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Working for a startup (or how I am about to turn my life upside down)

Discussion in 'Business, Careers & Education' started by feynmix, May 13, 2010.

  1. feynmix

    feynmix Well-Known Member

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    NO NO NO NO NO NO NO

    You negotiate the stock option plan/vesting of equity before going in. If you don't meet the targets or timeline, you don't get anything. Thus, it costs them nothing. And at this point, their equity isn't worth much anyway. You'll also want as much anti-dilution as you can get.

    To be the cynic, is sounds like they want free/cheap labor, and if you wouldn't have came to SF, they'd already have it.


    Sorry if I was unclear. I am going to meet them in a couple of weeks, and that's when I will negotiate with them an initial reasonable starting salary + option plan/vesting of equity. If we can't reach an agreement, I will probably not join them.

    I am glad I came to SF, as its always good to hear some perspectives. My decision will hinge on how my meetings go with them and what we can mutually agree upon. Thanks again.
     
  2. ennui

    ennui Well-Known Member

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    Sorry if I was unclear. I am going to meet them in a couple of weeks, and that's when I will negotiate with them an initial reasonable starting salary + option plan/vesting of equity. If we can't reach an agreement, I will probably not join them.

    I am glad I came to SF, as its always good to hear some perspectives. My decision will hinge on how my meetings go with them and what we can mutually agree upon. Thanks again.


    What is your definition of "reasonable"? I am sure that the percentage of equity and other related points such as what class of stock you are vesting (hopefully there is only one class for your sake), etc. depend on the industry and situation, but I think in general you will want some idea of what you should be offered, before the meeting.

    Keep in mind that even if you got say 1-2% at first, that percentage is mostly only going to go down as time moves on due to dilution associated with additional rounds of funding. Hence the advice for an antidilution clause.

    They may offer additional equity in exchange for investment of your own money into the company. My advice 99% of the time is to just say no, considering that the vast majority of startups fail. I would also advise to not take too much of a salary cut, again because of the high probability of failure. I have multiple friends who have learned that the hard way.
     
  3. feynmix

    feynmix Well-Known Member

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    Bumping this up to provide an update.

    Met with the partners and this where things are right now: We all got along well and we talked about what my role would be in the company. I would join to fill an integral role for them, that of increasing bulk sales in India.

    I brought up equity into the equation: They say that it doesn't make any sense for them to give me equity straightaway (since I don't have the experience or the sales track record), but that they are willing to give me a chance to see what I can do.

    They are willing to give equity after a certain time period, if I meet expectations (this is tough to set) and reach certain goals (also difficult to set). Besides, they will probably be backed by a VC by the end of the year and so getting any sort of equity after that would be tough.

    In terms of salary, they are willing to pay Indian market rate salary (salary is OK, comparable to say making ~55k in NYC).

    I am trying to figure out a way to get some sort of an equity stake into this that vests over time and after specific targets, but how can one make this happen if neither party has a great idea what reasonable targets should be?

    The company was just in the news as well:
    http://finance.yahoo.com/news/Changi....html?x=0&.v=1
     
  4. Crane's

    Crane's Well-Known Member

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    You're being bulldozed. Tell them you want X amount of equity and your stake is to be maintained and not diluted over time. When they balk ask them about how many successful start ups they were involved in. After all they did mention your lack of experience as their reason for not giving you equity.
     
  5. CBDB

    CBDB Well-Known Member

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    If you are willing to take drastic action (and it sounds like you are) to get into a b-school, there are more "cost-effective" actions you could take for the effort you are willing to put in:
    - get a 760+ on your GMAT
    - get your CFA
    - move to a different, larger shop in risk and then work your way into trading/banking
    - start a non-profit or assume a leadership position in a community program

    As far as where you are right now, while you may feel you're not doing anything substantial, you can at least spin promotions, raises and other discreet performance related events into a good story.

    Once again, I'm just speaking from a b-school applicant perspective. If you're looking to satisfy other life goals, then it sounds like a great opportunity.


    Fair points all but top B-schools look at "crafting" a class and that means not admitting all bankers, consultants, FMCG and the like. They often take a few entrepreneurs to spice up the mix particularly if what they were doing was topical.
     
  6. crazyquik

    crazyquik Well-Known Member

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    You are being bulldozed. And played for a fool.

    OTOH, if you don't have any other job/any other options, I don't guess you have anything to lose.


    I brought up equity into the equation: They say that it doesn't make any sense for them to give me equity straightaway (since I don't have the experience or the sales track record), but that they are willing to give me a chance to see what I can do.


    If your equity grant only vests after meeting certain targets, then it doesn't cost them anything up front. At this point your salary costs them more than the equity; as it effects their cash burn rate, while their equity is worthless.

    They are willing to give it to you after a time period/trial run, but by the end of the year they will have VC funding and won't be able to give out anymore equity [​IMG] [​IMG] Repeat that to yourself a few times.
     
  7. Blackhood

    Blackhood Well-Known Member

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    At this juncture I would have to agree; they're trying to get a fully qualified staff member to relocate on a risky platform for zero financial incentive.

    I would say that this is a case of not all that glitters being golden.
     
  8. R-H

    R-H Well-Known Member

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    In terms of salary, they are willing to pay Indian market rate salary (salary is OK, comparable to say making ~55k in NYC).

    It sounds like these guys want you to drop whatever you are doing, move to India, and work for an unknown company for $20k USD (or whatever it works out to). Oh, and they have no idea if this idea will be successful (unlikely) and just have zero idea what they are doing.

    I don't see how this benefits you in any way. Work on school, or if you want it bad enough, start working for yourself.
     
  9. crazyquik

    crazyquik Well-Known Member

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    I think it only benefits if you have zero other options, or are just comparing it to working as a waiter or whatever. It will certainly look better on your Bschool apps than 'barista,' but this is not a serious offer. Or, they are seriously trying to get as much from you for nothing, and are not looking out for you in any way.
     
  10. highball

    highball Well-Known Member

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    Wow lots of good comments/advice in this thread.
    My buddy and I first did a large portion of the leg work when the company was just a project, so I know the product and I have been "in" on it since the beginning.
    Let me add my voice to the chorus here. I am suspicious of their reluctance to offer any structure for vesting of equity, particularly when it costs them nothing up front, and clearly could be tied to your value-add. It also seems they are unconvinced of your ability to add value, in spite of the fact that you say you were integral to the project/product in the initial stages. This I find strange. How long have they been doing this for? I am surprised that they are unable to identify sales milestones, for vesting of equity or otherwise. Have they not yet been able to determine sales goals based on their current market penetration? If they know they have a need for someone to increase sales, they should have at least a ballpark for these targets. I would be just as wary of a startup that may not have a handle on their pro forma as I would be of one that won't offer equity.
     
  11. cchen

    cchen Well-Known Member

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    How long have they been doing this for? I am surprised that they are unable to identify sales milestones, for vesting of equity or otherwise. Have they not yet been able to determine sales goals based on their current market penetration? If they know they have a need for someone to increase sales, they should have at least a ballpark for these targets. I would be just as wary of a startup that may not have a handle on their pro forma as I would be of one that won't offer equity.


    Good point.
     

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