I am employee #1 for a rapidly growing startup, been here nearly two years. It's my first developer position, I'm definitely underpaid (until our A-round apparently), but I have .5%. I feel like pretty soon it'll be apparent whether this is going to ~really~ take off (I honestly feel it will).
Any advice on what steps I should take to prevent getting shafted?
But maybe you mean it's a 50 million dollar company - then, best case (no dilution, you stick it out until they IPO, let's say 5 years working there total) you could walk away with $250,000, or the equivalent of having been paid an extra $40k-$50k per year each year you worked there. That sounds like about break-even financially, with some great experience but shitty lifestyle for several years. Up to you if that was a good deal.
Or maybe you mean it's a 10 million dollar company. Would you be at this job if you had no equity and an extra $10k or would you feel screwed?
I'm not really sure why you feel that way. Are you underskilled? You make it sound as though you're underpaid but then call it an amazing experience.
So regardless of whether or not make tons of money on this startup, I'll have 2+ years of job experience for the next job that I didn't have before.
The tell-tale sign is that you compare your current position with a bad job (consultancy).
The thing is: there are plenty of startups that make cool things and have nice people AND pay well AND offer good equity AND have potential to take off in the future.
So if you really think you're underpaid for your skills (as in: you could find another job that is as good as this one and pays better), you should ask for a raise that would match a market rate for your current skills.
If a raise is not possible, you should start looking for a new job (and if you're in SF/Bay Area, there have never been a better time to do that).
> They took a chance on me with no degree or job exp.
Stand out to you? S/he sounds like a beginner..
Even building my own company, bootstrapping over these 5 years, I feel like I lucked into where I am. Not because I'm undeserving, but really because I feel lucky to live in an era where I even have that possibility.
If my world is entirely comprised of SV type startups, perhaps I'd feel differently. But I try to keep some perspective. (As in, I lucked into not being a field hand in 4th century Italy, and instead I can use my brain to manipulate electrons through small finger movements, that supposedly create value enough for other people to transfer electrons into a virtual account of "mine" that I can exchange for goods and services.)
I'm sorry if that sounds harsh, it's not intended that way. I really just wanted to point out that people define luck very differently.
Also, I bet you learnt a fuckton in this position which'll make it easy for you to accelerate your career. For me, seeing the hyper-growth from inside, taking on responsibility as the company grew, handling the shit as it hit the fan… that's priceless experience. Combine that + the 5MM I'll probably make out of it, and it doesn't matter how much better off the founders are, I still got a great outcome.
After proving your value as an early engineering hire, what about approaching the Founders to re-up the equity on a regular basis? Awesome first quarter 2012? Company revenue up 100x? Profit through the roof? Ok... how about that equity re-up? :-)
Nothing should restrict irreplaceable engineers or engineers who just create tons of $$$ value from getting increased equity post-hire. I'm sure there are some great techniques for this, and this can definitely become a norm in our industry. (My friends on Wall Street have this down to an art form...) As companies grow out, individual engineer performance is usually under-appreciated so there is less leverage.
I'm surprised you didn't walk away with co-founder (10%+) level equity. You built nearly everything... all the hard/nasty bits like supporting multiple api versions across diff platforms and also building/maintaining new features that drove new customer adoption. From an engineering perspective it was pretty awesome to see the value creation, so it's a bummer to hear that after sticking it out you won't get rewarded for that early value creation.
Definitely think it'd be appropriate to show up one day after acquisition and ask for a rather large boat. Or 2. :-)
I'd happily bet you $50 that your next offer will be 25% over your current one. my username at gmail if you'd like to take me up on it.