Completely agree. I understand that this is becoming more common in London. This is still a harsh practice.
Which angle is becoming more common in London? Losing equity if you leave or the opposite?
Readit NewsManchesterDev commented on Ask HN: What's an appropriate compensation counter offer in London 2024? · Posted by u/ManchesterDev
ManchesterDev commented on Ask HN: What's an appropriate compensation counter offer in London 2024? · Posted by u/ManchesterDev
> Joined 4yo as a junior full stack. £40k comp, 0.2% equity. Offered role as good friends with founders. 1st employee.
I understand this was junior, and friends maybe helping someone learn on the job to switch careers, and probably a good and fair deal.
But since this is HN, I want to note that 0.2% equity for a first hire experienced full-stack person would be a terrible deal for the employee.
(I'm calling this out on HN, because I often see founders who think they deserve 70%+ equity, while simultaneously thinking that even a key first hire, who to a large extent could make or break the company, and brings skills founders don't have, deserves only 1%-2%, and only in options they'll probably never be able to liquidate. Just yesterday, I walked away from a recruiter pitching a seed-stage first-hire opportunity. The apparently not-very-technical founder needed a laundry list of technical skills, all over full-stack and iOS and ops, at very experienced hands-on level (they asked for no big company small cogs), as the first hire, to un-fudge the MVP they previously tried to contract-out... for below-market salary, and 0.5% equity. I told the recruiter it's ridiculous for the founder to think they deserve two orders of magnitude more equity than this mythical unicorn first hire. Then I had to clarify that I wasn't negotiating, but that (combined with other concerning signs I was previously open to discussing) this looked like definitely a stereotypical bad startup, of a kind that I wouldn't be allowed to fix. Experienced people should just say no to founders who think the company is their creation and their property, and that first/early hires are only commodity gig workers. I hope post-ZIRP VC will destroy most of the people who got away with this kind of thinking, such as with the Potemkin Village investment scam startups. And that we'll eventually heal all the follow-on negative cultural effects this had on the field.)
Agreed - I didn’t feel like I had much knowledge to negotiating power at the start and definitely got ripped at a .2%
Thanks for calling it out - we all need more educating on this
ManchesterDev commented on Ask HN: What's an appropriate compensation counter offer in London 2024? · Posted by u/ManchesterDev
I am American, but did spend 3 years in London as hire #1, later becoming CTO. This was SV company that moved headquarters to London, this was slighty larger scale than you're indicating, but same order of magnitude when I moved to London (2011-2014).
The first thing I'll say is, advice about negotiating hard—thinking through BATNA and all that—is not wrong, but it's also a specifically American perspective that you don't want to deploy blindly. Doesn't matter what culture you are in, personal relationships matter, so be thoughtful.
That said, you also don't want to be taken advantage of. It seems implied one of the co-founders is technical, but you're leading most of the code/infra level technical work, and you aren't easily replaced. It's hard to know just from this how strong your position is though. Are you the strongest engineer technically? Are you an ideal fit to lead the next phase of growth? If the answer is yes to both, then $75k + 0.2% equity feels light.
I never had EMIs, but I understand they are more or less equivalent to ISOs. A legit engineer #1 that serves as a tech lead should get 1-2% as a rule of thumb. In this case though, you say you started as junior, so 0.2% may have made sense, but you've grown and are contributing a lot more. Equity should not be a one-time thing, especially as you step into larger roles.
You're right folks advise against sacrificing cash salary for equity in private companies, because a huge percentage will go to zero. Yes, it's a lottery, but in this case you're already working for this company, and the trajectory already sounds better than 90% of startups (although "almost profitable" could be spin), so equity gives you upside. Note it's also easier for them to give you more equity because it doesn't require precious cash, and the sooner they give the equity the more valuable it will potentially have (lower strike price).
Also, I definitely agree with folks saying that your personal living situation should not factor into negotiations explicitly. What matters is your worth to them, not your expenses. That said, if you are comfortable that you can take more equity, and you believe in the trajectory of the company (and the financial acumen of the founders), and you can afford to take the risk, equity is what mints millionaires and create a real sense of cohesion in the core team. On the other hand, if you don't feel solid about the company's future and don't feel embraced by the inner circle, then just ask for as much cash as you can.
Fantastic perspectives thank you. I don’t feel like going too hard on BATNA because it’s a sensitive and positive environment. If I get mugged off, I would walk away, but I wouldn’t enter with this stance.
