As a fun project, I’ve been crowdsourcing data on startup compensation. This sparked a bunch of requests to value and negotiate offers. So far, I’ve helped people get $3M+ (yes million!) in extra comp.
Being in the front row of all these negotiations has been fascinating, so I wanted to share some tips, scripts and mistakes to avoid.
Many people see negotiation as a necessary evil. One side “wins” at the expense of another. After all, we’re talking about a finite pool of money.
While logically sound, this view holds us back. Here’s a simple reframing:
- Negotiation is a preview of how a company operates with actions. If they negotiate in good faith (respectful, reasonable) they will likely extend that to how they treat you; in any case, you know what you’re walking into
- The end of a negotiation is the start of a relationship. The point isn’t to “win” at their expense, it’s to have them see you as a valuable asset
- Just as companies make more by upselling at checkout, you can make more by upselling yourself through good questions and negotiating with poise
In reality, people often make mistakes that doom negotiations before they begin. Let’s review the biggest ones, and why even competing offers can fail.
Beware of low-hanging fruits
People love low-hanging fruits — quick, easy wins that make us look and feel good. But low-hanging fruits are the absolute wrong thing to chase here.
Easy openers actually make for hard negotiations. This is because once a company concedes on a few points, they are less likely to say yes to follow-ups. So don’t start by asking for bonuses, benefits, learning budgets — unless they are your top priority. Instead, start with what you care about most.
If cash is more important, asking for a higher salary first is better than an equivalent bonus because it’s recurring, compounding and taxed more favorably. If equity is more important, you’ll need to clarify if you're getting stock options (ISO, NSO) or RSUs (single-trigger, double-trigger). Each incurs a different tax treatment which affects your take-home pay.
Options can get pricey fast, so it’s good to figure out if you plan to exercise early (save on taxes) or play the wait-and-see game (higher taxes but no upfront risk). If you plan to wait, try to negotiate for an extended exercise window. And in all cases, ask for an equity cut that fits your profile and how far along the company is.
The smaller the company (in funding, size, traction), the more flexible they can be on equity. I’ve rarely seen a $50K salary bump, but a $50K bump in annual equity is more common than you’d think.
Other negotiation mistakes
Don’t tell them your comp expectations before they give you an offer. This is a polarizing topic, but I still lean towards disclosing less simply because it works better in more situations.
- If you anchor too low, they will follow suit
- If you anchor too high, it can take the conversation off-track before you’ve shown them that you’re worth it
- If you anchor just right, it can still limit your room to get more
A major exception is when you’re focused on earning over learning, and you don’t want to waste time interviewing. Otherwise, consider saying something like: “I’m still researching what makes sense. I definitely want us to be on the same page though. If you’re ready to share a comp band, I’m happy to review it and get back to you.”
Don’t tell them you plan to compare offers before they give you an offer. Words and timing matter. Once you get the offer, it’s kosher, even useful, to mention competing offers. But if you allude to comparison shopping especially before you secure the offer, companies tend to think: “This person is deciding purely on numbers and we’d rather find someone who’s more excited about us”.
Don’t tell them you’re excited to join until you’ve negotiated a package you’re happy with. This might seem obvious, but I’ve seen people jump the gun when they have friends at the company, or when the role is a perfect fit. If too much excitement takes the wheel, it steers the negotiation off-track.
It’s ok to leave some money on the table — for the right company, it’s better not to overindex on the immediate payout. However, if you care about getting a strong offer, affirm your interest, but don’t make premature promises: “Excited about [mission]” or “Enjoyed chatting with [names]” affirms interest; “Would love to join [team]” or “You’re my top choice” promises too much.
Rule of thumb: don’t say the word “join” or “sign” until you have the offer you want.
Don’t tell a company they’re overvalued. Unless they’re living under a rock, everyone knows valuations are taking a beating. It’s reasonable to believe your equity offer could be worth less in the near future — the question is will it persist during the timeframe you care about?
If you’re optimizing for the next 1-2 years, then focus on cash and consider a public company with liquid stock. If you’re optimizing for the long-term, then frame your equity ask as conviction in the upside. Positive words go a long way.
Now onto the must-dos
While every situation is different, these three steps are at the heart of all negotiations done right:
Understand your rough comp band. Historically, this was a black box at startups, but I’ve now collected thousands of data points. For early-stage startups, it makes more sense to think of comp as salary + equity % rather than an absolute $ amount because valuations will change a lot.
Figure out if they are a “strong yes” on hiring you. If they are, there’s ample room to raise the comp band limit. If they’re lukewarm but you still want to join, middle of the band is a more reasonable target. If they’re lukewarm and you don’t mind walking away, may as well ask for what you want.
Prioritize what you care about and counter with an offer you’d be thrilled to sign. Your first counteroffer is critical to get right because it not only signals what you care about, but it also sets the anchor for what you end up with.
A common concern here is whether a company will rescind if you counter. This is fairly unlikely — usually the worst case scenario is they tell you it’s their best and final offer (which may still not be true).
Nonetheless, there is always a non-zero chance that the offer disappears whether you counter or not. So it’s worth adjusting your approach and how quickly you act based on how much you want to join.
Competing offers are not bulletproof
Most people think the holy grail of negotiation is to secure competing offers. But markets are changing. I’ve seen an increasing number of people get identical offers, likely because companies are relying on a common dataset.
So what do you do when the offers are meh and roughly the same? Escape the stalemate by having at least one company raise their offer for others to match.
Sequencing is king here. I would place your companies in a 2x2: how much you want to join vs. how likely they are to increase your offer. Start with low-risk negotiations: companies you don’t mind walking away from and are more likely to meet your asks. Progressively move towards your top choice — this gives you more chances to secure higher offers to anchor on before the one that really matters:
Your biggest enemy in this is… yourself.
Manage loss aversion
You know those studies that suggest the pain of losing dwarfs the pleasure of gaining?
Well, everyone has fallen prey to this. People are afraid to lose offers even from companies they’re not psyched about:
- “I don’t want to ask for too much, they’re a good back-up”
- “It’s better to keep them in the running”
Here’s the truth — there are only two real uses for an offer:
- So good you would sign today
- So good you can use it to get what you want from your top choice
While it’s a nice ego boost to have multiple backups, at the end of the day, you can only pick one. Playing offers beats sitting on them.
One last thing
There are lots more to cover here, but I don’t want to drone on for too long. If you’d like to see more content on this (like how to upsell yourself, renegotiate, tailor what you say based on the scenario), check out my Negotiation Playbook. And if you would like 1:1 support, hit me up.