

How do you ask for equity? - vu0tran

I'm a software engineer for a startup (I'm the only one and I'm responsible for all our servers, internal development, research and development, developing iPhone and Android Apps, as well as development for client products). There are about 20 employees.<p>I've been on board for about half a year and I feel like I'e been contributing a lot to the company so far. I've developed systems and software that have directly made the companies hundreds of thousands of dollars. Some of my other projects could potentially add millions of dollars in value to the company. I'm not saying I'm irreplaceable. Everyone is expendable. I just know I'm working for cheap right now, and doing a lot. To replace me, my company will probably have to pay to hire 2-3 additional developers.<p>I don't want to work 40 hours a week. I want to work more. At this point, I'm being paid for 40 hours a week, but I'm probably putting in a good 60-70 a week. I think I've shown that I'm willing put my blood, sweat and tears into this company and dig in my nails and work my ass off. I want to put in more, and I think asking for equity is only fair.<p>This December, during my review, I will most likely be promoted to the Director of Technology and oversee all technological development for this company. They will offer me a raise, most likely to around 100k, but I feel like 100k is too low for the level of work I'm doing. I'm hoping to negotiate and discount my salary to 80k, and ask for 30k-40k in equity. Or ask for 110k and ask for a stock options plan.<p>Is this a fair approach? Am I being way too naive?
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chrisbennet
A couple of points:

\- Why do you want stock in this company? Is this "marketing agency" something
that is going to scale 10-100X with the intention of having some sort of
equity event [get bought or IPO] so you can make money on your equity? Is
there any evidence that someone else thinks so i.e. VC and angle investors?

\- Like pace said, you need to be mentally prepared to leave in order to have
any control in the negotiation. My personal ethos is that I want to create
value and if I can't create value sufficient to justify the pay I want, I owe
it to the company to train a better replacement and move on to where I'm a
better fit. In your situation the compensation (re)negotiation might go
something like this:

(Over lunch with your manager/partner/etc) "Now that I've been working for the
company a while I like where it's going and I'd like to be part of that i.e.
with equity. Obviously I want to deliver value to justify that and if you
don't think I can produce that value I owe it to both of us to move on so you
can get someone who can." When/If the "Can't this wait until your December
review?" comes up you could reply with "I think the position I'm filling is
critical to the company's success and the longer I stay, the longer I'm
keeping you from getting someone who is a better fit."

My guess is that they will be happy to cut your pay and give you some
(worthless) equity. Google "start up stock dilution".

~~~
vu0tran
I want stock because I know the work I"m doing is adding tremendous value to
the company. I also know that right now, I am underpaid. I do more than 40
hours a week and what to do more than 40 hours a week. I want that work to
translate to something and ultimately, I feel that this company is in the
position to take off. It was featured in Inc. 500 as one of the top startups
in the industry.

Here's a little more of a background with where I'm at:

I was initially signed on as a contractor (startup obviously). My contract was
for 9 months and there were 4 other devs there at the time including me.

Within a month, one of the devs changed workplaces because he got a better
offer. After that, they took the initiative to sign me on full time as a
"senior level" developer for 75k. I was expecting more of a 85-90k range,
however, this was the start of the summer months and the work coming in is
drastically reduced.

I approached the general manager anyways and pointed out that 85k-90k is where
I want to be, but I am willing to be patient through summer. The feedback I
got from him was that I was too "naive" the way I approached this and sounded
too "greedy" and "arrogant". Big blow to my ego. I resolved that I would just
work tremendously hard and prove my value otherwise.

Within another 3 months, another developer left, and the technical director
left as well. Due to better opportunities or they just didn't get along with
the people there anymore.

This leaves me in the position of doing all of their work, including the job
of the Technical Director. Generating business strategy, implementing new
technologies, overseeing research/development etc.

I had a chat with the general manager and my boss about a week ago. This was a
midyear review. They raised my salary to 80k, but didn't really talk to much
about whether I'd be the new Technical Director or not, but just deferred to
December.

Unlike with the general manager, I have a pretty good work relationship with
my boss so I gave him a call that night and asked him what's up. He told me
that he was trying to push the general manager to increase my pay to 100k and
push me to Technical Director right now given that my responsibilities to
change. However, the general manager pushed back and said that this "wouldn't
be fair" to the rest of the team as I was the only one that got a midyear
review.

I'm grateful of my boss. He definitely understands me. However, because he's
not a technical guy (nor anyone else at the company), he doesn't understand
the grasp of how much I'm doing for the company, and more importantly, how
much devs should get paid. 85-100k is a great salary for a lead developer. For
technical director, I would be expecting more like 110-120k... Seeing that
they're struggling so much to even bring me up to 100k, I imagine the fight to
get 100k + 20k in equity is going to be pretty hard.

And yes, I understand what stock dilution is.

A couple more details: I'm 19, I don't have a degree. My work history as been
with 2 other companies, but haven't lasted more than half a year. Maybe this
has a huge factor as well?

~~~
chrisbennet
The sad reality is that it is very rare for a company you to pay you what you
are worth if they "got a good deal" initially. You need to move to another
company. It's sucks if you like where you are but that's how it is.

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pace
Way too naive.

It's your fear that blocks you. The fear of loosing something.

Nowadays the skill-set of good software engineers are so wanted and rare that
working for equity (at least mixed w/salary) should be the general case. Just
think: they wouldn't survive a single day w/o you, to get and train a
replacement would take months and lead to rev drops.

If I were you I would ask ASAP and not just ask, you have to face them w/the
decision, equity or you will leave. If you just ask they will put you off and
delay until 2015.

I reckon that you are not ready to leave the company, yet. But you have to be
ready to leave -- just in your mind -- to withstand the negotiations. Look out
for other options, that makes it easier to get the leaving attitude. Get
somebody who is experienced with deal making and supports you through the
negotiations in the background (you do not have the same experiences as your
company's management).

~~~
vu0tran
I'm ready to leave. I know that if I leave, the company will be in shambles.

I know that if I dont' approach it right, I will strain my relationship with
the general manager and that is not a good position to be in when you want a
potential future partnership.

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philipkimmey
I'd be curious what industry this in - one engineer out of 20 employees seems
totally insufficient. Especially if you're responsible for the entirety of
their software offering.

~~~
vu0tran
It's a marketing agency.

It's ridiculous. We have about 6 accounts. 4 creatives including me. 4 on the
media team and 4-5 in operations.

I handle the bandwidth of anything HTML/CSS/JS/iOS/Android/LAMP

------
steventruong
Off topic but is there any reason you're not interested in launching your own
startup if you're that good on the technical side?

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YuriNiyazov
Why are you waiting till December?

~~~
vu0tran
That's when my annual review is.

