The flexibility of the startup environment means that people have frequent opportunities to ask for something: promotions, salary increases, more equity, etc.. If you want those requests to actually succeed – as opposed to just venting – then you should consider the following aspects before making your push. This is based on personal experience supervising people in a number of startups but also as a board member serving on lots of compensation committees – hence suitable for employees, founders and executives alike.
Before you do anything, you should do your homework. You should understand whether your request is common, unconventional or really exceptional. Different requests need different kind of background info, but it is always worthwhile digging a bit before you make your big request. When doing so, try to get a balanced perspective of the matter. Don’t just speak with the most visible/vocal people because that will usually lead to confirmation bias in your sample. For example, when trying to explore a raise, don’t just get your background info from people who complain a lot about their salary or that one outlier who might have gotten a recent raise.
When conducting this benchmarking exercise, try to be unbiased and context specific. The latter is critical when using online salary estimators which often don’t distinguish between company sizes. Being a “Vice President” has very different meaning – and salary – at a startup of 5 versus a company of 50,000. Also, I would recommend doing most of this with your supervisors rather than your peers. While the latter is much easier, there is a lot more value in gaining this kind of info from your supervisor (or other mentors in the organization). Unlike your peers, they will often have a broader data set. Moreover, nothing is more detrimental to your request than an emerging brand as a “trouble maker” (see Brand Management below). And that’s often an accidental consequence of doing a lot of peer-level benchmarking once word of it filters up (it’s hard to distinguish genuine inquiry from stirring up trouble when you are a manager and get rumors about an employee who is asking a lot of questions without coming to you).
- Specific Requests
Before asking for something, make sure that you understand what you want. This should be obvious, but is surprisingly often not the case. In general, there are three categories of things that people ask for in a startup environment: short term benefits (e.g. salary, bonuses, etc.) , long term benefits (e.g. equity, titles, etc.), and ownership (e.g. roles, autonomy, budget, etc.).
First, understand that those are different things and be explicit about your goal. Don’t go to your boss with “I want to be promoted” and force her to figure out whether you want a salary increase or more ownership. That will just end badly for you because your boss will conservatively assume that you want more in all three categories which will reduce your chances of getting the one thing that you might actually want (i.e. even if you get the promotion, you might get 10% increase in each category when you really wanted a 30% increase in one of them).
Figure out what you want and then be direct about it. You would probably be surprised how incredibly direct successful leaders are about this. I very frequently get direct requests, especially from seasoned operators, such as “I will trade x points of equity if you give me this guy on the team”, “I need this salary and will trade 1:1 for shares” (and vice versa), or “I want this title but will give x for it”. Meanwhile, with less experienced people I am often stuck beating around the bushes for weeks while trying to figure what some moping-about employee actually wants (and that’s very annoying :)).
When being explicit about your desires, also be explicit about the trade-offs that you are willing to make. This can be gentle – “I would like to have higher variable compensation but can live with a lower base” – but also pretty aggressive. Bonus points if those explicit requests are easy in the company context, but consistent with your personal long term goals.
Once you figured out your category, make sure that you have actually demonstrated achievement in that category. It is really difficult for a manager to give speculative increases because of the political repercussions if they get it wrong (i.e. other staff complaining, loss of credibility, etc.). So most managers will wait until you have clearly demonstrated achievement before backing up a request.
This is category-specific so make sure that demands and achievement match up. For short term benefits, managers will usually consider the P&L so the best way to ask for short term benefits is to bring cash into the operation (sales, financing, etc.). Especially in a startup, you are often implicitly asking for a “cut” of what you brought in. For example, most of our portfolio boards have categorically refused material cash bonuses until the company decent revenue (or in some cases even profit). Often, this has nothing to do with “fairness” – the asking contributor might perform very well – and is just a function of psychology. You eat what you kill…
Incidentally, this is also why business/sales leads often have lower pay early and much higher pay later in the revenue stage (relative to technical folks who have more initial “anchor” leverage but rarely connect to the revenue line later).
