Analyzing AngelList Job Postings, Part 2: Salary, Equity Benchmarks, and the Power of Generosity

Analyzing AngelList Job Postings, Part 2: Salary, Equity Benchmarks, and the Power of Generosity

"One million strong" - The Rise of Substack and the Shift in Media Habits

In today's competitive job market, startups are constantly searching for the right balance of salary and equity to attract and retain top talent. AngelList, a popular platform for job postings in the startup world, provides valuable insights into the industry's salary and equity benchmarks. However, founders must be cautious about being too generous with their equity offerings, especially in the early stages of hiring.

When it comes to equity distribution, the danger of generosity lies in giving away more equity than necessary, particularly for the first few hires. While it may seem like a noble gesture to offer higher equity stakes, it can have consequences down the line. By giving away too much equity upfront, founders limit their ability to provide stronger offers to future candidates, raise more money from investors, or retain decision-making power.

To understand the benchmarks for engineering jobs in Silicon Valley, we analyzed a medium-sized sample of AngelList job postings. The salary ranges for employees 2 through 13 were as follows:

• 20th percentile salary range: $75k - $100k
• 50th percentile salary range: $85k - $125k
• 80th percentile salary range: $100k - $150k

When it comes to equity distribution, the percentages varied based on the hire number:

• Hire 1: 2% - 3% of equity
• Hires 2 through 5: 1% - 2%
• Hires 6 and 7: 0.5% - 1%
• Hires 8 through 14: 0.4% - 0.8%
• Hires 15 through 19: 0.3% - 0.7%
• Hires 21 through 27: 0.25% - 0.6%
• Hires 28 through 34: 0.25% - 0.5%

It is important to note that these benchmarks are not hard-and-fast rules but rather general guidelines based on the analyzed data. Founders should consider these figures as a starting point for negotiations with potential hires.

A helpful way to frame these numbers is by adding "up to" before each range. For example, a typical 6th hire can expect to receive up to 0.5% - 1% equity. The equity distribution for designers among the first four hires is slightly higher, ranging from up to 1-2% equity, occasionally only 0.5%. For designers among the next five hires, the equity range is up to 0.5% - 1.0%. From employees 10-30, the equity percentages decrease to 0.2% - 0.5%.

While these benchmarks provide insights into industry norms, it is crucial for both founders and potential hires to manage their expectations effectively. Two scenarios can create challenges in the hiring process:

1. The employee's expectations are too high: If a candidate has unrealistic expectations regarding salary or equity, the interview process becomes a waste of time. Additionally, the employee may pass on multiple good job opportunities before realizing their expectations are not aligned with the market standards.

2. The employee's expectations are too low: Exploiting a candidate's low expectations may seem beneficial in the short term, but it can harm long-term retention and create resentment among employees. It is crucial for founders to ensure fair compensation and create an environment where employees feel valued and motivated.

While salary and equity are vital components of attracting and retaining talent, they are not the only factors that drive success. Substack, a rising platform in the media industry, exemplifies how a shift in media habits can empower both creators and consumers.

One million strong - Substack has demonstrated that millions of people can make money from their creative work, and billions can find better content to engage with. With over 1 million paid subscriptions to publications on Substack, it is evident that people are willing to pay for content they trust and value.

The success of Substack lies in its departure from the traditional attention economy. Instead of relying on ads and engagement metrics, Substack operates on a different set of principles: payments, trust, and considered thought. By allowing writers to monetize their work directly through subscriptions, Substack creates an alternate media universe where quality content thrives.

Furthermore, Substack has opened doors for new types of publications that serve previously ignored communities. By providing a platform for underrepresented voices, Substack enables writers to connect with their audiences on a deeper level. This shift in media dynamics allows writers to pursue the work they believe in and achieve more than mere financial support.

Drawing connections between AngelList and Substack, we see a common thread - the importance of fair compensation and trust. Founders must strike a balance between offering competitive salaries and equity while maintaining a sustainable allocation strategy. By doing so, they can attract top talent, retain decision-making power, and raise more capital from investors when needed.

As a founder, here are three actionable pieces of advice to keep in mind:

1. Be mindful of your equity distribution: While it may be tempting to be overly generous with equity offerings, think about the long-term implications. Consider the benchmarks, negotiate reasonably, and ensure that you have enough equity left for future hires and fundraising efforts.

2. Prioritize fair compensation: Take the time to research industry standards and salary ranges for the roles you are hiring. Offering competitive salaries will attract quality candidates and foster a positive work environment.

3. Build trust and value: Create an environment where employees feel valued, motivated, and trusted. By fostering a culture of open communication and fairness, you can retain top talent and establish long-term relationships.

In conclusion, analyzing AngelList job postings provides valuable insights into salary and equity benchmarks. By understanding these benchmarks and managing expectations effectively, founders can strike a balance between fair compensation and sustainable equity allocation. Additionally, the rise of platforms like Substack highlights the power of trust and quality content in the shifting media landscape. By embracing new media habits and empowering creators, we can create a flourishing culture where writers and readers are in charge.