4 ms·

I agree. I worked for one startup which got bought. The founders made money. All of the employees lost money. One of the founders reached out to me a few ye

by adekok 10y ago

I agree. I worked for one startup which got bought. The founders made money. All of the employees lost money. One of the founders reached out to me a few years later, asking me to join his new startup as employee #2. I said "yes", but only if I made 10% of what he made. The answer was "No". OK... maybe 1% of what he makes? "No". Thanks, but no thanks. If you admit that you're not going to share the benefits, I have no reason to get involved.

JonFish85 10y ago
>> I worked for one startup which got bought. The founders made money. All of the employees lost money. I think this is far more common than you'd think. Take YC for example. I'd be really curious to compare SamA's outcome vs. employee #5's outcome (for example). Even when companies "fail", founders do just fine for themselves via acquihire, and it's generally not tied to their stock (acquirer values stock at $0, pays off investors, employees get retention bonuses of ~$50-100k over 4 years, founders get quite a bit more than that).
cookiecaper 10y ago
Yeah, most of the time, there is an expectation that employees will be employed at a market salary and remain content with that. There are not many ways around this. If you don't want to be a wage slave, it's hard to wage slave your way out of it. Just have to save until you can start something on your own, rinse and repeat until you strike it big. The systems are always going to be biased to the people who have the most money. You may realize you're getting a terrible deal, and their deal is much better. That's not an accident, and asking them to fix it is just going to cause suspicion and anger, especially if you blow past their facially spurious justifications for this ("I'm taking a lot of risk here!!!"). The real answer is "I have more money than you, so I can set the terms to favor myself". I'm not necessarily saying there's anything wrong with that per se. Consider the flip side. You've promised an employee that he will make 10% of what you make that year, even if it means you're tithing that to him directly. You make $10M. Your employee makes $1M. Is your employee going to stay employed, or is he going to leave immediately and use that $1M to start something that will make him $10M next year, or even just to buy a fancy house on the beach and invest from home without having to pull a 9-5 every day? Making your employees too prosperous can really hurt your company, because everyone will quit when there is no longer a financial imperative to work together.
- spamizbad 10y ago
  For a startup I think market-rate salary for early employees is more than fair, assuming it's coupled with an appropriate options package. But if we're talking about "Well you make market rate if you value your options like XYZ..." then yeah, that's BS.
  - ryandrake 10y ago
    Exactly. Equity should balance out the risk and opportunity cost of joining a start-up vs. an established company, NOT compensate for a below-market salary.
  - deleted 10y ago
    [deleted]
- cobbzilla 10y ago
  I couldn't agree more. After I first realized this asymmetry back in the dot-com 1.0 days, I stopped wanting to be an employee and started founding companies. I did take a couple senior VP jobs where I fully understood the equity I was getting and was OK with it. If you want the large exit, you're either a founder or an investor. It's been that way for as long as I can remember.
- UseYrIllusion11 10y ago
  Honestly, in my experience company loyalty in employees has less to do with outside financial incentives and much more to do with internal transparency and mutual respect at all levels of the company than compensation. One of the main problems with the current startup culture is that everything is overly commoditized. For something to be considered a unicorn it has to fit a model, have a certain amount of growth, a certain amount of revenue, a certain number of employees. This hurts a lot of companies's success because it forces them to adhere to a model that's designed around a totally different organization, ironically the same thing that created "Startup Culture" in the first place. I would and have much preferred working at companies where I liked my coworkers managers and reports rather than ones where I was simply paid more.
- sedachv 10y ago
nugget 10y ago
Just to play devil's advocate - as a founder, I've both made money and lost money. Some of my ventures were self-funded to failure and I had to write off hundreds of thousands of dollars. I repeatedly remind my family that my worst case is not a year of unemployment with zero income but rather a year of business failure with a painful amount of red ink. One or two experiences like that and you become very aware of the line between people willing to risk their time and money vs. people only willing to risk their time. If you really want to make the leap from employee to co-founder, you can probably do it - but need to bring money to the table or at least offer to work for much less than market (or even zero) in salary, which good founders will typically respect and overvalue since it reflects extreme personal commitment to them and/or the business.
- acedinlowball 10y ago
  but you're extremely wealthy so youre not like normal people. you can afford to lose hundreds of thousands of dollars starting companies and its just a tax write-off for you. That amount of money would destory most peoples lives. Never forget how privileged you are. you seem you have forgotten.
- smileysteve 10y ago
  > line between people willing to risk their time and money vs. people only willing to risk their time But when people take equity instead of compensation at BigCo, they are quite literally risking money + time.
- st3v3r 10y ago
  If I'm not being paid market rate, I am being given equity, and I'm expected to work the typical startup bullshit hours, then there is absolutely no way you can say I'm not risking both money and time.
  - superqd 10y ago
    Exactly that. Your additional time is money invested in the company.
- 10y ago

