Now, Next, and At Exit: The Three Ways To Evaluate Compensation Before Accepting That New Startup Job
‘Sell calls.’ That’s what a conversation between a job candidate and a VC are called. We’re supposed to help seal the deal, get the person to sign on the line which is dotted [insert Glengarry Glen Ross gif]. Now, I LOVE these conversations with possible new team members, but take a very different approach. I don’t sell them. Instead I try to understand what they’re looking for in an opportunity and help confirm that this would be a great career move, if the match makes sense. But if it doesn’t, or they’re trying to understand the pros and cons of, say, starting their own company instead, I’ll talk to them about my POV, without trying to talk them into, or out of anything. [Now it just so happens we also have a very good close rate, but that’s because the startups in our portfolio are typically interesting, rewarding places to be and they are thoughtful in the candidates pursued].
Recently in speaking with an engineering manager candidate who had been working at later stage/public companies, we got to discussing compensation. Not the specifics of his offer — I don’t negotiate on behalf of the company, just provide advice to both sides — but more about how he should think about it vis a vis his previous employers. My framework was a sort of triangle, and here are the three sides:
Use available benchmarks (public, from friends, etc) to understand whether your offer is generally ‘fair.’ Once you’ve established that, and especially if there’s an opportunity to trade off cash compensation for equity [some startups will present two offers for you to choose from, or be open to some negotiation], figure out what your floor is for near-term salary. And don’t go to the startup if they can’t get above it in some easy or creative way.
The reality is that most hires to early stage startups will be taking a near-term hit to cash compensation or at the very least, earning less than they could if they *only* prioritized salary (and not role, company, or equity upside). The ‘below market’ hit way smaller than it was 10–20 years ago for sure, but it still exists, especially at seed…