Should you hire a veteran or wean & train when building a growth-stage company?

[originally written for Mass High Tech]

In our role as executive search consultants for growth-stage companies, one of the questions that seems to continually vex the CEO is how best to build out their team.   This question often narrows to a discussion around whether it would be better to hire a senior level person first in each of the key functional roles in the organization chart, or rather to hire a more junior level person and hire at a higher level once the company has built up some “traction.” For our purposes, traction can be defined as any or all of a number of indicators, including revenue, funding, or product development milestones.

Short answer, “It depends…”

When asked this question, the CEOs and venture capitalists we talked to universally responded, “It depends….” So then the question became, “On what?”  The answers came back and included the following key variables to balance when trying to decide on whether to hire high or low when you first fill a key position in your early-stage venture—

• • Funding—Money is certainly a gaiting factor for most early-stage companies, and often the largest line item on the P&L is salaries & wages.  Putting in a leadership team too early all at cash compensation that runs north of $150,000 can certainly create a net-cash-burn that would rival the bubble days.   However, “talented people hire talented people,” says Lou Volpe, Managing General Partner of Kodiak Venture Partners.   And talent doesn’t necessarily mean ‘experienced.’ Talent alone is usually less expensive.”
• • Composition of the Incumbent Team— You need to have a balanced team.  Companies are often referred to as “engineering culture,” or sales, or finance-driven.  This speaks to an inherent imbalance in the leadership team.  Kodiak’s Volpe emphasized that, “you need to think of the entire picture, the entire team.  You need to have it balanced.  If you have too much strength in one function, you’ll be out-of balance and the company will suffer accordingly.”
• • Stage of Company— If too early-stage a company, it may be difficult to attract the world-class talent you need.   This conflicts to some extent with the current thinking today popularized by Jim Collins in his book, Good to Great.  In one of the areas Collins explored with the “great” companies he studied, he and his team learned that these companies focused on “getting the right people on the bus,” then deciding where they were going to drive it.  David Power, a Partner at Fidelity Ventures, qualified Collins’ observations, saying, “If you’re a charismatic enough leader, you might be able to get everyone on the bus BEFORE you start to drive, but every company doesn’t have that privilege, especially when young, and often capital-constrained/higher-risk.  You need to be able to give talented executives that you are seeking to attract some general direction, to be able to explain to a ‘hire-high’ A-player why the company and role should have great appeal to the candidate.”
• • Which Function It Is — There are certain functions in an early-stage company where hiring the best is critical early on.  One such critical area is hiring into the leadership roles responsible for the product development in the company—engineering in the case of technology product, or science in the case of biotechnology/life sciences.  CEO Tuan Ha-Ngoc  said that it was critical for Genpath’s success to get the best Chief Science Officer they could find, and they did.   One of the VC’s commented however that the finance function is a perfect example of where hiring low is often the right thing to do—the company only needs a part time finance person at its earliest stages, then a controller later on, and then if the company is looking to go public, a world class CFO.
• • Speed of Anticipated Growth— If the company is anticipated to grow slowly, it is possible that a person can grow in parallel with the company.  However, given the often-cannibalistic nature of technology and sciences companies, “slow” is often not an option due to fears of product obsolescence, time limits on patents, or pure competitive pressures.    Globespan’s David Fachetti put it clearly, saying, “Hire higher for fast growth companies.  The opportunity will grow into the people, rather than the people grow into the opportunity.  Talented and experienced executives will bring up the level of the opportunity to meet their needs, and in so doing will accelerate the company’s growth.”
• • Price point of Product /Service— Enterprise software or very expensive hardware sold into the C-levels within the Global 2000 may put pressure on the upside of the high/low spectrum.  Kodiak’s Lou Volpe feels that if price-points are high, it is likely the company will need more senior/experienced talent to get it to market.

