13 ms·

Startup employees don't earn more

255 points by z0a 10y ago

danielrm26 10y ago
This will surprise nobody on Hacker News. The allure of startups isn't a guaranteed 20% more than a regular company's salary; it's the possibility of 1000% more.
- swampthinker 10y ago
  It's like the lottery, except you can influence your odds a bit more.
  - isoos 10y ago
    It would be interesting to see what the expected outcome's distribution is with buying lottery tickets for $X/month vs. doing a startup (and potentially earn less by $X/month than one could have had at a larger corporation).
    - elliotec 10y ago
      Interesting. If I spent 20% of my salary on lottery tickets, how good would my chances be of winning vs cashing in my stock at a startup that goes public in which I made 20% less salary? And what would the payout differences be?
      - vasilipupkin 10y ago
        The startup deal is a much better deal than lottery tickets. If you can get a 1% ownership stake and we assume a 10% chance of a 100 million dollar startup, the expected value of that grant is 100k. The expected value of buying lottery tickets with 20% of your salary is close to zero You should also consider the fact that if you are an early employee in a startup, your future expected payout is at least in part a function of your efforts
        bendbro 10y ago
        Even given the generous 10% success rate, and 1% equity comp, you need to factor in dilution, time till maturity, whether the company even goes public, and below market salary/benefits. After that, I'll bet that in the vast majority of cases your maximum upside is significantly less than what you'd have with the standard bigco package. Edit: not to day there isn't legitimate reason for joining a startup: it's just if the work isn't super interesting, you're getting tricked
        msandford 10y ago
        You don't get to say that the EV is close to zero in one case, but not in the other. 20k/year (dollars spent) * 1/100mm (odds of winning) * 100mm (jackpot) = 20k/year If you get a 1% ownership stake for a 20% salary reduction (per year) and you have to stay there for say, 4-5 years in order to get that 100k payout then you're looking at numbers on very similar terms. I understand why people need to be convinced that their odds are much better in startups than in the lottery. But wanting to believe something to be true and it being true aren't the same thing.
        sidlls 10y ago
        Is 10% a reasonable value for that chance? Is 1% a reasonable value for the ownership stake? What about dilution and payout rights? A reasonable expected value of a lottery ticket is directly computable: jackpot times probability of a winning set. I'm not so sure the same is true for the value of startup employment.
        dragonwriter 10y ago
        Lottery tickets' jackpot is usually determined in part by sales of tickets for that drawing, and a winning combination wins a divided pot in the case of multiple winners (the probability of which depends again on sales of tickets for that drawing.) So, no, you can't, at the time of buying a ticket, actually calculate more than a guess of they parameters you cite for determining its expected value.
        sidlls 10y ago
      - mbesto 10y ago
        More interesting would be to take the delta between a startup salary and a Google salary and invest it in SV real estate. I'd easily bet real estate would net higher returns.
  - vollmond 10y ago
    And you're (hopefully) working on something more interesting and more self-directed than you might at a typical job.
  - gdilla 10y ago
    and accelerate your learning/career path a bit. Big companies with big company politics tend not to reward talented 20y/rs like they should with promotion, raises, and bonuses. But being promoted or growing in a startup has a return when you job hop, at least when you're starting your career.
    - nommm-nommm 10y ago
      Not my experience at all!
- susan_hall 10y ago
  "not 20% more but possibly 1000% more" -- you are implying that the median startup employee makes less but it is worth it because of the big payoff for the lucky ones. That is, you imply that the median might be lower, but the average pay is higher. But that is not what the article is saying. The article is saying that average payoff is lower. In other words, being a startup employee is irrational the same way the lottery is irrational -- total payouts are lower overall.
  - thoman23 10y ago
    Both the lottery and working at a startup are rational bets if you believe the value of money is non linear.
    - rlanday 10y ago
      No, many people believe the value of money in non-linear but most of those people believe that the marginal utility of each additional dollars diminishes as your wealth increases, rather than increasing. I.e. even if you might earn more money on average at a startup (which the article claims isn’t the case), it still wouldn’t be worth it because it’s better to earn a decent salary from a big company with high probability. Who seriously believes that the marginal value of money increases as you have more?
      - zachsnow 10y ago
        Interesting that while I agree that the marginal value decreases I also feel (literally feel) that somehow having say an order of magnitude more would somehow be qualitatively different (and better). Funny to see my own biases play tricks (?) on me!
