Are you "on the bench" looking for a new job in b2b SaaS?. Not sure how to know if the next place is a fit for you?
We share a few things to ask, analyze and get in the process.
We share a few things to ask, analyze and get in the process.
- (00:00) - Introduction
- (01:02) - Navigating the Job Market
- (02:29) - People on the bench
- (06:26) - The first thing to think about
- (09:02) - Pressure test the stats
- (12:36) - Employer-Employee Fit
- (16:05) - When is an impact expected?
- (19:13) - Replacement hire?
- (21:34) - Runway
- (24:13) - Exit Package
- (28:22) - Equity
***
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What is The Revenue Formula?
This podcast is about scaling tech startups.
Hosted by Toni Hohlbein & Mikkel Plaehn, together they look at the full funnel.
With a combined 20 years of experience in B2B SaaS and 3 exits, they discuss growing pains, challenges and opportunities they’ve faced. Whether you're working in RevOps, sales, operations, finance or marketing - if you care about revenue, you'll care about this podcast.
If there’s one thing they hate, it’s talk. We know, it’s a bit of an oxymoron. But execution and focus is the key - that’s why each episode is designed to give 1-2 very concrete takeaways.
[00:00:00] Toni: everyone, this is Toni Hohbein from Growblocks. You are listening to the Revenue Formula with Mikkel and Toni. In today's episode, we discuss how to qualify a future employer, so you take the right next step.
[00:00:16] Enjoy.
[00:00:17] They can make those.
[00:00:18] Mikkel: Yeah, that's true. So, we had an entire episode planned out. For a wonderful listener Who sent us a question?
[00:00:30] Toni: get to it.
[00:00:31] Mikkel: we'll get to it, but we decided Which happens very rarely I might add we decided to go completely off script now completely and record something
[00:00:41] Toni: because what you have like a rogue CEO that just comes in and is like, now I want to talk about this here now.
[00:00:47] Mikkel: I know you planned a project a b and c but actually have you heard about Z?
[00:00:51] You I really like it. Go
[00:00:53] Toni: just saw it on
[00:00:54] Mikkel: Yeah. Yeah. And it's totally going to work. It's like week, week after it's like forgotten.
[00:00:59] Toni: make the logo a little bit bigger?
[00:01:01] Mikkel: Yeah, exactly. That's it.
[00:01:02] So we actually decided to talk a bit about the folks looking for a job, looking for the new gig. How should they navigate this environment? How should they basically.
[00:01:16] qualify their future employer. That's really what it is, right? And you and I have done that ourselves a couple of times before. You haven't qualified your employer? Of course you have. Some have succeeded in qualifying them. Others have not, which is why I'm here. No, okay. So we're going to talk a bit about that because it is pretty important.
[00:01:36] The step you make in terms of job is not just going to influence your career. Also, you personally So pretty impactful for you as a listener. So that's what we want to get into today.
[00:01:48] Toni: Is this going to be the intro? Are we going to have another intro? No,
[00:01:50] Mikkel: have another intro, no. This was the rogue CEO.
[00:01:53] Toni: fact, we're gonna, we're gonna we're gonna leave the studio set up like it is now, because actually my two kids are gonna come over in like an hour or two.
[00:01:59] Mikkel: record the next episode.
[00:02:01] Toni: You know, basically something with some heft behind it.
[00:02:07] Mikkel: looking forward to the mix of like German, English. Yeah, yeah, yeah. And intelligent because we're not getting much out of the, yeah,
[00:02:13] Toni: no. Now
[00:02:15] Mikkel: at the paper? Why am I looking at the paper now? Because this is no longer
[00:02:18] Toni: I have some notes here, so I'm not
[00:02:19] Mikkel: sure. Oh, yeah, you, this is encrypted
[00:02:24] No one can read Toni's writing. So,
[00:02:25] Toni: Let's get into the problem itself. Um, So again, right.
[00:02:29] We are, we want to talk to some of the folks that are listening that are maybe on the, Pavilion started this, I'm not sure if this, they popularize, I heard it from Pavilion first, so, you know, whatever.
