For startups or any companies who offer illiquid equity, the following is a good tactic I’ve been using that never fails.
Simply tell them (at the offer stage):
“Make me two offers, one with a higher cash compensation and the other with higher equity.”
Then, always take the position with higher cash to base your next negotiations. If it’s good enough, you might even take it outright.
This is a trick that exploits the fact that most startup founders and recruiters have an over-inflated “best case” view of how much their equity is actually worth, so it works in your favor when they use it as a benchmark against real money today. I’ve found they also fail to account how much it would be worth for you vs. them. Considering the risk is high you won’t make anything from those options even if you exercise them (& stay long enough), the cash position is nearly always better. If the company becomes some run-away success there will be opportunity to get more equity but getting a cash raise in 6 months is infinitely harder I’ve found. Promotions at startups often times have an additional equity award and by that time you’ll have more information as to the chance of success or not.
Generally, based on my experience, it’s a good way to immediately get an extra $10-20k, with little emotional effort and without the other side feeling as if they were strong-armed, or that they had to give up something, since they offered you the choice. (This is important because you don’t want to start your position there viewed as an “expensive new toy”). They still feel powerful and in control. They may even be happy you took the cash option and let them “keep more” of their precious company. When I started doing this I originally feared they would think I don’t have faith in them, but I’ve never had someone feel insulted I took the cash option.
As an engineer I actually enjoy the negotiation process, it’s the best type of problem: pure tactics.
I've always found it amusing how ham-fisted employers' tactics are when dealing with talented engineers. They know you're not stupid, but they try to swindle you anyway, knowing the only way you fall for it is if you have serious self-esteem or assertiveness issues.
That's why I tell every honest engineer I know how much I make and how the game works. It's disgusting.
Engineers are typically intelligent, but most of them know very little about negotiation, especially straight out of college - which is a huge percentage of new hires every year.
You may have graduated from MIT and done hard psets for 4 years, but the most you ever negotiated was that $50 desk you bought on Craigslist.
> the only way you fall for it is if you have serious self-esteem or assertiveness issues.
Which young engineers, being often introverted and nerdy, do tend to have...
Recruiters are basically sales people, so they're on the other end of the extroverted scale: extremely assertive, used to interact with, read, and manipulate others. Is it any wonder they try to push engineers around?
I agree with nearly everything you said except this:
> If the company becomes some run-away success there will be opportunity to get more equity but getting a cash raise in 6 months is infinitely harder I’ve found.
The size of grants you get after a company is deemed a "run away" success (or even just "not going to die in the next year") are literally 3-4 orders of magnitude smaller than the grants you get before then (ie pre 10 employee number).
Based on this I tend to optimize more for equity (I'm young and not super risk averse), and another thing I've done is agree to take a pay cut until after another round is raised, with a pre-negotiated salary adjustment in order to min-max more towards equity.
But I think you've touched on something super important which is that using the ambiguity of the value of the options is a great way to put the ball back in their court.
True, but honestly if you aren’t already a co-founder, friends with the investors, or very close to the founders, or have A LOT of experience on the business side of tech startups, I’m afraid to say the chances of you getting screwed are extremely high.
As an engineer, you won’t be privy to much if any of the business side, investor meetings, etc. I’m talking about personal relationships. Most engineers I know don’t even have access to or know what the cap table is. The only companies where I’ve made any money from the equity have been ones where the founders are already rich and happen to be nice, altruistic people. It’s unfortunatley how the sausage is made in SV. Most engineers (>90%) make $0 from any equity, no matter how well they have played their game. The era of massage therapists startup millionaires is over. The cat has been out of the bag for awhile now, people know there is money to be made in these companies so they are structuring them to do that.
I’m pretty sure engineers often get screwed as this has something to do with the fact they just don’t have face time with investors or access to the business side and spend their lives “heads down” building the product.
A sad anachronism but very true. Or maybe I'm just old and bitter? lol
Kind of depends on your definition of "getting screwed." The venn overlap of companies that are very successful and also screw early employees out of stock options is very small, but sometimes expectations aren't properly set about how options work.
It is difficult to make money as an engineer via early stock options, but it is not impossible and the problems of a. understanding what you're being offered and b. making sure you don't get screwed are fairly tractable imo. The hard part is building a company that makes these things matter. Survivorship bias, n of 1 etc. of course, though.
The main problem with startups is joining as employee 10-500ish/public. That's where you aren't getting good stock offers, no one has heard of your company yet and your salary sucks. The upside is this is a great place to learn as a junior both about engineering and about stock options.
You are right that you need to have a lot of business experience to really understand this stuff too. Dabbling in startups is a good way to spin your tires and get screwed, but if you commit to the industry and go through enough deals you can learn enough to protect yourself.
If anyone is currently considering an offer that includes equity and wants some help thinking about how to value it my contact info is in profile, feel free to reach out.
The venn overlap of companies that are very successful and also screw early employees out of stock options is very small, but sometimes expectations aren't properly set about how options work.
Do you have any support for this? I'd love to read (or whatever) if so.
but sometimes expectations aren't properly set about how options work.
Sorry I don't have a source, but what I really meant by that was: when you hear the stories of engineers getting "screwed out of options" it always boils down to things like liquidation preferences and taxes and things like that that are built into the stock agreement. You also very rarely hear these stories in places that are doing super well, it's places that are failing and the company is being chopped up for scraps that things like liquidation preferences really even become a serious problem for employees anyway. The real problem is usually just that the business doesn't do well.
I'm sure there are exceptions and places where people disagree about the terms of the actual agreement but by and large these stories are "a thing that felt really low chance happened and the stock agreement had a clause for that and that sucks for me." Truly shitty situations, but ones that you can factor into your risk model when deciding whether or not to accept the offer. Part of the deal of having ownership in the business is taking the responsibility of that risk on. Not everyone wants that which is why a higher salary at a more stable big company makes more sense for some people.
Also, I think the perverse incentives thing is real, but again I want to reiterate: the cool thing about stock options is that they allow you to have a small (but often significant) amount of ownership in the means of production. But that also means increased responsibility, which includes the responsibility to understand the value of the options agreements you sign. If you need to hire a lawyer to explain the agreement, or you need more information on the business, cap table etc., in order to fairly value the options in the offer those are all fair questions to ask. Additionally the way companies respond to your request for such information will tell you everything you need to know about how they truly feel about employee ownership.
To add to that: most engineers are completely clueless about how equity works.
And the typical startup execs do everything they can to keep them that way.
Most engineers I met in SV only knew their equity "will be worth X millions" because that's what the founder told them when they joined. They don't understand funding rounds, dilution, the power of the board and majority owners... Often they don't know what the cap table is.
1. The valuation you will get from the founders before being hired ("your equity will be worth $X millions when we IPO") is unrealistically optimistic. Even on the remote chance your startup becomes a huge success, you'll see a small fraction of that at best.
2. Unless you have a lot of influence on the board and majority shareholders (you won't), you can't really protect yourself from losing all the value of your stock.
> 1. The valuation you will get from the founders before being hired ("your equity will be worth $X millions when we IPO") is unrealistically optimistic. Even on the remote chance your startup becomes a huge success, you'll see a small fraction of that at best.
If a founder is selling you on anything but a very sober view of the stock that's a great signal to not join the company. Even so, it is not too difficult to model a few reasonable dilution, acquisition etc. scenarios and get a feel for how you'd do in each.
> 2. Unless you have a lot of influence on the board and majority shareholders (you won't), you can't really protect yourself from losing all the value of your stock.
Sort of. The reason this doesn't really happen much in practice is that it destroys the company's talent pool and ability to hire in the future. Most companies that are succeeding don't tend to screw employees, it's only when they've entered the "squeezing blood from a stone" phase that these things start happening, and at that point the stock's not worth much anyway.
> If a founder is selling you on anything but a very sober view of the stock that's a great signal to not join the company.
Have you interviewed in many startups? "Sober view" is not what you'd get from a founder hard-selling you on any role. Try "wildly optimistic, unrealistically so".
> Even so, it is not too difficult to model a few reasonable dilution, acquisition etc. scenarios and get a feel for how you'd do in each.
Eh. Unless it's a late-stage startups (which is not the typical scenario), it's very hard to know what will happen. You can model some events, but the key question remains unanswered: how successful is this going to be?
Absent this crucial detail, any talk of future outcomes represents, at best, some good intentions. Even the most generous founder can't do much for you when his startup fails to make any money and runs out of funding.
> Most companies that are succeeding don't tend to screw employees, it's only when they've entered the "squeezing blood from a stone" phase that these things start happening, and at that point the stock's not worth much anyway.
It's true that companies tend to be more generous when they are successful, and most of the nastiness and screwing people over happens when things are going south.
Still, you overestimate how much damage screwing people will do, and underestimate how greedy various decision makers can get.
There are unfortunately many cases in which the startup had a good exit, yet everyone below the top saw little or no money. There are even cases where the startup had an incredible exit, and still went out of its way to suck all potential earnings out of its employees pockets. For example, Skype exited for $8.5bn, yet made sure to claw-back any potential gains from multiple employees, using an obscure small-print clause that essentially made even vested stock worthless:
Apparently, they weren't too concerned about "poisoning the talent pool", which seems like good judgment, given how nobody seems to even remember this incident anymore.
> Have you interviewed in many startups? "Sober view" is not what you'd get from a founder hard-selling you on any role. Try "wildly optimistic, unrealistically so".
Don't join those companies. I've spent over a decade in the startup industry, I've interviewed at a ton of startups. Most startups are not worth working at.
> Eh. Unless it's a late-stage startups (which is not the typical scenario), it's very hard to know what will happen. You can model some events, but the key question remains unanswered: how successful is this going to be?
Right, that's exactly what I said...in the case that it's not successful it's not like anyone is getting rich, so in that case it's not like employees have been "screwed out" of options.
In reference to Skype: they did absolutely poison the talent pool look at you remembering and posting this article. Are you or anyone reading this thread ever going to consider working for Skype? Why else would TechCrunch cover it?
Not only that, the agreement that Skype offered did not change, so a bunch of people signed a shitty agreement and are then upset that it didn't work out well. This is not the rug being pulled out from underneath engineers, this is engineers not understanding what they are signing.
You're right that most startup options are worthless, but not all are, and that doesn't mean you can't reason about which are worthless and which are not.
I agree completely, which is why I stopped working at startups myself. The question was about how startups are in general, so we must acknowledge that wildly optimistic equity value expectations are the norm.
"Just don't work at these places" isn't viable advice when the vast majority of startups are like this. Like it or not, most people open to working for a startup will end up working for a startup like this, where the founder tells all candidates their 0.0001% is going to be worth millions because the startup is taking over a $300bn industry.
> Right, that's exactly what I said...in the case that it's not successful it's not like anyone is getting rich, so in that case it's not like employees have been "screwed out" of options.
Sure, but modelling liquidity events and such is totally worthless if the most important number isn't known. Especially when that most important number dominates the others. How many funding rounds is the startup going to have? Totally depends on its revenue. Same for dilution, and how likely they are to look for ways to screw regular shareholders over.
> In reference to Skype: they did absolutely poison the talent pool look at you remembering and posting this article.
So one person in a huge thread is evidence Skype paid dearly for that massive shit show?
Let's get real. The typical fresh graduate hasn't even heard of the Skype IPO. Skype is now part of MS. Even hearing of this awful story, would anyone refrain from joining MS because of it?
I doubt.
> You're right that most startup options are worthless, but not all are, and that doesn't mean you can't reason about which are worthless and which are not.
This reply was for someone who is the average financially-non-savvy startup employee. It's not for me, maybe also not for you.
If I was looking to work for a startup again, I'd know what to look for, and what to avoid.
> The question was about how startups are in general, so we must acknowledge that wildly optimistic equity value expectations are the norm.
Isn't this true about life in general? Even when you go interview at bigco they are lying to you about your position and how great the work/life balance is etc. It's weird to me that HN expects employers to be their personal lawyers, explaining incentives to them when it comes to options.
The idea that there are tons of employers out there violating legal agreements over options is nonsense and its what is implied in a lot of these threads. People need to learn about options, like people need to learn about everything in their career to get good at their jobs. It's not a mystical art, people are just greedy and read the FB story and expect to show up and make a billion dollars their first go around so they don't bother to read or understand the agreements. I certainly was like that, got burned, and then wised up.
FWIW I'd actually still considering joining Skype today I'd just read the agreement before I did so. I would expect them to stick to their agreements, as they have a track record of doing in the past. As I said, it's bizarre to me that the expectation is that people signing these agreements aren't responsible for understanding them.
> Isn't this true about life in general? Even when you go interview at bigco they are lying to you about your position and how great the work/life balance is etc.
No, it's not. Because if they tell you their work-life balance is great, and you join and realize everyone works 12 hour days, then they have a disgruntled employee who's probably going to leave ASAP. That deception is affecting your life right now, probably in ways that threaten your life or lifestyle, things you counted on.
Also, you're not going to hear about the workplace only from "the employer". You're going to get input from a bunch of employees like yourself. They're not going to orchestrate a lie, typically. Definitely not a lie about something you're likely to discover immediately.
"Hey guys, how was your weekend? Oh, and thanks for totally lying about the great work life balance... You totally got me, haha... My kids don't even remember me anymore, hilarious!!"
Compare that to options, which worth is hypothetical and up for debate. None of your fellow employees know more than what the founders told them. It's some glowing future promise that will only be broken a few years down the road... When they typically won't need you anymore...
That's what the threads here are about, by the way. I don't see a ton of people complaining their hyped-up worthless equity was illegal. It's just that all these people assumed it would be worth a lot, because that's what they were told, and ended up with nothing.
All these bubbles take years to burst, and then folks find out after 4-5 years that their equity is worth nothing, so they come to complain here in HN threads.
> Compare that to options, which worth is hypothetical and up for debate. None of your fellow employees know more than what the founders told them. It's some glowing future promise that will only be broken a few years down the road... When they typically won't need you anymore...
Hmmm...I think the part that is maybe missing from your model is that the value is not hypothetical and made up, you need to price the certainty into the value itself when negotiating the offer. If you are given very little information, the value is low. But it's not "high value low certainty" it's simply low value.
Skype equity that allows you to be fired and have it bought back at strike price is not "high value low certainty" it's simply low value. Engineers overvalued their equity going into it. They were not misled, and this was something that could've been reasoned about going in easily. They should've read what they were signing.
Some employers will give you enough information to make an informed decision (cap table, current revenue, projections, etc.). Most will not. Most are not worth working for, or at least their options are not worth valuing above $0. Some are, though.
> Hmmm...I think the part that is maybe missing from your model is that the value is not hypothetical and made up, you need to price the certainty into the value itself when negotiating the offer. If you are given very little information, the value is low. But it's not "high value low certainty" it's simply low value.
The context for this argument is that joining a profitable business carries less risk of being deceived / manipulated and waking up after 4+ years to a reality that is totally different than what you were repeatedly lectured to expect.
Your response doesn't really refute or address that argument. You are claiming that in the theoretical case that you are given 100% valid information and 0% hype, you should be able to to get a more accurate profit expectation. That's, of course, true.