        phamilton 10y ago
        I think one could define a metric in which average result is higher for startup employees than for BigCo employees. Someone with $100M has access to politics/investments/etc that most people earning $250k/yr don't. So while the average monetary payout is smaller (1% chance at $100M is equal to a 50% chance at 2M), average social currency is much higher. (1% chance at the social power that comes with $100M vs 0% chance in the BigCo job).
- tdb7893 10y ago
  How many engineers get 1000% more? I thought it was the founders and investors that got more.
  - Hytosys 10y ago
    Yep, you're right. There's a belligerent, Randian dream behind that 1000% nonsense that always seems to be accompanied by some far-fetched narrative of climbing the ladder.
philsnow 10y ago
As others have posted, people don't go to small startups to earn more on average. They're not looking at the average or median, they're looking at the 99%ile numbers, because they think the startup they picked has an angle or advantage, giving it a shot at a 99%ile exit. 80000hours' audience is clever enough to understand cumulative distribution functions or even just correlated sets of [25%ile, median, 75%ile, 90%ile, 99%ile] numbers.
- devonkim 10y ago
  I've always thought that historically engineers cared more about working on things they had more emotional investment in rather than working on things they had no passion for that makes money as an established business like ad tech or dog dating social networks.
  - tostitos1979 10y ago
    Your comment made me think of the episode of the show Silicon Valley (in the current season), where the engineers want to build a scalable platform rather than a box (appliance). The negotiate with mgmt to let them work on the platform after they have worked on the box :) As an aside, I thought this episode was very well done. The engineers believe their algorithm will get better over time as it ingests more data (hence, a scalable platform is the way to go). A box won't learn, and benefit from these improvements. However, large companies want boxes (servers/appliances in their data center) and aren't in a position to have their data leak out (for statutory or competitive reasons in many cases).
  - _delirium 10y ago
    In recent years I think that too might make big companies more attractive. Companies like Google are solving a lot of interesting technical challenges, and produce interesting software (even some open-source) like Kubernetes and deep-learning frameworks. And there are many jobs you can have there there are purely about solving those tech challenges (the business side is someone else's job). While a lot of startups are less about tech and more about specific business plays, "AirBnB for x" or "Uber for x". Which, yes, to be an AirBnB-for-X you do need some tech, like a website and payment processing system, but the real innovation at these startups (in cases where there is any) is around business models, not technology, while the technology is relatively pedestrian.
forgotpwtomain 10y ago
Obviously has been referenced a lot but still relevant: https://danluu.com/startup-tradeoffs/ https://danluu.com/startup-tradeoffs/
qwertyuiop924 10y ago
This should surprise nobody. If I had my copy of Cryptonomicon at hand, I'd quote the bit about everybody being impressed Avi could let them sell out for roughly what they'd have made at a regular job. Yes, even in the '90s, this was pretty well known.
cj 10y ago
If your #1 job criteria is compensation, do not work at a startup. You'll be paid more at big companies. If you don't mind being paid a little less, and want the opportunity to be a part of building a company from the ground up, consider working at a startup. There will be a lot more ups and downs than at a company like Google. But at smaller companies, you'll have the chance to have a material impact on the success of the organization instead of being just a cog in the wheel. By no means am I saying you should accept a below market offer from a sketchy startup that offers no benefits and expects 12 hour work days (those unfortunately exist). Disclaimer: I run a 6-person seed-stage company. To help keep our employees happy (and to be competitive with bigger companies when recruiting), we try to get as close as possible to big-company salaries, we don't expect anything beyond 40 hrs / week, 100% paid health benefits, 401k, 25 paid days off per year, snacks, food, full financial transparency, etc. (Not trying to self-promote here, mainly trying to communicate that not all small companies are bad just because they're small). Also consider that the day-to-day work at startup is dramatically different than the day-to-day work at a big company. For people who don't mind being paid low $100k's instead of mid $100k's, the day-to-day work should be the main deciding factor when considering startup vs. large co. In my opinion, startups are more fun, you get to wear more hats since your role is likely less specialized, (ideally) there's less politics, you can have a real impact on the success of the business while (hopefully) watching it grow, and learn a lot really fast along the way. That said, the big company route definitely offers higher compensation and more stability, and makes a lot of sense for people who are a little more risk-averse. Also +1 on viewing equity as a lottery ticket. When evaluating offers from a startup, try to maximize your equity in negotiations (ie. more lottery tickets), but the fact is the majority of startups will eventually shut down, so don't use equity as a major factor when comparing offers between large and small companies.