[00:02:39] They popularizing this this term called sitting on the bench.
[00:02:43] Mikkel: Mhmm
[00:02:44] Toni: which basically is about like, well, you know, you're in between jobs. You're not on the playing field, I guess. That's the American, you know, metaphor right now. If I got it right, I'm not sure. But basically kind of you're sitting on the bench, right.
[00:02:55] Of which there are many, many people right now. And usually also people, especially higher seniorities. Right. and why is that? Well, it's, it's a little bit harder to find your next gig. If you're a C level or VP versus an AE, like it's a little bit harder because there are so many AE jobs and they're just so few other
[00:03:13] Mikkel: Yeah. And they don't get listed
[00:03:15] Toni: like the, the, the, the, the tip of the pyramid is a bit
[00:03:17] tighter. So that's why a lot of senior folks are sitting on the bench right now. And I think there is, you know, I think the. The employment market is starting to wake up again, to thaw, kind of, there's, there's stuff moving again, but everyone that, you know, could jump into a job now is I think they, they a bit more careful now.
[00:03:37] Yeah. I think they got burned. Many times, and I'm specifically talking CRO, CMO folks. We'll, we'll talk a little bit about like a special you know, RevOps thing as well, but those two personas, you know, VP of sales is in there, obviously they got burned and many times probably were fired or laid off.
[00:03:59] Not because of reasons of, you know, them not succeeding or right?
[00:04:04] But obviously as an organization does that being portrayed like that and so forth, and you don't really have hard proof against it and so forth. So kind of like a shitty experience, let's just say a shitty experience. You work your heart out for this organization.
[00:04:15] You kind of do everything you can all day long. You work long hours. You see the, the business is hurting. You kind of put in the extra. Work. And then there comes like, well, you know, you didn't hit your target. You're gone by. Right. So that sucks. So, and, and in that case, I think they got burned basically.
[00:04:30] But at the same time, yes, you know, I think for some, you know, money is obviously a topic, right? You can't just not work, especially if you have in the U S I don't know, three, four, 500. Like K, large ones salary. And if you can't just like not have that for too long, right. While they're getting more careful I think they also just really afraid of misstepping, making the wrong move next.
[00:04:54] Right. Because it's, it's one thing to get burned and, you know, when this crazy period and Hey, you know, every little shitty startup is going to make it and let's go. Versus, well, now that I kind of come from that experience, I want to make sure my next steps are right. And, and also think about it like a life thing, right?
[00:05:11] Kind of when you're in your late thirties, forties and fifties, you don't want to be jumping in and out of roles every six or seven, you know, 12 months or something like this, right? You want to find something that you can sink the teeth in. And I think figuring that out before you join, pretty important, right?
[00:05:27] So I think what we want to talk about today is a little bit, how can you do an audit? Of your prospective employer.
[00:05:37] Mikkel: Yeah, that's And actually, one of the things, by the way, just on this whole job switching thing that I saw and found pretty interesting.
[00:05:44] So it's become pretty common to switch jobs earlier. If you look at the boomers that generation, they would stick around for way longer. Yeah, they would stick around way longer, right? They would get a medal for staying 25 years or stuff like that. The generation I'm from now and you are from is not the same.
[00:06:01] They switch more frequently. And actually,
[00:06:04] There was a stat showing that the growth of salary of those who switch jobs more frequently is higher than those who don't. So there is also that upside, but don't be fooled. You shouldn't just switch job because of the paycheck. And we're going to get into some of the things at least you should ask to kind of diagnose.
[00:06:22] Hey, is this even a place I should consider going to?
[00:06:26] Toni: So I think the first thing you need to make up your mind about is, let's just say, any role.
[00:06:34] So especially we're going to talk about the sales leader, CRO, RevOps leader or RevOps person, kind of marketing leader, CMO, kind of those profiles. The first thing you need to think about is like, what overall risk profile do you want to have? And you know, for that, if you're like in the startup world, The risk profile correlates extremely nicely with the different funding rounds that someone completed.
