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VCs win if enough of their bets make it big enough to offset the ones that go under. Naturally the big hits are few and the ones that fail are numerous. That me

by eis 8y ago

VCs win if enough of their bets make it big enough to offset the ones that go under. Naturally the big hits are few and the ones that fail are numerous. That means the big hits need to be huge and the failures need to have a certain cap. The latter also means you can't run a company for 10 years in slowmo until they get profitable. And the big hits need to be huge which means they need to take over a nice chunk of a market which you can only do with good funding and moving faster than everyone else. VCs were able to control the startups they invested in to a pretty big degree. What does that mean for founders? It means that you are putting all your eggs into one basket. A founder does not found 20 startups at the same time in the hope that one succeeds. A founder puts his effort usually into only one. So founders take a larger risk than VCs. They make it big or go bust. And the vast majority goes bust when running in supercharged mode. What does that mean for startup employees? Well, they got the worst of all worlds. High risk and little to no upside. Their eggs are also in one basket as they work for only one company AND they don't have the huge upsides that VCs and founders have. The whole game favors only VCs and founders who like big bets. But for the vast majority of people (which includes employees), the VC game is not a great game to play.

mlthoughts2018 8y ago
Additionally, the particular mix of attributes you bring up (few and far between options for huge near-term growth) heavily incentivizes exploiting weaknesses in laws and/or outright violation of laws, because one of the only formulaic ways to displace entrenched incumbent businesses is to look at where they are forced to operate inefficiently due to obeying laws and then undercut them by operating more efficiently and skirting / violating those laws. If you take a premise that society is better off most of the time if the business is less efficient but the law is obeyed, then it makes the whole concept of modern VC-backed startup businesses generally a destructive endeavor on society. Obviously not in every individual case, but overall and pretty consistently in the largest growth start-ups.
hn_throwaway_99 8y ago
I think your point about employees is especially true, particularly since the large tech companies pay disproportionately so much more. If you are a senior-level software engineer, even if the startup is successful in the "unicorn" range, for most people that means an equity payout on the couple hundred K to the $1 million range for all but the very largest successes. Not bad at all, but when the FAANGS are already paying in the 250-500k range, going to a startup is you are not an exec or founder is almost always a poor financial decision. And remember, the vast majority of startups still fail outright.
- milquetoastaf 8y ago
  Not everyone can get a FAANG job nor do many FAANG jobs pay >300k
- hamandcheese 8y ago
  This is assuming one can get hired by a FAANG, which is not true for many.
  - billconan 8y ago
    I’m about to join a startup. I just want to do meaningful work and learn new things. I view it as a learning experience. I am so fed up with corporation life. I don’t see a way out other than joining a startup or starting my own. I don’t want to deal with project managers and fill their spreadsheets anymore. The most valuable thing I have is the remaining time I have in this life. Not the number in my bank account.
    - jonathanyc 8y ago
      > I don’t want to deal with project managers and fill their spreadsheets anymore. Oh boy are you in for a surprise. Whether a company is a startup or not is almost entirely orthogonal to a culture of “filling out spreadsheets.”
    - hsk0823 8y ago
      Careful what you wish for, startups have people who will wear as many different hats as required to make it work. Corporate life may have had a really well defined job role, that may not be true in any startup you join.
      - billconan 8y ago
        I think I'm very entrepreneurial. "wear as many different hats as required to make it work", this is basically what I do for my side projects. I write both the web frontend (vue) and backend (in c++), do devops, content marketing, whereas my day job is device driver development.
chosenbreed37 8y ago
