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By now everyone knows that expected payoff of working at a start-up is the same or lower than a big company, but with much higher variability. Everyone knows t

By now everyone knows that expected payoff of working at a start-up is the same or lower than a big company, but with much higher variability. Everyone knows this. The thing is though, no matter where you work, as a professional you'll spend 50+ hours a week working. The satisfaction you get from that time matters a lot to your happiness and sense of satisfaction. You could work at a large soul destroying company that MUST pay you more because you have to put up with their BS, or you could work at a small company where you can look the founder in the eye and tell him or her to change something you don't like (as this article disparagingly puts it, change the culture in two weeks). And the founder is going to listen because everyone on the team is dedicated to the same mission. Really where are you going to be happier? The fact that start-up payoff is even remotely equivalent to big company salaries tells me start-ups are a great choice if you value things like your happiness, sense of accomplishment, self-esteem, impact on the world, etc.

gaius 11y ago
y now everyone knows that expected payoff of working at a start-up is the same or lower than a big company, but with much higher variability. Everyone knows this. Not everyone or the VC business model would have imploded.
- dang 11y ago
  It has certainly become a well-worn meme on HN, so much that it's probably past its best-before date. Once things get repeated too often, the discussions around them stop being vibrant.
  - gaius 11y ago
    It needs to keep on being repeated until 20-somethings aren't getting chewed up and spat out by the startup machine anymore.
    - dang 11y ago
      It sounds like you might have had some bad experiences. If so, I'm sorry that happened. From a discussion-quality point of view, though, your comment seems an example of what I'm talking about. Hype inevitably leads to cynicism, but neither gives a balanced view and neither is good for curiosity.
      - gaius 11y ago
        Fair enough! :-)
- terravion 11y ago
  Actually it wouldn't. Most professions with high variability pay lower average wages than more stable alternative industries, this is a basic, well documented principle of hits businesses like the VC industry, upstream oil & gas, movies, and even drug gangs.
  - mcguire 11y ago
    You sure about that? My experience working as a government employee (i.e. about as low-variability as it gets), with corresponding low pay, and as a corporate contractor (high-variability in the sense that you may not be needed tomorrow), for higher pay, argues otherwise. Heck: drug gangs.
gearoidoc 11y ago
There are plenty of large companies where you can go to your boss, express dissatisfaction with some aspect (tech used, projects youre involved with) and get an almost immediate turn around on. Conversely, there are startups (even ones just founded) where the CEO is inapproachable and your input wont affect culture/product/whatever one jot. As a programmer, my satisfaction comes from writing quality code on systems that are in some way complex and commonly used. There's not a lot of satisfaction to be gleaned from writing a dozen CRUD apps. Btw, citing 'impact on the world' as a reason to join a startup is a really good way of coming across naive imo ;) EDIT: I also disagree with your point on 50+ hours a week. 40 hours is about right with 50+ hours during crunch periods - which should be rare (2-3 a year max).
- sjg007 11y ago
  Agree that "impact on the world" is naive and meaningless. It's like new grad resumes that hype leadership skills.
  - dang 11y ago
    It's a cliché, but neither naive nor meaningless when the small company you're working for is trying to do something ambitious.
    - freshhawk 11y ago
      But you are talking about <1% of the companies making that claim.
    - jonathankoren 11y ago
      It's naive because the vast majority of small companies crash and burn, with no impact whatsoever. Also, since we're talking about Silicon Valley, it's naive to think that Uber-for-Dog-Walking or Grindr-for-BitCoin startup is going to change the world in any meaningful way. Most business startups are playing inside-baseball games that only certain companies care about, and consumer startups tend to be trivial contrivances for people with copious amounts disposable income.
Silhouette 11y ago
By now everyone knows that expected payoff of working at a start-up is the same or lower than a big company, but with much higher variability. If that were true, places like Silicon Valley would be smaller, I think. The thing is though, no matter where you work, as a professional you'll spend 50+ hours a week working. Nonsense. I've been doing this stuff for decades and in my entire career I have never worked for anyone who expected or received 50+ hours per week routinely. If this is your norm, you need better employers/clients. Particularly in creative fields like the software or Web work we usually discuss around here, I would even say that most people can't sustain 50+ productive hours per week for an extended period. You could work at a large soul destroying company that MUST pay you more because you have to put up with their BS, or you could work at