For long term benefits, achievements are usually along the lines of demonstrating risk tolerance and commitment. Even more than short term benefit, this is almost entirely emotional rather than economical. While short term benefits come out of the P&L, long term benefits often come directly from somebody (often literally the person you are asking). “Give me more equity” almost always just means “Give me some of your equity” as these things are generally zero-sum at least at the senior level (less so for employees covered out of a fixed employee stock option plan).
This influences the analysis that managers (or boards) make when receiving long term benefit requests. You are basically asking yourself if the demanding person is willing to take similar risk to you (financial, reputational, etc.) and, even more importantly, if they will be there with you when the going gets inevitably tough. The best way to positively influence such a decision is to demonstrate these attributes. Conversely, no matter how much you perform operationally, it will be very hard to get large long term benefits if you aren’t around during tough times (around = active, engaged, publicly affiliated, risk sharing, leads all bad things yourself first, etc.).
Related to this, never signal that you might leave if you are hoping for long term benefits. “Give me a raise or I quit” might work for short term benefits – if used carefully and only with strong backup – but it is generally a death sentence for long term benefits. Boards that get this message will immediately start to look for alternatives (same for us). Most people have to work really hard to get significant long term benefits so they will only grudgingly share it (and only with those who appear committed to sticking with them for the long term).
For ownership requests, you mainly have to demonstrate that you won’t embarrass the decision maker later. Startups have near infinite opportunity for ownership and it generally cost neither money nor upside (initially – obviously ownership is the best way to gain opportunities for gain in the other categories later). So requests for more ownership will generally be successful unless they are muddled with other benefit requests. Except when there is risk of embarrassment, that is.
When you, as a supervisor, hand broader ownership to somebody, you are basically transferring some of your brand reputation to them. In a very real sense, you become their sponsor. And while Nike sticks with their athletes if they lose a few games, they drop sponsorship in an instance if there is embarrassment that spills over onto their brand. Similarly, the best way to get more ownership is to demonstrate that you won’t embarrass your sponsor: don’t drop assignments, don’t make (visible) bad judgment calls (you can make tons of mistakes in private or even in front of your sponsor – just don’t make them in public settings), don’t cause trouble (especially those that drag your sponsor into the fight and/or happen publicly), don’t quit when there is pushback (because that will often just dump the problem onto your sponsor). Also, immaturity is bad news here. Don’t pout or flip-flop through mood swings if you want ownership. Everybody appreciates a grown up.
Note that performance is actually less critical here. Of course it helps if you perform at the tactical level, but this usually is only a secondary consideration for ownership delegation. Most ownership delegation is managerial in nature so coordinating the function smoothly is usually more important than personally being the best at that function.
Most of the above assumes that your supervisor and sponsor are the same person. For short term benefits that’s pretty much a requirement. For long term benefits and especially ownership, it is sometimes possible to have mentors in the organization beyond your immediate supervisor or even outside of the organization.
For this to work, those mentors need to be additional to your immediate supervisor and you need to handle the relationship very carefully. The best relationships of this kind are the ones that are leveraged mostly for guidance and only very rarely for decisions (e.g. CTO’s often cultivate mentorship relationships with more technical Board members which works as long as there is a clean line between functional guidance and decisions that belong to the CEO). Never push mentors to decide between you or your actual boss (for regular business decisions – obviously there are exceptions to all of this such as elevating harassment claims or similar stuff that transcends hierarchy by its nature). You will generally lose and leave a hole that is hard to close. Similarly, don’t push your actual boss by invoking your mentor. Most bosses know that their peers/bosses will mostly side with them so not only will such an action not get you much, it will hurt your relationship with your boss (and your mentor if word gets out). “I have a challenge with my boss and would appreciate your guidance” is ok, “I want you to tell my boss to give me a raise” isn’t. Also, when you get that guidance, try to listen.
The best use of mentors is to give you perspective. They will know the internal dynamics, career options and benchmarking data. Plus, they usually have functional knowledge that can help you (especially if you get it from them privately). Use them for that.
