Congratulations!! You have now cleared two job interviews and received two competing offers. Both of them list different components like your role/responsibility, base pay, stock grants, bonus, and other benefits.

The problem is how do you select which one is better. The key is in understanding each of these components and identifying what it is that you want.

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Note that the pay structure here is focused on the USA.
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None of the below is financial advice. Please do your due diligence before accepting an offer.

Knowing your worth

The key to finding out your worth is doing enough research. There are many different data points you can use to determine how much you should be getting paid. Here are a few websites that you can use to get some idea

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Every website has min and max range. Expecting to get a max of the range may not always work. Stick between average or 20-30% above average unless you have strong competing offers or you really nailed the interview.

Have you checked out our discord group? We host live sessions for coding and system design every week on the server, have study kits that are based on multiple different patterns and topics. No sign up required, just join the discord


Base Salary

The most basic form of compensation is your base salary. This is the paycheck or cash that you will receive beginning of every month or every fortnight. There is not much to talk about here.

Employee stock options or equity

This is the most confusing part of your compensation. It also makes a much larger part of your compensation package. These usually form around 50-60% of your pay package. So let's deep dive into this.

Employee Stock Options

Quoting directly from Investopedia

The term employee stock option (ESO) refers to a type of equity compensation granted by companies to their employees and executives. Rather than granting shares of stock directly, the company gives derivative options on the stock instead.

uhh. what??

If you have never traded in the stock market or have never read the fine print the above is Latin. I will leave some interesting links in this article if you want to understand more details. But in nutshell, a company promises to give you its stock for your time and skill over a certain period of time (vesting schedule).  Whether you can get money out of those stocks (immediately) depends if the company is public or private (and has buyback programs)

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A company (public or private) promises to give you its stock for your time and skill over a certain period of time

Resources

Bonus

This is one of the things that is always included as part of the total compensation which should never be. Bonus is dependent on a lot of factors outside your control. Most of the time bonuses reflect the average percentage you will be awarded if you "just did your work". So if I am hired as a Staff engineer and I perform average, I will be awarded X%.

However, there are two big caveats

  1. You are usually judged at annual leveling cycles for which you need to have completed 9+ months at a company. Hence if you joined in December, and the leveling cycle is in July, tough luck. You are not going to get that bonus
  2. Bonus is sometimes also dependent on how your org or company performs. You will get the "average" bonus if the company performs well and decides to give everyone a 100% bonus. But if the company performs poorly and decides to give everyone a 50% bonus, your average bonus is going to be slashed by 50%.

Signing bonus

I am surprised by how many candidates are not aware of the signing bonus and let this go. You have to ask for this bonus. This really sweetens the deal. If you nailed your interview and you sense the company really wants you, then ask for this regardless of competing offers.

Benefits

These comprise a lot of different things like health insurance, life insurances, 401K matching, dental, vision, etc. If you have circumstances that require you to have extensive coverage, I would suggest you look into these more deeply. Most of the time these benefits in competitive tech companies are pretty similar.


Have you checked out our discord group? We host live sessions for coding and system design every week on the server, have study kits that are based on multiple different patterns and topics. No sign up required, just join the discord


How to decide on an offer of a private company or startup?

This is possibly the most difficult question to answer. Since startups are private, essentially their stocks or ESOP in the present are worth 0$. You are essentially betting on the future. For instance, if the company is valued at $1B and there are 1B stocks. If in the future the company gets valued at $10B then all your stocks are 10X'd.  The tale could be reversed and the company may end up being worth $500 million (you losing 50% of your promised pay). In short, there is no way to predict this kind of future value of the startup. All you can do is make an educated guess.

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There is no way to predict this kind of future value of the startup. All you can do is make an educated guess
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It is completely okay, for you to ask your recruiter about the current price of the stock for a private company. 

However, the benefit of startups is that you can get a lot of responsibilities, exposure, and build really cool products. You will be working close to customers, designing microservices, building for scale, failing when you build for scale, learn and growing immensely. You could set the process and direction of your team, org, or even the startups.

Conclusion

In the end, you have to determine what is more important to you. If you want to get more breadth and get insights into the business aspect, startups are a good way to go. If you are looking for money, public companies or unicorns have a higher probability (This is not to say that you will not have opportunities in public companies. They may be limited).