💲SALARIES IN STARTUPS: Exposing the salary scale, rationale & more — PART 1❗
By now you know/heard/seen that there are startup talents in Egypt who get paid 50, 60, 80 & even north of 100K EGP per month.
But this brings to our minds multiple questions:
a) Do all startups pay these numbers? Can startups sustain this pay for long?
b) Is every talent worth that amount of money?
c) What effects will the inflated salaries and titles have on the career of these talents? (assuming we concluded that it’s inflated)
While preparing to write this article I realized that we need an Egyptian Glassdoor dedicated for the Egyptian market to provide more transparency on culture & salaries in startups. I’m lucky that I have the network of founders and top management people that are genuinely helpful and have provided me with a lot of insights. Still, I do not consider this a study on startup salaries, but rather an overview on its trends in the entrepreneurship ecosystem in Egypt.
I can start with this,
A few extraordinarily successful startups are responsible for the hype and stretched salaries in the startup ecosystem!
So if there are 29 million Egyptians in the market labor force, we’re talking here about less than a 100 companies hiring a few thousand talents, of which very few are making relatively high salaries. Context is important. We are addressing something that is far from being a “general market trend” but rather “a startup world phenomena”, at least for the time being.
So back to our main line of thought,
Which startups are paying which talents what crazy amounts?
1- Which kind & stage is the startup you’re joining at?
“I’m joining a startup, how much should I get paid?”.
My reply will always be “If you’re talking about a lifestyle business, a family business, a social development entity, a new agency, some sort of a service provider….then I HAVE NO CLUE”
All of these are Non-Tech Small & Medium Enterprises and you’re calling them a startup because they literally just started. But this article (& my experience) mainly lies in the “TECHNOLOGY HIGH GROWTH STARTUPS” area. These are ventures with new business models, mostly tech-enabled or tech-centric, very scalable, extremely risky & by nature need huge funds to survive and thrive.
Your second question will probably be: “Let’s assume I’m working in of those tech companies, how much should I get paid?”
My reply will be: “Joining a tech startup at a super early stage by default means a lower salary than your market price but higher equity (stock options).”
BUT THERE’S AN INTERESTING PATTERN HERE!
If you join a startup after they have raised a decent fund from a VC, you can actually get paid much more than your market value.
There is also another common finding: In many cases with these highly funded VC-Backed tech startups you carry multiple responsibilities, which bulks up your resume with tons of experiences and skills, and the moment the startup you work for raises another round of investment they NEED you to stretch yourself for a bigger role, title and therefore can compensate you with a bigger salary.
This is one of the main reasons why you can find a 30 year old sales manager in a multinational making 40K EGP while a 28 year old Head of BD in a tech startup making easily 70K EGP.
Still, I believe we need more data that can help us quantify and visualize the pay discrepancies between startup talents and corporate talents.
In general, there is a common culture in the startup ecosystem globally to find talents taking pride in being employee #5 or employee #20 who joined their startup!
The reason is that a low employee number means:
“I helped build this venture from scratch, I helped make it grow that fast, I was part of raising that crazy amount of money and consequently my market price in terms of salary & equity are high in case you want to hire me.”
But wait there’s more,
Joining a startup after they became a VC-backed venture can even sometimes make you earn more than the founders themselves if you’re really experienced and have a track record in your domain!
According to Dustin Moskovitz (Facebook Co-founder & Asana Co-Founder):
“ The 100th employee at Facebook and dropbox both make more from salaries than the founders of billion-dollar companies. Arguably it’s easier to be the 100th employee of an amazingly awesome company than it is to be the founder of a good company, so even though the average startup might be worse than the average large company, if you work for the best startup you will earn more better than if you work in the best large corporate.”
I have heard this from multiple founders, a founder who raised series-A might get paid so much better than a corporate senior manager but one of the top employees in this startup might be even getting higher than both of them, up to a 6-digit amount equivalent to a corporate director!
You might ask me, HOW CAN WE FIND THESE pre-Series A / seed-funded / very-early-stage startups to join them and build with them the company and our career?