[00:07:00] Think about it like that, right? If someone is in seed stage, massive risk, 80, 90 percent likelihood this thing is going to go, you know, belly up, not going to work out for, you know, your fault or not, doesn't actually matter. Kind of those are external odds. Sure, you can influence them and so forth, but you just need to be aware of that, right?
[00:07:18] Then seed sorry, A, you know, those chances now kind of get better and better, B and so forth until it is boring, C and D, basically like corporate, it feels like, right? You just need to be aware that, you know, that risk level that's just inherent with those choices. And I'm not saying you shouldn't be joining a seed company, by the way, but I'm saying you need to figure out yourself if that's okay with
[00:07:41] Mikkel: Yeah, and actually, so since we're at a seed we're a seed company, the reflection I had is, say the company goes belly up and I need to go interview with someone else.
[00:07:51] What will that look like to the prospective employer? And I actually just realized, well, it all comes down to the work I've performed. What do I have to show? Because that might not necessarily correlate with, you know, the work I did leading to the company failing, that there's all kinds of things with product, market fit, et cetera, et cetera.
[00:08:09] Right? No,
[00:08:10] Toni: exactly. But, so I think from this perspective, it's more about the the Well, you know, if you join a company that's in seed, you might only be there for 12 months and then you need to look for the next thing.
[00:08:19] I kind of think about I don't think it's going to be your fault or anything. But think about like, Hey, that will, that has a large chance of reducing the average tenure that you maybe hoped you would get there. And then, you know, there's also a flip side, which many people see as an extreme. The, That's why all of those crazy people join those early stage firms.
[00:08:37] It's like, oh, it can impact stuff and you can, and that's kind of, that's kind of the really cool thing, but, and again, right, when you join a thing like this, just be aware, yes, you will be not just a, like a cog in the system, you will be pretty important, but also you know, you know, for reasons not of your own.
[00:08:56] But obviously you have an impact, reasons not of your own. This thing could not work
[00:08:59] out.
[00:08:59] right? And
[00:09:00] I think that's fine. So let's just say we kind of get over this hump.
[00:09:02] The next thing that you probably want to ask for as a commercial leader, and I think that could go for CMO and CRO, a couple of stats I would be testing.
[00:09:12] I would be asking for average quota completion. Yeah. How many of the reps are hitting target? you know, that is. That doesn't tell you much, much about the organization, but it tells you a little bit in terms of like the health, the mindset, what kind of shop they're running. If, if, if you're a CRO, those would be things you can tweak obviously afterwards, but it gives you a little bit like, what's the playbook that's present there.
[00:09:39] Is it still the kind of five years ago playbook where you just kind of throw in more wraps or is it a little bit more understood and balanced? What would be like a, a stat you would be asking for from the, from the marketing
[00:09:50] Mikkel: I would just ask them to the ability to hit the plan overall, honestly And really understanding like, hey, if, if they've been unable to meet their plan, when was the last time they did it?
[00:10:00] Because it kind of, for me, tells me, are they living in this dream world of, yeah, we do need to follow the unicorn path. So that's what we put in the plan, but there's no way the organization is geared to meet those
[00:10:12] Toni: Yeah, I think this is, this is almost kind of a different chapter and maybe let's jump into this and then maybe get back to some of the metrics. But this whole.
[00:10:20] what has been the plan, what is the plan and, and it's not about trying to like from five feet away, diagnose if this thing is going to work out.
[00:10:31] I think for me, it's way more listening to the thinking and the awareness of the other side. I think it's totally fine if you're early stage not to hit your plan. I think it's fine. I think The, the bigger issue is like, well, what's your reasoning why it didn't work out? And what do you want to do going forward?
[00:10:48] Red flag for me would be, well, we missed target because the sales reps are shit.
[00:10:52] Mikkel: Yeah, they're lazy.
[00:10:53] Toni: no, honestly, that, that would be like a typical, like, ah, okay. You know, you know, yes, there's a chance that that's by the way, you're also responsible for that because you probably hired and onboarded those folks, but there's a chance that true.
