Don’t Be Amy From Secret
How “Non Developers” Can Protect Themselves At Startups
If you aren’t a developer and you work in Silicon Valley, stop right now and read this New York magazine article about a how a designer was screwed by her startup.
Ignore for a moment the debate about why she wasn’t hired. Here’s how to protect yourself.
Demand transparency.
Ask to see the capitalization table(who owns what % of the company), and the current financial statements. If the founders won’t show this to you, run for the hills. Even Jack Dorsey advocates for transparency in this regard. You deserve to know the actual level of risk that you are taking on. Investors have multiple companies in their portfolio to spread their risk to; you only have one company at a time.
Don’t accept less than market salary from a very early stage/risky startup.
If they aren’t the next Facebook, and they can’t afford to pay you market rates, then you might want to carefully consider whether it’s something you want to do, or can afford to be screwed on.
Insist on a “double trigger provision” in your employment agreement.
The current climate in Silicon Valley values developers over anyone who isn’t. So it’s unfortunately common that designers, marketers, customer support staff, admins, and anyone who doesn’t code will often not be acqui-hired. Get used to it. The way to protect yourself is through negotiating your employment contract. A double trigger provision simply states that you will be compensated in the event BOTH of the following things happen.
- Your employer has a “change in control;” that is to say it is sold, merged with, or the ownership of the company changes for any reason, be it IPO, sale, acqui-hire, merger, etc. No matter what they call it, if the people who own the company are not the ones who hired you, that is a change in control.
- You are terminated for any reason, other than “cause” within x months (usually six) of change in control. Cause simply means that you were terminated for job performance, theft or other violation of your employment contract. In that cause the provision is NOT triggered. Any other reason, that’s a trigger for your compensation.
Typical compensation for double trigger provisions varies according to level. Executives usually get fully accelerated vesting of stock; which is great if you are sold for a lot of money, but it wouldn’t have helped “Amy.” For a new startup, I’d suggest the number should be full acceleration of vesting + 6 months severance pay OR 1 year of market rate salary (define if you like); whichever is higher.
Read all paperwork carefully. Hire a lawyer.
Here’s what happened to Yee Lee during the Skype takeover by Silver Lake and Andreesson Horowitz. Here was my own take on the impact of that approach. Years of precedent overturned quite stealthily and even a seasoned veteran like Yee got hosed. A lawyer is cheap compared to the cost of losing out on a big deal. Don’t be penny wise and pound foolish.
Got More Tips? Share in the comments and I will add them to this list.
Please note that I’m not an attorney and this shouldn’t be construed as legal advice. These are just some hard learned lessons from my decade plus in Silicon Valley as a “non-technical” employee; which is sort of like being a “non-person” these days, but that’s for another post.
