Earlier this year, Variant and USV conducted an extensive web3 compensation survey of our portfolio companies. Our goals were twofold: create a proprietary dataset exclusive to web3 startups, and capture a snapshot of the state of web3 compensation amid a hard year for the industry.

The survey’s key findings are encouraging for founders building amid a bear market. A majority of respondents said the prolonged bear market either did not have an impact on their hiring plans or did not change their plans for hiring engineers specifically. Moreover, the international nature of web3’s labor market is allowing startups to calibrate for different-sized budgets. 

Builders looking to hire, however, should know that web3 talent comes at a premium—you may have to pay more than web2 firms in order to compete. Additionally, compensation structures are changing, with traditional equity becoming just as important a benefit as tokens.

The survey yielded over 1,000 data points from employees at 32 web3 startups across the Variant and USV portfolios. We received input from companies that cover the spectrum of web3 today: pre-seed to later stage; small (<10 employees) to large (>200); infrastructure, DeFi, and consumer; DAOs to SaaS business models and everywhere in between. 

Based on the anonymized dataset, which we’ve shared with all survey participants, we’ve identified four key observation areas about the current state of web3 compensation and talent as we turn the page to 2024.

1. Web3 startups compete for talent mainly within web3
   
   • Approximately 50% of survey respondents say they compete almost entirely with other crypto startups for new hires, 25% say they compete primarily with web2 (mainly FAANGs and other mature/public companies), and 25% recruit equally from both realms.
   • This suggests that during a bear market, it’s easier to recruit from within web3 than attract first-timers to join the crypto space.

2. Engineers dominate crypto teams—in headcount and pay
   • Engineers account for 50% of headcount across web3 companies surveyed. In particular, Web3 values specialized engineers, e.g. those with these keywords in their titles: smart contract, solidity, rust, protocol, web3, ZK, or cryptography.
   • Web3 engineers are also paid more than the general engineering market: Senior-level web3 engineers earn a 23% premium, and early-career engineers earn 27% more than their counterparts in the general market. (All comparison data via Pave.)
   • The next-largest employee groups, product and marketing/community, lag far behind engineers, with neither exceeding 10% of average web3 org headcount. The relative lack of sales-focused roles is a reminder that web3 is still in its early building phase.

3. Web3 startups are growing more geographically decentralized
   • Across our data set, more than half of employees are located outside of the U.S. 
   • 70% of companies surveyed are headquartered in North America, but 50% of them have employees across three or more continents. 
   • Employees in the U.S. earn 28% more than those outside of the U.S., and for engineers, that gap is 33%. (Interestingly, we did not see any strong correlation between engineer salary and specific location within the U.S.)
   • In our survey, 56% of employees hired in 2020 or before 2020 are based in the U.S. But for employees hired in the past three years (2021-2023), that falls to 46%.

4. Token compensation was a longtime staple of crypto firms—but that’s changing 
   • Web3 companies have been compensating employees in the form of tokens since 2013, and none (in our survey) bestowed equity compensation prior to 2018.
   • Fewer than 40% of employees polled have received equity, while roughly 50% have received tokens. But in 2023, those numbers flipped: new hires were three times more likely to receive equity than tokens.
   • While it may be too early to describe this as a trend, the data suggests that startups are experimenting with new incentive mechanisms that may be less reliant on tokens than in previous crypto market cycles. 

The data we’ve gathered suggest that crypto companies didn’t spend 2023 bemoaning the bear market. Rather, they have used market limitations to further decentralize their operations, experiment with new compensation models, and grow their ranks of engineers.

As always, you can view open positions across Variant’s portfolio here. 

Special thanks to USV and The People Design House.

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This post is for general information purposes only. It does not constitute investment advice or a recommendation or solicitation to buy or sell any investment and should not be used in the evaluation of the merits of making any investment decision. It should not be relied upon for accounting, legal or tax advice or investment recommendations. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by Variant. While taken from sources believed to be reliable, Variant has not independently verified such information. Variant makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. This post reflects the current opinions of the authors and is not made on behalf of Variant or its Clients and does not necessarily reflect the opinions of Variant, its General Partners, its affiliates, advisors or individuals associated with Variant. The opinions reflected herein are subject to change without being updated.