Saturday 28 February 2015







I’ve never raised investment before, but from speaking to a handful of friends and my accountant I’m confident that the progress of my business means that it is ready for venture capital funding and I’m keen to accelerate growth. Without revealing too much about the business, it is in its third year, has a turnover of £2.3m and profits of £600,000. My long-term plan is to roll it out region by region with satellite offices, as most of our clients are in the South East right now. What would you advise me to do with respect to making the business attractive to investors?

A. Alastair Mitchell writes:
It’s becoming increasingly difficult to raise venture capital (VC) in the UK. Despite the government’s best efforts to improve it, the environment remains tough and there is a lot of competition from companies all looking to secure funding for growth. The challenge is to get your company noticed above all this noise. If you can convince a number of high-profile people that what you are doing is a great idea – and you have the courage to get out there and talk about it – your credibility will increase. One of the best tips I can give you is to attend as many networking events as you can. They are great for meeting with venture capitalists (VCs) and also provide an excellent opportunity to meet with other entrepreneurs.   Entrepreneurship is like an addiction and many people will have been through the mill a few times and have a great contacts book of investors. Talk to them about your business and mention that you’re looking for funding. There’s every chance that they will know someone who might be interested. In keeping with my networking advice, ensure that you use Linkedin to stay in touch with contacts. You can then work out who can connect you to any interesting VCs and ask them for a personal introduction by email. Another tip is never, ever pay to pitch for funding because great VCs don’t attend the kind of events that encourage this practice. When meeting VCs, ensure that you know your metrics inside out – customer acquisition cost, churn and lifetime value. And make sure you have solid justifications for any projections. In addition, remember that you are interviewing the VC just as much as they are interviewing you. You will have to work with this person and company for three to five years, so be certain that your ambitions are aligned with theirs. Good luck!




By Marc Shoffman for The MailOnline
culled from:http://www.thisismoney.co.uk
I want to make sure my investments are protected and I know that £50,000 of money invested with each investing platform or fund house is covered by the Financial Services Compensation Scheme. But how can I protect amounts above this limit?
Protected: The Financial Services Compensation Scheme protects up to £50,000 of investments and £85,000 of cash deposits
Protected: The Financial Services Compensation Scheme protects up to £50,000 of investments and £85,000 of cash deposits

Mark Polson, of platform research business the lang cat, replies: Investments are 'insured’ or protected by the Financial Services Compensation Scheme.
The exact arrangements are complex, but broadly speaking the first £85,000 of any cash deposits in a savings account with a bank or building society are covered if it goes bust.
You only receive this £85,000 coverage once under each bank or building society's 'compensation licence', it is doubled to £170,000 for joint accounts. You can ask for information on how you are covered by the FSCS from your bank and get a full explanation of savings compensation here.
Under a separate part of the scheme you also get compensation cover for the first £50,000 of any investments. Remember this is not cover against you losing money if investments go down, ie your fund dips in value, it covers you against losses if the investment provider or platform goes bust.
This covers the companies who are holding investments on your behalf; it doesn’t mean that if a firm you buy shares in goes bust you get your money back.
 
I’ve looked but can find no-one willing to offer this kind of insurance. In its absence and if you are concerned then you may wish to consider spreading investments around and holding no more than £50,000 with any one fund house or custodian.
Most fund houses and platforms will appoint another company known as a custodian to look after your money.
And that is important – a bit like different banking brands, sometimes behind the scenes different investment brands use the same custodian to hold your investments. 
Broadly speaking, if your investment platform or provider gets into difficulties, you may face delays and frustration, but your money should be safe as it is held separate from the assets of the company itself.
A custodian provides this service; these are normally very large, highly regulated and financially stable organisations such as Bank of New York Mellon, Citibank and Deutsche Bank.
For your money to disappear, it is the custodian who would need to fail rather than the business through which you transact investments.
So if the fund house, platform or custodian goes bust, you are covered by FSCS up to £50,000.
So in that situation, let’s say you are with Platform Z, which uses custodian X, and you’ve asked them to buy Fund Y from Fund Manager W.
If Fund Manager W goes bust you have FSCS cover to £50,000. Same for the custodian and for the platform. What you do not have is protection against Fund Y falling in value.




Image result for Recruiting? Publish Your Salary Range, Already!
Contributor
culled from:http://www.forbes.com
I don’t understand why every employer doesn’t list its hiring salary range in every single job ad. What are they trying to save, a few thousand dollars? Put the salary level in the job ad already! A job ad is the first way a lot of people encounter the organizations they end up working for.
They want to know how you roll and what you’re made of. When you keep your hiring salary range a secret, you fall thirty stories in a job-seeker’s estimation, because the salary is of course one of the most important elements of the job. Everybody wants to know what they’re going to be paid. It’s one way people decide which jobs to apply for and which to leave alone.
Are you going to cheap out and say, “No, we’ll let hundreds of people apply for the job who would not have done that if they knew the salary range! That way we play our cards close to the vest. We keep all our options open. We can decide on the job offer at the last minute. Maybe we’ll get lucky and we won’t have to pay too much.”?
That thought process is unethical, and it’s not good business either.
In this universe there is no control — only the illusion of control. You can say “We’ll keep our salary range a secret, and keep our options open” in case somebody walks in who’s perfect for the job and out of touch with current salary levels. Maybe it’s that, or maybe the perfect candidate’s compensation level is artificially depressed right now. There are lot of reasons that can happen.
So the job should really pay about sixty thousand dollars a year but the perfect candidate, George, doesn’t really know what these kinds of jobs pay. You make George an offer for fifty thousand bucks and he accepts. Are you going to high-five about that coup? If you do, you are seriously confused about physics, because as dear Isaac Newton reminded us, for every action there is an equal and opposite reaction.
George sitting at his desk paid ten grand under the market is a risk factor for your business.  I have watched the scene play out countless times. Smart Manager thinks he or she can outwit Gullible Perfect Candidate and lobs in a lowball offer.