The reality still is that you will not get 100% facts and 0% hype in the vast majority of startups. The entire industry has been operating for some time on bringing in clueless fresh grads, telling them they're all "rockstars", and that if they'll just work 14hr/day for 4 years, they'll also be multi-millionaires.
So while in theory (as you correctly point out) there can still be room for verification and realistic assessment of upside in startups, in practice the startup model has more loopholes, and these are universally exploited, such that the industry is generally quite deceptive.
It's just like how in theory, given perfect information, a used car can be priced almost as accurately as a new one. In practice, since there's so much room for deception and manipulation, that's not the case, and the industry has a well-deserved reputation of being shady and untrustworthy.
Now, imagine profitable businesses offered you a deal like this: "You start working at half your usual market salary. After 4 years, if you're still with us and we really like you, we'll pay you a huge one time bonus. We won't tell you exactly how much it will be, because frankly we don't know (and there's a tiny chance we won't be able to pay it anyway), but it will almost certainly be over $10 million and you'll get sooo rich, bro!".
Most people would laugh at that, because the normal full-time employment isn't so exploitable. But the startup model is, and that's the deal most startup employees agree to.
> Skype equity that allows you to be fired and have it bought back at strike price is not "high value low certainty" it's simply low value. Engineers overvalued their equity going into it. They were not misled, and this was something that could've been reasoned about going in easily. They should've read what they were signing.
As before, you are correct in theory, but in practice this is extremely shady. There's a pretty standard set of terms for equity in startups, and clawbacks are definitely not part of it. In fact, they go pretty much directly against it, and against the meaning of what option plans aim to be and achieve.
It's not unreasonable for an inexperienced engineer to assume the standard terms will be followed in his case as well. A fresh grad won't spend a substantial portion of his signing bonus on a lawyer to read his contract, and the clause was obscure and vaguely phrased that even a lawyer might miss it.
What Skype (technically, SLP) did was obviously legal, but extremely shady, and a good example of a savvy business tricking naive engineers. This wasn't innocent: these options that could (and eventually did) amount to millions of dollars were dangled in front of the employees noses since they were mere candidates. And all this time, they were actually worthless.
Legal? Probably. Shady and deceptive? Definitely.
> Some employers will give you enough information to make an informed decision (cap table, current revenue, projections, etc.). Most will not. Most are not worth working for, or at least their options are not worth valuing above $0. Some are, though.
Now I'm curious: which are these employers, in your opinion?
> The context for this argument is that joining a profitable business carries less risk of being deceived / manipulated and waking up after 4+ years to a reality that is totally different than what you were repeatedly lectured to expect.
> Your response doesn't really refute or address that argument. You are claiming that in the theoretical case that you are given 100% valid information and 0% hype, you should be able to to get a more accurate profit expectation. That's, of course, true.
You need to put yourself in a position where being deceived is fraud. If they show you fake revenue numbers that's fraud. If you don't understand that the real revenue numbers they are giving you aren't good enough, that's not fraud. If they don't tell you every single thing about the business that's not fraud. If they tell you they expect the business to do really well and it doesn't, that's not fraud. Ask the questions you need to get a feel for if the risk is worth it to you and take an educated risk. If they don't give you enough information run.
How much the employer hypes the position doesn't even come into the equation. I don't really understand why you think it's an important thing. Hype is not part of the deal. The numbers and the structure of the agreement are. Of course the CEO is excited about his company why else would he be risking so much to start it? Stop paying attention to emotions and start paying attention to the documents you are signing and the deals you are making.
> What Skype (technically, SLP) did was obviously legal, but extremely shady, and a good example of a savvy business tricking naive engineers. This wasn't innocent: these options that could (and eventually did) amount to millions of dollars were dangled in front of the employees noses since they were mere candidates. And all this time, they were actually worthless.
Again, why are you letting these engineers off the hook for not reading or understanding documents they signed that said in really big letters SIGN HERE IF YOU UNDERSTAND THIS. I can't imagine anything less misleading than spelling out your exact intent in legalese and then following through with it. Engineers chose to pay attention to the cheer leaders instead of the lawyers to their detriment. Why would employees expect Skype lawyers and managers to be on their team?
> Now I'm curious: which are these employers, in your opinion?
Cap table access is rare though I've gotten it a few times, and high level numbers about the cap table are not (# shares, %owned be investors etc.), revenue numbers are widely available, projections are widely available, I dunno man these aren't huge things for early stage employees to ask for, I think most people just usually don't.
> You need to put yourself in a position where being deceived is fraud.
>
> How much the employer hypes the position doesn't even come into the equation. I don't really understand why you think it's an important thing. Hype is not part of the deal. The numbers and the structure of the agreement are.
Again, what you're arguing here is like "The used car industry isn't shady at all. All you have to do is spend a couple of months learning to evaluate used cars, maybe a couple more to learn the relevant law and know what the salesperson can't legally lie about, then you'll probably be almost as good at detecting the real value of the used car as the people whose full time job is to hide and inflate it!".
Yes, in theory if all fresh grads took a full semester of financial literacy, startup equity models, and US securities law, they'd stand a chance against the savvy business folk greeting them at the door. In practice, it's not happening, so it's simply unrealistic to expect that, level of knowledge from a fresh grad. What's actually happening is that they do get manipulated (yes, not illegally so, typically) and then a few years later, they find out, and become bitter and come to post at HN about it.
> Again, why are you letting these engineers off the hook for not reading or understanding documents they signed that said in really big letters SIGN HERE IF YOU UNDERSTAND THIS.
I'm judging them by realistic standards, you're judging them by unrealistic standards. From what I recall of reading that clause at the time, it was near incomprehensible unless you knew both legalese and exactly how equity works. If they got a decent lawyer to review the contract for them, he'd probably catch it, but how many fresh grads spend the time and money to find a good lawyer for their first job?
I think you're being too demanding of naive fresh grads, and surprisingly forgiving of savvy businesses that are out to manipulate them with fine print in what would normally be a standard contract.
> I dunno man these aren't huge things for early stage employees to ask for, I think most people just usually don't.
Right, that's the reality I'm talking about, in which most employees are naive fresh grads. They hear some really attractive numbers from the founders, and they don't know anything about equity and how it works, legally or financially.
That's the reality we're dealing with here. Yes, I agree, these engineers could do more to protect themselves. Reality is, though, they don't. It's not completely crazy that they don't - learning all this stuff takes time and effort, and engineers aren't primarily interested in finance or US security law.
This general lack of knowledge also creates an environment in which more savvy people are at a disadvantage. For example, I obviously know to ask for the necessary data to evaluate my equity. Typical scenario I encountered, including in the last time I interviewed with startups:
They don't tell you anything you need to know. "You'll get X shares, which we estimate to be worth roughly a gazillion dollars when we exit, since we'll be taking over a bajillion dollar market."
That really is all you'll typically hear in the pitch talks. Seems like the vast majority of engineers never ask. So now when I ask for more information, I'm the odd one out. I got weird stares just for asking about the total size of the equity pool (!).
It's not pretty, and theoretically wrong, yet that's how the industry operates. It's been over a decade now, and these practices have become standard: giving employees no information, systematically hyping them with unrealistic valuations, and when it all blows up, their inflated fantasies collapse, but by then, they've served their purpose, so nobody cares.
I think your analogy is 100% spot on. I'm not arguing that the startup industry isn't shady, I'm arguing that it is and, much like the shady used car industry, and much like you said, you can totally find good deals if you know what you're doing. Yes, like any way of making a lot of money, it is hard to know what you're doing and founders promising you millions in 2 years, like all get rich quick schemes, don't work out, it turns out. Let's not throw out the baby with the bath water though.
> They don't tell you anything you need to know. "You'll get X shares, which we estimate to be worth roughly a gazillion dollars when we exit, since we'll be taking over a bajillion dollar market."
I have literally only once been told what shares would be worth on an exit and it was the first, worst company I ever worked for. Every other time I have been told total # shares and current FMV. You're correct this is a sign for dogshit founders though.
> That really is all you'll typically hear in the pitch talks. Seems like the vast majority of engineers never ask. So now when I ask for more information, I'm the odd one out. I got weird stares just for asking about the total size of the equity pool (!).
My experience with this has only been positive. I have always found that founders respect you for asking these kinds of questions, even if they don't want to give you the information. If a founder reacts poorly, again, that's your free sign to leave.
But look: yes, most people aren't good at starting startups and so most equity is worthless. Some of them are trying to screw you, but most of them just don't understand themselves. Don't buy most used cars. Don't join most startups. Don't live your life through simplistic stereotypes like sleazy used car salesman and misleading startup founder.
Anyway all I can really do is offer my assistance in helping others figure this stuff out, as I did in a previous post. This can be a frustrating industry but it can be rewarding as well.
> I'm not arguing that the startup industry isn't shady, I'm arguing that it is and, much like the shady used car industry, and much like you said, you can totally find good deals if you know what you're doing.
I suspect this is what's happening in the startup industry. At least back when I was involved, there were a handful of startups that were really good, and a vast majority that were really bad.
As time goes by, people become more aware of this. You yourself agree that most startups are awful, so most people with startup experience don't have many good things to say about that experience. You see that reflected in HN threads, including this one.
This leads to negative evaluation of all startups, since it's hard to tell which are good and which are bad - and mostly they are bad.
Theoretically, a Lemon Market ultimately collapses.
This isn't inescapable fate. If the industry reestablishes some ground rules, mostly obvious ones that already existed in early startup culture, then it can get on the path to recovery.
For example, equity should be meaningful, instead of the scam it has become. There are way too many stories of companies enjoying a good exit while nobody benefits except the founders and the VCs.
There's a lot of skilled people who will not go anywhere near a startup again because they and all their friends have been burned by this and similar endemic issues.
Startups heavily recruit naive fresh grads for that very reason, but that pool is shrinking for them as profitable tech companies pay more and more competitively. Right now I think most of the top grads want to go to top tech, not to startups.
If all the best engineers, especially senior ones, ditch the startup lemon market, that will be very bad for us here in the US. Our economy and culture has benefited immensely from startups like Google that became huge success stories because they offered meaningful equity, attracted top talent, and truly disrupted their market. Unless startup reposition themselves to attract this kind of talent, this won't happen anymore.
Thank you for that link, it seems really informative! I'm going to give it a read, since this is something I've recently become interested in learning more about.
Yep. The one surefire way of becoming a startup millionaire as an engineer: save and invest consistently. I recommend that everyone read "The Millionaire Next Door" in their 20's, and actually follow it.
In 20+ years in the industry, the only equity that ever paid off didn't even make up for the pay cut that I took to go there. We don't talk about all the losers.
So far I've made way more from my house than from any company equity in SV. Earn cash, buy a house. Benefit from prop 13 and the mortgage interest deduction.
Many early employees end up with nothing even if they are given significant equity and they aren't screwed by VC or founders. Employees have 90 days to exercise their options when they quit and often it is better to not exercise because of the tax liability. If you know, for sure, there is going to be a liquidation event, then that is different. But that is rare.
Right, you definitely have to understand what you're getting into. Being a successful startup engineer is probably a specialty in itself, that requires a mix of business knowledge and software knowledge.
Many startups are beginning to offer the ability to convert your ISOs (which the SEC requires you to exercise within 90 days regardless of company preference) into RSUs (which allows the company to set the terms, I believe Stripe and some other big ones offer 7 years). You do lose some tax benefits of ISO treatment when you convert to RSUs, but this is just something you need to understand going into the deal and consider part of the offer.
Another thing being offered frequently is early exercise. If you join a company early enough you can often afford to exercise all your options outright. If you couple that with an 83B filing you can eliminate your tax liability until you sell your shares. Frankly I probably would not consider joining a company without early exercise at this point because of the exact issues you pointed out.
It's not as straight forward as cash, but you can definitely create a mental model for thinking about the risk.
> Another thing being offered frequently is early exercise. If you join a company early enough you can often afford to exercise all your options outright. If you couple that with an 83B filing you can eliminate your tax liability until you sell your shares.
Even for mature startups you can negotiate a sign-on bonus equivalent to the option grant, and use that to exercise immediately. This is cash-neutral for the company, but the employee will only have to pay the income taxes for the sign-on.
Ditto. I always ask for the higher cash position. This is guaranteed to carry forward (and in most cases can be used to help negotiate future salaries at new companies if this one fails). I've always ended up with opportunity for large equity positions at some point anyway.
So, basically, telling them something will only hurt you and never help you. So don’t do it. Now, here’s exactly what to say when asked to name the first number:
At this point, I don’t feel equipped to throw out a number because I’d like to find out more about the opportunity first – right now, I simply don’t have the data to be able to say something concrete. If you end up making me an offer, I would be more than happy to iterate on it if needed and figure out something that works. I also promise not to accept other offers until I have a chance to discuss them with you.
And they answer, "Sorry, I cannot move forward without a number."
Stalemate.
I've been there and maybe I just don't enjoy awkward silences enough but my strategy is to have two numbers ready:
1. My Public Number: the inflated number I give out when pressed. It's grounded in reality but vigorously optimistic. I'll often offer this up front just to anchor the discussion. I make sure it's a number I will be more than happy with, even it turns out that maybe it wasn't as much as they were prepared to offer. If the other side finds it out of the question, I've saved myself time and stress.
2. My Walkaway Number: in the event the offer is lower, which it often is, the number below which the offer gets rejected. I don't share this publicly.
These vary based on other factors of the offer. But I have them ready. And I stick to the second number.
I was asked once (and in a 15 year career, only once) in an interview "How much do you need, and how much do you want?".
This question was almost devastating to my otherwise composed and in-the-moment mindset because it was so shockingly frank and signaled a sense of authenticity coming directly from the owner I had never seen before interviewing for tech jobs. I gave them both. He in turn gave me something in the middle, but much closer to the 'want' than I expected. What was more unexpected was how quickly I gave him numbers-they weren't just random numbers, it was a range that I had decided for myself would be the moonshot salary and "thanks but I'll pass" salary floor.
It was definitely a first being asked such a critical question in such a tactical way-I appreciated it for what it was.
That job lasted for four years until acquisition. We all walked away happy with the accomplishments made, that owner and I are still great friends to this day.
Interesting, but I think how much you need is none of their business at the beginning of your relationship. How much you need depends largely on your healthcare needs, child or adult care needs including educational and developmental needs, current level of debt, etc. There's also a lot of subjectivity involved - do you need to travel across the country to visit your parents? Do you need to take a $1000 webinar to refresh/expand your skills? Do you need gigabit connectivity? Do you need a fuel efficient car?
How would he have responded to one of these replies?
"I need x dollars annually. That's also how much I want."
"How much I need is a personal question that I don't feel comfortable answering. How much I want is ..."
Or even,
"How much effort do you want me to put into my work? How much effort do you need me to put into my work?"
Oh, I hadn't considered that interpretation of "need." I thought of "need" as being "the low floor below which I wouldn't accept an offer," which has nothing to do with how much I "need." I need so much less than I make to stay alive lol, cause I been there before.
"How much effort do you want me to put into my work?"
I would hope that a candidate with that sort of response when handed an olive branch would have been screened out of the hiring process at an earlier stage than salary negotiation.
It's very easy to see how the want vs need question could be yet another ploy. For a small company I could be inclined to believe the owner asking the question, but could I ask them if they're living within their wants or needs? I think skepticism can be warranted...
