[HN Gopher] Working at a startup is overrated, both financially ...
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Working at a startup is overrated, both financially and emotionally
Author : dshipper
Score : 522 points
Date : 2021-05-22 10:01 UTC (13 hours ago)
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| mad_ned wrote:
| It also makes a huge difference if the startup is your primary
| source of income or not. My wife worked for several startups, all
| of which failed. But since I had a more stable paycheck, it
| wasn't so bad, and we just treated the extra startup income as a
| bonus, and had very low expectations on cashing in on the equity.
| erwald wrote:
| though at that point it sounds no different than a hobby,
| really.
| XorNot wrote:
| I mean she would've still been paid. What it means is that
| losing your job doesn't become a pressing financial concern
| right away.
| amelius wrote:
| This is the promise of UBI. Everyone can work on their hobby.
| ghaff wrote:
| Enjoy working on your hobby on the government's
| $1,000/month because that's what any remotely plausible
| _basic_ income is going to be like.
| the-smug-one wrote:
| That's what every Swedish student's income is like :).
| lotsofpulp wrote:
| UBI is not about working on any hobby you want. It's
| about redistributing wealth so that people can negotiate
| for more of the pie since the current system relies on
| using the cumulative wealth of one's ancestors to
| determine their bargaining power.
| ghaff wrote:
| At least you're candid that it's about taking money from
| people against their will. Most advocates couch UBI in
| terms like unleashing individual creativity and things
| like that.
| lotsofpulp wrote:
| I'm also candid about my current lifestyle being based on
| taking things from people against their will.
|
| Their will probably was not to pick strawberries in a
| foreign nation or clean beers spilled surfaces at 11pm or
| not being able to breastfeed their infant because they
| need to go slap hamburgers together for $15 an hour.
|
| I assume not all of those people willingly got drunk and
| high and got caught engaging in crime in their teens and
| 20s and willingly threw away their economic
| opportunities.
| yao420 wrote:
| > taking money from people against their will
|
| Yes, that is what taxes are.
| rriepe wrote:
| I don't think mad_ned can afford all of us.
| asddubs wrote:
| they don't call him mad_ned because of his sound decision
| making
| FooBarBizBazz wrote:
| Problem is, how do you support this? You must have made a lot
| of money to both (a) support your family, and (b) pay for the
| childcare that your wife would have been too busy to help very
| much with. Either that, or you lived in a low cost of living
| area and were able to do some kind of price/salary arbitrage.
| And if the solution _was_ "make a lot of money", then that
| again makes childcare doubly important, because if _you also_
| were focusing on work, then you wouldn 't have had much time to
| raise your kids either. Right?
|
| Ah. I've left out the obvious option: You don't have kids, and
| don't plan to?
|
| I bring this up not to be snarky but because this feels like a
| very real Catch-22.
|
| (Deleted weird coda with mythological references and stuff.)
| hluska wrote:
| Why do you assume they have children? Not everyone choose to
| have children and frankly, that's a great decision. I'm a
| parent but I subscribe to the feeling that instead of
| assuming everyone has/wants kids, we should praise people who
| don't.
| FooBarBizBazz wrote:
| I started out assuming they had kids, but I did catch
| myself:
|
| > Ah. I've left out the obvious option: You don't have
| kids, and don't plan to?
|
| Yes, that's their business.
|
| My problem isn't with their personal decision per-se. It's
| that today's myths ("the glorious and independent startup
| founder") encourage people to make sacrifices that they may
| not think about until it's too late. I think most people
| who chase the startup dream will regret it. I also think
| that there are other people, not founders on average, who
| benefit from these myths. So they should be treated with
| suspicion.
| novok wrote:
| Children are a public good that funds everyone's
| retirement, no matter your political system and the people
| who don't have kids are basically free riders in the end.
|
| In a libertarian perspective, the young create growth in
| the market that the ownership old use to fund their
| retirements, and in a socialist perspective, they create a
| tax base of income that the government uses to fund the
| retirements of the old.
| anon12345678910 wrote:
| I did it, took a lot of risk and it has paid off somewhat.
|
| I chose to work at an early stage startup, in my home country
| (which is known to be adverse to entrepreneurship), in a very
| monopolized market, even though I could've easily moved abroad
| and joined a big company.
|
| Despite all the odds it worked out for me financially and I'm
| proud of what we achieved, but I realize it was basically
| gambling.
|
| My advice is to take a shot at it if you're young, but try to aim
| on ambitious startups so you can balance the slim odds with huge
| potential upside.
| annoyingnoob wrote:
| I've worked at several startups. If you are new to stock options,
| I think that the different ways those options can work and be
| diluted is the hardest part to grok. Personally, I never had to
| 'take a haircut in comp' to work at a startup, but I've had bad
| stock deals.
|
| I would say that each of my startup experiences had some dark
| times, it wasn't always easy by any measure. At the same time,
| each of those experiences provided a lot of personal growth and
| opened other opportunities for me.
| ttul wrote:
| I don't think you're doing it right if you're going to work in a
| startup out of a desire for enormous riches. The odds are tiny
| that you'll end up better off financially than you would working
| for Google and collecting huge RSUs.
|
| Do it because the startup excites you, and be okay with things if
| the startup fails and you are out of a job. Because the economics
| likely won't work out, you'll have to derive value in other ways.
| globular-toast wrote:
| This makes me think of the composition fallacy[0]. There is
| another, more specific, term called the "apex fallacy". The idea
| is that people have a tendency to see only the most successful
| representatives of a particular group and infer that the group as
| a whole has an advantage.
|
| [0] https://en.wikipedia.org/wiki/Fallacy_of_composition
| wgyn wrote:
| This is compellingly well-written but wrong, in my opinion.
| There's been a steady trickle of articles on the top of Hacker
| News that make essentially the same argument: your odds of
| choosing a successful startup are miniscule (2% in this one). I
| think this does people considering startups a disservice.
|
| The _conditional_ chance of picking a successful company to join
| is way higher than 2%, or whatever the median success rate of all
| startups is. In particular, I think really intellectually
| curious, ambitious, hard-working people can, for the most part,
| identify each other. This is really different from reading about
| valuations or what other people think in the news, which leads to
| a lot more noise. If you meet a bunch of people at the company,
| you can assess the their caliber for yourself.
|
| While it's not a perfect predictor of success, it's at least the
| case that such people are usually working on cool, worthy
| projects. Based on this, it's possible to get conviction on a
| group before their likely success becomes common knowledge--
| granted it's getting harder to do this because of how much money
| is floating around.
|
| To put it another way, there are a handful of companies out there
| right now at Series A/Series B with a dense accumulation of
| talent. It's probably a reasonable bet to try and join them
| before they hit unicorn valuations, when room for growth is
| smaller. And in these cases, you could be #10-#40 at a relatively
| de-risked company and have a really great outcome.
|
| On the flip side, if you even remotely enjoy learning and
| autonomy, working at Google/Apple/Amazon/etc is probably a great
| way to set yourself up for existential frustration. It's not even
| a great financial proposition. Even at $500k/yr, it's 20 years--a
| whole working life--to make it to $10m, the hypothetical number
| from the article. Even if your first startup doesn't make it
| after 2-3 years, you can try again a few times and still come out
| ahead. This is a classic pg argument--I can't remember which
| essay--but the point of a startup is to compress decades of
| working life.
|
| Caveat: I happened to join a startup whose success changed my
| life both financially and in terms of career trajectory. I'm very
| biased. But this is also why I feel passionately that this
| article's advice is bad.
| derekdahmer wrote:
| > Even at $500k/yr, it's 20 years--a whole working life--to
| make it to $10m
|
| Just one nitpick here, FAANG companies have 2-5x'd in the last
| five years so with $250k of equity in this example would have
| had an actual comp of $750k-1.5m/year which would leave you
| set-for-life rich in just 5-10 years no matter which one you
| chose.
|
| If you have access to a FAANG job and are optimizing for
| expected return you have to ask yourself - is it more likely
| this billion dollar company doubles in value or a seed stage
| startup that you have 0.5% of becomes a billion dollar company?
| wgyn wrote:
| Perhaps, but it's possible to invest in Google via the stock
| market. I'm not sure it makes sense to bake in the stock
| market performance of a public company when considering value
| of their "equity." It seems like you should be using whatever
| your standard discount rate (S&P 500 or NASDAQ)?
| novok wrote:
| FANG equity packages are an implicit buy option that lasts
| 4 years. $1 million dollars of options that lasts 4 years
| is very expensive and very lucrative.
|
| Plus in startup land, your missing that equity half, so you
| can't take that money and go invest it in google like you
| could working at FANG.
| oncethere wrote:
| I agree that the math is very poor for early employees. I went
| through the best case scenario and it still wasn't worth it.
|
| I joined a startup just after their series A. I was offered what
| they said was a lot of equity (1/2000 of the company). I ended up
| with the best case scenario: it grew like crazy and 8 years later
| went public at a multi-billion dollar valuation. My shares had
| gone up more than 100x.
|
| My payout was good, but financially not worth it. The company
| raised a bunch along the way (I stopped counting after series G)
| so I got diluted a fair bit. I also took a lower than market
| salary for the time I spent there (which was of course justified
| by the fact the company was growing so fast and people were
| jumping to hop on a rocket ship).
|
| I ended up with low 7 figures, which, yes, is amazing, but I
| actually would have had more at any FAANG company during that
| same period.
|
| So who really got paid? The founders and the executive team (no
| matter when they joined). It was a good experience, but startups,
| financially, are not a great move.
| jFriedensreich wrote:
| On the other hand i think working corporate jobs is also still
| way overrated (even if it is maybe already rated low). Whenever I
| think this will be different i want to shoot myself after 1 or 2
| months latest, working for a startup just is the lesser evil.
| sbarre wrote:
| It depends what you value..
|
| Early in my career, I wanted experience with as many parts of
| the business as possible, I wanted to work on really hard
| problems and build really cool stuff, and I could take risks..
| I was young and perfectly comfortable with a bad work/life
| balance because I had no other commitments.
|
| At this stage in my career, I value stability and work/life
| balance much more, and while I am still looking to solve hard
| problems, it's not at the urgent pace that startups demand, and
| how I define "hard problem" has changed too.
| AdmiralGinge wrote:
| Yeah, I think I'd be utterly "half a bottle of gin a night"
| miserable working in the average corporate environment. It's
| hard to put my finger on the precise reason, but that kind of
| environment just has absolutely zero appeal to me even though
| I'd be earning a fair bit more.
|
| Money's nice, but not hating your life is nicer. I'd make a
| rubbish Sisyphus.
| villasv wrote:
| _Having_ to work (instead of the privilege of working if you
| want on whatever you want) is the root of evils.
|
| Startup life isn't working on what I want, it's agile firefight
| every sprint. Corporate life wasn't working when I wanted, it
| was plowing through the day unproductive and unmotivated.
| gcheong wrote:
| Most people I know working for a startup as an employee are doing
| it mainly because that was the job they could get at the time
| they were looking not because they were deliberately looking to
| join a startup. Whether it's financially or emotionally optimal
| is usually secondary to basic survival or at least not wanting to
| have to deal with current tech hiring practices longer than one
| has to.
| itake wrote:
| The author also fails to mention the stock option trap. I've seen
| offers at early state companies like this:
|
| * $150k base (take-home $100k)
|
| * $30k/yr options that expire 3 months after you leave or 10
| years.
|
| You have to either set aside 30% of your take-home to invest in a
| extremely high risk single stock or you're chained to your desk
| until the company exits.
|
| If you golden handcuff your way to an exit, you better hope the
| exit happens before the 10 year mark when your options expire.
| hluska wrote:
| The ten year expiry is an IRS rule for issuing an ISO.
| itake wrote:
| Interesting. didn't know that.
| marcinzm wrote:
| In my experience startups, equity NOT included, pay worse than
| big tech companies but better than non-tech companies. So if you
| can get into big tech companies then that's better financially
| but if you can't then startups beat the alternative.
| scott_meyer wrote:
| Doing a bunch of math about payoffs and probabilities completely
| misses the most important point:
|
| When joining a startup you are a minority investor. The value of
| your options depends 100% on the integrity of the majority
| investors.
| k__ wrote:
| For some people it's just that they like to try new stuff.
|
| I did employment and self-employment with consulting.
|
| Trying a product business is simply an interesting new step.
| cudgy wrote:
| What is success? The article assumes for the most part that
| success is mainly monetary, and further it makes the classic
| mistake of comparing success monetarily to companies like
| Facebook. Success is different depending on many factors. For
| example, if a person needs or likes guidance and structure, a
| startup is likely not a good fit, especially when they are
| inexperienced. There are some good points about the strong
| community in startups and how it can be used to encourage
| excessive work hours and lower pay. However, that same community
| feeling and sense of purpose is what I remember fondest from
| working at startups. In addition, startups give you access to
| other capable and driven people that you might create a startup
| of your own with ... much less likely at a large company full of
| risk-averse employees who work on a small piece of the company's
| "mission".
|
| What personality type are you? The author likely comes from a
| structured, religious background and prefers the "certainty" of a
| corporate environment. Some of us were raised by hippies with
| little or no religion and high structure. People like that are
| miserable in highly structured environments in which gaining a
| sense of the "mission" is impossible.
|
| The main point here is that career decisions are highly personal
| and one person's hell is another person's heaven.
| jsonne wrote:
| > The author likely comes from a structured, religious
| background and prefers the "certainty" of a corporate
| environment.
|
| I'm a practicing Catholic and have worked either as a
| freelancer or a startup founder for >90% of my career. Not sure
| how you're drawing that conclusion but plenty of my peers are
| religious in a traditional sense and work in startups.
| kingsuper20 wrote:
| It's a thing that engineers (particularly software, hardware
| guys aren't as rude) really have to watch.
|
| Given the tendency for programmers to be that edgy
| libertarian atheist guy, it's easy to be unthinkingly rude to
| a coworker who is of a churchly persuasion.
| airstrike wrote:
| > The author likely comes from a structured, religious
| background
|
| How on God's green Earth did you jump to that conclusion? Can't
| it just be a matter of personal preference, as you said it
| yourself?
| celim307 wrote:
| Yeah sounds like OP has a chip on their shoulder and is
| projecting.
|
| I wouldn't trade my years at a startup for anything but they
| can be run by tyrants in a fiefdom just as much as a VP runs
| an org, sometimes more so as they have no one they report to.
| jasode wrote:
| _> >> The author likely comes from a structured, religious
| background
|
| >How on God's green Earth did you jump to that conclusion?_
|
| The author wrote: "From the ages of 19-21, I spent my time as
| a missionary for the Church of Jesus Christ of Latter-Day
| Saints, popularly known as the Mormon church. I worked 12
| hours a day for two years straight with only Christmas and
| Mother's Day off. [...] For this job, I was paid a total of 0
| dollars."
|
| It seems reasonable to assume that _non_ -religious people
| wouldn't do that for $0 pay.
| jsonne wrote:
| Ironic because Utah is becoming a tech hot spot driven in
| part by the large Mormon presence.
| selimthegrim wrote:
| How so? Recursion doesn't scream full of Mormons to me.
| jsonne wrote:
| Just one example. The Mormon mission program is quite
| possibly the best sales training program in the world. If
| you can go door to door in a country that isn't your own,
| in a second language, selling religion then enterprise
| SaaS is really a breeze. (Note I am not Mormon)
| hashkb wrote:
| Selling eternal salvation to the poor will always be
| easier than selling another support tool to a procurement
| person spending someone else's money and probably with
| one eye on a new job.
| steveklabnik wrote:
| There is/was a significant Mormon contingent in the Ruby
| community, all the way up to Matz.
|
| I've worked with a lot of Mormons in tech. You may have
| too and not realized it. In my experience, they tend to
| not put an emphasis on it, it's a more private thing.
| selimthegrim wrote:
| I meant the pharma company in SLC.
| steveklabnik wrote:
| Ah, I didn't know it was a company name, I thought it was
| a _slightly confusing_ comment about computer science.
| vmception wrote:
| It does to me.
|
| Their support system and rigid structure is unparalleled
| for such a large scale in the US. Their funding church is
| very wealthy, and the discipline churns out people that
| are very effective in high growth industries, which is
| just a convenient side effect relevant right now.
| [deleted]
| m463 wrote:
| In my experience, working at a startup can get you more
| experience and responsibility faster, and the work itself can
| be more satisfying.
|
| The compensation itself is a lottery and should be treated as
| such. And there will be shenanigans.
|
| I do think that startups more closely align with people with
| less personal responsibilities and a higher tolerance for risk.
|
| EDIT: downvotes? just saying - this was my personal experience.
| YMMV.
| ernopp wrote:
| Spot on.
|
| I've been working in startups for 10 years (my whole career so
| far) because I was optimising for learning, not financial
| return. I made the bet that startups would be the fastest way
| to learn (breadth of tasks, workload, exposure to more senior
| people etc) and I am allergic to larger company bureaucracy.
| higeorge13 wrote:
| It highly depends on the startups, not on people personalities.
| There are good startups where your work will be appreciated,
| you will bond with everyone, become friends through the
| difficulties and hopefully enjoy and celebrate the successes.
| And there are startups where you will see chaos, poor
| management, bad attitude to employees, pointing fingers and
| engineers leaving every couple years. Even startup-oriented
| personalities cannot stand such workplaces.
| geofft wrote:
| > _However, that same community feeling and sense of purpose is
| what I remember fondest from working at startups. In addition,
| startups give you access to other capable and driven people
| that you might create a startup of your own with_
|
| Depends a _lot_ on the specific startup and specific big
| company. The 50-person startup I worked at right out of college
| never really found product-market fit, and tried many things,
| and the product I worked on (and deeply enjoyed working on
| technically) was always a second-class product to the business.
| And we were selling B2B software, so I was never motivated by
| wanting to change the world, just by wanting to ship some cool
| software.