culled from:wordpress.com
What I’m about to say is true now, as of July 2012. It wasn’t necessarily true 15 years ago, and it may not be true next year. Right now, for most people, it’s utterly correct– enough that I feel compelled to say it. The current VC-funded startup scene, which I’ve affectionately started calling “VC-istan”, is– not to be soft with it– a total waste of time for most of the people involved.
Startups. For all the glamour and “sexiness” associated with the concept, the truth is that startups are no more and no less than what they sound like: new, growing businesses. There are a variety of good and bad reasons to join or start businesses, but for most of human history, it wasn’t viewed as a “sexy” process. Getting incorporated, setting up a payroll system, and hiring accountants are just not inspiring duties for most people. They’re mundane tasks that people are more than willing to do in pursuit of an important goal, but starting a business has not typically been considered to be  inherently “sexy”. What changed, after about 1996, is that people started seeing “startups” as an end in themselves. Rather than an awkward growth phase for an emerging, risky business, “startup” became a lifestyle. This was all fine because, for decades, positions at established businesses were systemically overvalued by young talent, and those at growing small companies were undervalued. It made economic sense for ambitious young people to brave the risk of a startup company. Thus, the savviest talent gravitated toward the startups, where they had access to responsibilities and career options that they’d have to wait for years to get in a more traditional setting.
Now, the reverse seems to be true. In 1995, a lot of talented young people went into large corporations because they saw no other option in the private sector– when, in fact, there were credible alternatives, startups being a great option. In 2012, a lot of young talent is going into startups for the same reason: a belief that it’s the only legitimate work opportunity for top talent, and that their careers are likely to stagnate if they work in more established businesses. They’re wrong, I think, and this mistaken belief allows them to be taken advantage of. The typical equity offer for a software engineer is dismally short of what he’s giving up in terms of reduced salary, and the career path offered by startups is not always what it’s made out to be.
For all this, I don’t intend to argue that people shouldn’t join startups. If the offer’s good, and the job looks interesting, it’s worth trying out. I just don’t think that the current, unconditional “startups are awesome!” mentality serves us well. It’s not good for any of us, because there’s no tyrant worse than a peer selling himself short, and right now there are a lot of great people selling themselves very short for a shot at the “startup experience”– whatever that is.
Here are 7 misconceptions about startups that I’d like to dispel.
1. A startup will make you rich. True, for founders, whose equity shares are measured in points. Not true for most employees, who are offered dimes or pennies.
Most equity offerings for engineers are, quite frankly, tiny. A “nickel” (0.05 percent) of an 80-person business is nothing to write home about. It’s not partnership or ownership. Most engineers have the mistaken belief that the initial offering is only a teaser, and that it will be improved once they “prove themselves”, but it’s pretty rare that this actually happens.
Moreover, raises and bonuses are very uncommon in startups. It’s typical for high performers to be making the same salary after 3 years as they earned when they started. (What happens to low performers, and to high performers who fail politically? They get fired, often with no warning or severance.) Substantial equity improvements are even rarer. When things are going well in a startup, the valuation of the equity package is increasing and that is the raise. When things are going badly, that’s the wrong time to be asking for anything.
There are exceptions. One is that, if the company finds itself in very tough straits and can’t afford to pay salaries at all, it will usually grant more equity to employees in order to make up for the direct economic hardship it’s causing them by not being able to pay a salary. This isn’t a good situation, because the equity is usually offered at-valuation (more specifically, at the valuation of the last funding round, when the company was probably in better shape) and typically employees would be better off with the cash. Another is that it’s not atypical for a company to “refresh” or lengthen a vesting period with a proportionate increase. A 0.1% grant, vesting over four years, can be viewed as compensation at 0.025% per year. It’s not atypical for a company to continue that same rate in the years after that. That means that a person spending six years might get up to 0.15%. What is atypical is for an employee brought in with 0.1% to be raised to 1% because of good performance. The only time that happens is when there’s a promotion involved, and internal promotions (more on this, later) are surprisingly rare in startups.
2. The “actual” valuation is several times the official one. This is a common line, repeated both by companies in recruiting and by engineers justifying their decision to work for a startup. (“My total comp. is actually $250,000 because the startup really should be worth $5 billion.) People love to think they’re smarter than markets. Usually, they aren’t. Moreover, the few who are capable of being smarter than markets are not taking (or trying to convince others to take) junior-level positions where the equity allotment is 0.05% of an unproven business. People who’ve legitimately developed that skill (of reliably outguessing markets) deal at a much higher level than that.
So, when someone says, “the actual valuation should be… “, it’s reasonable to conclude with high probability that this person doesn’t know what the fuck he or she is talking about.
In fact, an engineer’s individual valuation should, by rights, be substantially lower than the valuation at which the round of funding is made. When a VC offers $10 million for 20% of a business, the firm is stating that it believes the company (pre-money) is worth $40 million to them. Now, startup equity is always worth strictly more (and by a substantial amount) to a VC than it is worth to an engineer. So the fair economic value (for an engineer) of a 0.1% slice is probably not $40,000. It might be $10-20,000.
