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Employee at early-stage SF startup. Should I stay or should I go?

9 points by seekingcharlie ↗ HN
I've been working here for 8 months, leading design & product. We're a 15 person team, VC-funded (raised an A round a few months ago for $2 mil). We aren't anywhere near profitable (hardly any revenue) - to the point that performance / greater responsibility isn't being compensated with cash because "we can't afford it right now".

To be fair, I've been told that no-one is getting cash increases. I was given extra equity, but that means nothing to me.

I like my job but feel like I could be making more elsewhere. Am I being a spoiled brat? At what point is it time to jump ship?

14 comments

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dreamweapon
I was given extra equity, but that means nothing to me.

If you don't believe in the equity, then the answer is immediately: Yes.

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digikata
You are paying for your equity in opportunity cost. So, roughly, if you take your possible market salary minus your current salary over some time period, that's what you're paying to purchase that equity. The straight financial calculation to make is - do you feel that that equity is worth that price - if you had that cash in hand, would you buy the equity with all its risk?

This is one financial estimation, it isn't the only consideration, there is career experience, cashflow to support your life style (is the salary so low that your life is being impacted), etc to be considered too.

However, if you don't believe in the equity, is the opportunity cost you're paying worth the stackup of everything else that's positive about your position?

alain94040
Agreed. The reason to be at such a place if because you believe in the product, you are excited by the growth and by the ability to have real influence on the product. You believe it's going somewhere. If this is just like any other job to you, then yes, move on, you are in the wrong place.
byoung2
It sounds like it is still pretty early in the game ($2 million A round, 15 people), so lack of profit shouldn't be an issue (did you mean revenue?). If you don't feel like the business will be on the path to success (equity means nothing) or you are not willing to take the risk, then you should quit today and just go work somewhere that pays more and is stable (BigCo). If you feel like the potential upside from equity say 5 years out is worth the tradeoff in salary now, then you should stay.
seekingcharlie
Yes, we're generating about $1,000 per month revenue.

Given the funding in particular, I expected there to be room to move in terms of my salary & I'm disappointed that there isn't right now. Is 'we can't afford it' an appropriate response at this stage of the company?

marquis
It's really hard being a founder, and as bosses what we want more than anything else ever, is to pay our staff more. It's the number one thing after customer satisfaction. If you aren't invested in the company or the lifestyle or are expecting a decent payout, your boss will understand if you decide to leave.
trcollinson
Just do the simple math. Your company received $2mm months ago and has 15 employees. This is ~$134,000 per employee for a year. We'll imagine they will push towards a Series B round within 12 months. They are receiving $1,000 per month in revenue. I'll assume you mean gross revenue here, net would be a different calculation entirely.

With that math in mind, imagine the salaries, benefits, employer paid taxes, equipment cost, and office (per employee). Assuming that is 100% of their costs (we didn't even talk about infrastructure costs, marketing, accounting, legal and the meriad of other costs associated with running a startup), does this add up to more than ~$134,000 per year per employee? I would imagine the answer is yes. So, yes, they can't afford to give you more. Frankly, they can hardly afford the employees they have now. In my view, that's a really tight budget.

What should you do? Well that is a really personal question. If I were you, I would decide if you would like to stay or not, but don't blame them for being good at figuring out the math of the situation. They are on a shoestring budget, I have zero doubt of that. I would most certainly tell you that "we can't afford it" right now, if I were them.

Now, if they are making $1,000 per month net revenue, then they are profitable. That would be a different situation entirely and they could actually give you more.

jmalicki
Net revenue isn't operating income - it does not include engineering or administrative expenses, where as net income does. So even with net revenue, they would not likely be profitable.
cblock811
A few other things to consider:

Are you learning new skills or honing your current skill set? If so is that worth the time to stay?

Are you increasing your network by being with this company?

I would value those two points more than a pay increase, but I'm also rather new to this industry. It's hard to quantify these things and weigh the opportunity costs but it's something that I consider when I look at my job.

fsk
Start looking around. It doesn't hurt to look.

Also, it sounds like the startup will be deadpool in a year. Better to look now while you can patiently shop around, than wait til the end.

If the startup fails, the equity is worth $0. If you start looking, you'll get an idea how much salary you're giving up.

davismwfl
No one should work at an early stage startup with the expectation to make a high market salary or get regular raises in the early years. Not that a startup should pay like crap (or they won't exist long), but usually you work at a startup because you believe in the idea, team and feel you can help make it real. The payoff for you is in the equity turning into real money after some years of work, but that money can really be life changing if you are in early enough with enough equity.

There is nothing wrong with admitting that it isn't for you and you'd rather work at a more mature company. It is whatever works for you, but just recognize this is what a startup or really any young business is generally like. If you don't think equity is a good reward though, I think your answer is clear, move on.

BTW -- I don't think you are a spoiled brat, but you are figuring out that this just may not be for you. And if you figured this out now, its your cue to move on likely. Or accept that equity is the reward and jump on the bandwagon to make it super successful so you and the team can get the satisfaction of making something cool and hopefully the monetary rewards.

debacle
A 2 million round for 15 people seems very sparse. That's either an incredibly short runway or you're all working for peanuts.

Keep in mind that your equity is 90% likely to be worth nothing, so you should value it at 10% of its face value, if that. If they're expected valuation is <20m and your equity is less than 1%, you're basically being scammed.

rudimental
"I like my job but feel like I could be making more elsewhere."

Most likely you can be making more elsewhere. You're not a spoiled brat, you just need to figure out what's important for you right now and get in an environment that can give it to you. There's day to day and the big picture to consider. Money is definitely a part of what's important for most people, but it varies, same with autonomy, chemistry with your team, liking the product- every big thing about a job.

Definitely look around, someone with design and product experience can find another job right now in the Bay Area. You might find a better fit.