|
| I get that same motivation at my current 1500-person employer,
| where I work on developer tools; I get to work on interesting
| technical problems, and the fruits of my work go to help people
| in, frankly, the same industry as most of our customers at the
| startup. I'm a little _more_ involved in what out internal
| customers actually do and therefore find it more motivating to
| help them, though the work they do, per se, isn 't interesting
| to me. And there are plenty of driven, passionate, and friendly
| people around who care about the same problems I care about,
| and it's much easier to find a few of those people and make a
| community when I've got orders of magnitude more people to try
| to work with.
| tuyguntn wrote:
| > The main point here is that career decisions are highly
| personal and one person's hell is another person's heaven.
|
| This. From "depends on person" perspective I fully agree with
| you, from monetary perspective I agree with the author.
|
| After years of working for startups, now success for me means,
| financially independent to work on whatever I enjoy doing, not
| some OKR, KPI set by person who already achieved their success
| story.
|
| Haven't reached my success. I was hesitant to do leetcode and
| join FAANG companies 10-15 years ago, worked for bunch of
| startups as an employee and contractor, all failed, financially
| I still depend on big boss, and even can be laid off if layoff
| season starts again.
|
| FAANG are not only more stable, but total compensation for 10
| years can easily beat 1B$ exit startups, assuming you get 0.1%
| of equity there
| christiansakai wrote:
| This is why I just do crypto. Say what you want about crypto, but
| the risk reward ratio is easily exceeding lotteries and startup
| lotteries.
|
| Edit: and I do it while working at one of the tech giants.
| Paycheck goes to crypto.
| shrubby wrote:
| I got out from the last startup. Started sleeping better
| immediately when I knew I was about to sign the termination.
| Founders wanted to be famous & millionaires and there was no
| meaning to be found.
|
| The pay wasn't a critical thing in my suffering. Now I'm making a
| third less and feeling ten times better.
| markus_zhang wrote:
| What about ownership? In a startup individuals can and often do
| take charge of a piece of business, be it technical or marketing
| or others, but in an existing business you won't have much
| ownership unless you start from the beginning (i.e. as a
| startup).
| podric wrote:
| I heard that being an early startup employee is also a great way
| to fast-track to a leadership/management position, as compared to
| working at a big corporation. Is there any truth to that?
| parsley27 wrote:
| I think that is true in the case of the growth startup I work
| at; probably 25% of the leadership started out as early
| individual contributors, and if things go as expected over the
| next few weeks, I will be making my first big step toward
| leadership after just six months at the company.
|
| I never had any internal career growth at other jobs in larger
| or more established orgs.
| 1billionstories wrote:
| 100%
| jerzyt wrote:
| One of the biggest risks for a startup is becoming a consulting
| firm. Once you do that, you won't be able to scale up. Been
| there, done that. That's why the FAANGs are so successful - they
| have millions of clients, without a single one who could control
| their destiny.
| jhbao wrote:
| This article isn't about if you should join a startup vs. a big
| company. It's about if you should join a startup vs. a FAANG
| company, which offers outrageous compensation & benefits. From
| that perspective, FAANG is the obvious choice 99% of the time.
|
| The more and apt comparison would be if you should work at a
| startup vs. a corporate job at a HP or Qualcomm. At those type of
| companies, compensation is not competitive (they often off-
| shore), benefits are tight, and the work is not interesting. It
| could very well be argued that a startup, even with high
| probability of failure, would be more fulfilling.
| SilurianWenlock wrote:
| Why do HP and Qualcomm want to offshore but FAANGs dont?
| analyst74 wrote:
| The job of an outsourced position and senior+ IC role in top
| tech firms are fundamentally different. You can't survive
| just be churning through ticket backlogs. Sometimes you are
| expect to come up with initiatives, gather support and
| resources, deliver said initiatives that have a measurable
| impact to a global company without much guidance or help from
| your boss; at higher IC tracks, the kind of initiatives you
| lead can have meaningful impact to a whole sector.
|
| These expectations, in a more traditional company, is
| normally reserved for positions much higher up in the org
| chart.
| axegon_ wrote:
| There are other aspects that you need to take into
| consideration: bureaucracy, the enforced-by-law company
| values(last year I got an offer which seemed really appealing
| until I saw the contract and some of those clauses), the
| endless "open a jira ticket" for every little thing such as
| rebooting a development server or whatever(which ends up being
| a 2 day task with hours of explanations as opposed to ssh; sudo
| rebbot), the endless and pointless meetings which are filled
| with "we should" coming from people who love taking credit when
| something is going right but will toss the blame to anyone they
| can when they aren't. Not to mention absurd expenses for
| "business trips" which are pointless in the vast majority of
| cases. I've been to several of these and they were all a waste
| of money and time: seriously, fly 20 people across the world
| just so they can listen to 3 days of "we should" lectures,
| there goes a ton of money which could have been spent on
| something useful like training or even a few small bonuses for
| the people that have worked their asses off. I've worked in
| such environments for many many years and the idea of ending up
| in such a place again terrifies me(I certainly started
| appreciating the absence of all that crap, though I never
| really knew how much all that truly bothered me until I ran
| away from it).
|
| My point is, if you decide to go with a FAANG, you will get the
| quirky benefits and traits but at the expense of having to
| throttle yourself much below your capacity and dealing with a
| ton of frustration coming from the corporate side of things.
| NationalPark wrote:
| Most tech startups seem to model their hiring practices and
| organization around FAANG companies (technical screens, OKRs,
| Agile, reliability teams, etc.) so I think the comparison is
| actually more interesting if you leave out the "normal" jobs.
| Since a lot of the skills are transferrable, you're more likely
| to have the option of either rather than one or the other.
| PragmaticPulp wrote:
| I'm part of a mentoring group for recent college grads. One of
| our biggest challenges is that much of the conversation on HN,
| Twitter, Blind, and other sites assumes that FAANG admission is
| guaranteed.
|
| This becomes a major struggle for juniors when they realize
| that there aren't any FAANG offices in their location. Many
| others apply to FAANG but don't receive offers, which is
| devastating if every HN comment, medium article, and Tweet they
| read revolves around getting into FAANG.
|
| It's a strange situation to have to console junior engineers
| about their "paltry" $130K compensation at comfortable 9-5 jobs
| in low cost of living cities.
|
| I have to remind a lot of people that the FAANG interview
| acceptance rate is very, very small. This idea that everyone
| can call up FAANg and get a $200K+ job in their city is not
| helpful to anyone but top candidates in a few select cities.
| nrp wrote:
| I fully agree that the fervor around FAANG is unhealthy.
| However, if you are just at the start if your career, that is
| the best time to move to wherever the jobs you are interested
| in are, rather than restricting yourself to what is available
| near where you currently are. There will be folks that have
| obligations preventing that, but most recent college grads
| should have little holding them from moving.
| PragmaticPulp wrote:
| This comment is a good summary of the problem I was
| describing: It's easy to say that anyone who can get a
| FAANG job should get a FAANG job, but if circumstances
| don't line up, what else? That's where many students draw a
| blank, because all of the advice they've consumed revolves
| around FAANG job offers that may not arrive.
|
| Statistically, more people are rejected than accepted by
| FAANG companies. A lot of my mentoring time is spent
| helping students figure out what's next when their primary
| FAANG plan doesn't (or can't) work out.
| taurath wrote:
| They also know that the money/prestige they start making at
| the beginning of their career can vastly change their
| trajectory in economic terms. I would argue that the chance
| of making $500k/yr 10 years into their career will be vastly
| different if someone goes to FAANG vs a Microsoft temp role.
| m463 wrote:
| I suspect it's not a carefully-planned long-term strategy
| on the part of new college grads - they're just comparing
| offers and picking the best.
| reikonomusha wrote:
| I work at a company that doesn't offer a total compensation
| package competitive with a FAANG, but still definitely very
| healthy, and we do lose _many_ straight-outta-college
| candidates all the time who are demanding base pay of $200k+
| because "that's what I'd get if I worked for Google." After
| denying that, unfortunately, some candidates insinuate that
| being offered $1.x * 10^5 for an entry-level position is a
| shrewd ploy to brazenly take advantage of their valuable
| skills at low cost.
| ffggvv wrote:
| ironically google pay is competitively low when youre at
| that tier. having worked there and other places google pays
| the least out of top tier companies. (no im not considering
| amazon or msft as the same level)
| pydry wrote:
| I imagine being under mountains of student debt makes them
| more nervous.
| hashkb wrote:
| Does anyone consider FAANG to be startups? I'm confused by your
| comment.
| dinkleberg wrote:
| No, what they are saying is that people present a false
| dilemma where your options to work are either at a FAANG or
| at a startup.
|
| Most people work at non-FAANG companies. If you're going to
| do a write-up on relative merits of working at a startup vs a
| larger company things are going to lean heavily in favor of
| the FAANG because the overall risk to compensation is much
| more favorable.
|
| But if you compare a startup to a more standard tech company
| then each side will have more pros and cons.
| bdcravens wrote:
| No, and I don't think that's the parent is suggesting that.
| They are saying if you are looking for a challenging, highly
| rewarding role, FAANG is a better fit than startups.
| [deleted]
| dleslie wrote:
| I generally agree, having worked for a number of startups most of
| the concerns seem valid; however, there is a unique arrangement
| that has benefited me:
|
| As a Canadian, I can generally make a higher wage working for an
| American startup than working for anything local. Usually I can
| expect 1.5x to 2x over the mean local rate for my skills and
| experience; and since I don't _need_ health benefits and I enjoy
| guaranteed parental leave and such, it works out quite well.
|
| I'm happy, and the startup is happy because _I'm still paid less
| than an equivalent American_.
| cmrdporcupine wrote:
| Yah there's another aspect to that, too, which is that American
| startups are in my experience better managed than in Canada and
| the investment and startup community far better in the US.
|
| After working at a local startup it becomes clear that most of
| the founders all know each other, went to private school
| together, etc. etc. it's kinda gross. A bit over a decade ago I
| worked at one, had a bad experience, and then went to work for
| a New York HQ'd late stage startup -- higher pay, good
| management, decent people, decently managed, and was acquired
| by Google a year later.
| sinablk wrote:
| That's interesting. I've just started working for a Canadian
| startup based in Vancouver and the pay is actually "fair"
| Canadian market price for someone of my experience level.
|
| Not sure if it's a difference in culture but my small team (a
| mix of Canadians and Americans) is super respectful of people's
| personal time. e.g. no texting during after-work hours even
| with tight and critical deadlines. You're also free to run a
| personal errand during work as long as you deliver on your
| tasks at the end of the day. And since it is an interesting
| work with lots of learning opportunities, a lower pay (compared
| to an American startup) is a nice trade-off for me if I get a
| more relaxed work environment. Although I'm sure this is not
| true of all startups in either country.
|
| I'd love to connect with you and share experiences. Feel free
| to message me on Discord (Tag in my profile).
| ChicagoDave wrote:
| If you don't want to work for a startup, then don't.
|
| Many people find value in the experience whether we got paid or
| not. I'd rather work my ass off for a startup than spend money on
| an MBA.
|
| I've been a part of five startups. One of them (and the financial
| collapse) resulted in ruining me financially in 2009, but it was
| my choice. No one told me to take the job.
|
| Three were mine (two failed, one is in hypothesis mode). The
| other was with a millionaire and it also failed. I learned to
| look at things differently because of all of those experiences
| and my value as a consultant today is because of those
| experiences.
|
| I know you can get screwed over by sketchy founders and
| unscrupulous venture capitalists. You should absolutely
| understand where you stand going in. Stock options are 100%
| worthless unless you have a startup that succeeds and you have a
| founder that is honest in their intentions. Even real equity can
| be diluted, so that's no guarantee.
|
| But there are always cases where the first few hundred employees
| make a life's worth of wealth in a few years.
|
| I hate these articles bitching about the startup world. If you're
| gonna bitch, maybe go take a job at a nice safe boring mega-
| corporation that will maybe just destroy your soul. You'll get
| paid on time and you'll work 40hr weeks, have PTO, health
| benefits. If that's what you want, then just go do that.
| throwaway78123 wrote:
| Agreed.
|
| One of the key issue is that most people do not know or
| understand how the equity piece works, leaving the door opened
| for abuse.
|
| It doesn't have to be complicated. Two things to check if one
| is granted equity or options: - What is the rough value of the
| stock when granted? 409A is the tool for that although it is
| usually quite conservative, which is good for the recipient. -
| Do I have the same class of stock as management/founders:
| ensures no funny business around dilution.
| neilsharma wrote:
| I've been an early engineer (first 3) at a startup. I didn't
| stick around long enough to vest for reasons, but in hindsight,
| it wouldn't have been worth it financially even if I had. They
| eventually got acquired by a big brand name Silicon Valley
| company after 4-5 years for an undisclosed amount. My 0.4% plus
| salary wouldn't even break $200k/year in total unless the company
| sold for a fair amount above $100M.
|
| Later in my career, I have had offers at seed stage companies.
| The compensations were marginally better than the one described
| above, but most still needed to 10-15x in value over 4 years just
| so the annualized comp would match the base annual comp at
| various series C/D companies I also had offers at.
|
| Given the risk, often poor culture, rampant inexperience in
| leadership, and long hours, the upside is only worth it as an
| early employee if the company is a unicorn. And every founder
| says their company will be a unicorn...
|
| After starting a few (failed) companies myself, I've come to
| adopt the mindset that the total equity allocated to the founding
| team (pre-seed + seed + maybe series A) should be around 20-25%.
| Everyone after should get 15-20%. In the event of a $100M exit,
| there should be no scenario in which the founders/investors walk
| away with a win financially, but the early employees do not. The
| early employees took the same risk and secured that win, and thus
| should be rewarded accordingly.
|
| Edit: fixed grammar and re-ordered sections
| auspex wrote:
| At the end of the day it is a lot harder to come up with an
| idea, find market traction, convince people to invest in you
| than it is to become the third employee.
|
| Additionally, a 100M exit isn't always a win. It depends on how
| much money was invested / spent to get there as well.
| neilsharma wrote:
| I agree; founders should have substantially more equity than
| any one early employee. But its not just about which is
| harder to start as (founder or early employee), but also the
| time/energy/emotion invested over years to bring the company
| to a successful scenario. Being a third employee is still
| pretty hard if you are working 60-80hrs/week for years and
| making major life sacrifices.
|
| And you're right; $100M exit isn't always a win. That was a
| somewhat arbitrary milestone I used to do quick math.
| taurath wrote:
| Hard work unfortunately only has marginal value in this
| economy. The real money is in being able to get other
| people to invest in you. The idea even matters less than
| your ability to convince investors.
|
| Startup employees are often quite screwed from a promises
| made perspective.
| tmcw wrote:
| Little to argue with on the fundamentals here, but ending up in a
| place where everyone's winning move is to work for one of five
| unregulated monopolies is, ahem, a bummer, in a macro sense.
| rahulpadalkar wrote:
| > Say you have a 2% chance of picking a unicorn and being a
| member of the founding team. That 2% is honestly way too high for
| most people, and perhaps a bit low for others, but a good median
| to anchor on. $10M * 2% = $200K. And realistically you're only
| going to get that this tranche of equity every 3-4 years at most,
| so that's a risk-adjusted value of $50-$66k.
|
| I didn't understand this math, 2% is the chance of it being a
| unicorn. 1% of 1B is 10M is the amount you might get if the
| startup sells for 1B. what does 2% of 10M signify?
| luca3v wrote:
| $200k is your expected equity payoff if you have a 2% chance
| that your equity is going to be worth $10M and a 98% chance
| that it's going to be worthless, which is the simplified model
| used in that back-of-the-envelope calculation
| acconrad wrote:
| So what is the solution for startups now?
|
| I've worked the whole gamut from FAANG to 1st employee (and
| founder of a side project startup) and I just don't know how they
| compete anymore.
|
| We need innovation and new companies.
|
| But for my own side project I can't imagine hiring someone. I
| either are hiring if we become wildly successful or we just get
| acquired with our founding team and still make an outsized
| outcome.
|
| It's a grim outlook for startups but we need them
| claaams wrote:
| I'm at a start up and the owner has no intention of going public
| lol. Oops
| ryanSrich wrote:
| I'm biased because I run a startup and have only ever worked at
| startups. But I'd say it basically comes down to different
| strokes.
|
| If you're in it just for the money AND you have the background
| and interviewing skills to get a job at a FAANG then you're
| better off doing that, you'll make far more money.
|
| For me though, there's not many salaries that don't end in
| "million" that you could pay me to work at a FAANG. Not only
| because I mentally couldn't deal with the people (see Apple's
| latest debacle), but because your impact is essentially
| meaningless. Working on some tiny little fraction of a fraction
| of a feature means I'd basically have to not give a shit about my
| job.
|
| At that point you're just a wage slave. A well paid one, sure.
|
| Additionally, building a successful company is one of the most
| rewarding things you can do. True American capitalism is a thing
| of beauty. Taking an idea, building a product, and creating
| value. Working at a startup is a good first step in building your
| own.
| rantwasp wrote:
| you'd be just fine at FANG. you are taking horror stories and
| thinking that is the way things happen at X. Your experience at
| a big company is mostly dictated by 1) your boss and 2) your
| team. There are good pockets in the worst places and there are
| really bad pockets in the best places. The exercise to how you
| figure this out is left yo the reader.
|
| Regarding impact: you can have an impact at bigCo. It's just
| that it's not something that's usually visible to the outside
| world (or sometimes not even internally). Hypothetically: if a
| change you make or a product you work on helps reduce the power
| usage of a datacenter or an android phone or a car by 1% you
| have made a gigantic impact. Even of only 1% of that 1% is your
| actual work. You're not interested in impact. You're interested
| in stroking your ego. That's all good and whatever but at some
| point you're gonna realize that you're gonna die and all your
| "accomplishments" mean jack shit. I have way more respect for
| someone that works at Google for example, puts in their time of
| focused work (even if it's "only" 20 hours per week), invests
| in themselves and also invests in their families and is an
| exemplary mother/father and/or invests in the community they
| live in than I have respect for someone who "hustles" and works
| 80 hours per week.
