Startup Money (and how much?)

Posted 1 year ago

Alright, did you get an offer to join a startup? Or maybe you are looking for a new career path. Are you fed up with years of wage slavery at huge corporations? Maybe you just graduated, looking for the first dent you'll make in the world. Perhaps you and a few friends are about to embark on a new voyage to discover a trove of digital treasures. So you're wondering if you should take that ever sought after leap of faith and join a startup? Maybe start your own? 

If you answered yes to any of those questions, one of the top concerns is the experience you'll have, and the things you will learn. But after that, the next thing you might think about is how much money you'll be making. And that's what we'll be talking about today.

Startup Lifecycle

Let's talk about the various phases of a startup. These phases will be very relevant to the total compensation you get from your startup endeavors. Startups go through lots of phases during their total lifecycle. Let's define a startup lifecycle as the following steps:

Phase # of People Funding
Idea You + couple founders $0-50,000
Seed Founders + couple employees $100,000+
Series A, B Founding team + early staff $2-15 million
Series C-E Early staff + Mid sized team $20-300 million
Series G and beyond Veteran staff + thousands of others $500 million+
IPO/Acquisition Thousands Unpredictable

Your compensation will vary wildly depending on when you join, and when you leave through out the lifecycle. And of course, your role when you join the organization.

There are many entry and exit points. The most ideal timing is you starting the company, growing it to a massive size, and then IPO'ing or selling it. If you can achieve this extremely rare feat, you will receive all the monetary gifts our society can offer. But this applies to less than 1% of the population. So let's look at how it plays out for most people.

Early Staff (Series A, B)

Most people who join a startup will enter during the Series A or B phase. They are probably the first few engineers, first product person, first designer, first marketing professional, key sales or business developers, or other required professionals to help take over critical portions of the business. These people are usually filling the role a founder previously used to do.

The typical compensation package for early staff members is a relatively normal salary (maybe a bit less), and a hefty stock options package. The stock options will also have a very desirable strike price. The only problem is that the options value is highly volatile at this time. They could shoot through the roof, or fizzle out after years of hard work.

If these people stay with the startup through the whole lifecycle, they can get nicely rewarded. In best case scenario, the early staff is with the company through a big IPO or acquisition. In average case scenario, the startup will get acquired somewhere in in Series C-E. The financial rewards will breakdown like this

Best case: $1M to $100M+

Average case: $100K to $1M+

Worse case: Get a salary, maybe some stock compensation from an acquiring company

 

Mid Sized Team (Series C - E)

Many people will join a company during its growth phase. This usually means the company has already moved past the Series A or B round, has raised a few millions dollars, has really proven product market fit, and is well on its way. At this point, the company is usually hiring pretty aggressively, and is equally aggressive about its impact in the marketplace. Many people of various skills will be brought in during this time. However the certainty of success is still unknown, and the value of the stock options is not as great as it once was. The options strike price will be higher, and you will be exposed to less upside.

The typical compensation package for someone who joins during this phase is a nice, market-rate salary, and a decent stock options package but nothing like early staff.

Best case: $1M+

Average case: $10K to $100K in stock, plus salary

Worst case: Salary

 

Employee #1000 (Series G and beyond)

So you're getting aboard the hype train. The startup you are joining has raised hundreds of millions of dollars. Or, hell, maybe even a billion dollars. This company is being talked about everywhere you look. Everyone wants to join. Everyone will be rich. It's the next Google! But you are one in a sea of many. It doesn't really feel like a startup, but everyone around you keeps calling it one. You're getting paid a great salary, but you don't really understand your stock options. The recruiter keeps saying it's worth a lot of money, and it'll be worth more in the future. 

The typical compensation for this role is a market-rate salary (maybe a little below), and stock options with a high strike price or RSUs (restricted stock units). If you decide to join a company at this stage, you need to be mentally prepared for a lot of unknowns. You may go into this thinking it's a sure thing, but it is not. The company can still fail at this stage, or the value of the company could be massively reduced. Your options will have a huge strike price, and will create a large tax liability if you choose to early exercise them. Overall it is going to be a very complicated situation. You should only join this if you really understand what you're getting into, or if you are ok with simply receiving the salary offered. 