There are several reasons for this disparity of value. First, the VC’s stake gives them control. It gives them board seats, influence over senior management, and the opportunity to hand out a few executive positions to their children or to people whom they owe favors. An engineer’s 0.1% slice, vesting over four years, doesn’t give him any control, respect, or prestige. It’s a lottery ticket, not a vote. Second, startup equity is a high-risk asset, and VCs have a different risk profile from average people. An average person would rather have a guarantee of $2 million than a 50% chance of earning $5 million, even though the expected value of the latter offer is higher. VCs, in general, wouldn’t, because they’re diversified enough to take the higher-expectancy, riskier choices. Third, the engineer has no protection against dilution, and will be on the losing side of any preference structure that the investors have set up (and startups rarely volunteer information pertaining to what preferences exist against common stock, which is what the engineers will have). Fourth, venture capitalists who invest in highly successful businesses get prestige and huge returns on investment, whereas mere employees might get a moderate-sized windfall, but little prestige unless they achieved an executive position. Otherwise, they just worked there.
In truth, startup employees should value equity and options at about one-fourth the valuation that VCs will give it. If they’re giving up $25,000 per year in salary, they should only do so in exchange for $100,000 per year (at current valuation) in equity. Out of a $40-million company with a four-year vesting cycle, that means they should ask for 1%.
3. If you join a startup early, you’re a shoe-in for executive positions. Nope.
Points #1-2 aren’t going to surprise many people. Most software engineers know enough math to know that they won’t get filthy rich on their equity grants, but join startups under the belief that coming into the company early will guarantee a VP-level position at the company (at which point compensation will improve) once it’s big. Not so. In fact, one of the best ways not to get a leadership position in a startup is to be there early.
Startups often involve, for engineers, very long hours, rapidly changing requirements, and tight deadlines, which means the quality of the code they write is generally very poor in comparison to what they’d be able to produce in saner conditions. It’s not that they’re bad at their jobs, but that it’s almost impossible to produce quality software under those kinds of deadlines. So code rots quickly in a typical startup environment, especially if requirements and deadlines are being set by a non-technical manager. Three years and 50 employees later, what they’ve built is now a horrific, ad-hoc, legacy system hacked by at least ten people and built under intense deadline pressure, and even the original architects don’t understand it. It may have been a heroic effort to build such a powerful system in so little time, but from an outside perspective, it becomes an embarrassment. It doesn’t make the case for a high-level position.
Those engineers should, by rights, get credit and respect for having built the system in the first place. For all its flaws, if the system works, then the company owes no small part of its success to them. Sadly, though, the “What have you done for me lately?” impulse is strong, and these engineers are typically associated with how their namesake projects end (as deadline-built legacy monstrosities) rather than what it took to produce them.
Moreover, the truth about most VC-funded startups is that they aren’t technically deep, so it seems to most people that it’s marketing rather than technical strength that determines which companies get off the ground and which don’t. The result of this is that the engineer’s job isn’t to build great infrastructure that will last 10 years… because if the company fails on the marketing front, there will be no “in 10 years”. The engineer’s job is to crank out features quickly, and keep the house of cards from falling down long enough to make the next milestone. If this means that he loads up on “technical debt”, that’s what he does.
If the company succeeds, it’s the marketers, executives, and biz-dev people who get most of the glory. The engineers? Well, they did their jobs, but they built that disliked legacy system that “just barely works” and “can’t scale”. Once the company is rich and the social-climbing mentality (of always wanting “better” people) sets in, the programmers will be replaced with more experienced engineers brought in to “scale our infrastructure”. Those new hires will do a better job, not because they’re superior, but because the requirements are better defined and they aren’t working under tight deadline pressure. When they take what the old-timers did and do it properly, with the benefit of learning from history, it looks like they’re simply superior, and managerial blessing shifts to “the new crowd”. The old engineers probably won’t be fired, but they’ll be sidelined, and more and more people will be hired above them.
Furthermore, startups are always short on cash and they rarely have the money to pay for the people they really want, so when they’re negotiating with these people in trying to hire them, they usually offer leadership roles instead. When they go into the scaling phase, they’re typically offering $100,000 to $150,000 per year for an engineer– but trying to hire people who would earn $150,000 to $200,000 at Google or on Wall Street. In order to make their deals palatable, they offer leadership roles, important titles and “freedom from legacy” (which means the political pull to scorched-earth existing infrastructure if they dislike it or it gets in their way) to make up for the difference. If new hires are being offered leadership positions, this leaves few for the old-timers. The end result of this is that the leadership positions that early engineers expect to receive are actually going to be offered away to future hires.
Frankly put, being a J.A.P. (“Just A Programmer”) in a startup is usually a shitty deal. Unless the company makes unusual cultural efforts to respect engineering talent (as Google and Facebook have) it will devolve into the sort of place where people doing hard things (i.e. software engineers) get the blame and the people who are good at marketing themselves advance.
4. In startups, there’s no boss. This one’s patently absurd, but often repeated. Those who champion startups often say that one who goes and “works for a company” ends up slaving away for “a boss” or “working for The Man”, whereas startups are a path to autonomy and financial freedom.
The truth is that almost everyone has a boss, even in startups. CEOs have the board, the VPs and C*Os have the CEO, and the rest have actual, you know, managers. That’s not always a bad thing. A competent manager can do a lot for a person’s career that he wouldn’t realistically be able to do on his own. Still, the idea that joining a startup means not having a boss is just nonsense.
Actually, I think founders often have the worst kind of “boss” in venture capitalists. To explain this, it’s important to note that the U.S. actually has a fairly low “power distance” in professional workplaces– this is not true in all cultures– by which I mean bosses aren’t typically treated as intrinsic social superiors to their direct reports. Yes, they have more power and higher salaries, but they’re also older and typically have been there for longer. A boss who openly treats his reports with contempt, as if he were innately superior, isn’t going to last for very long. Also, difficult bosses can be escaped: take another job. And the most adverse thing they can (legally) do is fire someone, which has the same effect. Beyond that, bosses can’t legally have a long-term negative effect on someone’s career.