[00:11:05] But then there's a very, very large chance that it's nothing to do with that, right? And, and this might be a product problem or it might be a go to market problem. You don't actually know at that point, right? But still you want to have that conversation. And this is more like the introspective, retrospective, you know, trying to figure out why you missed.
[00:11:23] I think the other thing you should be asking is like, well, where's this going? Especially as a CRCMO. You know, what's the, what's the one up? Where do you, where do you want me to kind of get this thing? Where do you want me? I help to kind of get this thing and then have an honest conversation with them around what's their thinking.
[00:11:40] I'm not, I haven't encountered a situation where someone says like, I don't know, that's what I hired you for. I think that's, you know,
[00:11:46] Mikkel: also bullshit. I
[00:11:47] Toni: think that's a little bit bullshit. But what you want to hear is like, well, you know, we're thinking about an outbound motion. We're thinking about this region.
[00:11:56] We're thinking about, Hey, we want to build up this sales team like this. You know, and, and not all of these things need to make sense. Not all of them, not all of the folks out there understand how this revenue engine works. And that's truly why you are hired. So some of that stuff will be like, what does that have to do with the growth plan?
[00:12:13] I don't get it. But you want to have them reason through this. And to your point, what you don't want to have them say is because the board said we need to triple. Right. That's that, that, that can be the motivation. I think that can be the conversation in the, in the boardroom, but it cannot be how someone is reasoning through.
[00:12:32] how they want to achieve that, right? That cannot be, that, that would be a red flag for
[00:12:36] me.
[00:12:36] Mikkel: I think the uh, an interesting thing you mentioned here is like, what's the one up really, right? And I think there is something around almost the employer employee fit. that you need to establish as well in the process. You as an individual, especially, I think this is for marketing especially, you will bring certain competencies because marketing has different disciplines.
[00:12:56] Some are going to be really strong on the brand side. Some are going to be really strong in a competitive environment, like market wise. Some are going to be really strong on demand gen or whatever it is, right? And I think you need to figure out what is it actually that the business strategically needs to achieve and do you have the competencies and skill to do that?
[00:13:16] I think the other classic employee, employer fit thing you see is what stage are you actually, do you excel at? Is it the C to Series A? Is it Series A to B, C, D or like where?
[00:13:28] Toni: yeah, I think on this one, it's super abstract to use those letters. I think the way I would be thinking about this, are you the zero to one guy or girl, are you the playbook guy or girl, right? And, and that might help you with below a million, below 10 million and so forth. There's like a little bit of this that helps you, but really think about it.
[00:13:46] Are you the, the figuring it out kind of personality or the, okay, I'm just going to tweak all the really important little notches to kind of make this thing go crazy. And you might have different skill sets that kind of then resonate differently. Right. Yes, absolutely. That's a good one. I think I think a very interesting one in your due diligence and look at this, like an investor would do due diligence, by the way, an investor, one of the first things they will ask is like, what's your gross retention rate?
[00:14:17] What's your net retention rate? Just tell
[00:14:18] me,
[00:14:18] Mikkel: rate? Just
[00:14:19] Toni: what is it? Why is this helpful? Well,
[00:14:22] this is really, this is telling you, this is telling you if, if that company truly is proper market fit.
[00:14:31] That's what this is actually doing. And, and it's super important to kind of keep in mind. Let's just say you are entering an organization is, you know, really, you know, doing the go to market stuff for one or two years, super early on.
[00:14:43] Chances are their gross and net retention rate are going to be super inflated. They didn't have enough cycles yet where people, you know, had the opportunity to churn, right? They don't know what their lifetime value is yet. Right. And, you know, take that with a grain of salt. It's like number one.
[00:14:59] Number two You also need to differentiate, and we talked about this a lot different segments churn differently. So when I joined you know, an SMB company, so they were selling to SMBs, and they told me that they had an 85 percent gross retention and 105 percent net retention. That's was insane.
[00:15:18] That was extremely great. Yeah. I came from a mid market organization that was hovering on 75 to 85. Right. So that was really, really strong, but if this is like an enterprise team, you're joining with like a hundred K tickets, that's not good, right? So you need to, you need to put it into perspective, both how long have they been operating and.
