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I was the first engineer at a TechStars startup that did have a successful exit (I was there about 5 years before the exit). If there is something I want YC to

I was the first engineer at a TechStars startup that did have a successful exit (I was there about 5 years before the exit). If there is something I want YC to know, it's this: You helped create the culture of founder empowerment. You have the power to evolve that narrative to those that sacrifice as early employees. Tell the world that early employees deserve a lot more equity. Tell the world that early employees contribute to the success of those companies and deserve to have that help their careers. Because here's what I see are the pros/cons... Pros: * I was forced to learn with no one else to help me. Not sure I'd be as good of an engineer without that. * I got exposure to a lot of things I wouldn't normally be able to control, which propelled my career going forward. * I built the seed to make connections with people in the startup community which I still leverage today for my own consulting business. Cons: * I was paid terribly, and this was 8 years ago, so it was even worse than now. * Even with the exit, I basically made enough money to recoup the money I should have been making at a bigger company, so it's net neutral. * No one cares about that as a success for me. I'm surprised no one has brought this up. I was the 1st engineer for a company that had a successful exit for TechStars. Zero recruiters, companies, etc, have ever even asked about that company or my connection to it other than the fact they are reading it down on my resume (and when they do see it, they barely take note of it). And for the record - I have no beef with the founders. But the culture around how to pay and credit early employees is institutional and was not their fault. They walked off with huge payouts and credit for their success, and I walked away with a catch-up check for missed EV and no one cares that I played an instrumental role in getting them where they are today. But YC has the power to change that. I reiterate from above: you have the power to tell the greater startup community through your words and your actions that startups should provide better equity to early employees and make it so that the success of a company is shared far greater than that of just the founders.