- mchaver 10y ago
  It looks like there is a font rendering issue in this image: https://global.localizecdn.com/uploads/1463786278815.png https://global.localizecdn.com/uploads/1463786278815.png The last item on the right column should look like this: 中文(简体)
- mavelikara 10y ago
djloche 10y ago
It's easier to get hired at an early stage startup because there are fewer hoops to jump through. You can then use that startup to build industry connections and get your next job via inside track referral through someone you know at a bigger / more established company.
- saryant 10y ago
  That's what I did. I was fresh out of a college nobody's heard of, joined a startup as their first employee and eventually networked my way into a big tech company. Nearly doubled my salary when I eventually jumped.
adamzerner 10y ago
This talks about aggregate earning rather than earning per unit of time. I think the latter is what people are/should be interested in, and from what I understand, startup employees put in a lot more hours.
- telotortium 10y ago
  Well, it depends on what you're trying to achieve. There are legitimate reasons to try to achieve the highest possible pay per year, no matter how many hours in the year you have to work in order to get it. In the case of 80000 hours, the goal is to donate as much money to charity as possible, and, if I may put it somewhat crudely, they would prefer you work as much as possible, only stopping work in order to eat and sleep, if that's the way to achieve the highest salary, since the noblest calling in their view is to dump as much money as possible into (the most optimal) third world charities, and 80000 hours has already taken the time to determine which charities maximize third world utility. (Technically, you need to deduct the negative utility to you from working increased hours, but your utility should be the same as a poor person in the third world, so that negative effect is minimal.)
  - HaseebQ 10y ago
    Completely disagree. Even if you're maximizing for donations, any reasonable analysis would still have to privilege your own well-being as a giver. Lowering your burnout/regression rate from 25% to 5% by giving yourself a higher quality of life seems like one of the best investments you can make. You don't need to expend wads of cash. But you don't need to be destitute as a software engineer to give effectively.
    - telotortium 10y ago
      I actually agree with you. I was being a bit facetious - 80000 hours is somewhat infamous for a rigidly utilitarian view of effective charity and for optimizing for monetary means of increasing the effectiveness of said charities. But even they recognize the risk of burnout.
    - 10y ago
bunkydoo 10y ago
I'm gonna be straight with y'all, I earn more as a post office mail carrier than I ever did as a programmer for a silicon valley startup with $1 million dollars seed funding. I also surprisingly have more freedom even though I work basically like a slave. Nobody wants to admit it but we are in a tech bubble. Sure, if you are in the right startup things might be different. I had a great valley experience - but it was all a façade, the next recession will really highlight the failures of silicon valley startup culture. Wall Street got pounded last time, and I'm sure I'll get downvoted night and day for saying this here - but I'm sorry guys, you are the new problem. Silicon Valley is the new Wall Street. There, I said it. Ironically I worked in both places before joining the postal service. So I do have perspective. My claims aren't baseless either, your startup that might even be funded at a million dollars like my employer's was is just a tax write-off for your investor when it fails. They are playing slots with your dreams, time, and skill - the only person who truly loses is you.
- saryant 10y ago
  I don't think a $1 million seed counts as "well-funded" and certainly isn't somewhere you expect large compensation. Startups pay below-market salary, especially at the seed stage. Maybe you have a big equity grant but that's not money in the bank.
- jeremyt 10y ago
  Just sour grapes. You don't have any magical insight into the industry. You're just drawing conclusions from one data point. Here are two more data points for you: I've worked at two startups and so far both startups are solid successes.
  - bunkydoo 10y ago
    Our country is just shy of $20 trillion in debt because investors spend their cash on startups like mine and expect the government to write it off on their taxes when it fails.
    - bhickey 10y ago
parent5446 10y ago
