Dan Siroker’s Post

How should you compensate your startup's employees? I generally feel like people should be better comped than you think, especially at startups where you have some funding. We've been lucky that we've gotten great funding from almost the beginning, so maybe I'm not one to speak for folks who haven't. But I don't think it's fair to say that you should punish people when it comes to cash comp if they join a startup. Obviously, you can't match what some big companies like Google and Microsoft pay. But you can still pay 75th percentile in terms of cash, and it shouldn't be a huge lifestyle change just because they're joining a startup. 10 years ago there was this idea that you're exchanging risk for reward, and you should punish people when it comes to salary. I feel like now if somebody who's great has a choice between working at 2 startups and 1 startup gives them a lot of equity and little cash, and the other gives a lot of equity and a lot of cash, they're gonna take the latter. And you wanna hire great people, not hire people who are willing to accept the marginally efficient salary that you can offer them. For example, we hired a great software engineer and we saw that actually the market is showing this person should be making $30k more than the other folks on the team. So not only did we hire her at that price, but we also raised everyone else's salaries to match because we didn't feel like it was appropriate to punish somebody just because they came in earlier. So that's my philosophy. I also compensate pretty internally fairly and operate on the model that if everyone knew what everyone else made, would they agree that it generally makes sense. Curious, how do other founders think about early-stage comp?

How should you think about giving out titles in an early stage company? Titles are a bit weird because they're kind of free to give in one sense, in that it doesn't cost you more money, but they're expensive in that they create this sort of mutually assured destruction. As soon as you give out that first VP title, then everyone wants to be a VP. That's why I think it's better for early companies to have a stage where there are clear "Head of" titles - Head of Marketing, Head of Engineering - and you don't have a distinction between VP and SVP. That's actually the sweet spot, because you want to be in a place where it's clear who is ultimately accountable for a particular function. I like this "Head of" title because it makes accountability clear, but it also doesn't box you out from later hiring an executive from the outside and giving them a title they're more accustomed to. The other thing titles do is that they can recognize - at least in some circles, like the Bay Area - anything with the word "founding" in it has a certain weight that is hard to ignore. "Founding engineer" for example can be so much more meaningful to somebody, especially if 80% of their friends are founders of companies, and they are just a software engineer, but they're also the first employee. Plus, by offering a "founding" title you mitigate the risk that somebody's gonna go off and try to start their own company instead. I also unequivocally believe that if title is something that a candidate brings up early or even during the interview process at all, it is a red flag. It shows you what their values are. The best people I've hired are people who've come in with really fancy titles, yet the topic of title didn't even come up. They could have been CTO or Principal, and it's such a positive sign when title is not something they're overly fixated on. It shows that they care about the problem, and they care about the company. They know that if they do well, they'll grow within the company.

When to move into enterprise and when to stay the course? The most important thing is to understand what's working about your business and what's not. At Optimizely, we had a core magical thing working from almost the beginning, which was this product-led growth motion. A term that didn't even exist at the time! A good example of this is we didn’t make people sign up to try the product. You could instantly start making changes to your own website and see what our visual editor looked like. Obviously, those changes didn’t go live until you put the JavaScript snippet on your page, but that alone was such a magical part of our product that led to not just small businesses signing up, but Starbucks becoming a customer. We had this confusion though. There are SMBs, which you get to through product-led growth or self-service. And then there's enterprise, which you get to through human beings who fly up to company headquarters. Yet we had this magical thing of getting large enterprises to adopt our product without a human being in the loop. And I think we ran away too quickly from that. Then we looked at the numbers and noticed: out of all our customers, the ones that are retained the best are enterprises. So let's go for the enterprises. And let's go hire a big enterprise sales team. But that last leap was too naive. We should have thought more about what would be the best way to get the Fortune 100 companies using our product and I think we could have done that by being true to our core and going after this much larger market. The key learning for me here was really to notice when you have some core magical thing working and double down on it instead of running away. So when is the right time to pursue enterprise clients then? I'd say when you feel market pull. When you have people at an enterprise company who are going past all of the processes to use your product. They're seeking forgiveness, not asking permission, to use your product. When there's a person at that company who feels the pain so viscerally that they've heard about what your product does and they've tried it for themselves. That's when a salesperson from your team can augment and maximize the potential of that relationship. Would love to hear stories from other founders who've experienced something similar!

