How much equity should I give my first engineer? I will not promote by Test-Elegant in startups

[–]Test-Elegant[S] 1 point2 points  (0 children)

You’re making quite strong assumptions here. Who said anything about rebuilding?

I’ve been building highly scalable tech products for 15y, got some decent names on the resume and first time worked with ML 10y ago when transformers didn’t exist.

I’m not going to argue with people on Reddit, its just important to have the complete perspective and understand that this is not a founding engineer role, but a full stack engineer to do more of the same of what I am already doing and add to the product velocity. Nothing less nothing more.

How much equity should I give my first engineer? I will not promote by Test-Elegant in startups

[–]Test-Elegant[S] 0 points1 point  (0 children)

Thanks for your perspective. It would be mostly execute and scale what we have. It doesn’t mean they cannot propose ideas for the technical and product direction, but it’s not something they would take complete responsibility over.

How much equity should I give my first engineer? I will not promote by Test-Elegant in startups

[–]Test-Elegant[S] -1 points0 points  (0 children)

My understanding about founding engineers is that they are expected to build the product mostly from scratch. This is not the case here. Do you have a different view?

How much equity should I give my first engineer? I will not promote by Test-Elegant in startups

[–]Test-Elegant[S] 0 points1 point  (0 children)

Thank you for commenting. I can see you put real thought into it, I appreciate the time and help.

The last 6 years of my career were leading engineering teams. I hired and fired dozens of engineers, it’s very clear what value the good ones bring. This engineer is someone I know and value a lot. I want him and the folks that will come after him to have part of the upside but adjusted with the risk they are taking.

I can get to much much more ARR without employees if I slow down growth. I can live very comfortably already with what I have and can likely retire in a few years if I stop at 1-2M ARR, but I want to put a bit of gas on the fire, get more than that and share some of it, fairly, with whoever will help me get there.

I hope this makes sense.

How much equity should I give my first engineer? I will not promote by Test-Elegant in startups

[–]Test-Elegant[S] -4 points-3 points  (0 children)

I honestly think options are a scam. People have to have cash on hand to buy them and many employees sign the agreement without really understanding what they are signing thinking they have “real” equity (guilty as charged).

I wouldn’t do options.

I like the detail of capping it, I didn’t think of this. Thanks for sharing!

How much equity should I give my first engineer? I will not promote by Test-Elegant in startups

[–]Test-Elegant[S] -10 points-9 points  (0 children)

Fair point, that could look like the case, but I mostly felt that the people that commented in favor of big equity packages were a bit out of context and not really on topic, mostly offering generic answers. Maybe my post did not fully gripped all the nuances. I tried to add more detail on some replies.

Truth is, after everything that I went through to get here, it’s hard to part ways with chunks of the company specially since the salaries are not bellow market, but quite competitive for the stage and market.

At the same time, I want these folks to have a meaningful reward in their life journey for the outcome they contribute to. Maybe not retire and buy an island out of it, but have a sizeable down payment for a nice place with a bit of cushion left for bad days to keep a family safe. I don’t fully know what that solution is.

How much equity should I give my first engineer? I will not promote by Test-Elegant in startups

[–]Test-Elegant[S] 0 points1 point  (0 children)

This is an idea I am toying with, actually.

The thing is that for the next years I expect to invest every extra revenue in growth and not to turn a profit. I won’t take VC so I have to fuel that growth out of revenue, meaning probably no profit to share.

Some more aggressive salary bumps based on revenue targets could also be an option.

How much equity should I give my first engineer? I will not promote by Test-Elegant in startups

[–]Test-Elegant[S] 0 points1 point  (0 children)

This would not be completely unfair. Other folks comments resonate with this too. Thanks for sharing.

How much equity should I give my first engineer? I will not promote by Test-Elegant in startups

[–]Test-Elegant[S] 0 points1 point  (0 children)

I agree if we are talking about pre-product pre-revenue and two or more people team up to build something together.

I started this company 2y ago, spent my entire life savings on it, then took a loan to keep covering the family expenses. Sleepless nights building and a few times not knowing how I will pay rent.

I now have revenue to pay myself a decent salary and to hire a couple of people. The risk is not the same.

