If you don't risk your well being joining the saas company (imagine being fired after two years ..?), ask for at least 30 % equity, if they ask for a vesting schedule ,ask to keep the same salary 250 K untill equity vested.
You seem very happy with your current situation. It sounds like you'd be taking a cut in your pay in exchange for much more work. There's a small chance of a large payout if they get bought out, but this is assuming the startup doesn't fail (as most do) and that you stay long enough to be there when it happens.
If they aren't willing to match your current salary and give you a much bigger slice of equity, I would decline the offer.
Ultimately you're going to have to decide your risk tolerance and how much you value the intangible elements of it as an experience.
Practically and fiscally speaking, it's a bad choice. I made the same choice at about the same point in my career. Nothing came of it in terms of exit, and I learned a lot about my own deficiencies in the process.
The benefit of being young is you generally have fewer obligations tying you down, so this kind of risk is palatable. You just have to decide how much risk is worth it for the experience; put a value on that intangible element experience.
Is the experience and sliver of opportunity worth $90k + work-life-balance?
It really depends on your personal perspective on life. Consider the two statement and which one aligns more with yourself:
1. "It's better to regret something that you have done instead of something that you haven't done."
2. "I want to retire comfortably with a high level of confidence."
People in my life always advised me to follow the highest paying job. I'm not sure that was the right advice given my circumstances. It's really up to you.
Never join a startup for the money. It’s meaningless to even compare your current comp.
Will you learn a lot? Will it be fun and do you enjoy working with tight deadlines?
You probably won’t learn a lot of technical skills since the other two are non-technical but you could learn sales which is arguably more important.
Unfortunately, the odds of your start-up succeeding are very slim. Not to say that it's impossible but I wouldn't bank on it. I worked at as a founding engineering with two sr directors that left a prior employer. it was fun for a couple years but then I moved to the bay for big tech. it's been close to 14 years now and I'll retire by the end of the year. all this to say, if I was you I would maximize my income and saving at this young phase of your career. big tech is still an excellent place to build your network. at some point as you climb the ladder the corp culture may leave you dissatisfied and a start-up may be more attractive but hopefully at that point you'll be financially independent
I'm a founder, i have 2 founding engineers on the team. so first of all, 3% is a bit low from what you describe.
Second, keep in mind that most startups fail, so beside the financial upside that might never materialize, you should do it for the adventure itself.
Building a startup is an amazing experience, you might start building something and end up building something completely different, you'll meet tons of inspiring people and you'll put yourself outside of your comfort zone.
The question you need to ask yourself is, do you want deep inside leave this adventure or you prefer a comfortable salary and job security. Because it will be anything but that.
ignore 3% equity; will you deliver the ask, working 7 days for 160k, and for a questionable title of founding engineer? you'll get no technical guidance from the founders (who get to keep +80%), and only get requests to pivot to current flavor of the week; ask for 10% if you still want it and see what happens; if they say no, you dodged the bullet early;
Unless you don’t have any other options, don’t do it. Your future self will thank you. I wasted so much time being a founding engineer, it’s the worst tradeoff. Don’t do it. Don’t do it.
> I’m currently at 2.5 YOE at big tech making 250k
250k is good money. I'd stay, accrue experience and contacts, bank some money. The startup probably won't work out anyway - they usually don't. And even if it does, 3% equity is too low for the financial and personal sacrifices you'd have to make.
250K is about $1000 a day in cash and your present employer is likely to be putting about another 250K into your non-cash benefits at the same time.
I would take advantage of your present (rare) work-life balance to cast some of it to the wind and work for these guys as a consultant without resigning from your employer, as long as it is not a conflict of interest.
Even help them find someone in their price range with the confidence that you can still back them up as a consultant going forward.
You hope non-technical founders are good deal-makers, but underhanded dealing is all too common as well.
So deal. One of the sure ways to find out how honest and generous someone is. I would accept less than the 160K on the table this year but with equity in proportion regardless of being "only" a consultant who might end up building the whole thing anyway. But it would have to be $1000 per day and if it turned out to be 80 days the next year it only cost them 80K with no benefits. What a bargain so there's no excuse not to stick with a calculated 1.5% proportional equity in this phase of the lottery. And keep on going :)
That would be about my final settlement point, where you start and how you negotiate down from there you're going to have to play by ear.
The next best thing to being a founder is to be able to write your own contract regardless. You already have an employer-employee relationship, that just doesn't sound like an ideal kind of relationship when it's going to be functionally a 3-person startup of "equals" the minute you start building.
If you don't risk your well being joining the saas company (imagine being fired after two years ..?), ask for at least 30 % equity, if they ask for a vesting schedule ,ask to keep the same salary 250 K untill equity vested.
