
Ask YC: What's a typical stock compensation for joining a series A, 6 months old startup? - abstractwater
I have a job offer from an early stage (6 months old), series A funded startup, consisting of cash and around 0.35% equity (common stock options).  The stocks can go up to 0.5% max, with less cash.  Some health coverage, no 401K, nothing else actually.  I'll be the 8th employee.<p>Since I have never worked for a startup, I am asking you: what's a "typical" stock offering figure for a early stage startup?  And what would that be for a more "established" startup (e.g. Twitter)?  I'm trying to understand if their equity offering is below or above market.<p>This is all very exciting but also confusing because I don't have anything to compare it with in my past experience.
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nostrademons
This is pretty typical of my experience. I was offered 0.1% at my first
startup (angel-funded, about 4 months old, I was straight out of high school,
think I was employee #13 but the first 6 or so employees were from an earlier
bootstrapped incarnation of the company and were no longer there). 0.022% at a
startup I interviewed with just out of college (series A coming up on a series
B, about a year and a half old, employee #22). No equity at the startup I
ended up taking a job with - companies that intend to remain private forever
are often very stingy in giving away stock.

It's pretty typical to have health benefits but no 401k. You should be getting
roughly market-rate compensation at a funded startup though; that's why they
have funding. If you want big stock grants, you need to take big risks, i.e.
work for little or no salary.

Edit: One more thing that I want to add since I've seen many friends get
burned or disillusioned by this: you should assume that the only thing you'll
get out of a startup is the cash you're paid and the experience of having
worked there. Very few early employees cash out with enough that they never
have to work again: the ones I know all fall into 3 categories:

1.) They founded the company.

2.) The company went public and became a household name.

3.) They joined early and rose really high, i.e. VP level.

The vast majority of early startup employees don't fit these categories:
either their company is acquired in the $40M range and they end up with $3K
(true story), or their equity is diluted by multiple successive funding rounds
so that they end up owning a tiny fraction of their initial equity stake (also
a true story), or the company goes bust and their equity is worth nothing
(yeah, that's me). If you go in expecting a job where you'll learn things and
hopefully build something cool, then any massive payday is just gravy. If you
go in expecting a massive payday, you'll probably be disappointed.

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abstractwater
Thank you very much for your remarks. It looks like I am in a typical ballpark
as far as the equity compensation goes, maybe slightly above average. And I am
definitively planning to continue to work after this. :) But I also hope in
"some" payday, otherwise I wouldn't be taking any stocks.

I _could_ get market rate salary with less stock, but I think I am going with
a below-market salary and more stocks. About that, I am still trying to decide
the right balance...

~~~
nostrademons
Financially, you're almost always better off taking more cash and less stock.
In the average startup, things do _not_ go well, so a raise in 8 months may
not really be in the cards (and if things _are_ going well, your equity will
be worth much more than your salary anyway).

But there are intangible benefits to taking more equity and less salary. You
work harder, which means that you get to work on more interesting things,
which opens up more doors in the future. If I were to take a job now (and I'm
looking :-)), I'd probably go for more equity and a lower salary as long as
it's adequate to cover basic living costs, if only because there're only so
many material comforts that one needs...

~~~
davidw
> In the average startup, things do not go well

At one point, I had something like 10K Linuxcare options, when VA Linux and
Redhat had recently had _huge_ IPO's and were trading well north of $100.
_Sigh_...

It's not something I think about much though. I was paid well and got a lot of
other things out of the experience. However...yeah, it's pretty easy for
things to turn sour in a hurry.

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rabble
If that is all you guys are getting, start your own company or expect to earn
cash doing consulting.

Just do the math, if you get 0.3% if a company, then they do two or three more
round devaluing you, you're at 0.1% at best. How much does the company have to
sell for you to see a windfall which is more than 1x your annual salary? a
LOT. They basically have to public.

Being a second or third tier hire is a bad place to be. Not enough salary to
make it worth it, not enough stock to have a windfall (unless you do ipo which
isn't happening a lot right now), and huge hours as if you were a co-founder /
first employee.

~~~
nostrademons
Depends where the company is in its lifetime.

Basically, it sucks to be an early employee in a startup that does not yet
have traction ("product/market fit", in Marc Andreesen's words). You take on
most of the risk of a founder yet have nowhere near the reward. And the hours
are often founder-like as well, since the company often has no clue what it's
doing and so you just keep doing everything until something works or you run
out of money. And if you do run out of money (pretty likely), nobody knows or
cares about what you did, which can hurt you in your future career.

Being an early employee in a startup with traction can be a very nice place to
be, though. Many people underestimate both the chances of success once
traction's been achieved (high, even if you're not yet profitable) and the
potential market size. And you don't have to put up with the uncertainty and
risk that the founders did. Most startups with traction don't get sold for
$10-50M that's common for a startup with a product and a couple customers,
they get sold for $200M+ or they go public for $5B+.

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xgene
There are huge variations depending on your expertise and any unique skill
sets, title, etc.

At a startup that has received a first round of funding from a top tier VC, a
VP could expect something in the 1.5% to 3% range (more for marketing &
technical people, average for product and business, less for finance and
support). Directors might get between 0.5% to 1.0%. Manager levels half that
with technical and marketing people higher in the range, product in the middle
and everyone else lower. More for earlier in the product lifecycle (pre-
prototype, pre-funding, pre-launch, etc.).

~~~
abstractwater
I should have said this in my post. I'm going to join as a Sr. software
engineer. I have around 8 years of experience and a MSEE. I wouldn't say my
skill set is unique, honestly, especially here in Silicon Valley.

The product is in stealth so I can't disclose anything about it.

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noodle
thats about average. if you're not a ridiculously important, irreplaceable
employee, don't expect more than 1%.

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pjackson
It's fairly typical, but I'm used to seeing at least a 401K with no match.
Most startups I have worked for at this stage started exploring HR Benefits
companies and generally the benefits improve slightly.

My advice is not to buy up the stock by taking less cash at that stage. .15%
probably won't justify it.

~~~
abstractwater
There's a planned salary increase up to market rate in 8 months from now (if
things go well of course). That's also why I am considering more stocks now.
If I start with a market rate salary now, I won't be getting any pay increase
later.

~~~
pjackson
Ah. In that case, buy them up. I've seen planned increases to market rate go
awry, but if you're comfortable that it'll be delivered, it can't hurt to
forgo 8 months for another .15%.

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bluelu
If your account is an anonymous account, can you disclose how much cash you
were offered? Or an approximate amount. It makes it easier to evaluate the
entire offer.

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notauser
The no 401K is a fairly big deal.

Here in the UK, for high rate tax payers, a matching pension is worth a bit
more than 140% of the stated value. So for an $80k job a 5% matching pension
is worth nearly $6k a year.

That's equal to a 0.1% stake in a $60m company, with better certainty of
growth. So over five years it might match half a percent stake depending on
your appetite for risk.

