Startups should not pay more cash than Google

Qasar Younis, the co-founder and chief executive of the startup Applied Intuition, has watched early-stage founders make an offer that strikes him as backward. Flush with cash from large fundraising rounds, they hand new hires starter salaries so generous they become, as the company grows, not sustainable.

His rule, as he puts it, is older and simpler: “Historically, the right way to incentivize in startups was low cash, high equity, and get rich through the growth of the stock.”

Younis argues the distortion starts with funding itself. Because so many investment funds exist, he says, founders raise large rounds, end up with a lot of cash on hand, and overpay. He argues the result does not make economic sense. A candidate can often get paid more cash to join a startup than to join Google or Facebook, companies that, as Younis puts it, “generate billions in cash flow every month,” a gap visible on Levels.fyi, a website that tracks tech pay.

Younis says keeping early salaries lower is about building a responsible business, not about pinching pennies. When founders use a big raise to inflate pay, he argues, they break the connection between creating value and getting paid for it. “The incentives are not there to build a functioning business. That’s the reality,” he says. At Applied Intuition, he says, the counterweight is discipline: “make this a viable company,” with watching costs as a central principle.

Younis believes that approach has worked at Applied Intuition, and he points to his own staff as proof. Younis says, “The vast majority of our employees are now at the 99th percentile of compensation, but they’re not there because of their first offer.” By that, he means they now rank among the highest paid in comparable roles. “They’re there because the stock price grew,” he says. “That’s the right way to do it. You get stock while it’s cheap, you contribute to the company’s success, and you get rich over time.”