

Ask HN: Offer to join a startup. Is this deal good? - pittip

Hi,<p>I am a regular HNer and this is a temporary account I made for this question.<p>I was recently approached by a guy who is starting up. His company has got funding to the tune of 1 mil with a valuation of close to 6 mil. I will be the first hire and will lead the tech efforts. The company is pretty much tech oriented, and when I join, the focus will be 100% on building the product (a web application).<p>The offer made to me is that of options worth 120k at a nominal price (i.e. Upon vesting, I can buy stocks which are worth 120k today for say 6k at the time of vesting), along with salary to cover my expenses of lodging and food plus some.<p>Please help me decide.
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pg
Don't measure the stock in money, but in percent. Sounds like you're being
offered 2%. That's lowish but not terrible.

The real question is whether you want to join this company. Is it founded by a
single, nonhacker founder? I would steer clear of those. Empirically they
don't do well.

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pittip
Its in fact a single, non-hacker founder. The investors seem to be bullish
though.

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pg
Are you hearing about their bullishness from him or them? And are they
prominent investors, or noobs?

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pittip
The company isn't a YC company. But the investors ar quite prominent people.

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DanielRibeiro
Are they profitable? Or do they have tons of users? Founders that learn to
hack and create something people want are quite formidable people. Even if
they take a step back into financing, hiring, and other CEO functions after
more experienced hackers come in.

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mindcrime
Doesn't sound like much of a deal to me. And the reason I say so is because my
theory is this: There's no reason to join a startup except to get rich, or to
change the world (or both.) If you wanted a "competitive salary" you could go
work for Oracle or IBM or Cisco or somebody and get that. So why join the
startup at all, unless you're going to make big bank, or unless you just
really, really believe in their idea? So, that said, you're looking at
options, and not an outright stock grant? As the first hire? IMO, f!@# that...
If I were joining an early stage startup, I'd be thinking "forgo all salary
except enough to eat Ramen noodles, and give me x% of stock up front (allowing
for vesting periods, etc.)" Otherwise, it's just another job, with the
possibility of a nice little bonus thrown in. But a "nice little bonus" isn't
"FU Money" which is what I'd be looking for, if I were to join a startup.

But that's just me.... if your motivations are different, it may be more
appealing to you.

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pittip
What is this x% which will make the deal sweet?

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keefe
10%?

The thing is like, you're talking a profit of like 114K on the stock options
and you're going to be doing like, insane amounts of work. 100K is fairly
typical, normal developer salary, right? Unless I misread the deal, I'd never
do this, you could go for a 120K job and not be gambling on options at all and
start having a good lifestyle right now or you could take a regular developer
job and some contract on the weekends and probably work less hours in either
case...

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geophile
You say that you are the first _hire_. How many people are there besides you
and the founder? If it's just the two of you, 2% is on the low side, but I
wouldn't necessarily walk away from it. If there are others who were there
pre-funding, then 2% sounds about right.

Other things to consider:

\- What do you think of the product you're building? Are there others like it?
What is unique about this one? Would you use it? Is there a voice in the back
of your head telling you saying that this is great, or that this is dumb, or
that it has fatal problems? Listen to it and think about what it's telling
you.

\- Similarly, what is your instinctual reaction to the founder? Is he focused,
or does he have shiny object syndrome? What value does he bring to the
venture, other than having convinced someone to fund it? Does his background
and track record suggest that he can make this work? Or that he's worth
betting on?

Good luck.

~~~
pittip
I will be the first hire in absolute terms. Nobody before me i.e. pre-funding

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SoWink
If it's just you and the original founder, sounds like you're almost taking
the role of a co-founder or cto. If that's the case, 2% does you absolutely no
justice. But again, that entirely depends on what skills you have and what
your primary workload is.

Another factor to consider is where you're located geographically. If this is
in Kentucky and you don't want to relocate elsewhere, 2% is a much better
offer than if you were in the Valley. Simple demand/supply.

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transmit101
Personally I would expect to get a salary much closer to market-rate than
"lodging and food plus some" from a company with $1m funding - especially if I
was to be the lead developer and first employee.

I would then consider 1-2% equity to be a not-unexpected bonus/incentive
above-and-beyond.

Difficult to be sure without knowing the full circumstances, but it sounds
like a poor deal from what you've said.

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amorphid
I'm a startup recruiter in San Francisco. My two cents is that it sounds like
a good deal if you like the company's mission and you want to be an employee.

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pittip
Even considering the fact that I will be the first employee, leading the tech
efforts, and probably making most of the product all by myself.

I do like the idea but its too early for me to be attached to it.

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stray
If he has funding of $1,000,000 seems like he could afford to pay you an
actual salary. Maybe somewhat less than market - but not _way below_ market.

Stock options are lottery tickets.

