Should I Take A Pay Cut for a New Sales Job?

Good Morning. Let’s pour one out for everyone selling lettuce right now. Over the weekend, the FDA said its initial test for the parasite giving people explosive di*rrhea was actually a false positive. Imagine a federal agency telling the world your product will make them sick, just to roll it back a week later and say just kidding (kinda). They’re still investigating shredded lettuce tied to cyclospora, so the story goes on. Sometimes the juice isn’t worth the squeeze. And sometimes the salad isn’t worth the risk. Now, let’s get into today’s Follow Up. (:

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I took a pay cut once to switch jobs.

I ended up working harder and longer hours than I did when I was making more.

But I have zero regrets about it.

It ended up being one of the best career moves I ever made. I worked directly with the founder and learned more about running a business in 6 months than my entire 4 years at college.

So yes, sometimes it’s worth it to take a pay cut for the right opportunity. But defining the ‘right opportunity’ is hard.

When you're weighing an offer that pays less than what you make today, there’s only two reasons to say yes.

You're either buying experience, or you're buying equity in something that might explode. Let me explain…

The bet here is on what the role teaches you or adds to your resume.

It’s about how those new skills or experiences will make you more valuable in the future marketplace.

Example: a sales job at Google, AWS, Dell, or Oracle can open up doors for the next decade. But you might have to take a lower level job or pay cut to get in.

Some people say the big company thing is overrated. Meanwhile, recruiters and founders love to say “our new sales rep sold at Google”. It’s like a badge of honor.

It also doesn’t have to be a brand name for it to be worth it. Sometimes it’s a lower level role at a no-name company that gets you into a new industry or working for a brilliant leader.

In both of these cases, taking the pay cut could be worth it. But to know for sure, you can use the 4 factor frame work.

More on that in a second…

Next we have the home run swing. Aka, joining a rocket ship.

This is basically getting a job at any hot new AI company right now. Or any startup going zero to 100 million in ARR faster than you can finish a season of The Office.

If you’re early on, you take a title cut or base salary cut. And you’re betting the equity could turn into life changing money.

We’re seeing this happen a ton at Anthropic this year. The CTO’s of Workday and Instagram, leaving their C-level jobs to become individual contributors at Anthropic.

But let’s be honest… the chances of this actually working out for you is slim. Sure, a job at OpenAI or Anthropic will likely make you rich. But about 90 percent of other VC-backed startups fail.

Most equity goes to zero (which is fine). You can’t expect a big outcome without risk.

Your risk tolerance changes throughout your life.

So, where you’re at in your life plays a major role in this decision.

At 23 with no mortgage and no kids, you should take every risk you can. Your downside is losing the little money you have, and your upside is a life changing opportunity.

At 42 with a mortgage, two kids, and a steady six-figure job, a new opportunity carries more risk. Which is a good reason to save more and live below your means. The more runway you have, the more risk you can take on.

Before you say yes to either path, run the opportunity through four questions.

> Will you learn stuff you can't learn where you are now?
> Will your network get bigger and better?
> Will this set you up for future opportunities you don't have today?
> Will you earn more over the length of your career by making the move?

If you can answer yes to 3 or more, then a pay cut is probably worth it.

If you’re still not sure about the 4-factor framework, borrow from Bezos.

In 1994, he built the ‘regret minimization framework’ by picturing himself at 80 year old, looking back on his life.

He said, "I knew that when I was 80 I was not going to regret having tried this. The one thing I might regret is not ever having tried."

If your 80-year-old self would kick you for staying safe, you already know what to do.

Today’s newsletter was written by Nic Conley