This is just a minor annoyance, but the header image of this article, which has been used in other articles [0], is CC-BY 2.0 licensed [1], and yet is not attributed to the original author at all. (Perhaps even more interesting is that it looks like it's being used to depict a startup company environment, even though it's actually a hostel in Amsterdam during the Wikimedia Foundation's annual international hackathon.) [0] http://silicon.nyc/code-academies-new-york-coding/ http://silicon.nyc/code-academies-new-york-coding/ [1] https://commons.wikimedia.org/wiki/File:Wikimedia_Hackathon_2013,_Amsterdam_-_Flickr_-_Sebastiaan_ter_Burg_(28).jpg https://commons.wikimedia.org/wiki/File:Wikimedia_Hackathon_... EDIT: I misread the license. It's CC-BY 2.0, not CC-BY-SA 2.0.
- parent5446 10y ago
  Follow-up: I contacted them, and they added the attribution, so all is well!
ryanSrich 10y ago
In other news the sun rose this morning. How do these stories get upvote?
hackaflocka 10y ago
On average? Of course not. It's a power-law! Averages mean nothing in power-law situations.
- aab0 10y ago
  It's not a true power-law (assuming it's not a lognormal). It's truncated by the fact that anyone considering a startup would never have earned more than the world GDP, or more specifically, the peak tech market cap to date (Apple's $775b). Once it's truncated at a finite value, the moments become meaningful.
  - AstralStorm 10y ago
    It is probably something similar to a negative binomial distribution. (Polya distribution) You play until your VC decides not to fund you or you actually win. This can be done over either money or time. This only works on startups as a group, for any specific one you would use a more complex method as trials are not independent. Discrete please - type distribution, derived by a Markov chain.
markbnj 10y ago
I'm working at my third startup, and money has never been close to the top of the list when deciding. First, I'm old enough and experienced enough to be skeptical about the pot of gold at the end of whatever. Second, my time is far more valuable than money, and how I spend it, who I spend it with, and what I am doing are much, much more relevant to me.
catuskoti 10y ago
The article assumes that everybody has access to the same knowledge as to whether a startup will be successful or not. I do not believe this at all. Gambling on startups is much more riskier for outsiders than for insiders.
deleted 10y ago
[deleted]
avindroth 10y ago
80k is my favorite EA organization. I love reading their articles!
dangero 10y ago
The thing I wish someone spelled out to me when I started my startup employment journey over ten years ago is that you need to pick the right company. Most startup equity ends up being worthless, so you need to think of yourself as a venture capitalist. Will this company really be the next big thing? Do I believe in them or am I just excited that they want to hire me? Looking back I wasted far too much time working for companies that I knew deep down were never going to make me money on options and working on projects that I knew were going to fail. I wasted my time and I let these failure companies give me valueless options in place of pay that I would have received working for an established company. Job interviews are bi-directional and everyone tells you that, but it took me wasting many years to understand what that meant.
- nathan_f77 10y ago
  I think you've nailed it. If you're an employee at a startup, you should be doing the same amount of research as a VC, if not much more. A VC is only investing a bunch of cash that they can afford to lose, and probably only a little bit of their own money. As an employee, you're investing maybe 5 years of your life that you can never get back.
repomies691 10y ago
This varies greatly from company to company. I would say in startups the pay related issues can have much greater variance than in established companies. The startups that have lots of cash flowing in but have urgent customers often pay well. The startups that haven't yet found a business model probably don't.
lamby 10y ago
Are they happier ?
manuelflara 10y ago
To be honest, I don't think startup employees (and by startups I don't mean Dropbox, I mean companies who have to count the cash they spend) are low paid. Obviously a startup can't pay like a company with tons of cash can. In tech and everywhere else. I like working at small companies because you get to do more things, because of the atmosphere, small team, agility, lack of bureaucracy, etc. Where I do think startup employees are getting absolutely screwed, specially in the US, is in the working hours. As an employee, you don't have founder shares. You should just be able to work your 9-5 hours and call it a day. If the founders think there's more work to be done, they can either prioritize better, hire more people, do it themselves, or just accept that not everything they want to do can be done with the resources they have. Period.
ikeboy 10y ago
Uh, taking the average equity granted and multiplying by the average value of equity is flawed on so many levels. If there's any correlation between equity granted and value, that analysis fails. Also, the average company value needs to be weighted by number of employees. Chances are if you take that average you'll get a higher number.
collyw 10y ago
I was looking for a job last year, and had a number of startups contact me as my 14 years of experience were interesting for them. "We can't afford to pay much because we are a startup" came up on a number of occasions. Sorry, but I already get paid poorly relative to other engineers because I am in Spain, and I am not a charity.

