of actual pay...is that risk okay with you?
I know that salary cash is not in great abundance now
My gut says that this statement will hold true for the entire time you are there.
Unless there's something about their business plan where cash flow is tight at 25 employees and and no president but somehow WILL be looser at 26 + President, you can expect a lot of tight budgets and maybe even some weeks where payroll doesn't get made.
Startups can be wild and exciting and you will gain a ton of knowledge, but assess your risk before diving in. Unless it's your name on the door, you're still just an employee. Remember that always. Get the cash.
posted by JoeZydeco at 6:31 AM on May 5, 2018 [1 favorite]
How are the other benefits? Is there health insurance? Do they provide computers, phones, equipment, etc? Do you get an allowance for supporting remote work?
I've been through a small startup wringer and I'll take a more cynical view about equity in lieu of salary. Given there's 25 employees already and you're probably due a few more rounds of funding, I wouldn't put too much value into any shares or options that are involved. Like bigplugin says, learn about liquidation because that will definitely be a downside to any equity play here.
If your employer offered you a stack of lottery tickets in lieu of actual pay...is that risk okay with you?
I know that salary cash is not in great abundance now
My gut says that this statement will hold true for the entire time you are there.
Unless there's something about their business plan where cash flow is tight at 25 employees and and no president but somehow WILL be looser at 26 + President, you can expect a lot of tight budgets and maybe even some weeks where payroll doesn't get made.
Startups can be wild and exciting and you will gain a ton of knowledge, but assess your risk before diving in. Unless it's your name on the door, you're still just an employee. Remember that always. Get the cash.
posted by JoeZydeco at 6:31 AM on May 5, 2018 [1 favorite]
If equity is offered as part of compensation, you will want to read this primer on what stock options are potentially worth/not worth in various likely situations: https://a16z.com/2016/08/24/options-ownership/. Key takeaway: don't take any assurances about stock "value" at face value until you've seen more numbers, because unless another company is offering to purchase this company right now, any notion of value is just made up.
Don't be surprised by a startup that "can't afford to pay you market rates because we're not cash flow positive right now" that suddenly can afford to bring on expensive new hires after you. If a company really wants to hire you, they will make an effort to sweeten the deal for you somehow. Even if it's not exactly what you asked for there almost always is something they can do for you, even if it's unorthodox. Like, pay for equipment or access to a co-working space, offset some kind of expenses, like phone or Internet, or provide opportunities to raise your profile through press or access to industry events or connections.
This will depend on you being a valuable hire who knows what you're asking for, why you want it, and why it ultimately brings value to the company (even if it means your continued satisfaction with the job). If you ask in an entitled way, you can end up painting yourself as being demanding as opposed to reasonable, which will likely backfire on you. This can be extra tricky if you're a woman or minority and suffer from Imposter Syndrome. So, your best bet is to do your research so you can confidently engage in negotiations and ask questions from an informed perspective(i.e. don't expect the company to initiate a transparent conversation about their financials and what their stock is worth).
If nothing else, as mentioned above, take this as a learning opportunity, get the experience you're looking for, and keep your eyes open for the next opportunity, and definitely ask about the company's current burn rate, runway, and future plans for fundraising or seeking additional injections of capital. The more you know, the better you can plan and lookout for your future. And if the person who is hiring you doesn't have this information, ask (nicely) if you can speak to someone who does.
Context: I have dealt with fundraising, employee stock options, and offer letters for hires at various levels for a VC-funded company.
posted by Goblin Barbarian at 9:51 AM on May 5, 2018 [1 favorite]
Don't be surprised by a startup that "can't afford to pay you market rates because we're not cash flow positive right now" that suddenly can afford to bring on expensive new hires after you. If a company really wants to hire you, they will make an effort to sweeten the deal for you somehow. Even if it's not exactly what you asked for there almost always is something they can do for you, even if it's unorthodox. Like, pay for equipment or access to a co-working space, offset some kind of expenses, like phone or Internet, or provide opportunities to raise your profile through press or access to industry events or connections.
This will depend on you being a valuable hire who knows what you're asking for, why you want it, and why it ultimately brings value to the company (even if it means your continued satisfaction with the job). If you ask in an entitled way, you can end up painting yourself as being demanding as opposed to reasonable, which will likely backfire on you. This can be extra tricky if you're a woman or minority and suffer from Imposter Syndrome. So, your best bet is to do your research so you can confidently engage in negotiations and ask questions from an informed perspective(i.e. don't expect the company to initiate a transparent conversation about their financials and what their stock is worth).
If nothing else, as mentioned above, take this as a learning opportunity, get the experience you're looking for, and keep your eyes open for the next opportunity, and definitely ask about the company's current burn rate, runway, and future plans for fundraising or seeking additional injections of capital. The more you know, the better you can plan and lookout for your future. And if the person who is hiring you doesn't have this information, ask (nicely) if you can speak to someone who does.
Context: I have dealt with fundraising, employee stock options, and offer letters for hires at various levels for a VC-funded company.
posted by Goblin Barbarian at 9:51 AM on May 5, 2018 [1 favorite]
Salary increases tied to the company successfully closing out (each) funding rounds.
posted by porpoise at 10:14 AM on May 5, 2018
posted by porpoise at 10:14 AM on May 5, 2018
Do not work for a 25 person company offering significantly lower-than-market salaries. You hire 25 people when you can start paying them, not before that.
You should ask for, and expect a market rate salary (or within 10-20% of one). Sub market pay past the first 2-5 employees is a really, really big red flag.
posted by so fucking future at 12:28 PM on May 6, 2018 [1 favorite]
You should ask for, and expect a market rate salary (or within 10-20% of one). Sub market pay past the first 2-5 employees is a really, really big red flag.
posted by so fucking future at 12:28 PM on May 6, 2018 [1 favorite]
This thread is closed to new comments.
posted by bigplugin at 9:30 PM on May 4, 2018 [1 favorite]