Best case: $1M+

Average case: $10K-$1M

Worst case: Salary

 

Employee #1

The scenarios we just covered are the most common scenarios. When you join a startup, it's most likely you are going to fall in one of those categories. Now we will cover two more scenarios, both of which are very rare, and can yield enormous results, or catastrophic failure. Let's start with employee #1.

So maybe you have a couple of friends who decided to startup. They've put in their own money, or maybe they have a small amount of seed funding from an angel investor. You decide to join at this phase because you can tolerate the risk, and you are really excited about what the startup is doing. This can play out in lots of ways.

First thing to keep in mind is that you will do an enormous amount of work, just as much work as the founders, but you will see less upside, and less risk, than the founders. However it can still be very lucrative. You will most likely get a small salary (the founders probably are not getting any salary), and if you lose your appetite for the startup, you can still walk away.

In the extremely rare chance that the startup becomes a huge corporation, you should expect your role to change a LOT. You will probably get a lot of bosses over the years, and you may not agree with all the business decisions that will be made. But as long as you are treated fairly, and the company is very successful, you will be set for life. But the compensation will vary wildly, and at this stage, it is anyones guess what will happen. You will be in for a very long journey, and it won't be easy.

Best case: Enough money to never work again

Good case: The company is acquired and you get a job with a decent stock package

Average case: You have a decent job for a couple of years and the startup fails

Worst case: You receive little salary for many years, you grind it out really hard, and the startup fails.

 

Founder

Ok, So you decide to start a startup. You have dreams of being the next Steve Jobs or Mark Zuckerberg. You're going to make it big, you're going to change the world. This is the mindset most founders have, and that's good. As a founder you will need to be extremely optimistic, because the road ahead is extremely rocky, and will be filled with extreme uncertainty. If you make it, you will be world famous, you will have wealth for generations, you will change the world. But 99% of founders end up with nothing but good experience, and maybe a network of connections. 

Typical founder compensation is zero salary for a few years, and dumping your whole life savings into the startup. You will grind hard for funding from angels and VCs, and you will always be worried about making payroll. A lucky few founders will take their startup to Series A or B, but most founders will fail within the first couple of years. The extremely rare, chosen few, will take their startup all the way to Valhalla, and never have to do anything else ever again. 

Best case: The next Steve Jobs, Bill Gates, Mark Zuckerberg

Average case: Fail within the first couple of years

Worst case: Grind it out for years, miss payroll for your employees, lose all your savings, alienate your friends and family, maybe get a divorce, and fall into a deep depression

 

Conclusion

So there you have it. Those are the typical routes most startup employees take, and the typical exits. There are many combinations of entry and exit points for a startup, and your experience will not be the same as anyone else. Being part of a startup can get you an incredible learning experience that money can't buy. It can get you wealth like no other. It can setup you up for incredible success, or incredible failure. But many people would not have it any other way.

About the author

Dev/Code/Hack is a technology and business blog by me, Par Trivedi. I'm a software engineer and I've been writing code and managing teams for over a decade. This blog serves as a way to share thoughts and ideas about the tech/startup community, and also to educate newcomers to software development.

