🚀 How to compensate early hires?

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3 tactics to compensate early hires

📝 Try out candidates on a contract-to-hire

• The best talent will consider contract-to-hire, because it’s the best way to assess long-term compatibility — of course, you still need a contract (and sometimes NDA)

• This gives the potential full-time employee a chance to build relationships and assess fit

• Test each other out for X number of days or months; then at the end of it, talk about whether it should be a full-time relationship

💵 Define your compensation framework early

• Build a framework for how to compensate early hires after assessing for the right fit

• Compensation should reinforce the specific value a function contributes to the wider organization:

  • Sales thrives on immediacy and ownership → fuel performance and discipline in equal measure

  • Customer success depends on relationships and retention → reward long-term value, not short-term wins

  • Product and engineering lives at the intersection of vision and execution → spark urgency and shared accountability for outcomes

• Determine compensation framework by asking:

  • What are the company values, and how can these be reflected in comp?

  • What will be the balance of equity versus cash?

  • Where will we sit on the transparency spectrum?

  • What percentile will we aim for our employees to hit?

  • How will top performers be rewarded?

  • Is the philosophy fair, simple, and defensible?

  • Is it scalable?

• Don’t wait for review season to talk about pay — recognize impact in real time and reward that with off-cycle comp increases

𓊍 Introduce 4 salary tiers

• Define 4 levels that reflect experience and contribution, based on company values

  • Level 1: Junior / entry-level. 0-3 years experience. Early in their career/new to the function. Requires more guidance and mentorship.

  • Level 2: Mid-level / experienced individual contributor. 4-7 years experience. Solid practitioner who can execute independently. Doesn’t require constant direction.

  • Level 3: Senior / expert. 8-12 years experience. Seasoned professional who brings strategic depth and can mentor others. May begin to define processes or best practices for their function.

  • Level 4: Principal / leadership. 10-15+ years experience. Deep expert or early functional leader, may be one of the first managers in the org. Owns a discipline or domain outright. May receive performance-based equity or leadership bonuses.

2 traps to avoid

🚨 Over-giving equity to land top candidates

• Over-giving equity may lead to dilution of ownership and control for founders

• To give perspective, a very late growth stage company might give 1% to their newly hired CEO

• First ten hires rarely exceeds 10% of the total equity pool

🚨 Paying at the top of the market

• Bonuses are for past performance, and compensation package is for future performance

• Paying top of the market even when you can is not sustainable, especially if future performance is uncertain

• Manage the balance between stewardship and reward by establishing the right early compensation to allow room for rewarding results (use equity to catapult total compensation)

1 tool to leverage

📖 Best practice to determine compensation

• Decide whether you’ll target the 50th percentile of the market (the market median) or a different point on the spectrum that fits your philosophy

• Use market data from resources like Radford and Mercer to benchmark roles and cross-check salaries

Bonus: 1 trend to spark startup ideas

📈 Gen Alpha is redefining culture, consumption, and influence online

• Born 2010–2024, Gen Alpha wields $100 billion in spending power, thrives online, and values participation over passive consumption

• Gen Alpha is pushing the next evolution: participation; platforms like TikTok, Roblox, and Discord are the main stage:

  • It’s not enough to get the joke; you need to remix it, clip it, meme it, launch the next viral wave. 

  • Humor has become a form of capital; the funniest voice wins attention, status, and algorithmic reach

  • internet fluency and comedic timing now define influence as much as beauty or aesthetics once did

• Brands thriving here embrace “unhinged” marketing, real-time banter, and community-driven chaos (e.g. Nike is using Roblox to reach younger audiences with “NIKELAND”)

• Opportunities include:

  • Community-first experiences: Building brands that thrive in TikTok comments, Roblox worlds, and Discord communities

  • Meme-driven commerce: Products, NFTs, and digital items that reward cultural participation

  • Creator-centric team: Treating community managers like PMs, hiring meme-literate employees, valuing “shitposting” as much as performance marketing