How do you ask for equity? | Hacker News Reader

How do you ask for equity?

10 pointsvu0tran10 comments

I'm a software engineer for a startup (I'm the only one and I'm responsible for all our servers, internal development, research and development, developing iPhone and Android Apps, as well as development for client products). There are about 20 employees.

I've been on board for about half a year and I feel like I'e been contributing a lot to the company so far. I've developed systems and software that have directly made the companies hundreds of thousands of dollars. Some of my other projects could potentially add millions of dollars in value to the company. I'm not saying I'm irreplaceable. Everyone is expendable. I just know I'm working for cheap right now, and doing a lot. To replace me, my company will probably have to pay to hire 2-3 additional developers.

I don't want to work 40 hours a week. I want to work more. At this point, I'm being paid for 40 hours a week, but I'm probably putting in a good 60-70 a week. I think I've shown that I'm willing put my blood, sweat and tears into this company and dig in my nails and work my ass off. I want to put in more, and I think asking for equity is only fair.

This December, during my review, I will most likely be promoted to the Director of Technology and oversee all technological development for this company. They will offer me a raise, most likely to around 100k, but I feel like 100k is too low for the level of work I'm doing. I'm hoping to negotiate and discount my salary to 80k, and ask for 30k-40k in equity. Or ask for 110k and ask for a stock options plan.

Is this a fair approach? Am I being way too naive?

A couple of points:

- Why do you want stock in this company? Is this "marketing agency" something that is going to scale 10-100X with the intention of having some sort of equity event [get bought or IPO] so you can make money on your equity? Is there any evidence that someone else thinks so i.e. VC and angle investors?

- Like pace said, you need to be mentally prepared to leave in order to have any control in the negotiation. My personal ethos is that I want to create value and if I can't create value sufficient to justify the pay I want, I owe it to the company to train a better replacement and move on to where I'm a better fit. In your situation the compensation (re)negotiation might go something like this:

(Over lunch with your manager/partner/etc) "Now that I've been working for the company a while I like where it's going and I'd like to be part of that i.e. with equity. Obviously I want to deliver value to justify that and if you don't think I can produce that value I owe it to both of us to move on so you can get someone who can." When/If the "Can't this wait until your December review?" comes up you could reply with "I think the position I'm filling is critical to the company's success and the longer I stay, the longer I'm keeping you from getting someone who is a better fit."

My guess is that they will be happy to cut your pay and give you some (worthless) equity. Google "start up stock dilution".

I want stock because I know the work I"m doing is adding tremendous value to the company. I also know that right now, I am underpaid. I do more than 40 hours a week and what to do more than 40 hours a week. I want that work to translate to something and ultimately, I feel that this company is in the position to take off. It was featured in Inc. 500 as one of the top startups in the industry.

Here's a little more of a background with where I'm at:

I was initially signed on as a contractor (startup obviously). My contract was for 9 months and there were 4 other devs there at the time including me.

Within a month, one of the devs changed workplaces because he got a better offer. After that, they took the initiative to sign me on full time as a "senior level" developer for 75k. I was expecting more of a 85-90k range, however, this was the start of the summer months and the work coming in is drastically reduced.

I approached the general manager anyways and pointed out that 85k-90k is where I want to be, but I am willing to be patient through summer. The feedback I got from him was that I was too "naive" the way I approached this and sounded too "greedy" and "arrogant". Big blow to my ego. I resolved that I would just work tremendously hard and prove my value otherwise.

Within another 3 months, another developer left, and the technical director left as well. Due to better opportunities or they just didn't get along with the people there anymore.

This leaves me in the position of doing all of their work, including the job of the Technical Director. Generating business strategy, implementing new technologies, overseeing research/development etc.

I had a chat with the general manager and my boss about a week ago. This was a midyear review. They raised my salary to 80k, but didn't really talk to much about whether I'd be the new Technical Director or not, but just deferred to December.

Unlike with the general manager, I have a pretty good work relationship with my boss so I gave him a call that night and asked him what's up. He told me that he was trying to push the general manager to increase my pay to 100k and push me to Technical Director right now given that my responsibilities to change. However, the general manager pushed back and said that this "wouldn't be fair" to the rest of the team as I was the only one that got a midyear review.

I'm grateful of my boss. He definitely understands me. However, because he's not a technical guy (nor anyone else at the company), he doesn't understand the grasp of how much I'm doing for the company, and more importantly, how much devs should get paid. 85-100k is a great salary for a lead developer. For technical director, I would be expecting more like 110-120k... Seeing that they're struggling so much to even bring me up to 100k, I imagine the fight to get 100k + 20k in equity is going to be pretty hard.

And yes, I understand what stock dilution is.

A couple more details: I'm 19, I don't have a degree. My work history as been with 2 other companies, but haven't lasted more than half a year. Maybe this has a huge factor as well?

The sad reality is that it is very rare for a company you to pay you what you are worth if they "got a good deal" initially. You need to move to another company. It's sucks if you like where you are but that's how it is.

Way too naive.

It's your fear that blocks you. The fear of loosing something.

Nowadays the skill-set of good software engineers are so wanted and rare that working for equity (at least mixed w/salary) should be the general case. Just think: they wouldn't survive a single day w/o you, to get and train a replacement would take months and lead to rev drops.

If I were you I would ask ASAP and not just ask, you have to face them w/the decision, equity or you will leave. If you just ask they will put you off and delay until 2015.

I reckon that you are not ready to leave the company, yet. But you have to be ready to leave -- just in your mind -- to withstand the negotiations. Look out for other options, that makes it easier to get the leaving attitude. Get somebody who is experienced with deal making and supports you through the negotiations in the background (you do not have the same experiences as your company's management).

I'm ready to leave. I know that if I leave, the company will be in shambles.

I know that if I dont' approach it right, I will strain my relationship with the general manager and that is not a good position to be in when you want a potential future partnership.

I'd be curious what industry this in - one engineer out of 20 employees seems totally insufficient. Especially if you're responsible for the entirety of their software offering.

It's a marketing agency.

It's ridiculous. We have about 6 accounts. 4 creatives including me. 4 on the media team and 4-5 in operations.

I handle the bandwidth of anything HTML/CSS/JS/iOS/Android/LAMP

Off topic but is there any reason you're not interested in launching your own startup if you're that good on the technical side?

Why are you waiting till December?

That's when my annual review is.

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