Comment by leeny

At young startups (seed and possibly Series A), there often isn't a recruiting team. Until a startup hires a recruiting team, usually one of the founders handles important hiring-related tasks, such as negotiation. Even if they do have one or two recruiters on staff, sometimes the founder hasn’t handed over the negotiation reins to them yet.

In case you do find yourself negotiating with a founder, here's how to handle it because if you treat them just like recruiters, the results could be disastrous.

Here’s the most important difference between recruiters and founders. Recruiters are doing a job, and at larger companies, they’re often following a script. Though we always advise you to be enthusiastic, gracious, and courteous (and we take great pains in our copy to do so), at the end of the day, there’s an undercurrent in our negotiations: if you read between the lines, we’re practically shouting, “Look! Here’s my leverage! I’m cold and calculating and indifferent! Money talks!”

For founders, everything is personal. The company is their baby, and talking to them like they’re a recruiter may upset them and make them think you’re wasting their time. Moreover, many founders are not experienced at hiring, especially if it’s their first company, and may not have had many candidate conversations. The playing field between you and a founder is, in this way, much more level than it would be with a recruiter.

Here’s a real story to drive these points home.

One of our users had just wrapped up the onsite at a seed-stage startup. The final step was to meet (once more) with the founders. During the call, they asked him where else he was interviewing. Using our playbook, he was deliberately vague and said that he’s interviewing with a number of companies, at various stages, and is unable to share more information at this time.

The founders dug in and asked several more times if he was interviewing with big tech companies. He held the line, even though the founders were visibly surprised in the meeting that he wasn’t more forthcoming.

After the meeting, the candidate got an email from their recruiter saying that they wouldn’t be moving forward because “we aren’t sure what you’re looking for.”

What happened here? Here’s my best guess.

After spending several weeks of interviews telling them how interested he was in their startup, the founders were shocked to find that he wasn’t fully bought in and was still considering other companies. Moreover, going into the conversation, the founders were probably worried that this candidate was interviewing at FAANGs and other big companies and that there’s no way they’d be able to match big company compensation. It’s a real thing.

As such, they made the calculated decision to stop investing in this candidate because they’d be unlikely to close him.

As a former founder, I can relate to the visceral irritation that comes with feeling like someone is wasting your time. But as a former founder, this decision strikes me as naive – if a candidate is spending time with you, it’s on you to sell him, and you sell til the last minute! However, founders don’t always feel this way. Their time is limited and the opportunity cost of any time spent is very high. Moreover, as we discussed earlier, they’re not recruiters – they have less experience navigating these conversations, and for them it’s personal.

So how do you deal with founders? Here’s what we recommend. Incidentally, the advice below assumes that you’re OK with the cash hit you’d invariably take when working at a startup and that you’re going into it with your eyes open. If you’re not actually OK with it, please don’t waste founders’ time! And if you’re using small startups for interview practice, shame on you. Not only is it unethical, but the types of questions and feedback you’ll get will likely be non-indicative of what you’ll see at big companies.

When founders ask where else you’re interviewing, you can say that you’re excited about this company and that you’re talking to a mix of startups and big companies.

If they ask you about your comp expectations and/or if they push on the big company thing, and especially if you’ve previously worked at one, say up front that you understand startups can’t pay the same thing as FAANG, and that you’re sure that they’ll make you a fair offer.

If they give you a compensation range at the beginning of the process, take it seriously. Large company ranges are often fungible (we’ve seen FAANGs go $100k+ above their ranges with proper negotiation). Startup ranges are much less so, when it comes to cash. You may be able to negotiate a lot more equity, but if you don’t want equity, think seriously about whether you even want to continue with the process.