Universal Truths

All those interviewed agreed on a number of best practices.  The one that stood out most is the need to hire what was referred to as “quality.” There are two primary axes on candidate qualifications briefly mentioned earlier—the first is quality or “talent,” and the second is experience.  If you hire someone with both, this defines the “hire high” approach.  If you hire someone with only quality, but less experience, it points to the “hire low” approach.

Hire quality

Those we spoke with also included several other must-have characteristics further define “quality.”  Fidelity Ventures’ David Power ticked off the first four:

• • Motivation
• • Intelligence
• • Integrity
• • Ability to produce results

Joel Rosen, veteran CEO and former venture capitalist  at Charles River Ventures added two more:

• • Passion about the business
• • Cultural fit with the rest of the team

One other CEO punctuated the list:

• • Work ethic

Though no doubt there are many more, these rose to the top of the list when trying to describe what “quality” in a hire looks like.

Hire experience

The other half of our working definition of “hiring high” we’ve termed earlier as “experience.”  David Fachetti at Globespan Capital articulated four key areas he probes to determine whether candidates he interviews have what he defines as experience:

1. 1. Lifecycle experience: prior experience at a similar stage of company development
2. 2. Domain experience:  prior experience in the same industry sector as the current company
3. 3. Functional experience: prior experience playing a similar functional role (marketing, sales, technology, finance, etc.)
4. 4. Relationships experience:  has the individual worked with others on the team before?

Don’t skimp when it comes to Leadership experience

One more key experience criterion, especially when “hiring high,” is leadership experience.  One CEO emphasized that, “experience and skills aren’t a surrogate for leadership.  If you’re going to be growing a team, you’ll fail without it.”

Determine where you need your best gene pool

Another common refrain was that–in an early stage company–there are at least three key roles where you want to hire high, rather than low.  Dave Fachetti, Principal at Globespan Capital Partners, summed it up, saying, “For a company to have a solid foundation for growth, bench strength needs to exist at the highest functional levels in technology (VP Engineering/CTO), sales, and the senior P&L role of CEO.  Scott Griffith, Zipcar CEO emphasized that each company can differ, so “get the strategy right, and THEN hire high into the key stress points of that strategy.”

One qualifier made by Genpath CEO Tuan Ha-Ngoc was the impact of the differences between technology companies and life sciences companies.  In pure technology companies, there is an additional emphasis on the importance of hiring a high level of experience into the position where the technology meets the customer, someone who has the pulse and understanding of the market into which the technology will be selling.    In life sciences, the pain of disease is more often self-evident, where technology can sometimes mistakenly be developed for technology’s sake, a “build it and they will come” approach.

Make sure executives can “zoom out and zoom in”

The individual has to be able to both lead a function and do the function.  In other words, if the decision is made to hire a VP Sales, that VP Sales has to be able to “carry the bag” and actually do the selling, as well as hire, train, motivate, and manage a sales force when the time comes.    Similarly, an early-stage VP Engineering should be able to code as well as architect early on, until more hands can be hired.  Early on at Yahoo!, the company determined that one of the key hiring criteria for any employee was that they could “zoom in and zoom out.”   Every new hire had to be able to think strategically at the 50,000 foot level, but also be able to go back to ground-zero and execute the strategy.   Zipcar’s Griffith—a licensed airplane pilot—added, “You have to be a pilot, willing to get under the plane and check all the equipment yourself, take off, navigate, AND safely land in order to get successfully from point of origin to destination.”

Biases & Cautions

Not surprisingly there were biases that had formed from the individual operating experiences of each CEO or VC with whom we talked.   And interestingly, despite these biases, many gave examples of a hiring circumstance that ran counter to their bias that worked out particularly well, or a hire that fit their bias that failed.   Following are some of the biases and cautions that stood out.

