0

I have recently signed a contract with an early-mid stage startup (5 people without counting me, less than 3 million on seed funding, and about 3 years old). The conditions are more than fair imo and I am happy with them.

However the CEO explicitly stated, on the email where he sent the formal offer, that "of course in a future if things work out there’s potential for salary increases and equity bonuses".

My doubt is, how do I detect this moment on the future? When should I bring up the issue? Should I guide myself by chronological criteria (after six months, one year, or a certain fixed amount of time), by the achievement of certain milestones, or by the moments when the company receives new funding?

I know the chronological criteria is the standard in many big corporations, but I am not sure if it applies for the startups too. Asking for an improvement every time the startup accomplishes a goal makes sense to me from a performance point of view, but it also seems like blackmail for doing what is supposed to be my duty. The latter makes sense to me as well from the sources availability standpoint, but at the same time I feel it can be a little uncorrelated with my personal performance.

I just would appreciate to hear what are usually the rules of thumb to identify the appropiate moment to demand a contract revision on the context aforementioned.

EDIT: "Your question has been identified as a possible duplicate of another question. If the answers there do not address your problem, please edit to explain in detail the parts of your question that are unique.". This is simply false. People who tag questions as duplicate should take the effort to read them carefully and understand the nuances.

  • 3
    No, don't create a new question for the stocks. This one is good enough. Yes, the conditions are more than fair, but your market value isn't based on fairness. What could you be earning elsewhere with your current skills? What are you sacrificing by working for a startup? Stability? Good solid benefits? A 40 hours job instead of 60-80 hours? When did he send that email? When someone makes you a vague promise like that, you should directly ask them for a clarification. And if you haven't asked that yet, do it now. What did he mean when he said that? – Stephan Branczyk May 12 '17 at 7:34
  • 1
    And whatever you do, do not try to guess what he meant. If you try to guess the goal post without making him commit to a particular one, he will most likely move it (or invent a new one) once you've reached it. That's why you need to ask him, and preferably, you need to ask him that question in writing so you get yourself a written answer (in case his memory falters). – Stephan Branczyk May 12 '17 at 7:42
  • 3
    Possible duplicate of How should I properly approach my boss if I'm feeling underpaid? – gnat May 12 '17 at 10:31
2

I'm assuming you're happy with your salary currently. If you aren't, there's a different answer to this.

I'd do it based off company performance. Startups are all about cashflow- keeping enough in the bank to pay the bills. The times you're most likely to get a yes are right after a fundraise, or after profitability.

Anther consideration would be asking for more stock. Some companies may decide that's cheaper, although its a high risk high reward option. The best time to ask for that is before a raise, so you can get options at the old valuation.

  • 1
    It is explicitly stated. Thanks for your input. I will probably create a new question for the stocks since I would be particularly interested on this more than in a salary increase – Arnold Frenzy May 12 '17 at 5:14
  • Sounds like you ought to be accepting this answer – Mawg May 12 '17 at 9:33
  • 1
    @Mawg, let me decide when I find an answer complete enough to accept it, I already voted up this one – Arnold Frenzy May 12 '17 at 19:55
  • Sure thing. You know best what helped you :-) – Mawg May 13 '17 at 7:17
2

However the CEO explicitly stated, on the email where he sent the formal offer, that "of course in a future if things work out there’s potential for salary increases and equity bonuses".

This is a given, at least when it comes to salary increases. And equity bonuses aren't uncommon in startups. So there's nothing peculiar or special about this and you have no indication that you should be asking for a raise on a shorter timeline than normal. The fact that there's talk of equity bonuses, stock options, benefits or anything else ultimately doesn't change the core of the issue which is about discussing your remuneration.

Time-wise the standard minimum limit is one year. Asking for a raise any sooner than that is usually considered strange and atypical. You presumably negotiated a salary you were happy with and it makes no sense to ask for more so soon, unless:

  • you have major accomplishments that are atypical for your role or level ("going above and beyond")
  • your duties expanded drastically or your role was redefined: you're suddenly managing 3 extra people, you were put in charge of a solo project, ...
  • you negotiated or were promised a salary review within a specific time-frame
  • you achieved credentials or certifications that are relevant to your job

There could be other factors that can move the timeline up, just like there are also factors that would delay it like bad performance or just not having had the chance to prove yourself. One reason that people sometimes bring up is that they're underpaid compared to the market but that is not a valid reason. They should have negotiated better.

Do note that you never "demand a contract revision", you make a case for a raise instead. And to do so effectively requires having accomplishments that make you deserving of a raise, which is why a one-year period is typical.

  • The one thing I would add to this, is that you need to time the request to company financial performance especially in a start-up. Once you have the accomplishments, then the best time to ask is when they are flush with money after receiving a new round of venture capital funding or a financial success in sales.. – HLGEM May 12 '17 at 13:52
  • @HLGEM Probably true for a startup culture. I debated including a mention of the company's financial performance but ultimately that shouldn't impact whether or not employees get the raises they deserve. But of course "shouldn't" is not the same as "doesn't" and poor financial numbers are often used as an excuse not to hand out raises. – Lilienthal May 12 '17 at 14:46
  • I never stated I pretended to have it sooner than normal, I simply asked what are the usual steps to consider in a future regarding this. Thanks for your input – Arnold Frenzy May 12 '17 at 19:54
  • "One reason that people sometimes bring up is that they're underpaid compared to the market but that is not a valid reason. They should have negotiated better." Well, to be honest, mentioning the market value and thereby hinting that one could get better payment somewhere else IS a negotiation tactic... – Thern May 13 '17 at 7:02
  • @Nebr Well yes but the point is that you should have looked at your market value while negotiating the position. Like it or not, once you accept a particular offer it comes across as acting in bad faith to try and revisit the terms of that too soon unless there are valid reasons for doing so. – Lilienthal May 13 '17 at 21:25

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.