You should get a market rate salary post series-B or damn close in my opinion. This is the round where founders can take money off the table, making them millionaires. If they take money off the table but tell you that you should take less then market, you are getting taken advantage of. At a large company, with stock and bonus you could be getting $100k more per year. Your startup stock should cover this and more since you are taking a risk it is worth nothing in the end. Your base salary should match what you would get elsewhere. Founders take money off the table so they can focus on building the company and not worry about finances. There’s no reason employees shouldn’t be treated the same way.
How would you like working at a place like Secret for a discount only to find out 18 months before shutting down the founders each made 3 million.[1] Don’t take a below market salary at this point. There’s enough money the company can afford to pay market. If the founders can make millions they can afford to pay you the wage you deserve. Even post series-A I feel should be close to market, since the company just raised millions. Seed can be lower, but you should have a guarantee that it goes up at the next funding round. There’s a lot of money in the market and a lot of bad founders, so don’t make personal sacrifices to make others rich. If you want a mission, join the Peace Corp. Startups are business, otherwise they would be incorporated as non-profits.
Employees should always negotiate to be paid their market rate, regardless of the stage of the company. Founders can pay themselves as little as they like, but once they start hiring people they need to actually pay those people to work for them. Stock options (on top of that market rate) and other things are a nice way of offsetting the risk that the company will go away in a matter of months, but never make the mistake of trading away salary for them.
Doing otherwise is a combination of betting on other people's lottery tickets and simply being taken advantage of.
I agree with jasonkester. Unless you are a very early employee getting an out-sized amount of equity (>2%) then you should be damn close to market from the beginning. Of course startups pay less, but more than 10% off market is terrible. Even early employees should be brought up to market very quickly once funding happens. If you google it, you'll find the consensus is that founders can pay themselves market after series A. You better be getting market too.
The best way to get a raise post funding round as an employee is to go in guns blazing in your next salary/performance review. Make sure to keep a list of your accomplishments, tie them to the revenue of the company, outline what you're excited about in the coming year, and print out a payscale report of how under market you are and say something like, "I'm getting a bit demoralized by how under market I am. It will be a load off my mind and make it much easier for me to stay motivated for all that we have ahead if this can get corrected."
If you are invaluable to them you will receive the raise. If you're not, then you're getting the better end of the deal and you should look for a job where you can be invaluable. If you are invaluable and they give you a shitty raise, you can be more explicit with them, but it's likely that you'll need to job hop to get what you want.
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[ 0.21 ms ] story [ 12.7 ms ] threadHow would you like working at a place like Secret for a discount only to find out 18 months before shutting down the founders each made 3 million.[1] Don’t take a below market salary at this point. There’s enough money the company can afford to pay market. If the founders can make millions they can afford to pay you the wage you deserve. Even post series-A I feel should be close to market, since the company just raised millions. Seed can be lower, but you should have a guarantee that it goes up at the next funding round. There’s a lot of money in the market and a lot of bad founders, so don’t make personal sacrifices to make others rich. If you want a mission, join the Peace Corp. Startups are business, otherwise they would be incorporated as non-profits.
1. http://www.businessinsider.com/secret-founders-pocket-6-mill...
Employees should always negotiate to be paid their market rate, regardless of the stage of the company. Founders can pay themselves as little as they like, but once they start hiring people they need to actually pay those people to work for them. Stock options (on top of that market rate) and other things are a nice way of offsetting the risk that the company will go away in a matter of months, but never make the mistake of trading away salary for them.
Doing otherwise is a combination of betting on other people's lottery tickets and simply being taken advantage of.
The best way to get a raise post funding round as an employee is to go in guns blazing in your next salary/performance review. Make sure to keep a list of your accomplishments, tie them to the revenue of the company, outline what you're excited about in the coming year, and print out a payscale report of how under market you are and say something like, "I'm getting a bit demoralized by how under market I am. It will be a load off my mind and make it much easier for me to stay motivated for all that we have ahead if this can get corrected."
If you are invaluable to them you will receive the raise. If you're not, then you're getting the better end of the deal and you should look for a job where you can be invaluable. If you are invaluable and they give you a shitty raise, you can be more explicit with them, but it's likely that you'll need to job hop to get what you want.
I got a 30% raise doing what I just outlined.