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This is knitpicky, because OP's point may still stand, but as a founder, this is what comes to mind after reading this: When I hear "work for a startup", I don'

This is knitpicky, because OP's point may still stand, but as a founder, this is what comes to mind after reading this: When I hear "work for a startup", I don't assume that means "be the 10th engineer at a company". You might make some money at that point, but you're not going to get financial independence unless there's a billion dollar IPO. By BigCo standards, 10 engineers is a tiny startup. By venture/founder standards, I think 10 engineers is when you've already made it past the riskiest parts. You probably already have significant revenue traction, or you're past a Series A. You should be able to pay market, and equity is about alignment not risk compensation. I think you can still get rich at a startup, but you need to take actual risk to be compensated for it. Join a 5 person company. Be the second or third engineer, and be able to become the CTO if the two technical people ahead of you leave.

lambdasquirrel 8y ago
Okay, and as someone who has hitherto largely worked at startups (2/3rd of my career), let me tell you the counterpoint. There is not a lot of risk from your perspective, but there is a large amount of risk for us. At a startup, you push all you can towards steering the ship in the right technical direction. For example, unlike at a BigCo, you are likely to be that person who will write the technical debt that later-joining younger engineers will call you stupid for, but you did it while producting your startup to scale. But you only get the pay-out if you actually manage to last until the exit. If you leave before then, because of politics or some failed product push or what-have-you, then you will have to exercise your options, which puts you in a bind in terms of financial risk. If you do exercise, you will be subject to dilution. If you'd stayed at the company, it's often the case that they continue to grant options to employees they want to keep. So to "make it," you effectively have to grow into a BigCo employee anyway. At that point, what is really the point to working at a startup? Especially since your pay will be like half that of a BigCo? Especially since it's A LOT more stressful? Especially since you actually need your critical thinking skills to compensate for your founding team's shortcomings? Now at a BigCo, you drink the kool-aid, you jump through the hoops (working at BigCo is more about jumping through hoops because that's how they "scale" things), but if you do all that, you're more or less set. You may have to "work" hard, but your life is on autopilot. I've had this conversation with lots of folks who've been there, and I myself have helped build one company from the pre-10 engineers phase (more like 3 engineers phase) to something that had a real shot. To be quite frank, the financial incentives are certainly not there, and for most companies I see, I'm no longer sure about the growth/learning incentives either. It's just a bad deal, and you should care because by and large, the smart engineers who can make your boat float aren't going to work for a startup.
- jerf 8y ago
  "You may have to "work" hard, but your life is on autopilot." Mmm... I get what you're saying, and I don't think you're necessarily advising auto-pilot, but I want to put a word out against career autopilot, even in BigCo. You want to put some thought into your career. I've always got my metaphorical finger in the wind to figure out whether or not I'm working in a part of the company that is rising or falling and taking appropriate steps. Sometimes it's figuring out how to make something falling become something rising by improving alignment, sometimes it's working toward shifting assignments, sometimes it's by shifting companies. Depends on a crap ton of things. Honestly it's just been maybe three or four explicitly-made choices I've made over the past 10-15 years, but it's made a lot of difference with where I am now vs. where I'd be if I just went on autopilot too much. (I know some similar people who did just kinda go on autopilot, and can compare with their results.) My meta-advice is just to look around and think about where you are and where you are going, though. Even when a company genuinely cares and works with you to develop your career, there's still an irreducible element that is your responsibility.
- throwaway93289 8y ago
  > But you only get the pay-out if you actually manage to last until the exit. If you leave before then, because of politics or some failed product push or what-have-you, then you will have to exercise your options, which puts you in a bind in terms of financial risk. Employee #1 of a startup that sold for 9 figures chiming in. I loved the people I worked with (until we got to around 70+ and bureaucracy/meetings grew), the company had an amazing life/work balance (it was one of their core principles and it was real), I learned a bunch of things (a lot of dead knowledge now though), and it seemed like my best shot for $$ because I knew the product was good. It took a decade to sell. Around year 7 the company started changing and I grew to like working there less, but the possibility of the payout was still my best bet for a pile of cash. It was then that I really felt the golden handcuffs and grew anxious. I couldn't leave and keep my options because of the exercise tax. We finally sold and the amount I got was so embarrassing that they offered me a second pot of cash that was more reasonable, but still a far cry from what the founders got. I probably could have made the amount over 10 years working for one of the bigs. I will never put on golden handcuffs again.
Analemma_ 8y ago
> “equity is about alignment, not risk compensation” This seems like moving the goalposts to me, I have always heard the opposite: that the tradeoff of working at a startup for a reduced salary is supposed to be that you get equity to compensate. If the equity share is tiny by the time you get to engineer #10, fine, but engineer #10 should get near-market salary to compensate. Otherwise there’s no reason not to go work for BigCorp if you don’t buy the starry-eyed promises about innovation and unique experience.
- jacobn 8y ago
  > "You should be able to pay market, and equity is about alignment not risk compensation."
  - aggronn 8y ago
    I think the parent didn't see those as connected in my post. To clarify, in my OP, I meant it how you read it: After a Series A, you should be pretty close to market salary, and as a result, equity is about alignment not risk.
bvm 8y ago
> knitpicky this one writes itself
- aggronn 8y ago
  Whooops, thanks! *nitpicky
gwbas1c 8y ago
> I think you can still get rich at a startup, but you need to take actual risk to be compensated for it. Joining any startup is risky. Most startups fail for reasons beyond the employees control. If employee #10's compensation is less than an established company, and requires an exit event that is unlikely to happen, then it's just not worth it. You just can't say "real risk" to gloss over the fact that startup compensation doesn't justify the risk.
jonathankoren 8y ago
The problem with this thinking is that you’re assuming that the founders are taking all the risk. They’re not. Series As implode all the time, as do Bs. In the end the equity is worth nothing. If you’re lucky, you might walk away with it being almost a wash compared to taking a job at an established public company. I think of the startup I was recently pitched. Two non-technical founders said they raised some money, and now needed to hire people to actually do the actual thing they promised they could do. These founders, brought nothing to the table beyond an idea, and not even an original idea, since I actually know three different startups already in that exact space that have an actual product and customers. I laughed at him. Why should anyone join him? I’m taking as much risk as him, providing more value, and then get a tiny fraction of the equity? It’s basically a scam, because they’re not providing anything of value, and yet they’re the only ones that are going to walk away with anything after the inevitable aquihire.

