Ask HN: What compensation to expect as new CTO?

[peacemaker]

I'm trying to get an idea of what to expect in terms and salary and stock for a CTO/Co-founder position at a startup. This is a startup that has raised money and working towards series A and is earning some revenue already.

A few searches online show wildly different figures so I thought I'd ask here and see if anyone has experience in this area to share?

While I'm really looking forward to working at this startup and in a new role, obviously I want to make sure I'm compensated fairly and have a good chance of doing well in any liquidation events in the future.

This is in London, UK by the way.

[davismwfl]

Take a read through this (not my content just something I have read):

http://rob.by/2013/negotiating-your-startup-job-offer/

The key is understanding how equity works and how you can benefit or get hosed with it. A well funded seed company should be paying employee's a reasonable salary along with equity, a Series A should absolutely be nearing if not at market rates. Always ask for the details, burn rates, how much money is left in the bank, expected next funding date, what's the biggest risk, is someone focused on funding full time, total option pool, what debt financing or debt equity exists etc. You need to understand it to know if what you are being offered is fair or not, and there really is no way to know that without having a fairly complete picture, since details will vary so much from deal to deal. Anyone who balks at giving you the details I'd say no thanks.

Also, make sure you know the difference between early hire CTO and a true co-founder. A true co-founder will not be treated like an employee in terms of equity or salary, so make sure you evaluate really what they are offering. Essentially, as a co-founder you would have a far smaller salary early on, but your equity would be more. A co-founder isn't someone with < 4-5% pre-dilution equity IMO. Although others may disagree.

[peacemaker → davismwfl]

Just finished reading this, thanks it's a great resource especially all the breakdowns comparing the salary lost over 4 years vs stock value after vesting.

[kspaans]

For more reading about your possible outcomes in liquidation events, check out https://github.com/jlevy/og-equity-compensation

It is US-centric (especially the tax stuff), but there is still lots of useful vocabulary there.

[peacemaker → kspaans]

Thanks for that, looks really useful!

[brudgers]

It depends on a lot of unique factors, from the mundane:

Is the CTO/Co-founder title part of the compensation?

To the social:

How many other founders are there?

To the financial:

How much money has been raised at what valuation under what terms?

Good luck.

[peacemaker → brudgers]

All good points, thanks for the input :) I don't want to go into too much detail here but it gives me something to think on so thanks again.

[dagw]

"CTO" in and of itself means absolutely nothing. I've seen places where CTO was just a fancy title they gave the de-facto sysadmin and I've seen places where the CTO was more involved in running the place and making decisions than the CEO. In both places the compensation received was entirely in line was responsibility and completely unrelated to their title.

[peacemaker → dagw]

Well, I know it's just a title but generally CTO is a board level position and as such you're expected to be in charge of the technical side of the company including some strategic elements as well. At least, that's how I've always seen it and I believe this is how the other founders of this company see it too.

The problem when trying to work out a fair compensation is searching for CTO salaries online tends to return only large company information and not so much startups. Same thing with stock, how do you know what is fair for a late entry co-founder? It could be anything from 25% down to 5% I guess, I simply don't know.

[montbonnot]

if they're already profitable (original co-founders) then I'd say you might be offered %5. Could go up to %10 if they think you can help double/triple that profit. If it's only to take care of the technical aspect of the company, then %5 seems reasonable. Salary might be competitive though I believe.