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I work for a startup as a senior s/w developer (2 years). The company recently made some people redundant and re-focused on a smaller product set because of lack of investment. As part of a "get everyone fired up" meeting, the management shared some details of what we should focus on. Some very tight (some would say unrealistic) timescales were put in place. I have been offered a big salary increase in return for a longer (5 month instead of 3 month) notice period. Somewhat reluctantly, I've agreed. My question - Should I expect the management to be completely honest about the burn rate and runway length? Is it normal to "protect" employees from these details so as to avoid attrition and loss of morale?

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  • I would not accept a notice period longer than 2-3 months. Such longer notice periods are for higher-ups, not probably for your salary bracket.
    – Rui F Ribeiro
    Oct 21, 2019 at 18:05
  • “Should I expect the management to be completely honest about the burn rate and runway length?” Maybe you should ask the people who were made redundant what they think.
    – AffableAmbler
    Oct 21, 2019 at 22:24
  • What's your (further) tolerance for risk? A startup is always a risky proposition. You've borne that risk for two years. Are you willing to continue to do so? Did the recent redundancies receive 5 months notice prior to termination? This is the risk asymmetry you have currently accepted.
    – Eric Towers
    Oct 21, 2019 at 23:52

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It's pretty normal to keep the hard and fast details of burn rate and runway from employees, especially if you're trying to turn it around and secure more funding.

View yourself in the shoes of the startup founder. They've hit a tight spot maybe and need everything to go right to proceed. To have a viable pathway towards more funding and eventual success, they need their employees giving their very best. That means they need them to be motivated.

You know what's the very opposite of motivating? To know that it might all be over in a year if you don't secure more funding and the logistics of that.

That is the founder's job to deal with. It's their responsibility and imperative to provide employees with sufficient notice and have the funds to effect that notice if they do go under, but it's also their responsibility to shield their employees from the woes of management - exactly what this is.

The good thing though - the employer requesting a longer notice period is a strict plus for you, unless you were planning to leave soon. It means that if the startup goes under, you won't have to serve the notice. But if it doesn't, you continue to get the (increased) paycheck.

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  • @JoeStrazzere you can certainly argue that, but whether or not that works depends on the employee involved. If I found out my company is less then a year from going bust, I would be applying to other positions posthaste. Or, even if not, It would make me quite uncomfortable.
    – Magisch
    Oct 21, 2019 at 11:40
  • @JoeStrazzere Fair enough, you convinced me. However, this is pinned, so I can't delete it. And I suspect changing the main thrust of the answer while it is pinned would draw ire by the OP.
    – Magisch
    Oct 21, 2019 at 11:48
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    @JoeStrazzere I'd like to though, since you've convinced me it's not a good answer. Ah well. Anyways, thanks for commenting.
    – Magisch
    Oct 21, 2019 at 11:50
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    For what it's worth, I also agree. If management refuse to give information to employees, then the tendency of the employees is to expect the worst anyway. I've interviewed for start-ups and they've always been very forthright about the possibility of failure if funding dries up. So, either the situation is more dire than even the employees may expect, or the management are making a huge mistake and undermining confidence by withholding. However, I guess it's still a valid answer as this all very much depends upon opinion, personal circumstance, etc and clearly OP likes the answer.
    – delinear
    Oct 21, 2019 at 14:43
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    Don't follow this advice. It doesn't really matter what's normative to the employer, protect yourself. You don't have to work at a startup.
    – Iron Gremlin
    Oct 21, 2019 at 21:27
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My question - Should I expect the management to be completely honest about the burn rate and runway length?

You should expect management to be exactly the same way they have been so far.

If they have been completely honest and open about the burn rate so far, if they were completely honest and open about the upcoming redundancies, then you should expect them to continue to be honest.

If you were surprised by the redundancies, if they haven't shared all the financial details so far, then there is no reason to expect them to suddenly become open and honest.

Check in with yourself: Do you know the burn rate and runway today?

Is it normal to "protect" employees from these details so as to avoid attrition and loss of morale?

Some companies are honest, others are not.

I've been there and done that. I can tell you that there is nothing more motivating to those who choose to stick around than complete honesty. A "We can't promise we'll succeed, but we can promise that we are all in this together and that you will be kept in the loop" feeling is empowering.

To me, it makes no sense to lie to folks who are trusting you by sticking around during a re-start. I can't imagine bothering to stay if you don't have trust.

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It’s normal. On the other hand, you know what’s going on anyway.

If the company runs out of money and can’t pay your salary, you can leave without notice because that is breach of contract, so the longer notice period doesn’t hurt you that way.

Changing jobs is slightly more difficult, but I assume the notice works both ways, so you can give notice today and then you have five months to find a job. And “big salary increase” should compensate for this.

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This is a dangerous way to frame this situation.

You have a valuable skillset that can get you employment in any number of places. If your management is making decisions or exhibiting behaviors that make you wary about your future, and they're refusing to give you concrete assurances about that future, starting thinking about jumping ship now.

Remember - These people don't gain anything material by being honest or treating you fairly. They have no material incentive to do these things. So if it seems like maybe they are being dishonest, or treating you unfairly, chances are pretty good that's true. This is true of all employers, but it goes double for a startup, because if they make the wrong call, they don't have to worry about the reputation of their brand - They'll be dissolved anyway.

Protect yourself and your career first, because these people aren't going to do that for you.

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    "These people don't gain anything at all by being honest or treating you fairly. They have no incentive to do these things." This implies reputations do not matter. A founder might be able to fool people once or twice, but if they leave a wake of exploitative behavior, it will catch up with them eventually. I am a failed startup founder who was transparent and about burn rate and outcomes. I still have good relationships with the engineers that I had to eventually lay off because I was always transparent about how things were going. They were actually referrals for me for my next job.
    – Technetium
    Oct 22, 2019 at 5:36
  • @Technetium That's a pretty soft incentive - relying on the people here to follow that soft incentive implies a level of trust in their character that needs to be built, through actions and not words. Your actions, in being transparent about the state of your company, gave those engineers that trust. The OPs employers are not being transparent, and should not be afforded that trust as a default.
    – Iron Gremlin
    Oct 22, 2019 at 22:53
  • I agree that it is soft incentive. I disagree with "these people don't gain anything at all by being honest or treating you fairly." My comment outlines an anecdote of how I personally gained from being honest and treating my employees fairly.
    – Technetium
    Oct 23, 2019 at 16:22
  • @Technetium Fair point, I've edited to be more specific. The core point here is that your reputation as a potentially ephemeral employer is in no way as significant to you as collecting a steady paycheck is to your employees. At best, reputation is a secondary consideration that might be impacted by such choices and might potentially influence your career prospects. That's two maybes in one hand, and one 'definitely unemployed' in the other.
    – Iron Gremlin
    Oct 23, 2019 at 19:54

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