If this is your precise scenario, you’re Stacy La, Clover Health’s Director of Design. Without further ado, here is your list of the pros and cons of working at an early stage startup: Pro: You learn so much. The earlier a company is in its lifecycle, the more the number of unanswered questions. Q: What form of equity should I receive? What will be the valuation of the company in 5 or 10 years? “It was a release to get it all down and scale what I’d learned to the rest of the team. Or maybe you just love the concept of developing a product that completely reimagines the way we see “X” industry. You will need to figure out how to do things yourself. All these resources can be valuable for the overworked, under-resourced early employee, but according to La, time management operates as a unique frequency for a startup’s first employees. Or ... you get the idea that this is complicated.]. Early-stage startups very commonly delay making grants. “The nice thing about being there at the start is that your priorities are very clear, because the constraints are numerous and looming. It’ll be worth less than toilet paper. When considering whether or not you want to join one, it can be easy to get sucked in by the glamour. You’ll be offered either stock options, or being a co-founder and owning some shares, or something else. Yes. Silicon Valley Wins Big With Tax Break Aimed at Small Businesses: An eight-figure IPO windfall can mean a zero-digit tax bill, Uber IPO - Lessons for Negotiating Startup Equity Offers - Spring 2019 Newsletter - Stock Option Counsel, P.C. “When joining a later-stage company, your role and career path are more defined,” says La. You can have something good or you can have something right now but you can’t have something good right now. Are they might want to eventually become an entrepreneur themselves to have their skin in the game before they embark on their own adventure. “When you have 15 people starting every week for 3 months you have to be extremely thoughtful about the hiring infrastructure you have in place. I’ve worked at 2 startups, have consulted with a number more, and have helped hundreds of young people get jobs at startups. This requires original thought in defining the kind of leader you want to be and career that you want to create.”. If you’re interested in joining a startup but nervous about whether it’s the right career move, ask these 11 questions to help you decide. Kelly Anne Bonner is a freelance writer and editor who was immersed in the startup world until just recently. Suddenly, spinning up felt more dizzying than galvanizing.”, With the support of Clover’s founders, La hit her stride when she zoomed out not only on her goals for Design at Clover, but also for herself as an early employee. To excel as an early employee requires mastering two key acts. If you are a super senior level person, this is no problem. When La speaks about how she discovered and chipped away at those responsibilities, she suggests a timeline more than tips. What choices do you make when nobody is watching? When we started weekly Design Reviews, our goal was to give technology leadership visibility at key project milestones, and to push faster decision-making while shipping high quality solutions. But, as an early employee, it was unique in that Kris [Gale, Clover’s co-founder] was involved. My parents could never…. You definitely have to work hard in a lot of industries, but I would venture to say that your relationship with your work is a different animal in startup land. These are the most tax advantaged forms of equity compensation for an early-stage employee in order of best to worst. They have funding! Welcome to the Stock Option Counsel, P.C. But if the company has great success within its first years, it is a huge problem for individual employees. But you take the risk that the stock will become worthless or will be worth less than the price you paid to buy it. If you are joining an early-stage startup you should also think about the return on investment of the money that you’re putting in the company. When these ancillary roles takes you away from your original job scope, it removes you from developing essential skills in the career you seek to forge. There may also be warrants outstanding, which should also be included. I think another reason why a developer would want to join an early-stage startup. Creating more highly-networked nodes at a company can groom leaders faster at startups at their earliest stages. There is a lot to be done and everyone has limited bandwidth. Right now, that’s our design system, for example. “For example, when vetting design agencies, all my planning, research, meetings, evaluation and decisions happened in a two-week span. We will send quarterly updates on all things startup equity. 5. Once you have that number, think about when would you want to have a return on that money and what is the payout you’re expecting to get off those shares. When you negotiate for an equity package in anticipation of a valuable exit, you would hope that you would have the opportunity to earn the full value of the package. In addition, do not ignore new grant agreements on the assumption that these are always going to be the same." I do it on my own at the beginning of every week but at Airbnb Design’s scale, Alex does this exercise daily with a member of his staff. We don’t have a company name yet. Startup MasterClass CEO: Joining an Early-Stage Startup Is Less Risky Than You Think Yes, the company is likely to fail, but your career will probably get a boost. They are generalists. An early stage startup can be a fantastic job opportunity, and can lead to something great for your career. It happens at the beginning.”, Read This Before Joining as Employee 1 to 20 at a Startup, Stacy La at Clover Health's office in San Francisco, This isn’t atypical for any individual contributor who becomes a manager. But if you’ve only got a few years of experience under your belt and are close to entry or mid-level range, the person to help guide you to the next level and in whose footsteps you’re walking may not exist or they may be so busy working on their projects that they don’t have time to sit with you and show you how to do things. Does it help or hamper your progress towards your long-term goals? 4 Reasons Why the Default Startup Is Default Dead. Given that, La began shifting her focus from design work to growing a design team within nine months of joining. Fully Diluted Capital = the number of shares issued to founders ("Founder Stock") + the number of shares reserved for employees ("Employee Pool") + the number of shares issued or promised to other investors ("Convertible Notes"). Can I negotiate that? But you pay ordinary income tax and FICA taxes on the value of the shares on the vesting date or at a later date (depending on the company's plan and when the RSUs are "settled"). I can say that because I live here and worked for an early stage startup for over two years. If your role at the company is not expected to extend for four years, negotiate for an vesting schedule that matches that expectation. you may forfeit your equity when you leave the company or are fired. This means that you earn 1/4 of the shares after one year and 1/48 of the shares every month thereafter. Some employees negotiate for “double trigger acceleration upon change of control.” This protects the right to earn the full block of shares, as the shares would immediately become vested if both of the following are met: (1st trigger) after an acquisition which occurs before the award is fully vested (2nd trigger) the employee is terminated (as defined in the stock option agreement). This is because usually in an early-stage startup, a boss wears many hats. Typically, early team members at startups get 0.2% — 2% equity share (depending on your experience, contribution, stage of the company etc).

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