255 points by z0a 10y ago

This will surprise nobody on Hacker News. The allure of startups isn't a guaranteed 20% more than a regular company's salary; it's the possibility of 1000% more.

swampthinker 10y ago
It's like the lottery, except you can influence your odds a bit more.
- isoos 10y ago
  It would be interesting to see what the expected outcome's distribution is with buying lottery tickets for $X/month vs. doing a startup (and potentially earn less by $X/month than one could have had at a larger corporation).
  - elliotec 10y ago
    Interesting. If I spent 20% of my salary on lottery tickets, how good would my chances be of winning vs cashing in my stock at a startup that goes public in which I made 20% less salary? And what would the payout differences be?
    - vasilipupkin 10y ago
      The startup deal is a much better deal than lottery tickets. If you can get a 1% ownership stake and we assume a 10% chance of a 100 million dollar startup, the expected value of that grant is 100k. The expected value of buying lottery tickets with 20% of your salary is close to zero You should also consider the fact that if you are an early employee in a startup, your future expected payout is at least in part a function of your efforts
      - bendbro 10y ago
        Even given the generous 10% success rate, and 1% equity comp, you need to factor in dilution, time till maturity, whether the company even goes public, and below market salary/benefits. After that, I'll bet that in the vast majority of cases your maximum upside is significantly less than what you'd have with the standard bigco package. Edit: not to day there isn't legitimate reason for joining a startup: it's just if the work isn't super interesting, you're getting tricked
      - msandford 10y ago
        You don't get to say that the EV is close to zero in one case, but not in the other. 20k/year (dollars spent) * 1/100mm (odds of winning) * 100mm (jackpot) = 20k/year If you get a 1% ownership stake for a 20% salary reduction (per year) and you have to stay there for say, 4-5 years in order to get that 100k payout then you're looking at numbers on very similar terms. I understand why people need to be convinced that their odds are much better in startups than in the lottery. But wanting to believe something to be true and it being true aren't the same thing.
      - sidlls 10y ago
        Is 10% a reasonable value for that chance? Is 1% a reasonable value for the ownership stake? What about dilution and payout rights? A reasonable expected value of a lottery ticket is directly computable: jackpot times probability of a winning set. I'm not so sure the same is true for the value of startup employment.
        dragonwriter 10y ago
        Lottery tickets' jackpot is usually determined in part by sales of tickets for that drawing, and a winning combination wins a divided pot in the case of multiple winners (the probability of which depends again on sales of tickets for that drawing.) So, no, you can't, at the time of buying a ticket, actually calculate more than a guess of they parameters you cite for determining its expected value.
        sidlls 10y ago
    - mbesto 10y ago
      More interesting would be to take the delta between a startup salary and a Google salary and invest it in SV real estate. I'd easily bet real estate would net higher returns.
- vollmond 10y ago
  And you're (hopefully) working on something more interesting and more self-directed than you might at a typical job.
- gdilla 10y ago
  and accelerate your learning/career path a bit. Big companies with big company politics tend not to reward talented 20y/rs like they should with promotion, raises, and bonuses. But being promoted or growing in a startup has a return when you job hop, at least when you're starting your career.
  - nommm-nommm 10y ago
    Not my experience at all!
susan_hall 10y ago
"not 20% more but possibly 1000% more" -- you are implying that the median startup employee makes less but it is worth it because of the big payoff for the lucky ones. That is, you imply that the median might be lower, but the average pay is higher. But that is not what the article is saying. The article is saying that average payoff is lower. In other words, being a startup employee is irrational the same way the lottery is irrational -- total payouts are lower overall.
- thoman23 10y ago
  Both the lottery and working at a startup are rational bets if you believe the value of money is non linear.
  - rlanday 10y ago
    No, many people believe the value of money in non-linear but most of those people believe that the marginal utility of each additional dollars diminishes as your wealth increases, rather than increasing. I.e. even if you might earn more money on average at a startup (which the article claims isn’t the case), it still wouldn’t be worth it because it’s better to earn a decent salary from a big company with high probability. Who seriously believes that the marginal value of money increases as you have more?
    - zachsnow 10y ago
      Interesting that while I agree that the marginal value decreases I also feel (literally feel) that somehow having say an order of magnitude more would somehow be qualitatively different (and better). Funny to see my own biases play tricks (?) on me!
      - phamilton 10y ago
        I think one could define a metric in which average result is higher for startup employees than for BigCo employees. Someone with $100M has access to politics/investments/etc that most people earning $250k/yr don't. So while the average monetary payout is smaller (1% chance at $100M is equal to a 50% chance at 2M), average social currency is much higher. (1% chance at the social power that comes with $100M vs 0% chance in the BigCo job).
tdb7893 10y ago
How many engineers get 1000% more? I thought it was the founders and investors that got more.
- Hytosys 10y ago
  Yep, you're right. There's a belligerent, Randian dream behind that 1000% nonsense that always seems to be accompanied by some far-fetched narrative of climbing the ladder.

