This doubles as a good lesson for somebody considering joining a startup, and kudos to them for being fully transparent about it. You should always ask to see the graph they've presented here, a graph with historical burn, revenue and months of runway left. Otherwise it is very difficult to figure out how much risk you are taking by joining. Because if the runway starts getting short and the startup need to "control expenses", that means laying you off.
> Generally, I think controlling expenses is a lot easier than figuring out how to make more money.
A key point. If your salary is coming out of future predicted revenue growth, and that growth doesn't happen, your expense is going to be controlled.
I'm not suggesting startups shouldn't be aggressive with spending, nor suggesting employees shouldn't take risks when joining startups. But you should ensure that, as an employee, you are compensated for the risk you are taking. And this graph is a great way to see exactly how aggressive the startup is being with their spending.
> But you should ensure that, as an employee, you are
> compensated for the risk you are taking.
"Oh no I lost my job" risk is already priced into current market-rate salaries. A startup may have a greater chance of laying off an employee, but the risk to the employee must also consider how quickly they're able to get another job at market rates. If the job market is tight, the risk is much lower.
What is unwise is to accept less than a market rate salary plus deferred compensation without thinking like an investor. At the very least one should consider how much their time is worth relative to the cost of investing, i.e. "H hours of my time at market rates is worth $D, therefore if I were investing $D of my time into this startup I'd receive C common shares."
> Generally, I think controlling expenses is a lot easier than figuring out how to make more money.
A key point. If your salary is coming out of future predicted revenue growth, and that growth doesn't happen, your expense is going to be controlled.
I'm not suggesting startups shouldn't be aggressive with spending, nor suggesting employees shouldn't take risks when joining startups. But you should ensure that, as an employee, you are compensated for the risk you are taking. And this graph is a great way to see exactly how aggressive the startup is being with their spending.