Ask HN: What do you think about these offer terms? | Hacker News Reader

Ask HN: What do you think about these offer terms?

3 pointsmircea7 comments

Hello HN,

I've been offered the role of CTO for a stealth mode startup(internet e-commerce) in Berlin, to complete the founding team. The terms of the offer were: - 3.5K€ gross, t < 7 mo - 4.5K€ gross, 6 months < t < 13 months - market value salary + 3-4% equity, t > 13 months

During the interview, I was told that my expectations of salaries in Germany are a bit high (I'm based in Romania, currently): what would be market value for a startup CTO in Berlin? I was expecting something like 7-8K€ gross.

How is life in Berlin (housing, dining, culture, etc)? I don't speak german,yet :)

For a salary that is much lower than what I perceive to be market value, at least I would have expected much more significant equity.

I have experience with US based startups having worked as a very early employee in a leadership role but don't have experience dealing with EU startups.

Anything you think would help me make a better decision (legal, financial, etc) is welcome.

Is there a website where I can calculate the net salary from gross?

Thank you.

I assume that market values in Germany don't differ too wildly from where I'm based (The Netherlands). The 3500 - 4500 Euros for the first year is OK I guess for a startup, albeit somewhat on the lower side. US salaries (especially Silicon Valley) are higher, but so is the cost of living.

What does raise a red flag for me is what happens after a year. 'Market value', how much is that? It seems they assume that business is going to grow fast, but there's no sure way to tell. Remeber: they're in stealth mode so they probably have no revenue to speak of at this point. If business isn't going well in the future you're likely stuck with the same salary and 4% of nothing, at best.

As for the net salary, you can use www.nettolohn.de (in German). I took the liberty to calculate the net wage from EUR3500,-, it will be somewhere around EUR 2100,- monthly.

Having said that, Berlin is a great city, amazing atmosphere and a nice startup culture. If I had to choose any European city to build a startup from, Berlin would be my first choice. With 3500 euros monthly, you should be able to rent a decent place, buy food, go out and save for the occasional trip to Romania.

Thanks a lot for the info. Do you know what is typical for an EU startup in terms of issuing stock? What types of stock are available, which type is usually issued to the founders, investors, etc?

Sorry, I have no idea!

3-4% equity is not really a founder's stake.

Assuming no dilution (a huge assumption for a startup in stealth mode), it would take a $200 million dollar exit under the US tax system (I suspect Germany's is no more favorable) to provide Fuck You money.

In the abstract, a founder's equity stake should provide that sort of money in the $50 million range at exit and should assume dilution unless the company is bootstrapping and already profitable.

What you really have in front of you is an offer to be an early hire at below market salary. There's nothing wrong with that, but see it for what it is.

Good luck.

The 4% is in fact dilutable. That was my first question when I heard the equity amount. Thanks.

I'm reposting the offer terms with, hopefully, better formatting.

  - 3.5K€ gross, t < 7 mo
  - 4.5K€ gross, 6 months < t < 13 months
  - market value salary + 3-4% equity, t > 13 months

You need more than 20% equity.

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