biztos 8y ago
What's an "early employee" for you? (That is, who gets "a lot more equity?") I ask because I've noticed with some high-dollar acquisitions a lot of times "engineer #50" makes his/her "F-You Money" on the acquisition, but having been "engineer #2" and "#4" and even "#1" (sadly, no big exits) I am skeptical that #50 took on much more risk or contributed more than, say, #200.
- acconrad 8y ago
  Pre-series A. Once Series A comes into play, you can get paid "market" - which is to say, the normal rate outside of FAANG.
  - munchbunny 8y ago
    "Market" is weird to measure, because you're not really asking what market rate is, you're asking what your baseline is. If you can get a FANG job, the number you care about is effectively the average of what FANG would pay. If you can't, then it's effectively average rate outside of FANG.
    - humanrebar 8y ago
      AND, arguably, "market rate" in SV is below market rate elsewhere, especially when you factor in cost of living.
  - s2g 8y ago
    So anyone who is good enough to work for a big company you have no interest in?
  - deleted 8y ago
    [deleted]
- deleted 8y ago
  [deleted]
- webmaven 8y ago
  #2-#9 (roughly) are taking on more financial risk (this corresponds to the startup's market risk). #50 is probably being hired for very specific skills and experience (to mitigate technical risk) that increases their opportunity cost considerably, and you aren't going to get an engineer with a track record of scaling operations like yours unless they get a decent salary and a shot at a significant upside. For certain skillsets and track records, when a startup is having severe growing pains, it becomes a sellers' market.
seige 8y ago
THIS. Its all about the founders. The VCs don't care, the acquirer doesn't care and largely, the industry doesn't care. I have been at 3 startups and they all feel more like "come change my world" instead of "come change the world". Equity is so lop-sided that its almost laughable. I earlier thought that a successful startup exit actually carries weight on one's resume but that's only on the founder's resume. Nobody cares in SV if you were an EE at a non-unicorn startup with a reasonable exit. After an exit happens, founders still get to keep their badge of honor and propel their careers, not the EEs.
- maconic 8y ago
  I would recommend making a distinction between a startup that manages to get acquired as a small team for building a good product (Instagram is an extreme example... but I know of a few startups that few here have ever heard of where the outcome for employees was substantially better over the same period than if they had worked for Google or Facebook). There is perhaps a warranted disdain for the behavior of founders on this thread, but I would also like to point out there are founders that genuinely care about the people on their team and would either ensure the equity was sufficient upfront or--if the total size and scale of the startup was miscalculated initially such as assuming the startup needed 100 employees when it really only needed 10--ensuring they receive ample compensation from the acquirer or not taking the deal. These types of founders do exist too, and I think there is an onus on an employee to figure out what kind of boss they have signed up to work for. If I had a few interactions with Steve Jobs, for example, I'm 100% sure I would have quit.
narag 8y ago
As the startup gets traction and more money from VCs, wouldn't it be wise to give raises in cash to early employees?
- acconrad 8y ago
  Most companies don't give 50% raises when you finally raise money (which is to say, most companies won't simply bring you up to market if you came in super early).
  - alfredallan1 8y ago
    No, but if you came in super early, wouldn’t you have (negotiated at the start) more equity anyways? A super early employee with decent equity ought to be treated as a late stage founder - so if the founders don’t take 50% raises, neither should the super early employee with decent equity. It would of course be silly for someone super early to not negotiate significantly more equity than the usual couple of basis points (0.0x % of the company)
    - acconrad 8y ago
      > If the founders don’t take 50% raises, neither should the super early employee with decent equity. You're missing the point of my original post. If a founder owns x100 the equity, why should an early employee be bound to the same salary restrictions? If anything, since I have 1/100th the equity, that means I should be able to get a multiple of some raise when series A comes through. Remember, equity is a lottery ticket (especially for an employee). If you're a founder, even if your startup fails, you can get a job as a highly-paid EIR or your founder reputation will allow you to join some other startup in a high level role (VP, Director, etc). This does not apply for engineer/employee #1.
      - icedchai 8y ago
        If founder has x100 the equity of employee #1, employee #1 screwed up.
bittcto 8y ago
TLDR: 30 years experience, I learned: don’t go work for a SV style startup. Be a founder, even if you have no experience. Don’t take VC money for more than %10 of your equity in total. Better off, right out of school, founding a company and failing than working for a startup, especially if they take VC. It’s lopsided against the founders too. They might walk away with big checks but the risk is too high. This is the problem with the SV model. VCs take way too much off the table, founders and employees are not adequately compensated. This is partly YCs fault because they basically groom startups and usher them into the maw of VCs while glorifying the exploitative VC model. But that model makes YC partners rich st startups expense. Founders and employees in the SV model sell themselves way short. This is also why so many startups are BS non-innovative companies— they are chasing funding rather than the future. Better model: - slicing pie with no bonus for money contributions- this rewards people fairly. - crowd funding, consultancy funding, boot strapping, angel money with no liquidation preferences, and no VC termsheet BS. Having founded and worked for startups for 30 years, I won’t ever take a meeting with a VC again. I have not met any good ones (and people who say theirs is great are generally just kissing ass to keep money flowing.) Worse- the number one cause of failures of startups in my experience is bad strategic decisions forced on them by VCs. The number two cause is conflict among the founders, and the number one cause of that conflict is VCs trying to force a bad decision in the company (and one of the founders realizing it.)
- anonu 8y ago
  > Be a founder, even if you have no experience. Easier said than done. Lots of people leave school without the faintest clue what they want to do. Getting a job somewhere gives people training and experience and maybe even credibility before they strike it out on their own.
  - dunpeal 8y ago
    > Easier said than done. Lots of people leave school without the faintest clue what they want to do. The rest of the startup game - building a product, pivoting correctly, building a team, overcoming oowerful rivals - is such a huge challenge, that gaining entry level experience before finishing school is perhaps the most straightforward piece of the puzzle.
grosjona 8y ago
I agree. There is a culture that founders are special but everyone else is replaceable which makes it self-fulfilling. If a founder leaves, it's bad and VCs won't invest in the startup - However, if a top engineer leaves, no big deal, they're only an engineer... For me personally, I have a really bad perception of incubators, venture capitalists and big tech corporations. It's all a zero sum game to increase concentration of wealth in the hands of the few but there is little meritocracy behind it. In a high traction startup, founders are often the dumbest people in the company but they get treated like they're genius visionaries. I've even heard really smart colleagues/engineers say stuff like "A good CEO needs to be enthusiastic and shouldn't be too smart" - For me this sentence means that we've accepted that the system is not a meritocracy but we've found a way to rationalize it.