> What does that mean for founders? It means that you are putting all your eggs into one basket. > What does that mean for startup employees? Well, they got the worst of all worlds. High risk and little to no upside. Their eggs are also in one basket as they work for only one company AND they don't have the huge upsides that VCs and founders have Presumably both of them get paid for their efforts...not entirely worthless
- eis 8y ago
  Not worthless but the deal they get is usually a lot worse than the deal a VC gets. Are they getting paid enough to account for the risk? A VC will make more money and have less risk (overall). An employee will most likely make not much more than working for an established company and have a high chance of losing his job within a few years.
  - wolco 8y ago
    Even if successful you have a good chance of losing your job or being forced to move to fully vest your options after a buyout. Chances are low you will be there or your job will in 5 years
  - jonathankoren 8y ago
    Exactly. The idea that Founders take on so much more ”risk” than early employees, and so deserve multiple orders of magnitude more reward is laughable. There’s no difference in the risk of a founder and employee 1. They’re both out of a job and perhaps underpaid at first.
    - eanzenberg 8y ago
      Do you consider the value add of a founder and 1st employee the same?
      - jonathankoren 8y ago
        Yes. If the employee didn’t add a massive amounts of value, no one would have been hired. Unless it’s a sole proprietorship, founders without employees are just masturbating until they fail. No one is a philosopher king. It’s just a self serving lie to justify gross exploitation. No one provides 1000x value.
IMTDb 8y ago
I agree with your statement, but only if you consider that employees have a significant downside of working at a startup that goes under. Usually they are able to jump ship sooner than the founder and don't loose any personal investment in the process they get more responsibilities and more independence which in turn can get them to higher salaries faster. Employees at startup usually get paid a bit less than "market rate" but enjoy a work environment they consider to be more exciting / enriching / challenging. There are people that dislike the startup environment, or that don't think it's worth the pay cut compared to GAFAN or other BigCo - and that's OK - but for many it's not as bad as you frame it.
- eis 8y ago
  I agree with yours as well. But to add to that: there are VC startups that are fun and exciting to work at and there are ones that are horrible. And the same goes for big companies btw. Overall though, the chance of finding more freedom and excitement is with small VC startups, sure. The employees that can jump ship quickly are the good performers that also live somewhere with ample opportunity. Those also are rarer than the average Joe Dev. I'm not saying it's always a really bad dicision to join a VC funded startup. But in the majority of cases, people would probably be better off not to - at least financially. Of course (and luckily) there are more factors than that.
  - collyw 8y ago
    > also live somewhere with ample opportunity. Isn't that where the vast majority of startups are based though?
- mikepurvis 8y ago
  I would agree with all of this. I'm a first employee and I have had a huge amount of influence, responsibility, and flexibility over the years— I could easily walk to multiple other opportunities for 1.5-2x salary at this point, and having the option to do that is actually worth more to me than the cash gained from actually doing it. The career growth that has made this possible wouldn't have happened working at BigCo. As far as I can tell, the biggest issue with most early employees is not being able to exercise your stock options— the ones that vest first you can't afford, and by the time the later ones vest, the tax bill would be too great. So if you want to leave before an exit, you're either walking from your options, bank-financing it, cutting some kind of side deal with a VC to finance it, or working out a deal with the board to buy you out over time.
duxup 8y ago
"VCs were able to control the startups they invested in to a pretty big degree." I don't think you're wrong, but I always thought VCs were there to hopefully guide these organizations too. Control, guide, probabbly overlap a lot. But the idea being you get capital, introductions, maybe help finding some people you need? Granted I don't think you're wrong about the rest of it but control (when you sold yourself...), also guidance are weird venn diagrams. Not sure there is a right or wrong there.