| novok wrote:
| FANG also has many lines of business where each one would be
| equivalent to a startup sized company. You can have way more
| impact than you think, on the specific product you work on.
| You'd be surprised how small many engineering teams are at
| apple for example, working on discrete products used by
| hundreds of millions of people.
| Brystephor wrote:
| My understanding is that he was referring to impact on the
| company. At FANG, there is no single product where your
| impact has a significant impact on the company as a whole.
|
| Sure you can go to AWS and work on Lambda. And then you can
| work on a feature of Lambda. It's very likely that the
| feature is going to have an extremely minimal impact on
| Amazon as a whole company.
|
| I'd imagine the same is for apple. You can join, go work on a
| secret feature of a feature on the iPhone, launch it, and
| then yay. You've now contributed to a feature of a feature of
| a product with 100s or 1000s of other features.
| JoeAltmaier wrote:
| Wow and a startup employee is different? Not a wage slave? So
| many more compromises in work quality and delivery get made at
| a startup vs FAANG. Not building a quality product. Building an
| MVP that fools a few early adopters to part with their money.
| Then sell out and cash in (not you; the founders).
|
| Ok not a wage slave, because the wage isn't worth it. To work
| overtime without compensation or really any hope of
| compensation, to help somebody else win the lottery. Just a
| sucker I think.
| ryanSrich wrote:
| If you want to make the argument that working for anyone
| other than yourself is wage slaving I won't fight you.
|
| The difference to me though is that you typically own (or
| have the right to own given enough commitment) significantly
| more of a startup than a FAANG. Granted, your chances of
| owning anything of value is low, but that's a risk I'm
| willing to take over making Bezos and Zuckerberg that much
| richer. Knowing I'm contributing to their wealth is not
| something I'd care to live with.
|
| But again, different strokes, as I said.
| rantwasp wrote:
| you're making Bezos richer while you get rich yourself. the
| 2nd part is important
| ryanSrich wrote:
| Forgoing the latter is worth not doing the former imo.
| Again, unless we're talking millions per year, which 99%
| of FAANG employees aren't making. The best one could hope
| for is high six figures, probably toping out around
| $800-$900k after 15 years.
|
| As I said though, this only makes sense if your goal is
| money. I personally don't value money over other things
| like mental health and enjoying my work. I know I would
| have much worse mental health, and hate what I do at a
| FAANG.
| rantwasp wrote:
| why not both? get the money and do something you enjoy?
| bradlys wrote:
| Owning a lot of something worth nothing is less valuable
| than owning a little of something very valuable. 1,000,000
| times 0 is still 0.
| femiagbabiaka wrote:
| Almost everything mentioned about startups here has an equivalent
| trade off at large companies. It's particularly amusing that he
| mentions Facebook towards the end as a potential place to work,
| given the pockets of high stress and long hours that I've heard
| about from folks who have worked there. Most of FAANG is no
| different. In comparison, most startups that I've worked at
| valued work life balance highly.
|
| Every workplace has trade offs, it's the nature of the thing. The
| compensation imbalances at large companies are bad as well, for
| example, it's just that the total increase in company income
| allows for much more competitive packages overall.
|
| Really this is more of a question of: what do you want out of a
| job and career? If you want to maximize compensation, go for that
| BigCo job. But that isn't the only valid thing to maximize for,
| which the snark about "higher callings" towards the end misses.
| Higher autonomy, less complex organizational politics, More
| ownership of big problems, potential for better alignment between
| your values and the companies mission, etc. etc.
| flippinburgers wrote:
| Underpaid and overworked. That is what one gets out of startups.
| I unfortunately seem to be permanently stuck grinding for
| startups (10+ years). Don't do it to yourself. It isn't worth it.
| tolbish wrote:
| Might I ask why it is infeasible to apply for a job at a non-
| startup?
| mcguire wrote:
| When your CV is a list of failures, it becomes self-
| reinforcing?
| bradlys wrote:
| You can join FAANG and similar. I've had almost nothing but
| failures on my resume and I was able to interview all the
| time. It's just about grinding LC and system design - which
| is really tough and time consuming.
| acconrad wrote:
| So where do startups go from here?
|
| I feel like all I hear about is how bad it is and FAANG is now
| the ideal. A crazy thought for a forum whose parent company's
| sole income is generated by creating and funding new startups.
|
| So what are we going to do about it?
| sealeck wrote:
| A little more nuance around different types of startups, goals,
| etc would go a long way.
| ShiftPrintBlog wrote:
| Social enterprise/public tech startups more often than not are
| very warm places but then the financial/ESOP discussion become
| something else
| geofft wrote:
| > _Rather than being treated as rare phenomenal outliers, these
| unicorn companies are a necessity for venture capital funds to be
| successful. So when a startup takes those venture dollars, they
| are almost always going for a big exit, or they'll be pressured
| by their investors to hyper-growth their way toward one. Extreme
| risk, extreme reward._
|
| To expand on this: Venture capitalists are incentivized, by the
| nature of how they invest, to drive companies towards becoming
| unicorns and attempting the extreme-risk-extreme-reward scenario.
| If you put $10M towards a company, and it says "Great, we're
| stable and our employees are happy and productive and we're
| building the cool thing we wanted to build and we're about to get
| enough sales to break even" and it doesn't hire or grow, the
| investors won't see the $10M back for a very long time. That
| scenario is only slightly financially better than the company
| shutting down, and in practice, given that the investor needs to
| keep thinking about the company, being on its board, etc., it's
| not worth having that distraction.
|
| So _even if your company would be successful_ , if it's VC-
| funded, it's going to get pushed to be either hyper-successful or
| to fail.
|
| And even if it's hyper-successful, it will probably experience
| mission drift. Early employees at Tiny Speck who wanted to build
| a neat MMORPG are probably very financially happy with
| Salesforce's acquisition of Slack, but all that remains of Glitch
| is a 404 page. (Read their shutdown announcement:
| https://www.glitchthegame.com/closing/) So if you're going into
| the startup because you're mission-driven instead of profit-
| driven, remember that the people who decide your mission are
| ultimately profit-driven.
| compsciphd wrote:
| I make it very simple. you don't work at a startup to maximize
| the size of your wallet (at least in the short term). straight
| up. most startups fail. most startups pay below market. you have
| to value the equity at 0 at all times till its actually worth
| something and then it simply is a nice (or very nice) bonus.
|
| you only work for a startup if 2 conditions hold
|
| 1) the pay is sufficient for your needs (and this is not just in
| an immediate sense of making ends meet, but also a long term
| sense of being able to save for future goals / retirement).
|
| 2) the job is something you really want to do and you cannot get
| that experience elsewhere at a more established company.
|
| i.e. if 2 doesn't hold, why would you take less pay than
| elsewhere?
|
| if 1 doesn't hold, you are making a bad long term financial
| decision for yourself, by essentially accumulating an actual or
| virtual debt (need to makeup retirement contributions or other
| savings) that you will have to pay back in the future.
|
| the #2 point can lead to earning more money in the long term even
| if the startup fails (i.e. the personal growth can outweigh
| experience you'd get elsewhere), but this is far from guaranteed.
| But even then, you shouldn't put yourself in "debt" to do that.
| sreeramb93 wrote:
| This is india specific, I chase startups which are best bet at
| implementing govt policy or is it a problem that I am facing.
|
| 1. One was recruiting phase as median age of India is low and
| adds overwhelming number of new workers every day. Google uses
| it. 2. Second one was a fintech during digital india phase. 3.
| SAAS with global sales and high scale (rpm)
|
| All three were hard and very fullfilling. I made a lot of money
| with fintech one and learned a lot on engineering at scale with
| third one.
|
| In the first one, I made lifelong friends and got to meet
| important people, attended VC talks and part of decisions like
| hiring PM as new grad, VC was very involved with CEO about it.
| Something my salary could not quantify.
|
| If I were to do it again, do it well with patience rather than
| arrogance and anger against founders.
| Animats wrote:
| If you're good enough to get into Google/Facebook/someone who
| pays at that level at a good engineering salary level, going to
| work for a start up is probably a net lose. At least until you're
| far enough along to do your own startup.
| SilurianWenlock wrote:
| Are the odds worth it if you are a founder or cant work at a
| FAANG in the USA?
| dboreham wrote:
| jwz pointed this out long ago.
| asdev wrote:
| It's way easier to build up experience and get your hands on
| impressive projects than at behemoth corporations. FAANG is not
| what it's all cracked up to be for 95% of people joining these
| days
| JoeAltmaier wrote:
| My son was part of a >$300M buyout. His half-percent netted him
| some hundred thousand. Didn't make up for the lower salary at a
| startup for the couple of years. The schemes VC's and founders
| use to skim all the fat are legion.
|
| He's now starting his own company, doing something socially
| useful that he can be proud of. Got a good team and making good
| progress. Will see MVP in a couple months!
| hinkley wrote:
| Many of the things I think I would enjoy about working for a
| startup are actually the qualities I enjoy about working on a
| small team. Not at startups retain the small team mentality for
| long. Not all small teams are at startups.
|
| Plenty of large companies build small teams for new ideas but
| they too have the problem of often not staying small for long.
| Empire building is a hell of a drug. But you can often see this
| coming and I've known a couple people who were very good at
| moving horizontally within a company every few years to avoid
| most of these sorts of problems.
| magsnus wrote:
| Fatfire[1] did a pretty thorough analysis of paths for financial
| success that ties in to this somewhat.
|
| [1]
| https://www.reddit.com/r/fatFIRE/comments/bxa3qz/guide_for_n...
| hn_throwaway_99 wrote:
| I think this is a really good article, but I think that one of
| the things it misses is that a huge reason the math works out so
| badly for startup employees is because founders and VCs take the
| lion's share of the gains.
|
| I mean, in my experience at startups, founders typically own
| around 40% of the equity. The option pool for _all other
| employees_ is around 10-20%.
|
| Now, I certainly believe startup founders deserve far more equity
| than anyone else, but this highlights that the risk/reward trade-
| off _really only makes sense for founders_. I mean, what founders
| risk in terms of opportunity costs and lower wages is usually
| only slightly more than very early stage employees, but their
| reward is ~10-30x. The reward, in rare cases, may also make sense
| for C level hires at proven startups that are already growing
| like gangbusters, because they 'll get a ton of equity. For rank-
| and-file, though, the issue is that _even if the startup hits_ it
| usually becomes more like a nice bonus than life defining wealth.
| neilv wrote:
| > _what founders risk in terms of opportunity costs and lower
| wages is usually only slightly more than very early stage
| employees_
|
| Excellent point. And there can also be huge differences in
| _non-monetary_ value that make the opportunity cost _more
| worthwhile_ for founders.
|
| If the startup fizzles, but the founders were spending most of
| their time getting startup founder experience, and building
| their professional network and personal brand, then the
| opportunity cost would probably be well-spent, despite the
| fizzle.
|
| Of course, worthwhile experience value can definitely happen
| for _junior non-founder_ ICs.
|
| Worthwhile experience value can happen for _already-experienced
| non-founder_ developers who can get experience /keyword in some
| very marketable thing they couldn't pick up on their own. (For
| example, the necessary capital expenditure means they couldn't
| get experience with Quantum Deep Learning Transhuman
| Interfacing from their kitchen table. Or they need a team of
| full-time collaborators to together accomplish something they
| couldn't do by just organizing hobbyists on an open source
| project.)
| khazhoux wrote:
| Or this:
|
| * Startup doesn't outright fail, but gets acquihired...
|
| * Founders gets executive positions with bonus on top of
| bonus. Their resume has taken a huge leap forward, and if
| they stay at the acquiring company for just one year, they'll
| amass enough cash to take another couple of years off to try
| another startup.
|
| * Employees get regular salary, and some small bonus to make
| it "worth it". They may as well have never done the startup,
| because it's an overall net-negative.
|
| Oh, and the employees still have to individually interview at
| the company, and several won't make the cut.
| _hyn3 wrote:
| > what founders risk in terms of opportunity costs and lower
| wages is usually only slightly more than very early stage
| employees
|
| Very early stage employees (before VCs get involved and impose
| the 10-20% option pool that you allude to) tend to get an
| outsized offering. (and, to me, a pre-VC employee sounds an
| awful lot like a co-founder, unless they're not committed
| heart-and-soul the way the founder is.)
|
| You might not be aware of the risks that a founder experiences
| versus a pre-VC employee. These risks are substantial. Many are
| not even quantifiable. Everyone likes to joke about rewarding
| failure, but the reality is that the reputational risk is very
| high.
|
| If you are instead talking about post-VC very early employees,
| there is an even wilder difference in the risk that those
| employees shoulder by taking a job with a VC-backed company
| compared to the founders.
|
| Let's face it; working for and/or founding a startup is really,
| really tough and possibly even hazardous to your health. It's
| not for everyone. In fact, it's really not for almost anyone.
| But it's one of the few shots at winning a lottery where you
| can actually change the rules of the game while you're playing
| it.
| an_opabinia wrote:
| > I mean, what founders risk in terms of opportunity costs and
| lower wages is usually only slightly more than very early stage
| employees, but their reward is ~10-30x.
|
| A first employee is, by another definition, someone to whom a
| professional investor would not give money.
| hn_throwaway_99 wrote:
| You're being downvoted, but as the author of the post you
| responded to, I don't really disagree. I've been an early
| employee and have learned I don't have the temperament or
| skills to be a founder.
|
| My primary argument is just that if founders and VCs don't
| loosen their purse strings, though, they will find employees
| are wising up about wealth distribution in a startup and will
| see they have better options elsewhere, as this article
| suggests.
| an_opabinia wrote:
| > I don't have the temperament or skills to be a founder
|
| If only everyone were as mature and introspective.
|
| > are wising up about wealth distribution... will see they
| have better options elsewhere
|
| Truthfully, all those people will discover is that the
| distribution of educational pedigrees - the real predictor
| of "better options elsewhere" - is far stickier, nepotistic
| and unfair than a 9 percentage point difference in equity.
| JoeAltmaier wrote:
| But they do. They pay salaries, benefits, overhead. Its a
| team that gets funded.
| mathattack wrote:
| Very true. The system overweights the rewards to the founder.
| And anyone can be a founder if they are willing to take more
| risk and go without getting paid.
| NeverFade wrote:
| Bingo. As a senior engineer, I get startup offers at the Staff-
| Principal levels, and even those grant no more than 0.1-0.5%
| equity at most, on top of ~$180-200k salary.
|
| That simply isn't competitive with big established companies
| like FAANG that offer me $400k+, far better career growth
| prospects, and far lower risk.
|
| For most startups, the equity will be worthless, and the whole
| company will either shut down or get acquired, which means you
| won't have a straightforward career path no matter how hard you
| work and how many impressive accomplishments you achieve.
| Meanwhile your friends over at FAANG will be earning twice as
| much and climbing the promotion ladder simply for doing a good
| job.
|
| Finally, let's not forget the abhorrent tax treatment that
| screws you, especially as a senior engineer: while your options
| will likely end up worthless, you'll have to pay tax for them
| as if they're worth their weight in gold. That puts a whole new
| level of risk on the already bad and risky deal of working at
| startups.
|
| It's beyond me how that tax treatment was allowed to continue
| given how bad it is for startups, and how much it advantages
| big established companies that are already deep in anti-trust
| territory, though I guess that could also be the answer to why
| it's still the rule.
| pjbk wrote:
| My humble recommendation: If the company has a valuation or
| is close to one, ask them to add the necessary money for
| early exercising to your signing bonus, which is usually
| pennies on the dollar for them. Then do it the moment you get
| your options converted to stock.
|
| In that way you minimize any tax risks and at the same time
| you test how much the company is interested in you and values
| their employees.
| hluska wrote:
| I'm curious - where do you pay tax on options before they
| have been exercised?? Every country whose tax system I'm
| familiar with treats receiving an option as a tax neutral
| event, but exercising them is taxed as per the country's
| capital gains legislation.
| hn_throwaway_99 wrote:
| The issue is you are taxed on them when you _exercise_ them
| before you can actually _sell_ them to get the money to pay
| the taxes.
| hluska wrote:
| I don't see how that is an issue. Exercising options is a
| form of income. Why not pay tax on income?
| NeverFade wrote:
| Exercising options is a form of income _in theory_. In
| practice these stocks very often go to zero, or a value
| lower than what you paid to exercise them.
| ghaff wrote:
| The issue people have is that you're being taxed on an
| unrealized (as in not converted to cash) gain--which in
| general is not the case.
| hn_throwaway_99 wrote:
| When you exercise startup options:
|
| 1. Usually there is no liquid market, so for lack of a
| better term, the valuation is made up.
|
| 2. Related to point one, with no liquid market, there is
| no option to sell the options the raise the money to pay
| the taxes.
|
| 3. There are often restrictions (e.g. lockup periods)
| that _legally_ restrict you for selling from a specific
| period. You are forced to take on the risk that the stock
| doesn 't crash, often with much less info or freedom than
| investors and execs.
|
| In fact, in the US, normally startup options are ISOs
| (incentive stock options) so theoretically they are NOT
| taxed on exercise. The issue is that AMT (google it)
| actually nullifies that ISO tax benefit in most
| instances, and AMT only has stuck around because Congress
| can not function to deliver reasonable tax policy.
| throwaway78123 wrote:
| That's right.
|
| The main issue with option is the lack of liquidity.
|
| One may have to put down quite a bit of cash down in
| order to exercise, and that is a problem, even if in
| practice, it is usually good value for the option holder.
|
| But most people either 1) do not have a lot of cash on
| hand, or 2) do not have the appetite to tie their hard-
| earned cash to anything illiquid-that-maybe-could-go-to-
| zero.
| throwaway78123 wrote:
| Not sure where you live, but in the US, options are typically
| granted with a strike price equal to the latest 409A
| valuation, which makes the grant neutral from a tax
| standpoint.
|
| I don't see a world where you have to pay lots of taxes for
| worthless options, unless someone really screwed-up (i.e.
| messed up the 409 Safe Harbor election etc...)
|
| Now... if you exercise the option, that is a different story.