- nojvek 8y ago
  Working at a startup and I feel you a 100%. Won’t name the startup but it seems we’re doing better after CEO-founder left.
evancharles 8y ago
Interestingly YC has encouraged startups to offer more equity to early employees and I'm not sure it's had an effect. See pg's recommendation in http://paulgraham.com/equity.html http://paulgraham.com/equity.html
- acconrad 8y ago
  I vaguely remember reading that article while I was at said company making basically the same salary (with the same company valuation at the time) and realizing my equity was far below that and scratching my head. If I had PG's recommended equity instead of what I had I would have gone from neutral EV to basically pay-off-my-house money. Like I said, it's things like these that make me never want to work for a startup again and only come in as a founder.
- rhizome 8y ago
  If it had an effect, it would be apparent after 11 years.
_cs2017_ 8y ago
Maybe engineers are more replaceable than founders? That would explain why founders walk away with a lot more cash and credit. After all, there are a lot of good engineers who probably would do a good job as an early employee. And relatively few people who have the vision, motivation, and skill to create a successful company. That said, I sometimes feel that being a successful founder has less to do with skill and more with being at the right place at the right time. Would be interested to see what others think.
- fitpolar 8y ago
  I agree, especially on your last point. Even when I think of my own career highs and lows, most of the highs has to do with lucking out with being given a chance or opportunity. By contrast, most of the lows has to with being denied a chance or opportunity. Of course you have to take advantage of any opportunity and work hard for it to pay off. But being lucky enough to be in the RPART is, huge!
- Joeri 8y ago
  I get the sense that with the right set of employees all a founder has to do to be successful is not to run in the way. One might argue that in that case they were so brilliant at hiring they deserve the payout. Anyway, who is to say where the line is drawn between founders and employees re: who contributes most? As long as both sides know what they’re getting in to nobody is taken advantage of.
- earthscienceman 8y ago
  This is such a laughably unprovable claim. "Few people who have the vision, motivation, and skill" is equivalent to saying "few startups succeed". It's just a truthism. It's equally likely that few companies are lucky enough to have a talented and motivated team of engineers. Finding someone who thinks they have it all and will be the next big billionaire is easy. Finding a group of people who know what work needs to be done and can put their nose to the grindstone to match the "vision motivation and skill" is the hard part. Just look to google, the holy grail of tech visionaries. No one doubts that Page and Brin have vision/motivation/skill but they readily admit that their initial team of engineers is what carried them and they rewarded them like it. What you're advocating probably feels good for the ego though... everyone loves imagining having demi-god-like status. For me it's always interesting to look at what people are fighting for. "The founder deserves 100 million, not 80 million, pay the engineers less!" At the end of the day it's just greed.
fergie 8y ago
Seconded.
dazhbog 8y ago
Thank you for your comment. I am a founder currently deciding how much equity to give to our beloved first engineer. Any tips are welcome!
- acconrad 8y ago
  PGs comments on equity resonate with me, and actually align with what I would have wanted. One of the replies to my original comment actually has the article.
- heurist 8y ago
  A baseline would be making up for the employee's salary reduction with equity. If you're taking VC money then you have some dollar value per share to work from, otherwise base it on 3-5x annual revenue linearly projected from historical monthly revenue. Formula: (Fair total dollar compensation - agreed salary) / (dollars / share) * 4 yr vesting A sliding scale for salary : equity is built in and you can compensate based on hire desirability or local market conditions by weighting dollars per share appropriately. This system is fair as long as both the employer and employee agree upon the share value (some information asymmetry there benefiting employers that decent companies will try to correct for). Saying this as startup first engineer ;)
- jacknews 8y ago
  I think the amounts should flow from the right attitude: that they are joining the team to help it succeed, rather than they are being hired to perform a task.
lbriner 8y ago
Not everybody that is an early employee adds to the company value! Some people are not so bad they get fired but they are living off of other people's input. Before you start giving away more equity to early employees, you need to seriously think about how you are going to make the employee earn that e.g. if they leave before 3 years, they lose it, if they fail appraisals, they lose it etc. Many companies go bad because they do give away too much equity then there's not enough left for subsequent raises.
- rhizome 8y ago
  Many companies go bad because they do give away too much equity then there's not enough left for subsequent raises Citation please, because this sounds outlandish.
  - 1123581321 8y ago
    Selling equity to employees for their time is exactly like selling equity to investors for their money. Founders can only dilute their stake to a certain point before they’ll own too little to make fundraising worthwhile. For a rough example, if the company gives 20% to early employees and 20% to investors, and want to raise $1MM A round at a $5MM valuation, they’d dilute down to 48% already. If they’d given 10% to early employees, they’d dilute down to 56%. That majority control could be significant. You can extrapolate lower numbers if a company needs significant cash and has to raise at a low valuation. Hopefully the mechanics make sense and yes, there are companies that give too much away on paper and hurt the value of the equity long term because they didn’t have room to raise money or grant shares without giving up personal stakes.
rhizome 8y ago
I had an extremely similar experience, but I do have a beef with the founders for not compensating me fairly with respect to the work I did in helping them create something they could eventually sell to a large company. [Before anybody throws shade, the site was developed by a Flash dev, a Java team for webdev, and me building the backend and running things as a solo sysadmin.] None of these people are your friends, get as much as you can.
- maconic 8y ago
  That doesn't have to be true, there are many decent and honorable people that decide to start companies. But I do certainly think you need to walk away as soon as you feel a founder doesn't recognize or value you or your contributions
  - rhizome 8y ago
    My experience does have to be true, but sure, not everybody has to be like this. They often are, though.
s2g 8y ago
Why wouldn't you have beef with the founders? Their decisions left them rich and you with nothing in exchange for years of your life lived with excessive risk and a lower standard of living.
jacquesm 8y ago
The thing to really appreciate is you are one of the ones that got lucky. The majority would not be able to recoup the money they would have made by not working for a start-up. Essentially a start-up is a school, don't join if you don't intend to learn a lot while getting paid a little so that if one day you want to do a start-up of your own you will at least be a little bit prepared.
rajacombinator 8y ago
100% correct and I say that as a startup founder that thinks SV startups ripoff their early employees.