If you’re the CEO, don’t hire low in an area just because it’s your functional strength

There was a great deal of alignment on this issue, and it’s a chronic mistake the venture capitalists we talked to saw in their portfolio companies.   David Power at Fidelity Ventures elaborated saying that “If a CEO hires a weaker player into a function where that CEO has expertise, say the marketing function, the CEO ends up still managing marketing instead of doing what the CEO should be doing—running the company.  You want to hire at equal levels across the functional spectrum.”  Joel Rosen at Charles River Ventures added, “younger companies don’t have a lot of training infrastructure.  The company is running too fast to have the leeway to train much.  Although this isn’t a law of nature, the biggest gaiting factor to growth is often bandwidth, particularly that of the CEO.”

Don’t hire talent too late

Genpath CEO Tuan Ha-Ngoc put it simply and elegantly—“It is rare that the company fails because you hired high-caliber talent too early.  It’s usually that the company hired too late.”

If you hire high, think about assigning multiple roles

One of the ways you can often get top talent in early-stage companies is to offer multiple roles that will allow the higher-level executive an opportunity to stretch their wings.  Lou Volpe at Kodiak added, “If hiring a senior engineering executive early-on, think about giving them QA, support, and/or manufacturing, even product management.”

The probability of a successful high/low hire is predicated on the clarity of the task

Put another way, the murkier the goals, strategies, and tactics of a particular functional area, the more you will bias your hiring toward the high side of the spectrum of experience.  Conversely, if the responsibilities of the position are well defined and clear, a lower-hire might be just the right fit.  As EquipNet CEO Roger Gallo put it, “Is the hire going to be focused on fulfilling known initiatives,

or rather creating and forging entirely new ones?”

Think about making a “high-low sandwich”

To this point, no mention has been made of the obvious question when talking about whether to hire high or hire low—what about “hiring in the middle”?  Kodiak’s Lou Volpe admits a bias to a combination approach of hiring a low with a high—“Hire high, and then do a step function, and hire low.  In sales for example, hire the VP, and then hire one or two lower-level individual contributors, one or more of which can be step-up candidates into the middle role of manager or director further down the company development cycle.”

What about hiring high/low when it comes to hiring the CEO?

This question is complex enough to support itself as a single topic of discussion with the venture capitalists and CEOs we consulted.  However, Fidelity Ventures’ David Power listed three circumstances where hiring a step-up/“low” candidate into the CEO position can work—

1. 1. When a particular functional area is important to the stage of company growth (hiring a VP Sales or VP Marketing into the CEO position when the company is just entering its revenue stage)
2. 2. When continual technological innovation/engineering is inherent to an industry sector (hiring a VP Engineering or CTO into the CEO position because of the pressures for recurring and sustainable technology innovation)
3. 3. When you can get someone who is traditionally “out of reach” (hiring a superstar VP level candidate into the CEO position because a step-up is the only way you can attract that particular talent)

With all of the above thoughts on best practices regarding hiring for early-stage companies, an image formed to sum up some of the wisdom of the CEOs and VCs we consulted.   Perhaps it’s not too different from how many parents buy clothes for their fast growing child—you pick the color and the style, and then have them walk up the rack trying on increasingly larger sizes until the piece of clothing actually falls right off.  You then step it back one size, and buy that one.   It’s just small enough that it can be worn now, but it leaves plenty of room for future growth.

The Q2 2010 CEO survey has logged more than 50 respondents, so although additional responses may roll in, we’re posting the results in order to make the feedback to those who participated as timely as possible.   Additional responses are unlikely to skew the percentages significantly.

We at BSG Team Ventures periodically take the temperature of the markets we serve.  Below are the results.  This survey’s focus was on the economic recovery (is it indeed here, and if so, measured how?), and where CEOs are budgeting their spend in the 2010 recovery year.

A note on methodology.  We send these surveys only to those who fit the category (in this case, sitting CEOs or board member/founders of technology/science-driven growth-stage companies).    All responses were anonymous due to the web-based survey technology employed. The majority of respondents were in the United States, with the highest concentration on the East and West coasts (New York, Boston, and San Francisco/Silicon Valley areas).

