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Negotiating Equity Compensation
the worst and best phrases for opening the discussion
I talk to a lot of engineers who are in the process of negotiating offers at a startup. These engineers often raise the issue of wanting more equity than they were initially offered. But the reasoning and the justification they give their counterparty is weak. I wrote up some of the worst and best arguments I’ve heard for why you might deserve more equity. The more effective you are at framing your value to the company, the more effective you’ll be in negotiating for a compensation package that appropriately compensates you for the risk you’re taking.
Current cash comp: “I am/was making $X at big tech company Y”
Intention to work hard: “I’m planning to work really hard and put in extra time on nights and weekends to make this product/company successful”
Lifestyle needs: “I need this to continue my current lifestyle”
Vague claims of value: “I’m going to contribute a lot of value to the company”
Alternative opportunities: “I’ve done an ‘expected value’ analysis of the compensation package and it falls short of my alternative opportunities.”
Lynchpin role: “The role we’re discussing is a lynchpin for the success of the company, but I don’t believe the compensation reflects the importance of the contribution I’m expecting to make.”
Responsibilities (weaker form of lynchpin role): “Given the offer you presented, I think we may have a difference of understanding about the seniority of the role/responsibilities. Could we have a follow-up discussion to make sure we’re on the same page about the role/responsibilities?”
Market data: “The market data I’ve researched suggests this is below what I would’ve expected to see for this role. Can you help me learn more about how you calibrated compensation for this role?”
What other ways have you seen or used to frame a negotiation around equity?
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