Top engineers at big tech companies earn $400-$500k yearly. Startups can't match that salary, so Garrett Smallwood says the only way to recruit them is equity, a clear mission, and visible KPI impact. Make the equity grant substantial enough to actually matter.
Chapters
Incentive drives behavior. Everyone knows what this means, hopefully. Incentive drives behavior. It's like literally the definition of sweat equity. So equity drives behavior, equity drives value, equity drives work, equity drives people to work harder. Getting people to work harder means your company's worth more. It's like a beautiful little flywheel, right? So like incentive drives behavior. If you're hiring a CTO, which I'm sure a lot of you probably are, a lot of— how many people here are technical? Like technical co-founders or founders? Nice. So like everyone here is going to be a technical founder. Yeah. Cool. Yeah. So, um, my favorite thing when people try to think about technical founders is they're like, or first employees, is they're like, oh, I just need an engineer. I just need an engineer. I'll just get one. And you're like, okay, good luck. For sure. Like everyone wants the good engineer, right? What's a good engineer? Name some companies. What's a good engineer? Just name a company. Facebook. Facebook. How much does the average engineer at Facebook make that you'd actually wanna work with? $400,000. Like $275,000 right now, excluding like options. Another good company. Garmin. Which one? Garmin. Garmin? Sure. Next. Apple? What do you think an Apple engineer makes right now? More. Like a hardware engineer, software, what are we talking? Either or. Yeah, sure. $500,000 net. They're probably gonna get $500,000 net with stock. Stock for a trillion-dollar company, right? They have 4-year stock, million-dollar stock package plus base plus performance bonus, $500K a year. So what does that mean? They go buy a house in Silicon Valley. Average house costs $2 million. What's that mean your mortgage is? $12,000 a month. $12,000, not including— I mean, includes property tax probably, depending on how much you put down. You probably buy a new car with that new money, right? So $700 car payment. Drive a Tesla, that's $1,000. So that's $13,000. Plus you probably have other things you care about, like a gym membership, insurance, grocery bills, restaurants, probably around $1,500. So expenses monthly, about $15,000. It's like a good, solid, amazing engineer. So $15,000 a year is $30,000 net a month. You have to make $30,000 a month to support that income. So I don't think anybody here could pay $30,000, because what I heard is you raised $150,000, you raised $50,000, so that's one month of burn. So you're not gonna get an engineer for salary. So what you are gonna do is you're gonna convince them through a really compelling story and an incredible mission and unbelievable insight into KPIs and a shit ton of equity. It's the only way you're gonna get them. 'Cause I can tell you, there's a lot of great engineers out there, guys, but they've heard this story. They know what you wanna do, and they love it. They love that you're approaching them. They love that you wanna work with them. But like, everything kinda melds together the same when you've been doing it for 10 years, right? So I would say that really what matters is how much you're giving them to keep them incentivized. So do not be afraid to give away a large percentage of your company if it means it'll be worth something. 'Cause otherwise, 0% of 0 is 0. It doesn't matter how much you gave away, doesn't matter what happens, your equity is literally worth $0. Is that fair? Yeah.