For prior survey results from Q3 2009, titled “Strategy & Outpacing Your Competitors in the Recovery”, go to http://www.bostonsearchgroup.com/blog/3rd-quarter-innovation-ceo-survey-results-outpacing-competitors-recovery/.

The response to the first question clearly demonstrates that CEO sentiment versus our last survey has demonstrably shifted, with almost 75% of CEOs indicating that the economy has either bottomed out, or is recovering.

Similarly, for those growth-stage tech or sciences driven companies, when looking at revenues, more than 40% of CEOs reported that revenues were up from Q1 to Q2, with the largest percentage revenue increases in the 1-25% range.  Approximately 10% of CEOs reported revenue increases of 25% or more.

We periodically survey the CEOs in our network on topics we feel are relevant to aggregate information around and rediseminate.

Below is our Q2 2010 CEO Survey.  Please participate, and we’ll share the results back with you once the survey closes in the next week or so.

Click on “Take my survey” below.  It won’t take more than a few minutes for mere mortal CEOs.  But, as you’re more the superhero CEO type, it will no doubt take you a fraction of that time to complete.

To see the results from our last survey, titled “Outpacing Competitors in the Recovery”, go to http://www.bostonsearchgroup.com/blog/3rd-quarter-innovation-ceo-survey-results-outpacing-competitors-recovery/

PharmaJet's innovative Needless Syring Technology

PharmaJet, Inc. (http://www.pharmajet.com) offers jet injection technology to deliver vaccines and drugs through skin. The company offers PharmaJet, a needle-free system that delivers liquid medications at high speed creating a ‘liquid jet’ that penetrates the skin and delivers the medicine through the skin in less than 1/3 of a second. It serves individual patients, as well as public health needs internationally. The company is based in Golden, Colorado with operations in

With approximately 23 employees currently,  PharmaJet was founded in 2007 and is currently headquartered in Golden, Colorado with other offices in San Francisco and  Baltimore.

As a privately held medical device design company, PharmaJet has developed an FDA 510 (k) cleared needle free jet injection technology.  It can be used to inject any liquid medicine into the body (human and animal), for fixed dosages ranging from 0.1cc to 0.5cc, into intra-dermal, subcutaneous, and intra-muscular tissue depths.  It is most appropriate for vaccine delivery, which is a standard 0.5 cc dose for nearly all human vaccines.  Since starting its first scientific collaboration 22 months ago, active pre-clinical and clinical testing of PharmaJet’s device is underway in 9 countries, with 18 partners for more than 25 vaccines and therapeutic medicines.

Market Opportunity

History & Genesis

PharmaJet’s technology was developed to address a need for safe and clean delivery of liquid vaccines, without a needle, in view of the massive infection rates caused from within the healthcare system of hepatitis B, hepatitis C, and HIV (and an additional 17 other blood borne diseases) due to syringe needle reuse and needle stick injury during vaccination (estimated at 22 million injuries per year world-wide).   With the World Health Organization’s (WHO) guidelines in mind, the Founders created a needle-free injection technology that is simple, robust, and inexpensive.  Besides getting rid of needles, however, there are a host of other sustainable competitive advantages and attractive features making it a value added device that can improve the lives of people, reduce the cost of healthcare, all the while generating profitability for PharmaJet and its partners.

Product  Potential

PharmaJet’s features help address the developing world problem of re-use (as much as 40-70% in some countries) which contributes to growth in disease and epidemic.  Further, the intra-dermal application (0.1 – 0.2cc volume) may contribute to stretching vaccine supply (reduced dosage, but similar immune response to standard 0.5cc dosage) where there is shortage so that the health net can be spread among a larger population, ultimately benefiting their group welfare and economy.  At the same time, it is perfectly appropriate for the sophisticated healthcare market, and eliminates needle-stick injury which is prevalent everywhere.  As a technology platform, there are a variety of additional product extensions that allow it to be useful in other injection segments, user groups, and processes.