Answers to your questions: - 3 of 5 founders strongly technical, one exceptional, one strong but she is not involved with my line of work/ probably couldn’t do it, on par with the other, and above all other devs. - trying to be modest, but almost definitely ideal for next phase of growth if they want to maintain momentum and trajectory. Would be a big hit to lose me. 3 months to hire a new lead, 6-12months to get up to speed, but longer to understand the industry/code which is nuanced, often weird and undocumented. - 1-2% is how I feel too, but just feel they would never give this. I’m very critical and pessimistic, but genuinely feel this is the one which could break through.
I just don’t believe the decision makers believe that any head of role justifies more than 100k or more equity so it’s going to take a lot of educating..
ManchesterDev commented on Ask HN: What's an appropriate compensation counter offer in London 2024? · Posted by u/ManchesterDev
As somebody who works in tech in the UK, some of my thoughts:
- I don’t really see senior engineering IC salaries below GBP 100k
- “Head of” roles are materially higher than IC roles, mid-to-high-100s.
- All of my experience is London-based so there is likely a premium compared to a market like Manchester
- There are a lot of other factors, so don’t take this as gospel, but unless it you are in a hot market like AI, your business is probably getting a 5-20x multiple on ARR - the fact that your business growth is so impressive and near profitable makes the top end of that achievable. If the primary goal is to get to 10M and the founders want to sell “sooner than later” then you probably need to mentally prepare for an exit of around 50-200M, or an outcome for you of 100-400k. The math changes significantly if the business doesn’t plan to exit for longer. But say you got 200k, does that make up for several years of below market salary and risk?
- You’ve been at the biz for 4 years? I know you say there’s no vesting schedule but usually equity vesting happens over 4 years, so you should be due for another grant if the business was in line other tech businesses
If I were in your shoes I’d definitely push for more equity. You’ve been at the business long enough to be eligible for another grant. You should make sure that, if the new grant has a vesting schedule, the entire grant automatically vests as part of an acquisition/change of control
And you also should be able to push a lot harder on salary, but again I can’t speak for the Manchester market.
Having been in the business for so long, and having received an offer for a role that you describe as critical to its success, the business should be willing to compensate you accordingly.
Something else to consider looking into is the business plans for profitability. It is not abnormal for profitable tech to pay bonuses. So if the business is indeed planning to be profitable, it could be a way for you to get outsized additional compensation if you’re willing to take some risk.
**And finally, it sounds like you have an unfair equity deal - largely at the company’s discretion? At this point all of your equity should be fully vested, and under EMI you should be able to exercise your options for a negligible amount of money. You should work really hard as part of your negotiation to get a better deal here for the existing equity, so you can own real shares of the business. And then you’ll loosen some of handcuffs - incentivizing the business to issue you a new grant as a retention strategy.
This is the sort of reply I was hoping for, thank you. I have a few follow ups:
- Do you have any sources for where you’re seeing salaries at 100k upwards? Anything online, or is this offline advertised roles? I’m going to need some evidence points to support my counter offer. I think a few senior salaries to solidify a low of 100s and a few head of salaries to set a benchmark will be helpful if I can find them.
- It’s not an AI business, but does leverage it. I think the 100k-400k at 0.2% isn’t a game changer, but double or triple that would be. Where are you getting your ARR multiple estimates from? I don’t doubt you, it just helps me assess my position.
Yeah I feel my equity offer is probably unfair, but didn’t know any different when accepting it sadly. Do you have any resources I could read to educate myself more about what I should be specifically asking for in a negotiation and how it works.
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ManchesterDev commented on Ask HN: What's an appropriate compensation counter offer in London 2024? · Posted by u/ManchesterDev
A personal example of this. A company I was working for made a lot of people redundant, although they wanted to retain me. I wasn't happy with the situation, not least because I would end up shouldering a lot more work in the reduced team. I knew I could find work somewhere else at least on what I was getting (with less responsibility). So I asked for a raise to retain me.
They refused, and I resigned immediately. I found a much better role, on more money, with better career opportunities quite quickly. My BATNA meant I could ask for the raise with some confidence. Of course you have to be willing to follow through; I wasn't bluffing.
That’s helpful, I’ve never thought about it like this before. It’s kind of what you believe is the best alternative out there and using that. A bit like hypothesis testing and gathering evidence.
Probably easier to be as aggressive as you were if there has been a significant negative change in the company vs a positive friendly environment which I have.
ManchesterDev commented on Ask HN: What's an appropriate compensation counter offer in London 2024? · Posted by u/ManchesterDev
Note that you have a best alternative, even if you don't improve it.