- eanzenberg 8y ago
  Yeah, when a good VC owns 30% of your company they are invested in seeing this grow and succeed. There are other VC which are handsoff and do a spray pray approach to investing.
deleted 8y ago
[deleted]
will_brown 8y ago
I think it’s just the start, soon there will be a much larger paradigm shift. Especially in tech where there is generally a large community of supporters who are willing to fund the projects they believe in directly. I think the Green Bay Packers is a perfect example, it’s the only “publicly owned” football team in the NFL and as a result when they need funding for large projects (like stadium renovations) they go straight to their community supporters with “public offerings of Packers stock”...which isn’t really stock at all but a certificate and small voice in corporate governance (ie election of a small number of directors). It’s so successful of a legal structure the NFL publicly takes the position they are at a competitive advantage to the other teams which are owned by billionaires. There is no reason Startup’s shouldn’t look at the same model and cut out all VCs, incubators, etc...
- sflanagan 8y ago
  Who makes money off of the Packers? Startups may not be willing to take this model on if its less profitable for founders
  - hsk0823 8y ago
    The organization does, it's a non profit, it gets reinvested into the team coffers to be spent. There's no dividend or anything like that.
  - will_brown 8y ago
    Packers are nonprofit but there are other sports teams/organizations that have similar public offerings to raise funds/capital that are for profit entities.
    - hsk0823 8y ago
      You keep calling it a public offering, but the reality is, a public offering is selling parts of your company for cash, aka a stock, ownership has it's privileges, without those privileges, you aren't selling anything to the public, the public is giving you money in return for a piece of paper and a fuzzy good feeling inside. I don't invest to get a fuzzy good feeling inside. I donate for that. Donations are not investments. They're expenses. Investments must have a return of some monetary vale, or else it's an expense.
Alex3917 8y ago
> The whole game favors only VCs and founders who like big bets. But for the vast majority of people (which includes employees), the VC game is not a great game to play. If you're not the capitalist then you're probably the capital.
jonlucc 8y ago
Maybe this is hopelessly naive or dumb legally difficult, but I wonder if a VC might have a slight advantage by offering funded companies a portion of the fund itself. They might be more enticing to founders. Of course there's still some severe disadvantage for employees. I'm thinking about a Planet Money episode that discusses big-time poker folks, and they frequently trade percentages of their winnings such that if enough people do it, the few big winners are evened out over time.
- hsk0823 8y ago
  But that's a deal a VC wouldn't make in the first place.
  - jonlucc 8y ago
    I could see that, but couldn't it give a lesser-known or less desirable VC an edge?
  - thruflo22 8y ago
    Some do https://www.kindredcapital.vc https://www.kindredcapital.vc
pjungwir 8y ago
The original story of getting rich off employee equity seems to go back to Netscape, but reading The New New Thing by Michael Lewis, I was struck by how abnormal that situation was. Jim Clark hated the VCs, identified as an engineer, seemed happy to share his winnings with everyone, and had the leverage to dictate VC terms. That story shaped tech for a while, e.g. Google bragged about how even their cooks got rich, but now 24 years after the IPO I think things have largely gone "back to normal", with investors and founders giving away less. The story's momentum still draws hopeful employees, but people are becoming more skeptical, too. Plus not every company is a Netscape or Google. . . .
- rchaud 8y ago
  That's one of my favourite books. There' also "Panic!" which is basically a curated list of newspaper articles and Lewis' columns about long-forgotten companies from the dotcom era and their business models. What I found hilarious was Jim Clark's original vision of a "trillion dollar healthcare cost disruptor" that was Healtheon, actually IPO'd in '99, but ended up being acquired by the content mill cesspool that is WebMD.
- walshemj 8y ago
