mobile-apps, equitySo I’m a front-end dev working at a startup building web apps & rehashing the promotional site. I’m building the web apps with AngularJS, vanilla JS & some jQuery. I’m technically only a “junior” web developer so my salary is basic (roughly average for a typical front-end dev just coding “flat” sites.) Anyway, that explained, I have to work very hard and I’m happy to do so because I’m gaining experience rapidly, learning tonnes and constantly pushed to keep learning which I think is the key to good programming–so I’m fairly happy with the situation.
After a probation period I’m due to get some equity in the company. I was told recently that this will be <0.1% which with a current valuation of < $5M isn’t a great deal, and I’m slightly dismayed by it. It’s easy to see a massive stock price would need to develop over time to gain any amount handsome enough to start my own ventures with. It’s a really good idea and I do believe in it, but let’s face it, not many startups go $1B+. It’s clear the contribution I need to make to the overall success of the project is certainly significant (to say the least, it’ll involve both a business side app to be used by all the implementers and a consumer facing one which is expected to garner a lot of attention.)
So what I’m trying to get is some perspective from those who have experience with this–this is practically my first job, let alone startup environment, and I want to try to gather some realistic expectations and be sure I’m not being unreasonable. I have two questions, really: does this seem like a reasonable amount of equity given the numbers provided and my responsibilities? Any tips for how to approach negotiations or what I ought to expect realistically?
Any advice or especially experience appreciated. Thank you.
If you’re amongst the first batch of employees (say, 1-10), then .1% is low by SV standards. If you’re amongst the next set (say 11-100), it’s common.
The devils are in the details, though. Parts of it depend on how rich the company is, parts of it depend on your salary negotiation skills, parts of it depend how you approach these negotiation to begin with, and so forth. There’s no one size fits all.
A few pointers, though:
And never accept a tiny bit more stock in exchange for a lower salary.
Because, if you hang around and the company fails in five years, the founder’s downside is to have worked for an undervalued founder salary. Your downside, if you accepted stock in exchange for a lower salary, is to have worked for an undervalued employee salary for the same number of years.
If the company turns into a big success, in contrast, the founder’s upside is a giant wad of cash. Your upside is a mere bonus in comparison. And it’s not necessarily a big one at that, since it’s typically vested options at arbitrary valuation levels.
Very similar downsides; very different upsides.
Therefor, as a non-founder, stock should only have upside. Equity is a bonus, and this should be on your radar at all times while negotiating.
If your startup gets in the way of you having a life, meaning long hours, crunch time code marathons, and what have you, make sure you get appropriately compensated for it.
Understand that a start-up’s tech staff frequently consists in undervalued enablers, and that you’re in a seller’s market.
Put bluntly, you’re holding the hand full of Aces here; the person in front of you is just good at bluffing. And he needs you a lot more than you need him.
You’re getting compensated for the opportunity cost of not working on your own projects.
How much do you think you’d make working on them? With very conservative assumptions, how high are your chances of success? Adjust for the savings you’ll burn through until you become profitable or locate investors. Your salary, plus risk-adjusted stock-related bonus, should ideally be in the same ballpark.
Because if it’s not, it means you trust your ability to make more while doing your own things.
https://angel.co/developer/jobs?src=new-landing
I think angellist is great to search for the current startup salaries and equities in a certain location, funding stage, company valuation, role types etc..
If your salary is in about the same as you would get from some other company, than I think 0.1 is ok. You could negotiate and say that you believe in the project and are willing to work for a lower salary and a higher equity. Great entrepreneurs will like this attitude and try to find a reasonable deal with you, bad ones will not want to give equity.
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