Ready to leave your 9 to 5 for the startup rise and grind? If so, this guide can help you understand the differences between established companies and knowing what to negotiate when it comes to joining a startup.
Startups offer high reward in terms of passion, innovation, collaboration, and exposure to dynamic thinkers who are set on changing the status quo; they also offer more risk than working for an established company that has a consistent revenue stream.
Researching startups you’re interested in is the first step to knowing if leaving your 9 to 5 is right for you. You’ll want to research what they’re all about; founder backgrounds, funding, and their vision – acquisition, partnership, or growing into their own as an established company in their industry. Research and asking questions are key to avoiding what can happen if you go in blindly following the charismatic passion of a startup founder.
Money Matters
Bills will keep coming in whether you work for a startup or established company. Startups in early stages may not have enough money raised to pay you, if you are set on working with them early on. Often times, people join because of a shared vision and belief in the founding members of a company. Knowing that 75% of venture backed startups fail compared to the average business in America with 50% failing after 5 years, the risk of working in a startup is much higher. Money matters. While the promise of making it big and being the next Facebook or Google is every founder’s dream come true, there is only one Google and only one Facebook. Knowing this, it’s critical that you negotiate the best salary that you can get, because you need money to live, and to invest in your future so you can retire comfortably.
If your job involves growing sales, you’ll also want to negotiate a fair commission structure that keeps growing as you acquire new customers, and as you onboard new team members underneath you who will learn how to sell from you. Now’s the time to secure your stake and future as the sales leader.
On the other hand, if you’re working in the early stages where money is not available in the form of a salary, you can negotiate a fee for successful partnerships and pilot programs that will give the startup credibility in the space they want to work in, and testimonials from actual users that can be used to secure more funding. Again, it’s critical that you get this in writing so you are paid for the time, work, and execution of what is agreed upon to help the startup grow. If you and the founder are aligned, you can also negotiate a working relationship and equity option for your continued work early on and when the company receives funding. While it’s tempting to join a charismatic leader who promises the moon, money is what pays the bills in this reality we call life. Your time is worth something, so negotiate a fair exchange and be willing to walk away if it doesn’t make sense for you.
Read More: Finding An Executive Coach in the San Francisco Bay Area
Mindset Matters
According to the data out there on successful ventures and startup failures, it’s critical that you take the extra time to understand the mindset of your team members. Since you’ll all be working closely together in a startup environment, you need to know how people see things, and what their true motives are so you set yourself up for success.
Startups can fail when:
- Founders are not 110% committed
- Founders are divided on the mission, vision, and impact of the company
- Funding is not available because investors or the market are telling you this venture does not resonate
- Founders are money hungry and not customer obsessed
- Products and/or Services are not refined or designed well
- You still have trouble understanding who their customer is because they haven’t figured it out
- There’s no clear go-to-market strategy and people are still in the dream phase over the execution phase
- Founders don’t manage money well and know nothing about motivating, mentoring, inspiring and developing team members to their full potential
- Great idea, but timing is off and there isn’t a plan to tweak things to grow into the opportunity
- Product focused and zero money to invest in a sales team to actually acquire users
As you can see, there are many things you need to consider when interviewing a startup and their key members. While some founders have access to capital, it does not mean they know what to do with money, people, operations, and meeting the needs of their customers. A startup founder who has a solid business acumen will be able to articulate their vision and perspective if you ask the right questions. Remember, you’re joining a nimble team, and not taking another job, so you need to understand the risks, rewards, and gaps to make a smart decision. Asking questions will also provide you the opportunity to articulate your value and how you can help the startup grow.
Startups move fast and have to pivot, so stress can be another factor to consider. If you’re dead set in your ways and not adaptable, startups may not be the right environment. If you love change, dynamic environments, and ambiguity, working in a startup might be what you’ve needed all along to feel fully alive in the workplace. Asking the right questions can reduce stress and improve communication with your future team members. Communication is key and having the right mindset to navigate challenges with optimism towards your end goal is what the startup journey is all about.
Stock Options and Equity
Every startup founder and employee’s dream is to go public and see their stock shares soar! Imagine what it was like for the early Facebook team members who are now multi-millionaires because of their stock values. Pretty cool, huh!
Knowing where a company is heading can serve you well. Negotiating your options early on can help you build out a nice portfolio should the company go public. Shares later on will become more expensive, so get in early and ask for more shares if they are not able to pay you what you could make for an established company.
Lifestyle
You ventured to the startup world for a different experience, so don’t set yourself up for the same experience you dreaded. Instead, negotiate the whole package. You can negotiate remote work, bringing your dog into the office a few days each week, educational reimbursement, cool conferences, paid public transit or ride sharing credits, memberships to network at places you know can land the right deals, and other things that can bring more alignment between your work and life. Depending on the startup, you may be offered great healthcare benefits as well. Know the lifestyle you want and don’t be afraid to articulate this when the time is right. Odds are, other startup team members want similar things, so your thinking is not that crazy in the startup world.
Negotiating Your Offer
Working in a startup is more of a personal experience than a transactional seat to fill. You’ll want to take the time necessary to allow everyone to see if this is a good fit. Since there’s a lot riding on a nimble team, you’ll be more like family that any other environment you’ve been in before. You’ll laugh, cry, smile, and thrive together as you ride the wave of startup life.
Take the time to do your own due diligence on the startup. Research their competition after you know more, and don’t be afraid to see if you can get an interview over there as well so you have a better understanding of the market, products, and mindset of the people you’ll be working with. Knowing your options, make a list of what you want and need:
- Salary range that’s acceptable (for tips on how to negotiate better, sign-up for my Career Success workshop at www.drewaversa.com)
- Benefits – traditional things like healthcare to flexible work arrangements, and more
- Stock Options or Equity
- Contribution and growth opportunities – management, leadership, team building roles
- Milestones and written agreements for pay raises and bonuses
Getting a job is easy. Investing in a dream and vision is life changing.
Take the time to determine if this is the right startup for you. Write down everything you want. Articulate your value, your vision, and how you see yourself contributing. Most of all, work someplace you love. With the right strategy, work ethic, and mindset you’ll never fail even if the startup you’re working for does.
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