Both Sides of the Table

JUNE 17, 2017

The most obvious way to explain this is with sales people. If you hire 6 senior sales reps in January at $120,000 / year salary then you’ve taken on an extra $60,000 per month in costs yet these sales people might not close new business 6 months. COGS” represents the amount that each sale costs you.

Stock Options 227

Stock Options Startup Dilution Venture Capital 227

Startup Professionals Musings

OCTOBER 21, 2017

CEO brought in to replace the founder, 5 - 10% CTO, CFO, VP of Marketing or Sales, 1.5 - 3% Chief Engineer or Architect, 1 - 1.5% Offers near the high end of a range will likely come with a lower cash salary, maybe even 50% of the going rate. Your compensation is the total package of stock plus salary plus benefits.

Stock 140

Stock Stock Options Advisory Board Startup 140

ReadWriteStart

OCTOBER 28, 2010

Common areas to address are decisions around capitalization, executive hiring and firing, share issuance (dilution), and acquisitions. Under what circumstances will someone decide that they just can't commit to the business full time anymore; for example, if the founders have to go without a salary for six months.

Cofounder 128

Cofounder Founder Equity Dilution 128

www.avc.com

SEPTEMBER 22, 2011

The other important data point is the number of fully diluted shares. The first bracket is the senior management team; the CFO, Chief Revenue Officer/VP Sales, Chief Marketing Officer/VP Marketing, Chief Product Officer/VP Product, CTO, VP Eng, Chief People Officer/VP HR, General Counsel, and anyone else on the senior team.

Equity 64

Equity Employee CTO Hire Fractional CTO 64

Both Sides of the Table

SEPTEMBER 29, 2009

Three reasons: There is a relative valuation between the price a VC pays and their expectations of what it will exit for in an IPO or trade sale. Also, it’s harder to pay a $30 million pre-money value on an unproved company when you see public companies with $100 million in sales trading for less than $20 million.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Startup Professionals Musings

OCTOBER 17, 2013

CEO brought in to replace the founder, 5 - 10% CTO, CFO, VP of Marketing or Sales, 1.5 - 3% Chief Engineer or Architect, 1 - 1.5% Offers near the high end of a range will come with a lower cash salary, maybe even 50% of the going rate. Your compensation is the total package of stock plus salary plus benefits.

Stock Options 224

Stock Options Stock Advisory Board Startup 224

Startup Professionals Musings

SEPTEMBER 22, 2012

CEO brought in to replace the founder, 5 - 10% CTO, CFO, VP of Marketing or Sales, 1.5 - 3% Chief Engineer or Architect, 1 - 1.5% Offers near the high end of a range will come with a lower cash salary, maybe even 50% of the going rate. Your compensation is the total package of stock plus salary plus benefits.

Stock Options 230

Stock Options Stock Advisory Board Startup 230

Startup Professionals Musings

JULY 24, 2011

CEO brought in to replace the founder, 5 - 10% CTO, CFO, VP of Marketing or Sales, 1.5 - 3% Chief Engineer or Architect, 1 - 1.5% Offers near the high end of a range will come with a lower cash salary, maybe even 50% of the going rate. Your compensation is the total package, stock plus salary. 7% Product Manager,2 -.3%

Equity 234

Equity Advisory Board Stock Options Stock 234

Hunter Walker

JANUARY 15, 2016

By the end of 2004 I had brought on two co-founders: John Vars – who is now the Chief Product Office at TaskRabbit, and Steven Reading took over Sales and Revenue. Though I should point out was still doing client work for OneMatchFire until mid-2005 until the business could pay full salaries.

Technical Review 48

Technical Review Startup Cofounder SMS 48

Startup Professionals Musings

MARCH 29, 2015

CEO brought in to replace the founder, 5 - 10% CTO, CFO, VP of Marketing or Sales, 1.5 - 3% Chief Engineer or Architect, 1 - 1.5% Offers near the high end of a range will likely come with a lower cash salary, maybe even 50% of the going rate. Your compensation is the total package of stock plus salary plus benefits.

Stock Options 120

Stock Options Stock Advisory Board Startup 120

Startup Professionals Musings

SEPTEMBER 5, 2016

Don’t let early funding increase risk and dilute your potential. You can use it best to entice outstanding team members and partners, building a level of commitment you don’t get with salaries alone. Thus they will insist on a sale or public offering at every opportunity, which will likely force you out.

Bootstrapping 120

Bootstrapping Entrepreneur Startup Exit Strategy 120

Up and Running

AUGUST 7, 2013

Reacting fast to your own people is as critical to a business as answering sales queries quickly. Don’t take a note for the next salary review. Every day you wait dilutes the impact. . A quick bonus has more impact than a future salary increase. Do not wait. Do it right now. I’ve seen that many times.