With VCs, the power distance is much greater and the sense of social superiority is much stronger. For example, when a company receives funding it is expected to pay both parties’ legal fees. This is only a minor expenditure in most cases, but it exists to send a strong social message: you’re not our kind, dear, and this is what you’ll deal with in order to have the privilege of speaking with us at all. 
This is made worse by the incestuous nature of venture capital, which leads to the worst case of groupthink ever observed in a supposedly progressive, intelligent community. VCs like a startup if other VCs like it. The most well-regarded VCs all know each other, they all talk to each other, and rather than competing for the best deals, they collude. This leaves the venture capitalists holding all the cards. A person who turns down a term sheet with multiple liquidation preferences and participating preferred (disgusting terms that I won’t get into because they border on violence, and I’d prefer this post to be work-safe) is unlikely to get another one.
A manager who presents a prospective employee with a lowball offer and says, “If you don’t take this, I’ll make a phone call and no one in the industry will hire you” is breaking the law. That’s extortion. In venture capital? They don’t have to say this. It’s unspoken that if you turn down a terrible term sheet with a 5x liquidation preference, you’re taking a serious risk that a phone call will be made and that supposedly unrelated interest will dry up as well. That’s why VCs can get away with multiple liquidation preferences and participating preferred.
People who really don’t want to have “a boss” should not be looking into VC-funded startups. There are great, ethical venture capitalists who wouldn’t go within a million miles of the extortive shenanigans I’ve described above. It’s probably true that most are. Even still, the power relationship between a founder and investor is far more lopsided than that between a typical employee and manager. No manager can legally disrupt an employee’s career outside of one firm; but venture capitalists can (and sometimes do) block people from being fundable.
Instead, those who really want not to have a boss should be thinking about smaller “lifestyle” businesses in which they’ll maintain a controlling interest. VC has absolutely no interest in funding these sorts of companies, so this is going to require angel investment or personal savings, but for those who really want that autonomy, I think this is the best way to go.
For all this, what I’ve said here about the relationship between founders and VCs isn’t applicable to typical engineers. An engineer joining a startup of larger than about 20 people will have a manager, in practice if not in reality. That’s not a bad thing. It’s no worse or better than it would be in any other company. It does make the “no boss” vs. “working for The Man” selling point of startups a bit absurd, though.
5. Engineers at startups will be “changing the world”. With some exceptions, startups are generally not vehicles for world-changing visions. Startups need to think about earning revenue within the existing world, not “changing humanity as we know it”.
“The vision thing” is an aspect of the pitch that is used to convince 22-year-old engineers to work for 65 percent of what they’d earn at a more established company, plus some laughable token equity offering. It’s not real.
The problem with changing the world is that the world doesn’t really want to change, and to the extent that it it’s willing to do so, few people who have the resources necessary to push for improvements. What fundamental change does occur is usually gradual– not revolutionary– and requires too much cooperation to be forced through by a single agent.
Scientific research changes the world. Large-scale infrastructure projects change the world. Most businesses, on the other hand, are incremental projects, and there’s nothing wrong with that. Startups are not a good vehicle for “changing the world”. What they are excellent at is finding ways to profit from inexorable, pre-existing trends by doing things that (a) have recently become possible, but that (b) no one had thought of doing (or been able to do) before. By doing so, they often improve the world incrementally: they wouldn’t survive if they didn’t provide value to someone. In other words, most of them are application-level concepts that fill out an existing world-changing trend (like the Internet) but not primary drivers. That’s fine, but people should understand that their chances of individually effecting global change, even at a startup, are very small.
6. If you work at a startup, you can be a founder next time around. What I’ve said so far is that it’s usually a shitty deal to be an employee at a startup: you’re taking high risk and low compensation for a job that (probably) won’t make you rich, lead to an executive position, bring great autonomy, or change the world. So what about being a founder? It’s a much better deal. Founders can get rich, and they will make important connections that will set up their careers. So why aren’t more people becoming founders of VC-funded startups? Well, they can’t. Venture capital acceptance rates are well below 1 percent.
The deferred dream is probably the oldest pitch in the book, so this one deserves address. A common pitch delivered to prospective employees in VC-istan is that “this position will set you up to be a founder (or executive) at your next startup”. Frankly, that’s just not true. The only thing that a job can offer that will set a person up with the access necessary to be a founder in the future is investor contact, and a software engineer who insists on investor contact when joining an already-funded startup is going to be laughed out the door as a “prima donna”.
A non-executive position without investor contact at a startup provides no more of the access that a founder will need than any other office job. People who really want to become startup founders are better off working in finance (with an aim at venture capital) or pursuing MBA programs than taking subordinate positions at startups.
7. You’ll learn more in a startup. This last one can be true; I disagree with the contention that it’s always true. Companies tend to regress to the mean as they get bigger, so the outliers on both sides are startups. And there are things that can be learned in the best small companies when they are small that can’t be learned anywhere else. In other words, there are learning opportunities that are very hard to come by outside of a startup.
