🌟 Today

Welcome to The Back Office. This week, the story of one founder’s costly hiring reset and what they’re doing differently the second time around.

💵 The Comp Divide: First-Time vs. Repeat Founders

They had to stop hiring just to fix the mess they created.

A 3x founder told me this after startup #1.

They thought if the mission was strong, talent would follow. That early hires would “get it” (see “missionaries vs. mercenaries”). That people would trade cash for cause. Six months later, they were bleeding offer rejections. Acceptance rates were tanking. Promises were vague. Titles were inflated. Trust was fading.

So they hit pause - on all hiring - to clean it up. It took three months they couldn’t afford to lose.

Now, it’s a different story. In their new venture, we’re building a compensation philosophy before the first offer goes out: pay ranges, equity bands, a clear leveling system. No more guesswork. No more patchwork.

And most importantly? No more backtracking.

Because how you approach compensation isn’t just a tactical decision - it says more than you think. It shows whether you're winging it or building like someone who's been here before.

First-Time Founders: Heavy on Equity, Light on Structure

Many first-time founders lean hard on equity. They offer big slices of ownership to offset low salaries, believing that people will jump at the chance to join something early. It’s well-intentioned, but the truth is people still have bills to pay.

Expecting someone to trade stable income for a high-risk dream doesn't always land, especially in today. Even the most mission-driven hires want some level of financial security.

These startups often don’t have an established system. There’s no comp framework. No clear levels. Offers are made case-by-case, usually based on how much the founder wants (or needs) the person rather than any strategic plan.

That’s when emotion tends to creep in. Guilt over offering low pay & anxiety when someone pushes back. Early employees learning (to their dismay) that new hires are collecting bigger checks. That one hire who’s about to walk, so the equity package gets doubled on the spot. Now you’re explaining to the board you gave a a new hire 1% of the company. These decisions add up and usually not in a good way.

Repeat Founders: More Clarity, Less Chaos

Founders who’ve done this before approach comp with a totally different mindset. They’ve touched the stove and gotten burned, but not again.

Before their first hire, they set up a structure. They’ll pull data from credible sources to understand what’s fair, competitive, and realistic. They’ll lean on advisors to build a strong foundation, rather than “ask folks in their network.”

They’re upfront & transparent with candidates about how they pay. Whether it’s lower cash with higher equity or balanced market comp with smaller upside, there’s no guesswork. It’s laid out clearly.

And when a great candidate isn’t a fit for the comp philosophy, these founders can walk away. They’re not thrown off and they don’t chase. That calm confidence comes from experience.

A Better Way to Start

No matter where you are in your journey, here’s what helps:

1. Decide what you believe. Do you want to lead with equity or aim for market-level cash? Make that choice early.

2. Sketch out basic levels and salary ranges. You don’t need a a million spreadsheets. A solid structure means avoiding chaos.

3. Explain equity like a fifth grader. Skip the jargon. Help candidates understand what those shares could mean one day.

4. Hold the line unless it truly makes sense to flex. A great hire can be a bad idea if the deal breaks your system beyond repair.

5. Keep checking in. Review your comp philosophy regularly. Markets change, so should your strategy.

Final Thoughts

Some folks see compensation as the numbers on your paystub twice a month. In truth, it communicates to your team how you think, what you value, and whether you’re building for the long haul. Getting it right early saves you from a world of backtracking later.

Veteran founders build for that from day one, having experienced the pain before. First-timers can too, with just a bit of foresight and structure.

Shoot me a note if you need help with this. Email below:

The recommendations provided in this article are intended for informational purposes only. They should not be construed as direct advice or guidance. Readers are encouraged to consult with a qualified professional before making any decisions related to benefits contribution strategies.

Talk soon,

Cris Cafiero

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