biztos 8y ago

What's an "early employee" for you? (That is, who gets "a lot more equity?") I ask because I've noticed with some high-dollar acquisitions a lot of times "engineer #50" makes his/her "F-You Money" on the acquisition, but having been "engineer #2" and "#4" and even "#1" (sadly, no big exits) I am skeptical that #50 took on much more risk or contributed more than, say, #200.

acconrad 8y ago
Pre-series A. Once Series A comes into play, you can get paid "market" - which is to say, the normal rate outside of FAANG.
- munchbunny 8y ago
  "Market" is weird to measure, because you're not really asking what market rate is, you're asking what your baseline is. If you can get a FANG job, the number you care about is effectively the average of what FANG would pay. If you can't, then it's effectively average rate outside of FANG.
  - humanrebar 8y ago
    AND, arguably, "market rate" in SV is below market rate elsewhere, especially when you factor in cost of living.
- s2g 8y ago
  So anyone who is good enough to work for a big company you have no interest in?
- deleted 8y ago
  [deleted]
deleted 8y ago
[deleted]
webmaven 8y ago
#2-#9 (roughly) are taking on more financial risk (this corresponds to the startup's market risk). #50 is probably being hired for very specific skills and experience (to mitigate technical risk) that increases their opportunity cost considerably, and you aren't going to get an engineer with a track record of scaling operations like yours unless they get a decent salary and a shot at a significant upside. For certain skillsets and track records, when a startup is having severe growing pains, it becomes a sellers' market.

