Josh, a Software Development Manager, has been working at Amazon for four years. He was promoted once, but his career has somewhat stagnated in his current position, and he doesn’t get along well with his manager. Recently, Josh started interviewing both internally and externally, leading to three options:
Option 1: An internal opportunity at Amazon that would be a lateral move. The work with the new team is interesting, but the level and pay would remain the same, with total compensation around $350K.
Option 2: An offer from an unicorn tech company, where he would be a tech lead, earning $475K annually, including base, bonus, and equity.
Option 3: A Series-A AI startup offering a Director of Engineering position with a $225K base salary, no bonus, and 0.25% equity.
The current job market is challenging, so it’s impressive that Josh has multiple offers in a relatively short time. My first piece of advice to him was that it’s a good problem to have; he deserves credit for securing several offers within just a couple of months.
To put myself in Josh’s shoes, here is my thought process and feedback:
- Bet on People: Counterintuitively, I often advise clients to prioritize people. Which option offers the best group of people to work with? You’re the average of the five people you work with every day, so it’s essential to choose a team that can elevate you personally and professionally.
- Evaluate Passion for the Work: Which job excites you the most? Is the product and technology something you’re genuinely interested in? Does the problem space align with your personal interests? Excitement about the work can make a substantial difference in long-term job satisfaction.
- Consider Chances of Success: Look at each job’s structure and the likelihood of your success. Is the role newly created or a backfill? If it’s a backfill, why did the previous person leave? Are you expected to lead a turnaround, or is the team already thriving? Understanding the role’s context and success metrics is crucial before making a decision.
- Reflect on Leaving Amazon: Starting a new job at a new company is both exciting and challenging. You’ve spent four years at Amazon and are used to its culture, technology, and processes. Do you feel you’ve learned all you can and that it’s time to move on?
- Compare Compensation: The compensation comparison between Amazon and the Unicorn company is straightforward. Amazon’s offer is $350K, while the other FAANG company’s total is $450K. However, the startup compensation is trickier due to the stock options.
A Basic Calculation:
The startup offers $200K in cash compensation, while the FAANG offer is $450K, creating a $250K annual difference. Assuming a four-year stay, that’s a $1M difference over four years.
For the startup equity (0.25%) to make up this difference, the company would need a valuation of $1M / 0.25% = $400M. Do you believe this startup can achieve or exceed a $400M valuation within four years? Note that each funding round could dilute existing shares, which this calculation does not account for.
Based on this analysis, purely from a financial standpoint, joining the startup may not make sense for Josh.
Which Option Would I Choose in Josh’s Shoes?
If I were Josh, I’d lean toward the Unicorn position, Option 2. It provides a substantial increase in compensation, an environment that may offer new opportunities and challenges, and a better growth trajectory than the lateral move at Amazon.
The startup role, while exciting in terms of title and potential growth, has a high financial risk and a more uncertain path to success, which could be a tough choice in the current job market.