There is also zero chance that I will accept an offer for the amount I need because there are plenty of people who are willing to pay me more than that.
The variation of this that I usually ask is, "What salary do you need to maintain a comfortable cost of living and what do you consider a fair salary given your experience and the job requirements?"
Depending on my flexibility in the hiring process I may give them a realistic estimate of my budget as well.
I want to set the stage for the best information symmetry I can (given the circumstances). This makes salary negotiations closer to a collaborative game than a competitive one. I've even told candidates that their ask is unrealistically low for their experience level.
Salary negotiation is the first moment in a trust-based relationship. To me it's very odd that we start that trust-based relationship with a very high-stakes competitive problem that relies heavily on information asymmetry.
It has nothing to do with trust. They just vetted your abilities and decided you can make them money. Now you're fighting for your cut. This also has nothing to do with how much you "need". I need a cabin and an axe. I want half of what I'm bringing to the table, and that's what matters to both of us.
A twenty-two year old straight out of school might think you're his friend.
I know, and you know, we aren't friends.
Don't ask me what I need. That's none of your business. I don't need anything. Tell me what I'm worth to you, then pick a respectful cut. I already have a good idea about the right number, and I'll fight for it, because I've already made people a lot of money. They weren't friends either, but we've sure as hell shaken hands with genuine shit-eating grins on our faces because we're capable professionals, and we didn't pretend. That's the recipe for success.
> What salary do you need to maintain a comfortable cost of living
That is a stupid question to ask. For anyone competent that I would ever want to hire, the amount that they need (unless they have a bad gambling habit or have made some terrible financial decisions) will be much less than the amount that they would ever accept.
Plenty of people, especially engineers with families, have lifestyle costs that exceed what a startup will comp in cash. (Lifestyle is supported by current job offering bonuses or liquid equity).
If I ever heard "What salary do you need to maintain a comfortable cost of living and what do you consider a fair salary given your experience and the job requirements?" I'd be walking straight out of the interview. That just screams "cheap" and gives off the impression that you don't value your technical talent. If I wanted a "fair" salary that just covered my cost of living I'd be doing something other than software engineering
Fairness is a good value to build a relationship of trust.
I worked with an engineer with this mindset of, "the company is out to get me" at an early stage startup. They left after a few years and started their own company. They couldn't recruit and grow. I turned down their offer because I didn't trust them. I didn't trust them because I was well aware of their distrustful mindset when working in a small group setting.
I had a different mindset during the early stages of the startup, one closer to a model of trust with the company on compensation, quality, and level of effort. I also left to start my own company and I've had no trouble attracting people, both employees and sub-contractors.
There is some merit to an adversarial mindset but it's a liability in the early stages of a company and it leaves a lasting impression on your reputation.
And if your response to an open and honest question is to immediately assume a whole bunch of stuff about the intent/etc of the people asking, i'm pretty sure they wouldn't want you.
The only issue on the table is, what are the job and my skills worth? How I spend the money, as a job candidate, is an irrelevant personal question.
The employer is the one bringing the job and money to the table. I'm bringing skills and the potential for success to the table. No employer would imagine they could not describe the job, why is it they can imagine they can not describe the money? Its all in their court.
I'm with the folks who are suggesting, say nothing about the money, let them do the talking.
I am afraid that this whole "mutual trust" aspect is missing in the OP and some of the comments. As a person who hires more than quite a few people, I definitely do not like to hire people with the mindset "The company is out to screw me, and I absolutely will stick for the absolute best for myself". If the mindset is established "the company is out to screw me", I actually do not want that person, regardless of how hot they are or how low a pay they want to accept (at that point, it is not about the pay). That spirit of mutual trust has served me well and I believe has served the people I have hired well.
Trust is earned. You don't actually have trust when you first meet someone.
It's a savvy negotiating tactic to start with behaviors based on an assumption of good faith, but only if you aren't cutting your own throat in the process.
I'm not all that great at job hunting, so I have hesitated to jump in to this discussion. But perhaps that says something important. I mean, the fact that I'm pretty good at negotiating generally, yet not so great at the job hunting process. Perhaps that is important commentary in its own right on some of the problems in the job market with asymmetrical info and how that can impact job applicants.
This is an embarrassing comment. You were wise to use a throwaway. Not a single talented engineer would ever knowingly work for someone who thought expecting and negotiating for fair market compensation is an attitude problem.
You still don't get it here, and elsewhere.
The parent you complain about is completely correct.
As they said, if your goal is to view all of this as a completely adversarial relationship, with no reason to do so given to you by me, i probably don't want you. I want people who stop to understand the perspective and situations of other people rather than just assume them. If i'm adversarial, fine, i have no problem with you being the same. But you shouldn't assume it.
Interestingly, most talented engineers i know in fact operate the same way. They try to understand the perspective of the other person first (in a meeting, in a negotiation, etc) instead of assuming what it is.
Your framing of this viewpoint as an attitude problem does not look great.
It's not an attitude problem, it's a way of operating problem.
You want to hire people who don't just say "well this other team that isn't doing what i want, so they are clearly stupid, etc". You want to hire the person who says "hey, i wonder why team x feels differently when we both probably want success", and tries to understand their perspective and how they can work together towards some goal.
An honest actor doesn't ask irrelevant questions that just so happen to put you in a weaker negotiating position.
When you do this to a naive kid, you might win out. When you do this to a seasoned professional, you burn any chance of him assuming good faith (which is almost never the case to begin with, given that negotiations are inherently adversarial), and he's going to enjoy playing hardball with you.
Listen, I know how this works. And I tell your employees and potential employees because I like when knowledge, dedication, and skill enrich people, and I hate when lesser-minded snake-charming enriches people.
I think there's a world of difference between "the company is out to screw me" and "I want the best possible result". And I think that the throwaway account you're agreeing with has trouble differentiating between the two (see my other responses to him).
It is absolutely reasonable to enter a negiotiation with the intent to base the resulting partnership on mutual trust. But "I will renege on this offer if you attempt to negotiate" doesn't scream trustworthy to me.
The mindset isn't "The company is out to screw me." The mindset is closer to "Some companies are out to screw me. I don't know what kind this is." They aren't assuming the worst of you.
Hell, I don't think they're even necessarily assuming that the worst is common. They are assuming that it's common for employers to not pay them fairly if they don't take these tactics. They aren't assuming you will do that, but they are just worried you might might be.
We live in a capitalist society where the literal goal of an enterprise is to exploit the labour of workers and pay them less than what they create in terms of value.
There are young graduates who haven't worked that out yet and there are veterans who know the game well. At no point is trust involved in this equation. Employment is a mutually beneficial arrangement where the worker's self interest to maximize their wealth is always orthogonal to the employer's self interest of maximizing their wealth.
Just be a grownup and negotiate a fair cut. I fucking hate employers acting like we have some kind of trust, or worse, friendship. We're in a business arrangement. The only mutual trust is that I will do what I can to make as much money off you as possible, and you will do what you can to make as much money off me as possible. So long as that arrangement benefits us both, we have a working relationship. There's a reason why you will find a paragraph along the lines of 'don't be friends with your employees' in every book for founders.
People who say stuff like you're saying fall into one of two categories: the naive who haven't yet figured out how the world actually works, and the disingenuous preying on the naive who haven't figured out how the world works. I won't work with either.
If I got that question I’m not sure I’d say it was “frank”. Sure, it’s asking me to be honest, but that isn’t the same thing.
Maybe just me, but I don’t think asking the same question in a different way should be expected to elicit a different answer. My bottom number would be whatever it would normally be and the top number would be a bit higher.
I was there with Ticketmaster. It was hilarious. We went back and forth for a good five minutes (that's a long time in a phone call) with our entire arsenal of canned responses. I was a recruiter in the past so I could just hear her going down the list. It got to the point where I don't think she realized I was looking for an out by saying things like "it's ok if we can't reach an agreement, we don't have to proceed with employment discussions." I had to eventually hard end the call with something like "I'm no longer interested in the opportunity."
Still goes down as my favorite recruitment call. No better way to practice "never give a number."
"I can't really effectively talk hard numbers before I've even tried the commute out, which I'll do if we do an on-site interview."
"I haven't had a chance to check over how your health benefits work, so can't speak to any hard numbers."
"What's the range you're looking at?"
"I haven't even had a chance to meet the team and guage my interest in the company, so I can't speak confidently to what I'd need for this position"
"I'm not sure what the job entails exactly so I wouldn't be comfortable speaking numbers yet"
Edit: check later and I'll have added later-stage-strategies
"I'd be more comfortable talking numbers after having an idea of your range"
"What's your comfort level?"
"What are you offering for this position?"
"What do you typically offer for (job) at this skill requirement?"
"I don't like to get caught up in details without first knowing your comfort level"
"I don't come to the table with a hard salary requirement - tell me what you're looking at and I'm confident we can work it out"
"The end salary isn't nearly as important to me as good team fit. If you have a number you're comfortable with, let me know and I promise I'll be able to fit within reasonable expectations"
I love that last one. In my head you've run right through the checklist, popping out a new reason not to offer up a number first, before hitting the last one and just coming right out with it.
Haha pretty much. I've only ever once had to run through the whole list and it was with ticket Master. My end is "if you aren't able to proceed with the interview process without having a range for me, that's ok, I'm happy to separate now on mutual good terms."
She wouldn't even relent with that though... I had to hang up on her. Never seen anything like this before or since.
I did the same last month. I was pressed for a number in the in-person interview. I dropped my inflated public number (which was $30k more than my walkaway), and lo and behold, they offered it to me!
Heh, I'll see your met offer and raise you a....um, raised, offer?
Was asked a couple of weeks ago what my number was, gave them what I was making in the market I had just moved from because I'm a single guy with a cat and can get by very easily on that and still live very comfortably.
They added an extra 25%. Ten short of the public inflated number.
In my experience it really isn't that rare. There are a lot of people who do not job-hop nearly enough to optimize income (maybe they're optimizing for stability though, that's their business) and once they've made one jump there's such a possibility/probability of doing so again that it's not really in an employer's best interests to make it easier for them to do so by taking advantage.
Most engineers only reach their steady-state productivity 9-12 months into a new job. Getting a year of somebody cheap is rarely better than getting multiple years of them unless you never should have hired them at all.
Not unusual if the hiring manager is at all experienced.
I MUST keep 15% or so in my pocket if I can. There are some people that simply will NOT feel good if the don't negotiate with you. Shrug. I let them "negotiate" their 15%.
To the ones who don't negotiate, I put the 15% into their final offer to sign.
I got $10k on top of what I was asking for. I undervalued myself quite seriously as I was moving countries and didn't really have a good grasp on what market salaries actually were for my experience and skills.
It may seem smart in the short run to hire someone for under their market rate, but when they eventually realise that they're massively underpaid, they're going to jump ship.
> These vary based on other factors of the offer. But I have them ready. And I stick to the second number.
This. Finding a walkaway number is the most valuable lesson I’ve learned over the years. It must be a number you’re comfortable with, such that if that’s what you’re getting you won’t feel cheated or otherwise unhappy about it. Anything below it means you walk away – end of discussion. I guess the difficult thing is making it a non negotiable and hard limit, but that’s key to making it work.
This has taken away all anxiety of negotiating for me.
I know that not everyone can do this, but at this point, I just thank them and let them know I won't be moving forward. I've only been in this situation twice. One didn't move forward, in the other, the recruiter pushed, then when they realized I was ok walking away, shifted and gave me a range, asking if it sounded reasonable (it wasn't). I've also never had this experience with a company I was particularly excited about yet.
My strategy in my recent job search was to provide my walkaway number (the minimum I'd need to bother leaving my existing employment), and state that I was looking for an offer that would be competitive with other offers. It helped that I was positioning myself to have offers from multiple companies I would be happy to work at, so offer competitiveness could be a major factor in making my decision.
it's not a stalemate. able devs are in short supply, jobs are plentiful. in this economy, the prospective employer loses if they don't budge.
if they can't work around you not providing a number first, don't work there unless you're willing to sacrifice expected salary for an opportunity at this particular company.
I was on the market five months ago. It took me three weeks of selectively applying directly to companies I wanted to work for (maybe 8 hours of actual work, then 10 hours of interviews, and lots of waiting) to net two solid offers. I didn't have to negotiate the offer I accepted because they didn't ask my baseline and capped out the offer for the job description. I negotiated with the other company to see if they would match, they would not. That's on par with every job hunt I've been on. The difference this time was avoiding job listing sites, which I've had very bad results with.
I don't think he's wrong, but I could be biased by my experiences. As a principal-level with a skillset around mobile, web, infrastructure, and security, I have never had trouble having more work than I wanted, either as a consultant or a FTE.
What type and level of developer are you referring to?
I'm talking about senior level. Recently, as in the past year. Something has been going on in the senior level developer job market. I don't know maybe I'm an anomaly as I have many public projects, experience at top companies. But I haven't been able to find work. There has been at least two posts recently relating to this trend so maybe there is something.
Exactly, this isn't a difficult thing, it's like real estate. You list higher then go from there. If you get a full priced offer the list price was too low.
Stalemate ? Not at all: it's great, you just get information that what you cost is more important than who you are and can now decide how to position yourself.
The last few jobs I've gotten I've gone in with a number I wanted, told them what it was, and gotten it. Prior to even attending the job interview I'd come up with a reasonable number that I was happy with. Then when the conversation comes up I know exactly what I want, and I haven't had to deal with tedious negotiations with recruiters. The closing process is easier on everybody, and either everybody gets what they want, or we find out if it's not going to work out right away.
> And they answer, "Sorry, I cannot move forward without a number."
> Stalemate.
It's not a stalemate. The application goes straight to the no pile unless you're a fantastically great snowflake:
> This candidate hasn't done their research on what other candidates are potentially asking, nor can they articulate why they're worth more than that. And even more crucially, I've no idea whether they can possibly fit in my budget.
In my experience on both sides of the hiring table, the application does not go to the no pile--unless, not that the employee is a "fantastically great snowflake", but rather the employer is unwilling to reckon with the market. Dismissing an employee because they won't kneecap their negotiating position for you is a sign of institutional toxicity.
(And I do mean on both sides of the table; I've quit jobs upon discovering that the employer would not allow me to hire people at fair wages, too.)
Fully agreeing there are many companies out there that are unwilling to reckon with the market, but I respectfully disagree it's kneecapping one's negotiating position to put your number forward.
A dirty little secret in hiring is that negotiating involves giving and taking by both parties. As a candidate, it's not like you're going to only give 80% of your work effort once hired or something if the salary doesn't meet your expectations. Your only BATNA is not working for a company that won't pay you that much. So what's really going on is that you're demanding, rather than negotiating, what you think you're worth.
With this out of the way, hiring managers (in properly managed companies, anyway) will have some kind of budget or salary band (sane or not) that they need to conform to. If you withhold what you'd like to get paid:
An inexperienced hiring manager might very well tell you know much they'd like to offer. You might have a happy surprise in some cases; you'll have a bad surprise in many more. In the latter case, you're wasting your time, and they might discover at the very end of their hiring process that they've been wasting their time all along.