a small company where you can look the founder in the eye and tell him or her to change something you don't like You imply a false dichotomy. There is a vast range of employers and many other ways of working that do not involve either working in a dead end job for a faceless corporate giant or working in a small start-up. I have nothing against start-ups. I have started my own companies, which I run to this day, and the majority of my earlier career as an employee was working for smaller businesses. But I do think articles like this are useful from time to time, because a lot of relatively inexperienced people do get taken in by the start-up culture and, in some cases, I would even say abused by it. If the start-ups are as attractive as their advocates would have the newbies believe -- and again, I'm not saying they don't have some big plus points -- then it won't do any harm to offer a more realistic look at the rest of the picture, will it?
- potatolicious 11y ago
  Agree with all points - and to add, part of the problem with all this is that developer pay has incredibly high variance and in general knowledge of salaries is poor. It's not that many people choose lower-paying startups for the enjoyment, satisfaction, etc, while fully aware of how much more BigCo pays - many simply aren't aware of how much more BigCo pays. Many are not even well informed on how much startups pay. Many are also not aware of the proper math around their startup equity, which results in a large overestimation of its value even in the case of success - I'd say it's not uncommon to see startup employees overestimate the value of their equity by ~10x. Most haven't seen the cap table at all, which means they don't have the ability to estimate the value of their equity at all. I've seen this in real life where people - not new grads either, experienced industry folk - express shock at the sizes of offers Google, Facebook, et al are throwing around. We've seen this here, where revelation about how much many engineers make routinely elicit shock - and even hostility - and this is a demographic that particularly cares.
viscanti 11y ago
Also, it's unclear that big companies would be willing to hire 100% of the people who want to work in tech. For some, working at a startup might be the best way to learn and improve. Google might not blindly extend 100k+ more offers, above market rate, just to cover everyone who wants to be a programmer. So for the (likely majority of) people who can't realistically get into Google, a startup might be one of the best ways to learn and make money.
sageabilly 11y ago
You could work at a large soul destroying company Yes, you could. You could also work at a medium-sized soul destroying company with a totally dysfunctional culture. Or you could work for a 5 person start up with a founder who was only able to function if he had multiple grams of cocaine in his system. Or an up-and-coming, making the transition from startup company who used to have a dysfunctional culture but who fired the perpetrators and who is focused on strategic hiring during a period of heavy growth. Or you could work for a US-based branch of a global company where things were pretty good except for that one co-worker who'd been there 15 years who threatened violence every day and suicide at least once a week and who worked at a snail's pace, yet who was still there the day you got fired because the new boss was younger and saw your college degree as a threat to his position. Or you could work at a 3000+ software company on a product that was used by almost the entirety of the Fortune 2000 and have the direct ear of the CIO even though you're 4 levels below him (as a result of the company culture, not because you're special) and have direct influence on the company direction because of it. Point being, "startup" != happiness or quality of life, no more than "established company" = stability or a big paycheck. Again and again, it all boils down to company culture, and that's entirely independent of company size, and often it will vary greatly from group to group within the same company.
- dang 11y ago
  Company culture is not independent of company size. Bureaucracy grows inexorably with size, probably super-linearly. Smaller organizations and teams are under fewer constraints. That doesn't guarantee that a small team or company will have a fine culture, but the option is so much more available that the odds are higher.
JDiculous 11y ago
> no matter where you work, as a professional you'll spend 50+ hours a week working This is false. There are plenty of companies that respect the 40 hour work week (and many where you can get away with less).
- guelo 11y ago
  Wake up, get ready, commute both ways, lunch, happy hours, etc. 50 hours is on the low side.
  - Armisael16 11y ago
    Are you seriously considering waking up and putting on pants to be working?
    - seivan 11y ago
      Job requires pants, it should be included, but you're obviously not paid for it.
  - vonmoltke 11y ago
    Sure, if you include all that I've been working 50+ hours a week for virtually my entire career. I don't generally count all that other stuff as "working", though, because I have some control over how much or little of that I have to deal with.
  - cobaltblue 11y ago
