[HN Gopher] Ask HN: Should an experienced engineer join a startup?
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Ask HN: Should an experienced engineer join a startup?
(throw away account since I will be sharing a lot of personal
stuff) I have been working at big and respected tech companies for
years, and lately I decided that I wanted to do something different
and join a startup. At first I was very happy to find that many
companies were interested in me, and several of them sound
promising companies, but when the compensation conversations start,
I can't help to feel like I'm getting the short end of the stick.
I have no expectations that any startup would match my current
comp, but after crunching the numbers of expected equity and using
VERY optimistic scenarios, the opportunity cost is too big to
ignore. For reference: - I make around $0.9M-$1.2M per year today.
Is a public company, so everything is liquid. - If I accept a
position with 1% equity, the company exit would need to be at least
$500M just to match my previous comp. - Investors are getting a
much better deal than I am, their money can buy more equity that I
would be able to buy with my work. So far I considered the
following options: - Accept my golden handcuffs, and stay where I
am. - Accept that this is the price for the privilege of working
at a startup. - Become a founder myself, so the exit value doesn't
need to be so insanely high. - Become an angel investor, since
they are getting a much better deal, I might as well join them.
I'm curious with other people think about this situation, while I
think I'm in an uncommon (but very fortunate) situation, is hard to
believe I'm the first one. I'm interesting to hear if I'm actually
missing something and is not as bad as it sounds, or if there is
other options which I did not consider.
Author : tempforquestion
Score : 13 points
Date : 2022-02-06 21:56 UTC (1 hours ago)
| heybecker wrote:
| Only if you want to have fun
| BerislavLopac wrote:
| After working for large organizations, compensation will be the
| least of your problems in a startup.
| joezydeco wrote:
| No, you pretty much nailed it, except for two things:
|
| 1) You're critical to getting the company from PowerPoint pitch
| to shipping product, but you won't be treated this way.
|
| 2) You'll be diluted to almost nothing if the company got to a .5
| Billion exit.
|
| If you want the excitement and experience? Go for it. If you want
| the money? Buy a lottery ticket.
| strikelaserclaw wrote:
| It seems like you are very interested in the making money aspect
| of a startup, from that view point, it doesn't make sense to
| leave 1 mm on the table to have a slim chance at a big payoff.
| IMO people who work at startups are either people who are
| extremely passionate about their work or people who couldn't make
| it into big tech companies.
| tempforquestion wrote:
| For me is less about the money and more about how the risk is
| asymmetric for the investors. I get it is how the system
| works...
|
| The issue is companies DO try to sell the idea their equity is
| going to be extremely valuable in the future, which is what
| started me on this rabbit hole to try to quantify how valuable
| they actually are.
| doopy1 wrote:
| Why are you using very optimistic scenarios instead of realistic
| ones? Do you know that most startups don't see an exit at all let
| alone one that can be measured in the hundreds of millions?
| tempforquestion wrote:
| Excellent question! I want to give the benefit of the doubt to
| the value of equity and I'm assuming I would join a company
| that I truly believe.
|
| If you account the true risk, for sure is not worth it.
| mianos wrote:
| If you want to give up your $1M salary (seriously WTF) and you
| want to have much more control over a technology stack, sure.
|
| I halved my salary and worked in startups for quite a few years,
| some things were fantastic. For example, bootstrapping a bank
| from scratch. I left all that chaos for an established large firm
| and it totally sucked the life out of me.
|
| The chances of getting a million dollar a year income, in stock
| or salary in a new startup is next to nil. It is like being a
| muso and saying you want to be a rock star or actor.
|
| I worked for 4 startups over 9 years. Three are gone completely
| and the one that may be successful has diluted my equity so much
| it is now near worthless. Basically I will never get the salary
| cut I took back, ever.
| tempforquestion wrote:
| I'm not trying to make $1M at a startup, but it does bother me
| when a startup spins their compensation to be what it is
| because the equity will become so valuable in the future.
| cjbprime wrote:
| Everything you wrote is correct, and there's previous writing
| available about this, e.g. https://danluu.com/startup-tradeoffs/
| lostdog wrote:
| You just can't justify joining a startup between series A and
| when they switch to RSUs. The equity amounts are usually small
| enough to be worthless, and if they are big they become
| impossible to exercise. Angel investing a smaller amount is
| almost always a better tradeoff.
|
| In my last search, the series D+ and public offers were good, and
| the startup offers were just laughable. I couldn't justify going
| to any of them just to make a bunch of other people rich.
|
| My friends in similar situations take exactly the options you
| described. Some become founders (getting 30-40% of a company),
| some are angel investing (and sometimes joining a company they've
| invested in "for fun"), some just can't handle the bureaucracy
| beyond 100 people and join startups, and the vast majority are at
| larger public companies or startups that are nearly there.
|
| I really believe there's an imbalance that's due for a
| correction, because skilled and experienced people mostly avoid
| startups right now. Early valuations may need to increase,
| employee equity pools will need to increase, equity terms must
| become less confiscatory, team sizes should shrink, and timelines
| to exiting must decrease. Will it happen? I'm not sure. It
| depends on whether startups can continue to coast on the pool of
| less-skilled engineers joining the true believers.
| tempforquestion wrote:
| > I couldn't justify going to any of them just to make a bunch
| of other people rich.
|
| That is a nice way to put how I feel about my situation.
| codegeek wrote:
| "I make around $0.9M-$1.2M per year today"
|
| A startup is like a lottery when it comes to that kind of money.
| 99.99% chance you will not make that money with the startup. So
| if money is the main factor, you are better off staying with the
| current company. If you were making like 200K/Year, even then it
| is a tough call but at least was worth a discussion. 1M a year is
| not even worth a discussion.
| Graffur wrote:
| > I make around $0.9M-$1.2M per year today
|
| Wow, can I ask how you make that much per year?
|
| I am not in that position but to me it sounds like you should not
| go with the startup. The chance of failure is very high
| late2part wrote:
| Your financial analysis is correct. However, if you have _enough_
| money you can choose to do things you enjoy. That is why a
| startup makes sense for experienced people, in many
| circumstances.
| shuckles wrote:
| The strongest case for startup equity as compensation is made by
| Ben Kuhn, in my opinion, and it amounts to: you can diversity
| your equity exposure in more companies than you could as an angel
| because (i) the best companies will want to hire you and (ii) you
| can quit your company as soon as it appears to not be a
| rocketship, something you'll have insider knowledge of.
| https://www.benkuhn.net/optopt/
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