You honestly believe that a first-hire, in addition to receiving a competitive salary + benefits, is also owed >5% equity? No founder of a company with any traction is going to go for that, and no investor of any VC-backed company is going to agree to that either.
Competitive salary for top devs at big companies is reaching $250-350k/year.
If your startup is paying that well then sure it doesn't need to offer a lot of equity.
Most of the startups ive interviewed at over the last year don't even come close so they damn well should be offering a lot more equity to make up for it.
First hires tend to be mid-level aspiring engineers looking for make a name for themselves and get in early but for whatever risk-adverse reason aren't looking for a cofounder type role. They usually need a steady paycheck.
Obviously there's always going to be a balance between equity and salary, but the hypothetical scenario we're talking about here is "first employee" which tends to mean a salaried position with benefits.
Or can't get it - because they don't have the idea to be a cofounder, or don't have the experience to be a CTO. And to address your comment in the higher tier, I never said the salary had to be competitive - in fact when I was a first employee my salary was cut in half (and my salaary was not that high by any stretch beforehand), but my equity was in a few percentage points. So yes, my point stands, if it requires very little capital or risk to found a company, but it's vital that you hire help, I would expect that you give them meaningful equity, especially if they're doing a great deal of the effort and labor to get there. I don't think that's entitled, I think that's being fair to your employees who are busting their ass to make you rich.
Agreed. Which is why they aren't getting co-founder levels of equity. 5% for a key position sounds about right.
But if you want them to go all-in on your startup then you are mad not to compensate them for it.
If you want mis-aligned incentives for a very key position then go right ahead but don't call someone entitled for wanting to be compensated fairly for the risk and responsibilities.
In less than 3 cities. So to say this as a universal truth is just false.
It is much more risky to join an early stage startup elsewhere. And so equity elsewhere should be bumped even higher to compensate.
Not all developers are equally good at their job, and if we see some getting paid effectively much more than others, the most natural explanation is that the higher paid ones are better developers. Otherwise, why would that startup employees take the deal?
I'm saying it's not being entitled to want high levels of equity as a first employee. It all depends on what you bring to the table.
On HN, please make your (otherwise fine) point without getting personal. It's not hard, and we want the culture here to eschew such things.
And on a similar note, unless federal laws change, I refuse to ever work for a company with fewer than 15 employees again (unless they're a defense contractor), as companies of that size are exempt from the EEOC and from the requirement to provide health insurance (and as someone who dealt with both discrimination and a company that refused to give anyone insurance, those are both personally important to me).
I'm currently at a mid-size telecom with ~500 employees, and I'm really happy here. It's both the biggest and the best employer I've ever had.
1) Group health insurance plans tend to have a significant upfront cost and it's extremely expensive per-employee with a small company. Larger companies get better plans and can pay significantly less per-employee. The SHOP [1] plans out there aren't even implemented yet in many states.
2) A logical option that many businesses wanted to do was simply reimburse employees the full cost of their individual health care premiums. It seemed like a good bridge between ensuring they have coverage without getting into the extremely expensive weeds of group plans. But for some absurd reason/loophole, that's actually illegal. And there's a $100/day ($36,500/yr) per employee fine if you reimburse employees for health insurance. [2]
[1] https://www.healthcare.gov/small-businesses/employers/
[2] https://www.irs.gov/affordable-care-act/employer-health-care... Question #1.
Second, I live in Texas. PPOs are no longer offered on the private exchanges here. Unless you have employer-provided insurance, you have to have an HMO, which I refuse to do for moral reasons. Even if it was legal, I wouldn't work at any company whose sole insurance option is to reimburse employees for the cost of individual plans because individual plans are not an option here.
This is simply the result of stingy, greedy owners trying to keep everything for themselves. The company I worked at before the defense contractor was about the same size, but not only did they not provide benefits, but they provided laughably low salaries (I was making $47k/year when recruiters were telling me I should be making $60-65k, and the defense contractor I jumped ship to paid me $65k), refused to provide any equity to anyone except to maybe the first two technical hires, and refused to seek any investment above the angel level because the owner wanted to keep ownership for himself.
If a business cannot afford to properly compensate their employees, they should not be in business. Period. Size isn't an excuse. And that means the <50-employee exception needs to go. And so does the <15-employee exception for EEOC (and some cities, including my own, have the same exception for their local non-discrimination laws).
If you're a small business, you should have three options: 1) offer full benefits and pay a competitive salary, 2) treat your staff as co-founders and give us both equity and public recognition as co-founders, or 3) you close your doors.
[1] including "coemployers" where lots of small employers pool together for a large company plan.
Even if the costs were the same, I live in Texas. PPOs are no longer offered on the private exchanges here. Unless you have employer-provided insurance, you have to have an HMO, which I refuse to do for moral reasons.
(and adding: my previous employer was a tiny company of 12 people, but they had to provide insurance anyway due to being a defense contractor, and I was paying $40 per month for the best insurance I've ever had. The employer I had before that was a startup of the same size and refused to give any insurance or even pay us what we were worth because the owner was stingy, so stingy that he refused to seek VC because he wanted to keep ownership)
How much was the employer paying when you were paying $x/pay period? From my experience, small businesses pay a lot more per employee than large businesses and also tend to only have one option for employees.
Employees get to bounce around from company to company, commanding an ever-increasing salary due to the bubble we're in, and usually get a solid chunk of equity to boot. They work their hours, they take their vacation time, they come on HN and wax about the insensitivity of the open-office floorplan, or that lunch is only catered 3 days a week. They have a never-ending flow of job offers in their inbox and when things aren't going their way, they can simply pack up, walk away (with equity in hand), and move onto the next cushy job. They aren't up late at night worried about how they're going to make ends meet the next day, their biggest concern tends to be whether they embrace the latest JS framework or wait the three months til it's supplanted.
I'm sorry if you've encountered founders that treat their employees like shit, but dammit, most of us do our best effort to take care of our employees with competitive salaries, excellent benefits, fair equity amounts, and frequent profit-sharing bonuses. We don't take lofty profits, we invest it right back into the company so we can hire more people and provide better accommodations. But if we come across as thinking we should eventually reap the benefits of a successful company: you're goddamn right we do, we earned it.