The more experienced hiring manager will consider whether the risk of spending any more time on you is worth it. Having been burnt a few times in their inexperienced days, they'll know better and simply bin your application unless a) you're absolutely awesome and b) they've enough wiggle room or political capital to get you hired at a much higher price point than they had in mind.
I recently withdrew an offer to a VP candidate because he negotiated too much (without being a jerk). He probably took advice from an article like this, and he wanted a) higher pay b) more vacation time c) special dispensation for items involving pay and time whose effect is even more pay.
He has been pursuing me to accept my original offer for the past 2 months and I have been lukewarm because I got turned off.
Summary: all successful negotiation comes down to leverage and it all comes to who has the leverage in a given situation. If you don't have the leverage, you may want to think about how much you negotiate. I have been in situations when I had no leverage at all, like my first job - where I had only one job offer, due to a) irrelevant educational credentials b) tough economic times - and thankfully, I had not read articles like this and that job led me to life outcomes that today I am quite successful and wealthy.
One of my classmates negotiated hard for that same job, and while he got more money, he left a bad taste in people and eventually got fired (I won't say he got fired because he negotiated hard in the beginning but he started out with a negative vibe, and I heard that from managers, and it went downhill from there). In fact, later on, when I became successful, he approached me for a job, and again negotiated hard with me. I passed him on.
So don't just blindly follow advice like this article. In fact, don't just blindly follow any advice, including mine. Negotiate if your situation permits, and know when your situation doesn't permit.
> One of my classmates negotiated hard for that same job, and while he got more money, he left a bad taste in people
Care to elaborate what "negotiating hard" means?
I've been on both sides of the hiring process multiple times. Never seen a candidate get any serious downside from negotiating.
In fact, there were a couple of cases I wish they did! The worst was when you find a good candidate, give them what seems like a competitive offer, then they disappear, and you learn after a couple of months they preferred my position, but got better pay elsewhere, where the difference is definitely small enough that we would cover it. If only the candidate wasn't so polite!
Recently there's also a trend of recruiters encouraging candidates to negotiate counter-offers, which in my eyes is efficient.
> He has been pursuing me to accept my original offer for the past 2 months and I have been lukewarm because I got turned off.
Clearly his mistake was negotiating with no leverage.
That said, I'll turn the table here: if I got an offer for a senior position, and a polite attempt to negotiate was met with immediate rescission, I'd assume the weren't quite so interested in the first place.
> you find a good candidate, give them what seems like a competitive offer, then they disappear, and you learn after a couple of months they preferred my position, but got better pay elsewhere, where the difference is definitely small enough that we would cover it. If only the candidate wasn't so polite!
or maybe: "If only you didn't try to shortchange the candidate!"?
numbers on offer are the honest signal free agents get in the job market. if the jobs are similar enough, why should the candidate expend extra energy to achieve what is the default state elsewhere? why should they risk receiving a could shoulder because they negotiated "too hard"?
Without going into all the details of the situation: I sincerely believed my offer was very competitive for that candidate. It was a very substantial raise over his current comp, and the number I gave him was vetted by our recruiter as very competitive.
The difference also wasn't very large. As I said, had he told me about the other offer, I'd have offered him more, no problem. That's why I encourage candidates to negotiate in this situation. Just say "look, I really liked your offer, but I just got another offer for $X." Worst case, you'll get politely declined. If my impression of you was positive so far, I won't change my mind over this.
He was one of those people "I should get the absolute maximum I could ever get out of any situation." He did get a better offer, and so he was successful in that. He also created much higher expectation of what he could do "he really negotiates hard, I hope he is worth it" kind of vibe.
Fortunately for me, I went in creating reasonably modest expectation (let's say I don't stand out) and I was able to vastly exceed those expectation while he came with inflated expectations that he fell short. Not a great way to start a career. And it went downhill from there for him.
People do make judgments about another person based on factors like this. In my friend's case, I wasn't the one judging him as a tough negotiator (I was a nobody), it was the manager who hired him.
My point is: articles like this should not be taken as the gospel and my own advice is not gospel either. Evaluate your particular recruitment situation (as a job seeker or as a recruiting manager) and act with judgement and common sense.
> He was one of those people "I should get the absolute maximum I could ever get out of any situation."
The problem then seems to be coming across as greedy and/or difficult / demanding person. So he's creating a concern over his personality, which goes far beyond the mere act of negotiating.
I maintain that if you negotiate politely and realistically, no such personality concerns should be raised. If a company still responds to that by rescinding, then either they are unreasonable, or they were never too interested, both of which are reasons for you to decline - especially the latter.
> People do make judgments about another person based on factors like this.
Yes, exactly.
Also, I'm guessing since it was a junior position, your friend's "tough negotiation" got him a few more thousands of dollars at best.
Negotiating hard over such a small amount will earn you the disdain of a hiring manager, who will see it as pettiness and lack of vision concerning future career.
> Evaluate your particular recruitment situation (as a job seeker or as a recruiting manager) and act with judgement and common sense.
Definitely! Still, imho, most candidates err on the side of not negotiating enough, so articles like these are welcome.
Employers do have an advantage in negotiations: they know a lot more than the candidate (certainly junior candidate), and have people whose full-time job is to hire you on the best terms for them, while you are presumably an expert in something like writing software or designing electric circuits, not contract negotiations.
So I welcome articles like this, that should hopefully even the playing field a bit.
I’m so glad you wrote all this. I’ve had exactly the same experience.
It matters very little what your initial salary is, if you’re working at a well run company.
If you come in low on the totem pole, expectations will be low, and if you exceed them, you will get rewarded as a high achieving person.
Coming in with high expectations doesn’t seem like a good play unless you were really happy where you were before, and just want to see if you can make it in a new place.
Can you explain what turned you off about his negotiation, if he wasn't being a jerk? Just the fact that someone would have the audacity to do it, when you didn't feel he had the necessary leverage to pull it off?
Every company you'll ever interview at will negotiate, and most will do so whether or not they have leverage. They usually do this via a recruiter or in-house HR, to try to disassociate any negative vibes that the candidate may feel towards their potential new boss due to hardball tactics in the negotiation process.
Your stance seems designed to deter any candidate from negotiating at all, and you can probably do it because there are enough people out there that are hesitant to negotiate. Which is exactly what this article is trying to fix.
To emphasize: n=1, so I don't want to overgeneralize my experience, nor would I overgeneralize the OP's experience.
I had told him in the very beginning that my strategy is to hire people at a reasonable, but not out-of-the-world pay, and move them up fast if they prove their worth, and try hard to keep them for the long term (which I can only do if I am paying well, because the sector I am in is hot and our people do get a lot of recruiter calls).
The reason I do this is I want to send a clear signal to the people with me long term that I put their interests first, and I won't chase after the new-new-candidate with the best offers. This message is quite well known in the company, and when people have done their fact-checks on this, they know it to to be true: indeed, our long term people get the best pay.
After hearing all this, and after indicating he really wanted to work for me, he proceeded to negotiate hard, and at that point, I wasn't comfortable with him anymore. As I said, he is still chasing me (he has a job, but wants this job more) but I felt he revealed an aspect of himself that I am afraid may create a mis-fit between us - and this is a highly-paid executive management position.
I'm not making any judgements on you, but in my experience "not out-of-the-world pay, and move them up fast if they prove their worth" usually turns into "cannot afford significant/any increases/bonuses due to market conditions/losing major clients/my new boat".
Unless it's in writing, promises of large future adjustments are not really worth relying on. At best you might actually get what was promised, or you will end up feeling ripped off and mislead.
Do you put those growth expectations in writing? As in, do you say "here are the criteria you will be evaluated on in 6mo/1yr/18mo", and your promotions/raises will look like XYZ as a result"? And do you provide performance bonuses to true-up people who you have been under-compensating for their performance?
Because if not, its not clear that you're putting their interests first. You're trying to get work at potentially below market rate, and then perhaps raise them up to market rate. That's not putting their interests first, it's getting cheap labor for a few months. Why would that engender trust?
People do "fact checks" on if I am fair to them. Recruiters do call on a lot of our people often, and we do retain them.
People have reputations that spread in a company and among friends of employees. If I routinely exploited people with false promises, I will have to keep hiring new people to exploit and it becomes self-defeating.
A reputation for unfair dealing is toxic to morale too and morale is what dictates if people put in their best work or unwillingly put up with the job for a paycheck.
You went to a lot of effort to write a lot of things while explicitly avoiding actually answering any of my questions. This leads me to think that a simple "no" would have sufficed.
It's possible to treat people well enough that you can retain them while still not keeping promises and paying below market. There's a balance, and you can do a lot of "exploiting" before its enough of a nuisance to want to leave, and many fair things are also exploitative.
For example: refusing to hire someone because they attempted to negotiate a better offer for themselves is perfectly fair, but it also appears to be exploitative. It also becomes much easier to keep your promises when those promises are not explicit.
If no one asks for true-ups, you never need to promise them. But by not paying them, you are being exploitative. It's no different than contract-to-hire positions that exploitatively underpay people for months or years before bringing them on as full-time employees (or not doing so, for any of a variety of reasons).
EDIT: To add, since elsewhere, you explicitly mention that you undervalue new hires, the fact that you don't true-up candidates for overperformance of your (lowered) expectations is telling. Again, why would I, as a candidate, want to engage in a long term relationship with someone who doesn't put enough faith in me to pay what I'm worth, but who wants me to trust them that they'll eventually pay me what I'm worth? And who won't at least promise to make me whole during the vetting process? That to me implies two things:
1. They want me to trust them immediately, but don't want to trust me in return.
2. They won't fully compensate me for the work I'm doing.
Neither of those things make me want to trust you or form a long term relationship. If you want such a relationship, the trust goes both ways. You don't get to say "trust me that I'll eventually pay you what you're worth, but in the meantime I'll pay you less until things are verified." That's not a relationship. Its exploitation of a power imbalance.
It totally makes sense to reject a person who talks only about the salary/perks and in that way shows he's just looking for a cool job to satisfy himself.
Of course it doesn't mean that one should expect "Yes, I waited my whole life to join your company to change lives of your customers." attitude from everyone. There's a whole spectrum of people in between and each company has to find its own keyhole.
Aside from that. I never accept "start lower and re-evaluate each month, quarter, half a year" strategy. I'm pretty sure I'm going to bring 90% of my value during the first month and probably 100% the next one.
I'm glad to have one more interview, maybe a day with your team on site so you can be more sure if I'm a good fit. I also understand that there's a chance I might turn out to be a mis-hire for some reason and after a month or two it'll be clear that the initial expectations are not met on one or the other side. In that case I'm happy to re-evaluate which could also go both ways.
"I was hired as a software engineer but it turned out my experience with leading projects, working with product team on developing fresh ideas etc is extensively utilised on daily basis."
"You do have the skill but your work organisation and focus are a bit lacking which results in lower output compared to the other guys that are in your salary range. We need to work on that aspect or re-evaluate your compensation."
Both of those I'm fine with. I'm not fine with being under-compensated for half a year because you have too weak recruitment process.
You say you value the people yet get 'turned off' on someone negotiating for their pay? It seems you value being in control more, and dangling the carrot of 'if you do good you'll get more'. Maybe.
Again n=1. I value people who have been with me long term more than I value people who I am newly recruiting. That just seems like common sense to me.
It comes from the idea that we often over-value the worth of people we don't know and devalue the worth of people we know well; the magic always seems to be "somewhere else".
> I recently withdrew an offer to a VP candidate because he negotiated too much (without being a jerk). He probably took advice from an article like this, and he wanted a) higher pay b) more vacation time c) special dispensation for items involving pay and time whose effect is even more pay.
Why, I'm positively poleaxed that he wanted things that would make his life better! Quelle surprise.
I don't and never will understand the mindset you express here. A VP is important to the health and success of your company. If a candidate won't fight for himself, why the hell would you think he'd fight for you?
>If a candidate won't fight for himself, why the hell would you think he'd fight for you?
There is balance here, won't you concede? There is "fighting for yourself" and then "fighting too much for yourself".
Part of the success of a team of people is that there is a spirit of shared rewards and shared sacrifices. I felt he had crossed that line to want too much for himself (or at least conveyed that strong impression to me).
Again, n=1 and I am some random commenter here. Just that a) this has worked for me b) the candidate, even though he has a job, still wants the job I offered at my original offer.
Negotiating hard or casually is a two way process - you can't "negotiate" alone. If the offer was made that means both sides were negotiating hard. So isn't is off why that offer wasn't made at an early stage when the company was ready to make that offer and they eventually did
This situation reeks of an endorsement of some sort which if I may crudely put as - "if a potentially employer is trying to screw you over financially, do not resist too much".
What do you check in an employee "for sure" when you hire that employee - their performance in the interview. And you do that "hard"! What does the employee know about you "for sure" before they join you (and in fact for a some time even after joining) - that is how much they are going to get paid. That's the only thing they are sure of and I'd sure want to negotiate for that hard.
I feel you lost a good candidate. I think he negotiated all those things because it had to exceed his current level. Having a VP with that negotiation would have been good for the company.
> Will my offer be rescinded if I try to negotiate?
> So, if you’re talking to a super small company with one role that closes as soon as they find someone, yes, then they might rescind the offer.
This happened to me. I was perfectly polite, asked for a very modest increase from their severely low offer (after listening to a speech about how they couldn't get any good help), and would have even accepted the position if their response was "non-negotiable". They not only rescinded the offer, but they were ridiculous jerks about it.
> But, to be honest ... an early startup punishing a prospective employee for being entrepreneurial is a huge red flag to me.
This happened to me years ago when I was offered a position at EasyPost. I tried to counter politely and modestly, and the CEO (I can't remember his name) got mad at me, told me I should be grateful that I even got an offer, and then rescinded the offer. It was a pretty big turnoff, and I wound up being afraid of negotiating for another year or so. Nowadays, I realize that kind of response means the CEO is a dick and I'm glad I didn't take that job.
I’m so curious about the state of mind it takes to acknowledge you need to hire expertise, while simultaneously seeing your own need as being a favour to someone else.
It feels resentful, I can’t imagine a bigger red flag than someone who resents having to hire. They’re basically saying they would never even consider approaching you if they had a choice.
You’ll never get a respectful deal out of that, never mind a healthy work culture.
Heh. I love EasyPost's product and documentation, but I had some odd account management interactions with them early on. I later learned via LinkedIn that the emails I assumed were from a customer service rep were actually from the CEO. Go figure.
I don't work with them anymore due to a job change, but towards the end they were doing better on the account side of things, and I still recommend them. Great product.
The correct response is to laugh at them and move on. And mock them on HN.
It's worth being aggressively negative toward such companies, because negotiating to your market value is step one in leading a good life. The fact that they would have you not do this means they don't care about the quality of your life, so you shouldn't care about their company.
This happened to my partner. He was upset and I was as shocked as the author. Another job at a small company. We came to the conclusion that it was an extreme jerk move on the part of the company owner and they did us an enormous favor by removing themselves from our lives. The experience taught me to always attempt to negotiate, if for nothing else than to weed out the insane employers who will no doubt throw you under the bus at the first convenient moment.
> This happened to me. I was perfectly polite, asked for a very modest increase from their severely low offer (after listening to a speech about how they couldn't get any good help), and would have even accepted the position if their response was "non-negotiable".