Salary 120

Salary Dilution Leadership Employee 120

VC Cafe

SEPTEMBER 26, 2010

As the founder, you’re the number one sales person of the company and it is not a function you can outsource right away. Show you’re knowledge and passion when speaking to an investor and don’t say you need money to recruit a sales force. Don’t raise just to get a salary or because you need to pay for servers.

Elevator Pitch 102

Elevator Pitch Incubator Technical Review Startup 102

Lightspeed Venture Partners

SEPTEMBER 21, 2013

With his back to the wall and about to run out of money, his first priority should have been runway extension, not dilution from new capital. pre money valuation seems big, the actual implication is only between 5% and 10% dilution since the round size is small. Sales skyrocketed and the company was bought by Cisco for $590M in 2009.

Pre-Money Valuation 162

Pre-Money Valuation Valuation Dilution Distribution 162

Steve Blank

APRIL 10, 2019

Stock options for all employees of startups served several purposes: Because startups didn’t have much cash and couldn’t compete with large companies in salary offers, stock options dangled in front of a potential employee were like offering a lottery ticket in exchange for a lower salary. Today that’s less true.

Stock Options 333

Stock Options Stock Vesting Common Stock 333

Startup Professionals Musings

JUNE 20, 2010

CEO brought in to replace the founder, 5 - 10% CTO, CFO, VP of Marketing or Sales, 1.5 - 3% Chief Engineer or Architect, 1 - 1.5% Offers near the high end of a range will come with a lower cash salary, maybe even 50% of the going rate. Your compensation is the total package, stock plus salary. 7% Product Manager,2 -.3%

Stock 144

Stock Stock Options Advisory Board Startup 144

Rob Go

JUNE 10, 2013

Write code, talk to users, and build the company (hire the best people you can find, get the culture right, fundraise, close sales, etc.) Keep salaries low and equity high. Don’t let your company be run by a sales guy. Worry more about making sure you pass than an extra point of dilution. You make what you measure.

Startup 49

Startup Technical Cofounder Hiring Cofounder 49

The Next Web

OCTOBER 7, 2013

Every time a startup raises capital, all common shareholders are diluted. Although salary information is now relatively easy to find online, insight into early option grants is still sparse and vague. In a CTO Salary and Equity trends report by Safire Partners, it finds non-founder equity compensation to settle out below 2 percent.

Engineer 129

Engineer Dilution Option Pool Vesting 129

Growthink Blog

MARCH 30, 2011

The company had raised several rounds of venture capital before selling to Amazon, so let's assume that the founders were diluted substantially and each only owned 10% of the company at the time of the sale. If they lived in the state of New York, on a $250,000 salary, they would pay $58,069.50 So, let's do their taxes.

Salary 93

Salary Acquisition Dilution Capital Gains 93

David Teten

JANUARY 21, 2021

Jonathan Bragdon , CEO, describes Capacity as “a team of founders-turned-funders making non-dilutive, founder-aligned investments of $50-$300k in post-startup, post-revenue businesses planning to 2X revenues in 12-24 months. We determine a salary cap with the founder based on a software engineer in the closest major city.

Equity 78

Equity Revenue Cofounder Colorado 78

Cracking the Code

OCTOBER 12, 2012

This post is a translation of the article: « Pigeons » : le cri d'alarme d'un fonds américain published on LaTribune (12/10/2012) and is a response to the proposed tax law proposed by the government of Francois Hollande, suggesting to tax all capital gain at the same level than salaries or 60%.

France 71

France Europe Capital Gains Dilution 71

www.payne.org

SEPTEMBER 22, 2011

3 Dilution. 7 Salary vs Equity. Companies raise money by selling new stock after the board of directors authorizes the sale to investors. Those new shares are created out of thin air by the company, and will dilute all of the current stockholders. In a startup, dilution happens, and you just need to factor it in.

Equity 56

Equity Employee Vesting Preferred Stock 56

epaley.com

MAY 6, 2013

Once financed, everyone at the startup should have a reasonable salary, but the real compensation for achieving the improbable is the equity that is typically shared between all employees proportional to the expected contribution of each person. Instead they do $9MM in sales. The logic is compelling, but faulty. Using revenue metric.s

Salary 41

Salary Startup Equity Forecast 41

Both Sides of the Table

APRIL 27, 2010

I was paid less in salary in 2004 than I was paid at the job I quit in 1999 (a job I had held 8+ years). But in our first year of sales (and those were really shitty years to be selling software) we sold $2.1 I learned how to establish sales targets and how to manage a sales pipeline. I never built Google.

