We are in the process of hiring our first programmer. As a startup trying to keep costs to a minimum, whats the standard equity / salary our first tech hire should get? (ballpark is cool too)
This post might be helpful: <a href="http://news.ycombinator.com/item?id=973060" rel="nofollow">http://news.ycombinator.com/item?id=973060</a><p>Everything is a negotiated outcome, but good engineers are worth market salary in the absence of equity.<p>With equity, one rule of thumb I've heard is give 1% for every $10,000 cut the person takes. This implicitly values your company at $1m, but I guess most companies don't hire an employee unless the business is worth at least that.<p>Another rule of thumb I've heard is $50k for 2%-4%. Somewhat supporting this is Aaron Patzer (Mint.com founder) paid his early engineers $30k-$50k for 1% to 5% equity. See <a href="http://techcrunch.com/2009/10/08/startups-101-the-complete-mint-presentation/" rel="nofollow">http://techcrunch.com/2009/10/08/startups-101-the-complete-m...</a>
It's all over the map. Some people like equity. Some people (I'm in this camp) think early equity is too risky to compensate for the salary cuts demanded.<p>Say I take a $10,000 pay cut. Say your company is worth $1,000,000. That means I should get 1% right? No. I should get 1% <i>this year, starting immediately.</i> But wait. My 1% has only a very small chance over ever turning into money. That means I need, say, 5-10 percent to compensate for that. Don't know many startups willing to give someone 5-10% for a $10k salary cut? Neither do I. Maybe I'm too conservative.<p>Or, if you want the short answer, I'd say between 0.25% and 5% is normal to go along with a 20-30% salary cut. That's what I've seen, at least. YMMV.
It varies wildly.<p>The old rule about remembering to pay your soldiers goes. Cutting salary has consequences to your ability to attract and retain talent and equity is worth $0 until some hypothetical point in the future.