You seem very happy with your current situation. It sounds like you'd be taking a cut in your pay in exchange for much more work. There's a small chance of a large payout if they get bought out, but this is assuming the startup doesn't fail (as most do) and that you stay long enough to be there when it happens.
If they aren't willing to match your current salary and give you a much bigger slice of equity, I would decline the offer.
Ultimately you're going to have to decide your risk tolerance and how much you value the intangible elements of it as an experience.
Practically and fiscally speaking, it's a bad choice. I made the same choice at about the same point in my career. Nothing came of it in terms of exit, and I learned a lot about my own deficiencies in the process.
The benefit of being young is you generally have fewer obligations tying you down, so this kind of risk is palatable. You just have to decide how much risk is worth it for the experience; put a value on that intangible element experience.
Is the experience and sliver of opportunity worth $90k + work-life-balance?
It really depends on your personal perspective on life. Consider the two statement and which one aligns more with yourself:
1. "It's better to regret something that you have done instead of something that you haven't done."
2. "I want to retire comfortably with a high level of confidence."
People in my life always advised me to follow the highest paying job. I'm not sure that was the right advice given my circumstances. It's really up to you.
I'm curious what makes you say that. I did (1), and I often deeply regret it.
Never join a startup for the money. It’s meaningless to even compare your current comp. Will you learn a lot? Will it be fun and do you enjoy working with tight deadlines? You probably won’t learn a lot of technical skills since the other two are non-technical but you could learn sales which is arguably more important.
Unfortunately, the odds of your start-up succeeding are very slim. Not to say that it's impossible but I wouldn't bank on it. I worked at as a founding engineering with two sr directors that left a prior employer. it was fun for a couple years but then I moved to the bay for big tech. it's been close to 14 years now and I'll retire by the end of the year. all this to say, if I was you I would maximize my income and saving at this young phase of your career. big tech is still an excellent place to build your network. at some point as you climb the ladder the corp culture may leave you dissatisfied and a start-up may be more attractive but hopefully at that point you'll be financially independent
I'm a founder, i have 2 founding engineers on the team. so first of all, 3% is a bit low from what you describe.
Second, keep in mind that most startups fail, so beside the financial upside that might never materialize, you should do it for the adventure itself.
Building a startup is an amazing experience, you might start building something and end up building something completely different, you'll meet tons of inspiring people and you'll put yourself outside of your comfort zone.
The question you need to ask yourself is, do you want deep inside leave this adventure or you prefer a comfortable salary and job security. Because it will be anything but that.
ignore 3% equity; will you deliver the ask, working 7 days for 160k, and for a questionable title of founding engineer? you'll get no technical guidance from the founders (who get to keep +80%), and only get requests to pivot to current flavor of the week; ask for 10% if you still want it and see what happens; if they say no, you dodged the bullet early;
Unless you don’t have any other options, don’t do it. Your future self will thank you. I wasted so much time being a founding engineer, it’s the worst tradeoff. Don’t do it. Don’t do it.
Yes, founding engineer math doesn’t work. Its a way to buy you cheaper than market can offer for comparable work/risks.
Only consider compensation you control.
If you don’t control equity, you cannot control the outcome, value, or liquidity of it.
Do you believe in the product/company? Does your equity dilute? Do you believe in the founders?
> I’m currently at 2.5 YOE at big tech making 250k
250k is good money. I'd stay, accrue experience and contacts, bank some money. The startup probably won't work out anyway - they usually don't. And even if it does, 3% equity is too low for the financial and personal sacrifices you'd have to make.
tldr: seems like the wrong time
250K is about $1000 a day in cash and your present employer is likely to be putting about another 250K into your non-cash benefits at the same time.
I would take advantage of your present (rare) work-life balance to cast some of it to the wind and work for these guys as a consultant without resigning from your employer, as long as it is not a conflict of interest.
Even help them find someone in their price range with the confidence that you can still back them up as a consultant going forward.
You hope non-technical founders are good deal-makers, but underhanded dealing is all too common as well.
So deal. One of the sure ways to find out how honest and generous someone is. I would accept less than the 160K on the table this year but with equity in proportion regardless of being "only" a consultant who might end up building the whole thing anyway. But it would have to be $1000 per day and if it turned out to be 80 days the next year it only cost them 80K with no benefits. What a bargain so there's no excuse not to stick with a calculated 1.5% proportional equity in this phase of the lottery. And keep on going :)
That would be about my final settlement point, where you start and how you negotiate down from there you're going to have to play by ear.
The next best thing to being a founder is to be able to write your own contract regardless. You already have an employer-employee relationship, that just doesn't sound like an ideal kind of relationship when it's going to be functionally a 3-person startup of "equals" the minute you start building.
Have fun :)