    If you include thinking about work, then even work-from-home people could reach the 50+ figure relatively easily since you include weekends and trying to get to sleep. But then you might easily get into low numbers of hours per week, 15-30, if you subtract things like spending some large % of your time doing non-productive non-work (happy hours, lunches not at your desk, watercooler talk, browsing HN) even though you're at work. Work time should generally only be the time between clock-in and clock-out. For professionals that are freed from clock-in-clock-out, I think they would still clump around that 40 hour figure if you made them clock-in-clock-out for the data rather than for the pay.
fweespeech 11y ago
> The fact that start-up payoff is even remotely equivalent to big company salaries tells me start-ups are a great choice if you value things like your happiness, sense of accomplishment, self-esteem, impact on the world, etc. I can tell the CTO I'd like something to change and one of these things happens: 1) I'll get a pay raise and/or more PTO. 2) What I'm not happy about will change. > The thing is though, no matter where you work, as a professional you'll spend 50+ hours a week working. I work 40 hours a week. I get paid more than a startup would pay me. > You could work at a large soul destroying company that MUST pay you more because you have to put up with their BS, or you could work at a small company where you can look the founder in the eye and tell him or her to change something you don't like. That is true of small-to-medium sized businesses with a reasonable C-Suite. This has nothing to do with startups and pretending it does perpetuates the myth that startups are different in ways they are completely identical to other businesses. > The fact that start-up payoff is even remotely equivalent to big company salaries tells me start-ups are a great choice if you value things like your happiness, sense of accomplishment, self-esteem, impact on the world, etc. I've designed and built systems that I'm as happy with as I would be at literally any other business. Really all of you've done is generalized a "bad employer" into "all large companies". This simply isn't true.
- seivan 11y ago
  I hope you understand how lucky you've been. Would you say majority of devs have it like you? Because I've experienced the working hour issue. And that's not even at a startup.
  - fweespeech 11y ago
    > I hope you understand how lucky you've been. Tbh, I maintain a several-million-dollar-a-year project with essentially no IT resources besides myself and my requests are reasonable. At this point, three developers [including someone my boss really, really was hoping would replace me on this] have failed to handle this project effectively. So it isn't just luck. > Would you say majority of devs have it like you? The Devs I know personally do but they are largely my coworkers or my coworkers at previous employers. > Because I've experienced the working hour issue. And that's not even at a startup. Yeah, its probably because I've been largely self-managing with hard deadlines really only when we have contractual changes.
svimma23 11y ago
"By now everyone knows that expected payoff of working at a start-up is the same or lower than a big company, but with much higher variability. Everyone knows this." I actually happen to agree with the statement but 1) I think the author doesn't understand the mathematical meaning of his statement (or he would have put an AND not a BUT) and 2) It is definitely not possibly true that "Everyone knows this" In pure probability / economics terms, if I have three payoffs: a) 50% probability of +1, 50% probability of -1; expected value = 0 b) 50% probability of +5, 50% probability of -5; expected value = 0 c) 25% probability of +5, 75% probability of -5; expected value = -2.5 a) and b) have the same expected value, so: -- I am "risk neutral" if I am indifferent between the a & b -- I am "risk averse" if I prefer a) over b (lower variance) -- I am "risk loving" if I prefer b) over a (higher variance - a gambler) In financial terms, any investor would absolutely prefer a) over b) [the lower variance bet]. c) is obviously worse than both b/c it has a lower expected value (and it's "doubly" worse than a) b/c it has a higher variance AND a lower expected value). If now, the argument is that startups have both a lower expected value AND a higher variability than established companies (i.e. they are like bet c)), then, if everyone knew this, the startup community would not exist not least because investors wouldn't be willing to fund it, but also b/c no one should be willing to work there. What are the caveats? 1) People's behavior isn't always rationale (people pick c) over a) --> for example, the lottery 2) There is a fair amount of evidence that most VC's don't make any real return at all (That putting your money in stocks is on average a way better investment.) Hence, perhaps it is true that startups are like bet c). 3) That the payoff of a VC is different (and better) than that of an employee who suffers from asymmetric information (VC's get access to the "best" companies to invest in whereas workers may not), lack of diversification, being screwed on equity structure, etc. So, it is possible that for a VC, there is expected value equal to that of comparable investors, but that for an employee, on average it is worse in all ways (lower expected value AND higher variability) to work at a startup as an employee than for a larger company.