If their offer was "severely low", then why would you accept it?
Certainly, from their perspective, their offer wasn't low - you would have accepted it!
It was enough to bring you on board.
> They not only rescinded the offer, but they were ridiculous jerks about it.
If what you say is true, and they responded unprofessionally to a polite attempt to negotiate - then you're better off not working there.
My wife had something like that happen to her. Twice. Without even an onsite (at both times she worked across the country) they gave her an offer. In one case she countered, in the other she waited to think it over (though it was still well within the deadline they had given her). In both cases they rescinded the offer. In both cases she feels she dodged a bullet.
I have had this happen twice to me ever, one being a startup that went on to fail, and the other being Amazon. I now work at a different FAANG.
Amazon balked at me asking for $250k minimum total compensation for a position in San Francisco and decided to ghost me when we were in the process of scheduling an onsite interview & do preliminary negotiation in parallel.
Unfortunately for them, they lost a potential top engineer who probably will never accept an offer with them ever again as a result.
I like a lot of the information in this article. But after going through a gauntlet of 20+ interview pipelines with 3 offers coming in at the same time and an additional 2 on the way, here's my advice... don't give the first number, give the first range.
Say the market is showing you between $X-$Y.
Consider it a form of late-binding. You want to be dynamic. So make that range both realistic and wide.
This is beneficial to you for a number of reasons. It will eliminate companies that can't get there. Win. It doesn't commit you to a specific number. Win. You don't have to ruin the rapport with an unnecessary game of chicken over who says the first number. Win. And most importantly, you have a wide open range to negotiate in when your offers come in. You can say... hey, I was upfront about my range, and I really feel like I'm <here> in that range for <these reasons>.
Using this strategy has worked beautifully for me.
The issue with a range is that you are by definition anchoring the minimum that you will accept, so a savvy employer won't go much higher than that (without mitigating circumstances like competing offers).
You're exactly right, a range anchors the minimum. However, there's far more bargaining chips on the table than just competing offers.
As a savvy negotiator you have to understand that every little piece of the offer is a bargaining chip that causes movement within your range: bonuses, equity, PTO, benefits, gym reimbursement, commute time, cost of living, hours, etc. Everything is fungible.
The salary range is just one lever in an entire control room.
No one has to agree or use my negotiating method. It's simply something that worked really well for me and allowed me to maintain more productive discussions as I negotiated. Whereas a game of chicken leaves a sour taste in both your mouth and theirs.
I never understood this line everyone parrots about not giving the first number. That tactic works best only in situations where both parties have no clue what ballpark the other party has in mind. Which is definitely not the situation when you're one of 1000 similarly qualified engineers applying for a well-established job role.
In situations where both parties have a reasonable idea of what ballpark they are playing in, it's far better to toss the first number, because you get to set the baseline for the rest of the negotiation. Unless you're a very experienced negotiator, that initial baseline plays an outsized role in where the negotiation winds up finishing. For example, suppose both you and your counterparty know that the negotiation is going to be within the 100-150k ballpark. You tossing out 145k as the first number, will play much more to your benefit than allowing the recruiter to toss out 105k as the first number.
Obviously this tactic only works if you're well aware of what ballpark you're playing in. But that should be achievable by simply talking to your classmates, or perusing the many salary aggregators and discussion forums online. The only caveat I would add is to wait until all interviews are over and you've received confirmation that the company wants to make you an offer. At that point, no one is going to reject you for being too optimistic with your initial offer. Worst case scenario: you're going to get a much lower counteroffer. But at least you get the benefits associated with setting the baseline.
It's theoretically optimal not to give the first number.
The employer doesn't know how much you're making now, and can't legally ask (not in CA and NY anyway).
They have a theoretical top comp they're willing to offer for the position. Once you give them your number, their top offer becomes min(your_goal, their_top), which cannot be higher than their_top.
In simple terms, if you know your market value, and you tell them that number, you will never know of or benefit from their willingness to pay above that (often for good reason).
> For example, suppose both you and your counterparty know that the negotiation is going to be within the 100-150k ballpark. You tossing out 145k as the first number, will play much more to your benefit than allowing the recruiter to toss out 105k as the first number.
That would be the recruiter messing up. His initial goal is to get you in the door, unless your expected pay ranges do not overlap. In this case, they do, so saying a low number just means he's encouraging a potential fit to walk away.
A recruiter in this situation will typically state a range, and definitely won't just quote a number near the bottom of the range.
> It's theoretically optimal not to give the first number.
Only if you ignore transaction costs of the interview process. Unless you feel you can get their numbers before you start, it may be worth the time savings to give up some potential future leverage.
Right, but employer normally won't offer a number pre interview. So the dynamics are tricky to expect them to give you a number while not offering one yourself. The article doesn't touch on how to pull that off. Have you been successful getting this info without giving your details up?
You're assuming that if you don't give the first number, the recruiter will give you a number that hints at "their_top". Realistically though, recruiters are very good at figuring out what your ballpark is, based on your experience/qualifications/market-conditions, and will toss out a number that's in the lower end of this ballpark, regardless of "their_top". At that point, not only do you not have any clue about their_top, but you've also allowed the negotiation to become anchored at a lowball number.
> Realistically though, recruiters are very good at figuring out what your ballpark is, based on your experience/qualifications/market-conditions, and will toss out a number that's in the lower end of this ballpark, regardless of "their_top".
Excuse my skepticism, but have you ever actually seen that happen?
Your supposition reflects lack of understanding of how both external and internal recruiters work, and how they are incentivized.
Their KPI is the number of candidates sourced by them who got hired. Which means they are two-way salespeople: they sell you on the position, and sell the employer on you.
Their key goal in the early stages is to ensure you go through the process if you are qualified. They have zero incentive to lowball you. If anything they can and sometimes do get in trouble for inflating a candidates' comp expectations.
So what you described, where a recruiter tries to preemptively negotiate you down, simply doesn't happen because it is counter-productive behavior for recruiter. He has absolutely no reason to lowball you, and every reason to make you aware of the highest pay you can possibly expect - because that will make you excited to come in for an interview.
> At that point, not only do you not have any clue about their_top, but you've also allowed the negotiation to become anchored at a lowball number.
This is negotiation between professional adults. The fact that the other party said a number doesn't obligate or "anchor" you in any way. You can simply say "sorry, but I'm looking for $X", or (more likely, if you have options) just assume the pay expectations aren't matching and walk away.
The risk of the latter happening is why you'd never see this "recruiter lowball" in reality.
Name the first number AFTER you receive the offer, at that point they are salivating to have you. Not before, if you name your number before then you are generally just turning them off and giving them a reason to filter you out.
I recently went thru job search, and i found something that worked really well when companies ask for your number.
Basically say that when you have been talking with recruiters you have heard a wide range for your experience and they are better qualified to tell you what your experience is worth TO THEM. Then ask what is their range for the position?
And it's 100% true. Salary is completely driven by how much an employer values your experience so they are more qualified. Also, I had more than a 40k delta between the lowest numbers I heard vs highest. So why would I throw out a number that has a high risk of being over / under what they value the position at?
And make sure you ask up front. I had one company that said they had "great" salaries, and it turned out to be a really low number. Thankfully I asked and did not waste time with them.
Most times it is completely fine. Sometimes recruiters push back - just acknowledge and repeat yourself. If they absolutely will not move forward without a number then I would walk away.
Also sometimes recruiters will demur to share until later in the process. Up to you if you want to chance it. But definitely hold them accountable. Ask when in the process they can share, and hold them to that.
The one company that i interviewed with that was a stickler about all this is Facebook. They would not share any range no matter how much I asked. That said fortunately it's so big you can get a decent idea from Glassdoor.
While waiting for the article to load i was thinking - was zero or one the first number? Or was it two, because you need at least two to start counting?
Then i realized that i was offtopic in a kinda funny way
Etymologically speaking, I feel like the first number was most likely "two". The idea of quantifying things wouldn't be relevant unless you had multiple items to bother counting.
Yes, I was thinking it had to be 2, because 0 is a bit of an abstract concept, and you don’t really need 1 as a concept before you already have numbers. I assumed we were talking annoying abstract thinking interview questions.
I was quite confused to find all the comments going on about salary.
I cringed reading this article. It is so much in the bubble of Silicon Valley startup culture it’s ridiculous.
Most developers don’t work for startups or one of the FAANG companies. Most will be working standard corporate jobs where you get a salary, paid time off, maybe a bonus, and somewhat likely a 401K match. That’s it. No great equity stake, nothing.
Depending on your market, it’s quite easy with the right networking, research, and talking to enough recruiters, you can find what your market range is.
Statistically, you’re probably not a special snowflake. Everyone thinks that they are and deserve way above what the local market is paying. You probably don’t.
The only time that I’ve been “underpaid” was when I either stayed at a company too long, or purposely made less than I could because I was learning a new technology or otherwise building my resume.
It’s not that difficult. Work with local recruiters, tell them what your minimum well researched jump number is and make sure you are keeping your skillset in line with the market. If I’m off by a few thousand, so be it. I’ll become aware of it in two or three years when I’m looking again.
But from looking at salary surveys, talking to friends in the industry, and talking to recruiters, I don’t think I am.
Yes I could make more if I wanted to be a manager (no desire) or a consultant (don’t want the travel or the stress right now).
>Statistically, you’re probably not a special snowflake. Everyone thinks that they are and deserve way above what the local market is paying. You probably don’t.
This is a very fiscal conservative thing to say (smacks of "know your place, cog"), so here's what I believe the fiscal conservative answer to be:
"Is the market bearing it? Yes? Then you deserve it."
Bearing in mind "market average" is not what a company is going to quote you off the bat. You should ask for more for that reason.
Bearing in mind that if you ask for more, you'll probably get more. That's just raw dumb game theory, so you should ask for more.
Also, what is this "don't deserve?" Don't deserve? I'm getting an emotional reaction to this! Don't deserve, because we should keep our head down? Chug along, dare not ask for more? What kind of dystopic corporate hell? We talk morals we should talk profit margins corporations pull in and disperse to upper management or CEO. Thank goodness many founders have realized they have to share the pie with equity to get the goods out of the best engineers. But since we're talking about bigger companies, soulless entities that will actually sell your 401k out from under you for a profit, I believe the "right" and "moral" thing to do is to suck every penny out of them as possible, because they'll fuck you in the end if it's profitable.
Also, what is this "don't deserve?" Don't deserve? I'm getting an emotional reaction to this! Don't deserve, because we should keep our head down? Chug along, dare not ask
(All numbers are based on salary surveys in my local market).
If the salary range is between $130K - $145K for a full stack developer that knows C# and React and all of the other buzz worthy front end stack and I only know .Net Asp.Net MVC and jquery (which is true), why would they hire me at $150K when they could hire someone who already knows the required tech?
On the other hand, if $135K is my minimum, and they were willing to hire me at that, why wouldn’t I take it? Spend the next year or two learning on the job and when they inevitably give me a 3% raise for the next two years, jump ship to a new job?
A job can offer me two things - immediate compensation and experience that makes me more valuable in the future.
When I did leave the job I had been at for way too long, I only had three skills that the market cared about - C/C++, database, and a little C#.
I had two offers - one paying 20K more and I could have negotiated $25K more than I was making as a C++ developer and one only paying $7K more with no room for negotiation as an entry level C# developer. If I had taken the higher paying job, I would have been worth less in 3 years - hardly any jobs wanted C++ developers. Instead, I took the job as a C# developer. Three years later, I was making what the first job offered and I was more marketable for the next 6 years. Nine years later, there are plenty of jobs paying $60-70K more than I was making back then for C# developers. For C++ developers, not so much.
About a year ago I was in a similar position. I was a “software architect” over a small development shop at a large company. It was time to look for another job. I had two offers, one paying $15K more that I was perfectly qualified for - .Net Framework, ASP.Net MVC, Sql Server, Windows platform and I would have been over a team of 10.
I would have made more at the above job, but using technology that was the opposite of where the industry is going.
The other job was a “senior developer” position that needed some exposure to AWS (I had a little but not enough to be an expert),JavaScript, NodeJS, React, .Net, and Python was a nice to have. It only paid $2K more than I was making, I asked for another $7K just because.
Guess which one I took? By taking the lesser paying job, I already have companies taking me out to lunch, talks with CxOs, etc. trying to recruit me directly at thier company paying $35K - $40K more than I’m making now as a full time billable consultant. It would require travel and I want to wait for my son to graduate before I entertain the offers.
But since we're talking about bigger companies, soulless entities that will actually sell your 401k out from under you for a profit, I believe the "right" and "moral" thing to do is to suck every penny out of them as possible, because they'll fuck you in the end if it's profitable.
Companies have no control over your 401K. They can’t “take money” out of your 401K account.
Thank goodness many founders have realized they have to share the pie with equity to get the goods out of the best engineers.
Statistically, equity is worthless at most startups. They either fail, don’t have an exit event that makes it valuable, or it gets diluted. I would rather have the guarantee of a salary.
> Companies have no control over your 401K. They can’t “take money” out of your 401K account.
They control who your 401k trustee is and therefore the range of investment products available to you. Companies get kickbacks from their 401k trustees and the difference comes from fees charged to you from the investment products you buy. Obviously the company with the higher fees can pay the most in kickbacks.
But its all very transparent you see. The inflated fees are clearly marked in the prospectus you didn't read, and if you don't like them you can get a job somewhere else. All very above board.
Seeing that my tenure at a job is usually only three years, in the grand scheme of things, it really doesn’t make a big difference. I can transfer the money to an IRA of my choice with lower fees - like Vanguard.
Your examples are very detailed, I appreciate that. But I don't get it, it just serves to help my argument - at each of those individual companies, you can ask for more money and probably get it, even if it puts you above market value. So why wouldn't you?
As for 401k, my friend's company was recently purchased, and in the deal the 401ks were wiped out, instead of transferred. It's probably not legal but a bunch of employees have to get together to form a lawsuit to sort it now. Basically, I feel it's important to remember that laws don't actually create boundaries for companies, companies have far more "legal worth" (money) so therefore they have more power.
Your examples are very detailed, I appreciate that. But I don't get it, it just serves to help my argument - at each of those individual companies, you can ask for more money and probably get it, even if it puts you above market value. So why wouldn't you?
Your market value is determined by supply and demand. Why would a company pay me as a “Senior .Net Developer” back in 2008 when I had less than 6 months experience with .Net at the same salary that they would hire someone with 5 years of experience?
Why would someone, hypothetically pay me a year ago as a “Senior Cloud Architect” who had only watched a PluralSight video and had done one small project on the side for the same amount as someone with 5 years of experience?
If you are actually asking why wouldn’t I ask for a larger raise after I gained the requisite experience, that’s just not the way the industry works. For some reason they would rather not give raises to existing employees but are more than willing to hire replacements at the prevailing market rates - that is the well known phenomena of salary compression and inversion.
Well I dunno, why did my company hire me as a mid-level frontend engineer straight out of a coding bootcamp? A lot of people didn't want to, I just went and found a company willing to... Is the market not as robust for .net?
If they called you “mid level” straight out of boot camp what exactly is a “junior”? Could it have possible been yet another case of title inflation?
