I joined a YC startup as engineer #1 with close to $200k salary and 2% options vesting at the usual 4 years, with a 10 year window.
I feel like this was bettern than usual, and for a while felt like I struck an awesome deal, but as time went on I realised I was building everything single-handedly, while getting (at best) 2%, which started to annoy me deep down.
Over two years in I'm considering quitting, for multiple reasons. I still believe there is a good chance of getting to an exit at some point, but I don't like the vibe and culture here, and honestly between cashing out 1.X% and cashing out 2% I don't see the point.
If I had been given a much higher chunk (>5%) there is a good chance I would've stayed, so we'll see if they value me enough with a counteroffer when I give my notice.
All in all, and reading through all of this I would never join a startup under these terms again, if I'm engineer #1 then I'm getting at least 10% and essentially being a cofounder. Otherwise I want a salary that's on par to a bigger company.
10% to a founding engineer almost never happens. You’re in cofounder territory. There really are 2 reasons to stay in the startup,
1. The startups reaches a great valuation. If it reaches a 1B valuation, then even assuming 50% dilution, you have 10M for 2+ years of work, almost 3-5M per year TC! Yes your founders are earning much more but comparison is the thief of joy, you just got a salary that no big tech company could match (unless you’re in C suite)
2. The startup doesn’t reach a large valuation but grows rapidly making you in charge of a large group. This too is useful, promotions in big tech have a very standard time schedule, it takes 8-9 years to reach staff (or never) and then 4-5 years for every subsequent promotion if it happens. With a startup, if as a founding engineer you gain experience leading a team of 50 people, you’re scoped for staff and above in your next job hop. Of course you need to sell this in your interviews but I’ve seen this happen and it can be worth it, if you played your cards right.
TC isn't TC if it will remain illiquid for a number of years. That is the issue described in the blog post. Founders get great secondary liquidation in each round which helps realize some of those gains. For you as the early employee you get stuck with a now more valuable potential lottery ticket, but no clarity on when it can be cashed in.
> 10% to a founding engineer almost never happens. You’re in cofounder territory.
Morally/ethically, if you're building everything single-handedly from the start, you are a cofounder. Obviously the original founders have no legal obligation to compensate you as such, of course.
What seems weird/odd to me is (assuming I got it correct) OP seemed quite important/essential to the working of the company, if not the most important technical person. 10M is nothing to laugh at, but I'd much rather get 500k from a company valued at 5M than 10M from a 1B corp if I was the largest contributor.
What I don't get is that you are engineer #1 but you say the vibe and culture are bad.
Why didn't you build a better culture? I very much doubt that the management team took all the hiring decisions on their own after they got you on board. I'd say the most important part of my job as #1 was to hire and build the team.
throwaway acct here. I left a flagship tech company with $500k total comp and joined a startup as engineer #1 with 5% options over 4 years. My salary is current $120k and I'm losing money each month, although I've been promised that will changed as soon as we raise more.
We are going to raise a Series A in the next few months. I know a little bit about this stuff, but not enough that I'm confident in exactly what to expect over the next few years, nor enough to know that I've negotiated properly (thought I did lol) and are protecting myself enough. This thread is scaring the shit out of me. I have a good relationship with the two founders and not afraid of being candid with them. Would appreciate any advice.
You should be candid with them that you're uncomfortable with the cash portion of your comp.
5% is an unusually high % of equity, the founders likely assumed you were happy to trade-off cash for equity. Series A is usually a dilutive round and it's normal to grant people like yourself more options to compensate for the dilution (i.e. to keep you at 5% of the new cap table).
My 2¢: I know people in your position who have ~$200k cash comp in addition to meaningful equity. Don't feel bad about asking for more cash, if your founders have a good relationship with you and you're providing value for the company, they'd rather invest the marginal cash in you and keep you happy + comfortable.