seige 8y ago

THIS. Its all about the founders. The VCs don't care, the acquirer doesn't care and largely, the industry doesn't care. I have been at 3 startups and they all feel more like "come change my world" instead of "come change the world". Equity is so lop-sided that its almost laughable. I earlier thought that a successful startup exit actually carries weight on one's resume but that's only on the founder's resume. Nobody cares in SV if you were an EE at a non-unicorn startup with a reasonable exit. After an exit happens, founders still get to keep their badge of honor and propel their careers, not the EEs.

maconic 8y ago
I would recommend making a distinction between a startup that manages to get acquired as a small team for building a good product (Instagram is an extreme example... but I know of a few startups that few here have ever heard of where the outcome for employees was substantially better over the same period than if they had worked for Google or Facebook). There is perhaps a warranted disdain for the behavior of founders on this thread, but I would also like to point out there are founders that genuinely care about the people on their team and would either ensure the equity was sufficient upfront or--if the total size and scale of the startup was miscalculated initially such as assuming the startup needed 100 employees when it really only needed 10--ensuring they receive ample compensation from the acquirer or not taking the deal. These types of founders do exist too, and I think there is an onus on an employee to figure out what kind of boss they have signed up to work for. If I had a few interactions with Steve Jobs, for example, I'm 100% sure I would have quit.

narag 8y ago

As the startup gets traction and more money from VCs, wouldn't it be wise to give raises in cash to early employees?

acconrad 8y ago
Most companies don't give 50% raises when you finally raise money (which is to say, most companies won't simply bring you up to market if you came in super early).
- alfredallan1 8y ago
  No, but if you came in super early, wouldn’t you have (negotiated at the start) more equity anyways? A super early employee with decent equity ought to be treated as a late stage founder - so if the founders don’t take 50% raises, neither should the super early employee with decent equity. It would of course be silly for someone super early to not negotiate significantly more equity than the usual couple of basis points (0.0x % of the company)
  - acconrad 8y ago
    > If the founders don’t take 50% raises, neither should the super early employee with decent equity. You're missing the point of my original post. If a founder owns x100 the equity, why should an early employee be bound to the same salary restrictions? If anything, since I have 1/100th the equity, that means I should be able to get a multiple of some raise when series A comes through. Remember, equity is a lottery ticket (especially for an employee). If you're a founder, even if your startup fails, you can get a job as a highly-paid EIR or your founder reputation will allow you to join some other startup in a high level role (VP, Director, etc). This does not apply for engineer/employee #1.
    - icedchai 8y ago
      If founder has x100 the equity of employee #1, employee #1 screwed up.

bittcto 8y ago

TLDR: 30 years experience, I learned: don’t go work for a SV style startup. Be a founder, even if you have no experience. Don’t take VC money for more than %10 of your equity in total. Better off, right out of school, founding a company and failing than working for a startup, especially if they take VC. It’s lopsided against the founders too. They might walk away with big checks but the risk is too high. This is the problem with the SV model. VCs take way too much off the table, founders and employees are not adequately compensated. This is partly YCs fault because they basically groom startups and usher them into the maw of VCs while glorifying the exploitative VC model. But that model makes YC partners rich st startups expense. Founders and employees in the SV model sell themselves way short. This is also why so many startups are BS non-innovative companies— they are chasing funding rather than the future. Better model: - slicing pie with no bonus for money contributions- this rewards people fairly. - crowd funding, consultancy funding, boot strapping, angel money with no liquidation preferences, and no VC termsheet BS. Having founded and worked for startups for 30 years, I won’t ever take a meeting with a VC again. I have not met any good ones (and people who say theirs is great are generally just kissing ass to keep money flowing.) Worse- the number one cause of failures of startups in my experience is bad strategic decisions forced on them by VCs. The number two cause is conflict among the founders, and the number one cause of that conflict is VCs trying to force a bad decision in the company (and one of the founders realizing it.)

