Negotiating Startup Employee Compensation

Originally posted on Smart Recruiters – by Mark Jacobson

Every Founder in today’s market knows the importance of recruiting top talent. It’s a non-stop process in a ferociously competitive market. Closing candidates is a function that can be broken down into a thoughtful and deliberate recruiting process. To scale your startup, you must structure a smart recruitment strategy, craft and refine a compelling story, then structure a thoughtful interview process in order attract your candidate. Once you are ready to extend an offer, use the following tips to successfully negotiate and close your ideal hire.


Tip #1 – Do your Homework

Before you can make a smart and competitive offer, you need to understand what they have earned.

Obtain the prior 2 years compensation history to look for final take-home numbers and year-over-year progression. This includes: historical base salary, bonus achievements, option grants, RSU awards, benefits, as well as, all payout and key vesting dates. You don’t want any surprises.

Conduct thoroughly complete background and education reference checks. While this is time consuming, it is critical and can help avoid costly bad hires.  Research has shown that a rigorous reference process is the single most critical thing you can do avoid foreseeable hiring mistakes.

Keep in mind candidates are often reluctant to give you this information because they are worried about losing leverage in the negotiation. By sharing your thinking about salary bands, equity ranges, perks, health/benefits and relocation assistance, you can get candidates to feel comfortable disclosing personal information and that they are not negotiating against themselves.


Tip #2 – Socialize the Offer

Make a pre-close call to outline the proposed details of your proposed offer. This exploratory call is to gauge your candidate’s reaction and increase your ability to shorten the closing process. You should clearly set expectations around when a formal job offer will be made.

A Pre-Close call should cover these topics:

  • Recap their compensation history with them.
  • Go through all details of the proposed offer.
  • Ask lots of questions, don’t make assumptions and clarify everything:
    • Are they comfortable with the terms or do they have any concerns?
    • Are the terms aligned with what they were hoping for? If not, what’s missing?
    • How will the decision be made? (Will a spouse or partner influence their decision? Do they have kids who will be impacted?)
    • How much time will they need to leave their current job?  What reaction do they expect when they tender their resignation? Try to determine if their company will make a counter-offer to retain them and how likely they are to accept your offer.
  • Collaborate to define short and long term milestones.  Setting mutually agreeable milestones helps candidates feel that their comp plan is fair.

Taking these steps will help you to better understand what will influence their decision and significantly improves your chances of closing your ideal candidate.


Tip #3 – Situation Analysis

As you prepare to extend a formal offer, make sure you know the leverage points from both sides.  Key consideration points include:

Strengths vs. Weaknesses:  Honestly assess your weaknesses (can you compete on cash, bonus upside, equity, commute) and plan how to shift conversation to your focus on your strengths (team experience, background, unique product, new market).

Hiring Experience vs. an Up and Comer: Your closing pitch should be different for “promotional hires” versus “functional experts.”

Company Comparison: Your pitch should be different if you’re pulling from a large company (high salaries but lower equity upside), recruiting from a failed or troubled startup, or poaching someone out of another hot startup.

Life Impact: Know your candidate’s personal situation to fully understand the impact of accepting your offer (Will their commute change? Will their cost of living increase/decrease? Are they single or married? Do they need to relocate?).


How to Extend the Job Offer

Candidates want to feel as though they are your #1 choice.  Always make them feel that way. Set clear expectations, keep your promises and use these tips to close the deal:

Sell the Mission and Vision: Reiterate how your company is changing the world.  Generate excitement (reinforce company culture, amazing people, shared interests and common goals). This will help remind them why they want to join your company.

Sell Impact, Education and Happiness:  Help candidates visualize their future.  Focus on the key selling points – the impact they will make at your startup, what will they learn and what challenges they will tackle. Reiterate how this opportunity maps to their goals and interests and furthers their career path.

Discuss the details: Take time to discuss all aspects of the offer, which should align very strongly with their stated interests.  Ask if they have questions or concerns.  Let them know that you want to move quickly to a decision.  Ask again for their expected start date.


Time kills all deals so don’t drag out the process. Make candidates feel special. Constantly communicate, go the extra mile, show them how important they are to you.


Great recruiting is an aggressive strategy with a lean-back style.  It’s up to you to drive the outcome.




