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Technical Roles in ClimateTech
Before diving into the compensation structure and salary negotiation process, it’s important to briefly level-set on which roles we are focusing on in this article. While most ClimateTech companies have a wide variety of roles, including quite unique titles such as Energy Training Enablement Manager, Senior Research Associate, and Senior Solar Performance Engineer, in this article we’ll primarily focus on the negotiation process for Software Engineers, Data Scientists, and Project Managers within the ClimateTech space.
Compensation Structure at ClimateTech Companies
Compensation at a ClimateTech company looks a little different - especially compared to FAANG companies - so before receiving an offer, you need to understand the basic components. A typical offer comprises:
- Base Salary
- Annual Bonus (also called performance bonus)
- Equity Grant
- Signing Bonus (at select companies)
Base salary is what you would expect at nearly any company (the income you receive on your regular paychecks), but equity grants, signing bonuses, and annual bonuses have more nuances to be aware of.
Equity packages at ClimateTech companies have similar stipulations as equity grants at your average tech company. Typically the equity is either offered in the form of stock options (most common if the company is privately owned) or restricted stock units (a.k.a. RSUs, which are usually offered if the company is later-stage or publicly-traded).
For example, Tesla is a publicly traded company, so they offer RSUs. Employees in 2021 and early 2022 saw large equity grants due to the high value of the stock at that time, but as Tesla’s stock has been more variable over the past year, equity packages offered today are considerably lower.
Climate software company Arcadia, on the other hand, is a privately-held company (they raised their Series E in May 2022), so they offer stock options. Those stock options can be valued by looking at the strike price (a.k.a. the price the employee would pay to exercise, or buy, their options) and the preferred price (the price investors pay today to purchase stock). The calculation to find the approximate value of the options today is to subtract the strike price from the preferred price and multiply that by the number of options on offer. For example, in simple math: if you had 1000 stock options with a strike price of $8, and the preferred price was $20, the estimated value of each share would be $12 (and $12,000 for all 1000 shares).
For more context on the difference between stock options and RSUs, please reference the chart below. If you’d like to learn more about the different types of equity and gather startup-specific equity negotiation tips, check out our blog post here.
The reason we recommend using a calculation to understand your stock’s value (as opposed to going off of what a recruiter quotes as the value) is that recruiters frequently oversell the value of private equity. It’s fun to hypothesize about how the equity could be valued post-IPO, but it isn’t very helpful when you're trying to compare offers apples-to-apples. Plus, there’s no guarantee that the ClimateTech startup will ever IPO - just look at Patagonia, one of the most famous climate-focused companies. They’ve been in business since the 1970s and still haven’t IPO’d - and they don’t plan to!
Many ClimateTech companies feel that going public, or even following the traditional startup route of using venture capital (VC) funding, could actually undermine their goal, depending on the influence of the VCs. In many cases, it’s actually quite challenging to get VC funding as a ClimateTech startup. According to a study by PwC, since 2013, ClimateTech companies with the potential technology to reduce carbon emissions by more than 80% (such as solar power, wind power, food waste technology and alternative foods), have received just 25% of total ClimateTech investment. Instead, software and micro mobility have received the majority of ClimateTech funding. Hopefully we will see this trend shift soon in favor of more planet-saving companies receiving the funding they need!
Because of the tricky funding dynamics in ClimateTech, equity may not be initially valued as highly as at the average tech startup, but that’s not a universal truth. We’ve seen companies like Form Energy raise as much as $818.8 million (as of their most recent Series E funding round), so it is possible to have strong equity upside at a ClimateTech company.
This is a one-time bonus that is used to incentivize you to sign an offer. It's usually not included in the initial offer and the policies around this are company-specific. From what we’ve seen in the ClimateTech space, it’s not common for companies to offer signing bonuses, but it’s definitely still worth inquiring about. Don’t expect the bonus to reach FAANG level, but there’s a chance to see a signing bonus as high as $30K (we just saw a $30K signing bonus given for a Staff Software Engineer offer at a Series A battery management company).
ClimateTech companies typically include an annual bonus in their compensation structure, but they don’t always outline it clearly in the offer letter or guarantee it. For example, Tesla is known to offer a roughly 10% annual bonus for its employees, but that information is not always shared with the candidate before they accept the offer. You should definitely inquire with your recruiter and do your own due diligence online to see if your specific company is known to offer an annual bonus.
GreenTech vs. FAANG Pay Comparison
Given the unique compensation structures, there are two initial differences to keep in mind:
- Many ClimateTech companies are startups, so while the upside for equity may be quite high (potentially up to 100x), you will likely receive less cash on a regular basis until the IPO or other liquidity event takes place. FAANG / big tech companies are majority public (with exceptions like TikTok and Airtable, both of whom offer RSUs as private companies), so your equity tends to have more immediate value (and you don’t have to pay to exercise your options), but the potential for upside isn’t as high. If you want to make a long-term investment in a GreenTech company you believe in, it may end up being worth your while. But if you’re looking for short-term cash, FAANG/big tech may be a better choice.
