Attracting Top Talent: A Startup Guide

The Growing Compensation Gap Between Startups and Big Tech

Historically, startups have faced challenges in matching the substantial salaries offered by established technology giants. This disparity has become increasingly pronounced with companies like Meta and OpenAI now offering salaries exceeding one million dollars amidst the current surge in artificial intelligence development.

Strategies for Competitive Startup Compensation

Despite this challenge, early-stage startups are not without recourse. Founders and industry experts, speaking at TechCrunch Disrupt 2025, emphasized the importance of developing a compensation strategy that is both generous and adaptable.

Yin Wu, co-founder and CEO of Pulley, an equity management software company, stated that startups shouldn’t directly attempt to compete with larger, more established firms. She pointed out that the candidate pools typically differ significantly between a stable tech company and a startup.

Wu advocated for startups to maximize their compensation offerings within their means, irrespective of their inability to equal Big Tech paychecks.

The Importance of Equity

“My firm belief regarding equity in a startup environment is to be more liberal in distribution than initially considered,” Wu explained. “It’s improbable that, should the company achieve significant success, one would regret having granted too much equity to those instrumental in its development.”

Randi Jakubowitz, head of talent at 645 Ventures, concurred with this assessment. She added that startups should establish clear performance objectives for new hires to ensure they justify their compensation.

Jakubowitz stressed the need for accountability and a clear understanding of equity vesting schedules. “It’s crucial to address underperformance promptly,” she said, “as fully vested equity that is not contributing to the company’s success represents a permanent loss.”

Flexibility and Fairness in Compensation

Panelists also highlighted the benefit of avoiding rigid compensation structures. Startups should prioritize fairness from the outset, creating a foundation that allows for adjustments without incurring legal risks or damaging workplace morale.

Pulley, under Wu’s leadership, has implemented a standardized compensation range for each role, independent of employee location. They consistently incorporate equity offerings at the 90th percentile.

“This framework has enabled us to scale effectively,” Wu noted. “As the company prospers, the actual share value received may vary, but the underlying principles remain consistent.”

Legal Considerations and Best Practices

Rebecca Lee Whiting, founder of Epigram Legal and fractional general counsel, emphasized the importance of these standards in mitigating potential legal issues. This includes preventing pay disparities based on gender, which is both unethical and illegal in jurisdictions like California.

Whiting, Wu, and Jakubowitz all agreed that a foundation of fairness is paramount, allowing for adjustments and refinements as the company evolves.

“It’s vital to consider the individuals you’re seeking to hire and what will motivate them to accept your offer,” Whiting stated. “Perfection isn’t required from the start. Post-Series B adjustments are often necessary and acceptable. Don’t strive for immediate perfection when onboarding your initial team members.”

• Key Takeaway: Startups should focus on generous equity offerings and a fair, flexible compensation framework.
• Important Note: Clear performance goals and accountability are essential for justifying compensation.
• Legal Reminder: Ensure compliance with equal pay laws and avoid gender-based disparities.