First Employee Financial Questions

[edwinoel]

I work for an early stage startup (around 1 year old, 2 founders, 2 employees) and I want to get an unbiased opinion on things like mileage reimbursement, business expenses, cost of living raises etc. We have found some moderate success, but it's not exactly rocket shipping to the top. We haven't found product market fit despite some sales. We have several investors and just finished our seed round (valued at 8.5x where our pre seed round was raised)

1) I have put 13,500 miles on my car in the last year for the company and have been reimbursed for some gas. I recently had to sell my car because we are moving to a location that isn't conducive to my 2 wheel drive vehicle and I'll need to buy a new car. I obviously lost value for adding those miles. What is fair? The IRS recommended reimbursement ($0.56/mile)? The loss in KBB value ($3,000) v. what I sold it for?

2). When I signed my contract to join, there was an unspoken agreement for a cost of living wage if we moved from city A (where I was currently living, and a decent salary with benefits). We are now moving to city B, I have no choice, and the city is 30% more expensive. I recently asked and was told I would not be getting any type of living raise. What is a fair way to navigate this. Is this just the cost of being involved in an early stage startup?

3). My computer is on it's last leg. I will need a new one shortly. I would prefer a Mac because that's what I've always used. I'm in a sales/business Dev role so it's not quite as necessary as if I was a dev, but I am much more comfortable and productive on a Mac. Should my company buy me a new computer or do I need to buy my own, and this is just part of being in an early stage startup?

I would be happy with either more equity or cash for any of these solutions. My question for reddit is if I am expecting too much from my founder or if I have some legitimate claims. I really love my founder and the company, but there have been a few times I felt my understanding personality has been taken advantage of.

TL/DR - I'm taking a significant paycut from my startup because of cost of living wages and use my own personal equipment for the betterment of the company. Should they take care of some of these or is this just the deal when working as an early employee at an early stage startup.

 

[orchida]

@edwinoel Mileage reimbursement is for business trips, were you commuting or using the car for personal purposes? You’re not always entitled to a reimbursement but unreimbursed business expenses may be deductible. Business mileage for business travel as a reimbursement is pretty standard.

I don’t think you’re entitled to compensation because you sold your car, no one would ever offer that.

Your unspoken agreement seems to be no agreement whatsoever (neither written nor spoken). So I wouldn’t expect a raise, in fact most employees don’t get raises for moves and often get cuts. You’re always welcome to find a new job.

Your company should supply required materials to perform your job, but sales/business dev doesn’t need an expensive mac tbh so see if they’ll supply you with something for work - if it’s a desktop in the office then so be it.

Tbh you’re seen quite entitled and asking way too much.

 

[edwinoel]

@orchida I have errored on the side of not bringing these things up so I really appreciate your response!

All the miles were for business trips and I haven’t been reimbursed. the reason I bring up selling my car is because the value of the car depreciated because of these business trips, and I have to have a different vehicle to perform my job in the new location. (This doesn’t mean you’re wrong just more of the story)

I wrote the part regarding my cost of living situation poorly, I meant to say I was told if I ever had to move they would give me a cost of living raise, but it was never written down. Does this change your opinion at all?

I kind of agree with the resources part, but a counterpoint is an extra $700 for 25% of your team to be geared up and ready to go seems like a reasonable expense.

Thank you for your response it’s super helpful!

 

[orchida]

@edwinoel I see, this makes me a little softer lol

Sure the mileage is helpful. For background, the IRS rates include depreciation impact so I would request reimbursement if they’re true business travel expenses at standard rates. Again, commuting, personal, etc without documentation is not reimbursable.

That changes my opinion to one that suggests you should seek an increase, but you’re also not considering how your pay is in absolute terms. For example, if you’re making 300k in Fairbanks Alaska, sure NYC is more expensive but they don’t need to give you a raise if normal compensation is 200k ish (all random numbers and I love Fairbanks so no hate). So are you underpaid in the new market for your role considering total comp and the company size/perks/benefits/etc? If not underpaid, moving somewhere more expensive doesn’t factor into the decision.

I see the argument, but core basics for materials/computers is likely the best option here. Companies don’t need to spend on fancy tools or computers, especially startups unless there’s a direct incremental benefit. That said, perhaps they’d offer a budget and you pay the rest yourself? Still think it’s in their court to decide what they offer and I note some employers ask people to supply their own laptops while providing a desktop in office or virtual machine for work.

 

[edwinoel]

@orchida haha hey I really appreciate all of this!

They were definitely true business travel and not commuting and I have documentation.

The absolute is a good way to think about it. I'll be underpaid for my position in the new city, and I wish it was for 300k haha! A 15k increase would make me feel dramatically different about the move.

The idea to ask for a supplies budgets and then pay for extra is a great idea that I would find fair.

Again - thank you for your thoughtful answers! I've really enjoyed your perspective

 

[orchida]

@edwinoel Sure, best of luck negotiating!