Startups have never been able to offer the same salaries as big tech companies. Now, with companies like Meta and OpenAI willing to pay million-dollar salaries amid the AI race, the pay gap has widened even further.
Early-stage startups are not doomed, however. If they develop a generous, fair and flexible compensation strategy, they can offer competitive compensation packages and give themselves the flexibility to adjust their approach as they grow, according to founders and experts on stage at TechCrunch Disrupt 2025.
Startups shouldn’t try to compete with big tech companies anyway, Yin Wu, co-founder and CEO of stock management software Pulley, said on stage at TechCrunch Disrupt in October. She added that a stable tech company and a startup typically don’t attract the same potential candidates initially.
Startups should instead be as charitable as possible in their compensation packages, Wu said, regardless of their inability to match the pay of a big tech company.
“My pretty strong opinion when it comes to startup equity is that you should be more generous than you think you should be,” Wu said. “I think it’s unlikely that if the company is really successful, you’ll look back and say, ‘man, I gave away too much equity to everyone who was in my company to try to make this company a real success.’”
Randi Jakubowitz, head of talent at 645 Ventures, agrees. Jakubowitz added that when a startup is looking to make a competitive offer, it should set clear goals for the person it hires to ensure the hire is commensurate with the compensation it receives.
“Make sure you hold them accountable and make sure you understand what the implications are from a vesting perspective,” Jakubowitz said, regarding when employees take control of their stakes. “That’s where, if you don’t act quickly if someone is underperforming, you’ll never get that equity back if it’s fully vested. Make sure there’s very clear accountability.”
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The panelists also emphasized that companies do not need to engrave their compensation and equity strategies from the start. Instead, startups should make sure their approach is fair from the start, so that even if they want to change, they have the foundation to do so without exposing themselves to legal issues or bitter office politics.
For Wu and his Pulley company, that meant setting standards for compensation. Wu said the company pays a set range for each role — regardless of where the potential employee is located — and systematically builds compensation packages with stock offerings in the 90th percentile.
“Having this framework allowed us to grow and say ‘great, as the company continues to do well, the actual number of shares you receive is going to differ due to the value of the companies, but this framework is still applied.’
Rebecca Lee Whiting, founder of Epigram Legal and fractional general counsel, added that having these standards will help businesses avoid potential legal pitfalls in the long run. For example, it helps companies avoid offering unequal pay between candidates of different genders — something all companies should ethically try to avoid — but it’s also illegal in states like California, Whiting noted.
Whiting, Wu, and Jakubowitz all agree that as long as founders approach building their compensation programs with the right intentions, everything else can be adjusted or changed ultimately.
“I think it’s really important to not just think about that process. Think about the people you’re trying to hire and what’s going to entice them to accept that offer,” Whiting said. “It’s not something you have to do right out of the gate. You’ll probably have to clean up after the Series B and recognize that everything is fine. But don’t try to make everything perfect from the start when you hire your first people.”