  The non tech MBA's took over ;-(
headmelted 8y ago
To your point, a lot of the traditional appeal that working at a startup has for engineers has been the options. When you take that (significant) compensation away it should make the job much less appealing. I think a lot of younger (by which I mean years of experience in the industry rather than age) talent has forgotten or is not aware that this is why a startup job became the "done thing". For many, they'd be better served by working at an established company (even temporarily if they have ambitions of their own startup in the future) as the package will be much better, and because the traditional upside of working for a startup largely doesn't exist anymore.
- icedchai 8y ago
  The truth is that "significant" compensation is often worth little or nothing, and always has been. For every guy who makes $400K off his FAANG options or RSUs, there's at least 100 who made nothing off of their early stage stock options.
  - headmelted 8y ago
    Even assuming this arbitrary estimate were true (I don't know what the real figures are, and doubt anyone else does, so why not) then this would mean the options were worth $4K ($400k/the 1 person who jackpots) in speculative value, give or take. Still significant for someone just starting their career.
golemiprague 8y ago
The founders play a different game and they get couple of benefits even if the company doesn't succeed. First and foremost is the chance to manage a company while getting payed without having to wait for years going through the corporate ladder and office politics. This is very valuable and for certain type of people also fun. Being the ultimate boss is much better than being an employee in most cases. People here taking it too seriously, you just have to take it easy and enjoy it, if you feel it is only about making money just don't do it. I have been in start ups that failed and succeeded and sometimes the failed ones were much more fun while it lasted.
tossaccount123 8y ago
You're operating under the assumption that most people have their choice of where to work. If you can work at Google or Facebook, then sure, don't go the startup route On the other hand if you didn't go to an Ivy league you can prove yourself at a startup or advance your career faster before transitioning to a bigger company at a better position
branchless 8y ago
And thanks to the enormous hero worship of YC it's taken until now for this to dawn on the majority of readers. I say that as it's the top comment and I feel that a few years back it would have been downvoted.
contingencies 8y ago
While your stats are right, the reality is that people aren't interchangeable and life isn't a perfect game to be approached from a statistical standpoint. For some people, "100% on" environments are the right choice, and entrepreneurial activities are a natural outlet, whether in isolation or with others. For others, traditional careers offering stability and insurance from any threat of rapid change, or even hermit-like isolation may be favorable. Personally I've fluctuated between the former and the latter, and VC has done well by me as an employee. YMMV. Do what excites you.
conanbatt 8y ago
Employees get cash, which has the lowest risk of the three players (no cash for founders, cash loss for a VC). You reduce VC earnings by having more VC competition. You increase founder earnings by having more VC competition as well. Also by providing a better environment for success (that VC's provide, like it or not) You increaes employee payout by the number of competing startups for talent-> more VC and more founders better deals for employees. There are things that tip the scales amongst the players, but its not true employees lose out as a whole: the majority of minted millionaires in this game are employees, not founders. Even more than VC's. VC's meanwhile have not great returns as an entire industry. And in the founders game, most lose out with detrmient to health, status, or family fortunes.
ratling 8y ago
I'll give you another reason. VC money is geographically limited. You're essentially required to build in San Fran or NYC if you want to get your product in front of someone with the cash to fund it. Pittsburgh has a great tech scene and a pretty good 'stable, 10 years in company' scene. It's got dick all for startups (duolingo yes there are always exceptions) because there's just no VC capital. IMO we're mostly fine with that. It's certainly a hell of a lot cheaper to live here than San Fran.

