> "... the average employee, for whom there are replacements lining up"
The article is talking about the first employee. If a tech startup is happy to accept 'average' employees at that stage it's probably doing it wrong. Also, if there are really that many people lining up, then why offer equity at all?
Please, for the sake of the global nature of the internet, state something like
"based on the assumption that we're talking about this specific country/region and based on my experience with..."
$100.000 seems to be the current salary of the friend in question for that blog post. If you don't know where he's based and what his costs and standard of living are, how can you judge the person as being 'B' level?
Also - what the hell is a 'super star team member'?
Edit: Just for fun I put the author's name into Google. According to LinkedIn/Twitter he's from Israel. If we assume that the startup was local as well (why not? And why should it be in the most expensive areas of the States?) $100.000 is really good salary. High tech (i.e. programmers) employees are already overpayed here compared to the everyone else and 100.000 USD / 30.000 NIS per month is a good salary even in that field.
Sorry, I did jump to conclusions. What I saw was this: Someone who usually makes $100k is being offered $50k and 1% of the company. They were excited.
If you're in Kenya and $50k implies you're a C-level executive, then you're not excited and boasting to your friends about 1%. The two figures combined, plus the excitement, implies that the person is being compensated at half a reasonable rate, and being offered a stock % on par with a less than VP (and maybe even Director) role. If it's not, then they're excited about an noncompetitive pay package and the article should have mentioned that as well.
- the guy was excited about the company/the job opportunity. This is, at least in my world, first and foremost not connected to the money to be made. 'Yay, I could join a cool startup'
- the guy got a safe/decent job (based on the assumption that he's in IL and his salary is _good_) and probably never had any experience with the math behind funding rounds.
You are, according to your profile, a startup founder. Therefor I assume
- you did the math at least once (maybe before for other startups, how can I tell..) and it's obvious. Now.
- you still base your assumptions on experiences that you cannot expect to be given
- (tongue in cheek, not completely serious) you might be the guy on the other side of the table (founder), asking for talent to accept a similar/related offer
I for one liked the article. My startup experience is rather limited, but I did join as a first employee once, with a big paycut and it didn't work out for me. I think it makes sense to at least remind people that startups are a risk not only for the founders.
Yes, to be clear, I'm a founder. All of my team whose salaries are in that range have better stock arrangements. I didn't think the point of the argument was whether the comp package was competitive. It was about comparing salary investment to an investor's investment. I just think the argument is flawed.
Really, the driving point is that an investor puts in all money up front at the immediate valuation. An employee puts minimal money in daily with the option to leave anytime, while they have day to day knowledge (hopefully) of the health of the company.
The author seemed to be arguing that the investment of salary wasn't being valued at what an investor receives. But they ignored all kinds of factors, such as the time over which the salary is "invested", and the fact that the investor may invest time and other resources, while the employee is likely to invest only time. Just having certain investors gets you other investors, gets you press, gets you all kinds of things. Very few employees get you the same things. They get you hard work. It's valuable. But the salary forfeited is just one very small component. Trying to convince employees that they should think of their $50k as the same as a $50k angel investment is leading them astray.
[Edit] All of this being said, yes, everyone who takes stock in lieu of pay takes risks. Employees should almost certainly treat options as icing on the cake, and expect nothing from them. Then, be pleasantly surprised if they get a return.
The article is talking about the first employee. If a tech startup is happy to accept 'average' employees at that stage it's probably doing it wrong. Also, if there are really that many people lining up, then why offer equity at all?