Fantastic perspectives thank you. I don’t feel like going too hard on BATNA because it’s a sensitive and positive environment. If I get mugged off, I would walk away, but I wouldn’t enter with this stance.
Answers to your questions:
- 3 of 5 founders strongly technical, one exceptional, one strong but she is not involved with my line of work/ probably couldn’t do it, on par with the other, and above all other devs.
- trying to be modest, but almost definitely ideal for next phase of growth if they want to maintain momentum and trajectory. Would be a big hit to lose me. 3 months to hire a new lead, 6-12months to get up to speed, but longer to understand the industry/code which is nuanced, often weird and undocumented.
- 1-2% is how I feel too, but just feel they would never give this. I’m very critical and pessimistic, but genuinely feel this is the one which could break through.
I just don’t believe the decision makers believe that any head of role justifies more than 100k or more equity so it’s going to take a lot of educating..
This is the sort of reply I was hoping for, thank you. I have a few follow ups:
- Do you have any sources for where you’re seeing salaries at 100k upwards? Anything online, or is this offline advertised roles? I’m going to need some evidence points to support my counter offer. I think a few senior salaries to solidify a low of 100s and a few head of salaries to set a benchmark will be helpful if I can find them.
- It’s not an AI business, but does leverage it. I think the 100k-400k at 0.2% isn’t a game changer, but double or triple that would be. Where are you getting your ARR multiple estimates from? I don’t doubt you, it just helps me assess my position.
Yeah I feel my equity offer is probably unfair, but didn’t know any different when accepting it sadly. Do you have any resources I could read to educate myself more about what I should be specifically asking for in a negotiation and how it works.
Sorry for the delayed reply ... feel free to email me (email address in my profile) if you have more questions
- No online sources. This is first hand data for engineers that have worked on my teams.
- Here are some resources [1] [2] [3]. During the boom a couple years ago, multiples got way higher - at the time I worked at a company that got valued at 26x. But that's not very realistic these days except for particularly hot companies. The median for SaaS is probably around 5x. But you get more points if you're growing fast, etc.
- Here are some resources [4] [5] [6]. Normally you'll see the first employee - especially the first engineering hire - get around 1%. That number drops quite quickly after the first employee. So based on your circumstances it seems you're below benchmark by around 5x, and that's further compounded by how early the founders want to exit (i.e., if you were an early employee of Instagram, then 0.2% would actually be a lot. But 0.2% of a business that wants to exit at $10M ARR doesn't make up for your risk).
I can't give you sources but personal anecdata. I concur with what the parent poster says.
Senior salaries nowadays can go from £85k to £120k depending on the company size and how important engineering is for them. Also any "Head of" confident of their value and expertise is likely on the six figures
Agree 200k isn’t going to be life changing when looking over the lifespan of a career, just quite a bit of fun, so won’t let that be the biggest sway - and it’s probably a best case scenario.
Dilution is something I’m very nervous of in perusing an equity strategy, but just don’t know how to calculate my exposure to it. I just don’t understand the topic enough.
There will be something that feels bitter if the company does sell for that figure and the guys/girls cofounders all land on a few million and me on 200k despite having done a significant amount of the code leg work. But probably bigging myself too much there.
I agree with both the comments. At the moment there are no progression paths which don’t involve moving up into doing more management, but I’ll still be spending 75-80% of time writing code. If the company was larger there may have been other options internally to focus on technical roles.
Be very cautious about “you’ll still be writing code” promises. A team of three is a significant time investment, and I’m highly dubious that leading a team can be done in 1 day a week, at least if you want to do it well.
At the very least you’re going to have to learn how to write code while being regularly interrupted, and in my experience that means you’ll have to let go of doing anything interesting because you’ll end up blocking work due to unexpected things coming up.
I live in South Manchester, role is technically in London. We don’t have a permanent office as the team are fairly remote. When we meet it’s in London and the team hire out some rooms/desks at a cowork. I occasionally travel down, 2-3 times a month for these meet days. Centre of gravity of employees and activity is London, but we have people flying in from Scotland and France too.
Thanks for the suggestions! I could definitely shop around. I don’t have time in this round of negotiations as need to give a counter offer next week. I also really enjoy working here, it’s a good set up.
“You may have been thinking that the highest rate of income tax payable was 45%, at which point the rate of National Insurance is 2%, giving an effective tax rate of 47%.
But did you know you could be subject to an effective combined rate of income tax and national insurance of 62% if you earn over £100,000?
The 62% tax trap refers to the income band falling between £100,000 and £125,140 on which the employed or self-employed will effectively experience an income tax rate of 60% alongside national insurance contributions of 2%.
This is because for every £2 you earn over £100,000 per annum, you lose £1 worth of your £12,570 tax-free personal allowance.
Your tax rate only reduces to the additional rate of 45% after the entirety of your personal allowance for that year has been eroded, i.e. on income above £125,140.”
You get significantly punished for breaching that 100k. So if you’re going to tip over, you needs to smash through it.