[00:15:39] You know, to which segments they're selling, right. And, you know, there's probably some kind of a matrix somewhere, but kind of think about this a little bit, whether or not that, you know, sounds good or not. And, and for all of these things, all of the stuff that you're collecting here, some of that might feel off or you don't fully, fully kind of comprehend how all of these things piece together, reach out to a friend, maybe invest a friend or something like this and have them kind of help you kind of get you a um, an idea.
[00:16:03] Uh, So I can just kind of really recommend that
[00:16:05] Mikkel: think the other reflection i've had when I look at the especially the tenure of some of the senior roles.
[00:16:10] We just discussed They're getting shorter, right? And I think it's really important for you to understand When do they expect an impact by? Because quite often that's going to be unrealistic and at least it gives you a chance to, to tackle that upfront. So let's say you, you need to build up outbound.
[00:16:28] That's going to take you 12 months until you have, okay, now it works. Now we can scale it. Right. But if the expectation is, okay, three months for onboarding and, you know, you being ramped up then quarter after outbound is going, okay, cool, good. Then you're kind of screwed. Right. no. So I think that is actually critical to understand when is it the desired impact they see that taking
[00:16:50] Toni: And I think there, you also have a, an opportunity to show your expertise.
[00:16:56] to say, Hey, and this is not, you know, me being good or bad at that stuff. But generally speaking, you're looking at this timeline for something like this, working out.
[00:17:04] If you, for financial reasons, need an impact earlier, we might need to look at different initiatives to achieve that. Right. And, and then he could start digging in a little bit into, well, you know, a short term initiative could be. Are there ways where the, you know, and you will be focusing on the sales team here, basically, are there ways where the sales team is giving too much discount?
[00:17:25] Can we increase ACV a little bit? Can we, you know, improve those conversion rates a little bit? And while also not being blinded to the realization that, well, if I have to double the team, because that's, maybe that's realistically also what we want to do You know, keeping conversion rates and ACVs flat, that would even be an achievement,
[00:17:45] Mikkel: Yeah.
[00:17:46] Toni: right?
[00:17:46] Kind of really creating, it's, it's not trying to short sell yourself, but, you know, this is also a way to educate and show your expertise and kind of level these things out a little bit. And, you know, I had a conversation with someone the other day and he's considering maybe a seed early series A team.
[00:18:03] And this is really going from founder led to something that he would then be doing. And it's kind of a tricky spot, right? Because on the one hand side, well, it goes from amateur salesperson, I would consider myself an amateur salesperson, to a professional, right? That should have a positive impact, but it's losing the, the, the co founder C level title, it's losing all the, you know, knowledge that, that founders built up, not only over the time in the company, but also before that is super relevant for the problem.
[00:18:31] So are you going to actually increase conversion rates? Are you going to try and protect conversion
[00:18:35] Mikkel: I mean, it's also cheating because this founder CEO also have another card to play and say, well, are you telling me you're going to sign if I build that feature? Yeah. Yeah. Okay. You can sign now.
[00:18:44] I'll get the team. And it's like,
[00:18:45] Toni: Yeah, you're absolutely right. Right. So kind of the, you know, this kind of conversation I think can be extremely, extremely good to at worst case. They think you're an idiot because of these things. And then this wasn't a match anyway. Great. Bye. Best, you know, middle case, this doesn't work out, but at least you have educated that founder and maybe there's a team going to be more successful.
[00:19:07] Thank you. Or like, Hey, you joined with a set, you know, having set the right expectation. I guess I think there's lots of upsides to this
[00:19:13] Mikkel: I think the other interesting thing to know in terms of whether it's a smart move to take a job is also, In many cases, as a leader, you're going to replace someone and that person you're replacing has either chosen to leave for another opportunity
[00:19:28] opportunity
[00:19:29] or has been pushed out.
[00:19:31] Right. And I
[00:19:31] Toni: pushed below, right?