Venture Capital 285

Venture Capital Hiring Software Review Stock Options 285

The Next Web

OCTOBER 10, 2013

Too dilutive.”. Since we bootstrapped Backblaze, early on we would have months when the company did not have enough cash from sales to buy the additional servers it needed. To start Backblaze, all five of us committed to a year without salary. Dilution – bringing on a co-founder likely means you’re splitting your share in half.

Cofounder 143

Cofounder Technical Cofounder Kenya Dilution 143

www.startupnorth.ca

OCTOBER 23, 2010

I would assume that they are very similar but given the lower valuations and this may change the salary/options mix. and then further dilute for advisors (0.5% – 1% – 2%) and early employees (5 – 15% *if* they are foregoing major chunks of salary). How many early employees are forgoing salary?

Employee 41

Employee Founder Salary Equity 41

Berkonomics

NOVEMBER 23, 2023

The document should also contain clear buy-sell clauses, forcing any sale of shares to first be offered to the corporate treasury, then to the other founders in proportion to their holdings, and then if there is no interest, to outside investors. An option plan should carve out an addition of about 15% of the “fully diluted” shares.

Equity 62

Equity Stock Options Vesting Early Stage 62

The Next Web

AUGUST 19, 2013

Sales are the bloodstream for most businesses, and tech startups are no exception. It’s always better to be earn money, not just raise it, as money you earn doesn’t dilute your ownership and reassures your investors. This post is about choosing the right sales strategy and channels for your startup from the start.

Belarus 137

Belarus Viral Channel Startup 137

Duct Tape Marketing

APRIL 7, 2022

Look, if you work in sales, wanna learn how to sell, and frankly who doesn't check out the sales podcast, where host Will Barron helps sales professionals learn how to find buyers and win big business ineffective and ethical ways. That's what you should be benchmarking your profitability against. Anyway, they get to do it.

Cofounder 76

Cofounder Hosting Networking Software Review 76

blog.nahurst.com

JULY 19, 2010

Compensation is probably between $0 and a ramen salary. This is an area that varies widely and can significantly impact how much equity a technical cofounder receives (if they take more salary). I assume both cofounders will be diluted equally as more employees and investors get involved.

Technical Cofounder 43

Technical Cofounder Cofounder Equity Salary 43

Berkonomics

SEPTEMBER 28, 2017

The document should also contain clear buy-sell clauses, forcing any sale of shares to first be offered to the corporate treasury, then to the other founders in proportion to their holdings, and then if no interest, to outside investors. An option plan should carve out an addition of about 15% of the “fully diluted” shares.

Early Stage 102

Early Stage Equity Stock Options Vesting 102

Lightspeed Venture Partners

SEPTEMBER 16, 2012

The founder wanted to take the offer, but he called his advisor (his business school professor) who told him it was too much dilution for this stage, so he turned it down. He was seeking $50k and wanted to take a salary in the $2-3k per month range to do this full time. 50k for 51% of the company with no salary.

Silicon Valley 162

Silicon Valley Salary Dilution Indiana 162

www.paulgraham.com

APRIL 28, 2010

Whatkind of anti-dilution protection do they want? For example, VCs generally write it into the deal thatin any sale, they get their investment back first. Some VCsnow require that in any sale they get 4x their investment backbefore the common stock holders (that is, you) get anything, butthis is an abuse that should be resisted.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

This is going to be BIG.

JANUARY 6, 2017

Just like in sales, if you don't put in lead generation tools for talent as early as possible, and start tracking it, that well is going to run dry very quickly. What I should also encourage is for someone to line that hiring plan up against a product plan and a sales plan. 4) They underhire.

Hiring 110

Hiring Lead Generation Dilution PR 110

www.paulgraham.com

OCTOBER 23, 2010

The woman in charge of sales was so tenacious that I used to feelsorry for potential customers on the phone with her. Stephen Hawkings editor told him that every equationhe included in his book would cut sales in half. A 10% improvement in ease of use doesnt just increase your sales 10%. Its more likely to double your sales.

Startup 105

Startup Cofounder Software Stock 105

maplebutter.com

JANUARY 8, 2013

Do that – nothing else but one product / company / focus and get to $1M in sales with atleast $15% net profit. I also like to get a sale $$$ ASAP. We’re a mobile development firm looking to increase new client sales. We have two full time sales people and we use Salesforce. Once you’ve done that – then. 1) Hire A’s.

Technical Review 44

Technical Review Startup Cofounder Software Review 44

discuss.joelonsoftware.com

NOVEMBER 1, 2010

. * I dont control the companys valuation: if for example the company is privately-held, then the value of equity might be complicated and outside my control (you can dilute equity, reinvest any revenue instead of paying it in dividends, etc., An employee is normally paid a salary or wages.

Sweat Equity 40

Sweat Equity Equity Angel Investor Affiliate 40