philsnow 10y ago

As others have posted, people don't go to small startups to earn more on average. They're not looking at the average or median, they're looking at the 99%ile numbers, because they think the startup they picked has an angle or advantage, giving it a shot at a 99%ile exit. 80000hours' audience is clever enough to understand cumulative distribution functions or even just correlated sets of [25%ile, median, 75%ile, 90%ile, 99%ile] numbers.

devonkim 10y ago
I've always thought that historically engineers cared more about working on things they had more emotional investment in rather than working on things they had no passion for that makes money as an established business like ad tech or dog dating social networks.
- tostitos1979 10y ago
  Your comment made me think of the episode of the show Silicon Valley (in the current season), where the engineers want to build a scalable platform rather than a box (appliance). The negotiate with mgmt to let them work on the platform after they have worked on the box :) As an aside, I thought this episode was very well done. The engineers believe their algorithm will get better over time as it ingests more data (hence, a scalable platform is the way to go). A box won't learn, and benefit from these improvements. However, large companies want boxes (servers/appliances in their data center) and aren't in a position to have their data leak out (for statutory or competitive reasons in many cases).
- _delirium 10y ago
  In recent years I think that too might make big companies more attractive. Companies like Google are solving a lot of interesting technical challenges, and produce interesting software (even some open-source) like Kubernetes and deep-learning frameworks. And there are many jobs you can have there there are purely about solving those tech challenges (the business side is someone else's job). While a lot of startups are less about tech and more about specific business plays, "AirBnB for x" or "Uber for x". Which, yes, to be an AirBnB-for-X you do need some tech, like a website and payment processing system, but the real innovation at these startups (in cases where there is any) is around business models, not technology, while the technology is relatively pedestrian.

forgotpwtomain 10y ago

Obviously has been referenced a lot but still relevant: https://danluu.com/startup-tradeoffs/ https://danluu.com/startup-tradeoffs/

qwertyuiop924 10y ago

This should surprise nobody. If I had my copy of Cryptonomicon at hand, I'd quote the bit about everybody being impressed Avi could let them sell out for roughly what they'd have made at a regular job. Yes, even in the '90s, this was pretty well known.

cj 10y ago

If your #1 job criteria is compensation, do not work at a startup. You'll be paid more at big companies. If you don't mind being paid a little less, and want the opportunity to be a part of building a company from the ground up, consider working at a startup. There will be a lot more ups and downs than at a company like Google. But at smaller companies, you'll have the chance to have a material impact on the success of the organization instead of being just a cog in the wheel. By no means am I saying you should accept a below market offer from a sketchy startup that offers no benefits and expects 12 hour work days (those unfortunately exist). Disclaimer: I run a 6-person seed-stage company. To help keep our employees happy (and to be competitive with bigger companies when recruiting), we try to get as close as possible to big-company salaries, we don't expect anything beyond 40 hrs / week, 100% paid health benefits, 401k, 25 paid days off per year, snacks, food, full financial transparency, etc. (Not trying to self-promote here, mainly trying to communicate that not all small companies are bad just because they're small). Also consider that the day-to-day work at startup is dramatically different than the day-to-day work at a big company. For people who don't mind being paid low $100k's instead of mid $100k's, the day-to-day work should be the main deciding factor when considering startup vs. large co. In my opinion, startups are more fun, you get to wear more hats since your role is likely less specialized, (ideally) there's less politics, you can have a real impact on the success of the business while (hopefully) watching it grow, and learn a lot really fast along the way. That said, the big company route definitely offers higher compensation and more stability, and makes a lot of sense for people who are a little more risk-averse. Also +1 on viewing equity as a lottery ticket. When evaluating offers from a startup, try to maximize your equity in negotiations (ie. more lottery tickets), but the fact is the majority of startups will eventually shut down, so don't use equity as a major factor when comparing offers between large and small companies.

