If you offer too little compensation, you may not attract the talent that you need to be successful.
It depends on their circumstances. There are smart people who'll work for low salaries if there are genuine reasons to do so, but not many of them. Most of us can't afford to work for free anymore.
But if you offer too much compensation, management and employees may begin to feel fat and happy and lose the motivation to maximize long-term value for shareholders.
Ahem. :cough: BULLSHIT.
That said, most startup executives I've known were worth nothing near $175,000 base. Most of them could justify $175,000/year not to work anywhere in technology again. Then again, I've never worked for a good startup.
Alright... now, this is a fun topic. I worked for a startup with outright evil management where there were 5:1 salary disparities over the same job. One person was making $30,000 per year (in NYC) in a non-tech role, then busted his ass to move over to engineering and did so, but was told that the promotion to engineer "should be enough". People were being hired into the same role at 4-5 times his pay. He eventually negotiated more, but he was underpaid for years. That was the startup that inspired my most famous blog post.
The good news is that most startups pay market. Salary may be about 15% less than you'd get in another company, but equity (at valuation) fills the gap. The bad news is that most startups are awful places to work and you learn very little and so you tend to "job hop"; it may not even be your choice because "fail fast" is often used as an excuse for impulsive firing. After a while in that game, you have more jobs than years in your history and startups are the only market left for you.
Your points are tangentially related to a question I've floated around in my head for years: when is a startup not a startup?
There's the income/profit metric (if a company is paying its CEO $200k+ and has several $150k+ engineers, they're obviously selling a significant amount of something)
Or there's the acquisition metric (our goal is to be bought, and we haven't been bought, so we're a startup)
When a tech startup runs well, it's constrained open allocation. People can't just go off and "do whatever" but if the work is important to the business, anyone gets to step up and do it. There's no fighting over "headcount" or jockeying for plum projects. There is the work that needs to be done and as long as (a) people work on things that are relevant to the business, (b) people take enough of an ownership mentality to do the difficult or unpleasant stuff that's comes along with the good, they remain in good standing.
Once you have closed allocation, you're definitely not a startup.
It depends on their circumstances. There are smart people who'll work for low salaries if there are genuine reasons to do so, but not many of them. Most of us can't afford to work for free anymore.
But if you offer too much compensation, management and employees may begin to feel fat and happy and lose the motivation to maximize long-term value for shareholders.
Ahem. :cough: BULLSHIT.
That said, most startup executives I've known were worth nothing near $175,000 base. Most of them could justify $175,000/year not to work anywhere in technology again. Then again, I've never worked for a good startup.
Alright... now, this is a fun topic. I worked for a startup with outright evil management where there were 5:1 salary disparities over the same job. One person was making $30,000 per year (in NYC) in a non-tech role, then busted his ass to move over to engineering and did so, but was told that the promotion to engineer "should be enough". People were being hired into the same role at 4-5 times his pay. He eventually negotiated more, but he was underpaid for years. That was the startup that inspired my most famous blog post.
The good news is that most startups pay market. Salary may be about 15% less than you'd get in another company, but equity (at valuation) fills the gap. The bad news is that most startups are awful places to work and you learn very little and so you tend to "job hop"; it may not even be your choice because "fail fast" is often used as an excuse for impulsive firing. After a while in that game, you have more jobs than years in your history and startups are the only market left for you.