lambdasquirrel 8y ago

Okay, and as someone who has hitherto largely worked at startups (2/3rd of my career), let me tell you the counterpoint. There is not a lot of risk from your perspective, but there is a large amount of risk for us. At a startup, you push all you can towards steering the ship in the right technical direction. For example, unlike at a BigCo, you are likely to be that person who will write the technical debt that later-joining younger engineers will call you stupid for, but you did it while producting your startup to scale. But you only get the pay-out if you actually manage to last until the exit. If you leave before then, because of politics or some failed product push or what-have-you, then you will have to exercise your options, which puts you in a bind in terms of financial risk. If you do exercise, you will be subject to dilution. If you'd stayed at the company, it's often the case that they continue to grant options to employees they want to keep. So to "make it," you effectively have to grow into a BigCo employee anyway. At that point, what is really the point to working at a startup? Especially since your pay will be like half that of a BigCo? Especially since it's A LOT more stressful? Especially since you actually need your critical thinking skills to compensate for your founding team's shortcomings? Now at a BigCo, you drink the kool-aid, you jump through the hoops (working at BigCo is more about jumping through hoops because that's how they "scale" things), but if you do all that, you're more or less set. You may have to "work" hard, but your life is on autopilot. I've had this conversation with lots of folks who've been there, and I myself have helped build one company from the pre-10 engineers phase (more like 3 engineers phase) to something that had a real shot. To be quite frank, the financial incentives are certainly not there, and for most companies I see, I'm no longer sure about the growth/learning incentives either. It's just a bad deal, and you should care because by and large, the smart engineers who can make your boat float aren't going to work for a startup.

