Carta’s Post

Excited to share our latest State of Startup Compensation report covering the first half of 2024. The market has essentially returned to "normal" after the insanely hot times of 2021/2022 and the cooler times of late 2022 into 2023. Salaries are starting to tick back up at historically normal rates and equity grants have found new footing. All that said, here's what I'm paying attention to for the rest of the year: - There's been a trend towards shorter vesting schedules for equity grants at publicly traded tech companies (and even absent shorter vesting schedules, either back-loading or front-loading new hire equity grants). This hasn't really bled over to private companies yet, but will it? - Many employees who received new hire grants at valuation highs, are coming due for refresh grants at entirely new (and potentially lower) valuations. How will companies respond? There's a tricky balance here of managing dilution, paying attention to market, managing internal equity, and rewarding high performers. - The world continues to move in the direction of more pay transparency rather than less. Just about all pay transparency regs focus on salary and, to some extent, other benefits. Will equity compensation start to receive the same scrutiny? Even with higher quality sources of equity benchmarking data for startups, there's still a ton of variation which leads me to think that this is an area ripe for pay equity issues (and transparency can help here, along with a well structured program).

I hate reposting my own content, but I feel I must make an important addendum to my earlier post. It's a common myth that you must sacrifice earning potential to gain flexibility. This is a story we've been telling women for decades to justify paying them (us) less than the guys, and now some are using the same argument to push full time staff back into the office. And it's baloney. You shouldn't have to choose. The reality is that I hit my full-time earnings peak back in 2012. You heard me. I've made less annually in the last decade than I did when I was 32. It took stepping out on my own, starting my own business, and setting my own terms to jump back up and beyond what I made back then. (In straight dollars - NOT adjusted for inflation.) There are many factors that go into what makes a job meaningful, rewarding, valuable and compensated. Sometimes there is a trade-off between stability, earning potential, stock options, flexibility, and more. But don't assume that working in a flexible mode means sacrificing your worth. The opposite may just as equally be true. #payequity #womanownedbusiness #insuranceindustry #womensupportingwomen #flexibility #futureofwork #value #insuranceprofessional #careergrowth #mentorship #knowyourworth

This passage struck a chord with me - and it's not just big tech workers who are feeling this way. Bramble and Bird Consulting is built on a model of flexible work for experienced professionals who want to find balance while solving tough problems in regulated spaces, like the #insuranceindustry. Fractional teams can help optimize companies evolving to increasingly lean operations while providing strong talent with meaningful work. “I am not really interested in joining an organization that has demonstrated that they don’t value the people who are keeping the business running.” Like Chavez, she says she’s beginning to think of looking for other kinds of work, focusing less on pay and more on jobs that might provide better work-life balance and more meaning and fulfillment, she said." #fractional #consulting #futureofwork #solopreneurship #team #changemanagement #layoffs #neweconomy #innovation #techcareers #womeninbusiness #deib #womanownedbusiness #talent #culturematters #culturechange https://lnkd.in/e84dwdSu

Last year, we witnessed a significant shift in the startup employment landscape, marked by layoffs and changes in hiring priorities. Our latest compensation report digs into the dynamic shifts in startup hiring and compensation we’re navigating today. In the ever-evolving landscape of VC-backed startups, understanding these trends is crucial for shaping effective HR strategies. The past year witnessed a notable reset in startup employment dynamics. A significant highlight was the unprecedented contraction in startup employment—a first in at least five years. This contraction was fueled by a wave of layoffs, with more than 18,000 employees affected in January 2023 alone. While startups continued to hire, their priorities underwent a discernible shift. Roles in engineering, sales, and operations took precedence, while functions in customer success, support, and product saw a relatively lower influx of new hires. Interestingly, compensation strategies also evolved, with average salary levels increasing for entry-level workers and C-suite leaders, while new managers and VPs experienced a decline. Here are some key takeaways from our report: 🔹 Hiring activity halved in 2023 compared to previous years, indicating a significant slowdown in recruitment. 🔹 Employee turnover remained considerable, with about 32% of hires from 2022 and 23% of hires from 2023 already moving on. 🔹 Equity packages have shown signs of stabilization, with a slight increase observed in the average amount of equity issued to new hires. Understanding these trends is paramount for HR professionals and business leaders alike. Stay informed, adapt proactively, and navigate the changing landscape with confidence. Read the full blog post here: https://lnkd.in/gA5fCWHe #HRInsights #StartupTrends #CompensationStrategy #HiringTrends

