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by sokoloff
1746 days ago
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You shouldn’t be giving managers 6-8x what you offer senior engineers at a startup, at least not in a startup where engineering matters. If smart candidates are rounding the grant value down to zero, smart companies will not seek to give grants that are multiples of the current size. (That’s giving away $100 bills to someone who values them at less than your cost.) When you’ve raised a $20M round and have an employee pool that is 10-20% in total, you don’t have many 1% grants to give…and you have exactly zero 6% grants to give. |
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This is true, but the percentages illustrate how silly many investors are being about the resources necessary to put together a good engineering team.
I've had offers from startups with well known VC backers who wanted me specifically. They'd tell me their upper bound on cash, and then assuming I thought they had a decent chance, I'd calculate how much stock I'd need to make for the expected value for working for them to be at least as good as at a big tech company. Generally the calculation came out to 4-6% of the company per year.
That number could be lowered if I had access to the cap table or were being issued some kind of preferred stock, but no one's willing to do those things either.
Cash is cheap and labor is expensive but investors still want a way better deal than any engineer could dream of.