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The idea that VC-funded startups should pay the same cash salaries as big companies is a sign of hot markets. It happened in 1999 as well. In reality, startup

The idea that VC-funded startups should pay the same cash salaries as big companies is a sign of hot markets. It happened in 1999 as well. In reality, startups should pay less because they give equity, allow more freedom and creation, and have less stupid corporate rules. It's not for everyone, but that's the tradeoff. Generally when you're borrowing from VCs who expect a 30-50% return on their equity, it's a bad idea to pay too much cash. (It's like paying salaries on a credit card - the lender may be willing, but they still want to get paid back) When it does become equal, it's a sign of froth. To get the benefits of a startup without any downside runs up against, "There's no such thing as a free lunch."

logicfiction 10y ago
That would be entirely true if equity were handled the same way as it was in 1999. To be fair, I wasn't there to know for sure and can only base this off what I've read. As I understand it equity has changed, almost in the opposite direction of the "free lunch" equation. Equity values are frequently hidden from employees to mask how low value they are, VCs now figured out how to ratchet and protect themselves at the expense of the rank-and-file options holders, and so forth.
st3v3r 10y ago
Why should VCs get a 30-50% return on what they put in, but engineers don't get a 30-50% return on the salary they sacrificed to actually do the damn work of the startup?
- mathattack 10y ago
  I agree - which is why startup employees get equity.
  - st3v3r 10y ago
    Except that equity is worth nowhere near the equity that VCs get, and in the majority of cases does not represent a reasonable return over the opportunity cost of taking the higher salary instead.
- smallgovt 10y ago
  Because we live in a capitalistic society where supply/demand ultimately controls price, not what's fair. I.e. On average, engineers get paid what they do because if they demand any more, another peer of equal caliber, on average, will take their job. VC's get paid, on average, what they do because no other VC will do it for less.
  - st3v3r 10y ago
    So basically a bunch of classist bullshit.
    - smallgovt 10y ago
      Whether or not that's true, you have little to no power to change it. Unless you have some genuine superhuman value for justice , you'll be better off spending your energy learning how to work within the system versus being angry/complaining about it.

logicfiction 10y ago

That would be entirely true if equity were handled the same way as it was in 1999. To be fair, I wasn't there to know for sure and can only base this off what I've read. As I understand it equity has changed, almost in the opposite direction of the "free lunch" equation. Equity values are frequently hidden from employees to mask how low value they are, VCs now figured out how to ratchet and protect themselves at the expense of the rank-and-file options holders, and so forth.

st3v3r 10y ago

Why should VCs get a 30-50% return on what they put in, but engineers don't get a 30-50% return on the salary they sacrificed to actually do the damn work of the startup?

mathattack 10y ago
I agree - which is why startup employees get equity.
- st3v3r 10y ago
  Except that equity is worth nowhere near the equity that VCs get, and in the majority of cases does not represent a reasonable return over the opportunity cost of taking the higher salary instead.
smallgovt 10y ago
Because we live in a capitalistic society where supply/demand ultimately controls price, not what's fair. I.e. On average, engineers get paid what they do because if they demand any more, another peer of equal caliber, on average, will take their job. VC's get paid, on average, what they do because no other VC will do it for less.
- st3v3r 10y ago
  So basically a bunch of classist bullshit.
  - smallgovt 10y ago
    Whether or not that's true, you have little to no power to change it. Unless you have some genuine superhuman value for justice , you'll be better off spending your energy learning how to work within the system versus being angry/complaining about it.