

Ask HN: Should I join this startup? - tway314

I've been contracting with a very young startup for a few months and they have asked me to join full-time. There are 3 founders, 2 are business and one is a designer. I developed their entire product and went through a well known accelerator program with them. They are trying to raise a seed round and are currently self funded. The offer is 3 points of equity and about 1/2 market rate salary.<p>The founders are young, with no prior startup experience. I'm a bit older and (in my opinion) have a very good track record working with both large fortune 500's and startups. They have a great product concept that I believe in and enjoy working on. However, I have issues with the makeup of the team and the offer. I'm currently leaning towards telling them no thanks, but would really appreciate getting others opinions.
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brudgers
I'll be conservative [aka lazy] and say that 1/2 your market salary is $30k.

That means that the company needs to be worth $1,000,000 for you to break even
in the next year if there is no dilution and all your shares vest immediately.

And they will need to grow $1,000,000 a year, every year just for you to stay
even...again with no dilution and full vesting.

One needs only to look at their offer and team composition to realize how
little they value technical skills, and only a little imagination to predict
how happily story ends.

My opinion, keep billing hourly.

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tptacek
3% for sole technical person at 1/2 market is^H^H seems way too low.

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jacoblyles
First - there's no harm in bargaining. If you like the team and believe in the
company, but you think the offer is a little low, then tell them that. If you
have some number in your head then ask for a little more and bargain to
something closer to what you want.

3% + salary is a better offer than I've seen for a first employee. I've seen
3% with no salary and salary with a lower stake, but not both together. It
means they are serious about bringing you on board and consider you more than
just a first employee.

It's often possible to bargain away salary for equity or vice-versa. Given
your place in the company, you could ask to be a cofounder with a higher
equity stake. But be prepared for the sacrifices involved. It could mean a pay
cut and you will be making a lower salary than your employees for a long time.

Older engineers tend to care more about the salary than the equity. If this
applies to you, you could also bargain away some of your equity for salary.
Maybe $80k a year with a 2% stake in a good company sounds better to you then
$40k and a 3% stake.

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tptacek
I think 3% is a better employee allocation than many people on HN probably
think it is. But:

He's not just first employee; he's the sole technical team member. He doesn't
say what he was making prior to the offer, but it may have been less than 1/2
of market rate.

If they're in the valley, 80k is also way below the market for anyone who
could execute as sole tech person in a viable startup.

... on the other hand, it depends on the product, too. If the company is
building something that a RentACoder could execute, then sole tech person or
not, he's replaceable and in a poor position to bargain.

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jacoblyles
Don't forget - he's been getting paid, and will continue to get paid, while
the founders are funding the company out of their own pockets. The founders
are clearly making sacrifices and taking personal risks that he is not, which
puts him into the "employee" bucket.

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tptacek
Yep, I think you make a good point. I still think 3% is too low for the person
on the team who everyone else depends on to actually execute the product.

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jacoblyles
Well, it depends on how difficult he would be to replace. It sounds like a
difficult project, so he probably has good standing to push for a bit more.

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thinker
I can't give you a definitive answer since that's yours to make. I can tell
from my experience of being in 2 startups that the team should be your most
important consideration. Your product and market can and will change more
often than the entire team would. You shouldn't go in feeling uncertain about
the people you're working with, because its not like you can A/B Test your way
out to a better situation like you can with a product/market. Sometimes,
however, the opportunity can be such that you just have to play the cards you
get and take a chance.

If you're main issue is compensation, then negotiate back a number that will
make you comfortable without being unreasonable; it seems like you're pretty
valuable to them.

Youth and startup experience shouldn't be a concern if you think their smart,
dedicated and have some gusto.

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tway314
My mentioning they were young/lacked experience was just a way to say they
didn't have prior success in the startup world, which would be a major plus. I
probably should have phrased it differently.

My bigger concern is the founding team is 3 non-technical people. In my
experience and talking with others this is not ideal for a web startup.

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0x12
It depends on how technically involved their product is. If you've developed
it in a few months then _probably_ (hard to say without knowing your skill
level) the 3% is ok, but may not be worth your time if you think their chances
of success are still low.

If it is very technically complex and you have them over a barrel I'd go for
something more substantial if you think their chances of success warrant it.

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tway314
I mostly answered this in another reply below, but ill rephrase it here.

The product is technically very challenging. I would never say no one else
could pull it off, but the reason why they initially reached out to me for the
contract was because of my tech skill set. Im the creator of a few open source
tools used by well over 10,000 projects and this startup directly relates to
these. I sort of hinted at my skill level, but its 10+ years professionally,
typically in a lead role.

~~~
0x12
So tighten those thumbscrews and make sure you get an iron clad shareholders
agreement including tag along clauses.

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mrchess
"I have issues with the makeup of the team and the offer."

No. If you join a young team, you guys had better be the best of friends or
you're just asking for trouble.

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willpower101
This is neat. Take it with a grain though.

<http://foundrs.com/calculator/index.php>

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rorrr
3% and you developed their entire product?

That's insulting.

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tptacek
Maybe, or maybe their product is so simple that their alternative was "just
hire a consultant to build it".

I jumped to the same conclusion too.

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tway314
I know I've purposefully been vague on details, but its a web based product
and technically very challenging to do what we've pulled off so far. I've done
a number of contracts for simple crud style apps, this is not one of them. If
it was something like that I wouldn't even consider joining as it wouldn't
keep me interested technically. I've also put in 12-15 hours everyday,
including weekends, to get things where they currently are at.

~~~
bhousel
In that case, I think 3% is low.. 12-15 hours a day including weekends are
founders' hours.

Unfortunately, I think you've lost most of your leverage. The time to
negotiate was before you did all the work.