What’s wrong here is the idea that startup jobs inherently more educational simply because they exist at startups. There’s genuinely interesting work going on at startups, but there’s also a hell of a lot of grunt work, just like anywhere else. On the whole, I think startups invest less in career development than more established companies. Established companies have had great people leave after 5 years, so they’ve had more than enough time to “get it” on the matter of their best people wanting more challenges. Startups are generally too busy fighting fires, marketing themselves, and expanding to have time to worry about whether their employees are learning.
So… where to go from here?
I am not trying to impart the message that people should not work for startups. Some startups are great companies. Some pay well and offer career advancement opportunities that are unparalleled. Some have really great ideas and, if they can execute, actually will make early employees rich or change the world. People should take jobs at startups, if they’re getting good deals.
Experience has led me to conclude that there isn’t much of a difference in mean quality between large and small companies, but there is a lot more variation in the small ones, for rather obvious reasons. The best and worst companies tend to be startups. The worst ones don’t usually live long enough to become big companies, so there’s a survivorship bias that leads us to think of startups as innately superior. It’s not the case.
As I said, the worst tyrant in a marketplace is a peer selling himself short. Those who take terrible deals aren’t just doing themselves a disservice to themselves, but to all the rest of us as well. The reason young engineers are being offered subordinate J.A.P. jobs with 0.03% equity and poorly-defined career tracks is because there are others who are unwise enough to take them.
In 2012, is there “a bubble” in internet startups? Yes and no. In terms of valuations, I don’t think there’s a bubble. Or, at least, it’s not obvious to me that one exists. I think it’s rare that a person who’s relatively uninformed (such as myself, when it comes to pricing technology companies) can outguess a market, and I see no evidence that the valuations assigned to these companies are unreasonable. Where there is undeniably a bubble is in the extremely high value that young talent is ascribing to subordinate positions at mediocre startups.
So what is a fair deal, and how does a person get one? I’ll give some very basic guidelines.
1. If you’re taking substantial financial risk to work at the company, you’re a Founder. Expect to be treated like one. By “substantial financial risk”, I mean earning less  than (a) the baseline cost-of-living in one’s area or (b) 75% of one’s market compensation.
If you’re taking that kind of risk, you’re an investor and you better be seen as a partner. It means you should demand the autonomy and respect given to a founder. It means not to take the job unless there’s investor contact. It means you have a right to know the entire capitalization structure (an inappropriate question for an employee, but a reasonable one for a founder) and determine if it’s fair, in the context of a four-year vesting period. (If the first technical hire gets 1% for doing all the work and the CEO gets 99% because he has the connections, that’s not fair. If the first technical hire gets 1% while the CEO gets 5% and the other 94% has been set aside for employees and investors, and the CEO has been going without salary for a year already, well, that’s much more fair.) It means you should have the right to represent yourself to the public as a Founder.
2. If you have at least 5 years of programming experience and the company isn’t thoroughly “de-risked”, get a VP-level title. An early technical hire is going to be spending most of his time programming– not managing or sitting in meetings or talking with the press as an “executive” would. Most of us (myself included) would consider that arrangement, of getting to program full-time at high productivity, quite desirable. This might make it seem like “official” job titles (except for CEO) don’t matter and that they aren’t worth negotiating for. Wrong.
Titles don’t mean much when 4 people at the company. Not in the least. So get that VP-level title locked-in now, before it’s valuable and much harder to get. Once there are more than about 25 people, titles start to have real value and for a programmer to ask for a VP title might seem like an unreasonable demand.
People may claim that titles are old-fashioned and useless and elitist, and they often have strong points behind their claims. Still, people in organizations place a high value on institutional consistency (meaning that there’s additional cognitive load for them to contradict the company’s “official” statements, through titles, about the status of its people) and the high status, however superficial and meaningless, conferred by an impressive title can easily become self-perpetuating. As the company becomes larger and more opaque, the benefit conferred by the title increases.
Another benefit of having a VP-level title is the implicit value inherent of being VP of something. It means that one will be interpreted as representing some critical component of the company. It also makes it embarrassing to the top executives and the company if this person isn’t well treated. For an example, let’s take “VP of Culture”. Doesn’t it sound like a total bullshit title? In a small company, it probably is. So meaningless, in fact, that most CEOs would be happy to give it away. “You want to be ‘VP of Culture’, but you’ll be doing the same work for the same salary? By all means.”  Yet what does it mean if a CEO berates the VP of Culture? That culture isn’t very important at this company. What about if the VP of Culture is pressured to resign or fired? From a public view, the company just “lost” its VP of Culture. That’s far more indicative than if a “J.A.P.” engineer leaves.
More relevantly, a VP title puts an implicit limit on the number of people who can be hired above a person, because most companies don’t want the image of having 50 of their 70 people being “VP” or “SVP”. It dilutes the title, and makes the company look bloated (except in finance, where “VP” is understood to represent a middling and usually not executive level.) If you’re J.A.P., the company is free to hire scads of people above you. If you’re a VP, anyone hired above you has to be at least a VP, if not an SVP, and companies tend to be conservative with those titles once they start to actually matter.
The short story to this is that, yes, titles are important and you should get one if the company’s young and not yet de-risked. People will say that titles don’t mean anything, and that “leadership is action, not position”, and there’s some truth in that, but you want the title nonetheless. Get it early when it doesn’t matter, because someday it will. And if you’re a competent mid-career (5+ years) software engineer and the company’s still establishing itself, then having some VP-level title is a perfectly reasonable term to negotiate.
3. Value your equity or options at one-fourth of the at-valuation level.  This has been discussed above. Because this very risky asset is worth much more to diversified, rich investors than it is to an employee, it should be discounted by a factor of 3-4. This means that it’s only worth it to take a job at $25,000 below market in exchange for $100,000 per year in equity or options (at valuation).