| At least in theory you would only exercise if things went
| well and the stock went up vs the strike, which makes sense
| why one would have to pay taxes then.
| NeverFade wrote:
| > _Now... if you exercise the option, that is a different
| story._
|
| You exercise if you leave, and startup IPOs can take many
| years, and most startups don't have a compelling options
| package for you after the first 4 years anyway.
|
| So a senior engineer who got their full 4 year equity and
| wants to leave, which is the most typical scenario, will
| indeed have to exercise and get hit by the tax bill.
| throwaway78123 wrote:
| You only be hit by a tax bill if you chose to exercise
| the option, which only make sense if the stock is worth
| more than the strike. If you are "given" something that
| is worth more than $1, the IRS will want a piece of it.
|
| If you worked at a startup (not a small business), the
| most likely outcomes after 4 years is either 1) Company
| went bust, 2) Company grew.
|
| The option protects you from the not having to pay
| anything if scenario #1 happens. If scenario #2 happens,
| then you should be happy: you have an option to pay X for
| something that is usually worth multiples of X after 4
| years.
|
| I actually think the IRS is being nice not to tax the at-
| the-money option grant. They essentially assume zero time
| value, which would be quite high for a startup given the
| high volatility and the potentially long term for the
| option.
| novok wrote:
| Startup engineers are often young and do not have much
| savings.
|
| Options are a cost, often in the 5 to 6 figures range to
| exercise. If you exercise at time of hire, your cost can
| be significant for something that will probably perform
| less than putting it into bitcoin as far as expected
| value goes. If you count exercise cost as part of the
| 'salary', then startup salary is even worse than it
| usually is.
|
| When you leave, the options expire away typically after
| 90 days. If you exercise, even if they are ISOs, AMT tax
| can easily make the exercise cost 6 figures anyway. Most
| engineers in their mid 20s do not have 6 figures in
| savings unless they already worked at FANG for the first
| 4 or 5 years of their career. You have to choose, do i
| put most of my savings into something that will probably
| go nowhere? Most do not and lose out on the significant
| compensation they would of at FANG. It's a system that
| favors the already wealthy and young adults with wealthy
| parents.
|
| Companies actively try to prevent giving liquidity to
| employees through restrictive clauses. The best case
| scenario is an employee that works hard and then forfeits
| their equity due to the above math. The company has a
| financial incentive to screw employees over and seduce
| them with unlikely projections of life changing wealth.
|
| -----
|
| On the other hand, founders have stock at the start,
| valued at $0. Even if they have a vesting schedule, they
| can pre-exercise for no cost. Since it's extremely
| unlikely that they will sell in the first year, all of
| their income from that stock in the future will be taxed
| at LTCG rates. Since the average employee can't afford to
| pre-exercise (or they get RSUs), they pay at income tax
| rates, so if they do get lucky, they've compressed 4-8
| years of equity compensation in one year, which means
| they pay %25-%35 more in income tax alone. Employees are
| often subject to 6 month lockups after IPO, which means
| if it drops, they have to pay tax on a value that is much
| higher than they can liquidate with the stock they
| actually have.
|
| Founders often get special liquidity access that
| employees don't, in secret, during funding rounds. VCs do
| this to align the founder's interests with theirs, which
| is going for an outlier $10B IPO vs. liquidate at $300
| million at series B, because if the founder has %20, that
| is a life changing $60 million, taxed at LTCG rates, that
| makes you an ultra high net worth individual, but is
| basically a failure from the VCs perspective.
| NeverFade wrote:
| > _If you worked at a startup (not a small business), the
| most likely outcomes after 4 years is either 1) Company
| went bust, 2) Company grew._
|
| Right, so the bottom line is this:
|
| After 4 years working at the startup, unless it already
| went bust, you will typically want to exercise, and then
| you'll get hit by a big tax bill for purchasing a
| security which is _still_ very likely to end up at zero.
|
| It's a risk no matter how you look at it. Unless you
| happen to work at a startup that became a unicorn, which
| is very rare, you will end up paying good money for
| something that may be entirely worthless.
|
| So in the best case scenario, you take a risk for an
| upside that may put your comp around the same level as
| what you'd get for simply working for FAANG. Worst case,
| you pay a big tax bill that drops your comp even farther
| below what your friends at FAANG are making, which is
| already going to be twice or more to begin with.
|
| Surely you see the problem here, especially for risk-
| averse engineers.
| comp_throw7 wrote:
| You don't _have_ to exercise if you leave. That part is
| totally optional - in fact, the company will probably be
| quite happy for you to leave without exercising.
| NeverFade wrote:
| ...in which case I just worked for 4 years for less than
| half the total compensation I'd receive in Big Tech.
|
| If the plan is to completely give up on my equity, why
| work in a startup at all?
| derwiki wrote:
| Why especially as a senior eng?
| [deleted]
| NeverFade wrote:
| Fatter options package = you pay more taxes when you
| exercise. Also, the opportunity cost of giving up on big
| company roles is higher.
| tisFine wrote:
| At least with the founders I've worked for it's hard to agree
| they are owed that much more.
|
| They fund raised. Poorly.
|
| They offered zero direction, touted a big number as potential
| revenue.
|
| They traveled ostensibly to fund raise, but usually just
| brought back personal stories of fun.
|
| While we all slogged on "their" vision, which meant rearranging
| deck chairs to the march of some alpha non-contributor who can
| brown nose.
|
| It was effectively our company with some entitled assholes name
| on the paperwork.
|
| I'm guessing there's many more founders like that, as I've had
| the "fortune" to work for 3 in the past, versus the one I work
| for now, who knows the problem space, has worked directly on
| solutions for years, and shows up everyday with new customers
| chomping at the bit to sign up.
|
| So I feel confident saying: Most founders are idea people with
| no skills. Just a used car salesmen personality and a richer
| network.
| hellcow wrote:
| > what founders risk in terms of opportunity costs and lower
| wages is usually only slightly more than very early stage
| employees
|
| Maybe this is different for others, but my co-founder and I
| spent 2 years bootstrapping before we got our first customer.
| We gave up 2 years of wages and consumed our savings to do this
| with no assurance of success, and even after that first
| customer it was another full year before we had any sense of
| stability.
|
| Years of time and money. I consider that quite a bit more risk
| than our first employees who got stable income, healthcare,
| 401k's, etc. on day one.
| jt2190 wrote:
| > Years of time and money.
|
| Exactly. Additionally, any of that money that you could have
| saved during those first two years would have had more time
| (obviously) for interest to compound than any savings you
| make today [1], so that "lost interest" needs to be factored
| into the equation as well.
|
| [1] https://www.investopedia.com/terms/t/timevalueofmoney.asp
| JoeAltmaier wrote:
| Everybody involved is taking some fraction of that risk.
| "No raises until we're profitable", "Here's stock to make
| up for the lower pay", "Lets cut benefits again to increase
| our runway" are all tall tales that essentially squeeze
| cash out of employees with empty promises.
|
| When there's no way it will every even make up for the
| sacrifices of the employees, all those demands are empty
| noises. Just a way to fool folks in to making the founder
| rich. And nobody else.
| jt2190 wrote:
| > Everybody involved is taking some fraction of that
| risk.
|
| I _think_ that by "that risk" you're talking about "the
| overall increased risk of investing in a new company". I
| deliberately use the word _investing_ because that 's how
| employees should think about their participation in a
| startup: They're usually giving up _something_ now...
| salary, extra work hours... in exchange for some possible
| upside in the future, often in the form of stock options.
|
| To state what you're saying another way: A lot of
| employees do not correctly assess the risks of the
| investment they're getting into, for example, of not
| having direct control over the date when a salary
| increase will occur, or whether that salary would be in
| the form or cash or shares. In short, employees often
| invest themselves into investments (i.e. startups) that
| bring far more risk than they can personally tolerate.
|
| Avoiding startups completely is one solution. Another is
| to really start thinking like an investor: Personally, I
| like to consider whether I would be a passive investor in
| the company (i.e. just write a check)... If not, it's a
| sign that perhaps the company is not a good addition to
| my portfolio overall, and I'd be better off taking the
| cash from another employer and investing in something I
| do believe in.
|
| (Aside: I've seen some pretty good "rent or buy your
| home" calculators out there, but never a good "work for a
| startup or an established company" calculator. If anyone
| can recommend one please reply.)
|
| Edit: https://triplebyte.com/startup-equity-value-
| calculator
| JoeAltmaier wrote:
| It's been repeated again and again, that the supposed
| equity bait is almost never worth it. Its just a story to
| string folks along. Since the 2000's, the VCs and
| founders have learned to squeeze almost every drop out of
| any equity event, leaving crumbs for everyone else. It's
| disingenuous to repeat the con story as if that explains
| everything.
| [deleted]
| [deleted]
| hn_throwaway_99 wrote:
| I think most unicorns actually have a different experience,
| though, in that the founders often worked on their own for
| less than 6 months/a year before they got some funding.
|
| I don't have data on this but I would bet a very long lead
| time before getting funded is actually correlated with a
| _worse_ likely outcome.
| JoeAltmaier wrote:
| Wealthy folks that can afford to start a company for
| little/no pay are always imagining some kind of moral
| superiority. I told a startup boss who tried that out on me
| e.g. "I'm risking my house too!". I said "you mean your 2nd
| house. I'm risking my first house. And my family's
| stability." He had nothing to respond to that.
| khazhoux wrote:
| Let me guess, you're not a Silicon Valley tech company? In
| S.V., it usually goes like this:
|
| * A couple of people have an idea, and quit their job (or
| didn't have a job), build a quick prototype, pitch it. Maybe
| they spend a couple of months at a startup summer camp like
| YCombinator
|
| * They raise seed funding or a small first round
|
| * ...and then _immediately_ hire Employee #1 at 1% equity,
| and it 's their job to build the first "real" usable version
| of the product. Employee #2 follows shortly at <1%.
|
| The risky investment put in by founders often amounts to: "We
| had to spend a few months grabbing coffee with potential
| investors"
| grogenaut wrote:
| It definitely is more risk. However when I evaluate startups
| I'm comparing them against other jobs. Stable income it may
| be but the runway is short, and depending on the founders it
| may or not be well communicated. So it is much less stable
| than a job in a big company. So to me I want a good
| multiplier.
|
| Many of the payoffs I've seen for startups that did well for
| early employees put earnings on par with what I've done at a
| large company without the startup risk. And that's for the
| ones that do very well which is a low chance.
|
| So in the end I personally would get a lot more stress and a
| lot less income to usually being equal in a great case.
|
| So generally it doesn't seem that worth the risk, low
| control, and probably low payoff.
|
| I'd actually be more likely to join a startup in some years
| when I'm financially at a retirement or FIRE point. But then
| it's like, working for a founder on their idea, and maybe the
| pressure to hold out for 5-10 years there for the actual
| payout.
|
| Just my mental space around it.
| fastball wrote:
| Really depends on the job market though. If the startup
| goes belly up but you were making good money in the interim
| and you can quickly find a new job, it's not much risk.
|
| A founder who eats in to savings and goes unpaid for two
| years is on an entirely different level of risk profile.
|
| But yes, if your primary concern is job security, in
| general you should not be working for a startup, regardless
| of how many points you get.
| grogenaut wrote:
| I'm not arguing that it isn't more risky for the founder.
| I'm saying that the payoff potential that remains esp
| when you look at the pool of startups, is almost never
| worth it compared to a job at a bigco, even at the top
| end.
|
| Eg this is me explaining why I wouldn't work at a startup
| as I shoulder more risk and very very low chance at a
| payoff better than I could get at a bigco, and worse case
| you spend 5 more years at the big co and you can be
| getting into founder level payoffs.
|
| At that point why even take a risk if there isn't a
| reward if you are a strong engineer. The only thing that
| makes sense to me is to be a founder, or go work a stable
| high paying job if you're able to.
|
| This pay structure greatly limits access to very
| experienced employees for a startup.
| fastball wrote:
| I think the key thing missing from your analysis is that
| some (most?) people aren't optimizing their careers for
| minimal risk and maximal pay. There are a great many
| other factors at play.
| grogenaut wrote:
| I didn't say there wernt, this is a message about my
| personal pov written while on the phone on the can, not a
| treatise or full data based coverage of all workers.
| hmmokidk wrote:
| It's a risk you were capable of taking. People without family
| they can depend on cannot take these risks. If some of us
| fall we fall into homelessness, for others their parents just
| bail them out. The people that risk homelessness do not start
| startups.
| Eridrus wrote:
| Stable doesn't really describe early stage startups at all.
| Just because there is a paycheck doesn't mean there will be
| one when a big account falls through.
|
| But anyway, I would urge founders to think more about the
| logarithmic utility of money and whether it makes sense to
| take 30x+ the gains of early employees. In particular, think
| of the number that make it all worthwhile and ask if you need
| to capture all the gains above that, or whether you could be
| more generous if you hit it out of the park, and if there is
| a way to write that into your contracts.
| achillesheels wrote:
| Why should leaders and team builders be more "equitable"
| than what is transactionally afforded by their diligent
| appreciation of their assets? How is the utility of money
| not best suited for those who created something from
| nothing versus those who entered into the tent after it was
| pitched? Aren't there gradients of personal ambition being
| demonstrated between the two parties? If so, wouldn't
| society be abler if the leaders were able to do more after
| having created the opportunity in the first place?
|
| The generosity emerges out of the availability for lending
| the capital to strangers in society thanks to the
| successful investment realization.
| Eridrus wrote:
| We're in a thread talking about how equity compensation
| at startups is generally not sufficient to overcome the
| pay cut that folks would take from working at a top tier
| tech company, so even if you come at this from a purely
| transactional perspective, you may want to be less stingy
| with equity.
|
| You can do whatever you want of course, but I think
| people should ask themselves if trying to hold onto all
| the returns is helping them achieve what they actually
| want.
| x0x0 wrote:
| > _equity compensation at startups is generally not
| sufficient to overcome the pay cut_
|
| ... so don 't take the job. Everything will naturally
| sort itself out -- a startup will increase their grants,
| hire different people, or not hire and fail. :shrug:
|
| This thread sure looks like it's full of people who can't
| get that well paid job at google, are taking jobs at less
| demanding employers out of necessity, and are mad about
| it. Otherwise, we're living through one of the absolutely
| hottest markets for engineering talent we've ever seen,
| so getting a new job is always an option if you're worth
| the money.
|
| As for founder vs employee risk... certainly at my
| company, every employee except for the founders walked
| into a six figure cash comp, fully paid health insurance,
| and a runway that's never fallen below 12 months.
| break_the_bank wrote:
| Also it's impossible for me to tell whether my below market
| base salary startup offer from a seed/series A startup is at
| market or not. Especially the equity bit, is 1% equity enough
| for the second employee(and engineer)? Especially when I am
| taking a 50% cut on base salary in addition to losing some very
| real liquid stocks.
| jiveturkey wrote:
| that's up to you to decide isn't it? what i mean is, there's
| no correct answer. 1% is a baseline (minimum) offer. many
| think it's fair. at this early stage there is high variance.
| i think 3-5% is fair. this early you are an absolutely
| critical hire. I _personally_ don't want to work for a
| founder that's stingy and going for bare minimum.
|
| otoh first second third employee jobs don't come along every
| day. turn in down and you may never see an offer this early,
| ever again.
| vinay_ys wrote:
| If you are the second employee (first engineer) at a tech
| startup with a solo founder company, most likely you can get
| more than this. Nobody will give you more than what they have
| to unless you educate yourself and negotiate on your own
| behalf.
|
| You are taking the same risks as the founder and you being
| there is directly helping the founder raise funds and hire
| other engineers. Don't under-value yourself.
|
| Your previous total comp was base + public/liquid stocks. You
| should compute the growth in valuation of those liquid stocks
| (if it was similar to FAANG stocks, its growth would have
| been 50%+) plus the return on investment of your savings. Add
| that to your total comp.
|
| For your startup comp to beat this total comp, given your 1%
| stocks, compute backwards the valuation your startup has to
| achieve. Does it look feasible or too crazy? How long will it
| take?
|
| Do market research to understand how much revenue and profits
| a public company in similar sector does to achieve that
| valuation and how much capital investment and tech innovation
| is needed to get to that. Ask questions to your founder boss,
| meet their investors to understand their thinking.
|
| Very important to consider what happens if you quit before it
| got there. If you have to pay to exercise options, or your
| options get bought back by the founder at a discounted
| valuation etc. (some startups have started doing "stock
| appreciation rights" which are somewhat unfair) understand
| those for what they really are and factor that into your
| calculation. Understand how cap tables, dilutions,
| liquidation etc works and factor the risks into your
| calculation.
|
| Finally, remember that founders get fired/replaced; your
| direct boss is going to be someone else very shortly
| (especially if the company grows fast) etc. so don't go by
| verbal promises. If you are looking to make millions, invest
| time and energy to understand and negotiate your employment
| contracts properly.
| break_the_bank wrote:
| In this particular scenario I'd be the second employee, not
| counting the two founders as employees.
|
| I did similar math as you said and I didn't find the
| numbers fair. I figured how much would I be losing per year
| at the current valuation and my pay cut seemed more than
| what the investors got for the last round.
|
| I wish there was more public information about startup
| salaries at various stages of employment, while the company
| is still a tiny company. Finding information about FANG
| salaries is so easy but startup salaries is tough.
| qqqwerty wrote:
| Yeah, something to consider is that FAANG salaries are an
| outlier. There is a bimodal distribution in tech
| salaries. Outside of tier 1 unicorns, no one comes close
| to FAANG salary. So when evaluating your options, using
| FAANG salaries as a comparison might not be the most fair
| benchmark. For example if you work in biotech, even as a
| programmer, you are probably looking at a salary about
| half of what a FAANG will pay. This holds true for a lot
| of other industries.
|
| In general, I agree though. Early employees should either
| be compensated better or given more equity. In many
| cases, they have a more direct influence on the product
| than the founders, because the founders are focused on
| fundraising, sales, and hiring. And they also can have an
| outsized impact on company culture. If it was up to me,
| the first few hires would be getting 2-5% depending on
| experience, and I would even consider giving them a title
| of co-founder.