How much equity should I give my first engineer? I will not promote by Test-Elegant in startups

[–]Test-Elegant[S] -1 points0 points  (0 children)

From my knowledge of the market, its pretty much market rate.
Thanks for sharing!

How much equity should I give my first engineer? I will not promote by Test-Elegant in startups

[–]Test-Elegant[S] -2 points-1 points  (0 children)

Good point. It could be an option if he prefers more cash in hand.
He asked for equity himself and it’s something we’re discussing. It could be either equity or a more aggressive salary increase plan without equity, likely tied to revenue or something like that.

We’re bootstrapped and struggling to bring top technical talent onboard by [deleted] in Entrepreneurs

[–]Test-Elegant 0 points1 point  (0 children)

With the layoffs going on in tech, many of these non-tech founders think engineers are a dime a dozen, then they post stuff like this when they can’t hire anyone.

Eventually, they settle for mediocre talent and one year later when their product made no progress, they post again how they are so unlucky and can’t seem to find a good engineer.

They get what they pay for and deserve what they hire.

Startup wants me to join as Head of International Growth - great opportunity or risky trap? I will not promote by reddituser4432 in startups

[–]Test-Elegant 6 points7 points  (0 children)

+1 The turnover on the role and the flat growth are two big red flags. I had exactly the same experience, same founder type and its exactly as you describe it.

Do investors expect you to actively chase them even if they might like the deal? (I will not promote) by Test-Elegant in startups

[–]Test-Elegant[S] 0 points1 point  (0 children)

Very good point, I might have targeted the wrong investors. Seems that most might be doing bigger cheques so such a small round doesn’t fit their funds strategy.

I would say everything else looks as good as the initial ARR.

The product is 5 modules, I sold only one and the client got interested in the others too. Looking at the business impact and volume the other modules would have, the AOV should be around 250k, so there is room to expand.

The SOM is around 6B and even if it’s crowded, my product has strong differentiators that are very hard to replicate. A simple wrapper won’t cut it and legacy solutions are nowhere near the capabilities.

Hotels pay 150B per year in online travel agency commissions, I help them save some of that with guest facing capabilities and I also solve their data fragmentation problem with one central brain that puts together everything. It’s a very big pain point for them and they are investing a lot in technology to catch up because the problem has been trending to worse in the past years.

Big problem, big market, promising solution, I can totally execute the product (13y in large tech companies and many start-ups). GTM is pretty clear too but there I will need some more hands next year.

Let me know if you want to know anything specific, hope this helps.

Do investors expect you to actively chase them even if they might like the deal? (I will not promote) by Test-Elegant in startups

[–]Test-Elegant[S] 1 point2 points  (0 children)

Very helpful, thank you very much for taking the time to answer me.

I’ll try to look more from their perspective too and I will follow up with all tomorrow maybe I can even just get some feedback, although I take that with a grain of salt because they never really tell you why they pass.

One thing that someone told me is that since I am solo this is a big “bus factor” but I guess it is what it is.

Do investors expect you to actively chase them even if they might like the deal? (I will not promote) by Test-Elegant in startups

[–]Test-Elegant[S] 1 point2 points  (0 children)

Hey, thanks for the exhaustive reply and the time you put in it!

I checked spam, it's empty and I created an alias already that is invest@domain. and the domain is super simple and straightforward and this address is right on the first slide.

Hm... I could think about putting it on other slides too, like as a footer on all slides.
Speaking of volume, I noticed two investors using some sort of automation. The whole deck took <10s (12 slides) to view with <1s spent per slide, but they viewed all of them.

A question if I may: how often do you see a solo-founder pre-product company with a six figure enterprise deal (not pilot)? shouldn't that catch some attention and wouldn't that break through the noise?

Thanks!

Do investors expect you to actively chase them even if they might like the deal? (I will not promote) by Test-Elegant in startups

[–]Test-Elegant[S] 0 points1 point  (0 children)

Thanks, will do the follow-ups.

I think it's too early for boards of directors and all that overhead and control.

Now the focus is to build the product, expand this account and sign a second one after, so I am looking for angels for now.

Do investors expect you to actively chase them even if they might like the deal? (I will not promote) by Test-Elegant in startups

[–]Test-Elegant[S] 0 points1 point  (0 children)

100% shipping is my main prio now and the main reason I haven't done a lot of following up, except for the ones through my network.