gaius 11y ago

y now everyone knows that expected payoff of working at a start-up is the same or lower than a big company, but with much higher variability. Everyone knows this. Not everyone or the VC business model would have imploded.

dang 11y ago
It has certainly become a well-worn meme on HN, so much that it's probably past its best-before date. Once things get repeated too often, the discussions around them stop being vibrant.
- gaius 11y ago
  It needs to keep on being repeated until 20-somethings aren't getting chewed up and spat out by the startup machine anymore.
  - dang 11y ago
    It sounds like you might have had some bad experiences. If so, I'm sorry that happened. From a discussion-quality point of view, though, your comment seems an example of what I'm talking about. Hype inevitably leads to cynicism, but neither gives a balanced view and neither is good for curiosity.
    - gaius 11y ago
      Fair enough! :-)
terravion 11y ago
Actually it wouldn't. Most professions with high variability pay lower average wages than more stable alternative industries, this is a basic, well documented principle of hits businesses like the VC industry, upstream oil & gas, movies, and even drug gangs.
- mcguire 11y ago
  You sure about that? My experience working as a government employee (i.e. about as low-variability as it gets), with corresponding low pay, and as a corporate contractor (high-variability in the sense that you may not be needed tomorrow), for higher pay, argues otherwise. Heck: drug gangs.

gearoidoc 11y ago

There are plenty of large companies where you can go to your boss, express dissatisfaction with some aspect (tech used, projects youre involved with) and get an almost immediate turn around on. Conversely, there are startups (even ones just founded) where the CEO is inapproachable and your input wont affect culture/product/whatever one jot. As a programmer, my satisfaction comes from writing quality code on systems that are in some way complex and commonly used. There's not a lot of satisfaction to be gleaned from writing a dozen CRUD apps. Btw, citing 'impact on the world' as a reason to join a startup is a really good way of coming across naive imo ;) EDIT: I also disagree with your point on 50+ hours a week. 40 hours is about right with 50+ hours during crunch periods - which should be rare (2-3 a year max).

sjg007 11y ago
Agree that "impact on the world" is naive and meaningless. It's like new grad resumes that hype leadership skills.
- dang 11y ago
  It's a cliché, but neither naive nor meaningless when the small company you're working for is trying to do something ambitious.
  - freshhawk 11y ago
    But you are talking about <1% of the companies making that claim.
  - jonathankoren 11y ago
    It's naive because the vast majority of small companies crash and burn, with no impact whatsoever. Also, since we're talking about Silicon Valley, it's naive to think that Uber-for-Dog-Walking or Grindr-for-BitCoin startup is going to change the world in any meaningful way. Most business startups are playing inside-baseball games that only certain companies care about, and consumer startups tend to be trivial contrivances for people with copious amounts disposable income.

Silhouette 11y ago

By now everyone knows that expected payoff of working at a start-up is the same or lower than a big company, but with much higher variability. If that were true, places like Silicon Valley would be smaller, I think. The thing is though, no matter where you work, as a professional you'll spend 50+ hours a week working. Nonsense. I've been doing this stuff for decades and in my entire career I have never worked for anyone who expected or received 50+ hours per week routinely. If this is your norm, you need better employers/clients. Particularly in creative fields like the software or Web work we usually discuss around here, I would even say that most people can't sustain 50+ productive hours per week for an extended period. You could work at a large soul destroying company that MUST pay you more because you have to put up with their BS, or you could work at a small company where you can look the founder in the eye and tell him or her to change something you don't like You imply a false dichotomy. There is a vast range of employers and many other ways of working that do not involve either working in a dead end job for a faceless corporate giant or working in a small start-up. I have nothing against start-ups. I have started my own companies, which I run to this day, and the majority of my earlier career as an employee was working for smaller businesses. But I do think articles like this are useful from time to time, because a lot of relatively inexperienced people do get taken in by the start-up culture and, in some cases, I would even say abused by it. If the start-ups are as attractive as their advocates would have the newbies believe -- and again, I'm not saying they don't have some big plus points -- then it won't do any harm to offer a more realistic look at the rest of the picture, will it?