There's one major thing I wish I did differently at my last company. My biggest failure pattern falls into the camp of: my gut says we should do A, somebody else thinks we should do B, we end up doing B, and it turns out poorly. There are plenty of times where I said we should do A and it turned out poorly, but those aren’t the times that keep me up at night. There are things where, in your gut as a founder, you don't feel they are the right moves or the right focus or the right investment. But you’re persuaded out of listening to yourself by smart people who you've hired that you've decided are gonna help influence the path. So instead, you go with their gut or you go with their decision and it turns out poorly. There are many, many examples of this at Optimizely, from moving to the enterprise too quickly, to not recognizing the core of what we had, to abandoning the core problem of solving churn. There are so many times where I felt in my bones we should do something different, and I didn't even have the words or the argument to defend my position. I think I'm deeply analytical and data-driven, but oftentimes, it's just my intuition. I couldn't verbalize my intuition at the time, so I didn't even feel like I could defend the path we should be on. I just didn't do the job of the CEO those times, which is to be decisive. The biggest mistakes I made were around not following my gut. Fortunately, I've corrected this at Limitless and am lucky to have hired a team of people who come with strong opinions, but are also willing to trust me when my intuition is coming in strong.

First-time founders: push back date night to work on their startup Second-time founders: prioritize ruthlessly so they don’t miss date night I made up for a lack of focus as a first-time founder with sheer hours. I worked every waking hour, basically. Now, with the benefit of hindsight after putting 10 years into my last company, I recognize it was only 3 or 4 things we did that made the difference in the success or failure of the company. At the time I was doing thousands of things and I thought all of them were important; in the moment you can’t tell which are the key things that will meaningfully change the outcome. That ability to focus and remember that “the main thing is to keep the main thing the main thing.” This is a skill where a lot of first-time founders could improve. The second time around, I also have the constraint of having kids which has forced me to really focus on the things that matter because I don’t have nearly as much time as I once had as a first-time founder. Other second-time founders, do you agree?

Hire great people and get out of their way vs. get into the weeds? I made a lot of mistakes in my past around hiring people and then abdicating responsibility to them. You have to be involved enough to hold them accountable, understand details, probe, and push. Something I failed at in my first company was hiring people who were great with decades of experience, and then feeling like how could I, a 20-something founder who's never been the head of GTM at a multibillion dollar public company, give them advice or hold them accountable? I didn't even know that was my job. I just sort of thought, "Get out of their way. Be the kind of founder that gives them ownership and autonomy." And what I really learned is that at the end of the day, as the founder and CEO of the company, you hold the bag. Many of the people who join your company, even if they're great executives, they're just on for a little bit of the ride. They make decisions for the company, and then eventually they end up leaving, and I'm left holding the bag. So if I'm gonna be left holding the bag at the end of this, I'd better be bought in on the things we do! Some of the biggest mistakes we made were when I abdicated my responsibility early. So today I try to really be involved in places I feel like it will have a big impact. I'm not all up in everyone's business. I'm up in the business where I think it has the highest impact on the company. While I try to pick the things I think are highest impact, you only know with hindsight whether those were the right things. This amount of accountability and focus, I think, helps set the example for everyone else. The other managers at our company know that their job is to be deep enough in the details that they can hold people accountable. It's a balance. Curious to hear how others strike this balance?

Lots of folks have asked me about Microsoft Recall so here’s my take!

When asked, “how much are you raising?” be careful how you answer!

First-time founders: brag about how many employees they have Second-time founders: brag about how few employees they have