Q: I saw that you were hosting this “working for equity” panel but I am not in Silicon Valley so I won’t be able to attend. I understand the normal protocols for working at normal jobs but am now considering whether or not to apply for work at startups. What level of salary/benefits should I expect? I understand that at many startups, equity is used as a substitute for salary.
A: like many compensation issues, it’s a negotiation. Deciding how to value the equity in a very early stage company can be quite challenging. Most people become early employees at a startup because they like the freedom of the work environment and they hope to learn enough to start a business of their own at some point.
Unless you really like the team or are confident you will learn something by working at an early stage startup you are probably better served to work at a venture backed startup. This can be very similar to working for an established company. Many of these firms fail but they can normally pay competitive salaries to regular employees. Officers and executives may take a pay cut but have substantially more equity than the average employee (e.g. 10-40X).
Joining a team that’s bootstrapping means that you have to collaborate with them to create and market something of value that customers will pay for.
Entrepreneurship gets a lot of hype but it’s not for everyone, in the same way that we need doctors and accountants and public safety officers but these careers require different personalities and strengths. I have been entrepreneurially inclined since my early teens, much to the disappointment of my father and grandfather who were both attorneys. I have done stints in big companies but migrated to opportunities for intrapreneurship–new business units, new products, new services–and have come to the conclusion entrepreneurship is not a voluntary career.
For the most part bootstrapping a startup is not the path to riches but to autonomy. Some people value that more than others.
If salary and benefits are of utmost concern you will probably be more comfortable working as an employee in an established firm. Most people do and they are what keeps our society running.
But even venture backed firms and large enterprises have layoffs and go bankrupt. I don’t think there are any careers that you can hope to work in for more than decade without continuing to improve your skills. Medicine, law, teaching at both the K12 and college level are all likely to undergo tremendous change in the next decade. The only security is to keep learning and to focus on areas where you can offer your employer or your customers value.
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