jerf 8y ago
"You may have to "work" hard, but your life is on autopilot." Mmm... I get what you're saying, and I don't think you're necessarily advising auto-pilot, but I want to put a word out against career autopilot, even in BigCo. You want to put some thought into your career. I've always got my metaphorical finger in the wind to figure out whether or not I'm working in a part of the company that is rising or falling and taking appropriate steps. Sometimes it's figuring out how to make something falling become something rising by improving alignment, sometimes it's working toward shifting assignments, sometimes it's by shifting companies. Depends on a crap ton of things. Honestly it's just been maybe three or four explicitly-made choices I've made over the past 10-15 years, but it's made a lot of difference with where I am now vs. where I'd be if I just went on autopilot too much. (I know some similar people who did just kinda go on autopilot, and can compare with their results.) My meta-advice is just to look around and think about where you are and where you are going, though. Even when a company genuinely cares and works with you to develop your career, there's still an irreducible element that is your responsibility.
throwaway93289 8y ago
> But you only get the pay-out if you actually manage to last until the exit. If you leave before then, because of politics or some failed product push or what-have-you, then you will have to exercise your options, which puts you in a bind in terms of financial risk. Employee #1 of a startup that sold for 9 figures chiming in. I loved the people I worked with (until we got to around 70+ and bureaucracy/meetings grew), the company had an amazing life/work balance (it was one of their core principles and it was real), I learned a bunch of things (a lot of dead knowledge now though), and it seemed like my best shot for $$ because I knew the product was good. It took a decade to sell. Around year 7 the company started changing and I grew to like working there less, but the possibility of the payout was still my best bet for a pile of cash. It was then that I really felt the golden handcuffs and grew anxious. I couldn't leave and keep my options because of the exercise tax. We finally sold and the amount I got was so embarrassing that they offered me a second pot of cash that was more reasonable, but still a far cry from what the founders got. I probably could have made the amount over 10 years working for one of the bigs. I will never put on golden handcuffs again.

Analemma_ 8y ago

> “equity is about alignment, not risk compensation” This seems like moving the goalposts to me, I have always heard the opposite: that the tradeoff of working at a startup for a reduced salary is supposed to be that you get equity to compensate. If the equity share is tiny by the time you get to engineer #10, fine, but engineer #10 should get near-market salary to compensate. Otherwise there’s no reason not to go work for BigCorp if you don’t buy the starry-eyed promises about innovation and unique experience.

jacobn 8y ago
> "You should be able to pay market, and equity is about alignment not risk compensation."
- aggronn 8y ago
  I think the parent didn't see those as connected in my post. To clarify, in my OP, I meant it how you read it: After a Series A, you should be pretty close to market salary, and as a result, equity is about alignment not risk.

bvm 8y ago

> knitpicky this one writes itself

aggronn 8y ago
Whooops, thanks! *nitpicky

gwbas1c 8y ago

> I think you can still get rich at a startup, but you need to take actual risk to be compensated for it. Joining any startup is risky. Most startups fail for reasons beyond the employees control. If employee #10's compensation is less than an established company, and requires an exit event that is unlikely to happen, then it's just not worth it. You just can't say "real risk" to gloss over the fact that startup compensation doesn't justify the risk.

jonathankoren 8y ago

The problem with this thinking is that you’re assuming that the founders are taking all the risk. They’re not. Series As implode all the time, as do Bs. In the end the equity is worth nothing. If you’re lucky, you might walk away with it being almost a wash compared to taking a job at an established public company. I think of the startup I was recently pitched. Two non-technical founders said they raised some money, and now needed to hire people to actually do the actual thing they promised they could do. These founders, brought nothing to the table beyond an idea, and not even an original idea, since I actually know three different startups already in that exact space that have an actual product and customers. I laughed at him. Why should anyone join him? I’m taking as much risk as him, providing more value, and then get a tiny fraction of the equity? It’s basically a scam, because they’re not providing anything of value, and yet they’re the only ones that are going to walk away with anything after the inevitable aquihire.