They also put a title of “lead developer” on business cards in 1996, straight out of college - I was the only developer - when this little small company was trying to seem bigger than it was when they were trying to get a government contract.
> a full stack developer that knows C# and React and all of the other buzz worthy front end stack and I only know .Net Asp.Net MVC and jquery (which is true)
Possibly Microsoft-land has moved on since I’ve last paid attention to it, but if you ‘know .NET’, surely you more or less have to know C#?
But .Net is not popular among the cool kids and the small companies. The ones that I prefer working for and will pay more for “adult supervision”/architect types.
Even if you do find a .Net/Windows type of company, they aren’t going to be using server side rendering with razor pages and ASP.Net MVC. They are going to want to use a front end framework.
Then if you are in a cloud environment or any environment for that matter, you really don’t want to tie your horse to Windows/.Net Framework or Sql Server. You want to be using .Net Core and one of the open source or open source compatible databases.
You don’t want to be using jquery in 2018.
Of course you can find jobs using Asp.Net MVC/Jquery/IIS/SQL Server, etc. but that’s not what you want to hang your horse on.
I would much rather stay with .Net than to move to Node, but the market has spoken.
There was blame from both the Enron and the employees. The employees voluntarily put thier retirement savings in Enron stock - you never put your retirement contributions in the company stock. But the company locking them out and putting thier match in company stock was inexcusable.
> Statistically, you’re probably not a special snowflake. Everyone thinks that they are and deserve way above what the local market is paying. You probably don’t.
It's certainly possible that everyone deserves (or more precisely, is able to negotiate) a salary much higher than they have, but social pressures and norms and the fact that potential employees have much more to lose than potential employers over a single negotiation failing means that market value is much lower than it should be.
The efficient market hypothesis, if it is even true, is only true in liquid markets with free flow of information. Hiring is neither.
The efficient market hypothesis, if it is even true, is only true in liquid markets with free flow of information. Hiring is neither.
My local market, has been very liquid for the past 20 years, if you have the right skillset. I’ve been able to find a job within two or three weeks each time that I was looking usually with two or three offers.
It’s not a free flow of information but it is out there. I talk to recruiters and former coworkers all of the time to compare salaries.
From the market perspective, it’s because I haven’t been asking more than the median based on my skillset during the last 10 years. From my perspective, I’ve been prioritizing learning skills and building a resume over maximizing wages. I can’t both ask a company to hire me knowing that I’m barely qualified and ask for the highest part of the range.
The second issue is a collective action issue. There are plenty of qualified “full stack developers” who can make yet another B2B Software as a service CRUD app. You can’t negotiate too far over your local market rates or there are other developers who are “good enough” who will take the job. I’m able to slowly get on the right side of the bell curve by being a “enterprise cloud architect” (yeah I die a little bit everytime I say that). My next step is a “consultant”.
You can find a job within two or three weeks, sure, but you're not switching jobs every two or three weeks. If there's a company that's willing to hire you for $10K more but doesn't have headcount until next quarter, you're not getting that $10K, and you'll typically go years before the next time you negotiate. (And if you jump ship after a quarter, your market value goes down because people start looking at your resume suspiciously; in exchange that company would have to offer significantly more than $10K to compensate you for that risk and encourage you to jump ship.)
A liquid market typically doesn't have the restriction that after a trade, the asset stays off the market for years until the next trade. A liquid market typically has market makers, who buy whenever sellers are ready and sell whenever buyers are ready and make a little profit from the spread, and thereby ensure that the market itself serves as a mechanism for price discovery. There's no equivalent of that in the hiring market. Nobody will hire you now for $9K more in the expectation that in a quarter they can contract you out for $10K more.
The hiring market does sort of compensate for this with raises, but - because everyone knows that there's a cost to switching jobs - raises don't have to match your current market value. They just have to get to your current market value minus the cost of switching jobs right now.
Insightful comment overall, but I disagree with your implication that the formula for pay raises is generally "current market value minus the cost of switching jobs right now".
First of all, what "cost of switching jobs" are you referring to?
If I live in SF, "switching jobs" likely means getting off at a different BART station. Hell, I might be able to walk to my next job.
I think the well-known fact that pay raises fail to keep up with market wages in tech - isn't some brilliantly efficient calculation like "current market value minus the cost of switching jobs right now" as you suggest.
It's clearly not working very well, since job hopping in the valley is crazy high, and everyone knows that's done because of pay. To wit, the longer you work for the same company, the farther your market comp will drift away from you, and the only way to catch up with the runaway comp-train is to hop jobs.
I think it's simply the traditional American 2-3% raise model clashing with a booming tech reality where your market wage will likely increase much higher. Plus, the traditional model itself never worked very well for well-performing employees:
> It used to be that jumping ship meant landing a salary 10 percent to 20 percent higher than your previous one. While increases of that size aren’t as widespread as they used to be, switching jobs is still the most common path to the best pay raise.
> If you stay at the same organization, your annual increases may be restricted by your current base salary because companies have a narrow percentage range within which they can boost your pay.
Simply stated: employers were never very efficient at raising comp for good performers. Even decades ago, in industries nowhere near the growth rate of current tech, top performers were much better off job-hopping. Tech just made it even more lucrative.
First of all, what "cost of switching jobs" are you referring to?
Besides the job hopping stench, there are other very real cost to switching jobs.
- there are three “levers of power” in an organization - relationship, expert, and role power - in that order.
At any job, especially at more senior levels, having the right relationships with the right people means for example the difference between you having to send a ticket to the IT department and wait in a queue to get those test VMs you need and being able to send a Skype message, they set everything up for you right then and then you submit the ticket as a formality.
- Expert power and developing a reputation for knowing what you’re doing is the difference, especially at a small company, is the difference between having to wait for the “IT department” (or the outsourced Amazon support people that your company hired), and being given admin access to AWS so you can do it yourself.
When people know you and trust you, you can punch above your role.
You lose that at a new company and it is a “cost” to get it back.
Also, at a company I’ve been at for three years, I know where most of the bodies are buried. I’ve buried a lot of them or know who did and I know the technology. I spend the first 6-12 months at a new company working extra just to ramp up on the company’s code base, and because I’m usually changing jobs to learn new-to-me technology, learning the tech stack. That extra time has a “cost” on my personal and family life.
By "cost of switching jobs" I mean that there's a negative cost in the long term to having a short job on your resume (especially if your previous job was also short), to not having an enthusiastic positive reference, to maybe getting a reputation as someone who doesn't want to stay at a job, etc. If I take a job paying, say, $100K, and someone is offering me $120K after six months, waiting until I've been at the job a year or two is technically costing me $10-30K over jumping right now but is probably worth more than that in the long term just to not have that six-month stint on my resume and to not burn bridges with my current employer.
After a couple of years it becomes more defensible to leave, so there are mechanisms for giving you significantly more money after several years (promotions, promotions to manager track, refresher grants, etc.) but fewer mechanisms for giving you more money in the first year or two, and basically none for within the first year, because employers know that even if your market value is theoretically higher, you can't actually take advantage of that yet.
I think that even in markets where job-hopping is high in general, any particular individual can still only job-hop so many times before it backfires on their ability to get a high salary.
Hopping after 6 months, or say less than a year, will definitely hurt your resume, even in the Bay. As a hiring manager, I'll typically assume your either got fired, or gave up too quickly. Both strong reasons not to hire you.
Hopping after 2 years in the Bay is extremely common. So much that I'm not even sure it's considered "hopping" anymore.
I'm not sure how long of a time horizon you mean when you suggest job-hops will eventually hurt you. In the Bay, at least, if you have say 5 2yr stints, what's likely to hurt you is... your age.
A developer with 2 2yr startup stints is your typical Bay "senior developer". And a developer with 1 2yr startup stint is your typical "experienced" Bay developer, and generally one of the most in-demand categories of developers in the Bay.
I'd go so far as to say that the 2 2yr stints will look better to a startup hiring manager than 7 years in an corporate environment like Oracle. The former is definitely in tune with SFBay startup-scene vibe, the latter looks like a corporate potato whose fit for startup life is questionable (not to mention a little too old as well ;).
How is that ageism? There is nothing stopping a person in their mid 40s from keeping thier eye on the ball, not getting complacent at a company, and not letting thier skills atrophy.
I’m in my mid 40s and also know plenty of other developers my age who decided not to go anywhere near management so we had to keep our skills up to date. There is nothing sadder than seeing an older developer who stayed at a company for 15 years, get laid off and spend months not being able to get a job. On the other hand, I have a former manager who retired from the military in the late 80s, started out as a Powerbuilder Developer and became a manager at a .Net shop.
When his kids moved out, he “self demoted”, got a job as a developer and is now doing .Net and React. He is at least in his mid 50s.
This isn't my ageism, I personally love experienced candidates. This is a reflection of the reality in SV, where most employers aren't like my current one.
I agree, even though I switched jobs 5 times in 10 years I had to have a story to tell - one company went out of business, one product was cancelled, one was a “change of direction and they didn’t want to be a software company”, but they did want me to finish a project and paid me well enough to lead it to completion.
But now I am starting to get the job hopping stench about myself.
But if you really want to stay liquid - contract. You don’t get the job hoppers stench about you if you do want to go full time later on.
That’s where recruiters come in. They know the range and you can ask them before you even start the interview process.
I once told a recruiter I would accept the offer from the hiring company if they offered slightly above the range - which was still below what I was offered as an “architect” for a company using a technology stack that I was good at, but was on the decline. They did the negotiating for me.
Why would I waste my time interviewing before knowing the range? It’s not proper to ask the hiring company from the offset the salary range but it is okay to ask the recruiter.
> That’s where recruiters come in. They know the range and you can ask them before you even start the interview process.
True, with the caveat that all benefits of (external) recruiters depend on the degree of alignment between your respective interests.
For example, if you choose a recruiter who only works with positions up to $X, I guarantee the top of the range he will assess you is going to be... you guessed it, $X.
Some recruiters also get paid more by some employers for some positions. So a recruiter may steer you towards a position that is inferior, including pay-wise, because he'll personally get paid more if you take it.
This can end really bad for you, since some of the employers who pay recruiters the most are those with the highest turnover... which usually has its own good reasons.
Always remember: recruiters ultimately get paid by the employers, not by you.
The best strategy is to work with several external recruiters, and ideally also interview with some employers directly.
I think the more general version of this argument is that jobs achievable via recruiters are a fairly small subset of the job market, and you don't have a good sense (as a job-seeker) of how exactly that subset is shaped, so this doesn't actually solve the problem of not having enough information. You now have significantly more information about a subset of the market and no idea what that subset is.
If you were to go trade, say, tech stocks, but you didn't know how profitable the companies were until after you had made a bid, and you decided to solve the incomplete-information problem by working with brokers who were paid by some of the companies, you would be making a mistake by thinking you're now in possession of enough information to make the EMH kick in.
Your argument is well-phrased, and theoretically correct, but in reality recruiters often work with a large subset of the job market in their area. The market is tight right now, and hiring managers have no reason to only work with one recruiter. On the contrary: they will cast the widest net, talk to any viable recruiter, and typically disclose comp information to that recruiter.
I agree it's not perfect information, but in reality if you job hop, work closely with several recruiters, and negotiate well - you'll get a pretty good idea of your market value, imho.
Employees who have the least idea of their market value are those who stayed in the same job for a long time, and haven't interviewed or talked to recruiters in years.
I completely agree with your earlier assertion that it's quite possible that entire sectors of the tech industry are underpaid, but the employers' frantic and often limited efforts to keep comp data secret are just one reason for that.
True. When I’m looking for a job, I am working with 7 or 8 different companies most of the time.
But if you already know your range. All the steering in the world is not going to convince you to take a lower paying job.
My experience is that recruiters get paid a percentage of your first years salary from the company. They have an incentive to get you a higher wage, but like real estate agents, that incentive isn’t perfectly aligned. (http://freakonomics.com/2008/02/26/real-estate-agents-revisi...)
> But if you already know your range. All the steering in the world is not going to convince you to take a lower paying job.
Sure. But if the top of my range is $150k, and I'm talking to a company that would be willing to pay me $175k, it's not in my best interest to tell them that $150k is enough to hire me.
> My experience is that recruiters get paid a percentage of your first years salary from the company.
Generally, yes. But the exact percentage may differ from company to company.
Typical example are bad employers with high turnover. They need the recruiters to get a lot of new people in the door every year, while convincing these candidates to walk in the door is typically harder due to the employer's poor reputation. So they end up paying recruiters more, sometimes a lot more, per successful candidate.
Sure. But if the top of my range is $150k, and I'm talking to a company that would be willing to pay me $175k, it's not in my best interest to tell them that $150k is enough to hire me.
Unless you are special snowflake, why would the company’s range be that far outside of the range for the local market? Either the company is incompetent, you’re about to step into some crap, or the employee doesn’t actually know the market.
Generally, yes. But the exact percentage may differ from company to company.
Typical example are bad employers with high turnover. They need the recruiters to get a lot of new people in the door every year, while convincing these candidates to walk in the door is typically harder due to the employer's poor reputation. So they end up paying recruiters more, sometimes a lot more, per successful candidate.
Every job I’ve gotten through recruiters, the employer was adding people not replacing them. Well, except for one where they fired the most senior developer, three weeks after I came in. I didn’t know I was being watched as his replacement and being made the team lead.
In hindsight it was obvious when half the interview was asking me to come up with a 90 day plan to create a modern software development shop on the spot after he told me about the challenges they were having....
For example, they're highly selective, and you're the first candidate to pass their interviews in months. Congrats!
Most jobs aren’t that selective and aren’t doing work so specialized that that need someone in the 90th percentile.
Or maybe you just successfully completed the exact same technology project they're looking to do themselves.
Congratulations - you are then that “special snowflake”. You would know that if you ask the standard “what type of challenges are you facing” question when you are interviewing.
Or maybe they're just doing really well and willing to pay above-market.
Why would a company pay above market value for a new employee out of the goodness of thier heart? I could see the paying a bonus to existing employees.
Trust me, there are companies out there with crazy-high turnover. They typically will not tell you that as an interviewee, for obvious reasons.
I found that out the hard way during my second outing after my awkening. It was a contract to perm job that was so bad. That I just up and quit in a month without having anything lined up or even in the pipeline. I had an offer for what was then a Fortune 10 company within 4 days. Thanks to a recruiter. It also paid more than I was making.
> Why would a company pay above market value for a new employee out of the goodness of their heart?
Several reasons:
1. They want to minimize the chance of the candidate declining. Every employer had a bunch of candidates go through the entire process (at the cost of multiple $k each) and then decline the offer, because you were a good boyscout and gave them their "market value" offer, exactly like all their other options, and slightly less than some. If I'm flush with cash, I may put a little extra on top of my offers, to ensure this doesn't happen, especially in a tight market where I'm competing against multiple other employers.
2. I want the employee to be motivated right off the bat, by knowing he's getting paid above market rate. One of the dangers with new employees nowadays is that they know they can easily get 3-4+ offers that pay the exact same (or a bit more) elsewhere. That causes lack of motivation, and some of them will quit if more disadvantages emerge. Paying above market ensures this won't happen.
> I found that out the hard way during my second outing after my awkening.