mchaver 10y ago
It looks like there is a font rendering issue in this image: https://global.localizecdn.com/uploads/1463786278815.png https://global.localizecdn.com/uploads/1463786278815.png The last item on the right column should look like this: 中文(简体)
mavelikara 10y ago

djloche 10y ago

It's easier to get hired at an early stage startup because there are fewer hoops to jump through. You can then use that startup to build industry connections and get your next job via inside track referral through someone you know at a bigger / more established company.

saryant 10y ago
That's what I did. I was fresh out of a college nobody's heard of, joined a startup as their first employee and eventually networked my way into a big tech company. Nearly doubled my salary when I eventually jumped.

adamzerner 10y ago

This talks about aggregate earning rather than earning per unit of time. I think the latter is what people are/should be interested in, and from what I understand, startup employees put in a lot more hours.

telotortium 10y ago
Well, it depends on what you're trying to achieve. There are legitimate reasons to try to achieve the highest possible pay per year, no matter how many hours in the year you have to work in order to get it. In the case of 80000 hours, the goal is to donate as much money to charity as possible, and, if I may put it somewhat crudely, they would prefer you work as much as possible, only stopping work in order to eat and sleep, if that's the way to achieve the highest salary, since the noblest calling in their view is to dump as much money as possible into (the most optimal) third world charities, and 80000 hours has already taken the time to determine which charities maximize third world utility. (Technically, you need to deduct the negative utility to you from working increased hours, but your utility should be the same as a poor person in the third world, so that negative effect is minimal.)
- HaseebQ 10y ago
  Completely disagree. Even if you're maximizing for donations, any reasonable analysis would still have to privilege your own well-being as a giver. Lowering your burnout/regression rate from 25% to 5% by giving yourself a higher quality of life seems like one of the best investments you can make. You don't need to expend wads of cash. But you don't need to be destitute as a software engineer to give effectively.
  - telotortium 10y ago
    I actually agree with you. I was being a bit facetious - 80000 hours is somewhat infamous for a rigidly utilitarian view of effective charity and for optimizing for monetary means of increasing the effectiveness of said charities. But even they recognize the risk of burnout.
  - 10y ago

bunkydoo 10y ago

I'm gonna be straight with y'all, I earn more as a post office mail carrier than I ever did as a programmer for a silicon valley startup with $1 million dollars seed funding. I also surprisingly have more freedom even though I work basically like a slave. Nobody wants to admit it but we are in a tech bubble. Sure, if you are in the right startup things might be different. I had a great valley experience - but it was all a façade, the next recession will really highlight the failures of silicon valley startup culture. Wall Street got pounded last time, and I'm sure I'll get downvoted night and day for saying this here - but I'm sorry guys, you are the new problem. Silicon Valley is the new Wall Street. There, I said it. Ironically I worked in both places before joining the postal service. So I do have perspective. My claims aren't baseless either, your startup that might even be funded at a million dollars like my employer's was is just a tax write-off for your investor when it fails. They are playing slots with your dreams, time, and skill - the only person who truly loses is you.

saryant 10y ago
I don't think a $1 million seed counts as "well-funded" and certainly isn't somewhere you expect large compensation. Startups pay below-market salary, especially at the seed stage. Maybe you have a big equity grant but that's not money in the bank.
jeremyt 10y ago
Just sour grapes. You don't have any magical insight into the industry. You're just drawing conclusions from one data point. Here are two more data points for you: I've worked at two startups and so far both startups are solid successes.
- bunkydoo 10y ago
  Our country is just shy of $20 trillion in debt because investors spend their cash on startups like mine and expect the government to write it off on their taxes when it fails.
  - bhickey 10y ago

parent5446 10y ago

This is just a minor annoyance, but the header image of this article, which has been used in other articles [0], is CC-BY 2.0 licensed [1], and yet is not attributed to the original author at all. (Perhaps even more interesting is that it looks like it's being used to depict a startup company environment, even though it's actually a hostel in Amsterdam during the Wikimedia Foundation's annual international hackathon.) [0] http://silicon.nyc/code-academies-new-york-coding/ http://silicon.nyc/code-academies-new-york-coding/ [1] https://commons.wikimedia.org/wiki/File:Wikimedia_Hackathon_2013,_Amsterdam_-_Flickr_-_Sebastiaan_ter_Burg_(28).jpg https://commons.wikimedia.org/wiki/File:Wikimedia_Hackathon_... EDIT: I misread the license. It's CC-BY 2.0, not CC-BY-SA 2.0.

