| Topic Name: |
Options or Salary? |
| Message Name: |
Internet Startup advice |
| Date Posted: |
06/26/2000 |
| In Reply To: |
I am about to join an internet startup as Director of Business Development. The company is only a few months old, and I will be the second employee, after the CEO/Founder. Three others are set to join in the near future (a COO, a combined Director of Sales and General Counsel, and a Senior Managing Director).
I'd like some advice on the salary and stock option ranges typical for such a position at an e-commerce company which is still in its very early stages.
The company is about to receive its first $500,000 to $1.5 million in seed capital, and VC funding won't occur for some time.
I have reviewed the company's business plan and a certain amount has been allocated a certain amount to monthly cash salary and wages. In order to calculate my estimated salary, I assume that the CEO will allocate 3/8 of this amount to himself,with the other 4 employees sharing the remaining 5/8 (after backing-out a rather modest amount to pay marketing interns). This renders an amount equal to just under $60,000 on a per-annum basis. This is far below the $85 - 120,000 cash salary range I see for other "dot-com" business development positions; however, those positions are usually with companies which are much further along (i.e. they might alrady have a dozen or so employees and $15 - $30 million in capital), and thus I don't feel that would be getting "lowballed", all things considered. However I plan to ask for about $75,000 per year PLUS an automatic increase to a "market" salary level once the company has completed its first round of VC funding.
Next, the CEO mentioned the idea of commissions. While I know that this is very common for purely sales positions (even in the e-commerce world), it is seems to be somewhat unusual with respect to a business development management position. However, I am thinking about asking for about 10 - 12% of revenue I bring in (this percentage is based upon the "rule of thumb" used to calculate discretionary bonuses for marketing and sales personnel in the securities industry, with which I'm very familiar). Nevertheless, I'm am quite optimistic about the company's prospects, even at this stage, and I am prepared to accept a much lower "cut".
Finally, there's the matter of stock options. Here, I'm at sea. Do I need to calculate an estimated value of the company one year out (i.e. project the company's future value) or can I simply base my calculation on the projected revenue set forth in the company's business plan? Does anyone know what kind of option packages are usual and customary for a "biz dev" position at a complete startup company? Are their any general standards about which I should be aware? Are the options usually qualifying OR nonqualifying? What are the usual vesting provisions?
I would really appreciate any assistance with respect to this vitally (!) important matter. |
| Message: |
I read with great interest your posting, since I now find myself in a similar position. I am working with a one-year old Internet start-up which has yet to make a profit, but is now headed in a new direction (transitioning from BtoC to BtoB), which could potentially be profitable. In terms of compensation, they can offer me about $60,000/yr. I am the third employee in this company, and it has been funded to date by one of the principals. The business model is as yet not validated, but we should know within 6 months whether things will work out. Did you receive any helpful responses to your posting (or do you have any advice based on your own experience) regarding what range of equity would be appropriate? Thanks for your help. I hope that things work out well with your new job.
Quito
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