In today’s episode of The Startup Chat, Steli and Hiten talk about how what perks and benefits should you offer your employees at an early stage startup.

Offering your employees perks and benefits can lead to a happy workforce, however, deciding what types of perks and benefits to offer can be challenging.

In this episode, Steli and Hiten why founders struggle with deciding what types of perks and benefits to offer, how Hiten typically approaches this issue at his businesses and the importance of establishing why you want people to work for your company much more.

Time Stamped Show Notes:

00:00 About the topic of today’s episode

01:20 Why this topic was chosen.

01:50 Why people struggle with this.

02:37 How Hiten typically approaches this.

03:50 How Google handled perks initially.

04:22 The main types of benefits you can offer.

04:46 The importance of establishing why you want people to work for your company.

06:23 Questions to ask around benefits when you’re hiring.

07:21 The difference between benefits and perks.

08:46 Why it’s important to think about what types of benefits to offer your employees. 

3 Key Points:

  • People definitely struggle with this because they just don’t know what to offer and at what stage.
  • I do the best I can in terms of benefits until I can do better.
  • Benefits grow as the business becomes more successful.


Steli Efti: Hey everybody, this is Steli Efti.


Hiten Shah: And this is Hiten Shah.


Steli Efti: And today on The Startup Chat, we’re going to talk about perks and benefits. Just in general, how should you think about what you offer to potential employees in an early-stage startup to be competitive or to attract the right kind of talent? And so here’s the setup. Right? We’re talking about early-stage startups. You’re trying to hire. Maybe you’re less than 10 people. You try to hire an initial 10, 15 people on your team, and when you are negotiating with these potential hires, there’s other companies that will compete for these people with you and make competitive offers. The main focus is salary and equity. It might be the main things that you are putting as an offer on the table that a potential employee could compare. But then there’s also benefits and perks, and benefits and perks might be, especially for kind of first-time founders and less-experienced entrepreneurs, a more difficult to navigate world of like, how much should I care about benefits and perks? How important are those? Is this kind of a luxury thing that I do once I’ve raised $20 million? Is it something I do once we’re profitable? Is this something I never do? I think it might make sense to unpack this a little bit and give especially earlier stage founders a bunch of ways of thinking about creating perks and putting benefit packages together for their company and their teams. What are your thoughts, and what are your experiences with that?


Hiten Shah: Yeah, people definitely struggle a lot with this, and the reason is they just don’t know what to offer at what stage, and I think at the earliest stages, it’s really tough to offer a lot. There’s things like health insurance that most people require. There’s even like you can bring people on, on contracts. So there’s a whole concept here for me which is like, the people who are joining really early-stage, they’re taking a lot of risk. And so my experience has always been just do the best I can in terms of benefits until I can do better and then do better. And better means the businesses is profitable, or the business is making money, or there’s a significant amount of capital that we’ve raised, or something like that. I actually think that benefits grow in a business as the business becomes more successful, and that’s my philosophy with it. And there’s a lot of different ways that you can think about that, and I know that some companies like tout these various benefits and things like that. It’s like back in the day when Google was very special. Not that they’re not special now, but they were definitely special as a earlier stage startupee-type company. They definitely offered a lot of perks in the sort of office, and they were known for that. Whether it’s free food in the cafeterias for any team member, anybody coming into visit, to I’ve heard they do laundry over there. That they have haircuts. They have massages. They have all these things that are free for you as a perk, as a benefit. And that used to be a big thing. And now I would say that there’s just a philosophy in general that it’s like, “We’re kind of getting tired of that.” And one of the reasons is people would go to work at those places like Google because of that. Is that the reason you want people to work at your company is kind of the big question in my mind when we talk about the sort of extreme end of benefit. So again, there’s basic benefits. Sometimes it’s things like health insurance, etc., and then there’s benefits that are more oriented around some of these extra perks that people sort of sometimes go overboard with and try to provide, and it’s a recruitment tactic. But I think it’s tried now, and it’s old, and it doesn’t matter as much.


Steli Efti: Yeah, I think that at the end of the day when you hire somebody, you need to know, at a given stage that you’re in, why do you want people to want to join you? Right? And if you’re losing people because when you’re making them an offer, they’re telling you, “Well, I like both companies. I like both offers, but they are offering me… I don’t know… Two extra free haircuts a month, and you don’t have a barber at your office. What can you add on your offer to match the free haircuts I’m getting over there?” If it gets to that level of negotiation, you really have to wonder, do you want… And this is nothing against that person… But do you really want somebody that comes to you mainly because you paid them… You’re making an offer that has like a $100 bucks more worth in perks than a competing offer. But if the main reason they’re coming to you is because it’s a few pennies more in perks or benefits, then the moment they’re getting offered a few pennies more than what you are paying them or giving them in perks and benefits, they’re going to leave again. Right? These are kind of complete hired guns that are only looking for the highest possible offer and the most personal benefit they can abstract out of the current market value. And I would say, especially for a early-stage startup, but really at any point in any business that I will ever run, when we make offers to people, I often ask them, “Hey, before I make an offer, if I give you a good and competitive offer, how are you going to decide between us and maybe some other companies that are at the table? Like what’s your decision-making matrix in how you arrive at what offer to pick?” Because I want to understand how they make decisions, and what they value, and what their priorities are in life. And if somebody is like, “The salary is number one, and number two are the perks; number three are the benefits, and number four are the days off and vacation days, and number five is whatever,” then I’ll don’t even bother giving an offer because I know our values aren’t aligned. Right? I want somebody that cares about the same thing that anybody else in this company cares about mostly. It doesn’t mean that I don’t want to give great offers, but I don’t want somebody that just optimizes for the numbers. Who doesn’t really care about the business, the culture, the product, the people, just wants the most money. Because I also know that on that level, I can’t really compete effectively. I cannot pay people more than any other business on this planet can pay them, and I don’t want to. Right? So I think that being aware of that makes a ton of sense. And to me, there’s a difference between benefits that… I think both benefits and perks… I think when Google first started with the whole like, “You never have to leave our campus again.” Right? “You could have your entire life transpire here.” Part of that was like, “We want to take great care of you.” But part of that I think later on was… I don’t know. I think it started as like, “Wow, look at how awesome my employer is.” And then it ended up with like, “Wow, my employer wants me to just work at all times and never leave work. They want me to work on the way to work.” Right?