- One benefit of many ClimateTech companies is additional flexibility regarding hours and work-life balance. Many companies still struggle with burnout culture, but for the most part we’ve seen numerous ClimateTech companies follow in the footsteps of Patagonia founder Yvon Chouinard, encouraging similar policies to “Let My People Go Surfing.” This radical policy was implemented to encourage employees to get out and enjoy nature, even during work hours, with the end goal of each employee fostering a stronger connection with the natural world - thus incentivizing them to work harder to reduce carbon emissions and slow climate change. We see this influence in Rad Power Bikes offering a free Power Bike to each employee, and in Impossible Foods offering paid mission days off to encourage employees to reconnect with where their food comes from and remind them of why they’re working towards this goal in the first place. Ultimately, the unique benefits offered by ClimateTech companies are in some ways more enticing than what FAANG companies can offer, but it ultimately comes down to what you value more - time off or money earned.
ClimateTech Career Paths & Pillars
One of the main benefits of working for a ClimateTech organization is being able to work at a company whose morals and values align with your own. The primary pillars in ClimateTech are emissions reduction, emissions removal and reuse, climate risk, and minimizing non-carbon impact. If you’re passionate about or interested in any one of these verticals, ClimateTech may be the place for you!
In terms of career progression, each company has different promotion cycles and performance evaluation guideposts. If a company is on the smaller side, it can be tough to find a path to a promotion, considering your desired role may not even exist yet within the org.
The best advice we can give in this case is age-old, but it’s stuck around for a reason - because it works! In order to carve out a path for promotion, it isn’t wise to wait for promotion cycles or annual reviews to make that desire clear. Managers - especially at startups - simply don’t always have the time to go the extra step to support your promotion.You’ll need to be the driver of your own career.
The best thing to do is to first think through the scope of the next role you want to take on and then think about potential projects you could take on that fit within that scope. It can be challenging to predict which projects would be the best reflection of your fit for the desired role, so consider putting together an Impact Roadmap detailing the problems the team is trying to solve and how your work could have an impact on them. This Impact Roadmap should also include your 30-, 60-, and 90-day goals for your time in this new position.
Taking the initiative to brainstorm high-value projects, prioritize them, and fit them within the scope of your desired role will demonstrate your readiness for a promotion. Your manager will see you going above and beyond and appreciate your ability to solve pain points for the team. After you’ve taken on a few projects, it would be beneficial to schedule a call with your manager (regardless of how close you are to a performance evaluation/promo cycle) and present your projects, the impact and value they brought to the team, and your Impact Roadmap. Worst case scenario, your manager says something like “with the economy the way it is, we can’t afford to move you into this role, but this initiative is very impressive and much appreciated, and it will definitely be noted in your next performance evaluation. They will walk away feeling pleased with your hard work and proactivity. Best case scenario, the manager agrees you’re ready for the promotion and they have the headcount to support it.
Best ClimateTech Companies
Thankfully, there are a lot of exciting companies in the ClimateTech industry, so below we’ll compare a few of the major ones in terms of product output and employee experience.
Beyond Meat vs. Impossible Foods
While Beyond Meat has been around since 2009, Impossible Foods launched in 2011 and has quickly become the default modern vegetarian burger option. While Impossible Foods aims to insert their product into every fast food restaurant chain in America, Beyond Meat’s goal lies within the supermarket meat section. Beyond Meat is certified vegan, while Impossible Foods’ continued testing on animals has prevented them from earning that designation.
The main differences between working for Beyond Meat or Impossible Foods are the pay and internal culture. Impossible Foods tends to pay a higher base salary than Beyond Meat by about 20%. Beyond Meat focuses more on diversity and inclusion and work-life balance, while Impossible Foods has more room for upward mobility and strong internal leadership.
Rad Power Bikes vs. Aventon
While Rad Power Bikes has been around since 2007, things changed substantially when Aventon was founded in 2013. Rad Power Bikes had cornered the market on electric bicycles, but Aventon offered a slightly more expensive, faster, and more streamlined battery-powered bike. Extensive comparisons have been done on the quality of the bikes compared to one another, but how do the companies stack up in terms of work culture and pay?
Aventon does appear to offer slightly lower pay than Rad Power Bikes, but the difference is pretty small. However, the culture within Aventon seems more positive than at Rad Power Bikes, as Rad Power Bikes went through a few rounds of layoffs in the past few years, which have affected company morale. One thing is for sure: both of these companies are making some pretty impressive products!