The goal is to have an active comparison, “if they just said no to everything here is what I would do and what that is worth to me.” And, you want to know the other party's best alternative, too, because you want to be able to say “I know we can do better than outcomes A and B.”
Negotiations “want” to be zero-sum and you have to constantly prop them up. There's actually strange parallels to this in theology and political science, complex multidimensional things getting collapsed to Left vs Right or God vs Satan and so forth. So we want to focus on one number, the salary, and party X wants it higher but Y wants it lower, now you have a zero sum game.
But the point of negotiation is the multidimensional space. “I want to work with you, we're on the same team here, we both want me to continue at this workplace and flourish...” is possible precisely because the space is not us-vs-them.
It's a little bit of a pipe dream but the ideal negotiation kind of sounds like, “oh, you're not able to pay me more than my manager? OK, what about getting me to be a team lead so that I am on the right trajectory? You don't have a spot for that? Well I have been thinking about starting a family, how about we explore a policy that would make it easy for me to take a chunk of that time off. No? What about these wonderful experiments with the four day work week, do you want to try those? Hum. Well, if we are really stuck on all of those, here's articles about how private companies with ESOPs beat the pants off of other companies, how can we get me some equity? Takes too long? I mean I can wait, just not forever. Want to meet in 30 days and we'll keep in touch on Slack about some of these ideas and float them to senior management?”
(Here notice that the “best alternative” is explicit, “we meet again about my career development in a month.”)
I think I got about 60% of that, but the penultimate paragraph helped a lot. I’ll have to get a beer and mull over what those best alternatives might look for me if it’s a no to salary.
ManchesterDev commented on Ask HN: What's an appropriate compensation counter offer in London 2024? · Posted by u/ManchesterDev
For other top European locations, I would expect more than 100k GBP (130k) for your top report and anywhere from 10% more to 50% more for your level depending a bit on the industry and org style.
I think glass door like services tend to underreport normal-high salaries for various reasons but London is also very low for its expenses and I would look around at nearby markets. Even if you wouldn't want to leave the UK its easier to anchor some firms on other markets now that work location is more flexible.
Very interesting thanks
ManchesterDev commented on Ask HN: What's an appropriate compensation counter offer in London 2024? · Posted by u/ManchesterDev
I'd not spend mental energy negotiating hypothetical salaries with a current employer, _especially_ someone you're friendly with.
I'd think about "what real offer would I need to up and leave?" and then spend a certain portion of your week pursuing that kind of offer, maybe start by finding a friendly recruiter to take the strain. You can let your friend know that offer when you get it, and what discount you'd take to continue to work with them (if any).
You might end up feeling like a crummy time for tech work (in the UK at least), and a good time to be settling for a lower salary doing interesting work, or you might find a crazy well-paid niche for your expertise that you never knew existed.
I hear what you're saying that you feel your expertise with their code & domain puts your in a position of maximum leverage, but I doubt your friendly founders see it that way. If I were advising them, I'd be urging them to consider nobody is irreplaceable (even if they end up paying someone new higher than they ever considered paying you). I'm sure your 1-2 year estimate for a run-in is pessimistic.
Would you consider a high day rate for contracting and let the employment and equity slide? If the company sold for £100m tomorrow and you got £200k, that sounds nice - but is it likely compared to the opportunity cost of working towards a real career ladder? Is it possible that they could dilute that 0.2% away? idk man, it doesn't seem like something I'd consider compared to salary.
Also - as others have said - don't bring your other income or into your salary negotiation (or let your employer do so, if they're aware of it). It's not relevant.
Sorry, not a complete strategy, but good luck with it.
Thank you for the thoughts lots to mull over.
Agree 200k isn’t going to be life changing when looking over the lifespan of a career, just quite a bit of fun, so won’t let that be the biggest sway - and it’s probably a best case scenario.
Dilution is something I’m very nervous of in perusing an equity strategy, but just don’t know how to calculate my exposure to it. I just don’t understand the topic enough.
There will be something that feels bitter if the company does sell for that figure and the guys/girls cofounders all land on a few million and me on 200k despite having done a significant amount of the code leg work. But probably bigging myself too much there.
You can get around this with salary sacrifice pension, which can push your pre tax income down bellow the critical levels. But most employers refuse to offer it.
At a small company, you might be able to make them do it.
You get significantly punished for breaching that 100k. So if you’re going to tip over, you needs to smash through it.