anonu 8y ago
> Be a founder, even if you have no experience. Easier said than done. Lots of people leave school without the faintest clue what they want to do. Getting a job somewhere gives people training and experience and maybe even credibility before they strike it out on their own.
- dunpeal 8y ago
  > Easier said than done. Lots of people leave school without the faintest clue what they want to do. The rest of the startup game - building a product, pivoting correctly, building a team, overcoming oowerful rivals - is such a huge challenge, that gaining entry level experience before finishing school is perhaps the most straightforward piece of the puzzle.

grosjona 8y ago

I agree. There is a culture that founders are special but everyone else is replaceable which makes it self-fulfilling. If a founder leaves, it's bad and VCs won't invest in the startup - However, if a top engineer leaves, no big deal, they're only an engineer... For me personally, I have a really bad perception of incubators, venture capitalists and big tech corporations. It's all a zero sum game to increase concentration of wealth in the hands of the few but there is little meritocracy behind it. In a high traction startup, founders are often the dumbest people in the company but they get treated like they're genius visionaries. I've even heard really smart colleagues/engineers say stuff like "A good CEO needs to be enthusiastic and shouldn't be too smart" - For me this sentence means that we've accepted that the system is not a meritocracy but we've found a way to rationalize it.

nojvek 8y ago
Working at a startup and I feel you a 100%. Won’t name the startup but it seems we’re doing better after CEO-founder left.

evancharles 8y ago

Interestingly YC has encouraged startups to offer more equity to early employees and I'm not sure it's had an effect. See pg's recommendation in http://paulgraham.com/equity.html http://paulgraham.com/equity.html

acconrad 8y ago
I vaguely remember reading that article while I was at said company making basically the same salary (with the same company valuation at the time) and realizing my equity was far below that and scratching my head. If I had PG's recommended equity instead of what I had I would have gone from neutral EV to basically pay-off-my-house money. Like I said, it's things like these that make me never want to work for a startup again and only come in as a founder.
rhizome 8y ago
If it had an effect, it would be apparent after 11 years.

_cs2017_ 8y ago

Maybe engineers are more replaceable than founders? That would explain why founders walk away with a lot more cash and credit. After all, there are a lot of good engineers who probably would do a good job as an early employee. And relatively few people who have the vision, motivation, and skill to create a successful company. That said, I sometimes feel that being a successful founder has less to do with skill and more with being at the right place at the right time. Would be interested to see what others think.

fitpolar 8y ago
I agree, especially on your last point. Even when I think of my own career highs and lows, most of the highs has to do with lucking out with being given a chance or opportunity. By contrast, most of the lows has to with being denied a chance or opportunity. Of course you have to take advantage of any opportunity and work hard for it to pay off. But being lucky enough to be in the RPART is, huge!
Joeri 8y ago
I get the sense that with the right set of employees all a founder has to do to be successful is not to run in the way. One might argue that in that case they were so brilliant at hiring they deserve the payout. Anyway, who is to say where the line is drawn between founders and employees re: who contributes most? As long as both sides know what they’re getting in to nobody is taken advantage of.
earthscienceman 8y ago
This is such a laughably unprovable claim. "Few people who have the vision, motivation, and skill" is equivalent to saying "few startups succeed". It's just a truthism. It's equally likely that few companies are lucky enough to have a talented and motivated team of engineers. Finding someone who thinks they have it all and will be the next big billionaire is easy. Finding a group of people who know what work needs to be done and can put their nose to the grindstone to match the "vision motivation and skill" is the hard part. Just look to google, the holy grail of tech visionaries. No one doubts that Page and Brin have vision/motivation/skill but they readily admit that their initial team of engineers is what carried them and they rewarded them like it. What you're advocating probably feels good for the ego though... everyone loves imagining having demi-god-like status. For me it's always interesting to look at what people are fighting for. "The founder deserves 100 million, not 80 million, pay the engineers less!" At the end of the day it's just greed.

