March 25, 2006

Entering a Startup On the Ground Floor

I've never not worked for "a startup". Since the beginning of my senior year at UC Berkeley, I have been toiling away in the Silicon Valley working for private companies with amazing ideas and strong technology. But I know I made some of the worst career mistakes at the very beginning, when I went into the initial interview with the company's founder, not having known what I should ask for on the salary side, expecting him to make the first offer, and having less than zero clue as to what to expect in terms of stock options for this "Pre-IPO" company.

Back then, in the fall of 1998, everybody was either public, or Pre-IPO. By 1999, some companies were filing to go public on the same day they were announced, even if they didn't yet have a shipping product, or customers - so I knew that getting in as the third or fourth employee at this company was a big deal, especially as I hadn't yet completed my degree. This inexperience led to my floundering through the interview and completely low-balling my salary request. I left knowing I'd possibly earned myself the position, but likely on the basis of how little I had asked for as much as how well I had represented my talents.

As I wrote in an e-mail to my parents at 2 a.m. that night (October 14, 1998):

"I also had to say how much money I expected to pull. Gulp -- I had no idea. I tried to have him tell me what I should say, asking where the money was coming from, and if the company was profitable yet. The answers -- primary investors and no. The eventual plan is to put together a working product, find secondary investors as a result of the product, and then go public. He threw words at me like "stock holdings", "venture stock and capital", "initial public offering" and said that I was early enough to be on "the ground floor" although obviously not a co-founder, therefore as every Silicon Valley startup dreams of, we could "go Netscape", and there is already an established product."

Long story short, I was offered the position at the low-low price of $1,200 a month for what was expected to be 20 hours a week in Silicon Valley and 15 hours a week or so from home in Berkeley, where I was wrapping up my degree in Political Science, having completed the degree in Mass Communications my junior year. And there was no stock. Another colleague and I were told we would be given shares of the founder's stock in time - whenever that would be. Needless to say, the company didn't take off. I worked hard, and put in the hours, and eventually, the company saw it was time to raise my pay to match the effort I had been putting in - to $2000 a month and then to $2333 and maybe up to $2500 a month by the time it folded the next year. I wasn't getting rich, but felt a lot better about things than many of my starving student friends.

But how could I have known what to ask for, being as naive as I was? In another insightful piece, Guy Kawasaki says there are "Nine Questions To Ask a Startup". By my third job in the Valley, I felt I had a better handle on the salary side, but still was on the low-end to start, my past underpayments still having impact years later. Had I had Guy's instructions in my back pocket, not only would I possibly have been paid better, I may have selected more successful companies from 1998 to 2001 and made some cash rather than watching so many other people get rich when all I got was tired.

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