| novok wrote:
| But negotiations are based on BATNA, and most of the
| better engineers you actually want to hire can also get
| hired at FANG. So even if 'FANG is an outlier', it
| doesn't matter because they set the standard. You have to
| be willing to do things that FANG is not, like real
| remote, employees that cannot immigrate (ex: no degree in
| developing nation) or no leet coding.
| robomartin wrote:
| > You are taking the same risks as the founder
|
| Not even close.
|
| You can quit and go get another job any second of any day
| with zero consequences.
|
| You have zero financial responsibility or obligations to
| the investors.
|
| You have zero responsibilities and obligations to
| clients/customers.
|
| You have zero obligations to financial institutions (banks,
| loans).
|
| You have zero or little reputation on the line in the
| industry being addressed. In fact, in most cases
| competitors will gladly hire you because you have valuable
| industry-specific experience and training.
|
| I could go on. I see a bunch of comments on this thread
| painting founders as greedy bastards. All I can say is: I
| hope you can one day wear those shoes and actually
| understand reality.
|
| That said, yes, there's a startup culture that works people
| to death and often offers dubious outcomes. I really don't
| like that at all. In technology some things are very hard.
| If you don't work hard it is often impossible to achieve
| anything of note. I don't have a problem with that. I am no
| stranger to 18 hour days, 7 days a week. I get it. A
| company can't operate like that forever. If it does,
| there's something wrong with it.
|
| As a founder my standard mode of operation is simple: If I
| am awake, I am working. There's no way I will demand or
| request such a thing from anyone else. I am the one whose
| all-in, not those who work for me.
|
| NOTE: Don't work for less than you are worth. Option are
| neat, they could be worth zero or a few million. More often
| than not they are worth zero. Get fair pay for your work.
| Assume options are worthless.
| 8note wrote:
| How much of this liability is mitigated through making a
| company rather than doing all of this in your own name?
|
| Is your business set up such that you personally owe the
| investors when the business goes under? Or is the
| business liable?
| dchichkov wrote:
| Founder has all the control - Employee has none. So
| employee takes more risk.
|
| Founder has all the information. Employee wouldn't even
| know, if the stock was diluted twice. Or if the company
| is going to seize to exist next day. Employee is in the
| fog - so employee has more risk.
|
| Employee risks with her reputation. A nut case founder
| can consider employee a traitor for leaving the company
| and give bad references to future employers.
|
| Employee has responsibility and obligations as well.
|
| Don't get me wrong. A cutting edge startup can be
| amazing. But it is a lot of risk for everyone involved.
| robomartin wrote:
| > Founder has all the control
|
| It reminds me of a story. Back about thirty years ago I
| bought a used surface mount assembly line from this guy
| who dealt exclusively in used manufacturing equipment. He
| was much older than me, a father figure, if you will. He
| was interested in what I was doing in my little startup.
| We got into a conversation while we setup the assembly
| line. I talked to him about some of the challenges I was
| facing. At one point he stopped, thought about it for a
| while and told me: A business is like a living breathing
| beast that has a mind of its own. If you think you can
| train, mold it or control it, you are likely to be wrong.
| The business tells you what you are going to do every
| day. The business pushes and pulls you around. The best
| you can hope for it so generally guide the zig-zag path
| in the direction you want to go and hold on. It's like
| sailing in a storm. You are not in control of the
| sailboat, the ocean is.
|
| Fonder is in control? Ha. Very funny.
|
| > Employee has none. So employee takes more risk.
|
| I am not sure how to say this. Here it goes again: The
| employee can pick up and go any microsecond of any day.
| At least in the US. Nobody can force anyone to work under
| any conditions. That's control. That is having 100%
| control.
|
| > A nut case founder can consider employee a traitor for
| leaving the company and give bad references to future
| employers.
|
| I don't know where you are from. In the US that would be
| one of the worst mistakes a founder, company, executive
| or manager could make. Depending on circumstances the
| resulting lawsuit could yield millions of dollars for the
| ex employee. Nobody does that (unless they are suicidal).
| achillesheels wrote:
| How many employees would work for no salary but only
| equity? Disregard whether they have the material
| affordances to be able to do so.
|
| Simply put, by necessity the founders have inherited more
| uncertainty with their life outcome than a salaried
| worker, regardless of the transience of the work
| agreement.
| vinay_ys wrote:
| > Don't work for less than you are worth.
|
| The OP's question was about how to do that and my entire
| response was to that question.
|
| > Assume options are worthless.
|
| That's bad advise for senior engineers with relevant
| experience. No startup I know can afford to offer cash
| compensation that matches the cash+stock comp from
| previous employment. Startup stocks have value - you just
| have to get better at figuring out its risk adjusted
| value and consider it for that worth.
| robomartin wrote:
| Without having done any accounting I'd be willing to bet
| that the vast majority of startup options end-up being
| worthless. This is a simple logical conclusion from the
| fact that most businesses fail. So, no, I disagree, don't
| work for less than you are worth and, yes, assume startup
| options are worthless.
|
| What ends-up happening is that the sexy startup culture
| sucks in young people with little life experience who
| haven't seen enough to be skeptical enough about these
| things. And, yes, under that context, if things go wrong,
| the end result is that they feel used and abused. You
| never hear complaints from anyone who worked super hard
| at a successful startup that made it and the early
| employees did very well.
| mcguire wrote:
| Back of the envelope: IIRC, the article indicates that there
| is a 1% chance of $1B. 1% chance of 1% of $1B is worth
| $100,000; if $100K is greater than what you're giving up then
| it is worth it.
|
| Two confounding factors: time and partial payouts. What if it
| takes 20 years to pay out? How does the range of possible
| payouts and probabilities change the valuation? That's where
| you establish your margin of safety and start making
| conservative assumptions.
| break_the_bank wrote:
| Also that 1% would keep on diluting before the money would
| actually become liquid. I figured that the 1% would be
| 0.35% if the company had IPO'd in say 8 years. At a 1B
| valuation, I'd net 3Million before taxes, while the company
| would have gone from 6M to $1B in valuation. This didn't
| seem fair and I said no to this offer.
|
| I'd have no financial regrets at the $1B valuation, but I'd
| if they make it to $10B/$100B.
| eecc wrote:
| That's what Wiener suggests in Uncanny Valley, when she
| describes the windfall when Microsoft bought the GitHub shares
| she had the option to buy during her time there.
|
| It wasn't life-defining, plus she noticed that many other
| employees didn't have enough savings to actually exercise.
| barrkel wrote:
| The way it should happen with a liquidity event is that you
| simultaneously exercise your options and sell them, pay off
| the taxes and bank what's left over.
|
| Savings should only come into it if you're leaving before the
| liquidity event.
| hibikir wrote:
| But that is a large problem today, because you have no idea
| when, if ever, the liquidity event is going to happen.
| There are companies that spend a whole lot of time private,
| and if said company is going well, it's going to be growing
| so fast that in 4 years, it might be unrecognizable. Even
| if you love the job you joined, you might hate the
| equivalent a few years later, and you probably still don't
| have a liquidity event.
|
| Quite a few years ago, a well known company was sending
| offers where the exercise cost of the shares was around
| $200k, plus whatever fun you'd have with AMT at exercise
| time. The company still hasn't seen an IPO, and I know
| quite a few people that didn't exercise their entire
| allocation just because it was just way too expensive for
| something illiquid... and that was with a company that was
| going (and still is!) going very well. Today you'll find
| companies that went for a decade without a liquidity event,
| and where a whole lot of options that were well in the
| money went back to the company, unused.
|
| Options would be far more worthwhile if there was a
| standing offer to, on departure, sell the options back to
| the company at departure time, but we all know this isn't
| how it works. So you end up in situations when two people
| join a company and leave at the same time, and their
| savings separate their final outcomes by 8 figures, because
| one could buy the shares and wait the necessary X years for
| the liquidity event, when someone else couldn't.
| hn_throwaway_99 wrote:
| > Savings should only come into it if you're leaving before
| the liquidity event.
|
| Which is another way some startups screw people. If the
| company is not willing to budge on the "standard" 90-day
| exercise window, there shouldn't be any negotiation. Just
| walk away.
| hellcow wrote:
| There are two types of options, NSO and ISO. You want ISO
| as an employee because it's better for taxes, but that
| has a 90-day exercise window set by the IRS. You can push
| for yourself paying higher taxes in exchange for more
| flexibility, but it's a tradeoff.
|
| https://carta.com/blog/pte-90-day-window/
| alasdair_ wrote:
| It's completely possible to have ISOs that convert to
| NSOs past the 90 day window.
|
| The last unicorn I worked for had a ten year exercise
| window after employment ended.
| novok wrote:
| ISOs also don't save you from the AMT trap, so they're
| not really that useful.
| rjzzleep wrote:
| Zach Holman one of the first github employees didn't get
| to exercise any of his options for the aforementioned
| reasons. When they tell you to throw your life away to
| believe in the vision, nobody tells that 24 y/o to get a
| lawyer to understand what that actually means.
|
| He compiled a list of startups with sane exercise
| windows:
|
| https://github.com/holman/extended-exercise-windows
| robocat wrote:
| At the bottom of that link: "It's worth noting that
| Andreessen Horowitz has come out in strong favor of the
| 90 day window. If you feel strongly about extended
| exercise windows, it might be worth considering whether
| a16z portfolio companies are a good fit for you." with a
| link to https://a16z.com/2016/06/23/options-timing/
|
| The a16z link is astonishingly self-serving. Their top
| line solution was: "One existing solution to the 'dead
| equity' problem has been -- and still can be -- to make
| exceptions where appropriate for certain exiting
| employees. In fact, employers make exceptions all the
| time for certain employees, depending on their
| contribution to the company, critical skill set, and so
| on." Riiiiiiight - asking nicely for a handout when you
| are quitting is a great strategy!!
|
| And I would love to know how they come to this conclusion
| "In our model, we estimate that moving from the current
| 90-day window to a 10-year window will cost the average
| remaining employee as much as 80% in incremental
| dilution." - just, wow.
| surfsvammel wrote:
| That's kind of how it worked out when we sold our company.
| All the transactions happened simultaneously so the only
| real payments was the net of it all. Both business and tax
| lawyers where involved to set up that whole process.
| adflux wrote:
| Couldnt a bank front the cash to exercise the options? Not
| familiar with the matter but it seems like an easy thing to
| get a loan for
| toast0 wrote:
| If it's to exercise at the close of a deal, the acquirer
| could also setup a loan too. I had options which were
| subject to revesting (lame, but worked out ok), and the
| acquirer fronted the money to exercise everything that
| wasn't already exercised and then took payments
| automatically when the chunks vested. Because of the strike
| prices we had, it didn't feel very risky.
| alasdair_ wrote:
| Most option contracts forbid the employee pledging the
| shares for anything, including a loan to pay taxes. Its
| kind of absurd.
| spoonjim wrote:
| Yes, but then you're holding illiquid startup stock that
| can easily to go 0 in value.
| eecc wrote:
| I guess it's still a question of borrowing money for a
| speculative investment, you just get a significant discount
| that makes profit more likely.
|
| Depending on your indebtedness (outstanding student loans,
| mortgages) savings and current earnings a bank could still
| refuse to lend you enough money, if at all
| wayoutthere wrote:
| If you're making a high enough salary to be getting
| enough options that you can't afford to exercise them,
| you're making enough to borrow about $100k.
|
| I had no trouble getting an uncollateralized loan at a
| reasonable rate for $75k; and I had $100k in student
| debt, a $500k mortgage and little else in the way of
| assets. And when I say "no trouble" I mean I applied for
| the loan, was approved 30 minutes later and had the money
| in my bank account within 2 hours. That loan is paid off
| now, but if your income is high enough banks will lend
| you money on that alone (I was making an equivalent
| salary to a principal developer at the time).
| vmception wrote:
| If you've ever taken any risk with credit and failed or
| simply had a disruption in income anytime in the last 10
| years prior you would have been denied.
|
| Its nice everything worked out for you, that has nothing
| to do with your ability to perceive a simple solution
| available to you.
| ptero wrote:
| The only risk is that one exercises the options, but by
| the time one sells the shares (which they got as the
| result of exercising options), the price of the stock
| falls below the strike price. To avoid this risk, do a
| quick sell after exercise. This makes risk minimal; in
| case of bigger companies effectively zero.
|
| Bigger risk comes in if someone wants to do an exercise
| and hold to sell much later, which can bring tax
| advantages. But this is a different game entirely. In the
| case of employee with little spare cash (to the tune of
| borrowing money for the exercise), not doing exercise and
| sell is really leaving money on the table. My 2c.
| ghaff wrote:
| One thing I learned during the dot-bomb era is think hard
| about holding too much of your company's stock and,
| especially, think really hard about exercising options
| and then not selling. Fortunately the stock drifted back
| up a ways over time and then my former company was
| acquired for a nice spike. So between that and tax loss
| offsets, I didn't do that bad. But I've been careful
| since. (Of course, more recently, I'd have been better
| off holding more for longer but I can't really complain.)
| vmception wrote:
| You missed the point that many people with good finances
| are denied credit. They cant get a $75,000 loan. Thats
| the only point I was making. The person provided no
| insight whatsoever and was unable to see that their
| experience is different.
| [deleted]
| adflux wrote:
| Whats speculative about exercising options, dont you know
| the exercise price and market value?
| vinay_ys wrote:
| Regular startup employees borrowing and buying their stock
| options is far riskier than them borrowing to do options
| trading in publicly traded stock markets because they have
| very little information about their company's future
| prospects.
|
| What goes on between the founders, board, current investors
| and likely future investors is likely known to very few
| amongst them, if at all.
|
| Even if you believe strongly in the product and know the
| market-fit is bang on, you don't know if the option is
| currently priced correctly.
| [deleted]
| emerged wrote:
| This is why I've found a balance. I like to work at a startup,
| but they get the amount of hours they invest in me. Typically
| that means I get to spend much of my day enjoying
| fitness/outdoor activities but still get the potential for a
| nice bonus if the equity amounts to anything.
|
| I'll never again work obscene hours without obscene
| compensation. Even with the compensation I'm highly unlikely to
| do it.
| rjzzleep wrote:
| From my own household/wife I have a person who's worked her ass
| off for a hugely incompetent CEO who has a majority stake. When
| I say ass off I mean 12-14 hours a day even on weekends. A
| promise of unlimited holidays and then coercing all employees
| to work during government mandated holidays and now he's trying
| to scam her out of her less than 1% options by coercing her to
| write a maternity leave policy that would make sure she doesn't
| get to vest. This is a sequoia invested company.
|
| I don't think this company has even 10% of equity allocated for
| all the other employees. No way it's that much. She's
| sacrificed her own health, the health of her child and her
| personal relationships for someone who's coerced a bunch of
| people who are to scared to talk to a lawyer into a bunch of
| labour law violations.
|
| When I myself interview with startups and they try to sell me
| on their BS vision fantasies, I tell them that I'm not
| available 24/7. I'm not on call duty either and if they have
| issues with that I'm happy to use my experience to help them
| transform/automate their business into a situation where they
| are more efficient and don't need to burn out their employees.
| Some people respect this as a sign of experience and others,
| especially the valley considers this not aligning with their
| "values".
|
| This is exploitation plain and simple. They cheat their
| employees into thinking taking abuse is acceptable, because
| that's what you have to do to change the world. If anything
| such people change the world for the worse if you ask me.
|
| EDIT: also, due to the lack of experience it's clear that some
| of the directions actually come top down from whatever VC is
| involved in it.
| [deleted]
| spoonjim wrote:
| So... why does your wife stay there?
| matsemann wrote:
| Possibly golden handcuffs (the options are worth much in
| theory, but cannot be exercised or cashed in until IPO for
| instance). Another reason why it's often bad to be a normal
| employee in a startup when it comes to equity. The terms of
| the options are often against you.
| Aeolun wrote:
| > that's what you have to do to change the world
|
| It may be what you need to change the world. But making a n
| uber clone for dogs is _not_ changing the world.
|
| Literally 99% of startups have zero claim to trying to change
| the world.
| bostonsre wrote:
| They're not all that bad. I've worked in a horrible startup
| before and they absolutely forced everyone to work harder
| with longer hours instead of working smarter. We had a few
| ~12-16 hour deploys that started after a full work day where
| the entire engineering department was required to stay and
| the oncall was brutal 2 week long slogs because no effort was
| allowed to be put into actually fixing stuff.
|
| But on the other hand, I've also been at ok jobs that were
| pretty great companies and the one I currently work at is
| absolutely amazing and it's a joy to work at. The pay has
| been pretty awesome as well.
|
| Larger companies in my experience can be soul crushingly
| beaurocratic and the slower pace means your skillet grows
| more slowly (no big tech companies in the valley, just some
| large public companies after startup acquisitions).
|
| It's just anecdotal from my experience and I'm not really
| sure how big of a haystack the amazing startup needles are in
| but they are out there. Work is work, but you spend a huge
| portion of your life at work, if you can enjoy it thoroughly,
| you can live a happier life.
| rjzzleep wrote:
| If you're saying not all startups are bad, I completely
| agree with you, but we're talking about a specific kind
| here. I've worked at some really challenging startups where
| I also did overtime during deploys(I did get to charge the
| hours though) in which I learned a lot. AND THEN we
| actually worked on reducing those issues for the future.
|
| They didn't actually make that part of the job either. I
| could have rejected if I wanted to. And there was never a
| vision alignment talk with miniscule equity with an
| unwritten agreement of doing anything that was asked
| otherwise I'd kiss my equity goodbye.
|
| EDIT: I can't believe I have to clarify this. Most of the
| startups that would fit my above description don't market
| themselves as startups to begin with. I.e. they don't think
| their distinguishing feature is to be a startup with
| equity.
| catillac wrote:
| You're saying not all startups are bad, just a specific
| kind are bad: bad startups. Seems tautological.
| BurningFrog wrote:
| > _This is exploitation plain and simple_
|
| If so, it's voluntary exploitation. She can quit on Monday.