5 Hiring Tips for Scaling Your StartUp

Originally posted here on SmartRecruiters – by Mark Jacobson

Founders dream of changing the world, but you can’t do it alone. The team you build will be instrumental in determining your future successes and failures.  Much has been written about a startup’s first hires, so let’s focus on some best practices to help scale your startup beyond 20 people.

Founders must evaluate the strengths and weaknesses of their team.  Every company has organization holes.  Founders must diagnose which are the most important holes to fill to round out the team.  Startups are a team sport and skills must be complimentary. Early on all-in-one hires (aka “Unicorns”) can be invaluable because they cover more bases with fewer people. Over time, however, this strategy doesn’t scale.

Sometimes specialists are needed and other times you can hire on raw intelligence, teaching high potential individuals new skills. Hiring candidates who check all essential boxes but have room to grow often outperform someone who checks all the boxes at the time of hire.  They are also more likely to stick around as there is room for career advancement. The most ambitious and competent candidates rarely take roles where they already have all the skills required for the job.

In order to recruit “A players,” you must clearly define what you’re looking for.  Saying you want candidates exclusively from Google, Facebook  or Apple (or Stanford, MIT, Harvard) is not a viable strategy for most companies. Hire on competency, intellect, determination and passion, not just on logos.

5 Hiring Tips for Scaling Your StartUp:

1. Clearly define the Roles & Responsibilities (the core competencies, qualifications, and key attributes that will drive success) for each position you need to fill.

2. Define Objectives & Key Milestones for success in the first 100 days and first 12 months.  This will enable you and your team to optimize the interview process, test for the right skills, evaluate candidates side-by-side, align internal perspective and set mutually agreed upon goals starting Day 1.

3. Ask short list of candidates to pitch you their ideas on what they want to accomplish in the first 100 days.  Use this to learn and debate ideas, opportunities & strategies. The best candidates will stand out from the rest.

4. Define & articulate your culture Not only does it attract more great people, but it’s a powerful weapon to keep the amazing people you already have.

5. Effectively tell your vision. Your employees should know it by heart and repeat it consistently when asked.  An aligned team is powerful and impressive. It unites, gives purpose, drives culture and differentiates your startup.  Remember, candidates are evaluating you too.  Startups evolve (and likely will pivot), but candidates want to know you have a vision, a deep understanding of your market and an undying commitment to succeed.

Research – Your Secret Weapon

Using RESEARCH smartly can be a powerful weapon for you and serve as an opportunity to “network with purpose” (as one of my good friends likes to call it).

Your goal should be to not only show what you did in your career but share best practices and offer to create the outline of a game plan going forward.  Your competition is showing what they have done.  You, the smart job seeker, must show what can be developed/acquired/operated for less money.  Make sure your research is in tune with what is happening in today’s tough times.

Start by selectively share your findings with people you know – those who have helped you.  These are the folks who will give you the opportunity to refine your thinking/thesis and who will be your advocate.  This is an ideal opportunity for you to interact with your key contacts in a way that doesn’t waste anyone’s time.  It will motivate the “connectors” (people who can help you network through the industry) in your network to help you.  Moreover, you are going to make them feel more comfortable referring you into their networks since they will have a specific reason.  People are incredibly busy these days and the time for general networking has taken a back seat to more pressing issues.  By adding value, you will be able to get that meeting faster.

Your goal should always be to pique a potential employer’s interest in meeting you.  When you get the coveted interview, let them know that you have done the work and that you can think “outside the box.”  Competition for jobs is fierce, it is imperative you remember this in today’s market – it is not what the company can do for you but what you can do for the company.

The key is to show what an impact player you can be without showing all the goods.  Be gracious but don’t give them all the answers and don’t leave the materials behind.  Your goal is to get them to realize what they would gain by bringing you on board and lose by letting you go to their competitors.  You never know where these meetings will lead, but even if there is not an immediate opening, you will be top of mind when an opening does arise.

Here are a few examples to consider:

Sales – do an analysis of where the customer budgets are being spent today. Consider building a game plan about how you would attack the job.

Marketing/Product/Business Development – provide the company/interviewer with a strategic overview of the market. Where are the holes and opportunities to take market share?