Initial Markets

• Human vaccine market: >1.75 billion needle-syringes being used annually for injection of vaccines, for children and adult populations.
• Animal vaccine market: Even larger by volume than the human vaccine market, PharmaJet’s device has been used successfully in a range of species (mice, rabbits, guinea pigs, dogs, cats, goats, sheep, horses, cattle), making it suitable for:
  • For pre-clinical research and antibody production
  • To keep companion animals from spreading disease to their owners (i.e. rabies), and;
  • To keep animals productive, so that populations do not starve (developing world), industries are not financially devastated (i.e. culling for foot & mouth disease), and producers maintain efficiency (i.e. dairy).

The Position

As PharmaJet, Inc. seeks to substantially expand it’s product user base, exposure and revenues in 2010, the PharmaJet Regional Business Development position plays a vital role in product introduction, demonstration and sales within several key market segments.  Leveraging their industry experience, this sales and business development leader will systematically identify and develop key new market opportunities and represent product sales to all public and private healthcare providers currently utilizing needle injection delivery of vaccines and select drugs to patients and the general public. Based upon a pre-defined region, such product introduction will use a team approach for product adoption and use support, in conjunction with PharmaJet Certified Trainers and Technical Support. This position will thus serve as the overall regional business manager of these services.  The role will be focused on integrating PharmaJet’s product capabilities into all relevant regional public health networks, private clinics, and hospitals, thereby participating in all key mass vaccination events at the city, county and regional levels.  Such efforts shall include attendance and representation at all relevant user’s groups and regional conferences of professional healthcare providers

PharmaJet Candidate Competencies Venn Diagram

Financial Backing

PharmaJet has raised a Series A and B equity financing from angels and strategic investors, and is well capitalized to enter their next phase of commercialization.

Compensation

Compensation is competitive with the position’s requirements.  In a performance-based environment, this will include base salary, incentive bonus structure based on both quantitative revenue goals and qualitative MBOs, and a potential stakeholder position in the company.

CEOs and executive leaders of innovation-stage companies often ask themselves what is the best approach to employee appreciation, productivity and retention.

We’ve all heard the stories around the lengths some venture capital-backed companies go in their efforts to service the needs of their employees.  What started as the water cooler and drip coffee pot, fast-growth companies have super-sized, continuing to up the employee pampering ante–  installing company-paid cappuccino machines and Kurig coffee makers with what appears to be an endless supply and variety of coffees and teas.  Keeping well-stocked office kitchen pantries with either favored junk food, healthy snack choices, or both.  Catering lunch, breakfast, dinner, sometimes all three meals plus a midnight snack that rivals food options found on luxe cruise liners.  Car valet services, onsite dry-cleaning pick-up/drop off, massages, yoga, concierge services, onsite daycare/nanny service, bring-your-pet-to-work options.  And on and on and on, the calories and comfort food arms race continues its grim march toward caffeine OD and adult-onset diabetes.

However, there’s a moral and dilemma CEOs often face when trying to strike the right balance of perks and austerity.

The argument for pampering:  In the new knowledge-worker driven economy, there is often precious little machinery or automation.  So every time an employee walks out the door to Starbucks, Dunkin’ Donuts, the sandwich shop, or the drycleaner, the corporate engine slows down a notch.  Therefore, the logic emerges that if you can remove all interruptions for employees, you’ll get far more in productivity out of them than junk food and pampering you put in to them.

The argument against:   It’s expensive.  It creates a sense of entitlement in employees.  It creates a false sense of prosperity in a company that may be pre-revenue and in need of several more rounds of funding before it can stand on it’s own two financial legs.

Some might say that economic recessions pound the potential for excess back to square one.   OK, so perks have slowed down a bit after each economic set-back in the last decade, starting with the Internet bubble bursting and post-Y2K malaise, the aftermath of 9/11 on the U.S. economy and, most recently, the banking sector melt-down.  However, after each setback it seems a new “floor” gets set that’s just a bit tonier than the last one.