Also worth keeping in mind is that raises and bonuses are uncommon in startups, and that working at a startup can have an affect on one’s salary trajectory. Realistically, a person should assess a startup offer in the light of what he expects to earn over the next 3 to 5 years, not what he can command now.
4. If there’s deferred cash involved, get terms nailed down. This one doesn’t apply to most startups, because it’s an uncommon arrangement after a company is funded for it to be paying deferred cash. Usually, established startups pay a mix of salary and equity.
If deferred cash is involved in the package, it’s important to get a precise agreement on when this payment becomes due. Deferred cash is, in truth, zero-interest debt of the company to the employee. Left to its own devices, no rationally acting company would ever repay a zero-interest loan. So this is important to get figured out. What events make deferred cash due? (Startups never have “enough” money, so “when we have enough” is not valid.) What percentage of a VC-funding round is dedicated to pay off this debt? What about customer revenue? It’s important to get a real contract to figure this out; otherwise, the deferred payment is just a promise, and sadly those aren’t always worth much.
The most important matter to address when it comes to deferred cash is termination, because being owed money by a company one has left (or been fired from) is a mess. No one ever expects to be fired, but good people get fired all the time. In fact, there’s more risk of this in a small company, where transfers tend to be impossible on account of the firm’s small size, and where politics and personality cults can be a lot more unruly than they are in established companies.
Moreover, severance payments are extremely uncommon in startups. Startups don’t fear termination lawsuits, because those take years and startups assume they will either be (a) dead, or (b) very rich by the time any such suit would end– and either way, it doesn’t much matter to them. Being fired in established companies usually involves a notice (“improvement plan”) period (in which anyone intelligent will line up another job) or severance, or both, because established companies really don’t want to deal with termination lawsuits. In startups, people who are fired usually get neither notice nor severance.
People tend to think that the risk of startups is limited to the threat of them going out of business, but the truth is that they also tend to fire a lot more people, and often with less justification for doing so. This isn’t always a bad thing (firing too few people can be just as corrosive as firing too many) but it is a risk people need to be aware of.
I wouldn’t suggest asking for a contractual severance arrangement in negotiation with a startup; that request will almost certainly be denied (and might be taken as cause to rescind the offer). However, if there’s deferred cash involved, I would ask for a contractual agreement, if there is deferred cash, that it becomes due immediately on event of involuntary termination. Day-of, full amount, with the last paycheck.
5. Until the company’s well established (e.g. IPO) don’t accept a “cliff” without a deferred-cash arrangement in event of involuntary termination. The “cliff” is a standard arrangement in VC-funded startups whereby no vesting occurs if the employee leaves or is fired in the first year. The problem with the cliff is that it creates a perverse incentive for the company to fire people before they can collect any equity.
Address the cliff as follows. If employee is involuntarily terminated, and the cliff is enforced, whatever equity would have vested is converted (at most recent valuation) to cash and due upon date of termination.
This is a non-conventional term, and many startups will flat-out refuse it. Fine. Don’t work for them. This is important; the last thing you want is for the company to have an incentive to fire you because of a badly-structured compensation package.
6. Keep moving your career forward. Just being “at a startup” is not enough. The most credible appeal of working at a startup is the opportunity to learn a lot, and one can, it’s not a guarantee. Startups tend to be more “self-serve” in terms of career development. People who go out of their way to explore and use new technologies and approaches to problems will learn a lot. People who let themselves get stuck with the bulk of the junior-level grunt work won’t.
I think it’s useful to explicitly negotiate project allocation after the first year– once the “cliff” period is over. Raises being rare at startups, the gap between an employee’s market value and actual compensation is only growing as time goes by. When the request for a raise is denied is a good time to bring up the fact that you really would like to be working on that neat machine learning project or that you’re really interested in trying out a new approach to a problem the company faces.
7. If blocked on the above, then leave. The above are reasonable demands, but they’re going to meet some refusal because there’s no shortage of young talent that is right now willing to take very unreasonable terms for the chance to work “at a startup”. So expect some percentage of these negotiations to end in denial, even to the point of rescinded job offers. For example, some startup CEOs will balk at the idea that a “mere” programmer, even if he’s the first technical hire, wants investor contact. Well, that’s a sign that he sees you as “J.A.P.” Run, don’t walk, away from him.
People tend to find negotiation to be unpleasant or even dishonorable, but everyone in business negotiates. It’s important. Negotiations are indicative, because in business politeness means little, and so only when you are negotiating with someone do you have a firm sense of how he really sees you. The CEO may pay you a million compliments and make a thousand promises about your bright future in the company, but if he’s not willing to negotiate a good deal, then he really doesn’t see you as amounting to much. So leave, instead of spending a year or two in a go-nowhere startup job.
In the light of this post’s alarmingly high word count, I think I’ll call it here. If the number of special cases and exceptions indicates a lack of a clear message, it’s because there are some startup jobs worth taking, and the last thing I want to do is categorically state that they’re all a waste of time. Don’t get me wrong, because I think most of VC-istan (especially in the so-called “social media” space) is a pointless waste of talent and energy, but there are gems out there waiting to be discovered. Probably. And if no one worked at startups, no one could found startups and there’d be no new companies, and that would suck for everyone. I guess the real message is: take good offers and work good jobs (which seems obvious to the point of uselessness) and the difficulty (as observed in the obscene length of this post) is in determining what’s “good”. That is what I, with my experience and observations, have attempted to do.