- Brand Management
While benchmarking, positioning and executing your request, make sure that you manage your internal brand carefully. I already touched on this a few times in the other sections. Think of each goal of yours as a campaign and follow the classic maxims:
– Don’t fight on multiple fronts (be clear about your goal and target one issue)
– Avoid protracted engagements (as a rule, don’t spend more than a week on a goal before you discuss it with your supervisor – moping around for weeks or months just labels you as a malcontent)
– Only fight when you have reasonable expectations to win (don’t grumble about a raise every other months – it’s not going to happen and you will lose credibility with each skirmish)
– Be gracious in defeat (you will not always get what you want right away – don’t use that as an excuse to bitch, especially publicly, as it will just lower your chances of ever getting it)
All of the above assumes fairly conventional requests: you are at a reasonable level, do a bit more and want a bit more in recognition thereof. This is the most common scenario for most employees, but there are a few other strategies as well. I will use my children to illustrate. Some time ago, my kids had a big race at their school and, mostly intuitively, the three of them adopted very different strategies for success (they each got a recognition despite being very different level of athletes).
- A) Old Reliable: The kids were supposed to pick whether they want to run 1km or 2km and whether as a group or individual tracks. As you could imagine, this creates a lot of logistics hassle for the sports teachers who have to massage 700 high energy kids into a schedule. So my son – who is a fairly middling runner – went to the teacher and told him that he would do whatever would be most convenient for the teacher. He ended up running 1km, performing in the middle of the pack, but being recognized by the judges nevertheless because he was “a pleasure to work with”.
This strategy works well for performers with benefits that are pretty close to their “fair rate”. Pushing pro-actively for more often doesn’t yield good return at this point so the best path is just to be “no trouble”. Solid execution, no drama, few demands, and both short and long term benefits usually come – even above “fair value” – because the upper level just doesn’t want to be mean to the nice guy. This is a common way for non-star engineering and operations folks to pick up unrequested increases.
B) Slingshot: My older daughter, who is a pretty good runner, signed up for the 2k race of a group where she was the youngest. She finished in the top 20% but because of the age difference and length of the race, she got much higher ranking overall.
This kind of slingshot approach works well for confident leaders who can tolerate risk. Commonly, it is achieved by deliberately taking jobs with lower short or long term benefits (or immediate ownership) and the overachieving against that lower bar. Psychologically, you will achieve a higher overall end result with a brand of “star performer” even against a lower bar than “adequate” against a higher bar. Not rational, but this happens a lot. And confident people can leverage this.
Note that for this to work, you have to avoid calling attention to the lower bar. For example, if you are lowering the bar of your new role by deliberately taking a lower entry salary then don’t complain about your low salary all the time. On the flipside, you of course need to make sure that there is room to slingshot in the category that you are targeting.
Finally, you need to make sure that you have the skills and confidence to actually pull of a slingshot. Otherwise, you run the risk of securing a lower entry point and then getting stuck there (often causing a confidence hit which can become a negative spiral if you have confidence issues in the first place). Old Reliable might be a better strategy if you are in this camp.
- C) Class Defiance
My younger daughter wasn’t even supposed to be there. She is five and a year away from going to the races of the older kids. But she knows how to run. So she just ran the whole 2km race. Pretty much regardless of timing, that makes you an instant popularity winner.
Defying classification like this can be a very powerful if done right. The key is to find fields where nobody thinks that you can make it and then over-deliver. Nobody can do this in all fields, so you have to be very strategic about picking the right field.
Often, people use personal characteristics to “stand out” (e.g. age, gender, background, etc.). That achieves the “low expectations” part, sometimes unfairly, but you also need to have a good reason why you can actually exceed those expectations. Good candidates for that are orthogonal skills: execution in a technical environment (e.g. rising in technical associations by organizing events rather than publishing papers); technical expertise in business environments (e.g. being a VC with a tech background); etc.. The trick is to leverage something that you have in an environment where people generally don’t have your thing and you don’t have their thing. And then overachieving with your thing in a way that converts into value in their thing.
In closing, know what you want, prioritize, do your homework, be mature, and deliver before you push. Hopefully this is helpful to some of you who are navigating the currents of the startup world.