So how do CEOs handle this arms race in employee perks you ask?

Below are a few lessons learned and secrets shared by a number of CEOs who know a bit about the word “value” in serving up employee perks-

Perks Case Study A: Intra-office “micropreneurship.” The secret of the concession license

One venture-backed CEO wanted to offer some of the perks, but not all when it came to stocking the pantry.    So, rather than facing an all-or-nothing approach, the CEO decided that a business principle was in play that could be exploited in a win-win-win fashion–  what the company had as an asset was the equivalent of a monopoly.  He reasoned that employees were a captive audience.  If the CEO offered the “vendor concession” contract to an aspiring employee who wanted to make a few bucks, the company would offer exclusive stocking/inventory rights to that employee to stock the pantry.  However, in trade, the employee had to agree to offer below-market pricing on food and beverages, and also manage the “SKU requests” that the employees would log from time to time regarding food selection and preferences.  His formula in a nutshell looked like this:

-          win for employees-as the got a below market food and beverage offering, the equivalent of a “company subsidized” pantry offering

-          win for the “intra-preneur”-who was given the food concession to run, and could make a few extra bucks running the business

-          win for the company-the company didn’t have to provide all the food gratis, nor had the headache of fielding all the requests from employees

Perks Case Study B:  Serving dinner not as an entitlement, but only to the truly meritorious

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More…

One of the questions we as executive recruiters often get asked  is the trade-off between experience and aptitude.   Both sides of the equation are prone to asking it, clients and executive candidates alike.  Sometimes this teeter-totter is referred to as “domain expert versus best athlete.”

What do they mean when they ask?  There’s actually a lot of nuance in the question-when are skills and experience most important to success in the role versus pure talent and aptitude?

• •    Just because a CEO is moving from one industry to another, does s/he lose his ability to successfully lead?
• •    If a VP Sales has been successful at one stage of company growth, can s/he take that same sales toolbox and be successful in another stage company, say either emerging-stage or mature-stage?
• •    Can a VP Engineering be equally effective managing in large companies and small?
• •    Do companies look for the same types of leadership in good economic cycles as well as bad?
• •    How does an executive’s move out of their wheelhouse of skills and experience impact their compensation and/or level in a new industry and company?

These questions are only a few of the factors that impact the answer.    The following discussion is aimed at trying to lend some clarity and context to question.

Let’s take a look at the hour-glass graph below to lay down some of these factors against our “expert or athlete” question:

1)     Level of management: The first factor is where an employee sits in the organizational chart.   In general, skills and experience are most critical at the “waist” of the hour-glass graph-mid-to-upper level management, starting at manager, through director- and VP-level.  At the top and bottom of the hour-glass, aptitude often ends up as the greater emphasis in “hireability.”  This may be fairly intuitive for many.

a.     Entry-level: When you first get out of school, employers often hire for a combination of attitude and intelligence and look for those who exhibit room to grow or “headroom.”   In fact, at entry-level, skills and experience for those roles are often a liability.  Employers may feel someone is overqualified, or a “flight risk” if that employee finds another better-paying and/or higher level position at another company.

b.     CEO-level: When you achieve P&L/CEO status, employers often will place more emphasis on the track record a CEO has in leading a company versus a tenured career history in a specific industry area.  Can a CEO move from rust-belt manufacturer to biotech?  Likely not.  However, there isn’t the same granularity of fit applied at the CEO-level as at the middle-management layer.  If a CEO has been broadly successful in in a number of software companies, it often becomes less important what type of software, or what industry vertical that software was developed for.  Certainly some screening is applied to industry, with some of the below more general industry characteristics takingi precedence-

i.      Experience in selling to similar customer base, B2B vs. B2C or government

ii.      Experience raising equity capital from venture capital or private equity

