get paid

Understanding and Negotiating Compensation

This was a presentation originally prepared for a code school graduating class a couple years back.

Hello

Hi\, I’m Gabe.

Tech startup employee\, founder\, consultant for 14 years

part 1:

negotiate

negotiating a job offer yields 7% higher salary on average

Information asymmetry is your enemy.

Being underpaid\, even once\, can have long-term career and financial repercussions.

two different approaches

  • I’m much more interested in {something specific about the job/company} than the size of the initial offer.

I will consider any reasonable offer.

-You\, when asked for a second time.

You are in a much better position to know how much I’m worth to you than I am.

Playing hardball

Problems

Some companies insist on getting a salary number from you

It’s increasingly common to ask for salary history

Your hiring manager probably has more experience at this than you do.

A better Approach

“Anchor” the negotiation by naming a number first.

Pick the top of the range.

Ask for a very specific number.

Be willing to say no.

Do your research

comparably.com

glassdoor.com

payscale.com

h1bdata.info

Don’T

Name a range (e.g. 80-100k)

Get combative

Focus on personal needs

Tell the hiring manager what your current/previous pay is if you can avoid it

Be too quick to answer

Other tips

Always ask questions\, try to understand what they want and where they’re coming from

Empathy is a two-way street\, if you establish rapport with your hiring manager they can and likely will advocate for you. Ask what they’d do in your situation\, how they negotiated their current salary\, etc

Consider the entire package: salary\, time off\, benefits\, equity\, commute\, ability to work from home

Part 2: Equity compensation

wtf is equity?

Public vs private companies

working for lottery tickets

Incentive Stock Options

Options give you the right to buy shares at a certain price

This is the “strike price”

The difference between the strike price and the market value of your shares determines how much money you’ll make at a liquidity event

If there’s no liquidity event or if the sale price is lower than your strike price\, you make nothing or even lose money.

Liquidity Events

Acquisition / merger

IPO

Questions you should be asking

What’s the exit plan?

When would it occur?

How many options do I get?

What’s the vesting period and cliff?

What’s the option exercise period?

How many outstanding shares are there?

What’s my strike price?

Is vesting accelerated in a liquidity event?

What liquidation preferences exist?

exits and timelines

It takes money to make money

calculating the value of your options

dilution

your options / outstanding shares * 100

= ownership percentage

20k / 30m * 100 = 0.0666%

strike price = $0.35

company sale price = $200m

dilution is 50%\, there are now 60m shares

you walk away with $59\,800

tldroptions.io

acceleration

liquidation preferences

Investors get paid first

1x is standard

2x or more\, is a red flag

There are some edge-cases I didn’t cover

The tax implications are similarly complicated

Publicly Traded companies

Way more straightforward

RSUs are worth actual money

Still subject to a vesting period

You can and should sell them

Diversify

In summary

Negotiate your salary aggressively.

Equity is nice but it’s complicated and often ends up being worthless.

Questions?

Gabe Ortiz

gabe@signalnine.net @signalnine