
Startup negotiation – first engineer hire - dvt
Two non-tech founders. Bay area. Series A went well, they made about 500k. They came to me looking for a senior developer with potential for CTO to write 1st prototype and take charge of development. First few meetings went well, and they asked what I would like to be paid.<p>What are some guidelines for salary&#x2F;equity? Would 140k and 2% seem greedy?
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7Figures2Commas
A $500,000 raise pre-prototype is _not_ a Series A. It's a seed round in a
market in which lots of seed rounds (perhaps the majority) are being raised by
companies that already have a prototype or launched product.

That means this company is going to be playing catch up. Instead of using
$500,000 to improve an existing prototype or product, or scale a nascent
business, the founders here need to use the $500,000 to build a product from
scratch _and_ get it to market successfully. If they don't, it is unlikely
they will be able to raise a Series A because while the bar for raising seed
funding is incredibly low today, the bar for raising a Series A is fairly high
and only getting higher.

If you're intent on being this company's first engineering hire, responsible
for building the first version of the company's product, you should consider
that _you_ are largely going to be responsible for getting the company to the
point where it can raise a Series A, which is going to be a low seven-figure
amount at a minimum.

In other words, if you deliver, you are going to put these founders in the
best position possible to raise millions of dollars at a valuation
meaningfully higher than the current valuation. From this perspective, you
might want to consider that $140,000 and 2% of the company is not too much but
rather too little.

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dvt
Sorry, meant to write _seed_ not Series A, mea culpa. I am very sympathetic to
your reasoning, especially considering I'm interviewing with other AAA
companies and startups that are offering 120k+ & benefits, so it's not like
I'm short on opportunities.

But being an early tech hire is quite appealing, especially if the company
takes off. Thanks for the post.

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sauronlord
Huge red flags:

Have great ideas: indecisive and flaky

Chance to be CTO: Yeah right. Become CTO now

2%....too risky and tiny payoff.

Here's what I would do:

149k/year

21 - 32% equity, with linear vesting over 4 years. 6 months and vesting starts
until 3.5 years later

28k signing bonus

Don't be a sucker. They will both your worse nightmare.( two dads!)

There's no product, there's no revenue, no prototype. Sounds ridiculous.

They have a pitch deck. However ideas are cheap and some investors are dumb.

Make sure any shares are voting shares and look for the termination clauses
and trigger events.

Don't sign any agreement without a lawyer explaining things to you.

Good luck

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mifreewil
I agree with this mostly other than the huge salary in relation to the amount
of equity.

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chadkruse
The times I've been in this situation it really came down to figuring out if I
was a true co-founder or just the hired gun. True co-founder roles meant I was
confident in the founder(s) ability to execute, was confident we'd work well
together (takes time), and was stoked about the industry/product/role. We paid
ourselves the same salary, I received founders shares (not options), and off
we went.

When I didn't have time to properly date first I just assumed I was the hired
gun. In these situations the cash component was high and any equity vesting
immediate.

Do you have enough time to flirt/date to get a better handle on how you'd work
together as a team?

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mifreewil
If you're looking to join this company that doesn't even have a prototype and
has no technical people, then I would consider yourself to be a founder. If
you want to be a founder, 140k would probably be too high at this point for a
salary, but I would be looking for at least 20% equity.

If you don't want to be a founder, then keep looking.

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mifreewil
Another piece of advice, you might want to look into the other two founders'
background and investigate how long they have been working together. You don't
want to deal with a founder breakup.

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JSeymourATL
Remove the word greedy from your vocabulary. These guys have nothing but an
idea and seed capital. They need a solid tech founder to build and navigate
uncharted territory. Create yourself as their peer. You're the prize. They
need to earn your attention, respect, and time. Suggest reading Oren Klaff.

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gumballhead
Greedy? Not only are you the first engineering hire, but you're the first
engineer, of what I presume is a technology company.

The salary is too high and the equity too low for a company at that stage.

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crazypyro
How did two non-tech founders raise 500k without a prototype or engineer lead?

This can't be usual....

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dvt
It's not usual, but they seem like smart guys and they both went to a great
school. Some of their ideas are pretty good and I guess they really resonated
with investors.

FWIW, their advisors are from a relatively famous California combinator.

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Alex-Galapagos
Do you mind providing that advisor's name? We're looking for an advisor right
now. You can pm me @ zakapar@gmail.com

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PeekPoke
So you want 28% of their funding and 2% of their equity?

28% seems high to me but I don't know their circumstances, be ready swap
salary for equity (or vice versa) depending on what they can pay.

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glimcat
Their funding isn't your problem.

Either they can meet your compensation requirements, or they can't and you go
elsewhere, or you find a compromise if you both want it to work.

If you're a decent engineer who can get things done and out the door to some
reasonable professional standard, there are a LOT of elsewheres.