by eis 8y ago

mlthoughts2018 8y ago

Additionally, the particular mix of attributes you bring up (few and far between options for huge near-term growth) heavily incentivizes exploiting weaknesses in laws and/or outright violation of laws, because one of the only formulaic ways to displace entrenched incumbent businesses is to look at where they are forced to operate inefficiently due to obeying laws and then undercut them by operating more efficiently and skirting / violating those laws. If you take a premise that society is better off most of the time if the business is less efficient but the law is obeyed, then it makes the whole concept of modern VC-backed startup businesses generally a destructive endeavor on society. Obviously not in every individual case, but overall and pretty consistently in the largest growth start-ups.

hn_throwaway_99 8y ago

I think your point about employees is especially true, particularly since the large tech companies pay disproportionately so much more. If you are a senior-level software engineer, even if the startup is successful in the "unicorn" range, for most people that means an equity payout on the couple hundred K to the $1 million range for all but the very largest successes. Not bad at all, but when the FAANGS are already paying in the 250-500k range, going to a startup is you are not an exec or founder is almost always a poor financial decision. And remember, the vast majority of startups still fail outright.

milquetoastaf 8y ago
Not everyone can get a FAANG job nor do many FAANG jobs pay >300k
hamandcheese 8y ago
This is assuming one can get hired by a FAANG, which is not true for many.
- billconan 8y ago
  I’m about to join a startup. I just want to do meaningful work and learn new things. I view it as a learning experience. I am so fed up with corporation life. I don’t see a way out other than joining a startup or starting my own. I don’t want to deal with project managers and fill their spreadsheets anymore. The most valuable thing I have is the remaining time I have in this life. Not the number in my bank account.
  - jonathanyc 8y ago
    > I don’t want to deal with project managers and fill their spreadsheets anymore. Oh boy are you in for a surprise. Whether a company is a startup or not is almost entirely orthogonal to a culture of “filling out spreadsheets.”
  - hsk0823 8y ago
    Careful what you wish for, startups have people who will wear as many different hats as required to make it work. Corporate life may have had a really well defined job role, that may not be true in any startup you join.
    - billconan 8y ago
      I think I'm very entrepreneurial. "wear as many different hats as required to make it work", this is basically what I do for my side projects. I write both the web frontend (vue) and backend (in c++), do devops, content marketing, whereas my day job is device driver development.

chosenbreed37 8y ago

> What does that mean for founders? It means that you are putting all your eggs into one basket. > What does that mean for startup employees? Well, they got the worst of all worlds. High risk and little to no upside. Their eggs are also in one basket as they work for only one company AND they don't have the huge upsides that VCs and founders have Presumably both of them get paid for their efforts...not entirely worthless

eis 8y ago
Not worthless but the deal they get is usually a lot worse than the deal a VC gets. Are they getting paid enough to account for the risk? A VC will make more money and have less risk (overall). An employee will most likely make not much more than working for an established company and have a high chance of losing his job within a few years.
- wolco 8y ago
  Even if successful you have a good chance of losing your job or being forced to move to fully vest your options after a buyout. Chances are low you will be there or your job will in 5 years
- jonathankoren 8y ago
  Exactly. The idea that Founders take on so much more ”risk” than early employees, and so deserve multiple orders of magnitude more reward is laughable. There’s no difference in the risk of a founder and employee 1. They’re both out of a job and perhaps underpaid at first.
  - eanzenberg 8y ago
    Do you consider the value add of a founder and 1st employee the same?
    - jonathankoren 8y ago
      Yes. If the employee didn’t add a massive amounts of value, no one would have been hired. Unless it’s a sole proprietorship, founders without employees are just masturbating until they fail. No one is a philosopher king. It’s just a self serving lie to justify gross exploitation. No one provides 1000x value.

IMTDb 8y ago

I agree with your statement, but only if you consider that employees have a significant downside of working at a startup that goes under. Usually they are able to jump ship sooner than the founder and don't loose any personal investment in the process they get more responsibilities and more independence which in turn can get them to higher salaries faster. Employees at startup usually get paid a bit less than "market rate" but enjoy a work environment they consider to be more exciting / enriching / challenging. There are people that dislike the startup environment, or that don't think it's worth the pay cut compared to GAFAN or other BigCo - and that's OK - but for many it's not as bad as you frame it.

eis 8y ago
I agree with yours as well. But to add to that: there are VC startups that are fun and exciting to work at and there are ones that are horrible. And the same goes for big companies btw. Overall though, the chance of finding more freedom and excitement is with small VC startups, sure. The employees that can jump ship quickly are the good performers that also live somewhere with ample opportunity. Those also are rarer than the average Joe Dev. I'm not saying it's always a really bad dicision to join a VC funded startup. But in the majority of cases, people would probably be better off not to - at least financially. Of course (and luckily) there are more factors than that.
- collyw 8y ago
  > also live somewhere with ample opportunity. Isn't that where the vast majority of startups are based though?
mikepurvis 8y ago
I would agree with all of this. I'm a first employee and I have had a huge amount of influence, responsibility, and flexibility over the years— I could easily walk to multiple other opportunities for 1.5-2x salary at this point, and having the option to do that is actually worth more to me than the cash gained from actually doing it. The career growth that has made this possible wouldn't have happened working at BigCo. As far as I can tell, the biggest issue with most early employees is not being able to exercise your stock options— the ones that vest first you can't afford, and by the time the later ones vest, the tax bill would be too great. So if you want to leave before an exit, you're either walking from your options, bank-financing it, cutting some kind of side deal with a VC to finance it, or working out a deal with the board to buy you out over time.