potatolicious 11y ago
Agree with all points - and to add, part of the problem with all this is that developer pay has incredibly high variance and in general knowledge of salaries is poor. It's not that many people choose lower-paying startups for the enjoyment, satisfaction, etc, while fully aware of how much more BigCo pays - many simply aren't aware of how much more BigCo pays. Many are not even well informed on how much startups pay. Many are also not aware of the proper math around their startup equity, which results in a large overestimation of its value even in the case of success - I'd say it's not uncommon to see startup employees overestimate the value of their equity by ~10x. Most haven't seen the cap table at all, which means they don't have the ability to estimate the value of their equity at all. I've seen this in real life where people - not new grads either, experienced industry folk - express shock at the sizes of offers Google, Facebook, et al are throwing around. We've seen this here, where revelation about how much many engineers make routinely elicit shock - and even hostility - and this is a demographic that particularly cares.

viscanti 11y ago

Also, it's unclear that big companies would be willing to hire 100% of the people who want to work in tech. For some, working at a startup might be the best way to learn and improve. Google might not blindly extend 100k+ more offers, above market rate, just to cover everyone who wants to be a programmer. So for the (likely majority of) people who can't realistically get into Google, a startup might be one of the best ways to learn and make money.

sageabilly 11y ago

You could work at a large soul destroying company Yes, you could. You could also work at a medium-sized soul destroying company with a totally dysfunctional culture. Or you could work for a 5 person start up with a founder who was only able to function if he had multiple grams of cocaine in his system. Or an up-and-coming, making the transition from startup company who used to have a dysfunctional culture but who fired the perpetrators and who is focused on strategic hiring during a period of heavy growth. Or you could work for a US-based branch of a global company where things were pretty good except for that one co-worker who'd been there 15 years who threatened violence every day and suicide at least once a week and who worked at a snail's pace, yet who was still there the day you got fired because the new boss was younger and saw your college degree as a threat to his position. Or you could work at a 3000+ software company on a product that was used by almost the entirety of the Fortune 2000 and have the direct ear of the CIO even though you're 4 levels below him (as a result of the company culture, not because you're special) and have direct influence on the company direction because of it. Point being, "startup" != happiness or quality of life, no more than "established company" = stability or a big paycheck. Again and again, it all boils down to company culture, and that's entirely independent of company size, and often it will vary greatly from group to group within the same company.

dang 11y ago
Company culture is not independent of company size. Bureaucracy grows inexorably with size, probably super-linearly. Smaller organizations and teams are under fewer constraints. That doesn't guarantee that a small team or company will have a fine culture, but the option is so much more available that the odds are higher.

JDiculous 11y ago

> no matter where you work, as a professional you'll spend 50+ hours a week working This is false. There are plenty of companies that respect the 40 hour work week (and many where you can get away with less).

guelo 11y ago
Wake up, get ready, commute both ways, lunch, happy hours, etc. 50 hours is on the low side.
- Armisael16 11y ago
  Are you seriously considering waking up and putting on pants to be working?
  - seivan 11y ago
    Job requires pants, it should be included, but you're obviously not paid for it.
- vonmoltke 11y ago
  Sure, if you include all that I've been working 50+ hours a week for virtually my entire career. I don't generally count all that other stuff as "working", though, because I have some control over how much or little of that I have to deal with.
- cobaltblue 11y ago
  If you include thinking about work, then even work-from-home people could reach the 50+ figure relatively easily since you include weekends and trying to get to sleep. But then you might easily get into low numbers of hours per week, 15-30, if you subtract things like spending some large % of your time doing non-productive non-work (happy hours, lunches not at your desk, watercooler talk, browsing HN) even though you're at work. Work time should generally only be the time between clock-in and clock-out. For professionals that are freed from clock-in-clock-out, I think they would still clump around that 40 hour figure if you made them clock-in-clock-out for the data rather than for the pay.

