You never want key members of the team to have questions about whether their effort is going to be rewarded in the event of a nice liquidity event. 0.2% would be great if you're working for the next Google--but even Google gave away more then 0.2% to their first employee. If it's not the next Google, think long and hard about how you're spending your time. The only reason anyone, other than the founders, works for a startup is for the liquidity event (or a solid future of profit sharing if no such event is planned). When we hire our first full-time employee we expect to offer them 1-5%, depending on their other compensation requirements and what they bring to the team.
Also, 12-14 hour days and seven day weeks are not productive over a sustained period, and they're a sign that the founders don't have a lot of real world experience. It can work out, if everyone is just that passionate and feels like founding members of a great company, but I don't think 0.2% (vested over four years) would make me feel like a founding member.
I'd say get out...Not just because the carrot (0.2%) is much smaller than the stick (12-14 hour days), but because I'd lay good odds on this company failing fast. From the small bits of data we have, I believe your companies management is incompetent.
How much do you like the company, the project, and the co-founders aside from this issue?
Personally, I have 0.2% in the company (vested over 4 years) and don't receive a 6 figure salary, but I'm also very good at the technical work I do.
I'm just curious if this is a very typical thing to see. Is 12-14 hour days for this compensation good? The work is extremely stressful, to say the least.
if both sides were happy with the prior terms and had the same expectations -- i.e. you didn't really understand or investigate your compensation compared to market value, and/or they deliberately lowballed you -- they're probably not going to be thrilled about revising things right now if they're also stressed out with the crunch and also not too excited about paying more for the same labor (or having other stressed out employees grumble for more comp, or wondering if you'll threaten to leave again in the future, etc.)
so even though you may be justified in asking for more, it might be tough to get it given the constraints on their end. if, though, both sides expected at the outset you'd be working a normal 40 hr week and you're working 2x that, then the negotiation would probably be easier.
the good news is you'd have no problem snatching up another (probably cooler) gig -- just look at the yc job postings :)
I was the first employee, and I came on board when the first round of angel investing was made. There are currently 2 other employees, and 2 co-founders. One is business-oriented, one technical. I work probably a few hours less than the co-founder (per week).
The tech co-founder seems to be somewhat slow to pushing updates, as he gets sidetracked micro-managing the 3 team members (who are all graduates, except myself). E-mails that come from investors are usually ignored, for the fear that they will "distract the dev team." I'm not sure if that's normal either.
I'm new to joining startups, and don't understand investment and equity as well. Obviously, I need to starting learning more ;) That's one disadvantage of being as young as I am and joining a startup (I'm not old enough to buy a drink, let's put it that way). I'm glad I got some feedback on this though..
I'd give some thought to what you want to get out of a startup. If you're just looking for experience (as I am, mostly), the equity isn't too important, and the real criteria should be whether you're learning stuff and are involved in decisions. If you want to get rich, be aware that 0.2% of a typical $40M exit is only $80K - not chump change, but you can't look at it as any more than a nice bonus. It will take a $500M exit to make you a million dollars, which basically means you either need a really hot product (Facebook/MySpace/YouTube) or you need to be able to go public. Salary also factors in - if you're being underpaid by $20K relative to market rates, your stock payout would get eaten up in 4 years.
If you're in it for money, I would suggest trying to renegotiate. Losing the first employee would be a tragedy for most startups, so they'd probably be willing to go up to 1-2% equity if they're smart. They may not like it, but part of being a successful entrepreneur is doing stuff you don't like for the good of your company.
If they aren't smart or their ego gets in the way, you want to leave now anyways, because they aren't going anywhere. Also, try to have another job offer in hand when you renegotiate - it helps your bargaining power significantly.
The micro-managing is a bit of a red-flag. It happens a lot with technical cofounders. My current boss has a bad case of it. I had a bad case with it the first time I managed a software project (at a volunteer nonprofit), and letting go and actually trusting the other developers to do things right was one of the hardest things I had to do on that project. The usual result is that the business stagnates and doesn't go anywhere, then folds when the employees all leave because the business isn't going anywhere.
I'm extremely experienced, so that's not really what I'm here to get. I pick languages up fairly quickly, and I've been doing sole proprietor/freelance work for years on end now. I've been told many times (by clients, professors, and employers) that considering my age, my skill set is remarkably impressive.
I'm very young though, so I have had very little startup experience (and very little "corporate" experience). I don't want to get too far into details, simply because this is the internet, but I've taken everything mentioned here into account and will plan to do something.
Very well said!
I'm assuming that the reason that you're doing this is because you own a bit of the company. But, have you run the numbers? For you to make $1 million the company is going to have to have a $500 million dollar exit. So, unless your company is the next Myspace, YouTube, Facebook or Google: renegotiate your compensation, or quit the job and start your own company.
You're just being exploited.
I am, too, living thru prelaunch of my startup. But think of looking back at yourself 10 years later... you will be proud that you live through this. If you have the passion, this is the time to be.
A few data points:
Before college, I worked at a VC-backed startup selling remote-access software to large corporations (well...planning to sell...they never launched). The core engineers typically worked 12-14 hours/day to put out a very buggy product.
Same startup, I knew an engineer who was employee #35 and later VP of Engineering at Stratus Computers. She said that yeah, if you have to hit a deadline, 10-12 hour days may be normal, but if you're doing it regularly you're doing something wrong. You should not have to work more than 8 hours/day to put out a decent product.
I'm currently working at a bootstrapped financial software startup, selling direct to hedge funds. The founder works about 10 hours/day; the rest of us work about 8 hours/day. The company is profitable.
My other job offer was for a VC-funded financial software startup, selling to smaller brokerages. Founders typically worked 12ish hour days, most of the rest of the employees worked 9-10 hour days. The company was not profitable at the time I applied, though they've been growing well since and may be by now.
According to Founders at Work, del.icio.us and Bloglines were both founded by single founders who kept their day jobs, and Steve Wozniak spent the first year of Apple Computer's lifetime employed by Hewlett-Packard. I'm assuming that means 3-4 hours/day on weekdays, plus full weekends.
I'm in a similar position: 3-4 hours/day of work, keeping my day job, about to launch after 5 months or so (including a month hiatus when we worked on a side project).
Do what you need to do to survive, but I would suggest you are being taken advantage of.