| Don't give 2 weeks notice if you feel the situation is
| abusive.
|
| You'll lose a paycheck, but you always have to be prepared
| for that when at startups. Mainly because they die all the
| time, but also for these kinds of scenarios.
| Grimm1 wrote:
| I've never had these abuses working for a startup. I feel
| like you have to push back against things instead of just
| going with it. Or choose the position better because they
| sound like bad jobs regardless of the type of business.
| That's what I can't help thinking when I hear that because
| I've now worked for 5 different startups and while there was
| some crunch time occasionally the majority by far was an 8
| hour day and then I was out, even for one of the companies
| when I was the 4th engineer. And they just closed another 20
| million round recently.
|
| I really don't think people do enough due diligence about
| where they should work plain and simple. Work is a mutual
| contract where you want to try to extract as much value from
| your employer while negotiating to the point they'll still
| hire you. And a lot of the negotiation is figuring out if
| it's a good job anyway and walking away to another option if
| you get the sense it's not a good from either a financial,
| time or social perspective.
| zepto wrote:
| > I feel like you have to push back against things instead
| of just going with it.
|
| In a bad startup you typically can't 'push back'
| meaningfully. If the management doesn't understand how to
| treat people well, people pushing back won't educate them,
| and employees have to get work done to justify their
| presence rather than fighting battles all the time.
| Grimm1 wrote:
| In that case, you leave.
|
| If you're a decent engineer you'll find work in a few
| weeks and any other startup will be happy to have you.
|
| Unfortunately for non engineers I understand that may be
| more difficult and for those starting out too. So matter
| of perspective definitely since engineers aren't the only
| employees at a startup, but I would hope with due
| dilligence that is caught while you're interviewing.
| sgtnoodle wrote:
| There's certainly some selection bias on these sorts of
| threads, but I agree with you that it's important for
| individuals to take as much responsibility as they can for
| the outcome they expect.
|
| That means vetting a company before joining it, pushing
| back during negotiations and being willing to walk away,
| giving necessary feedback to your coworkers regardless of
| their title, and personally practicing the style of
| leadership you expect from others.
|
| It takes a team of people though, and if the team isn't
| solid then you need to either try to fix it or walk away. A
| good team will build individuals up and support them rather
| than wear down and exploit them.
|
| I just passed the 5 year mark at my current company. When I
| joined there were about 30 people, and now it's probably
| around 400. I took 4 days off this week, but on Friday
| afternoon I popped into the old "office", which are some
| portable buildings on a cattle ranch. It turned out to be
| the once-every-few-years junk cleanup day, and the CEO,
| possibly a billionaire on paper at this point, was limping
| around with leather gloves and a sore back, and all he had
| to talk about was the recent ultrasound of his first baby,
| and how proud he is of how the company has grown since the
| last cleanup day.
| harikb wrote:
| We either need agents who will negotiate on the employees
| behave or some kind of training that is part of a 4 year
| degree. Negotiations and finances are hard - this is why
| some people are good at selling and some are not. Engineers
| are usually good at their primary job and usually not that
| good at defending against other social engineering tactics
| founders use
|
| edit: don't want to blame founders, they also need to
| preserve their equity for future employees but there has to
| be a better balance
| rcruzeiro wrote:
| It's funny how often I got rejected after saying that I am
| not 24/7 available and that I believe that, if someone needs
| to have this kind of availability, it means that something in
| the company is not working and needs to be fixed. The words
| they used in the rejections were always something like: "we
| feel like you are not willing to put enough skin in the game"
| or "everyone else sees the opportunity here is is willing to
| work their asses off, why are you different?" It's specially
| funny to hear all this after the CEO has basically told me
| that they are planning for an exit in a couple of years, and
| being someone who has seems this first hand a few times., it
| usually means everyone works til the point of burn out and,
| in the end, the CEO gets handsomely while everyone else has a
| regular Wednesday.
| hinkley wrote:
| They say "skin in the game" but they mean "skin in the
| machine".
|
| These sorts of word games work on young naive people,
| especially young men. Maybe we need to broadly educate
| people that this sort of exploitation is not okay...
| ad404b8a372f2b9 wrote:
| The valley is a machine, caked with blood, running on
| flesh.
| swensel wrote:
| I don't like having to be on call 24/7 either and would
| prefer to work on a team that has 24/7 ops, so the devs
| don't have to do that. However, in the case of a startup
| where the devs also do ops, what is the option? I don't
| understand the part where you said that this means
| something in the company is not working and needs to be
| fixed if devs need to be on call. What happens if something
| goes wrong with an environment and an auto restart doesn't
| fix the issue? I am curious because I'd like to have a
| better answer for potential startup opportunities that
| won't spend money on a 24/7 ops team and ask this of their
| devs.
| [deleted]
| [deleted]
| vidarh wrote:
| The option is to compensate for it on top of extra salary
| to the point where you get enough volunteers for
| rotation, and/or hire for it.
|
| I had a side gig that very explicitly was being hired to
| be the guy that gets woken up by PagerDuty. They paid me
| about an extra $1k/month purely for having my phone on in
| addition to what they paid me for the time I spent
| dealing with actual issues. Even then $1k/month was only
| enough because most of the other work I did for them was
| explicitly to improve site availability so I could ensure
| the platform was resilient enough that I rarely got woken
| up. In effect my hourly rate for being woken up probably
| translated to $2k-$3k/hour, with it sometimes going half
| a year between being woken up, before suddenly a bad
| release might cost me sleep a few nights in a row.
|
| But having felt the stress of this on a full-time basis
| in the past, without that kind of compensation, I don't
| think it's cost-effective to have your dev team serve
| this role vs. having a few people on retainer to at least
| triage and try the obvious things. You're going to pay
| for it with staff that do not get proper rest (even when
| the phone doesn't go off it'll be there at the back of
| your head).
| rjzzleep wrote:
| Hire for it? Don't coerce your employees into doing
| something you you don't want to pay for?
|
| What most people don't think of is that when you're on
| 24/7 duty your salary is less than half of what it should
| be.
|
| Halfway decent enterprises will reimburse you for off-
| hour duty usually at multiple times your normal rate plus
| a minimum pay. Or just hire someone in a different
| timezone.
|
| The reality is though, most people don't need panic calls
| from their CEO at midnight and the company would still do
| perfectly fine without it. There really is no excuse for
| this.
| varjag wrote:
| Isn't that what the company in question was trying to do,
| hiring the devs who are willing to do 24/7 too?
| danShumway wrote:
| Sure, but then the lesson to take away from this is that
| the company in question apparently isn't offering enough
| to make that job worthwhile, and that's not the fault of
| the people turning them down.
|
| When the company phrases their rejection as "we don't
| think you're committed enough to do this", that's when
| things smell off to me. They're hiring for a specific
| role, they should act like it.
|
| As an analogy, if you hire me to build software, and then
| slip in that you expect me to spend 10 extra hours a week
| doing cold sales calls, I might turn down your job
| because I don't want to do sales, I'm an engineer. And
| the problem at that point isn't my commitment to the
| company, the problem is that the company hasn't figured
| out it needs to make the sales tasks part of the job
| description.
|
| How do interviews get to this point? How does a company
| get to the point where you're talking to the CEO, they're
| laying out their exit strategies, and the job
| requirements still haven't been made clear?
|
| > "we feel like you are not willing to put enough skin in
| the game" or "everyone else sees the opportunity here is
| is willing to work their asses off, why are you
| different?"
|
| Those quotes say to me that the owners are viewing this
| as a question of "loyalty" or moral obligation, not as a
| normal part of a job negotiation. A good test: if the CEO
| feels offended that you ask for more compensation in
| exchange for being online 24x7, then this isn't about
| trying to hire a specific role, it's about their
| ego/entitlement.
| varjag wrote:
| You could be right and it could well be the case, but we
| don't know really. We are only aware that the GP turned
| them down, but it's quite possible they had the position
| filled.
|
| One person wearing many hats is rather typical in small
| companies and early stage startups. Being asked to do
| extra is not something insulting per se, as long as you
| compensated accordingly, either with more hard money or
| (a lot more) equity.
|
| It is a non-starter proposition to many, which should be
| respected. But it's not something borderline criminal.
|
| > How does a company get to the point where you're
| talking to the CEO, they're laying out their exit
| strategies, and the job requirements still haven't been
| made clear?
|
| Look, if we're still talking about a startup it could
| well be the interviewer is the CEO, the guy who brought
| you coffee is CFO and you're interviewing for
| CTO/dev/ops/support in one :)
| toast0 wrote:
| I think you're basically right. At the end of the day, if
| the servers catch fire, you probably need to call the
| responsible developers for help getting things back on
| track.
|
| The real questions then are how is the work divided, what
| does escalation look like, what steps are taken to reduce
| incidents outside of office hours, what's being done to
| allow for urgent maintenance to wait until office hours,
| etc, and also like how well is that all working, and
| where is the leadership in this?
|
| I worked somewhere with not great answers to a lot of
| these questions, but it was okish because the cofounders
| were waking up with all the pages and hoping on to fix
| things too, and I had a mediocre experience with a
| dedicated ops team at a previous job that I didn't want
| to repeat. Eventually, as the team got bigger, we made a
| lot of things better, including on call responsibilities.
| michaelt wrote:
| Where I work, being on call means being able to respond
| to a call by being at your laptop, with a reliable
| internet connection within 10 minutes - and able to keep
| working for as long as may be needed.
|
| That means no stopping at the gym on the way home, no
| going into the city to see a show, no lengthy car
| journeys, no getting drunk, no going on dates, no evening
| classes, no school plays, no sport that takes you more
| than a block away from home, no taking your kids to the
| park to feed the ducks.
|
| The idea you could have people be on call constantly
| sounds crazy to me.
| atoav wrote:
| > if someone needs to have this kind of availability, it
| means that something in the company is not working and
| needs to be fixed.
|
| The crazy thing is, they think they can just throw manhours
| at bad planning and somehow make it work.
|
| You can literally plan well, have a good life and still
| come out ahead of these chaotic organizations that make
| everybody run in circles out of pure panic.
|
| I have seen this so often in film projects: people believe
| by exploiting themselves, their crew and their cast they
| somehow "extract" more value and magically make it work.
| And that one one the point, relexad, but well-planned
| project will always achieve better results. Because oh
| wonder: crews and casts that are not overworked and that
| use their maximum potential where it matters instead of
| spreading it out over the whole project will always produce
| better results.
| planet-and-halo wrote:
| I read a book by a consultant who said he could
| immediately gauge how well a factory was operating by
| looking at how relaxed the average workers were. The most
| efficient factories almost looked like nothing was
| happening, because they had a smooth and efficient
| process and knew how to calmly handle emergencies.
| atoav wrote:
| And what is true for the factory is also true for a film
| set.
|
| The thing many dont realize is: If you have a good plan
| and follow it, you will very often have _more_ freedom to
| try out new things than when your planning is chaotic or
| non-existent -- because then literally every step is made
| out of fear, out of panic, to avoid pain or because other
| decisions froced you into something.
|
| I say this because startups would argue about creativity
| and all that, but having worked aomw time both in art
| school and on film sets I can guarantee that the qell
| prepared always have more freedom than those who just try
| to figure things out as they go.
|
| Thinking it is somehow more honorable to plan badly,
| throw peoples lifetime at the thing and getting a
| somewhat okayish result is really problematic in my eyes.
| Romantizing things that could have been solved by
| realistic (or even pessimistic) planning is not cool, it
| just shows me that you have no experience.
| halsom wrote:
| Your discounting of the budget factor among many others
| is brave. Many hardworking directors with high
| expectations have very different priorities, some which
| are simply big distractions from producing a quality
| production. This "be relaxed and chill to make a good
| film" idea is delusional, but its not necessarily wrong
| as much as it is just nonsense. And the ability to merely
| plan and execute plans, regardless how good they are,
| depends tremendously and straightforwardly on budget.
| jimmont wrote:
| if you can share the title/author of the book please do,
| I've seen this pattern in work as well
| planet-and-halo wrote:
| I can't be sure, but I think it was "Slack" by Demarco.
| sharken wrote:
| There certainly is a place where working extremely hard
| pays off, John Carmack is an example of this, though he
| was a founder at the time.
|
| So i wholly agree that the old adage "work smarter, not
| harder" applies here.
|
| The fool is most likely yourself if you are available
| 24/7 and work long hours more often than not.
| gorbachev wrote:
| Funny how those same companies never are willing to pay you
| for that 24/7 availability. I'd be happy to do that, if
| they paid me for it, and not with bullshit options.
| runarberg wrote:
| Thank you for sharing. As a worker passionate about labor
| rights, I believe sharing these stories is an important step
| in raising awareness to what happens when we waive our labor
| rights.
|
| In a just society these kind of labor violations would be as
| criminal as a bank robbery. There would be prison time
| involved and the victims would be paid, both for the value of
| the work that was stolen from them, plus compensation for the
| crime committed.
| skohan wrote:
| I think what's also missing from the equation here is the fact
| that part of the reason which startup compensation is not
| competitive is because FAANG salaries have been set in such a
| way to attract talent which might otherwise go to startups.
| BeFlatXIII wrote:
| How true to do suspect the following hypothesis is: FAANG
| overpays for top talent they do not need purely to keep it
| out of the hands of startups and competitors who do have a
| present concrete need for the top-shelf talent pool?
| skohan wrote:
| I don't know to what extent that's an explicit strategy,
| but I would find it plausible to imagine that FAANG could
| spend a lot less on engineering - both in terms of salaries
| and head count - to keep their current velocity on product
| development, but they see a strategic interest in
| controlling that talent pool which they have an opportunity
| to exploit via capital advantage.
| ariwilson wrote:
| The other side of this is mentioned in the OP - at scale,
| if you get top talent for $$$ and can squeeze 1% more
| revenue out of your products, it's still worth your time.
| softwaredoug wrote:
| Are there VC firms that invest labor instead of direct capital?
| It seems they could have a group of amazing, employed devs ready
| to hit the ground running, then continue on if the VC firm
| continues to invest. They could train the next tier of tech
| talent when the company could pay more competitive salaries, then
| step back to go to the next investment. This VC firm could give
| real equity in the firm to the techies, meaning the technologist
| could also benefit in the upside of whatever unicorns the firm
| invested in...
| csa wrote:
| I think that this is generally more common in PE (investing
| with both capital and key labor roles) than VC.
|
| That said, good VCs often have vast formal and informal
| networks of folks they can tap to work with a specific start
| up. Whether that talent is reliably good or not is a different
| issue.
| nthngtshr wrote:
| I only ever worked at startups, always one of the first
| employees. Different projects, from consumer stuff to enterprise
| computer vision tech. Most of those companies failed. One was a
| moderate success (~100M valuation), and when a liquidity event
| came I made a decent chunk of money.
|
| I love small companies, I love the chaos, I love having that bond
| around some crazy idea that might never work. I love being in the
| know about how things work and why people buy our product and all
| of that.
|
| I used to want to work at Google. I have a few friends that do
| and the common thing I hear is that it is fun at the beginning
| but then it gets boring. Things move slowly, people are less
| excited about work and there's a lot of red tape. Not saying that
| it's inherently bad, it's just a tradeoff. I could see myself
| being into that kind of work at some point in life.
|
| ---
|
| One thing that people often miss in these conversations is that
| if a company is failing it doesn't take a long time to figure it
| out. If you join a startup and it's tanking or you think the
| founders are incompetent, you can quit and go try another one.
| That's more or less what happened to me. I stayed for 2 months at
| one company, 8 months at another, one company I almost started
| with some people but quickly realized we'd fail because none of
| us knew the problem space. Then I worked at a successful startup
| for 5 years and we all made money.
|
| Another reason to work at a startup is if you ever want to start
| your own company. Starting a company consists of doing a lot of
| different things, so it helps if you have some prior experience
| with them. I learned a ton of random things working at startups,
| from interacting with lawyers to doing content marketing. I
| recently started a company and I talk to other founders a lot and
| I think people who worked at startups before are better prepared
| compared to people who come out of large companies.
| jp57 wrote:
| This reminds me of the recent post linked on HN about "why it's a
| bad idea to write books."
|
| One thing I think people miss is that founding a startup, or
| working at an early-stage startup, belongs to a class of
| financially irrational aspirations that includes other things
| like rock-star, novelist, actor, and professional athlete. For
| all these careers, the financial rewards are distributed
| according to a power law. A few superstars take a massively
| disproportionate share of rewards while the expected ROI is
| negative across all aspirants.
|
| I stress "financial" rewards because for many of these pursuits
| there are intangible rewards that make it worth it even for the
| "losers". I spent most of my 20s playing in rock bands and
| legitimately trying, and failing, to "make it". During that time
| I had a day job, so I was working constantly either at the band
| or at my day job, and really not doing much else. I wouldn't
| trade that time in my life for anything, despite the fact that it
| cost me money both out-of-pocket and in opportunity cost, and
| only perhaps a few hundred people now remember my band. On the
| other hand, I had no family to support during that time, and I
| was willing to live a low-rent bohemian lifestyle.
|
| Early-stage startups are probably the same: the camaraderie, the
| esprit-de-corps, and the joy of building things are the reward.
|
| It's important to enter into these risky pursuits with your eyes
| open and understand that the most important rewards you receive
| won't be financial. If those intangibles aren't important to you,
| or if the base level of financial security you need is higher
| than that of a bohemian lifestyle, then you should look for
| something else.
| [deleted]
| babaganoosh89 wrote:
| The best way to value startup equity is based on their last
| valuation. Then you can quickly compare the offer apples to
| apples to cash offers. Obviously startups don't like this when
| you figure out the 50k shares they offer you is only worth $10k a
| year at current valuation.
| flybrand wrote:
| There are a lot of great things about being in a startup, and
| many people have done well financially and personally with that
| career path.
|
| It's also true that a great deal of the promotion of this career
| path is propaganda that benefits owners - both founders and
| financiers.
| mikeappell wrote:
| Stories like this make me glad my company has yet to accept VC
| money.