parent5446 10y ago
Follow-up: I contacted them, and they added the attribution, so all is well!

ryanSrich 10y ago

In other news the sun rose this morning. How do these stories get upvote?

hackaflocka 10y ago

On average? Of course not. It's a power-law! Averages mean nothing in power-law situations.

aab0 10y ago
It's not a true power-law (assuming it's not a lognormal). It's truncated by the fact that anyone considering a startup would never have earned more than the world GDP, or more specifically, the peak tech market cap to date (Apple's $775b). Once it's truncated at a finite value, the moments become meaningful.
- AstralStorm 10y ago
  It is probably something similar to a negative binomial distribution. (Polya distribution) You play until your VC decides not to fund you or you actually win. This can be done over either money or time. This only works on startups as a group, for any specific one you would use a more complex method as trials are not independent. Discrete please - type distribution, derived by a Markov chain.

markbnj 10y ago

I'm working at my third startup, and money has never been close to the top of the list when deciding. First, I'm old enough and experienced enough to be skeptical about the pot of gold at the end of whatever. Second, my time is far more valuable than money, and how I spend it, who I spend it with, and what I am doing are much, much more relevant to me.

catuskoti 10y ago

The article assumes that everybody has access to the same knowledge as to whether a startup will be successful or not. I do not believe this at all. Gambling on startups is much more riskier for outsiders than for insiders.

deleted 10y ago

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avindroth 10y ago

80k is my favorite EA organization. I love reading their articles!

dangero 10y ago

The thing I wish someone spelled out to me when I started my startup employment journey over ten years ago is that you need to pick the right company. Most startup equity ends up being worthless, so you need to think of yourself as a venture capitalist. Will this company really be the next big thing? Do I believe in them or am I just excited that they want to hire me? Looking back I wasted far too much time working for companies that I knew deep down were never going to make me money on options and working on projects that I knew were going to fail. I wasted my time and I let these failure companies give me valueless options in place of pay that I would have received working for an established company. Job interviews are bi-directional and everyone tells you that, but it took me wasting many years to understand what that meant.

nathan_f77 10y ago
I think you've nailed it. If you're an employee at a startup, you should be doing the same amount of research as a VC, if not much more. A VC is only investing a bunch of cash that they can afford to lose, and probably only a little bit of their own money. As an employee, you're investing maybe 5 years of your life that you can never get back.

repomies691 10y ago

This varies greatly from company to company. I would say in startups the pay related issues can have much greater variance than in established companies. The startups that have lots of cash flowing in but have urgent customers often pay well. The startups that haven't yet found a business model probably don't.

lamby 10y ago

Are they happier ?

manuelflara 10y ago

To be honest, I don't think startup employees (and by startups I don't mean Dropbox, I mean companies who have to count the cash they spend) are low paid. Obviously a startup can't pay like a company with tons of cash can. In tech and everywhere else. I like working at small companies because you get to do more things, because of the atmosphere, small team, agility, lack of bureaucracy, etc. Where I do think startup employees are getting absolutely screwed, specially in the US, is in the working hours. As an employee, you don't have founder shares. You should just be able to work your 9-5 hours and call it a day. If the founders think there's more work to be done, they can either prioritize better, hire more people, do it themselves, or just accept that not everything they want to do can be done with the resources they have. Period.

ikeboy 10y ago

Uh, taking the average equity granted and multiplying by the average value of equity is flawed on so many levels. If there's any correlation between equity granted and value, that analysis fails. Also, the average company value needs to be weighted by number of employees. Chances are if you take that average you'll get a higher number.

collyw 10y ago

I was looking for a job last year, and had a number of startups contact me as my 14 years of experience were interesting for them. "We can't afford to pay much because we are a startup" came up on a number of occasions. Sorry, but I already get paid poorly relative to other engineers because I am in Spain, and I am not a charity.