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Which is bullshit because founders get paid more and have an ownership stake. This is a laughably bad attempt to provision their companies with junior developer

Which is bullshit because founders get paid more and have an ownership stake. This is a laughably bad attempt to provision their companies with junior developers who have a slave mentality.

wslh 9y ago
It is not bullshit statistically speaking. Ownership doesn't imply you have something valuable.
- nooyurrsdey 9y ago
  yeah it's a gambit. When you win you win big. But many times you don't win at all. In a statistics sense I'd be curious what the expected (average) return on being a founder is
  - wslh 9y ago
    Watch the first lecture!
tertius 9y ago
Junior developers don't often skip payroll (they can move on if asked to do so) founders do. Junior developers don't often mortgage their houses or max out credit cards, founders do. I can go on and on. I think getting into debt is dumb, but statistics show that founders risk a lot more than employees. And many people do not want to be founders. Please don't call them slaves.
- angersock 9y ago
  "risk" is a relative term here. Most of the founders come from fairly privileged backgrounds, and most of the time "I started a company let me tell you how it failed" works pretty well when interviewing in later ventures. Additionally, early engineers and biz folks are usually brought on specifically because the founders don't know what the fuck they're doing in either technology or business. There's this big myth that being a founder is some magical hardship and a massive fucking gamble, but the realities don't make that so--instead, it's used to justify fleecing employees out of market rates.
  - retreatguru 9y ago
    I don't think it is accurate to say most founders come from a privileged background without actually knowing the numbers. I am a founder (not YC) and both parents were public school teachers.
    - klausbaudelaire 9y ago
      https://www.inc.com/minda-zetlin/do-you-need-a-wealthy-background-to-be-a-successful-entrepreneur.html https://www.inc.com/minda-zetlin/do-you-need-a-wealthy-backg... https://qz.com/455109/entrepreneurs-dont-have-a-special-gene-for-risk-they-come-from-families-with-money/ https://qz.com/455109/entrepreneurs-dont-have-a-special-gene... CB Insights also concurred with the principle in their May 8th email.
  - dnautics 9y ago
    I think you've misunderstood the reality of being a founder. It is truly a privilege, but not in the way you think -- if you successfully label yourself as one and get enough attention, you are more likely to be able to 'fail upwards' as investors will overvalue your experience and personal network.
- deleted 9y ago
  [deleted]
- frozenport 9y ago
  Going into debt is entirely optional. At the start non-founders have the same or lower salary with less long term benifits. Obviously not everybody can be the founder because they didn't come up with or act on the idea.
andygcook 9y ago
In a proper startup, the founders typically make the least amount of money to start and plow back all available resources into growing the company. Only when the company is on more stable financial footing, either through profits or investments, does the founder start to make a salary closer to market. Of course this can go wrong and since the founders set the salaries they can suck money out of the business, but IMO the founder should be making the least amount of money in the early stages. In regards to the Startup School lecture, one of the points Dustin Moskovitz makes in his talk is that you have a better shot at doing well financially if you join a startup at Series B+ than you do trying to start your own startup. You'll have less stress and if you join the next mega-successful company, you'll most likely make more money. There's also a huge amount of learning that takes place working at a rocket ship for a few years and the brand creditability is worth something too. The hard part is picking a startup that is actually the next Google, Facebook, Uber, etc and sticking around until it goes public to exercise your options (especially since companies are taking longer to go public and lock up early employees with golden handcuffs - https://en.wikipedia.org/wiki/Golden_handcuffs https://en.wikipedia.org/wiki/Golden_handcuffs). That being said, if your goal is to get rich, your best bet is probably to start an actual business, raise as little money as possible, and "sell early" - e.g. acquired for < $30M. If you look at most acquisitions, most of them are under the $30M mark (https://www.cbinsights.com/blog/tech-companies-exit-early-stage https://www.cbinsights.com/blog/tech-companies-exit-early-st...). The reality with taking venture capital is even if you take a "small" amount of from seed investors of lets say $2M in exchange for a 20% stake, you're looking at a $50M exit to make back 5x the VC's money (simplifying the math and not accounting for additional liquidation preferences), which in a VCs perspective isn't that great. They're more so looking for a 10x return, so $100M is the minimum for a seed investment. Probably the ideal scenario for the founder trying to become wealthy is to just be as lean a possible, keep as much equity as possible and ultimately sell to become financially secure. Once you have enough money to keep you set for your life, then maybe it makes more sense to swing for the fences.
digitaltrees 9y ago
Most start ups will fail, and the founders' equity will be worth nothing. They are putting all of their eggs in one basket and taking responsibility for investors' money, employee salary and customer needs. Compare that to early employees at companies that have found product market fit and are early in the life cycle of rapid growth, their smaller equity grant will be worth more, especially after considering the significantly lower risk they are taking at a well funded company with product market fit. The point is, if you want to maximize for your own personal wealth, join a great company with traction as early as you can. If you are obsessed with creating something or solving a specific problem, or are a little be crazy, then start a company to pursue the vision. Just do so knowing the risk reward points to a lower wealth outcome compared the the alternative. And by the way, many founders take below market salary for a long time and may even go without salary or put money in when times are lean.