duxup 8y ago

"VCs were able to control the startups they invested in to a pretty big degree." I don't think you're wrong, but I always thought VCs were there to hopefully guide these organizations too. Control, guide, probabbly overlap a lot. But the idea being you get capital, introductions, maybe help finding some people you need? Granted I don't think you're wrong about the rest of it but control (when you sold yourself...), also guidance are weird venn diagrams. Not sure there is a right or wrong there.

eanzenberg 8y ago
Yeah, when a good VC owns 30% of your company they are invested in seeing this grow and succeed. There are other VC which are handsoff and do a spray pray approach to investing.

deleted 8y ago

[deleted]

will_brown 8y ago

I think it’s just the start, soon there will be a much larger paradigm shift. Especially in tech where there is generally a large community of supporters who are willing to fund the projects they believe in directly. I think the Green Bay Packers is a perfect example, it’s the only “publicly owned” football team in the NFL and as a result when they need funding for large projects (like stadium renovations) they go straight to their community supporters with “public offerings of Packers stock”...which isn’t really stock at all but a certificate and small voice in corporate governance (ie election of a small number of directors). It’s so successful of a legal structure the NFL publicly takes the position they are at a competitive advantage to the other teams which are owned by billionaires. There is no reason Startup’s shouldn’t look at the same model and cut out all VCs, incubators, etc...

sflanagan 8y ago
Who makes money off of the Packers? Startups may not be willing to take this model on if its less profitable for founders
- hsk0823 8y ago
  The organization does, it's a non profit, it gets reinvested into the team coffers to be spent. There's no dividend or anything like that.
- will_brown 8y ago
  Packers are nonprofit but there are other sports teams/organizations that have similar public offerings to raise funds/capital that are for profit entities.
  - hsk0823 8y ago
    You keep calling it a public offering, but the reality is, a public offering is selling parts of your company for cash, aka a stock, ownership has it's privileges, without those privileges, you aren't selling anything to the public, the public is giving you money in return for a piece of paper and a fuzzy good feeling inside. I don't invest to get a fuzzy good feeling inside. I donate for that. Donations are not investments. They're expenses. Investments must have a return of some monetary vale, or else it's an expense.

Alex3917 8y ago

> The whole game favors only VCs and founders who like big bets. But for the vast majority of people (which includes employees), the VC game is not a great game to play. If you're not the capitalist then you're probably the capital.

jonlucc 8y ago

Maybe this is hopelessly naive or dumb legally difficult, but I wonder if a VC might have a slight advantage by offering funded companies a portion of the fund itself. They might be more enticing to founders. Of course there's still some severe disadvantage for employees. I'm thinking about a Planet Money episode that discusses big-time poker folks, and they frequently trade percentages of their winnings such that if enough people do it, the few big winners are evened out over time.

hsk0823 8y ago
But that's a deal a VC wouldn't make in the first place.
- jonlucc 8y ago
  I could see that, but couldn't it give a lesser-known or less desirable VC an edge?
- thruflo22 8y ago
  Some do https://www.kindredcapital.vc https://www.kindredcapital.vc

pjungwir 8y ago

The original story of getting rich off employee equity seems to go back to Netscape, but reading The New New Thing by Michael Lewis, I was struck by how abnormal that situation was. Jim Clark hated the VCs, identified as an engineer, seemed happy to share his winnings with everyone, and had the leverage to dictate VC terms. That story shaped tech for a while, e.g. Google bragged about how even their cooks got rich, but now 24 years after the IPO I think things have largely gone "back to normal", with investors and founders giving away less. The story's momentum still draws hopeful employees, but people are becoming more skeptical, too. Plus not every company is a Netscape or Google. . . .