Why Are So Many Perks & People Being Let Go In Silicon Valley? There once was a time when technology workers were pampered with treats; free gourmet food, free laundry services, free massages & generous compensation. But those days are not only over, apparently, tech workers themselves are getting sacked in high numbers. While the US added 353,000 jobs last month, tech companies continued giving thousands more workers their pink slips in January after laying off 260,000 employees last year. So why the massive change of heart with respect to the value of workers? First, AI is a big deal & orgs like Google, Amazon, Microsoft, Salesforce et al, let people go in under-performing areas in order to invest heavily in the future. An existential moment, perhaps. Second, AI may already be eliminating some jobs that can be automated. It’s almost certain this relates to a small percentage of the job cuts. But the big reason according to this research is that investor demands (greed?) for greater profits and share price appreciation have pressured CEOs to improve their bottom lines even more (Note that the Nasdaq 100 index closed at an all-time high just 18 days ago) and to squeeze workers to get there: "The continued cuts come as companies are under pressure from investors to improve their bottom lines. Wall Street’s sell-off of tech stocks in 2022 pushed companies to win back investors by focusing on increasing profits, and firing some of the tens of thousands of workers hired to meet the pandemic boom in consumer tech spending. With many tech companies laying off workers, cutting employees no longer signaled weakness. Now, executives are looking for more places where they can squeeze more work out of fewer people." “That is the way the American capitalist system works,” said Mark Zandi, chief economist at Moody’s Analytics. “It’s ruthless when it gets down to striving for profitability and creating wealth.” 

The world is facing and heading towards a big Monopsony. It is important to begin to process that the gap between working for a company (salaried or corporate) and being a freelancer is becoming increasingly shorter and everything points to acceleration and unification. In 2023, the IDB explained it like this: "Monopsony occurs when there are many people looking for work and there are only a few employers, who can afford to offer a lower salary than they would have to offer if there were more competition for workers." It also states that when monopsony occurs, employers have “more power” in the relationship with the workforce. The statistics prove it and it is not that we are creating more humans, I mean it is clear, more massive layoffs, more automation and impressive numbers on the growth of the Gig Economy (people looking to obtain additional income or devoting themselves full time to offering services independently ). One fact that makes this clear is the projected gross volume of the collaborative economy in the world and what has happened in its impressive growth: 2019 represented $248.3 billion. 2021 represented $347.8 billion. 2023 represented $455.2 billion. Many are or will think it's not going to touch me, but I have seen up close how corporate officials arrived at their office tower and their access batch did not allow them to enter, they simply did not read the email that was sent to them on a Sunday at 11 pm where they were announced that they no longer belonged to the company from one day to the next, I am talking to them from important positions to minor positions. And yes, of course, in the US it was named "Layoff" but no region is immune to this. McKinsey in 2029 already estimated that 800 million jobs would be covered by robots in 2030 and let's see, there was no talk of Ai even with the force that was detonated in 2023 and the same firm announced a layoff package so that 2,000 of its employees look for other jobs or ways to earn income in the next two years and when we counter it with data from the same firm where they express that in 2025 around 540 million people will look for work through online platforms it seems to be very clear towards where we are headed. I asked an Ai to make an image for me using the following prompt: "Create an image about monopsony" and this is what it gave me:

In 2023, startup hiring decreased significantly, with key findings showing a decline in total hires, stabilized equity packages, salary benchmarks trending upward, and a shift towards prioritizing engineering, sales, and operations roles as layoffs and departures increased. I for one hope these trends are reversing in 2024 #startups #sales #marketing

Here's a weird stat: Out of all workers who were hired by companies on Carta in 2022, about 32% have already left their jobs, and about 68% are still with the company. For workers who were hired in 2021, the numbers are nearly identical: 33% of workers are no longer with the company, and 67% remain. I would have expected that the annual rate of employees who have left their jobs increased steadily across time, rising by a few percentage points for each year further back you go. But that's not the case. It's probably worth thinking about the rest of the employment landscape. A wave of hiring swept across the startup world in 2021 and the first half of 2022. Then, in late 2022 and early 2023, layoffs skyrocketed. If startups were pursuing any version of a last-in, first-out philosophy, hires from 2022 might have been more impacted by layoffs than those from 2021, which could push the annual ratios closer together. I'm sure there are other variables at play here, too. A similar phenomenon is at play for 2018 and 2019, with nearly identical rates of new hires who are still at their companies. Maybe these are explainable anomalies—or maybe this particular dataset is just more volatile than I guessed.

Fascinating startup hiring/compensation trends (per Peter Walker, head of insights at Carta): - Hiring halved last year compared to previous years. Of the hiring done, it was more for engineers, sales, and ops (less so for customer success, support, product, and research). - Average salaries have been pretty flat, with a slight uptick the last few months. (Hope the trend continues!) - Equity grants dropped significantly last year (37% since Nov. '22!) but have stabilized. Ops dropped by 11.2%, and HR by 23% (the most of all functions). - In-state hiring happens most often for unicorns/larger companies and in energy/life sci/hw (less so for SaaS/fintech/sw).

What's new in startup hiring and compensation trends? Our latest report is here, packed with data insights on what's happening across startup hiring, salary, equity, layoffs, tenure, and more.