by adekok 10y ago

JonFish85 10y ago

>> I worked for one startup which got bought. The founders made money. All of the employees lost money. I think this is far more common than you'd think. Take YC for example. I'd be really curious to compare SamA's outcome vs. employee #5's outcome (for example). Even when companies "fail", founders do just fine for themselves via acquihire, and it's generally not tied to their stock (acquirer values stock at $0, pays off investors, employees get retention bonuses of ~$50-100k over 4 years, founders get quite a bit more than that).

cookiecaper 10y ago

Yeah, most of the time, there is an expectation that employees will be employed at a market salary and remain content with that. There are not many ways around this. If you don't want to be a wage slave, it's hard to wage slave your way out of it. Just have to save until you can start something on your own, rinse and repeat until you strike it big. The systems are always going to be biased to the people who have the most money. You may realize you're getting a terrible deal, and their deal is much better. That's not an accident, and asking them to fix it is just going to cause suspicion and anger, especially if you blow past their facially spurious justifications for this ("I'm taking a lot of risk here!!!"). The real answer is "I have more money than you, so I can set the terms to favor myself". I'm not necessarily saying there's anything wrong with that per se. Consider the flip side. You've promised an employee that he will make 10% of what you make that year, even if it means you're tithing that to him directly. You make $10M. Your employee makes $1M. Is your employee going to stay employed, or is he going to leave immediately and use that $1M to start something that will make him $10M next year, or even just to buy a fancy house on the beach and invest from home without having to pull a 9-5 every day? Making your employees too prosperous can really hurt your company, because everyone will quit when there is no longer a financial imperative to work together.

spamizbad 10y ago
For a startup I think market-rate salary for early employees is more than fair, assuming it's coupled with an appropriate options package. But if we're talking about "Well you make market rate if you value your options like XYZ..." then yeah, that's BS.
- ryandrake 10y ago
  Exactly. Equity should balance out the risk and opportunity cost of joining a start-up vs. an established company, NOT compensate for a below-market salary.
- deleted 10y ago
  [deleted]
cobbzilla 10y ago
I couldn't agree more. After I first realized this asymmetry back in the dot-com 1.0 days, I stopped wanting to be an employee and started founding companies. I did take a couple senior VP jobs where I fully understood the equity I was getting and was OK with it. If you want the large exit, you're either a founder or an investor. It's been that way for as long as I can remember.
UseYrIllusion11 10y ago
Honestly, in my experience company loyalty in employees has less to do with outside financial incentives and much more to do with internal transparency and mutual respect at all levels of the company than compensation. One of the main problems with the current startup culture is that everything is overly commoditized. For something to be considered a unicorn it has to fit a model, have a certain amount of growth, a certain amount of revenue, a certain number of employees. This hurts a lot of companies's success because it forces them to adhere to a model that's designed around a totally different organization, ironically the same thing that created "Startup Culture" in the first place. I would and have much preferred working at companies where I liked my coworkers managers and reports rather than ones where I was simply paid more.
sedachv 10y ago

nugget 10y ago

Just to play devil's advocate - as a founder, I've both made money and lost money. Some of my ventures were self-funded to failure and I had to write off hundreds of thousands of dollars. I repeatedly remind my family that my worst case is not a year of unemployment with zero income but rather a year of business failure with a painful amount of red ink. One or two experiences like that and you become very aware of the line between people willing to risk their time and money vs. people only willing to risk their time. If you really want to make the leap from employee to co-founder, you can probably do it - but need to bring money to the table or at least offer to work for much less than market (or even zero) in salary, which good founders will typically respect and overvalue since it reflects extreme personal commitment to them and/or the business.

acedinlowball 10y ago
but you're extremely wealthy so youre not like normal people. you can afford to lose hundreds of thousands of dollars starting companies and its just a tax write-off for you. That amount of money would destory most peoples lives. Never forget how privileged you are. you seem you have forgotten.
smileysteve 10y ago
> line between people willing to risk their time and money vs. people only willing to risk their time But when people take equity instead of compensation at BigCo, they are quite literally risking money + time.
st3v3r 10y ago
If I'm not being paid market rate, I am being given equity, and I'm expected to work the typical startup bullshit hours, then there is absolutely no way you can say I'm not risking both money and time.
- superqd 10y ago
  Exactly that. Your additional time is money invested in the company.
10y ago