12 Comments

  • ?MEET THE REAL HACKERS? These Days There Are alot of fake Hackers Online, We Just Have to Be Careful about who we meet for help, Because Most Of These People Are Just here to rip people off.??? You Can Always Identify Them With Their False Write Ups and False Testimonies Trying To Lure you Into their Arms.??? ?COMPOSITE HACKS is here to Connect you with The Best Hackers Online So you can get saved from The Arms of the Fake Hackers?? ?We have Legit Hackers and Private investigators at your service. ???? Every member of our team is well experienced in their various niches with Great Skills And Technical Hacking Strategies.???????? ?We have Digital Forensic Specialists, Certified Ethical Hackers, Computer Engineers, Cyber Security Experts, Private investigators and more on our team. Our Goal is to make your digital life secure, safe and hassle-free. Some Of The Services we render includes: * Website hacking ???? * Facebook and social media hacking ???? * Database hacking, & Blog Cleaning???? * Phone and Gadget Hacking ???? • CREDIT CARD Loading ( Strictly USA & UK Credit Cards Only) ???? * Clearing Of Criminal Records ? * Location Tracking ???? and many More ?We have a team of seasoned PROFESSIONALS under various skillsets when it comes to online hacking services. Our company in fact houses a separate group of specialists who are productively focussed and established authorities in different platforms. They hail from a proven track record Called “HackerOne” and have cracked even the toughest of barriers to intrude and capture or recapture all relevant data needed by our Clients. Some Of These Specialist Includes ?? PETER YAWORSKI ??FRANS ROSEN?? JACK CABLE ??JOBERT ABMA?? ARNE SWINNEN ??And More. Feel Free To Hit Our Email Anytime ???? * ???? CONTACT: E-mail: compositehacks@gmail.com Hire a Hacker! Want faster service? Contact us! HackerOne©?LLC 2018. All Rights Reserved ®? ?We Treat Every Request With Utmost Confidentiality?

    COMPOSITE HACKS 1 week ago   Reply

  • I Basically think we all don't have to face all these deceit and lies from our spouse...in a case of mine wen i got sick and tired of all the lies and deceit i had to contact a friend of mine to get me the contact of one of the best hackers in the states ..then i met hackintechnology@gmail.com..He saved me from the lies of my cheating husband by hacking his phone..Incase you need help with hacking any phone or account or other jobs contact him via email/text (HACKINTECHNOLOGY@GMAIL.COM) or text +1 8456436145Tell him i reffered you.He will help you

    GEORGE WILSON 2 weeks ago   Reply

  • Excellent and professional investigative services. I hired Mr Frank for a very private and difficult matter of hacking my husband's phone, and he far exceeded my expectations. He helped me get the info(whatsapp, facebook, text messages, call logs etc) I needed faster and cheaper than I had imagined. The first time we spoke, we had a very long phone consultation in which he gave me all my options that he could think of to resolve my case, and he even recommended I try other options before hiring him, which shows that he is honest. I decided to hire him and I am glad I did. He is a fantastic investigator and a great person and if you have a dishonest partner don't hesitate to send him a mail Contact: frankthegreathacker at g mail dot com. Eva Tito REFERRED YOU

    eva tito 1 month ago   Reply

  • In the world of hacking we are the best when it comes to client satisfaction. Cyberapphack is an experienced online Private Investigator/Ethical Hacker providing investigative solutions and related services to individuals. You might be curious that what hacking group services can provide? .. If you hire a hacker, you will need to be taken along with the progress of the hack till it is completed and that is what we provide at cyberapphack. We render: +University Grades Hack, +Bank Account Hacks, +Control devices remotely hack, +Facebook Hacking Tricks, +Gmail, AOL, Yahoomail, inbox, mobile phone (call and text message Hacking are available) +Database Hacking, +PC Computer Tricks +Bank transfer, Western Union, Money Gram, Credit Card transfer +Wiping of Credit, +VPN Software, +ATM Hack Contact at: CYBERAPPHACK@GMAIL.COM.

    Josh Miles 2 months ago   Reply

  • test

    abc 2 months ago   Reply

  • They are all scammers, they will make you pay after which they will give you an excuse asking you to pay more money, they have ripped me of $2000, i promised i was going to expose them. I figured it all out when my colleague took me to Pavel (HACKINTECHNOLOGY@gmail.com) (+1(669) 225 2253) He did perfect job, he hacks all accounts ranging from (Emails, Facebook, whatsapp, imo, skype, instagram, Phone cloning, DMV removal, tracking locations, background checks Kik etc. he also hacks cell phones, cell phone tapping and cloning, clears bad driving and criminal records, bank transfers, locates missing individuals e.t.c. You should contact him and please stop using contacts you see on websites to execute jobs for you, you can ask around to find a real hacker.