Which is bullshit because founders get paid more and have an ownership stake. This is a laughably bad attempt to provision their companies with junior developers who have a slave mentality.

wslh 9y ago

It is not bullshit statistically speaking. Ownership doesn't imply you have something valuable.

nooyurrsdey 9y ago
yeah it's a gambit. When you win you win big. But many times you don't win at all. In a statistics sense I'd be curious what the expected (average) return on being a founder is
- wslh 9y ago
  Watch the first lecture!

tertius 9y ago

Junior developers don't often skip payroll (they can move on if asked to do so) founders do. Junior developers don't often mortgage their houses or max out credit cards, founders do. I can go on and on. I think getting into debt is dumb, but statistics show that founders risk a lot more than employees. And many people do not want to be founders. Please don't call them slaves.

angersock 9y ago
"risk" is a relative term here. Most of the founders come from fairly privileged backgrounds, and most of the time "I started a company let me tell you how it failed" works pretty well when interviewing in later ventures. Additionally, early engineers and biz folks are usually brought on specifically because the founders don't know what the fuck they're doing in either technology or business. There's this big myth that being a founder is some magical hardship and a massive fucking gamble, but the realities don't make that so--instead, it's used to justify fleecing employees out of market rates.
- retreatguru 9y ago
  I don't think it is accurate to say most founders come from a privileged background without actually knowing the numbers. I am a founder (not YC) and both parents were public school teachers.
  - klausbaudelaire 9y ago
    https://www.inc.com/minda-zetlin/do-you-need-a-wealthy-background-to-be-a-successful-entrepreneur.html https://www.inc.com/minda-zetlin/do-you-need-a-wealthy-backg... https://qz.com/455109/entrepreneurs-dont-have-a-special-gene-for-risk-they-come-from-families-with-money/ https://qz.com/455109/entrepreneurs-dont-have-a-special-gene... CB Insights also concurred with the principle in their May 8th email.
- dnautics 9y ago
  I think you've misunderstood the reality of being a founder. It is truly a privilege, but not in the way you think -- if you successfully label yourself as one and get enough attention, you are more likely to be able to 'fail upwards' as investors will overvalue your experience and personal network.
deleted 9y ago
[deleted]
frozenport 9y ago
Going into debt is entirely optional. At the start non-founders have the same or lower salary with less long term benifits. Obviously not everybody can be the founder because they didn't come up with or act on the idea.

andygcook 9y ago

In a proper startup, the founders typically make the least amount of money to start and plow back all available resources into growing the company. Only when the company is on more stable financial footing, either through profits or investments, does the founder start to make a salary closer to market. Of course this can go wrong and since the founders set the salaries they can suck money out of the business, but IMO the founder should be making the least amount of money in the early stages. In regards to the Startup School lecture, one of the points Dustin Moskovitz makes in his talk is that you have a better shot at doing well financially if you join a startup at Series B+ than you do trying to start your own startup. You'll have less stress and if you join the next mega-successful company, you'll most likely make more money. There's also a huge amount of learning that takes place working at a rocket ship for a few years and the brand creditability is worth something too. The hard part is picking a startup that is actually the next Google, Facebook, Uber, etc and sticking around until it goes public to exercise your options (especially since companies are taking longer to go public and lock up early employees with golden handcuffs - https://en.wikipedia.org/wiki/Golden_handcuffs https://en.wikipedia.org/wiki/Golden_handcuffs). That being said, if your goal is to get rich, your best bet is probably to start an actual business, raise as little money as possible, and "sell early" - e.g. acquired for < $30M. If you look at most acquisitions, most of them are under the $30M mark (https://www.cbinsights.com/blog/tech-companies-exit-early-stage https://www.cbinsights.com/blog/tech-companies-exit-early-st...). The reality with taking venture capital is even if you take a "small" amount of from seed investors of lets say $2M in exchange for a 20% stake, you're looking at a $50M exit to make back 5x the VC's money (simplifying the math and not accounting for additional liquidation preferences), which in a VCs perspective isn't that great. They're more so looking for a 10x return, so $100M is the minimum for a seed investment. Probably the ideal scenario for the founder trying to become wealthy is to just be as lean a possible, keep as much equity as possible and ultimately sell to become financially secure. Once you have enough money to keep you set for your life, then maybe it makes more sense to swing for the fences.

digitaltrees 9y ago

Most start ups will fail, and the founders' equity will be worth nothing. They are putting all of their eggs in one basket and taking responsibility for investors' money, employee salary and customer needs. Compare that to early employees at companies that have found product market fit and are early in the life cycle of rapid growth, their smaller equity grant will be worth more, especially after considering the significantly lower risk they are taking at a well funded company with product market fit. The point is, if you want to maximize for your own personal wealth, join a great company with traction as early as you can. If you are obsessed with creating something or solving a specific problem, or are a little be crazy, then start a company to pursue the vision. Just do so knowing the risk reward points to a lower wealth outcome compared the the alternative. And by the way, many founders take below market salary for a long time and may even go without salary or put money in when times are lean.