Negotiating a Salary with a startup

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If you are interested in working at a startup, you are most likely coming across a common concern: salary. Smaller startups might not have experience hiring MBA students. They will also often not see as much value in hiring a business person, let alone pay post-MBA salaries. This will be especially true if you are looking for something outside the Silicon Valley and New York areas.  

In this article we will provide you with the best techniques to try to negotiate a better salary. Those include:

  1. Getting a reference point from your school
  2. Using another offer to negotiate
  3. Thinking of the salary holistically
  4. Negotiating terms
  5. Negotiating a trial period

A reference point from your school

Since the startup might not have hired another MBA student, it helps to give them references. Stopping by the Career Services and/or look through the prior class statistics will help you figure out the expected range. You should also be able communicate your expectation if asked during your interview. And basing it on your school numbers is a good way to start.

It helps to have another offer in hand

In the case of a startup, I would suggest recruiting for other larger tech companies like Google, and Amazon. This will not only help you to practice for interviews, but it will help give you more leverage in the negotiation. Getting an offer from a big tech company has an additional advantage of building your credibility with the startup. For example, if you are recruiting for an operations focused startup, an offer from Amazon will probably make you a more interesting candidate. But most important, another offer will help you feel less pressure. And even if you don’t really intend to work there, you can use this to gain more leverage. Hence, this can be an offer from another startup that pays better (ex: in SF or NY).

Think of the salary holistically

It is also important to keep in mind the different components that can make up your salary: signing bonus, base salary, bonus, stock option, equity. Often companies (and startups) have less flexibility to increase your monthly salary. Many have fixed level salary ranges, concerns in increasing their burn rate, amongst others. That is why it is helpful to try and understand what is the startup’s pain point and demonstrate flexibility to find an alternative that better suits both parties. For example a friend was able to negotiate to transform his travel expenses (only offered as a reimbursement) as an upfront signing bonus. Another one was able to negotiate an additional 10k stock options as a signing bonus.  

Negotiate terms

Another huge advantage of going to work at a startup is that usually you can have more flexibility when negotiating your contract terms. Perks, number of hours/days worked, vacation days are all negotiating opportunities. In case you are offered stock options (as signing bonus and/or annual performance bonus) it is also important to fully understand the vesting schedule. Keep in mind that most startups that offer stock options will probably have policies around the vesting schedule. But you can probably negotiate to increase the time you have before choosing to exercise your stock option if you leave the company, for instance.

Negotiate a trial period

Finally, one more strategy is to agree to start at a lower salary, but condition it to a promotion review. Since most companies will promote people at the end of the year, for most MBA students this would mean an opportunity for promotion within the first six months. This message will usually reveal your commitment to helping the company succeed and will create for you the opportunity to negotiate your salary once again in 6 months, after you have proven yourself.

Competing with the big consulting, investment banking or big corporates on salaries will be a hard job but rest assured that start-up can be worth the initial lower salary. And that is not only true for the lucky ones that find themselves a unicorn. Working at a startup carries other benefits such as a faster promotion trajectories and opportunities to manage many people, that are very valuable for your future. Plus, from our class those that went to startups are happiest in their carriers so far.

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