Ask HN: Salary and equity expectations for 4th employee

[tmaki]

Hi all,

I've recently graduated from university and have been offered a developer (web dev - rails) role at a startup. The company has a founder and 3 employees and I would be the 4th (2nd developer). I like the company a lot; I feel that they have a lot of potential. However I feel that as the 4th employee, the compensation is a little lacking.

Background: This is a Toronto start up (lower salary average) and they're about to enter their round A's My offer: 40k + 0.5% equity (over 4 years + 6 month cliff)

I'm okay with the low salary as my living expenses are not that high, but I'm not so certain about the equity. However, I've been told that there are opportunities later on for me to get more? What do you guys think?

[JSeymourATL]

Leaving $10-$15K on the table is significant. Start-up equity are lottery tickets, with more losers than winners.

Areas to explore: What's your time worth? What if you traded equity for 8 weeks paid vacation instead? Is there any specific/unique work experience (apprenticeship education) you could get at this firm?

[tmaki]

Thanks, that seems like a good way to think about it. I'm a new grad, so I'm definitely going to get a lot of experience with this company. But I just feel that if I pour 60hr/week into it, I don't wanna exit the company 4 yrs later with nothing.

[JSeymourATL]

It's impossible to predict your exit. Too many variables at play beyond your control. The most reasonable expectation is to be fairly compensated for your time. It's the experience you gain, and relationships you make-- that will pay dividends for the rest of your career.

[jesusmichael]

You just got out of college and you got some equity and you don't think its enough? Wow... If were the founder I'd wonder what a recent grad had to offer to get any equity at all... Even if you got 1% or 2% the company would have to be worth hundreds of millions for you to see big money... and if its going that good then option and stock grants will be available to good employees. Don't try to hit a home run on your first time at bat. If you don't strike out... you're doing better than most.

However, I think you're looking at this the wrong way. Most startups fail.. you should be angling for more base and not worry about the equity at this point... get the experience and add it to your portfolio and look to your next job when this company tanks

[tmaki]

Thanks a lot, this was really helpful. More base sounds like the right approach here...

[Furzel]

Since you just graduated, remember to factor in the learning experience, I'm not familiar with the rails ecosystem but if you are working with some really good developers, you are gonna learn so much which is IMO worth way more than equity. Especially since equity is kinda random ( remember 9 out of 10 startups fails ).

As said in another comment, ask them how they value the equity by bargain, can you raise your wage and take no equity or have more holidays.

A last thing : Try an do some maths, like if you could get +1k/year how high must the exit be for the 0.5% equity to be worth more than the wage raise.

[RollAHardSix]

40k is low for rural usa, I couldn't imagine taking that in Toronto.

[staunch]

It depends on you and the company. AngelList might be helpful. You can see what other companies offer for salary and equity.

https://angel.co/jobs#find/f!%7B%22locations%22%3A%5B%22Toro...

[whiddershins]

0.5% equity seems really small to me. This isn't based on a comparison to other offers, or what is typical for the market, but rather on an intuitive sense of fairness.

less-than-1% equity seems more like a symbolic percentage, and I might be concerned about why the founder is so hesitant to share the pie with the initial team.

[sjg007]

1% or more

[tmaki]

I've talked with a few people, and I'm on the same page as you. What do you think is a fair package?

[RollAHardSix]

40k with 3-5% equity. 1-2% with 60k.

[jesusmichael]

there's 20 guys fresh off the boat that will take the job for zero equity and probably have more experience...

[RollAHardSix]

That's any job. You have to take risks and ask for what you want to get it in life. If this guy is being offered equity it's a fair bet the company is very interested in him, more-so then a regular hire. To quote Zombieland: 'Time to nut up, or shut up.'