Thanks, I feel a little better about the situation. I pushed pretty hard for the equity. One of the founders knew me and sought me out, so I leveraged that a bit. When I signed on, the plan was to raise a new round within a 2 months, which would be accompanied by a bump. But for reasons not worth getting into, we waited about 9 months. I padded my bank account in preparation, and I'm just about to tap into savings, which I really want to avoid.
I just told them I need around 200 to be comfortable. And that's the truth. Response was good, and they can't match that now, but they will. I'm working for good people I trust. And we are building some pretty awesome tech that are much needed in our industry.
5% is insanely high based on the founders I surveyed personally (probably around 50 at this point) and generally available info from hiring pros. They must really value you. Cash comp is probably low (depending on the locale ofc) but i dont know how much money you raised.
This sounds like a bad job and you should find another.
At some point you were happy with $200k and 2%. Now you aren't. I don't think there's a bump that they could give you at this point that would make you want to tolerate the shit that's bad about the job.
Note that this is a bad job. Startups are more prone to creating bad jobs.
The math for employee #1 at a startup is almost never ideal if you're being completely rational about expected value. That is, I think, a separate problem than you're dealing with.
The ideal reason to be engineer number one tbh is if you want a playground (for lack of a better way of putting it) to build the system out the way you want. That will be of high value to specific people (Architects, not the LinkedIn kind) and low value to most of the population who just sees a job as a means to an end.
But for some people, direct access to an AWS account and license to build as they please is intoxicating.
Compensation wise, that’s a great startup job, especially with such an insanely generous exercise window. Where I think you maybe went wrong is, if you are building everything, it’s not a collaboration with the founders, which is half of the fun of everything.
I suspect it’s more about the culture than the numbers. You say on one hand, oh I’d probably stay for 3% more, yet, you don’t see the point to earn another 1%. Your salary is pretty good man. Meanwhile they are burning $250K every month into smoke
10% is not realistic. That’s the whole employee options pool. I mean imagine if at your current job, someone worked there for a year before you, then walked away with more than your entire current equity grant, never to be heard from again. That’s what you’re describing.
It's normally considered a bad salary in comparison to what you could be making. I won't speak for the poster but I left a ~$1m / year TC job ($300k base the rest RSUs) to join a startup. I have a good salary compared to the population at large but it's a fraction of what I could be making on the hope that my equity turns into something meaningful that makes up for it.
The easiest way is to move to the SF area. However, you'll end up spending most of the after-tax pay on housing, food, etc. For example, rent on a 1 bedroom apartment in the suburbs is going to be $30-60K per year:
If you live in the US and work as a software engineer at a top tech company it’s very straightforward to make more than 200k. Otherwise, it’s much harder.
It's not just a matter of place, but what you can have if you work for Google instead. I can make $200k as a freelancer in France, but much more as a Google employee.
Today I'm giving a training to 3 people, each paying 2600 for this training. It means this week they get billed 7800 in total. If you do that for 30 weeks (not even a full year), you get to 234000.
15 years ago, my team leader was already doing $15K month as salary, and it was a startup in Sophia, not Google, and a long time ago.
So it's all possible, but indeed, not the average situation. The median dev is underpaid in France:
I'm in a really similar position to you. I'm currently engineer #1 at a seed stage startup making $155k with 1.5% equity. But a year in I'm realizing I've built their entire product from scratch while they do sales and outreach. Obviously those things are important but I'm a leg of a tripod holding the whole thing up and yet I have a fraction of the equity they have. Makes no sense.
I've been thinking about the equity split amongst early employees. Our startup is reserving 20% of equity for early employees. How about a division by 2 every time? First employee gets 0.5 x 20%, second employee gets 0.25 * 20%, etc.
Early employees are better rewarded for the risk, but later employees (e.g. #10) will get basically nothing. It's all about tradeoffs
people already do a variant of “earlier gets more, later gets less” that’s a lot smoother/linear than your scheme and can be customized and adjusted to roles (engineers get more than salespeople as an example). With what you describe, offering some exec down the line 0.5% or whatever is impossible.