fergie 8y ago

Seconded.

dazhbog 8y ago

Thank you for your comment. I am a founder currently deciding how much equity to give to our beloved first engineer. Any tips are welcome!

acconrad 8y ago
PGs comments on equity resonate with me, and actually align with what I would have wanted. One of the replies to my original comment actually has the article.
heurist 8y ago
A baseline would be making up for the employee's salary reduction with equity. If you're taking VC money then you have some dollar value per share to work from, otherwise base it on 3-5x annual revenue linearly projected from historical monthly revenue. Formula: (Fair total dollar compensation - agreed salary) / (dollars / share) * 4 yr vesting A sliding scale for salary : equity is built in and you can compensate based on hire desirability or local market conditions by weighting dollars per share appropriately. This system is fair as long as both the employer and employee agree upon the share value (some information asymmetry there benefiting employers that decent companies will try to correct for). Saying this as startup first engineer ;)
jacknews 8y ago
I think the amounts should flow from the right attitude: that they are joining the team to help it succeed, rather than they are being hired to perform a task.

lbriner 8y ago

Not everybody that is an early employee adds to the company value! Some people are not so bad they get fired but they are living off of other people's input. Before you start giving away more equity to early employees, you need to seriously think about how you are going to make the employee earn that e.g. if they leave before 3 years, they lose it, if they fail appraisals, they lose it etc. Many companies go bad because they do give away too much equity then there's not enough left for subsequent raises.

rhizome 8y ago
Many companies go bad because they do give away too much equity then there's not enough left for subsequent raises Citation please, because this sounds outlandish.
- 1123581321 8y ago
  Selling equity to employees for their time is exactly like selling equity to investors for their money. Founders can only dilute their stake to a certain point before they’ll own too little to make fundraising worthwhile. For a rough example, if the company gives 20% to early employees and 20% to investors, and want to raise $1MM A round at a $5MM valuation, they’d dilute down to 48% already. If they’d given 10% to early employees, they’d dilute down to 56%. That majority control could be significant. You can extrapolate lower numbers if a company needs significant cash and has to raise at a low valuation. Hopefully the mechanics make sense and yes, there are companies that give too much away on paper and hurt the value of the equity long term because they didn’t have room to raise money or grant shares without giving up personal stakes.

rhizome 8y ago

I had an extremely similar experience, but I do have a beef with the founders for not compensating me fairly with respect to the work I did in helping them create something they could eventually sell to a large company. [Before anybody throws shade, the site was developed by a Flash dev, a Java team for webdev, and me building the backend and running things as a solo sysadmin.] None of these people are your friends, get as much as you can.

maconic 8y ago
That doesn't have to be true, there are many decent and honorable people that decide to start companies. But I do certainly think you need to walk away as soon as you feel a founder doesn't recognize or value you or your contributions
- rhizome 8y ago
  My experience does have to be true, but sure, not everybody has to be like this. They often are, though.

s2g 8y ago

Why wouldn't you have beef with the founders? Their decisions left them rich and you with nothing in exchange for years of your life lived with excessive risk and a lower standard of living.

jacquesm 8y ago

The thing to really appreciate is you are one of the ones that got lucky. The majority would not be able to recoup the money they would have made by not working for a start-up. Essentially a start-up is a school, don't join if you don't intend to learn a lot while getting paid a little so that if one day you want to do a start-up of your own you will at least be a little bit prepared.

rajacombinator 8y ago

100% correct and I say that as a startup founder that thinks SV startups ripoff their early employees.