ClimateTech Negotiation Process
GreenTech salary negotiations aren’t too different from tech negotiations as a whole. Negotiations are fundamentally about creating leverage, and a company has to believe that you as a “rational actor” would choose another offer over their offer. If you simply “want X” or “saw online that people make $Y” it’s not going to carry much weight. To negotiate well you need to 1) deeply understand the company’s compensation bands, 2) prepare a strategy that uses the optimal points of leverage in your situation, 3) understand company-specific rules, and 4) prepare for the actual conversations (e.g. receiving offer, counter offer, etc.). We cover some of these topics on our blog – for example, this article about How to Prepare Negotiation Scripts.
That said, here are a few important points and differences for ClimateTech negotiations vs FAANG:
- FAANG companies’ base salary and equity grants have much more room for negotiation than smaller ClimateTech companies, with the exception being companies like Tesla.
- ClimateTech companies may leverage their mission more in a negotiation than a FAANG would. They may say things like “if you believe in our mission, compensation shouldn’t be the top priority,” so be prepared to respond to this pushback accordingly. We recommend saying that “while you are super excited about the mission, being paid fairly is important for you to be excited about the opportunity and consider joining.”
- Certain companies are more willing to negotiate than others (this is true in big tech, as well). For example, Tesla may offer a signing bonus, but it’s highly unlikely Northvolt would allow one to be added to an offer.
- You can focus on benefits (PTO, healthcare, etc.) and get more traction with ClimateTech companies (especially if they’re early stages) than at FAANG, where more often than not the benefits are set for everyone with little to no flexibility.
- Many GreenTech companies press candidates for their initial expectations. It's usually best to deflect this, but if you do share, make sure you've already mapped out your strategy and chosen your number based on the leverage you have (this is particularly important because the largest increase happens on the first round of negotiation).
Given the large number of small firms in the industry, it's impossible to cover all of the company-specific points in this article. If you want support to ensure you don't leave any money on the table, book a call with our negotiation team today.
Can I Lose my ClimateTech Offer by Negotiating?
This is by far the number one question Rora’s career partners are asked. It is a very common and valid fear, especially considering today’s volatile market conditions. But based on our data, what’s the actual probability that a ClimateTech company would decide to pull an offer?
First, let’s discuss what benefit companies like Arcadia, Tesla, and Northvolt would get from rescinding your offer. The primary reason a hiring manager would elect to rescind an offer would be a fear of liability - i.e., this hire may cause a scandal, this hire will in no way be able to perform their duties, this hire will be detrimental to the company, etc. Aside from that, by the time an offer has been extended, they have already invested substantial time and money into the candidate and should have a solid understanding of how this candidate will perform in the role. It would be a net loss for the company to go through all those interviews, conversations, and putting together the offer to decide to cut ties at the last minute – this is a risk they try to mitigate before giving an offer.
Even in this economy, we have seen clients get increases in their offers from companies of all sizes by making respectful and well-reasoned requests. A company is very unlikely to pull the offer based on negotiation - in our experience across thousands of negotiations, we’ve seen this happen less than 0.5% of the time. That includes companies that are on hiring slowdown/freezes right now!
Now, there is a fundamental difference between getting an offer rescinded and losing the offer due to headcount. A headcount loss is solely based on the state of the ClimateTech org and the necessity of the role within the team. This isn’t common but can occasionally happen if needs at the company shift, and it’s more common with earlier-stage startups. It does not reflect your interview performance or skill level, and oftentimes companies will try to keep in touch with you and share other opportunities once headcount opens up. If your offer was rescinded, the company would not have any interest in keeping you warm.
Regardless of the low likelihood of getting an offer rescinded, we know that this is a very common fear – and one that often holds candidates back from negotiating! To help mitigate the risk (and increase your confidence while negotiating), follow these dos and don’ts to lower the probability of your offer getting rescinded:
- Do keep it professional: avoid getting into politics or making jokes that could be poorly received and make your hiring manager think you might be a liability to the company
- Do give justification and reasoning behind your ask for increased compensation: this could be based on your market value, another opportunity you have, specific expertise you bring to the table, or the strong relationship you’ve built with your hiring manager
- Make your first compensation ask over a phone call: in most cases we see a higher rate of success and understanding when the first ask is done over a call instead of an email
- Do demonstrate to your hiring manager that you’re a solid candidate who would be a strong hire by creating and collaborating on an impact roadmap (outlining your 30-day, 60-day, and 90-day goals and priorities for getting started in your new role)
- Do your best to understand the necessity of the role on this team: How critical is it? How long has the role been open? This can help you determine the likelihood of the headcount being lost – and also the leverage you may have in negotiating