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Re:You are an amazing engineer, but you are a terrible fit f... by tptacek on Monday December 03, 2012 @04:25PM (#4867940)
Your first sentence is a non sequitur. It's grammatically correct but contains no detectable semantic meaning. Salary is deferred when it would ordinarily be due immediately but is paid later. Formally, a deferred salary is a commitment to pay a precise amount of money at some point in the future. Colloquially, any promise of compensation that would ordinarily be due in the next pay period but will instead come 1-2 years from now at "exit" is a deferred payment.

Your reasoning about "Series C" versus "Series A" startups and salary expectations is also suspect. We pay market salaries to a large number of very talented, very specialized engineers and haven't raised a dollar of funding.

The problem with your reasoning is that it isn't based on the market, but rather on some kind of status hierarchy about startups. The mistake I think you're making is that you frame things in terms of "90k and a huge chunk of equity", rather than "your market rate of 150k, 2/3rds in salary, 1/3rd in equity, risk-adjusted based on expected liquidity from revenues we forecast at N, N+1, N+k over the next k quarters, at acquisition multiple y".

If you write the blog post that way, so that you can make a case that a 150k candidate is effectively demanding 300k, your post starts to make sense (but it's a little boring, right?). But when you write it in terms of "Series A employees should get 90k", you go way off the rails.

Later edit: you can also reason through your equity valuation with a candidate the way 'ChuckMcM does, but it seems like to do that honestly, your equity would need to be liquid enough that you could place another x00,000 shares; in particular, you can't just treat your last valuation as gospel; just like your B investors can reduce your valuation, so can candidates.

Re:You are an amazing engineer, but you are a terrible fit f... by droithomme on Monday December 03, 2012 @08:23PM (#4869019)
Your analyses are very good and your posts pedagogical.

I'd like to add that, just as you have the company presenting this in a certain light, the engineer needs to look at this investment of $60,000 a year of his personal money as cash salary to buy stock in a startup the same as a $150,000 a year earning person would view any other $60,000 a year stock investment in an extremely high risk unproven early startup. As a point of comparison, we know that Y Combinator gets significant equity for one time investments of only $10,000 in early stage startups. An investment of $60,000 a year should be valued similarly. Clearly the employee is directly contributing more than six times as much as Y Combinator does and should receive six times the equity for that first year.

Re:You are an amazing engineer, but you are a terrible fit f... by dadkins on Monday December 03, 2012 @11:25PM (#4869541)
How do compute the risk-adjusted part? What would 50k risk-adjusted mean in your example?