Job searching is part science and part art.  There are no quick fixes or can’t miss strategies that will get you a new job in 2 weeks.  Today’s job market requires patience, diligence and focus.  People have quipped, “Amateurs practice until they get it right.  Professionals practice until they can’t get it wrong.”  Pure repetition won’t ensure results.  Quality and depth of the content you can provide will.  But, if you take care of the fundamentals and prepare yourself as best you can for “that moment,” you will significantly improve your odds of finding your next job opportunity and succeeding at beating your competition.


Job Search Strategies (part I) – Build Your Game plan

Over the past 6 weeks, I have been seeing early signs that jobs are coming back slowly into the tech market.  In almost every one of the conversations I have had recently with VCs and CEOs, they have been quick to point out the flood of talent in the market and a significant increase in resumes hitting their inbox.  Not only do these companies and funds believe that they are getting “A” players, but they are seeing executives make career changes and use this time to take a flat-to-down move in total compensation to move from one industry to another (i.e. getting into tech startups where growth is happening).

Assuming you haven’t been living under a rock these past 6 months, you know the job market is super-competitive today. It’s not hard to find any job… but it’s an entirely different story to find a great job for you and get that first meeting. The market requires much more than a casual approach to your job search if you want something NOW. Yesteryear’s strategy of making a few calls to get some leads simply won’t cut it. It’s more than half-heartedly updating your resume and blasting out a few generic emails. You need a GAME PLAN. You ready?

Ok, so where do you start?  Well, let’s start with a big picture question… Where do you want your career to be in 5 or 10 years from now? Do you want to be a CEO? A CFO? Heading up Sales and Marketing?  Sitting on Boards advising the next waves of entrepreneurs?  Perhaps you want to run an international business line? Or maybe you just love creating that cool next-new thing that no-one else has built yet.  It is actually a tougher question than it sounds, so don’t be discouraged if it takes time to come up with your answer.  I strongly believe people should follow their passions and interests when defining their careers.  The path may not always be clear or without challenge, but there is usually a way to accomplish whatever you set your mind to.   (If you were only 6’ tall and wanted a pro basketball career, there would be no need to study Shaquille O’Neal’s game.  Obviously, just because you aren’t 7’ tall and 300+ pounds doesn’t mean you can’t get to the NBA.  Just look at what Spud Webb, Muggsy Bogues and Nate Robinson were able to accomplish!)

Not surprisingly, when I ask most executives the basic question “what type of job are you looking for?” I typically get an answer with multiple career options or possibilities.  Answer the question too specifically and you might not be considered for something interesting that may be slightly outside of your core skill set. But answer too vaguely and you may come across as ill-defined.  While some executives love to do one thing in particular and strive to be known as “experts,” many enjoy moving across an organization and experiencing different functional challenges to add breadth to their knowledge base.  By understanding your passions, your skills and what makes you really great, you can figure out which opportunities are best suited to your stated goals.  Although the path isn’t always clear, I have found that people tend to have an idea of the ultimate position they want to hold.  Sometimes reverse-engineering your career path creates much more clarity than trying to build your plan ground-up.  Remember, you don’t need to be clairvoyant but you do need to choose your path wisely so there is purpose to your career moves and you understand what you are shooting for.

So, with that in mind, let’s make the first step of building your Game Plan to compile the list of skills you need for your dream job. I’m not talking about just the basic skills… but the skills you need to be really excel in your career. Not sure what those are? Well, that’s a good sign that you need to do some homework on what the best execs in your business do and begin to point yourself in the right direction. If you get stuck on this, pull up job postings for similar jobs to your own and see what the requirements are…  OK, let’s move on.

Next, do a quick gap analysis and look at the skills you have worked hard to acquire versus the skills you need to get you into that job you eventually want. This will provide you with the areas you can develop to help you get from the job you have to the job you ultimately want. Map it out. Consider creating a skills inventory list that you can reference. A spreadsheet or a post-it note on your refrigerator. Whatever it is… just be honest here. If not, the only person you cheat will be yourself.

Here are some questions that might help you think about specific roles and skills. Do you want to:

– Broaden your industry experience?
– Manage more people? Manage less?
– Develop an international rolodex? Or leverage your international rolodex to build your US contacts?
– Transition from a major corporation to a startup?
– Create new product or execute against corporate strategy?
– Add new functional responsibility to round out your overall competencies of running a business?