[00:19:32] Mikkel: all push below. Yeah. It could also be right. But I think what's super important to understand if, if that person has chosen to leave him or herself, It can be a natural thing, by the way. It doesn't have to have anything to do with the company. But they now want to understand things like, well, how long did he or she stay with the company?
[00:19:48] If it's like a long tenure, I was like, okay, probably then there's a lot of stability, a lot of continuity, a bit more calmness around the team versus if, yeah, this is the second leader in two years you're coming in to replace, like very different environment you're going to get into.
[00:20:03] Toni: on the replacement topic, and this is, I picked this up from, I think, Sam Jacobs Pavilion. He was talking about this, like, Hey, just be aware whether or not you're placing the VP of sales or not, it doesn't actually matter if you're working in an organization that was founder led before. Like founder led sales, which is, you know, almost all organizations, honestly, just be aware that, you know, what will always go through this person's mind is like, I could, I could do this job as well. I don't need to pay half a million for this. I could just literally jump in and do this myself
[00:20:36] Mikkel: Yeah,
[00:20:37] Toni: Right. So, and I think as a, and this is especially for VP of sales, for VP of marketing is a little bit different, but for the VP sales profiles, just be aware. There's like a permanent constant.
[00:20:48] Sitting at the ready on the bench next to you. person that has more power than you have that feels for all the wrong reasons that he or she could step in immediately. Right. Just be aware of that. And that's fine. Just manage it. I think it's, the importance is to be aware that that's actually kind of also what goes through some people's minds, especially when you're a newbie.
[00:21:10] When funds are running low and they, you know, in the middle of the night, sort the spreadsheet, you don't, by the way, you don't need to sort any spreadsheet. You know, this CEO, who's my most expensive ticket, you know? And it's like, okay, so if I only lost this one person, that would give me basically two month more runway, you know, and I just need to kind of step in and do those sales calls again.
[00:21:32] You know, we can do this, right?
[00:21:34] Mikkel: Speaking of runway, I think that's also kind of almost a, what do you say? Tender subject you know, it's kind of sensitive subject, right?
[00:21:43] But you do want to have an idea of what the runway is for that business is Especially at this point in
[00:21:50] Toni: in time. So following trick that will tell you always is more than 12
[00:21:53] Mikkel: Yeah, yeah.
[00:21:54] Toni: But what you can actually do, and this is this is roughly correct. You basically take the headcount that is kind of present in the business. Time it by 100, 000 per year, roughly fully loaded with all the other stuff. That's kind of what you're looking at. And, you know, then apply that number, you know, how often does it fit into the last funding round?
[00:22:15] Then you have your runway. It's honestly, it's super straightforward. There's, you know, all kinds of other, I mean, You know, take a little, give a little for where they are in revenue and so forth. You know, yes, totally get that. But especially in the early days when run rate is an actual problem, like series A basically, you know, up until once you're hitting B.
[00:22:35] Run rate is not being discussed anymore. It's kind of, it's their money's there. You're at 20, 30 million. You can go to literally a venture capital bank and get money. You're not going to run out of cash that easily, but everything pre B, like, seed and A that's the problem there. And you know that revenues aren't that high anyway, right?
[00:22:53] So you can apply that logic kind of to roughly figure this out. This is how I would, by the way, do it if it was you, but, but basically kind of, this is a way to kind of get around this, like how much money is left in the bank, you can kind of estimate this to a degree, right? I would also say that, you know, you know, things like growth rate, gross retention rate, net retention rate.
[00:23:11] And, you know, talking about this CAC Payback and so forth, kind of those things, I think you should be asking about to also show that you understand these concepts. Yeah. But also those are things you can take to a VC friend and say like, Hey, those are the stats roughly. Do you think they will get funding next time?
[00:23:31] Is this a fundable case actually? That gives you also a little bit of an idea, especially if joining seed or A, If they're, you know, how likely are they to make the next step, right? And chances are that the numbers won't look that great because otherwise there would be out there getting funding right now, right?