|
| We're a five-person legal tech startup and the work environment
| is far and away the best I've ever experienced. Granted, I've
| only been a developer in total for four or five years now
| (including almost three here), but of all the jobs I've had it's
| the best.
|
| My CTO/supervisor is amazing: smart, funny, likable and with a
| management style that works for me amazingly well. Mostly hands
| off, but fully available for deep dives on technical subjects
| when necessary. At this point I've earned enough trust to be able
| to just get shit done with minimal oversight, though we do check
| in daily at least, and keep each other apprised of what we're up
| to, or interesting things we've come across.
|
| The lack of external forcing agents is probably a win for us at
| this point. Obviously there's benefits to having a pile of money
| to burn: we'd probably hire several more developers and really
| work to hone our product. But for a team with two full-time
| developers and a really great designer, not to mention extremely
| smart and talented leadership and sales teams, we're doing great,
| and ship features at a pace that seems to put to shame similar
| companies with much larger teams and far more money. Honestly, I
| have no idea what they're doing with their time.
|
| Still working on that product-market fit though...
|
| Anyway, tl;dr I feel like I hit the jackpot here.
| gumby wrote:
| I'm glad to read this.
|
| I have only worked in the startup environment over the last 30
| years. I don't miss the big company environment and what I see
| from my GF (FAANG, plus one F50 brick and mortar) just reinforces
| that.
|
| But a lot of people choose startup jobs because they read (or saw
| on TV!) a romanticized version. As described in this article the
| very things that make it so great aren't the things that most
| people want...and if you try to blend in too much of the big
| company thing too early the company doesn't usually make it. It
| it much more fun to work with people who are really into that
| environment so anything that steers unhappy people away is better
| for everyone.
|
| I worked with a guy who had an extreme version of this: his limit
| was about a dozen people. And looking at his linkedIn he's since
| worked at some amazing major companies....always at the very
| beginning. It's just his thing.
| zebnyc wrote:
| Unrelated, but does anyone know what happens to employee options
| if there is an exit before the employee's start date?
| ferdowsi wrote:
| Depends if the employee has signed an options agreement and
| those options have been approved by the board.
|
| At a recent gig I started up a few weeks before an exit. My
| options had not yet officially been granted by the board. My
| company granted my equity but they didn't have to.
| GiorgioG wrote:
| In the best of circumstances working for a startup is akin to
| playing the lottery. I worked at a startup almost a decade ago
| and I took (nearly) no equity in exchange for a much higher
| salary. The startup failed not long after I left.
|
| If you just want the experience of working at a startup, go for
| it. But don't do it expecting any financial reward beyond of your
| salary.
| yawaworht1978 wrote:
| If the whole c level does not work the same hours and the reward
| is not reasonably near the horizon and the extra time is not
| compensated, then you are being exploited, will never see a
| reward materialize and your salary is diluted.
|
| Jump ship as far and as soon you can.
| zallarak wrote:
| I've worked at 3 startups, founded 2, and worked at 1 bigco.
|
| 2/3 startups had excellent returns in the form of equity. Life
| changing over time. Startups: 66% hit rate.
|
| Bigco was mentally draining and sucked. Bigco: 0% hit rate.
|
| Starting the first company was a failure, but the second one
| seems to be doing pretty well. 50% hit rate.
| kingsuper20 wrote:
| I was just musing about how the definition of 'startup' has
| changed. I've worked in a couple plus a few post-startup small
| companies, but they always involved a fairly expensive piece of
| boutique hardware. At best, stock options might mean a decent
| bonus after a few years and you work as long as they pay you. You
| take the job because it's interesting and because it's more fun
| to lay track than to fix it. Using folding tables is always
| better than dealing with some middle managers three ring binder
| of yearly performance review.
|
| Seriously, just how many startups in the last ten+ years involve
| anything but some sort of internet service/social
| media/advertising software construct with (usually) the hope of
| selling the company? It all sounds kind of depressing.
| cmrdporcupine wrote:
| Yes, for sure, back in the 90s I fantasized about getting to
| work for a company like that. Just working on really neat tech,
| and getting to have some creative input and some technical
| excitement. I'm sure companies like this exist still, but the
| term "startup" and the investment around it seems to have been
| swallowed up into the kinds of things you mention.
| kingsuper20 wrote:
| Looking around, I've been really blessed by putting together
| a full career of that very sort of thing.
|
| Some things you have to watch, especially if you are selling
| domain knowledge as an employee, is that products in a given
| subindustry will tend to become cheaper/higher volume/lower
| margin over time, the push for Asian manufacture always
| becomes a reality, and as companies age they acquire the
| anchor of supporting and repeating old products.
| novok wrote:
| Now it's ikea LINNMON reinforced cardboard tables, but same
| ethic :P
| [deleted]
| nt2h9uh238h wrote:
| Startups are the most efficient organisations in the economy.
| Because you have to get shit done and can't fuck around. A lot of
| people love to fuck around and do "fake work". Only output and
| impact matter. Hard work is "hard", and at startups you can't
| hide "not working". It sounds pedantic but that's quite the
| reality, a lot of people just don't know what "work" feels like,
| and don't want to do it.
| jdhdhdush7363 wrote:
| Lol! It is possible to work hard but expend time and effort in
| the wrong things. Startups, especially if founding teams fo not
| have deep industry experience, spend a lot of time reinventing
| the wheel and rediscovering various footguns because they often
| cannot afford experienced professionals who know better. So
| there is quite a bit of wasted motion at startups.
|
| Working hard != working smart
| gorbachev wrote:
| I guess you haven't worked at a dysfunctional startup.
|
| Dude...there are all kinds of startups, as there are all kinds
| of other types of companies. Good and bad. With incompetent or
| competent bosses.
|
| There are plenty of people who fuck around at startups. Plenty.
| softwaredoug wrote:
| There's all kinds of BS you work on at a startup. Dumb projects
| to impress some VC to get that next round of funding... or
| chase something because the charismatic founder or influential
| investor is dead set on a crazy direction... or the CTO decides
| this company is their personal tech playground... or tech being
| overbuilt for scale that doesn't exist yet... VCs that hold the
| company to impress their friends instead of actually being
| invested in the company's outcomes... politics between
| competing groups of investors...
|
| Its just a different set of trade offs.
| Mike8435234 wrote:
| Startups do need to be efficient and optimal, but actually most
| of them are incompetent. Most of them fail.
| rantwasp wrote:
| hah. nope. you are simplifying things a lot.
|
| working hard does not mean shit. whenever you hear someone
| saying they want hard workers you should turn around and run.
|
| delivering results is where it's at. people do this at startups
| and companies of all sizes. nobody is gonna keep you and pay
| you if it does not make financial sense.
|
| what happens in the case of a startup is that a lot of corners
| are cut in order to get something out the door and gain
| customers/marker share. it's do or die. but: this corner
| cutting has its cost that, if successful, you will pay back
| with interest in the later stages. it's not good or bad. it
| just is what it is.
|
| bigger companies have more structure and are better about both
| optimizing for cost (ie we don't want to build something that
| will cost us X now and 100X over the next 5 years) and
| optimizing for risk (if X leaves or we learn about Y market
| factor we should be able to keep going without going bankrupt).
|
| the "what work feels like" is some bs. you define what work is
| for you and diminish other people that just don't know the
| feeling. please.
| xivzgrev wrote:
| Great article. One point it kind of touches on but misses is the
| higher risk of "growing pains" / incompetence in startup land.
| Leadership, processes (lack there of) etc can all be lacking /
| poor. Anything from poor strategic judgement to shitting the bed
| on equity valuation (eg I once joined a "rocket ship" that valued
| its shares at $50 a piece. I realize of course share price is a
| function of outstanding shares but given startups want to
| minimize their share price, it didn't seem well managed at all)
| geophile wrote:
| This is mostly accurate but it misses one essential point. And so
| do many of the responses here. One of the reasons to work at a
| startup is to get a lot of responsibility for something
| interesting to you, the sort of thing that wouldn't come your way
| outside of a startup, for a long time, or maybe ever. The point
| in the article that comes closest to identifying this regards
| "calling", but that's not the same thing.
|
| I am 64, and worked in many startups, from 1988 through 2013. My
| main criteria for evaulating a startup were interesting work, and
| potential financial reward. I would also try to avoid companies
| whose business model didn't make sense to me. This worked out
| pretty well. I started out on an academic path, went to an
| industrial research lab in the 80s, and this led me to the
| startup world, where some ideas in software research were used as
| the basis of innovative products. I wasn't comfortable as a pure
| academic, and I loved writing software, so this was the right
| path for me.
|
| At each new company, my thought was: if the business fails, at
| least I've had fun and worked on interesting software. And this
| often worked out very well:
|
| - Startup 1: The company was building an innovative product,
| really a new category of software. I was given responsibility for
| one huge part of it, and this was my first job ever in which I
| was being paid to create software (as opposed to research). The
| company had a modest IPO. Nice payout. In my last couple of
| years, I started a new project which was rejected by the company.
| But this led to ...
|
| - Startup 2: I took a summer off, built software based on my
| ideas, and merged with a startup that had complementary ideas. We
| needed each other. So much fun. This company was acquired toward
| the end of the dotcom bubble. Nice payout.
|
| - Startup 3: Post bubble explosion, my choices were a consumer
| startup or interesting tech at a non-startup. I chose the
| consumer startup. Pretty dull, although fascinating from a
| sociological point of view. I left when I got bored and tech
| startups were happening again. Minor payout a few years later
| when they were acquired.
|
| - Startup 4: My favorite. Fascinating project, three key pieces,
| I built one of them. I also really enjoyed building the tools to
| support the development and troubleshooting work. Acquired by a
| huge company. Nice payout.
|
| - Startup 5: Really interesting idea. I loved the idea so much
| that I missed the fact it should have been a feature of a
| product, not a product by itself. Oops.
| raspasov wrote:
| This!
|
| My guess is this is more wealth and range of experience than
| 99% of the people on this forum.
|
| I encourage everyone to read this comment.
| mycologos wrote:
| It's a nice comment with an interesting point of view, but
| the "range of experience" is somewhat limited by the fact
| that their first four startup experiences ended in four "nice
| payouts", which is an amazing and atypical track record.
| throwaway212722 wrote:
| Throaway for obvious reasons. Sharing my journey:
|
| Startup 1: joined as the first employee pretty much straight
| out of school. Talked to potential customers, worked on the
| product and overall learned lot about startups. Modest low exit
| some years after I left. No payout. (Europe, so not common to
| have equity back in the day).
|
| Startup 2: joined the founding team of a gaming startup. The
| company flopped. Built and learned a lot.
|
| Startup 3: started my own company, moved to US, raised funding
| etc. Learned a lot, we had to shut it down after couple of
| years as failed to grow the business and didn't see a way to
| pivot. Returned remaining funds to the investors.
|
| Startup 4: joined another startup. One of the first 20
| employees. Build a lot, learned lot. Exercised the stock when I
| left. The company IPOd 6 years later. $50M payout. I had early
| exercised some stock so some of it was federally tax free under
| QSBS.
|
| Startup 5: Joined pre-IPO FAANG, got a decent salary. Learned a
| lot of about politics and presenting to execs. Honed my own
| craft and skills on the company time. $3M payout from RSU which
| more than half went to taxes as ordinary income.
|
| Anyway, been lucky with two of my last companies, but I would
| say the earlier startups gave me skills and confidence to
| operate in the level I needed.
|
| I think FAANG is nice place to make $1-2M over some years but
| it's unlikely to make $10M or more.
|
| In all my jobs there were some crunch times every now and them,
| but I never worked 100 hours or over the weekend consistently.
| After being a founder I did realize that you don't have to work
| that hard for other companies.
|
| Startup outcomes are uncertain but you can definitely affect
| them by choosing the right companies. If anything else, you
| will learn a lot likely. Time moves faster in startups, so few
| years in a startup might be like 5 years at FAANG, and you
| actually learn to build things instead of sit in meetings.
| novok wrote:
| How many years did you spend at each place, and where to
| next?
| johnrob wrote:
| Worth noting that this is an exceptional track record - 4 of 5
| startups with a paying acquisition. Great story, but it's not
| likely the normal result of doing 5 startups :)
| geophile wrote:
| I am aware of that. I was extremely lucky.
| sbarre wrote:
| It's important for anyone joining a startup to understand that
| the odds of success are overwhelmingly against you.
|
| For every successful startup we see on here and elsewhere, there
| are thousands that fail in obscurity, sometimes leaving people in
| ruins.
|
| Treat options/shares as a literal lottery. Assume your odds of
| winning are zero when making life choices. Also unless you're a
| very very early employee, those options/shares are likely to not
| be worth what you imagine they will be worth even if the company
| has a successful exit.
|
| Go into it with eyes open and realistic expectations if you
| choose to try it out.
| swader999 wrote:
| I remember my CEO laughing at me buying my options when they
| vested. "Well Swader, you'll be able to wipe your as with those
| at least". Was a great guy, great company and a great bunch of
| people to work with. But facts are facts. We were successful
| but in a very competitive field so nothing was guaranteed.
| sbarre wrote:
| Indeed! You can still have a very rewarding experience in a
| startup, it's just rarely the "retire young and rich" outcome
| that I think a lot of people imagine it will be.
|
| As someone else also said, I wouldn't trade my startup years
| for anything, but it was just a job like any other, when take
| a macro view of my career.
| rubyn00bie wrote:
| I have always said I wish I had gotten toilet paper instead
| of options. Because at least I can wipe my ass with toilet
| paper, and at the start of the pandemic I'd have actually
| gotten rich.
|
| Next time I'm offered options I'm going to request TP instead
| and see how they take it haha.
| swader999 wrote:
| Hmmm... There might be an opportunity in combining these
| into one product.
| sbarre wrote:
| Yeah the last startup I worked at, I declined options
| altogether and just said pay me more..
|
| It was a difficult conversation but in the end they agreed,
| and it worked out in my favour.
| dominotw wrote:
| I don't understand why people list their options value under
| 'stock' in levels.fyi . I see lots of pre ipo company people
| give specific value to their options.
| RhodesianHunter wrote:
| I'm guessing because these companies are way past what any
| reasonable person would call a "startup" and are getting
| regular third party valuations.
| sethammons wrote:
| Yes, even when you win that lotto, it is not as much as you may
| imagine. I rode the SendGrid/Twilio rocket; engineer 12 at
| SendGrid. IPO and acquisition later, I'm still a decade out on
| even thinking of being able to retire or be financially
| independent. Don't get me wrong, things are good. But early
| equity in a multi billion dollar company and I'm still having
| to work :)
| ZephyrBlu wrote:
| This doesn't add up to me. According to an article on Twilio
| the acquisition was ~$3B.
|
| Even 0.01% equity is 300k. Not "time to retire" money, but
| still a good chunk of change. Yet you're a decade out of even
| thinking about retirement?!
| zebnyc wrote:
| 300k is not much money in SF Bay area. If you have a
| mortgage / looking for a new home, then homes can go
| upwards of 2 million.
|
| I am assuming that GP means they have not hit their target
| net worth to FATFire.
| SilurianWenlock wrote:
| The math changes if you live in London/Europe where the big
| company salaries are much lower
| alecco wrote:
| The key thing I recommend is to *prioritize who you want to work
| for* (or have as clients). People who will care about your well-
| being. Find what they need and try to match your skills.
|
| I had my own startup at some time, and worked for both other
| people's startups and for big corps. I used to maximize career
| and CV over quality of life. I was easy prey to
| assholes/takers/sociopaths. Burned 15 years of my life without
| much to show. On the upside, I _really_ appreciate now working
| for good bosses and good leaders. I could easily earn 1.5-2x in a
| soulless corporate job. But I know my current employer would go
| out of its way to try to not screw me over while the 2x employer
| will throw me under the bus the second I stop being useful.
|
| You can study or do research on your spare time. Good bosses will
| understand if you eventually move on. And some might even help
| you progress against their convenience.
| lbacaj wrote:
| The article is good but it's missing a big point that equity in
| startups is tied to risk taken not to contributions.
|
| Many people, including myself, make this mistake the first round
| at startups. The mistake of believing if you work hard the
| outcome will be good. I wrote an article a little while back on
| how this relationship works and how it follows a logarithmic and
| exponential relationship, risk and equity, and how human minds
| are terrible at understanding those scales.
|
| For anyone interested: https://louiebacaj.com/equity-and-risk/
| yawaworht1978 wrote:
| To work in a start up some times can be good, if you are a self
| starter and they appreciate that.
|
| Just never do it for "equity" unless you have enough money on the
| side.
|
| But to spend the vast majority of the career in a startup without
| being one of the founders is not recommendable I think.
| nipponese wrote:
| Yes, it's hard to explain that some people just want to "run
| fast", and can't operate in any other workplace environment.
| yawaworht1978 wrote:
| Hard to say which one's the worse place to be, hiding behind
| massive corporate walls or the ones hiding behind the " break
| it, apologize later" MO. The latter will not fare well in a
| corporate environment, unless backed up by managers.
|
| I simply alternative the environments when I get a decent
| proposal. I have seen successful startups turning into
| Byzantine corporations pretty fast. Bad things start to not
| be fixed anymore, instead more manpower with less quality is
| thrown at the issue, this is one of the tell tale signs that
| it is time to go if you want to learn something else.
|
| I have found that learning useful things on a job is more
| important than whether you are in a startup or in an
| established corporation.
|
| The moment you stop learning and no promotion is in sight,
| promote yourself, by changing companies if need be.
| notjustanymike wrote:
| I personally work for startups because I prefer building and
| owning big projects over maintaining someone else's cog in the
| corporate clocktower.
|
| I'm not interested in working on the "retention" team, or the
| "console ad integration" team. I want to build the main thing and
| feel like I make an impact every day I go to work.
|
| It is possible to do that at a larger business but the odds are
| stacked against me. Google has a history of killing large
| projects, and the thought of two years work being cancelled by an
| accountant because it didn't make enough money just sounds
| draining on a completely different emotional level.
