Re:What would do you need to see before joining an early sta...
by akkartik on Monday July 12, 2010 @01:51AM
(#1506967)
Vesting schedules add further complexity to this analysis.
Re:What would do you need to see before joining an early sta...
by nostrademons on Monday July 12, 2010 @02:37AM
(#1507048)
True, although if I were coming on-board as a cofounder, I'd expect to be there for the long haul, so they don't affect me all that much. I'd prefer to see both partners have pretty standard vesting, probably 4-year.
I do take vesting into account if I'm joining as an early employee and I expect the company to be bought out soon. I believe that acquirers can do whatever they want with an employee's unvested options, and this is a pretty easy way to get screwed.
I might expect a relatively small (cover living expenses) salary if I were taking on, say, a 20-30% equity stake as a cofounder in a pre-traction startup. This is sort of a no-man's-land of risk/reward tradeoff, though. There's an awkward dynamic when you're paying someone else's living expenses and yet their salary is still well below market-rate. It's worked for a couple startups (Hotmail was one, Intuit may've been another, though the equity stakes for Intuit all got renegotiated when they almost went bankrupt), but you don't see it often.
Once you're down in single-digit equity stakes, it's expected that you'll pony up market-rate salaries. That's what fundraising is for. :-) The equity stake for early employees is there to compensate (and incentivize) them for the possibility that their salary may not be their tomorrow, not for the lack of a salary.