[00:23:48] Kind of, that's usually how it is. Kind of, it goes in like valleys and peaks. You go out when your stats are great and then for a long time, your stats are shit and then your stats are great again, right? Kind of, otherwise it doesn't work, right? So keep this in mind that, you know, again, take it with a grain of salt and don't say, ah, okay, VC friend, said, he wouldn't invest right now. Doesn't mean they can't get investment later on.
[00:24:09] Next one. And this might be controversial.
[00:24:13] As, especially as a C level or as a, as a senior person, negotiate your exit package.
[00:24:19] Mikkel: Yeah.
[00:24:20] Toni: Super
[00:24:21] Mikkel: So not saying I'm gonna leave, but if I join, yeah. And then leave.
[00:24:25] Toni: No, it's a little bit like honey I really think we should have a prenup.
[00:24:28] That's,
[00:24:30] Mikkel: that's, that's,
[00:24:30] Toni: kind of the kind of conversation and it's difficult, and it's not that, you know, it's It's sensitive as well, but we all know if you're a C or VP you're not going to find a job in the next two weeks. Like in the U S you have like a notice period of two weeks, right? Maybe you have a month or whatever.
[00:24:48] In Denmark, you have three months. Great. In
[00:24:51] Mikkel: Unless you're on a contract and you have
[00:24:53] Toni: I'm just, I'm just saying, right. So you will, it's very clear that you will not find the next job for you know, notice period that is put in place by the government. It's not going to happen, right? You will need more time because again, you're sitting on the bench, you got burned, you're careful and so forth, and then not so many opportunities, right?
[00:25:13] So you need to have kind of a conversation already there and then to kind of discuss discuss how the, how the negative scenario works
[00:25:20] Mikkel: Yeah, yeah.
[00:25:21] Toni: And
[00:25:22] and I would, I would
[00:25:24] to try and approach it as matter of fact as possible. It's like, Hey, all of us know this is going to go fantastic. Don't get me wrong, but I have a family, I have a mortgage, I have an expensive car.
[00:25:38] I've, yes, I have some savings, but
[00:25:39] Mikkel: a lot of wine.
[00:25:42] Toni: My brain fridge is really big. You know, we need to have a conversation, you know, if this doesn't go well you know, for my reasons or not my reasons, by the way. How we can, how we can, you know, unravel this here without me completely getting screwed over here.
[00:25:55] And when it happens, there there's usually when it happens, there's no, you know, good blood left. It's all bad blood at that point in time. And yes, people, you know, amicably and blah, blah, blah. But at those points, you know, especially when the company's under distress. You're not going to be super like, Oh, you know what?
[00:26:15] Let's be generous. No,
[00:26:16] Mikkel: No, no, no, no.
[00:26:17] Toni: Let's give another three to
[00:26:18] six
[00:26:18] Mikkel: months. Yeah.
[00:26:19] Toni: You know, the, the reason why I'm firing you is cash, but let's give you more cash. You know, it's not going to work out like this. So you want to have these things pre negotiated. And I would probably leave it at, you know, a a timeframe that you get money and whether or not you get the full OTE or not, or kind of OTE.
[00:26:35] How do you calculate that based on your previous achievements and so forth? Those would be the kind of the things I would be trying to navigate in order to land this in a reasonable way. And in Europe, your starting point would be, well, governmental notice period at that point. Plus in the U S I think you need to have.
[00:26:52] The thing is, you know, it's employment at will. You might have, you know, two weeks or something. And, and I don't know, it's like you at least want to have three months, three months paid,
[00:27:00] Mikkel: There's also the double trigger, event being talked about. So if you have warrants or ESUs there's like an accelerator that kicks in upon an event like that You can you can also negotiate into place, but I think it's a good point You want to have it in place? And I think this is also where they will show You know Kind of who they are to a degree, right?
[00:27:21] Are they receptive to having this conversation? I think this will show you those uncomfortable conversations up front will show you a lot. Don't, you know, you don't want to complicate the process of it with your future employer. I
[00:27:32] Toni: I think it's difficult because it is complicating the process. Right. And I think what
[00:27:37] you, it's a little bit like when you sell a deal to someone, right? Kind of, you can't, you can't squeezing these things. If you're like, ah, they're on the edge and maybe, maybe not. I would argue if they're like on the, maybe, maybe not kind of, maybe then this is probably also not a good start, you know, place for you to begin with, right.