After working hard for one company for 7 years and only getting 3% raises and feeling the effects of salary compression and inversion. Also I realized the lack of optionality when your skills aren’t a fit for the market.
The first job I detailed above after I left, was a great decision. I chose technology over money - I also met my now wife.
After that company laid everyone off [1], and I did a short stint as a contractor with one of our former customers, I got a job at a horrible company and all of the signs were there in hindsight. But I had never worked at a bad company before then. I had only worked for 3 companies in the past 16 years. I didn’t put that company on my resume and I explained the three month gap ase deciding to take some time off to get situated after getting married.
After that, I jumped shipped from a company as soon as I saw a market opportunity. People worry too much about job hopping. If you interview for a job and they are concerned about job hopping, they won’t give you a job. If they do hire you in spite of your work history you leave. What harm is interviewing? The next job either hires you or you stay where you are until the job hopping stench wears off.
[1] They were very up front with us and the investors promised us that they would keep paying our salaries until they either found a buyer or officially gave us notice. We wouldn’t have to worry about not getting paid while we working. All of us stuck around because why not? We knew based on the tech stack we were using, that we could get another job before our final check cleared.
1. They want to minimize the chance of the candidate declining. Every employer had a bunch of candidates go through the entire process (at the cost of multiple $k each) and then decline the offer, because you were a good boyscout and gave them their "market value" offer, exactly like all their other options, and slightly less than some. If I'm flush with cash, I may put a little extra on top of my offers, to ensure this doesn't happen, especially in a tight market where I'm competing against multiple other employers.
This is where your recruiters come in...
I have three criteria for choosing a job - technology, environment, and money in that order.
If three separate recruiters are representing separate companies and all other things are equal except the money (they rarely are), you tell the recruiter representing the job you want the most that you will take it if they can get you $market_value + $x.
I’ve had cases where the recruiting company offered me a signing bonus out of thier commission to convince me to take an offer. It didn’t work. Usually there is one company out of the offers that is offering a better tech stack/shorter commute/preferred environment.
Recruiters don't know, or often lie about the true range. They are incentivized more to get you in the door than to get every last $, because that will sour their future with that company and will only net them a % of that increase.
I’ve been on the hiring side working with recruiters. We tell them the range up front.
If they don’t tell you or they don’t know, stay away from them. They don’t have a direct relationship with the company.
Any recruiter that you tell what your range is and they still try to steer you below the range stay away from them. That’s like dealing with real estate agents who try to steer you above your range or your expressed preferences.
We just tell people in a fairly detailed document we share with everyone. Comp is not completely open, but everyone lives in a band for the position and we stick to it.
One company I left tried that too. They established “bands”, made it hard to get out of the band, and 5 developers jumped ship within 6 months to jobs paying from $10K -$20K more....
It has drawback, and you can't do it in an unfair way. It works fine for us. It isn't hard to get out of the band. The criteria are reasonably objective and people move upward with ease when they demonstrate capability / qualification. It is far more transparent than not disclosing the information.
The original article assumes you're going to go through the entire interview process before discussing a number?
What happens if the delta between you and the hiring company isn't just a few thousand, but multiple tens of thousands? Will negotiating ever bridge that gap? More often than not it will never happen, and everyone has wasted their time...yours especially.
In the current US job market, and let's say everywhere except the FAANG companies for reasons of this discussion, we're in a extreme situation where employers need people but aren't willing to move salaries upward to get it.
patio11 had it right when he said
"The explosive growth of the tech sector keeps average age down and depresses average wages. Compared to industries which existed in materially the same form in 1970, we have a stupidly compressed experience spectrum: 5+ years rounds to "senior." This is not a joke."
We're stalemated before we even finish answering the phone call or email from the recruiter. Knowing your jump number is the gatekeeper.
It's not just the FAANG companies; it's a lot of startups and unicorns that compete with FAANG for talent (though generally Amazon pays less than the rest so it is more like FANG) as well.
But it's certainly true that in the broader US job market, everyone is complaining about a shortage in job-seekers, but refusing to raise wages to attract the employees they so desperately need. In fact, last time I checked, wages went up by less than inflation, year over year. There seems to be some sort of reverse unionization where employers are keeping wages sticky and unwilling to raise wages even when doing so is necessary.
All the money in the world is not going to help the immediate problem of finding developers on the high end if the pool is smaller than the demand. In the long run, the pool should increase if the salary is higher, but it will still take time to enlarge the pool.
It also doesn’t help that the US is becoming very unfriendly to immigration that would enlarge the pool.
> we're in a extreme situation where employers need people but aren't willing to move salaries upward to get it
This line nails it and is true for so many companies now it's painful. Just a few weeks ago I was trying to help a hiring manager fix his candidate pipeline for qualified people and when I dug in, his target salary was the same as it was in 2010.
I think the fundamental problem is that outside of tech, companies are completely unwilling to potentially sacrifice corporate profits to raise wages. Instead, they'll explore every possible alternative from outsourcing to "contract-to-hire" (spoiler: they'll never hire) to underpaid H1B to piling more responsibilities onto fewer people before even considering bumping pay up. The second chart in [1] summarizes the situation nicely.
What’s equally amazing to me, and this just personally happened to me, is that companies would rather walk away from the discussion over a figure smaller than the amount of productivity being lost by the vacancy.
I recently turned down an offer from a company that went on and on about the backlog of projects that needed attention and couldn’t ship. My estimate was that they were probably losing a few hundred thousand in annual sales due to headcount.
Want to know how much they wouldn’t budge on a salary offer? $15K.
The position is still unfilled. It’s been six months, and the job was open six months before that.
they'll explore every possible alternative from outsourcing to "contract-to-hire" (spoiler: they'll never hire)
What’s wrong with contract to hire or straight contract? I’ve always made more on contract jobs - even taking into account unpaid time off - than I could have made with the same skillset as a fulltime employee. It helps that I don’t care about health benefits. I get those through my wife’s very stable government job.
Health benefits is just another expense that you should calculate into your required hourly rate if you need it. We aren’t talking about exploited (not being sarcastic) relatively low paid employees. It’s no different than calculating your self employment taxes and factoring in unpaid time off when taking your required hourly rate into account.
I paid insurance out of pocket during my first contracting gig via CORBA - that was before I was married. Most contractors I know either buy through the ACA exchanges or through thier contracting company.
This also struck me as suffering from severe valley myopia.
> What happens if the delta between you and the hiring company isn't just a few thousand, but multiple tens of thousands? Will negotiating ever bridge that gap? More often than not it will never happen, and everyone has wasted their time...yours especially.
This has happened to me on a few occasions. The bottom line is that there's a wide range of a) what companies are able to pay and b) what people will work for. The end result is that without any malfeasance by either party, there are vacancies and candidates that are hopelessly mismatched with each other in terms of salary even though they are a match in terms of job description. I've had to cut a few conversations short as they were – not entirely unreasonably – trying to hire at ~50% of what I was already earning at the time. If I waited until the end of the interview process before discussing salary ranges, I'd be wasting an awful lot of my time and theirs.
By all means, get them to blink first if you want. But unless you want to waste a lot of time, don't wait until the last minute before discussing salary.
Yeah, but if I'm already making the market number, then any company that wants me to leave has to provide a reason why I'd want to jump ship. Usually that reason can be more money.
As a Linux Admin/consultant I’ve been impressed with some of the directions they’ve been headed in recently. If they don’t butcher github in the next few years I may consider hating on them slightly less.
I've been really impressed with the last few years. I still hold on to some little bit of skepticism, but it's shrinking more with every year of their open source + Linux work.
These days I usually start the conversation with a recruiter saying I'm looking for total compensation above $300k.
Some don't respond, which is fine because it saves us both time.
Others will shoot back with something about equity. Then we can talk about cash / equity split and there's plenty of room for negotiation there. I've never felt like my $300k number limits my ability to negotiate (beyond putting a halt to some discussions).
Where did I get $300k from? My peers at FAANG, my friends in recruiting, recruiters who state salary bands upfront. Basically, I've done my market research.
If you are in California, this is a completely moot point. The new comp law (AB168) requires employers to disclose the pay range for a job upon request.
So if a recruiter asks you to name the first number, you should ask them for the pay range and they are legally obligated to disclose the range.
Between me and two friends who are all early in our careers, we’ve had very difficult times getting companies to move on salary. This was in SF, all within in the last 6 months.
On the other hand, all three companies increased our starting bonus substantially with hardly a fight.
For two of us the reasons were more or less “you’re already at the top of your salary band” and for the last the reason was they pay all new grads the same (only one of us is a new grad).
I've gotten them elsewhere in the US, but can't speak to Europe. Usually they have strings attached; basically "work for us for a year or pay us this back". It's a good way to make the offer more attractive without it affecting the following year's budget, while also achieving a bit of risk management. Relocation usually stipulates the same thing; I know with a recent move and job change of my own, between signing bonus and relo costs, I probably would be looking at $50k if I walked away within a year, so yeah, they own me for that time. However I knew what I was getting into and so far am very happy there, so mutually beneficial.
I got one in Australia 10 years ago, but it was for a US company (one of the big Telcos that has a presence here). It's the only time I've ever heard of them here (for IT) though. I definitely get the impression it's more a US thing from how often I hear about them here and on reddit.
Can’t remember where I read it (and I’ve never tried it), but you could try this: name a ridiculously high number as a joke. Laugh about it a little. Then try to move on with them by saying something like “no seriously, what are you offering?”
You’ve fulfilled their demand for a first number and pivoted back to them for a response.
As a candidate, asking the candidate for their price to prey on their information imbalance would seem jerky to me. Just be open and tell them what you think you can pay them, and whether that's negotiable based on different conditions.
I can give you one better; giving an offer in all serious, that is a little aggressive but not out of line (at the top of the pay band on Linkedin for the area, but the job is in the higher price part of the city), and having -the hiring manager- laugh and say "No, seriously, I was thinking more" and quoting you -half- of that.
If it doesn't work, you can always find a different company. There's no need playing games with a company that doesn't want to tell you what they can pay you.
This is good advice about naming the first number if and only if you don't have good market data. If you have good market data, and you should with sites like levels.fyi, you should use that data to your advantage. Why? Well, first off it signals value. If you name a number that is a bit of a stretch for the prospective company, but still within a realm of reason, they start to wonder if they have undervalued you. Second, it demonstrates that you have done your homework. Third, it shows that you have negotiation skills and willingness to use them.
On reverse car salesman - use this on the company you know for sure you want. Likely the company you know for sure you want will remain that company even within a 10k range price difference (speaking to software engineers here). That being said, you can start throwing all sorts of weird shit on the table, if you've already negotiated your salary up. PTO is usually the first thing that comes to mind, but I've also seen "guaranteed right to wear flip flops in the office, forever, no matter what office dress code becomes" put in a very picky qa engineer's contract (which is funny because he showed up to his onsite in a suit and tie... And I haven't seen him in anything but flip flops since). There's a hardware laboratory here so I got "access to laboratory" put in my contract, and since then I've learned to solder by just hanging around in there. Remote work stuff comes to mind, maybe some sort of time-bound access to powerful servers, just see what you can think of.
Reason being, if the company has to give just one more thing to nab you, they'll feel like they really worked hard to secure the perfect candidate, there'll be no doubt in their mind, the recruiter/decision maker will always tell the story about how you were looking at other offers "but we finally secured her by putting the Foosball table right into her contract." And on the other side of it, you get that warm fuzzy feeling that you negotiated all there was to negotiate.
I negotiated flex time at my current job, as I have for every job since 1999.
After 6 weeks they told me I couldn't have flex time anymore but wouldn't give me the pay cut I took to get it. So now I leave early every day at different times and "work" from home once a week.
I haven't done any real work for them in over a year and a half because of the flex time fiasco. I keep waiting for them to fire me but I'm friends with my boss so he's protecting my job, which is hilarious, but that's how shitty this company is.
Another thing to add would be car allowance. Which still counts as income, according to the IRS, but perhaps comes out of a different line-item in the company budget, and thus allows them to "make their salary budget numbers"
Or even a company-provided car/transport. The last place where I worked many employees drove a company-owned car - every three years the firm would lease a new one for them to drive.
I did this, back in the depths of history... Changed job involuntarily in early 2000, had verbally accepted an offer from one company, another company came along and said they couldn't offer me any more 'salary', but they could include a car/allowance - which meant quite a lot more cash since I already had a car.
With recruiters there's simply one rule to go by: Either you're feeling the pain, or they are.
If there's a trick in this, it's to make the recruiter feel just enough pain that they hate to say no, because they lose their commission.
So when you're asked salary first, go ahead and answer it and highball it. Either one of three things will happen:
1. They will tell you it's fine (and it might be), in which case, you didn't ask high enough.
2. They will say you're way too high and hang up.
3. They will reveal what their highest salary is for the position (or something close to that).
Number 3 is what you're looking for. Because then you can negotiate off your high ball answer and look like you're being reasonable, if they refuse to come up, then it's time to hang up the phone.
I don't like how this starts out. Ratcheting up the pressure on how critical it is for you to negotiate from the get-go in your career, as if it's going to somehow compound down the road.
That's only true if you're planning to stay at the same company forever. You can ask for whatever you want in your next interview. It's nobody's business how much you made in the past.
I'm not saying that you shouldn't negotiate, I'm saying it's okay if you didn't.
> You can ask for whatever you want in your next interview. It's nobody's business how much you made in the past.
That's only true in California. For the rest of us, it's perfectly normal to be asked how much we currently make. It may not happen at the beginning, but after your first counter-offer, they will almost always ask where you're at now, and then say something like, "that's quite an increase from where you're currently at. How do you justify that?"
“If you can only e good at one thing, be good at lying. Because if you’re good at lying, you’re good at everything.”
-gselevator
I respectfully disagree with the “it’s OK to lie” approach. I have integrity so the option of lying isn’t a tool that is available to me but even if it was, I think the market rewards trustworthy actors over the long term.
I mean, I only recommend that someone do this when a company does something as immoral as demanding your previous salary and trying to use it as a negotiation advantage.
Companies shouldn't be doing that, and if they do, well they deserve every tactic to fight right back at them.
That’s the thing about integrity, the lack of it in others doesn’t change your own response.
Interviewer: “What were you making before?”
Interviewee: “Why would that be relevant?”
Interviewer: “I just want to make sure we’re in the same ballpark.”
Interviewee: “Ah, no problem. Tell me the you’re range and I’ll tell you if it’s worth going forward.” (Big smile)
And then the interviewer responds "Haha, No. No job for you."
And then they move on to only interview someone who is will to screw themselves in the negotiation game.
I don't see anything immoral about punishing companies that use sleazy negotiation tactics with your own sleazy negotiation tacts. Kinda like how it is morally ok for police to use force to arrest criminals, even though "force" in general is wrong.
But in this case, replace "force" with "counter sleazy negotiation tactics".
Your stance is equivalent to someone saying "I am a pacifist, and oppose all force no matter the purpose or who it is used against, even if it is the legal authority using the force, or someone using force in self defense." Its negotiation pacifism.
My stance is that I won’t lie. That said, I don’t recall ever being in a position of weakness that would require me to lie either. (It’s easy not to steal if you aren’t hungry.)
This honesty thing is a big deal in life but it isn’t something you can “try out”. It may take decades before it really pays off and when it does, you may not even realize it.