| rrdharan wrote:
| The average engineer at a startup is far more likely to work on
| something for two years that ends up being pointless, and
| canceled, by economics, when the entire startup fails.
| cblconfederate wrote:
| But if you view your work as something that you do primarily
| for yourself, you end up with a net gain
| WJW wrote:
| Or even if the startup _is_ successful, because no initial
| MVP survives 10x userbase growth. Every company I 've ever
| worked for was constantly reworking parts of the codebase
| that were "good enough" 2-3 years ago but aren't anymore.
| hprotagonist wrote:
| My expectation is that the total compensation i receive from any
| employer is limited to salary per paycheck, health benefits,
| maybe retirement matching, and that is it, startup or no.
| jmartrican wrote:
| And RSUs. I love me some RSUs.
| hprotagonist wrote:
| can't say i've ever had the pleasure.
| stephc_int13 wrote:
| A starving wolf asks a very well-fed dog what he should do to be
| bulky too. The dog advises him to put himself at the service of a
| human: the services rendered, he will be spoiled. The wolf then
| realizes that the dog has a wound where the human puts a leash on
| it. When he finds out that this injury is from the object
| depriving him of his freedom, he decides to run away with his
| freedom and return to the woods.
|
| This animal fable opposes two animals similar in morphology but
| which have two different lifestyles: one is wild and the other is
| domestic. This confrontation allows La Fontaine to present two
| conditions: the insecurity linked to freedom and the comfort
| linked to servitude.
|
| https://fr.wikipedia.org/wiki/Le_Loup_et_le_Chien
| mcguire wrote:
| If the wolf is truly starving, the only thing he is free to do
| is search for his next meal---at least until he becomes too
| weak to do that.
|
| Freedom requires some level of security.
| hewrin10 wrote:
| Reason 4 for joining a startup is very underrated. Not all of us
| studied CS in fancy schools
| s17n wrote:
| People work at startups because they want crazy hours and stress.
| It's fun. You get a bond with your coworkers that you can't get
| any other way.
|
| If that doesn't appeal to you then yeah you shouldn't work at a
| startup. But tbh I've never met these mythical people who joined
| a startup thinking that it was actually a rational financial
| decision - everyone I know did it because they wanted an intense
| experience.
| user3939382 wrote:
| In my experience as a manager I've found that the two major
| motivating factors for most people are stability and vertical
| mobility, and that most people and organizations favor one at the
| expense of the other. Startups, especially early stage, are great
| for those who value the latter. You may not choose the
| opportunity for "two in the bush" but that's the compensation
| some people want.
| blakesterz wrote:
| As much as I agree with everything said in this article I
| wouldn't trade my years at a start up for anything. Both
| financially and emotionally it was awesome. I didn't get rich,
| and I worked way too much, but it was awesome. I loved the
| constant change and chaos. I learned so much, way more than I
| would've in any other type or work place. I made great friends
| too. It was as bad as the article, but it was way waaaay better
| too.
| BelenusMordred wrote:
| This is relatable. It's incredibly satisfying building new
| things rather than maintaining decades old cruft, regardless of
| the paycheck, hours and stability.
|
| Also the joy of working in small nimble teams and the freedom
| to experiment with new technologies. Like everything in life
| these things are a tradeoff.
| toomuchtodo wrote:
| I will give you the other perspective. I get paid double what
| I've made at startups, for 35 hours a week, no overtime, no
| on call, and clear expectations of what success looks like
| for both myself and my team. I get six weeks of PTO (real
| weeks, not "unlimited"), 4 months off if we have another kid,
| and significant bonuses, while being fully remote. This is at
| what you'd call an "enterprise".
|
| I am happy to keep existing lines of businesses in
| maintenance mode for the above comp. My work is _just work_ ,
| I find satisfaction outside of it. My comp and work life
| balance affords me the ability to indulge my curiosity and
| academic endeavors outside of work while also providing high
| quality of life to my family.
|
| As a friend once taught me, "Money and wealth are options,
| and options are freedom."
| dbancajas wrote:
| Sounds like an outlier? Can you also tell us the actual
| comp? is that like 500K or 200K? YOE? I mean it's an online
| forum with unknown identities.
| toomuchtodo wrote:
| ~$220k base, role required 6-8 YOE. Not FAANG comp, but
| doesn't need to be.
| sdfin wrote:
| Is that 35 hour work week the one available in France? That
| sounds awesome, it allows a nice work/life balance.
| toomuchtodo wrote:
| US based multinational.
| tkiolp4 wrote:
| Umm, I do enjoy the things you mentioned (building new stuff,
| experiment with new tech) but I love doing that on my free
| time, without pressure, deadlines and bosses.
|
| At work, though, I love: boring stuff I can deal with easily,
| long epics that end up in features that are barely used (so,
| no big deal with critical bugs, also no need to be on call).
| At work I can be done in 4h and call it a day (which gives me
| TON of free time to experiment with new tech, keep my cv up
| to date and even fantasize with making my side projects
| profitable).
| gscho wrote:
| I often think about leaving my job for an enterprise role
| and doing exactly what you describe. After working for
| years in the professional services space I am confident I
| could do that job in a few hours per day and spend the rest
| on other more exciting things.
| devoutsalsa wrote:
| I value my experience in startups because you learn so much in
| a short period of time. Meanwhile, in a recent enterprise gig,
| I had to participate in weeks of debate and upfront planning to
| add three non-interesting CRUD endpoints to a service.
| vinceguidry wrote:
| Everybody's got to make their bones somehow. The problem comes
| when you think you have to keep making them. Then you just get
| exploited your whole career.
| moron4hire wrote:
| I firmly believe that one should never, ever take a pay cut to
| work at a startup. We've all heard the numbers, 80% of startups
| fail in the first year, by year 5 it's 90%. If you're taking a
| pay cut, you're not building savings for the inevitable thin
| times. When the startup fails, you're going to have a period of
| zero pay while you look for a new job. How long is that period
| going to be? If anything, one should be demanding more money.
|
| And this is _especially_ true if the field is one you 're excited
| about working in. You're putting yourself at an emotional
| disadvantage. You're more likely to put up with missed paychecks
| because you're supposedly "working your dream job". And when you
| end up in a bad situation, if you don't have a cushion of cash to
| fall back on, it could very well sour your view of your "dream".
| softwaredoug wrote:
| 10+ years ago part of the allure of tech startups was they really
| "got" what made technologists jobs fulfilling. Back then
| companies had management that had no idea how to build high
| quality software. There was lots of waterfall like process and
| TPS report style bureacracy.
|
| Fast forward to the present. FAANG companies dominate the
| economy. They pay well, offer upside in actual stock, AND most
| crucially: they _do a better job giving more fulfilling tech work
| than most startup_
|
| Who wants to work at a startup where management likely sucks?
| They might have no real track record building good tech or
| empowering great technologists.
|
| You'd rather have your 40 hr / week FAANG job doing what you
| love, spend time with your kids and family, where you know the
| balance of risks means you'll likely end up in a position of
| upper middle class life (if not outright wealthy...)
| taurath wrote:
| The current stereotype among my circle in FAANG is that they
| move slowly and you're more likely to be working on something
| dreadfully boring and also have few opportunities to branch
| out. That's what keeps a lot of people going to startups though
| I agree with the OP the financial and work life arrangement
| gets less and less ideal.
| reikonomusha wrote:
| More anecdotal experience, but I agree. Most people I know
| doing FAANG only "don't hate" the work, but love the pay and
| benefits, and the fact that laying low rewards them.
| Quizzically, previously politically active friends have
| turned quite quiet about their beliefs and morals as soon as
| they started earning a fat paycheck from Facebook.
|
| For a lot of people, vast amounts of money really is the most
| attractive aspect of a job.
| dang wrote:
| This article is responding to the romantic version of the startup
| story that was popular 10-15 years ago, in the early heyday of YC
| and HN. In that sense it is 10 years out of date.
|
| There has been since at least one major wave, which was
| characterized by disillusionment and cynicism about startups
| ("just buy a lottery ticket", "startup equity isn't worth the
| paper it's printed on", etc.). This became standard fare on HN
| and until recently was probably the dominant view.
|
| That has become old hat in its own right--you can tell that such
| a wave is in its later stages when the comments become
| predictable, and then compensate for that by getting snarkier.
| When information gets worn out through repetition, comments have
| to add in extra spice to get interesting again--though not
| necessarily the good form of 'interesting'.
|
| It's too soon to tell but I think we might be at the beginning of
| another wave now--a more balanced weighing of pros and cons. Many
| comments in this thread are good examples of that.
|
| There's another dynamic too, which I've not yet seen anyone
| comment on: these waves are staggered geographically. This became
| obvious to me when looking at the geography of HN comments
| (judging by IP geolocation, which is mostly pretty good). These
| waves don't get started and then subside in lockstep all over the
| world--rather, they exist in different stages in different
| locations. It took years for the romantic story to make its way
| to certain locations, and those places are now in the early
| stages of the cynical wave. Other parts of the world are still in
| the crest of the romantic phase. This creates unfortunate
| misunderstandings where someone in one of those areas posts an
| enthusiastic startup story, of the kind that was popular on HN in
| say 2008, and then gets blasted with flames by people in
| locations where the cynical wave is strong.
|
| I hope I'm guessing correctly that the next wave is more balanced
| and nuanced, because I think we need to look beyond "startups:
| yay or nay" to asking [oops - phone just rang - will complete
| later]
| cmrdporcupine wrote:
| Fun story, I worked at as employee #3 or #4 or something at a
| startup many years ago, and it was fun at first, trying out
| various product ideas and strategies and pivoting a lot. Then the
| first serious funding crunch came, and the founder ran out of
| money to pay us, so we worked for a month without compensation.
|
| Except during this unpaid period the founder took off to Costa
| Rica to "work on his vacation" while we continued to work in the
| office with delayed pay. He came from a wealthy background, while
| I had a young child and a pregnant wife at home and a mortgage to
| pay.
|
| So he didn't really get it, I think, when I raised a stink. I was
| offered more stock options and a higher title to retain me
| (without that title being communicated to anybody else). But a
| mark was put on me for my whining and my attitude and the
| founder's attitude toward me took a turn. He pivoted again, and I
| was either fired or I quit (I was already interviewing elsewhere
| and had an offer) depending on who you talk to.
|
| Through some hand waving the ability to buy the options
| disappeared, though I couldn't be bothered.
|
| He built that business up, and a few years later he sold for an
| OK sum. But the business itself was dubious, I doubt the company
| that acquired his business kept any talent or tech worth anything
| and he's now living in Costa Rica. The people I know who worked
| there and were there from day one certainly didn't get rich.
|
| So yeah, that's when my attitude towards startups in general
| changed significantly. I used to be very interested and motivated
| by being early in the process in a company and getting to be
| technically creative and involved in the decision making and
| architecture, and I loved the feeling of _coding like crazy_ and
| really pounding metal on something greenfield. But honestly, it
| 's not worth it when you start to see the kinds of people and
| egos involved.
|
| So I'm getting older and maybe I'm not the ultimate talent that a
| startup today would be looking for, but there are plenty of other
| people like me who've been burned in this game and their advice
| would most likely be: don't bother. This isn't the 80s or 90s,
| you're not likely to change the world tech wise, and you're
| unlikely to get rich out of it, and jobs at FAANGs are soul
| sucking boredom in many ways, but they'll treat you well.
|
| (FWIW I went from there to a later stage 50-100 person company
| that was acquired by Google a year later and did OK out of that,
| but that was a properly managed company run by ethical human
| beings.)
| gnicholas wrote:
| > _acquired by Google a year later and did OK out of that_
|
| What does it mean to "do OK" in an acquisition by FAANG a year
| after you joined? I would assume if you didn't think a
| liquidity event was coming soon, this would be seen as a
| windfall (assuming you were retained).
| cmrdporcupine wrote:
| It certainly was not expected, so it was nice. And yes, I'm
| still there, 9 years on. So I've done well for myself. I'm
| just saying, it's not like I got rich :-) Thing is, I liked
| the company before Google bought it. It was just the kind of
| small->medium sized company I enjoy working at.
| lalokaya wrote:
| I wish I got that advise decades ago.
|
| I joined several startups in SF throughout my journey.
|
| Took me forever to realize that not all levels of hard are the
| same:
|
| - Working harder than most for 1% was not worth it. Small team
| comradery dissolved as soon as the company started going under.
| Sometimes founders screwed you over at the end. Nowadays I
| sometimes wonder why I worked so hard for other people's
| companies.
|
| - Working for FAANG pays well, but golden handcuffs are not for
| everyone.
|
| - Doing your own startup is super hard. Emotional roller coaster.
| It sucks all the time, until it doesn't.
|
| All of these are hard, but the last one forces you to learn
| skills you wouldn't have cared for otherwise. Again, not for
| everyone, but if I had to pick my "level of hard", that would be
| it.
| amir734jj wrote:
| > sometimes wonder why I worked so hard for other people's
| companies
|
| I have the same feeling. I'm working at FAANG now but I worked
| very hard when I was just starting my career for a small
| manufacturing company to create a e-commerce website. I can't
| work as hard as those days, I have a back problem and I'm much
| older now.
| domano wrote:
| Man, if i look at the numbers people are throwing around i start
| to think that Europe is another planet.
|
| Well at least we have better social benefits all around i guess.
| wreath wrote:
| We do indeed have better social benefits. But are they really
| benefits for a SWE in 2021? The social benefits in Europe are
| great for people with low-mid salaries but as an SWE, I'd
| rather take a US salary with less social benefits than a
| European salary.
| encoderer wrote:
| Startups shouldn't be romanticized so much, but it can be a good
| job.
|
| A good startup experience can help you figure out what you really
| like to work on. In a big company things are already specialized
| -- it's pretty hard to be a data engineer and move over to the
| android team. Not impossible, but hard. That's why people say you
| go to startups to "learn" -- because in our line of work you
| learn by doing and in a startup you can usually do a lot.
| throw123123123 wrote:
| Onne important point of startups that pay less than established
| companies is that it is the best way to get into the industry by
| outsiders. Sure, if you can choose a FAANG or similarly sized
| company, startups are not a great bet at all.
|
| But FAANG big as they are are a small fraction of the action.
| moolcool wrote:
| There's also the geographic restrictions if you want to work at
| a FAANG
| thrav wrote:
| This is a huge one, which won't work in the best startups, but
| is a great strategy for someone trying to break in --- leverage
| a position at a cool tech, bad market fit, middling or even
| failing startup.
|
| When my Mountain View startup disbanded, most of the team
| dispersed into Google, Facebook, Salesforce, and other large
| soon-to-IPO companies. Almost everyone ended up in a better
| place, and many of us would've had a hard time doing so before
| we joined.
| SergeAx wrote:
| The article is quite comprehensive and well written. There's also
| a lot of assumptions and false alternatives, like that people
| work to maximize financial outcome or that there's an
| equalprobable choice between working for startup or for FAANG.
|
| My opinion is to try working for early stage startups while one
| is young and idealistic, choosing it by heart, thus maximizing
| its chances to success. Getting familiar with different techs and
| stacks. Getting a good networking while visiting meetups and
| hackathons. Even if the startup won't fly, it will help to get
| much more interesting position in established company later.
| hintymad wrote:
| I don't think the author is comparing apple to apples. Instead of
| contrasting joining startups and joining FAANGs, we should really
| compare joining top-notch startups with joining FAANGs. That is,
| just like good companies are scarce, so are good startups. Look
| back, and we can see that those who join square, pinterest,
| airbnb, uber (before early 2015), facebook (before its IPO) all
| did really well. By the way, Netflix circa 2008 was still in a
| sense a startup, as they were still being threatened by
| blockbuster and most doubted their streaming initiative and the
| company had fewer than 150 engineers.
|
| Even those who joined Uber in 2016 or later got something back.
| Uber's success did give halo to its employees. As a result, many
| became senior managers or directors or staff engineers in other
| reputed companies, even though they had started their career only
| 3 or 4 years before.
|
| The trick to land on a promising startup is taking sunken cost
| seriously. Switch to a different company decisively and swiftly
| once you are convinced that the company has a bad leadership. And
| trust me, there will be many signs. Take Uber after 2016, for
| instance, you would see 1. Head of HR reported to this hot-head
| VP, who was the buddy of the CEO; 2. CFO told employees that they
| RSU hold period was a year instead of 6 months and the reason is
| for employees' own good; 3. CEO told employees that he didn't
| want to go IPO simply because he didn't want the employees to
| check stock price all day. 4. Uber copies pretty much every
| policy from Amazon yet could execute well and everyone was
| launching project for promotion and the company had more than 800
| services. 5. CEO forced managers to A/B test packages to see how
| low a package can go to hire people. 6. Company splurged 10s of
| millions hosting extravagant parties for 4 days straight in Vegas
| for bogus metrics like total number of trips; 7. HRs used number
| of people hired as the key metric to boast that Uber was the
| fastest-growing company.
|
| See? When you see so much distrust from the top, you should just
| jump ship, and use the halo you get from UBER to land on a
| different top startup, whatever that is, and rinse (in case you
| ended up joining WeWork).
| tarkin2 wrote:
| Between working for a startup and a corp, I can't say I have
| massive emotions either way now. I'd definitely suggest working
| for a startup at one point, but not for too long, while taking
| care of your physical and emotional state.
| [deleted]
| rohanstake wrote:
| It depends.
|
| If you want to learn a lot, get a sense of startup, have great
| founders, bootstrapped company then startup is a good idea.
| Especially at the start of your career.
|
| But if you are late in your career with family, responsibilities
| and health issues - then startup isn't the best place to work.
|
| I hope - you decide weighing everything and enjoy the process.
| davidw wrote:
| I would love to see more small-ish companies in a niche with a
| good product, and competent people that are maybe slowly growing,
| but not on the rocket ship ride. That kind of environment has
| always felt like a place where you can get good work done.
| cmrdporcupine wrote:
| Exactly! But it could be that a company like that is just
| really hard to run now. Investment very difficult to get and
| potential talent eaten up by FAANGs.
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