You need flexibility because at any moment some killer candidate might come along that you need to juice the grant for. Just being earlier doesn’t mean they contribute more to the company
But you can leave easily. and in 2024 I think people should insist on getting a decent salary (FAANG is impossible, but for most of the country, “even just” $170K is eye watering), and work life balance (sure, you will have to put in extra hours sometimes, but if it’s a 12 hours a day shop, don’t join). Founder should work a lot more aggressively, live a lot more spartan, and obviously is shackled to the damn thing with no optionality.
I'd say take a startup. Those early companies don't have a lot of staff so you can try lots of things, wear lots of hats. Good experience. Take cash, don't get played by options/equity. When you find the hat you like move into a more stable role.
i joined as founding engineer as my second job, 2 years after college. The founders were the same age which I think let them consider a young founding engineer. It worked out for me and I think if you have the opportunity then it is a great time to take the plunge. Knowing what I know now I would likely not take the same role at 30 due to lifestyle requirements (have wife and house now, back then I was paying very little for rent with roomates and had no issue with 12 hour days. I think the risk can make sense early in your career but most founders probably dont want to risk it on an untested dev with sub 3 YoE.
It would be like what you say, with my core hours being in my TZ - but I can imagine some late meetings will be unavoidable, specially given I’m joining as founder engineer so I’ll have to be present in many I’d imagine
How did you cope with social life though, plans after work, sports - that sort of thing?
There hasn't been much of a social life in general. I've been largely self isolating since 2020. I was just starting to get back out into the world as I began this remote role, then omicron hit and I decided to stay home and wait for a booster.
In about a week, I plan to start going to the gym again and sign up for a dance class, so we'll see what the social life looks like then. The three main meetings I have in the week are pre-scheduled, so it should be possible to schedule these things around them. Sometimes surprise meetings pop up, but 99% of the time they're closer to the evening. I believe it should be possible to take a longer lunch to meet a friend or go to the gym, considering I'll end up making up the hours (likely many times over) anyway. The only thing stopping me would be purely my own workaholism and inability to switch off.
Scheduling-wise, the time zone discrepancy might give us _more_ flexibility since we'd know there won't be a surprise meeting for several hours in the day. Some convenient scenarios I've considered:
* Visit the gym during off-peak hours and have the equipment to ourselves.
* Take a long weekend in another city and work from the train there/back instead of having to book time off. You could schedule the trip in the beginning of the day where you know you won't have to hop into a meeting mid-transit.
* If meeting a friend in the city, could work from a coffee shop before/after (same as above, might be especially convenient if you know you have a chunk of the day where you won't be taking a meeting in the coffee shop).
I could even easily work on the way to a social engagement on the bus/subway and not worry about missing "work time", although after two years of no public transport I've been getting very carsick (I'm betting that'll pass).
So I _suspect_ that once one gets into the swing of things, this kind of arrangement could actually make it better in terms of social activities.
Yeah they’re ok with just some overlap - but it’s hard to know if this will be maintained in the future…
I’m not too worried about long days (I would start later if needed) but late meetings for instance.
I also do stuff with my wife like dance classes or climbing after work which would be quite challenging, how did you cope with social life with that schedule?
I joined a YC startup as engineer #1 with close to $200k salary and 2% options vesting at the usual 4 years, with a 10 year window.
I feel like this was bettern than usual, and for a while felt like I struck an awesome deal, but as time went on I realised I was building everything single-handedly, while getting (at best) 2%, which started to annoy me deep down.
Over two years in I'm considering quitting, for multiple reasons. I still believe there is a good chance of getting to an exit at some point, but I don't like the vibe and culture here, and honestly between cashing out 1.X% and cashing out 2% I don't see the point.
If I had been given a much higher chunk (>5%) there is a good chance I would've stayed, so we'll see if they value me enough with a counteroffer when I give my notice.
All in all, and reading through all of this I would never join a startup under these terms again, if I'm engineer #1 then I'm getting at least 10% and essentially being a cofounder. Otherwise I want a salary that's on par to a bigger company.