Strip away personal bias and try to see your career experience as objectively as possible.  If you know what opportunities to look for, you will significantly improve your odds of finding that next great job and smartly managing your career towards your ultimate goals.

In Part II I will discuss the importance of considering how your personal life can affect your career path/decisions.


Announcing Chris’ New HBR Article

For those of you who know us, you’ll know that Chris has been hard at work compiling some incredibly interesting and insightful information on Best Practices in Venture Capital.  We are delighted to finally announce that the first publicly-available article has been published in the June 2010 edition of Harvard Business Review.

It’s tough to keep Chris to 800 words on anything related to venture capital, but this is just the tip of the iceberg of topics that are fresh on our minds.  Many of you know the extensive amount of research that was conducted – of which this article is but one theme.  There is a lot more behind this research and that drives to core of what we are doing at Ignition.  Chris had the honor of working with guys like David Teten and Yujin Chung on this article.  And you can expect to see a lot more insight and perspective from Chris, myself and the Ignition team in the coming months ahead on the topics of Leadership, Venture Capital and Entrepreneurship.

Here’s the link to the HBR article entitled “Time for Investors to Get Social.”  We’re pretty excited about what is next… and we hope you are too!


Job Search Strategies (part II) – Your Personal Situation

In my last post, I encouraged you to create a game plan for your job search by identifying your career goals, mapping out skills you have versus skills you need to acquire, and honing your personal pitch.

There is another critical element, though, that I strongly encourage you to consider… your “personal situation”. This falls under the emotional intelligence category and while it borders a bit on stating the obvious, I feel it is worth mentioning nonetheless.  You would be surprised at how many people pursue job opportunities (even to the point of getting an offer) without fully considering how their personal/family requirements impact their professional careers.

Before you embark on your job search, keep in mind that it is important to be cognizant of what is happening in your personal life and how that will impact the types of roles you can/should take at this point in your career.  As stated before, your goal is to put yourself in a position where you can be incredibly successful and accelerate your career over the next few years.

Individuals who are single have different issues and concerns than married couples with newborn children. Or individuals whose kids are grown and in college (or empty-nesters).  Or families who need to care for aging parents.  Or, sad as it is to say, those experience marital troubles or personal sickness.  Want some proof?  If you follow Monday Night Football, you will know that Tony Kornheiser recently left ESPN’s MNF show citing a fear of flying.  Phil Mickelson just put his PGA season on hold while he helps his wife battle cancer.  I’m sure you know many people who fall into the aforementioned categories.  The personal factors in your life will have a significant impact on the type of opportunities you can take on right now.

Be really honest about your personal situation so you can articulate the types of opportunities that are the best fit for you now. Make sure you compare these realities to your future dream job so you can streamline your personal game plan or make necessary adjustments. Your goal should be to achieve a balance in your personal and professional life.  Being honest about your personal situation will help you put yourself in a position to achieve your goal.

OK, so now that you have addressed some of the bigger picture issues, you want to get going.  I’m with ya… My next post will offer some successful strategies that executives are using to win in today’s market.

Attitude is Everything

Easy to say, harder to execute!

Seth Godin wrote another highly insightful blog post (the hierarchy of success) in which he highlights how critically important Attitude & Approach are.  He sums up his post with the statement: “If the top of the hierarchy is messed up, no amount of brilliant tactics or execution is going to help you at all.”  As usual, Godin nailed it.

His point holds true in business and life… and in your career.

1 – Attitude – I agree with Godin.  Attitude is everything and sets the tone for everything else.  Companies and hiring executives, particularly in startups, need passionate, committed people who are willing to do whatever it takes to succeed.  A defeatist, or even ambivalent attitude, can be a deal breaker.  Superior attitude, superior state of mind.

2 – Approach – How are you looking at your career?  Are you a student of your industry?  Are you on top of the trends?  Or are you a 9-5er?  Either one is fine, but this sets the tone for how you optimize points 3-6.

3 – Goals – Have you set specific, clear career goals?  If not, take the time to do so immediately.  Don’t send another resume until you do!  Struggling to identify goals?  Turn to a “trusted advisor” to help you get started.

4 – Strategy – Job Boards are so yesteryear!  You can’t afford to be reactionary in this market.  As a senior executive, you need to build your game plan that meshes well with the goals you are setting for yourself.

