Negotiate Like a Beast and Get Paid
Engineers misunderstand true value, therefore they throw away their talents and hard work for ambiance.
A nice monitor, chair and cool glass to write on is more attractive than stock, profit-sharing or the notion of running their own businesses. If I were a conspiracy theorist, I’d wonder if the business world wants engineers to continue to focus on aesthetics, rather than being paid well.
And I mean, paid-paid, not just salary.
For most of my career, I missed it. I worked for years — running teams, building software, managing customers, and making other people money.
If you added up the year’s worth of salaries, you’d picture me sipping scotch off the back of my yacht. But here I am.
I was fortunate to collaborate with guys who were millionaires back in the nineties. These guys were in tech for the money and understood how to wield the dollar. Their approach to salary was different, and none of them are working today — not one.
I bumped into one of them in a coffee shop in the early 00’s. A few lattes later, I realized I had it all wrong. I figured I was at the top, but; I was duped by a business world that still today, devalues engineer’s work.
He was a top-notch professional who spent a lot of his time with sales. Not only did he take a low sixty-five thousand dollars a year salary, but he also structured participation in the upside of the company. The rest of us were making about $150,000 a year.
We were strolling around town with nice cars, eating at the best restaurants, and buying games and computer parts we didn’t need. Our conversations typically revolved around esoteric, technical topics. We were proud to be in tech. In our minds, we made it. Furthermore, we were respected, heavily recruited, and “paid well.”
The guy that took the deal based on upside bought a building.
Every engineer needs an entrepreneurial sherpa who provides insights that aren’t the typical, watered-down stuff all over LinkedIn.
This article documents my decent from status quo negotiation. Here is what worked for me.
Negotiate Based on Upside
If you can afford it, upside is superior to salary.
Financial wealth isn’t the only goal, but you never hear moguls tout their savings’ ability as core to their success. They understand the benefit of risk and deal structure. And even if money isn’t your primary motivation, it doesn’t hurt.
Upside is reflected in deal structure; it’s something you can control and easy to learn. It took me a few years to capitalize on my learnings because I was afraid. Nevertheless, I started studying sales commission packages.
I put my new knowledge to work when I applied for a senior architect role. It was clear we were moving to the offer stage, so the recruiter called and asked me for a number (salary).
I asked what the total compensation package would look like. She quickly pointed out I would get benefits, and they had a world-class working culture — “People loved to work there!”
The recruiter shared pictures of a stocked fridge, ping-pong tables, and ergonomically perfect chairs. I scrolled through the pictures and proceeded to press on total comp.
She came back and presented the typical, $150K with a stock package calculated based on the company’s worth topping Google.
I asked about deal flow and pointed out that participating in the company’s success beyond stock intrigued me. She cleared her throat and fumbled through deal terms. Then, she admitted; “We don’t have these types of conversations with engineers.
I said, “these types of conversations?”
She explained those types of conversations where for people who protected revenue or helped the company become profitable.
I asked, “What is it you think engineers do?”
My next call was with the COO.
Try Different Deal Structures
Right off the bat, I aimed for an offer that rewarded me for facilitating revenue growth and protection. I tossed out the standard offer letter and negotiated on a salary plus commission.
Here are the basics:
- I was put on a quota attainment structure; meaning I was part of a particular business vertical and worked alongside colleagues on that team.
- I got a base salary (lower than usual) plus commission.
- I negotiated a multiplier — if we went over 100%, I’d benefit.
I averaged over 100% attainment and collected > $20K per quarter above my salary.
Not all deal structures are created equal, but try — know your worth. Jackie Luo has a great article on salaries and equity packages.
The COO wanted to end the negotiation, but I had a list of asks. Once we agreed on the deal structure, I turned my focus towards what-if scenarios.
Don’t be afraid to hit all your deal points. Negotiating is not a race. The best negotiators believe, you get one shot. For the most part, you get what you negotiate upfront. So don’t rush.
Now that we agreed on a deal outline, I moved down the list to my next bullet.
Always Ask For Severance
Severance is a security blanket — it enables you to approach your job fearlessly. Sometimes deals sour, so you need the protection.
Colleagues much smarter than I insist on a severance package of at least 6-weeks.
To find your next perfect opportunity, you need time and comfort to do so. You make bad decisions when stressed and worrying about bills while you work, sucks.
Not all companies will work with you, but you can’t get what you don’t ask for. At a minimum, be prepared to horse-trade. If not a 6-week severance package, what else can they give on to benefit from the bounty of your talent?
Your skill-set and resume will speak for itself as you grow and move up. None of this advice works if you are average.
You should expect to haggle over severance. It’s normal to go back and forth three to four times or more. Severance can be negotiated in weeks, or a fixed number — you need to make sure the timeframe works for you.
Here is an article that can help by Jackie Luo.
Creative Ways to Negotiate a Severance Package
As companies downsize, you may feel you are walking a tightrope at work. For every employee you see being laid off, you…
Ask for Intangibles
Negotiating is give and take. You will concede, and so will they. If you don’t put enough in your asks, you have nothing to barter with.
I once requested an office with a window and a view. Truthfully, I didn’t care, but a nice office doesn’t hurt.
I conceded on the office for another two-week’s severance.
Keep in mind, if you make it this far, they want you. No deal will blowup over one bullet clause or ask. This is your honeymoon, so shoot for the stars.
A friend of mine asked to work remote every Friday. He’d ended up settling for every other Friday.
Here are intangibles that are easy asks:
- Keep your computer once you leave the company.
- An early review to revisit the deal points in your offer.
- Sponsored growth courses.
- A company credit card for team growth.
- A particular work environment at home.
- Expenses such as cell phone and internet.
You get the point. Be unafraid.
This is a tough one. Unless you are one of the first five to twenty-five in the company, there’s little to negotiate. The cap table will already have a pre-allocated number based on position and rank.
That said, I still ask.
My goal is to understand the size of the stock pool. We all know that preferred investors get paid first, and your percentage is out of what’s left after they get paid.
My advice? Make sure you understand how it works and get a professional consultation from someone who knows. You are more likely to be aggressive on the other bullets in this article once you understand your stock package.
I’ve worked with engineers who calculated a million dollar exit and ended up with a new car and a couch.
Be careful. Detail matters.
The point is you are valuable and deserve every bit of benefit. You have to ask for it.
I recently spoke to a very good friend of mine who walked away from a company that wasn’t what he expected. I could hear over the phone calmness in his voice. With the pandemic’s black cloud hovering over everything we love, how could I hear his smile over the phone?
I asked, “are you good?” He said, “oh yeah, I negotiated a good deal.”
If you found tips like these valuable, join my free mailing list to get weekly tips emailed to your inbox.