Compensation in a startup

Compensation has always been a big decision maker while choosing a job. How many times have you thought about it while looking out a new opportunity? Numerous calculations, Number crunching and when another company offers a little higher number, we are back at numbers and mathematics.

I have done it myself and I would like to share my 2 cents here. Compensation is definitely important but it is not true. I have always mentioned to everyone, “Money is a by-product of your passion and interest”. And it is true in terms of compensation.

When I passed form my institute, I had 4 offers to choose from. I chose the one that paid the most. It was a good decision in terms of learning but a very bad decision in terms of compensation. A fixed package with no commitment to increment or bonus. One of the hard ways to learn that compensation in terms of CTC is just another number with no benefits. The only thing good that I started doing was buying the company’s shares. Even though I made some money but that was the starting point.

My next jump was not for better compensation but an opportunity and experience of a lifetime. I joined a startup for a friend and till date, I am enjoying the ride. Seeing a business so close was fun and full of learning. Atleast after failing couple of times in Entrepreneurial attempt, this experience came very close to second. When I joined here, I did not ask for any specific figure but definitely asked for stock options. I feel that was the best thing I did. At the same time, I saw people joining startup without any mention of stock options.

So, why compensation must include stock options? Business is not about one or two founders coming together. Neither it is about CEO, MD, CFO and so. Business has always been about people. At the same time, I pity on all those founders who either hesitate to share their options or could not get/hire people without stock options. One of the very common reasons that I have heard is people in India are not aware but those who mention this statement, I have a question that what is the guarantee that people whom you hire/keep in such a way would stay with you for your growth or growth of your organization.

Coming to the conclusion, I would like to recommend everyone the following while choosing to work for an organization and in particular, a startup:

  • Most important, get complete clarity on stock options. Never join a startup without commitment to stock options. Don’t worry all founders maintain a cap table and it must not take more than 2 days for a founder to come back with a number. Your timing of joining a company matters a lot. Negotiate based on your capability and time of joining.
  • Negotiate on your variable pay structure and it must be linked directly with your performance. Negotiate well on this.
  • Get yourself on quarterly review mode. Ask for benefits if the performance meets the expectations.

Never hesitate to ask. Startups demand a lot from an individual in terms of risks, stature, reputation, work-life balance and many more. So, an individual bets on his life and career in a startup. Talk directly and preferably, face-to-face with the founders. Never join without talking to them and in case of confusion and no clarity, dare to walk away. Such founders do not deserve to have good people around.

If you beg to disagree or have any opinion, please feel to share and I would love to hear from you all.

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