Ask HN: How much of a salary and equity do I ask for? | Hacker News Reader

Ask HN: How much of a salary and equity do I ask for?

9 pointsdumptwist7 comments

I'm an employed full stack web developer and hacker. I'm being approached by a startup because I know one of the founders and my skillset really fits the space they're trying to break into.

I was asked what it would take me to leave my current job. I don't have a good answer, but more than that, I'm not sure how to come up with a good answer. It's a bit of a loaded question. So HN, do you know of any resources out there that cover how much of a salary, equity, health insurance, etc... to ask for? Is there an "idiots guide" to equity?

I'd also appreciate any feedback from someone who has had a relatable experience.

TIA!

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It depends on a lot of parameters.

a. Motivation: is your dream to dump your day job and join a startup? If not, stop.

b. Savings: can you afford to make almost no income for a year or more, do you have student loans, unpaid credit cards (ignore mortgage debt, it's usually healthy). Is there a minimum income you absolutely need monthly?

Then there is the actual job. Will you be the first dev for the product, do you consider the job a quasi-founder position or just dev #n?

Once you figure all of this out, the right deal can be anywhere from:

Full co-founder: no salary, 20% - 50% equity (with vesting of course).

First dev: 5% - 20% equity, with a third to half of your old salary

Dev #n: 1% - 10% equity, half to 2/3 of your old salary

Thank you!

Do you have a read you'd recommend on vesting--an overview for someone who has never worked for a startup?

Is what you listed an industry standard ratio (for lack of a better term) between equity and salary?

Here is a decent overview: http://pando.com/2012/04/26/founders-should-give-their-stock...

There are hundreds of pages online you can find that discuss vesting, why it's good and what the tricks are. Also, for co-founders, when we say vesting we really mean buy-back, which is much better than having options.

The co-founder bullet looks fine, but the employee numbers seem off.

You can't scale equity by the discount you take to your previous salary. Your previous salary might define your negotiating floor, but it's not a parameter for the employer.

5% seems very high for a non-founding employee developer. 1% seems high for any but the very first few employees.

>to ask for? Is there an "idiots guide" to equity?

Not exactly, but I'd recommend reading http://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitalis... because I think it will help despite being focusing more on founder vs investor rather than employee asking for equity.

The decision to leave any job is a personal one, and even more so the decision to ditch regular employment and switch to a startup. There are a lot of factors here that depend on your situation (age, family, background, ...) and desires. I would recommend you to think seriously about your goals and preferences, and come up with a specific list of "things that I want to be true of my job." This has helped me a lot in the past.

The one point I will throw out there is that it wouldn't be a bad idea to internally value any equity they offer as monopoly money. You can negotiate on it to see that it's fair, especially if you think they will take off. But don't rely on it to the exlusion of otherwise fair compensation.

Independent of what you ask for, get a signed formal agreement which captures the terms of your understanding in detail.

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