    SCOTTY 2 months ago   Reply

  • I strongly recommend the service of a GREAT Hacker to you and his email is hackersolution89@gmail.com. I have used him quite a number of times and he has never disappointed me. He does all types of mobile hacks, get unrestricted and unnoticeable access to your partner/spouse, Skype, Facebook Account, Email(s), Whatsapp, Instagram, Text messages, Snap Chat, Hang out, Twitter, Hangout, Bank accounts, office files etc. Getting the JOB done is as simple as sending an email to hackersolution89@gmail.com stating what you want to do.

    Sharon mapes 3 months ago   Reply

  • ?COMPOSITE HACKS? If Truly you Are In Need Of A LEGIT PROFESSIONAL HACKER Who Will Get Your Job Done Efficiently With Swift Response, Congratulations, You Have Met the Right HACKERS. ? WHO ARE COMPOSITE HACKS??? • We are a Team Of Professional HACKERS , a product of the coming together of Legit Hackers from the Dark-Web (pentaguard, CyberBerkut, White Hack and Black Hat,) we have been existing for over 12years, our system is a very strong and decentralized command structure that operates on ideas and directives. ? JOB GUARANTEE:  • Frankly speaking, I always give a 100% guarantee on any job we are been asked to do, because we have always been successful in Almost all our jobs for over 12years and our clients can testify to that. The Problem we are Facing right now is that there are some fake Hackers here online who are claiming what they are not, just to Rip people off. But its only the SMART People that would be able to distinguish between these Fake Hackers and the Few LEGIT HACKERS. I could remember there was a time i started hacking their emails and shutting it down because they are making people have bad impressions about Hackers, but at a point I had to Leave them and Face my Job. - COMPOSITE HACKS is One of the Leading Hack Teams in the United States With so Many Awards from the IT Companies. ? OUR HACKING CAPABILITIES: We Offer Varieties Of LEGIT Hacking Services With the Help Of Our Root HackTools, Special HackTools and Our Technical Hacking Strategies. - Below is a List Of Services we Render Often: ?Penetration Testing ? Phishing ? Jail Breaking. ? Phone Hack: Giving you access to the Target's Call Log, messages, chats and all social media Apps . ?Retrieval Of Lost Files ? Location Tracking. ? Clearing Of Criminal Records. ? Hacking Of Server, Database And website e.g Facebook, twitter, Instagram Snapchat etc ? SOME OTHER SPECIAL SERVICES WE OFFER: ? Bank Accounts Loading ( Only USA Banks) ? Credit Cards Loading (Only USA CC's) ? One Vanilla Cards Loading ($100 cards and above) ? Sales Of HACKED/PROGRAMMED ATM Cards & CC's ( For All Countries.) ? You can also contact us for other Cyber Attacks And Hijackings, we do almost All. ?Contact Us for Your Desired Service Via: compositehacks@gmail.com ?We Treat Every Request With Utmost Confidentiality?

    COMPOSITE HACKS 4 months ago   Reply

  • Need a private investigator, hacker, or other darkweb services such as, creditscore hacks(removal of negative listings and many more) social hacks, seo hacks, php, ddos, fullz, western union hack, paypal load, credt cards top up, cellphone hack/clone amongst others blackrazor@protonmail.com

    Mohammed Khan 4 months ago   Reply

  • Hello ,I know you do all your best and worry about me . but im dont this for the wrong way thank you so much Sirinart Khongyadee

    sirinart khongyadee* 6 months ago   Reply

  • I wanna hack ROBLOX ;-;

    BBOXTIN 1 year ago   Reply

  • i wanna hack pls

    Baccablox1234 1 year ago   Reply