iii.      Experience creating exits for investors that have generated good returns for those investors

iv.      Experience taking a company from one industry into other industries, popularly referred to as “crossing the chasm”

c.     Mid-to-upper management:   Mid and upper management are where skills and experience over mere aptitude are often most sought after by employers.  Those who are hiring at this level will often even emphasize industry skills and experience above managerial experience, giving the edge to a candidate with industry-relevant background and a lesser degree of leadership experience, assuming that management is a learned skill and can be taught or picked up on the job.  Is this right?  That’s not the focus of our discussion here.  Rather, our goal here is to describe corporate hiring  norms from our observations.

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More…

Periodically, we make an effort to pull together executive compensation trends and analysis focusing on venture capital backed companies in the United States.  The last executive compensation report we put out was in September 2009 (see prior blog post http://www.bostonsearchgroup.com/blog/ceo-compensation-analysis-west-east-founder/), and focused on C-level compensation, with a further contrasting of founder versus non-founder CEO compensation, both West Coast and East Coast.

This report is similarly focuses on West Coast and East Coast differences in executive compensation, however this time looking at the VP level across the functional organizational structure.  For purposes of this report, only companies who broadly fit the definition of “information technology” were used in the analysis, not including biotech, medical device/medical technology, or cleantech.

The titles looked at include the following–

Vice President Business Development

Vice President Engineering

Vice President  Marketing

Vice President Sales

Vice President Sales & Marketing

VP Software Development

VP Product Management

Note that below we’ve only included the analysis of the executive compensation data, in other words the deltas. If you’d like more detail and the information on which we based the analysis, please email damador@bsgtv.com with your name, title, company and business email address, and we can provide you with the baseline full report.

Do keep in mind that this is only one set of data. To draw the best comparables, it’s important to do all three data-grabs listed above. Also, this is a “blended” sample set of multiple venture-backed industry sub-sectors in the information technology category. Some industry sub-segments may pay more or less than others with further parsing.

West Coast Early vs. Later-stage Venture Capital-backed Companies

Cash compensation is almost always higher in later stage companies, and this is reflected in all 3 quartiles of data analyzed.  For West Coast venture-backed companies, the differences are $15,000 to $50,000 in most roles, with an average different of about $25,000.  The only exception is for the VP Sales/Sales Marketing role, where cash was significantly higher in later stage companies for these roles, ranging between $75,000 to more than $125,000 in the top quartile companies.

Conversely, equity is almost always higher in early-stage companies to offset the lower salaries referred to above.  For these West Coast companies, regardless of quartile, earlier-stage companies received on average ¼% to ½% more equity, with the biggest jump in VP Sales/Marketing, and lowest in the VP Engineering function.

East Coast, Early vs. Later-stage

East Coast compensation tells a different story from their West Coast counterparts.  Although cash compensation was similarly lower in early versus later-stage companies, East Coast executives of venture-backed companies didn’t see the “make-up” effect in equity.  In fact, equity appears lower in many of the quartiles compared, by as much as ½% comparing East Coast early versus East Coast later-stage.

East Coast vs. West Coast, Early-stage

Cash compensation, East versus West, shows that West Coast executives of early-stage companies more often than not earn more in base .  West Coast Engineering is $10,000-20,000 more in base, VP Marketing is up West over East by $10,000 to $50,000. VP Sales/Sales & Marketing is actually the one notably lower cash category where East Coasters are better off than West in the higher quartiles (but not the lowest).  As noted above, West Coast early-stage executives are compensated more favorably when it comes to equity than their East Coast brethren virtually across the board.

East Coast vs. West Coast, later-stage Venture Capital-backed Companies

As for cash compensation for later-stage companies East vs. West, a similar pattern existed being mostly lower than their West Coast counterparts, than its West Coast peers.  However, when looking at equity stakes in later stage companies East vs. West, the East Coast did better, often by ¼% to as much as ½%.