Josh Melick has worn many hats throughout his career. First, as an engineer, he worked on some of the earliest mobile phone apps for managing field service operations. Then as a startup CEO, Josh wore the product leadership hat and helped grow Broadly into a ten-thousand user SMB CRM platform that Smith-Micro acquired in 2010. In the years since Josh has been a venture capitalist and startup founder in residence. But right now, he’s helping other entrepreneurs bring their ideas to fruition as a mentor in the Founder Institute, an early-stage incubator that helps entrepreneurs launch companies with sound business models.
We recently caught up with Josh to ask his advice for founders who are looking to hire their first employees.
Q: What do you base new hires’ salaries on?
Josh: “The most simple rule is that salary should be based on fair market value for the industry, skillset, and location of the role. Let me explain a bit further, though. I think there are many ways that founders can go about fair market value. One is to look at salary data on websites like Glassdoor or Salary.com. However, this can be challenging in early-stage companies without a lot of data because often the salaries are missing pieces of information, especially when you have an early-stage company that has raised less than $5 million in outside capital.”
“Another way to look at fair market value is by going to your local staffing agencies and seeing what they would charge for a candidate with the same skillset as the person you want to hire. If both options aren’t available, I think it’s okay to use a number you feel comfortable with based on research and personal knowledge. Still, I suggest that founders always err on the side of being generous.”
Q: How do you think about salary caps for new hires?
Josh: “I don’t know much about salary caps. Each time we’ve hired someone at Broadly, we just set the cap based on our current revenue and profits. Sometimes it was more than what we were paying a candidate, and sometimes it was less. It all depended on how much money we had in the bank (or more accurately, how much money we projected to have) at the time.”
Q: What’s your approach for bonus or equity incentives?
Josh: “My personal opinion is that bonuses are used best when you feel like you’ve really nailed the compensation number. This is especially true for higher-level roles like sales or marketing where you feel like you can show revenue goals and know what the bonus should be if the goals are met.”
Q: Anything I haven’t asked that you think is important to mention?
Josh: “I think that equity incentives are great but should be reserved for the very top talent. I also think it’s important to give a minimum amount of cash upfront, even if you have to take a small percentage away from the equity incentive.”