Image result for Advice and How-Tos Why You Can’t Get A Job … Recruiting Explained By the Numbers
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culled from:http://www.ere.net
Is your “six seconds of fame” enough to land you a job?
As a professor and a corporate recruiting strategist, I can tell you that very few applicants truly understand the corporate recruiting process. Most people looking for a job approach it with little factual knowledge. That is a huge mistake. A superior approach is to instead analyze it carefully, because data can help you understand why so many applicants simply can’t land a job. If you can bear with me for a few quick minutes, I can show you using numbers where the job-search “roadblocks” are and how that data-supported insight can help you easily double your chances of landing an interview and a job.

Your Resume Will Face a Lot of Competition

Although it varies with the company and the job, on average 250 resumes are received for each corporate job opening. Finding a position opening late can’t help your chances because the first resume is received within 200 seconds after a position is posted. If you post your resume online on a major job site like Monster so that a recruiter can find it, you are facing stiff competition because 427,000 other resumes are posted on Monster alone each and every week (BeHiring).

Understanding the Hiring “Funnel” can Help You Gauge Your Chances

In recruiting, we have what is known as a “hiring funnel” or yield model for every job which helps recruiting leaders understand how many total applications they need to generate in order to get a single hire. As an applicant, this funnel reveals your chances of success at each step of the hiring process. For the specific case of an online job posting, on average, 1,000 individuals will see a job post, 200 will begin the application process, 100 will complete the application, 75 of those 100 resumes will be screened out by either the ATS or a recruiter, 25 resumes will be seen by the hiring manager, 4 to 6 will be invited for an interview, 1 to 3 of them will be invited back for final interview, 1 will be offered that job and 80 percent of those receiving an offer will accept it (Talent Function Group LLC).

Six Seconds of Resume Review Means Recruiters Will See Very Little

When you ask individual recruiters directly, they report that they spend up to 5 minutes reviewing each individual resume. However, a recent research study from TheLadders that included the direct observation of the actions of corporate recruiters demonstrated that the boast of this extended review time is a huge exaggeration. You may be shocked to know that the average recruiter spends a mere 6 seconds reviewing a resume.
A similar study found the review time to be 5 - 7 seconds (BeHiring). Obviously six seconds only allows a recruiter to quickly scan (but not to read) a resume. We also know from observation that nearly 4 seconds of that 6-second scan is spent looking exclusively at four job areas, which are: 1) job titles, 2) companies you worked at, 3) start/end dates and 4) education. Like it or not, that narrow focus means that unless you make these four areas extremely easy for them to find within approximately four seconds, the odds are high that you will be instantly passed over. And finally be aware that whatever else that you have on your resume, the recruiter will have only the remaining approximately 2 seconds to find and be impressed with it. And finally, if you think the information in your cover letter will provide added support for your qualifications, you might be interested to know that a mere 17 percent of recruiters bother to read cover letters (BeHiring).

A Single Resume Error Can Instantly Disqualify You

A single resume error may prevent your resume from moving on. That is because 61 percent of recruiters will automatically dismiss a resume because it contains typos (Careerbuilder). In a similar light, 43 percent of hiring managers will disqualify a candidate from consideration because of spelling errors (Adecco). The use of an unprofessional email address will get a resume rejected 76 percent of the time (BeHiring). You should also be aware that prominently displaying dates that show that you are not currently employed may also get you prematurely rejected at many firms.

A Format That Is Not Scannable Can Cut Your Odds by 60 Percent

TheLadders’ research also showed that the format of the resume matters a great deal. Having a clear or professionally organized resume format that presents relevant information where recruiters expect it will improve the rating of a resume by recruiter by a whopping 60 percent, without any change to the content (a 6.2 versus a 3.9 usability rating for the less-professionally organized resume). And if you make that common mistake of putting your resume in a PDF format, you should realize that many ATS systems will simply not be able to scan and read any part of its content (meaning instant rejection).

Weak LinkedIn Profiles Can Also Hurt You

Because many recruiters and hiring managers use LinkedIn profiles either to verify or to supplement resume information, those profiles also impact your chances. Ey- tracking technology used by TheLadders revealed that recruiters spend an average of 19 percent of their time on your LinkedIn profile simply viewing your picture (so a professional picture may be worthwhile). The research also revealed that just like resumes, weak organization, and scannability within a LinkedIn profile negatively impacted the recruiter’s ability to “process the profile” (TheLadders).

50 Seconds Spent Means Many Apply for a Job They Are Not Qualified for

Recruiters report that over 50 percent of applicants for a typical job fail to meet the basic qualifications for that job (Wall Street Journal). Part of the reason for that high “not-qualified” rate is because when an individual is looking at a job opening, even though they report that they spend 10 minutes reviewing in detail each job which they thought was a “fit” for them, we now know that they spend an average of just 76 seconds (and as little as 50 seconds) reading and assessing a position description that they apply for (TheLadders). Most of that roughly 60-second job selection time reviewing the position description is actually spent reviewing the narrow introductory section of the description that only covers the job title, compensation, and location.
As a result of not actually spending the necessary time reviewing and side-by-side comparing the requirements to their own qualifications, job applicants end up applying for many jobs where they have no chance of being selected.