5 – Tactics – As Godin points out, you can’t know which tactics will work without a solid strategy in place.  Nail points 3 & 4 before you spend time worrying about Tactics.

6 – Execution – It’s easy to write a resume or bio.  In all likelihood, it’s the first thing you did (or are considering).  However, this bottoms-up approach is not the smartest way to manage your career – it’s the bare minimum effort!  Your career is worth more than that.

OK, so here is the shameless self-promotion angle to this post.  Check out my earlier advice for constructing your personal Game Plan.  Hopefully this will prompt some thought-provoking ideas that will inspire you, help you identify the best career opportunities for you, beat out your competition and accelerate your career!


Job Search Strategies (part III) – Research, Personal Pitch & Networking

The current trend is for companies to try and hire new employees as inexpensively as possible. Although job boards/postings are not the best way to get a job interview, it is one of the most frequently used methods in today’s market.  Job boards are best used as a way to find out about openings. Just remember, they are a poor way to get in the door and that you and 1,000 other applicants will be fighting for that opportunity. Don’t make this your only attempt!

–  Job Boards (Monster, Yahoo! HotJobs, TheLadders, CareerBuilder,, Craigslist, SixFigureJobs, etc.)

–  Job search engines (Indeed, SimplyHired, and others)

–  Company job postings

Tip: Use Job Boars and postings as an opportunity to do targeting networking to people within the organization that can refer you to the hiring manager.


Hey, you do competitive analysis when you build your company, think about potential partners or identify companies who might put out a competing product. So put the same effort into identifying potential employers.

–  Talk with your confidants about which ones are doing well (or not), which ones are getting funded, acquiring other companies, or any companies with similar business models you might not know about.

–  Take the time to learn if there companies making a push into the sector(s) of your expertise, who builds similar products, cuts similar deals, or sells to the same customers? Perhaps you can help them.

–  Leverage the tools available to you to learn about your networks and contacts. What deals have they invested in? Who do they partner with? Who are their clients? Do you share mutual interests?

– Check out websites, press releases, blogs, LinkedIn, and others to figure out how you can get connected to the person or company you have identified.  Warm introductions are the only way to go in today’s market.  Cold calls don’t send the right message and won’t get you the response rate you desire.

–  Research the industry conferences, special workshops and alumni events that are going on. Pick the ones that you think will be most impactful, skip the rest. Be focused… don’t tire yourself out going to pointless events.


If you are unemployed or feel like you are not being fully challenged in your current job, this is a great time to think broadly.  Don’t expect that perfect job to come find you.  You need to actively pursue it and you need be able to articulate what you really want to other people … but you need to be able to articulate concisely not only what you want but what you offer.

–  Have you ever asked someone what they do only to have them start talking about their job but end up discussing the finer points of underwater basket-weaving or blabbering on about how their lap dog ended up at the vet?  DON’T BE THAT PERSON.

Your career is a story and your resume gives some of the highlights. When talking about yourself, your goal should be to talk about yourself in an authentic way that conveys the best parts about you.

Too often people blow the opportunity to intelligently talk about themselves. Don’t try to say everything you have ever done. Don’t lose track of what you said or the point you were trying to make. No-one is going to tell your story as well as you can.  But if you don’t practice your story, you won’t nail the delivery.

The way you tell your story and can give you a tremendous edge over your competition.


Your next job is going to come from your network. The people you know are the most likely source from where you are going to find your next job.  You can’t be afraid to put yourself out there and talk to people.  Once you have honed your resume, built your game plan and refined your personal pitch, you next step should be to talk with as many friends, colleagues, recruiters, alumni networks and outplacement agencies as possible.

Sift through that great rolodex of yours and identify your targets. But do not just blindly email or call them without purpose! If you want to stand out, you better be over-prepared. Pro athletes spend countless hours practicing/training for their games.  The same applies to your career. Get up to speed on what’s happening in your field. Know the trends and issues being faced in your field.  Know who the promising players/companies are and get to know what they are doing that is creating successful outcomes.  Remember, your competition does.

Some of the most successful job seekers I have interacted with in the past 6 months have all had something to bring beyond just a good resume… and savvy CEOs and investors are demanding more too.