air born

The toxicity of salary conversations at startups

I have seen this so many times now. A bunch of young folks join the startup. They have a lot of energy. Work hard to prove themselves. Go through one or two appraisal cycles and find out that their friends or peers may be getting paid more than them. And that is how it starts. They start making up theories of whats and hows. And numbers from “big tech” on the internet make it worse.

They start reading more into every decision their company or manager makes. Reading online about how companies exploit engineers. Some of this is even true. Once this attitude seeps into an engineer, it will spread to peers they are on friendly terms with. Because it is bound to come up in informal conversations. And money talk always gets people's attention.

I am not immune to this either. I was this young fellow only 3 or 4 years back. And I know how this take on work can quickly go into a toxic spiral. Especially when the company is actually pretty small and your founders are optimizing for survival during tough times (think covid, 2022/23 funding crisis, etc.). They will not be willing to spare enough to keep every employee happy. They have to look after their own interests, and the company at large. So you see a few peers rise up. You don't really know what increment they got, but you assume it is more than your standard 15% to 25% raise.

Some of you might think 15% to 25% is not bad at all! It is not but this is a fair expectation from a growing startup. Promotions might even mean 40% to 50% increments. This is one of the upsides of the bet you are taking. Because at most early-stage startups, you start with really low comps at junior levels compared to what any established tech company will pay you. There is also equity. But you don't really know what it will be worth, if anything at all. But this is not nearly the most compelling reason to join a startup.

And this brings to my message. I would like to take a healthier stance on the nature of work and pay at startups.

When you are a young man, fresh out of college, it is less likely that you will have major responsibilities in your life. Although, I am myself an exception to this. Anyway, the point is - you need not optimize too much for money. Sure, having lots of dispensable income is nice at any age. But once your bare-minimum (and a bit more) needs are met, more money is unlikely to make you happier at this stage of your life. In fact, more money will almost certainly result in a bloated lifestyle because you do not have any other use for it and you don't know any better. It is also a common mistake to think that, apart from standard of living, more money will solve all your “other problems”. It may. It may not. Please think about it more intentionally.

On the other hand, if you do have several responsibilities and duties just after graduating (as it is the case for a lot of us Indians), that involves a good deal of financial security, feel free to disregard any of this advice.

Okay, but why work at a startup!? Because...

You can “f*ck around, and find out”

air born

I am not even kidding. If you have worked or are working at a startup, think of all the responsibilities you get at any given position. You get called an SSE and TL after 3 to 5 years! While you may need significantly more battle experience and maturity to be called an SSE or TL at a large company, the risk profile of your projects are no less. Things you build at a startup have non-trivial impact on the product's UX. On top of that, you may get to learn a little bit of finance, and hiring and marketing by being involved in those processes early on in your career. Those divisions stop seeming like black-boxes to you. As a TL or a manager, you can also influence how engineering is done at your company (e.g., org-structure, dev-practices, etc.).

If you have the talent and charisma, you may even be able to influence and help your leaders and founders make decisions w.r.t. directions the company should be taking. These decisions may be related to technology or otherwise. Of course, whether you are successful in any of this depends on how good you are and how receptive your peers are. But just having that opportunity is rare in any big-tech org unless you are high up enough to have the ears of execs.

If you mess up, chances are, your mistakes will be forgiven. Or maybe you will end up causing huge losses. Or maybe you cause some chain reaction that destroys your company. But then that is the short end of the bet that the company is taking by hiring a relatively cheaper stock of junior devs to build its product. Long story short, both parties are taking on risks. As individual employees, we probably risk losing less than the founders do.

Once you grow into a seasoned engineer or manager, you will likely be working at a bigger company. Either because your startup grew while you grew, or you realize that it pays better and life is saner at big-tech and you want it to be this way at that stage in your life. And even if you are a seasoned engineer at a young startup, you may be occupying the position of a director or VP. Either way, the expectations from your role will be very different and you will need to make wiser, more well-thought decisions. If you do a reorg and the company's productivity or profits goes down for more than a quarter, your will be politely asked to exit and be left with a hard-earned, potentially career-damaging lesson at 40. Learning this same thing at 25 or even 30 is not nearly as embarrassing, I wager.

It is a great advantage to f*ck up and learn while you are relatively young and unknown and the impact radius of your work and decisions is limited to a small ecosystem. Your young startup is going to burden a fair bit of your mistakes. But this does not mean you continuously break things. Your intentions have to be good and use existing literature as much as possible. With time, you should learn what works and become more conservative about rewrites, rearchitects and reorgs. Your leaders will only give you so many chances.

I might sound like I am siding with the company a bit much. What stupid tool sympathizes with a corp? And I agree that after a certain size (maybe 200+ employees?) most companies become an unfeeling hive-mind that fully serves no one person's interests. If you do stick around in a company for longer than this, you will need to start representing your interests more aggressively. Be part of negotiations with HRs who are way better at it than you are.

But my point is, as individuals, the prospect of money should motivate us and not intoxicate us into making short term decisions. There should be a proper risk-to-benefit analysis going on in your head when you choose to devote a significant time of your youth with any business. If you do need the money, go ahead and join big-tech. Who cares about more “learning” if you cannot support your parents get an expensive medical procedure that they need. But if you do not need the money, why not experiment and do more with the freedom that comes with working at a startup? You will almost certainly thank yourself for the experience and stories later on.

Final takeaway

Do not discuss salaries. Ask for transparency from your manager. Get a sense of the market comps at your level for companies your size. After that, only compare yourself to your past self. If you are truly growing at a high-growth startup, your comp should roughly double every 2 years. All other information is noise.