Hiten Shah: Yep.


Steli Efti: “They give me this bus with free Wi-Fi and a desk, so I can work and lots of coffee on the way to work, and then they want me to just stay at fucking work forever and never have an excuse. Oh, I need to go to the dentist.” “There’s a dentist at the campus.” “Oh, I need to go workout.” “Well, there’s a gym here.” “Oh, I need a haircut and laundry.” “Oh, I need to eat. I need to sleep.” “All the things you need to do, you just stay right here, keep working. You can do them around the corner here.” And so people kind of switched the way they felt about it from, “Wow, our company’s so awesome. They want to treat us so well,” to, “Wow our company’s really trying to squeeze every bit of life out of us and not have a life outside of work.” So the sentiment has changed quite a bit. But I do think that thinking about what types of things do you want to reward, and what kind of investments do you want to make in people. Right? So when we think about benefits, like paying for good healthcare for people, makes so much sense. Again, it all depends on your company, and the structure, and the stage of it. But when you can afford it, for us, it’s really important for our company to invest in amazing healthcare because we want our people to be healthy and taken care of when they don’t feel well. Health is so important, so we want to make investments in the health of our people. 401(k), right? We’re very aggressive with that because we want people to be building up for their retirement, and we want people to be taking care of themselves financially and think long-term financially, and we want to invest in that and take good care of them in that way. There’s other perks when it comes to team retreats that we make, when it comes to coworking space. There’s certain things that we do where we’re like this is an investment in our people that makes sense, and that will benefit their health, their lives, their growth, and their work, so it makes sense on all levels for us as a business to offer these perks or offer these benefits and invest in our people in this way. But then there are perks that make no fucking sense. Right? That are just like cool to have. Things that we could put in an offer or promote in a job posting that sounds sexy, or cool, or fun. But if you actually think about it, what is it really promoting? What is it really rewarding? How is this going to benefit the business long-term and this person long-term? There’s really not much to it. And so I think it’s important when you think about benefits and perks, a) to understand what is the stage that you’re in, and what can and cannot the business afford. Right? When you’re two co-founders, and you’re trying to hire your first employee. You’re losing money, and you put all your savings in there, and it’s a bootstrap business. Obviously, you won’t be able to give people amazing benefits and perks because the business cannot finance these things, so you need to be able to hire somebody that can take a lot more risk when it comes to their salary and these benefits and perks and get rewarded maybe with equity, maybe with something else. Maybe it’s the kind of experience or the ownership over the product, or whatever they get, the exposure. But you’re looking for a different type of person at that stage. You’re not going to hire maybe somebody that is in their mid-50s, that has a large family, that has a mortgage, and that has financial pressures and needs a high salary, and safety, and security, and all that. You’ll have to attract different type of talent and offer them some different type of things. But as your business grows, and as you hire more and more mature employees, and as you scale the business, you’re probably going to start to think more about the benefits and perks that are part of the overall package that you offer to people that work for you. But I think that it’s important to separate the bullshit and the hype from the real and understand that there’s certain things you can do that are real investments and things that are good for your people and good for the business, and those are the investments the business should be making versus things that just sound cool, or other companies do. “Oh, all these cool companies do X. Let’s also do X.” No. Just pump the brakes and ask yourself, “Why? What is X promoting? How would it really benefit our people? How would it benefit the business long-term? Why is this in the best interest of our shareholders, of our customers, of our employees? Why is this smart? And why would we do it, other than everybody else is doing it? That’s not a good enough reason.” So, yeah, it’s a fascinating topic. But the most important tip, I think, that I have for this episode is don’t just create certain perks or benefits because other companies do it, or because you’ve ever lost a candidate that told you, “Oh, they’re offering me this amazing package with X, Y, and Z in there, and that’s why I’m going with this other company versus you.” And then you feel the pressure to just offer X, Y, and Z to the next candidate, not to lose. Just think about if these perks and benefits of this… These things make sense to your business and the type of people you want to attract as employees and as teammates.


Hiten Shah: Couldn’t have said it better myself. I think you’ve thought about this a lot, and so have I from just looking at different companies. At the end of the day, these perks and benefits, there’s not much to it. I think people make it really complicated, and they come up with reasons why they should offer certain things in order to attract certain types of folks. If that’s the case, and you know that certain benefits are going to attract the type of people you want and represent your culture, do it. Talk about those perks, talk about those benefits. If you’re just making them up because you think you need to do it because some other company’s doing it, I would definitely think twice, if not three times, before you consider perks and benefits like that.


Steli Efti: Awesome. That’s it from us for this episode. We’ll hear you very soon.


Hiten Shah: Later.