rchaud 8y ago
That's one of my favourite books. There' also "Panic!" which is basically a curated list of newspaper articles and Lewis' columns about long-forgotten companies from the dotcom era and their business models. What I found hilarious was Jim Clark's original vision of a "trillion dollar healthcare cost disruptor" that was Healtheon, actually IPO'd in '99, but ended up being acquired by the content mill cesspool that is WebMD.
walshemj 8y ago
The non tech MBA's took over ;-(

headmelted 8y ago

To your point, a lot of the traditional appeal that working at a startup has for engineers has been the options. When you take that (significant) compensation away it should make the job much less appealing. I think a lot of younger (by which I mean years of experience in the industry rather than age) talent has forgotten or is not aware that this is why a startup job became the "done thing". For many, they'd be better served by working at an established company (even temporarily if they have ambitions of their own startup in the future) as the package will be much better, and because the traditional upside of working for a startup largely doesn't exist anymore.

icedchai 8y ago
The truth is that "significant" compensation is often worth little or nothing, and always has been. For every guy who makes $400K off his FAANG options or RSUs, there's at least 100 who made nothing off of their early stage stock options.
- headmelted 8y ago
  Even assuming this arbitrary estimate were true (I don't know what the real figures are, and doubt anyone else does, so why not) then this would mean the options were worth $4K ($400k/the 1 person who jackpots) in speculative value, give or take. Still significant for someone just starting their career.

golemiprague 8y ago

The founders play a different game and they get couple of benefits even if the company doesn't succeed. First and foremost is the chance to manage a company while getting payed without having to wait for years going through the corporate ladder and office politics. This is very valuable and for certain type of people also fun. Being the ultimate boss is much better than being an employee in most cases. People here taking it too seriously, you just have to take it easy and enjoy it, if you feel it is only about making money just don't do it. I have been in start ups that failed and succeeded and sometimes the failed ones were much more fun while it lasted.

tossaccount123 8y ago

You're operating under the assumption that most people have their choice of where to work. If you can work at Google or Facebook, then sure, don't go the startup route On the other hand if you didn't go to an Ivy league you can prove yourself at a startup or advance your career faster before transitioning to a bigger company at a better position

branchless 8y ago

And thanks to the enormous hero worship of YC it's taken until now for this to dawn on the majority of readers. I say that as it's the top comment and I feel that a few years back it would have been downvoted.

contingencies 8y ago

While your stats are right, the reality is that people aren't interchangeable and life isn't a perfect game to be approached from a statistical standpoint. For some people, "100% on" environments are the right choice, and entrepreneurial activities are a natural outlet, whether in isolation or with others. For others, traditional careers offering stability and insurance from any threat of rapid change, or even hermit-like isolation may be favorable. Personally I've fluctuated between the former and the latter, and VC has done well by me as an employee. YMMV. Do what excites you.

conanbatt 8y ago

Employees get cash, which has the lowest risk of the three players (no cash for founders, cash loss for a VC). You reduce VC earnings by having more VC competition. You increase founder earnings by having more VC competition as well. Also by providing a better environment for success (that VC's provide, like it or not) You increaes employee payout by the number of competing startups for talent-> more VC and more founders better deals for employees. There are things that tip the scales amongst the players, but its not true employees lose out as a whole: the majority of minted millionaires in this game are employees, not founders. Even more than VC's. VC's meanwhile have not great returns as an entire industry. And in the founders game, most lose out with detrmient to health, status, or family fortunes.

ratling 8y ago

I'll give you another reason. VC money is geographically limited. You're essentially required to build in San Fran or NYC if you want to get your product in front of someone with the cash to fund it. Pittsburgh has a great tech scene and a pretty good 'stable, 10 years in company' scene. It's got dick all for startups (duolingo yes there are always exceptions) because there's just no VC capital. IMO we're mostly fine with that. It's certainly a hell of a lot cheaper to live here than San Fran.