[00:27:53] Kind of, because then, you know, especially in those scenarios, negotiating an exit package is even more important if you will. Right. So I think it's delicate. But I also think if you're a senior, if you already don't want to mess this up, if you can create a reasonable story that says like, Hey, I'm, I'm sorry, you know, I'm just not 24 anymore, you know, I, I cannot do it like this.
[00:28:14] If you, I think if you're running that narrative, I think people will kind of see it, especially if you're sitting in front of an adult as well.
[00:28:20] Right.
[00:28:20] Mikkel: as
[00:28:21] Toni: And then the
[00:28:22] last one is compensation in terms of warrants.
[00:28:26] So the thing or warrants or ESOP or, you know, shares or RSUs or whatever it might be you kind of need to understand what these numbers are about. And I'm not going to go into all the details of this, but if they're only telling you, you get a thousand warrants at a strike price of 5 dollars. You know nothing.
[00:28:48] Mikkel: Yeah. you, you,
[00:28:51] Toni: know, you have no fucking clue what this means. This could be you know, a glass of coffee or it could be like a new house. You don't know where it's in between. So what do you need to understand? It's like, okay, thank you very much. A thousand warrants. out of how many in total shares, right?
[00:29:10] You want to understand that, you know, they either give you this other number or they tell you the percentage, right? The percentage point. And then the the strike price at what valuation is that actually putting me, right? Is the strike price, the shares that you paid for uh, your totally inflated series A, Or is this a discount on that?
[00:29:31] Or is it actually even further down or where, where are we here? Why is this important? Well, the strike price basically kind of determines the share price at when you actually start making money. So if the overall share price at a sale doesn't go above 5 dollars, you don't make any money.
[00:29:51] Mikkel: They're underwater.
[00:29:52] Toni: They're underwater.
[00:29:53] So you only make money, you know, the, between the difference of the 5 to what it's eventually being sold for, right? That you need to understand that. And if you're stepping into an organization where the 5 puts you at a 50 million valuation at, you know, 2 million in revenue,
[00:30:12] Mikkel: You're underwater
[00:30:13] Toni: you need to understand that you will have to do a lot of catching up and a lot of blood, sweat and tears will go into even reaching the 50 million. And then on top of that, can you then get this from 50 million to 150 million where you start making bank? Or can you not, right? And you just need to be aware and sometimes you can't negotiate, but usually at C level you can negotiate and kind of try and get this number a little bit down to maybe put you at a 25 million or something.
[00:30:38] I, I entered I entered one organization. I think I had a 40 percent discount on the last round. For one part, and then I had a 0 percent discount for another part of my compensation, right? You can go in all kinds of different directions here, and you just need to understand that it's so easy to screw over people with this.
[00:30:58] Um, And, and you just need to kind of be aware of how those things work. and then, you know, make this part of the negotiation.
[00:31:04] Mikkel: that's like a full on rev letter at some point.
[00:31:07] It's such a massive subject, honestly, but it's so important. It's such a key part of compensation, or at least a promise, to be honest, of a startup that you can get a stake and that can be a life changing event. But I think a lot of it is just snake oil. So,
[00:31:23] Toni: Besides in Growblocks, right
[00:31:25] Mikkel: Of course, that's why I'm still, that's why we're two years recording this show.
[00:31:29] That's right. That's why. So,
[00:31:31] Toni: thanks
[00:31:31] Mikkel: Mikkel. Thank you, Toni.
[00:31:32] Toni: Thanks everyone for listening. Hit like,
[00:31:35] Mikkel: subscribe, subscribe, share, share, download,
[00:31:38] Toni: And just the love button.
[00:31:39] If there is one. If you have some feedback, send it to podcast at growblocks. com. Some inspiration for new episodes. Or if you think that Mikkel's shirt, you should change his shirt maybe once in a while you can totally do that. Have a good one, everyone. Bye bye.
[00:31:57] Mikkel: bye.