??SALARIES IN STARTUPS - Part 2?

I wrote part 1 of this article 3 weeks ago and since then I received messages and calls from friends and readers of my blog who requested more details & insights to the point that one of the feedbacks was: “Just tell me what salary should I ask for!”. I got messages from Egyptian talents abroad who were excited to come back and work in some of the top startups in Egypt. A lot of corporate friends were suddenly open and interested to jump ship in the start up world too!

I understand many pain points when it comes to negotating your salary in a startup;

I’ve been an employee in corporates who didn’t know what salary to ask for when I jumped to a startup,

I’ve been a talent in fast growing tech startups who doesn’t understand how much more should they be earning,

I’ve been a founder for a couple of companies who suffered from not knowing what to pay certain talents,

& nowadays I’m working with a VC which means I work with founders all week long who suffer from hiring and setting salary scales.

I see these salaries discussion from both sides.

I have friends in many startups in the ecosystem and a lot of them are married and have kids, so this discussion is no joke to them!

For part 1 I covered WHY startups pay these crazy salaries, & for part 2 I aim to help you as a talent in the market understand HOW to approach your salary discussion.

Yours Truly

Amr El Selouky

------------------

One of my friends working at Vodafone asked me if joining a startup will boost or depress his career progression on the long run in terms of titles and salaries. I will tell you how we approached this discussion but you need to know something:

Your career is like a game of chess and every move can potentially push you 2 steps forwards or 1 step back. Not a single decision will make or break your career. I’ve seen talents work for startups that completely failed and then got hired by other companies where they’re doing great.

I’ve also seen founders completely breakdown after their startups crashed and then being picked up as a director in a more established startup where they can get paid well and were able to over perform and work without the pressure of managing the whole company;

so let’s not exaggerate the effect of 1 single bad move to or from a startup (or corporate for that matter).

So, to my friends in Vodafone, P&G, Etisalat, GSK or in other established companies, if you’re being approached by a startup here a few points I believe that will help you in making up your mind and eventually even negotiating a salary!

1)?????Startups MIGHT pay less initially, but it's all about the salary increase trajectory on the long run!

Firstly, I’m not going to tell you that stock options should motivate you to settle for a lower salary because how many startups have the potential to exit or IPO?

Infact, do not let an early-stage startup getaway with paying you 50% of your market value except if you’re going to be a Co-Founder or a founding team member given the proportionate equity, scope, title and honestly you should have a buy-in to the vision and the whole experience. You're not joining for the income here but rather the entire journey.

Seriously, if you’re in a discussion where you're offered a 50% salary cut to join startup and it isn’t a “let’s make you a cofounder” discussion, WALK AWAY!

There is no such thing as a ‘magic startup discount’ where they sell to you the narrative that they’re the next SWVL and will disrupt their industry so you should just accept working for them at a much lower salary!

Now back to our discussion, when a funded startup approaches you, you'll probably go for 1.2x to 1.5x of your current market value, but this isn’t the catch.

The catch is this: Due to the fast growth of tech startups, more senior positions are being formed really fast which means they will stretch you to grow and take on new regional and global roles every year. In the span of 3-5 years you can move from a team leader to a manager to a regional manager. Literally the growth, title and salary you can get in a corporate in 10 years; you end up getting in a tech startup in half the timespan!

Due to this insane growth, your salary increase trajectory piles up on the long run resulting in some cases where talents will be earning 2x & 3x compared to other corporate talents with similar profiles and years of experience.

But which startups are we talking about?

They are VC backed, revenue generating, enjoying exponential growth & their founders have a previous track record with startups. You can find their names in the list of the 50 most funded startups in Egypt. They are looking for top talents I promise!

If they raised a significant amount of investment, chances are they could afford you and will provide you with much needed stability.

2)?????Ask about the startup founders, some of them are notoriously delusional about raising funds and will say anything to hire you!

Many founders will tell you that you should settle for a lower salary until they “close a funding round” as they have “advanced discussion with global and local VCs”.

Well, you have 2 options in this case:

-???????You accept their offer because you really believe in what this startups does and what your learning experience will look like & just accept that you can stay underpaid for a month, a quarter, a year or forever. Just don’t give the founders a hard time because honestly it’s you who believed them. Sometime the founders are honest and it’s the investors that back out of a deal. Other time it’s the founders who made a bold claim. In all cases, taking this offer is your conscious decision. False hopes are painful.

-???????You reject the offer until they pay you what you want or at least formally & legally commit to your salary adjustment within a certain period (disregarding if the money from the claimed round of investment entered their bank or not). Personally, I’m not a big fan of this scenario. If it’s a no, just say no.

WHY DO I RECOMMEND YOU ASK ABOUT THE FOUNDERS?

Usually when the founders have a track record in building companies and raising funds, it’s much easier for them to get an investment from pre-established connections with investors which means a fund that can help them afford your salary. If they had an exit before, they could potentially fund this new venture themselves too.

3)???????Supply & Demand on your role can make you worth 2x your actual market price!

Know what your role is worth in the market. I mean if you’re a data scientist, you’re scarce and probably worth 2x than your actual value just because of supply & demand (taking into account your background & experience).?

Ask your friends in startups, especially founders or those in HR, on which roles are most hard to hire for and you'll have your answer on if your role should be paid more in terms of salary!

After that you can determine a salary range for this role and request the upper half of it, so you can negotiate down if needed.

?4)?????Stock options mean nothing for most startups.

I wrote a full article about stock options that you can check here: https://www.dhirubhai.net/pulse/stock-options-startups-how-changed-game-forever-get-your-el-selouky/

As I mentioned, many startups do not have the potential to exit or IPO ever in their life time. Many of them aren’t even designed to do so or lead by entrepreneurs who have this vision, experience or know-how. Also note that on average less than 20% of companies that make it to Series A successfully exit.

Unless you have a clear understanding and buy-in on how this startup can truly become the next SWVL, SOUQ or CAREEM; in the salary vs stock options debate go for money 10 times out of 10 to be brutally honest.

I’m not promoting for talents to be greedy or to undermine the value of stock options, I’m just promoting for talents to be educated on which startups' stock options have the potential to compensate a hit the risk in their salaries and which companies are going to remain a small/medium enterprise so salary is everything in this case!

5)????Besides salary, Early-stage startups are not where you get benefits, scaleups are.

Even though I’m not talking about salaries at this point, but benefits are a huge part of any compensation deal. Early-stage startups that just started and have minimal pre-seed fund probably can’t give you beyond a salary to survive with. On the other hand, scaleups that raised a much bigger investment provide benefits mainly to help them in their recruiting efforts and most of these benefits become an extension of the company culture that you can enjoy in the workplace.

Compensation will always go beyond your salary so when weighing any offer consider flexibility to work from home, medical insurance, potentially bonuses, stocks, your potential growth in the company and most importantly culture.

In Conclusion,

Even if you’re offered the most interesting a job at a startup, it’s your right to make sure your package will help you put food on the table.

The “coolness & swag” of working in a startup shouldn’t make you starve.

We haven’t seen enough growth and maturity in our startup ecosystem to make data-driven conclusions & I believe things might shape up differently in the next few years. However, for the time being, from the cases around us I can say that senior employees of the?most successful and funded?startups are expected to earn more than corporate talents who share the same experience.

I read this quote in an article: “If you can really pick the startups that will succeed better than average, then you’ll earn much more than average, and you should probably go do that.”

Personally, I always ask myself 1 question:

Will this opportunity make me an overall better version of myself in terms of personal & career growth?

?