Be Aware That Even if Your Resume Fits the Job Posting, You May Still Be Rejected

To make matters worse, many of the corporate position descriptions that applicants are reading are poorly written or out of date when they are posted. So even if an applicant did spend the required time to fully read the job posting, they may still end up applying for a job that exists only on paper. So even though an applicant actually meets the written qualifications, they may be later rejected (without their knowledge) because after they applied, the hiring manager finally decided that they actually wanted a significantly different set of qualifications.

Making it Through a Keyword Search Requires a Customized Resume

The first preliminary resume screening step at most corporations is a computerized ATS system that scans submitted resumes for keywords that indicate that an applicant fits a particular job. I estimate more that 90 percent of candidates apply using their standard resume (without any customization). Unfortunately, this practice dramatically increases the odds that a resume will be instantly rejected because a resume that is not customized to the job will seldom include enough of the required “keywords” to qualify for the next step, a review by a human.
Even if you are lucky enough to have a live recruiter review your resume, because recruiters spend on average less than 2 seconds (of the total six-second review) looking for a keyword match, unless the words are strategically placed so that they can be easily spotted, a recruiter will also likely reject it for not meeting the keyword target.

No One Reads Resumes Housed in the Black hole Database

If you make the mistake of applying for a job that is not currently open, you are probably guaranteeing failure. This is because during most times, but especially during times of lean recruiting budgets, overburdened recruiters and hiring managers simply don’t have the time to visit the corporate resume database (for that reason, many call it the black hole). So realize that recruiters generally only have time to look at applicants who apply for a specific open job and who are then ranked highly by the ATS system.

Some Applicants Have Additional Disadvantages

Because four out of the five job-related factors that recruiters initially look for in a resume involve work experience, recent grads are at a decided disadvantage when applying for most jobs. Their lack of experience will also mean that their resume will likely rank low on the keyword count. To make matters worse, the average hiring manager begins with a negative view of college grads because a full 66 percent of hiring managers report that they view new college grads “as unprepared for the work place” (Adecco).
Race can also play a role in your success rate because research has shown that if you submit a resume with a “white sounding name,” you have a 50 percent higher chance of getting called for an initial interview than if you submit a resume with comparable credentials from an individual with a “black-sounding name” (M. Bertrand, University of Chicago Graduate School of Business).

Remember a Resume Only Gets You an Interview

Even with a perfect resume and a little luck, getting through the initial resume screen by the recruiter only guarantees that your resume will qualify for a more thorough review during what I call the “knockout round.” During this next stage of review, the recruiter will have more time to assess your resume for your accomplishments, your quantified results, your skills, and the tools you can use.
Unfortunately, the recruiter is usually looking for reasons to reject you, in order to avoid the criticism that will invariably come from the hiring manager if they find knockout factors in your resume. If no obvious knockout factors are found you can expect a telephone interview, and if you pass that, numerous in-person interviews (note: applicants can find the most common interview questions for a particular firm on glassdoor.com).

Even if You Do Everything Right, the Odds Can Be Less Than 1 Percent

Because of the many roadblocks, bottlenecks, and “knockout factors” that I have highlighted in this article, the overall odds of getting a job at a “best-place-to-work” firm can often be measured in single digits. For example, Deloitte, a top firm in the accounting field, actually brags that it only hires 3.5 percent of its applicants. Google, the firm with a No. 1 employer brand, gets well over 1 million applicants per year, which means that even during its robust hiring periods when it hires 4,000 people a year, your odds of getting hired are an amazingly low 4/10 of 1 percent. Those unfortunately are painfully low “lotto type odds.”

Up to 50 Percent of Recruiting Efforts Result in Failure

In case you’re curious, even with all the time, resources, and dollars invested in corporate recruiting processes, still between 30 percent and 50 percent of all recruiting efforts are classified by corporations as a failure. Failure is defined as when an offer was rejected or when the new hire quit or had to be terminated within the first year (staffing.org). Applicants should also note that 50 percent of all new hires later regret their decision to accept the job (Recruiting Roundtable).

Final Thoughts

Unfortunately, much of what is written about “the perfect resume” and the ideal job search approach is based on “old wives’ tales” and is simply wrong. However, when I review the numbers that are available to me from internal company recruiting data and publicly through research done by industry-leading firms like TheLadders, Adecco, BeHiring, staffing.org, and Careerbuilder, it doesn’t take long to realize that the real job search process differs significantly from the ideal one.
Rather than leaving things to chance, my advice both to the applicant and to the corporate recruiting leader is to approach the job search process in a much more scientific way. For the applicant that means start by thoroughly reading the position description and making a list of the required keywords that both the ATS and the recruiter will need to see.
Next submit a customized resume that is in a scannable format that ensures that the key factors that recruiters need to see initially (job titles, company names, education, dates, keywords, etc.) are both powerful and easy to find during a quick six-second scan. But next comes the most important step: to literally “pretest” both your resume and your LinkedIn profile several times with a recruiter or HR professional. Pretesting makes sure that anyone who scans them for six seconds will be able to actually find each of the key points that recruiters need to find.
My final bit of advice is something that only insiders know. And that is to become an employee referral (the highest volume way to get hired). Because one of the firm’s own employees recommended you and also because the recruiter knows that they will likely have to provide feedback to that employee when they later inquire as to “why their referral was rejected,” résumés from referrals are reviewed much more closely.
I hope that by presenting these 35+ powerful recruiting-related numbers I have improved your understanding of the recruiting process and the roadblocks that you need to steer around in order to dramatically improve your odds of getting a great job.