Well, that’s a topic for another article. (Tell me in the comments if you want me to write about it!)
Before we move to another point, I need to add a few disclaimers:
- There are experts working in VCs whose full-time jobs are choosing which startups to invest in, but even them a lot of the time they fail at betting on the right companies. This means that it isn’t easy to assume you can be the one who spots the next Facebook and work for it at a very early stage becoming employee #50.
- You might work for an early startup for a lower salary, waiting for the moment they raise funds and you get a better one; but the reality is very few startups survive and many never grow to beyond 50 employees. This means that there might be way fewer opportunities for career advancement and higher rises in these cases.
- In general, if you join super early in the life of a startup, it’s not a game of salary or benefits, it’s a game of equity.
A good rule of thumb, though, is this: The earlier a stage the company is in, the lower the salary and employee benefits will be, but the higher the startup equity will be. As the company matures, the scales start to move in the other direction.
Check my last article on stock options in startups: shorturl.at/dzNU9
2- Which talents are worth that amount of money?
There are many assumptions here. Many talents think that because they will bear more risk by working in a startup they should get paid more. This same risk that will lead the founders to eventually cash out real wealth from exiting their company should mean that their employees also must have a piece of the pie in terms of stock options and salaries. High Risk High Return To All!
But this is just one perspective.
Thing is, startups are like any other company out there in the sense that they will pay what they can for the talent they need. Once they have proper money in the bank from the funds they raised, they need to get their growth targets AT ANY COST. Even if it means hiring some talents at 1.5x and 2x their salaries IF THEY’RE GOING TO DELIVER!
The only math most founders are doing at this point is how much time they have before the cash runway ends and how they can reach their growth targets committed to investors before that happens.
Let’s look at some talents in the startup ecosystem today who might be getting paid really well:
- Top talents who have a track record with a high growth startup in Egypt
- High in Demand Tech Career Talents (Any years of experience)
- Experts in startups working abroad (Egyptians in GCC or Europe or USA)
After raising a round of investments in millions of dollars, startups are willing to prioritize paying those who will help them get to the next round successfully. Here are some of the conversations that happen around the above talents in closed rooms between founders, HR teams and sometimes even investors.
A) Top talents who have a track record with a high growth startup in Egypt
“Let’s get the best growth manager in town. What! They work for another high growth tech startup? What’s their current package? 50K EGP? Offer them 70K EGP and get them tomorrow.”
These are some of the most highly paid talents in the ecosystem because “they did it before” in another high growth startup, might be a bit bored of what they do and need a new challenge with a bigger pay cheque. Some of these talents are managers and heads making between 60K & 100K EGP monthly today.
B) High in Demand Tech Career Talents (Any years of experience)
“Our investors need a proper data room to look at our growth. We need to start hiring a strong data team. We don’t have a lot of those in the market? Find someone who has a foundation and let’s work on them!”
The supply is really low for Developers, Data scientists & analysts, UX/UI designers, Product Managers and other tech roles; and the demand is really high. I’m never surprised to hear product managers jumping from big telecom companies earning 25K EGP there and suddenly making 40–50K EGP in a funded startup. I’m even less surprised to find talents with 1–2 years of experience only making 20–35K while their peers with the same number of years might be still getting paid 10–15K!
C) Experts in startups working abroad (Egyptians in GCC or Europe or USA)
“There aren’t a lot of startups in Egypt who reached the heights we’re aiming for, so where can we find talents who have extensive experience? We need to hire someone who tells us what to do in certain domains and verticals! There are 2 talents in Egypt who have what it takes but there’s no way we can hire them. Let’s look at Egyptians who want to come back. Check the top startups in hubs like Dubai, Dublin, Berlin, Silicon Valley, etc. Allow them to work remotely if they want but let’s hire them tomorrow!”
I don’t think I need to explain what price tags are on some of these talents. Do the math.
In part 2 of this article, I will try to cover:
- What happens to the careers of talents who join startups? Do they overall get paid more than corporates or not?
- Should you settle for a discounted salary in the beginning of your journey in an early stage startup?
- Tips on knowing what salary you should go for in a startup!
