I'm new to Silicon Valley need salary advice | Hacker News Reader

I'm new to Silicon Valley need salary advice

4 pointsjrsikken4 comments

Hi, I'm a hardware engineer that recently moved from Europe to Silicon Valley and believe that my market value is about $100k/yr. I helped a startup (2 founders) for a few days by designing and building hardware of the first prototype. They want to hire me but they cannot pay 100k/yr for salary. Instead, they want to offer me part cash and part stock. I'm very new to Silicon Valley and know little about the invest stages of a startup. For me it is completely new to get my salary partly in cash and partly in stock.

Let me give you some background about the company, before I post my questions. Right now the startup has 2 founders in Silicon Valley and a few people doing software in another country. The founders are very convinced about the future success of their product. They have more than 10 years experience in founding and have started several companies. Those companies are so successful that now they can spent 100% of their time on this new startup. They are currently in the seed fase and want to show of with the first prototype to possible customers. They have self funded this new startup.

For my personal situation: Normally I would ask a salary equal to my market value of $100k/yr. I need at least $50k/yr to pay my bills and to save a little. I have never worked for a startup in Europe or US, so I'm completely new to company stock.

So here are the questions: - Is there a big risk in stock? - is it acceptable to have 50% cash and 50% stock? - what salary should I ask for a temporary position (2mo's), and how is it divided into cash and stock? - what salary should I ask for a long term position (>1yr), and how is it divided into cash and stock? - where can I learn best about salary for engineers in startup companies?

I really appreciate your replies! Thanks!

1) How are you arriving at that estimate of your market value? Is it tied to your previous experiences in Europe? My understanding of market rates in the Valley is that if you can solo-prototype hardware your market rate is probably substantially north of that. (If you put a gun to my head and said "Pick a number!" I'd say "Oh please don't shoot 140k!")

2) The options you receive are not directly comparable to stock of public companies in terms of variance of returns. +/- 90% of options in startups will be valueless.

3) You ask what is acceptable. Anything which you and they agree on is acceptable. As your peer who wants to see you get the best deal possible, I would strongly suggest negotiating primarily for hard currency and treating the equity like the lottery ticket that it is.

4) It is not the customary practice of Silicon Valley firms to award equity for temporary (2 month) positions. A company doing that is signaling bad things about its likelihood for future success. Silicon Valley firms which need specialized contract work done for them raise money and then pay market rates for it. (n.b. Market rates are probably at $10k+ per week. Yes, that's a much larger number than the salary we discussed earlier. Ask if you don't understand why that would be true.)

As for #4, does the $10k number apply to only hardware specialists?

$100k is low for a HW designer unless you have no experience building anything (home/school projects don't count). $135k-140k is about right for an experienced Staff-Level HW designer.

In my view not getting paid market rate and taking equity is for founders. Under no circumstances would I take 50% stock and 50% salary as an employee. Generally founders carve out 15% equity for the employee pool. So you might get what 1%? Not worth it.

Also, there's a perk premium that you are giving up when you join a startup. Established companies have ESPP, profit sharing, 401k matching, RSU's, bonuses, etc... This can easily be 30% over your regular salary.

Joe Sixpack HW engineer at Average BottleCap Co, is probably earning $135k base + ~$40k or $175k-$180k in total compensation.

So even at market rate salary, you are below market in terms of total compensation.

Ask yourself this: why can't the founders afford to pay market salaries if they have successful businesses already, and had previous success with fundraising?

It's likely not that they can't pay you market wages, but rather that they don't want to for some reason. By that I mean they presumably could either pay out of pocket (if their other businesses have been financially successful), or they can sell the equity they are offering you to an investor, and then use the money they receive in return to pay you (that's the whole point of fundraising, after all!)

I would have an upfront conversation with them to find out the answers to these questions - maybe they strongly believe the equity is going to be worth a lot in the near future, and want you to share in that upside for your contributions. Or maybe they are trying to take advantage of you - only talking to them and reflecting on their responses will get you your answers.

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