fweespeech 11y ago

> The fact that start-up payoff is even remotely equivalent to big company salaries tells me start-ups are a great choice if you value things like your happiness, sense of accomplishment, self-esteem, impact on the world, etc. I can tell the CTO I'd like something to change and one of these things happens: 1) I'll get a pay raise and/or more PTO. 2) What I'm not happy about will change. > The thing is though, no matter where you work, as a professional you'll spend 50+ hours a week working. I work 40 hours a week. I get paid more than a startup would pay me. > You could work at a large soul destroying company that MUST pay you more because you have to put up with their BS, or you could work at a small company where you can look the founder in the eye and tell him or her to change something you don't like. That is true of small-to-medium sized businesses with a reasonable C-Suite. This has nothing to do with startups and pretending it does perpetuates the myth that startups are different in ways they are completely identical to other businesses. > The fact that start-up payoff is even remotely equivalent to big company salaries tells me start-ups are a great choice if you value things like your happiness, sense of accomplishment, self-esteem, impact on the world, etc. I've designed and built systems that I'm as happy with as I would be at literally any other business. Really all of you've done is generalized a "bad employer" into "all large companies". This simply isn't true.

seivan 11y ago
I hope you understand how lucky you've been. Would you say majority of devs have it like you? Because I've experienced the working hour issue. And that's not even at a startup.
- fweespeech 11y ago
  > I hope you understand how lucky you've been. Tbh, I maintain a several-million-dollar-a-year project with essentially no IT resources besides myself and my requests are reasonable. At this point, three developers [including someone my boss really, really was hoping would replace me on this] have failed to handle this project effectively. So it isn't just luck. > Would you say majority of devs have it like you? The Devs I know personally do but they are largely my coworkers or my coworkers at previous employers. > Because I've experienced the working hour issue. And that's not even at a startup. Yeah, its probably because I've been largely self-managing with hard deadlines really only when we have contractual changes.

svimma23 11y ago

"By now everyone knows that expected payoff of working at a start-up is the same or lower than a big company, but with much higher variability. Everyone knows this." I actually happen to agree with the statement but 1) I think the author doesn't understand the mathematical meaning of his statement (or he would have put an AND not a BUT) and 2) It is definitely not possibly true that "Everyone knows this" In pure probability / economics terms, if I have three payoffs: a) 50% probability of +1, 50% probability of -1; expected value = 0 b) 50% probability of +5, 50% probability of -5; expected value = 0 c) 25% probability of +5, 75% probability of -5; expected value = -2.5 a) and b) have the same expected value, so: -- I am "risk neutral" if I am indifferent between the a & b -- I am "risk averse" if I prefer a) over b (lower variance) -- I am "risk loving" if I prefer b) over a (higher variance - a gambler) In financial terms, any investor would absolutely prefer a) over b) [the lower variance bet]. c) is obviously worse than both b/c it has a lower expected value (and it's "doubly" worse than a) b/c it has a higher variance AND a lower expected value). If now, the argument is that startups have both a lower expected value AND a higher variability than established companies (i.e. they are like bet c)), then, if everyone knew this, the startup community would not exist not least because investors wouldn't be willing to fund it, but also b/c no one should be willing to work there. What are the caveats? 1) People's behavior isn't always rationale (people pick c) over a) --> for example, the lottery 2) There is a fair amount of evidence that most VC's don't make any real return at all (That putting your money in stocks is on average a way better investment.) Hence, perhaps it is true that startups are like bet c). 3) That the payoff of a VC is different (and better) than that of an employee who suffers from asymmetric information (VC's get access to the "best" companies to invest in whereas workers may not), lack of diversification, being screwed on equity structure, etc. So, it is possible that for a VC, there is expected value equal to that of comparable investors, but that for an employee, on average it is worse in all ways (lower expected value AND higher variability) to work at a startup as an employee than for a larger company.