If you find yourself in such a situation, you should say something along the lines of "At my previous job, I provided a tremendous amount of value to the organization, and was unsatisfied with the amount of that value I was capturing for myself. Given the current market conditions, this is something I feel comfortable remedying"
It’s not a crime to lie in a job interview. In fact, it’s one of the best tools jobseekers have at their disposal. As long as you can afford to not get the job, swing for the fensces.
Honest question. What do you do when the salary offer is contingent on providing w2 for verification of previous salary? Non sales role. I had a company I wanted to work for go through the whole interview process, get to an offer stage, and I offered my number first. They said no we can't do that but we can do this. 'this' was less than I was making currently, so I told them no. They asked for W2 to verify. At that stage I said hell no, no longer interested. But what would you do if the demands that?
When asked for previous salary I tell them my "current compensation". In this I include employer contribution to health care, retirement benefits, vacation time, office perks, etc. All of these are nebulous enough to where I can get to whatever number I want.
If they really want to see my W2 it's probably not a good fit. As a jobseeker, I have to trust what an employer says and they're not extending me the same courtesy. I mean can I see the W2s of my coworkers to verify I'm not getting ripped off?
Great question, and I'm not the one you asked, but here's my two cents anyway :-)
I would likely do what you did and say hell no (tho this may lead them to believe I was actually lying, even tho I'd be clear that I felt it was an invasion of my privacy). If I really wanted the job for some reason (maybe I'm desperate, or their tech really is that 1337), and felt like they were asking in good faith (didn't want to be conned, especially if their market data would say I was already statistically way on the high end), I might counter by offering a previous paystub or something (w2 doesn't often tell the whole story, and can also give them more info than they need. Yes I'm paranoid).
If I had lied tho? Well I might just cut my losses, knowing that it would be interpreted as me being guilty, but then again I would be guilty. I do wonder tho if somebody would resort to GIMPing their w2 or paystub to fudge the numbers? IDK. I couldn't do it without feeling like a horrible person, but I'm unusual.
Absolutely do not lie unless you want the offer rescinded. A lot of companies will ask for exactly that after the offer is accepted and it is a perfectly reasonable thing to do.
There is no way for your employer to verify this information.
And even if they DID, do this, 6 months later, if they fire you then they just lost that 3 months of training time that they spent on you.
Sure, they might do it anyway if they are spiteful and idiotic. But most of the time Ive learned that businesses don't like wasting money.
And the immoral people in this situation is the COMPANY, for engaging in this shady negotiation practice. They deserve anything that happens to them if they engage in this behavior.
You can also be terminated immediately, forfeiting any protection of law (wrongful termination, etc) for lying or misrepresenting yourself. I've never heard of this happening personally, but I've signed a few waivers acknowledging that I have been informed of this (CYA at its finest).
I heard of one case where the dude said his GPA was way higher than it really was, and his employer found out and canned him.
I totally agree, but when I was a junior dev in SLC in the mid-2000s, it was unheard of to find a place that didn't base your offered salary directly on your current salary. They didn't care if you were underpaid and more valuable than what you were making. It was all about that big corporate HR and their rules for determining appropriate pay. It's how "engineers" that hadn't coded in 20 years and offered no value, but had been with the company for 30 years, could pull down 150k a year while I was making 60k. It's all about seniority.
Of course you could bypass that by working at a startup, but as a junior dev those jobs were very hard to get. They always wanted a senior engineer. Also, they could make the problem worse since salaries were lower due to stock incentives (which corporate HR rarely counted since their value was ambiguous).
True in my experience. I’ve had salary go up 10% and equity double when getting promoted. So equity goes from a small portion of total comp to the majority.
Is that at a public company? If so, it makes little to no difference where the extra comp comes from because you have immediate liquidity. If it’s a still private startup, that equity could end up being a liability if you exercise options and the company goes under. Or, it could end up being many times your salary.
Most companies outside and inside the Bay Area are things like individual law practices and barber shops. I'm a bit surprised to find such companies a topic of conversation on HN.
I've gotten bolder and last time job hunting my answer the first time the recruiter asked for my range: "if you offer $300k right now, I'll take the job today."
What constitutes an exploding offer? Is it a 3 day deadline? 1 week? 2 weeks? 3? Personally, anything less than 2 weeks seems rushed to be making a decision that could cost me $10K or more over the next year. I feel like 3 weeks should be enough to wrap up any open recruitment processes, and 6 weeks is downright absurd, but I don’t have a good sense of the issue overall.
Also, if merely mentioning having an on-site can get me a $5k increase, why not just bluff?
Everybody has their own range. That said, when a company demands an answer by the end of the day or the end of the next day, or if you have mentioned you have another interview coming up and they set it before then, it's an exploding offer and you should reject it.
It's entirely reasonable for a company that really needs your skills now because they don't have anyone else who can do that work to ask for an answer in a week. You should consider negotiating a little harder.
For any company that already has several people working in the same position, or is expecting you to move any significant distance, you should expect them not to be in a huge hurry.
What would a hiring manager say if you told them "I'm going to finish my job hunt, if yours is the best offer at the end I'll submit another application" ?
Maybe this advice is good when applying to the big four, but otherwise it's a wonderful way to waste one's own time. From having conducted hundreds of in person interviews and probably thousands of calls with recruiters or phone interviews, I find that figuring out the band a company is willing to pay is fairly easy. Also, it's not a wide band even at senior levels. In fact, the acceptable range is usually quite narrow. I save a ton of time by not interviewing with companies who can't even pay the low end of the range I'm looking for. This is the situation most of the time, in fact. I've done interviews and take home assignments only to find out the company's range and my range don't overlap at all. That's just stupid and a waste of time. These days, I discuss salary first if it comes up and definitely before dedicating any major amount of time to an interview. Is there a chance that I'm leaving money on the table? Maybe a very tiny one. Usually, I'm just saving myself hours or days of interviewing for a job I will never take. For almost all jobs, I find this advice to be wrong and a waste of time.
I'm probably too late, and I am probably too far outside the core interest group (the US developer market) for this one. but anyway: What would you say, if I hypothesized a fairly narrow but structural pay grade for years of experience, qualifications and perhaps a more variable quality for domain specific knowledge or above-competent?
Seriously: if the entire industry moved to a different model, would the fact some of us were significantly worse off, but most of us on average were better off be acceptable?
Thats basically what Unions, and Unionized negotiating achieves. If (like me) you worked in the tertiary education sector as a researcher, this is how it worked.
Could any of you people go there? If not, why not?
I would be skeptical, but open, so long as it is frequently renegotiated. Dev salaries have gone up incredibly over time, and new technologies come in all the time. After new technologies/niches come in, their value changes over time. A specialist in neural networks pre-2010 vs post-2012 would have quite different market rates. It wouldn't be enough that most of us on average are better off today. It would be important that most of us on average will be better off today and in 15 years, which seems to require frequent renegotiation in a fast moving sector like this.
One can also do this... When asked what your compensation requirements are, simply say you need to research what realistic salaries are in the current market before answering the question. If pressed for an answer, just say doing that research is important to you, and that if they really need an answer before continuing, you'll come find them when you have an answer. This allows you to plainly state your preference, respect their process, and it gives you time to come up with a number you'd actually want. The recruiter may just back off and let you proceed without asking for a number until much later in the process.
The correct response is "No thank you."
For extra style points tack on "But it was great talking with you, I'll be sure to tell my colleagues about you."
"I'll be happy to iterate on what I need when I get an offer"!! I'd move along politely at this point. Reality is, our best hires have approached us even when no job posted - but know what we do. They don't seem to care about salary - and I'm eager to give big raises fast to keep them - 15-20%+ at 6 mo, 15-20% at 12 months + bonus. The market is tight at this point and managers want to keep staff.
Thankfully not doing tech hires, if this article is the way these guys work - I'm grateful not to have to hire in that space.
My life is more boring. screening resumes, only 40% of which are minimally qualified. Quick phone screens after two of us go through the stack (we use an online tool to manage this). What are salary expectation is a question in that first call. I'm happy to share ranges with folks as well. Saves us all time to chat this out early - and I find I enjoy working with people who can talk about money in a rational manner.
How can you talk about salary if you don't know the job ? I certainly won't negociate the same money for a start up, a big co, a remote work, a borring one, one with hard challenges, one with long hours, one with benefits, location, travelling, fancy clients, bonuses, shared values, etc.
After a first call, I won't know remotly what I need to know what to negociate for, and giving any price is most probably setting wrong expectations that will be very hard to come back from later.
It seems lose-lose to me.
Besides, i have several offers at the same time. I put my recruiters in competition.
If it is a contract to hire position let the recruiter pick the number for you, because their commission is a percentage of that number and they know the client's (hiring company) target range and exceptional range. You will want to max out that contractor rate, because that rate is a factor in your conversation negotiation.
Another aspect which is often missed during thinking about own number, or discussing the offer with a recruiter is that even if one's skillset is worth X, it is not always the case company will need the whole set of skills applicant posses. Hence their market price for that position might be lower than what an applicant is looking for, yet still fair. This kind of mismatch of honest numbers is the case where things will just not work out. One thing is being underpaid, the totally different thing is doing something too simple for one.
When I was searching for a job, I used to ask straight their salary range, since I always assumed business is pricing job fairly and that number would tell me what kind of skillset their business need. (And no, one's extra skills are not gonna give an edge to business, and usually these extras worth nothing to the business, hence lower offer)
The best way I've found to avoid this problem is to have multiple offers on the table at the same time. And to be sure the employers are aware they have competition.
It seems to create the same dynamics as a blind-bid procurement process, which works in your favor.
As someone trying to build a brand new team, I am happy to pay people whatever they think they are worth. I wonder if there is a way to do this without offending the engineers I am trying to attract - I mean, if they are not to answer the question how much do you want, how do I pay them what they want? I am not at all worried about over-paying because any engineers that don't meet the performance bar I set won't last long enough for it to matter.
You say you're not worried about over-paying, but you mention the opinion/want of the engineer twice.
If you're truly not worried, just figure out the most generous compensation on the market (e.g. consultant rates, what FAANG pays) for a comparable engineer and exceed it.
Alternatively, or additionally, be generous with equity and/or profit-sharing. Even with a base salary that's only slightly above market, an engineer is unlikely to feel cheated/exploited if they're also being compensated with a significant portion of the value the company realizes from them. (In the typical company, where all employees' combined share is 10%, it's not significant).
If you tell them how much you previously made, and it was a lot, is there a good way to prove you're telling the truth?
Or should you not want to work for them if they don't believe you (and they shouldn't hire you if they don't believe you)?
Is it acceptable to offer a copy of previous job offers or contracts to document salary history, sign-up bonuses and relocation plans, or would that be weird?
Unless it's a really small company the job has been graded, which means that they already know the title and level of the job and the salary range that has been approved.
When they ask for the number I always respond by saying, "Please tell me the approved salary range for the position."
If they won't tell you the salary range it's probably not a company worth working at.
Not saying up front what you are looking for is completely wrong and really bad advice.
I've negotiated thousands of salary deals and it never works like that.
Consider this simple scenario - employer is looking for a mid level developer, wanting to pay around $80K. You, however, know that you would never accept a role for less than what you got paid in your last job, which is $110K.
So how is this going to play out? 3 interviews, everyone invests their time and effort and codes coding tests and assessments and at the end of it they say "we've got $80K in mind for you", and you are outraged.
The correct advice when asked your salary target is to know the range you are after. It should be neither too high, nor too low. Ask yourself the question - "what is the salary I would feel happy with to stay in this job for the long term?" - that number is the bottom of the range you present. You can add $5K to $10K to that range to give yourself some negotiating upside.
So your answer in the above example might be "I'd like $110K to $120K depending on the responsibilities of the role".
That's the right way to do it. It's ridiculous to go into a recruiting process hoping to negotiate at the final stage - that would waste everyone's time.
> You can add $5K to $10K to that range to give yourself some negotiating upside.
This probably makes more sense as a percentage. If you're making 80, adding 5-10k for negotiating makes sense. It you're making 120, adding 10-20k probably makes more sense. I always go with the top range of what I think is reasonable and add 10-20% or so.
Basically the very upper limit of reasonable. Yeah it's silly, but everyone's in on it and since I started doing that, I've been pleasantly surprised quite a lot.
I realized recently that companies that have asked me upfront what my salary expectations are have never made me an offer of employment (regardless of whether and how I answered that question.) As a result I don't give them a number and I also expect that to be our last conversation.
This would be helpful if it were 1994 and there was lots of what economists call asymmetric information, but now you can price-check a company's offer in seconds.
Besides, companies can also easily see what the going rate is and normalize their budgets accordingly. I recently went through the job search process and almost all companies offered similar rates.
If you're north of 100K (and I assume most experienced software engineers are) realistically 10-20K more will not make a significant impact on your quality of life. We're talking an extra $500-1K a month. Nice, but doesn't exactly catapult you into the 1%.
As long as your salary is in a competitive range it's more important to focus on finding the right fit of industry, company, people and projects. Wouldn't over-weight salary negotiations, especially in a day where both employers and job-seekers can quickly ascertain market rates.
Something not often considered is playing on an awkward silence between the tit-for-tat. If you let things stick in the air a bit longer sometimes signaling from the other party can help you find that sweet spot.
How about "From my research and experience, I believe that I can get $X" (name your most optimistic realistic expectation), "but I'm willing to negotiate if that number is a problem."
The reason you don't do this is there is a real possibility they are willing to pay $X+25%, so now you've just anchored the discussion around $X and you'll likely not see an offer for more unless you've really low balled yourself and the employer has set salary bands.
Also definitely do not follow up with the '...but i'm willing to negotiate' bit.
OK, I know this doesn't contribute to the discussion and I apologize in advance.
But based on this title I thought this would be a short blog post about recruiters using phone-screen questions to probe whether a candidate uses zero-indexed or one-indexed counting.
Simply tell them (at the offer stage):
“Make me two offers, one with a higher cash compensation and the other with higher equity.”
Then, always take the position with higher cash to base your next negotiations. If it’s good enough, you might even take it outright.
This is a trick that exploits the fact that most startup founders and recruiters have an over-inflated “best case” view of how much their equity is actually worth, so it works in your favor when they use it as a benchmark against real money today. I’ve found they also fail to account how much it would be worth for you vs. them. Considering the risk is high you won’t make anything from those options even if you exercise them (& stay long enough), the cash position is nearly always better. If the company becomes some run-away success there will be opportunity to get more equity but getting a cash raise in 6 months is infinitely harder I’ve found. Promotions at startups often times have an additional equity award and by that time you’ll have more information as to the chance of success or not.
Generally, based on my experience, it’s a good way to immediately get an extra $10-20k, with little emotional effort and without the other side feeling as if they were strong-armed, or that they had to give up something, since they offered you the choice. (This is important because you don’t want to start your position there viewed as an “expensive new toy”). They still feel powerful and in control. They may even be happy you took the cash option and let them “keep more” of their precious company. When I started doing this I originally feared they would think I don’t have faith in them, but I’ve never had someone feel insulted I took the cash option.
As an engineer I actually enjoy the negotiation process, it’s the best type of problem: pure tactics.