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The easiest public data on this is now levels.fyi. For example, https://www.levels.fyi/salary/Google/SE/L5/ https://www.levels.fyi/salary/Google/SE/L5/ shows th

by boulos 7y ago

The easiest public data on this is now levels.fyi. For example, https://www.levels.fyi/salary/Google/SE/L5/ https://www.levels.fyi/salary/Google/SE/L5/ shows the locations and pay for L5 engineers at Google, which is not new grads, but also not "only the most senior engineers". The data reproduces the "engineers don't get paid well in London" story. Fwiw, I have always found that startup pay (particularly equity) is incredibly slanted against employees. I'm curious if the higher "risk-free rate" from the various FAANG companies will mean that startups instead learn to push back against the VC status quo of small equity grants. It sounds sort of bizarre to me to instead attempt to match on salary / nearly-guaranteed compensation, instead you must meet the "not having to deplete savings" bar and then the rest are lottery tickets. Historically, with "1% of equity" (or so) those lotto tickets don't sound so attractive.

opportune 7y ago
I have not been in the software industry as long as other people on this site, but I think this is a pretty worrying trend, and eventually, founders are going to have to yield more equity to employees. If your startup involves technically challenging work that requires good engineers, how are you going to compete with companies that can compensate employees 2x what you can in fully liquid comp? The only way is through more equity. Of course cash-rich late stage startups can do that, and they can also convince people that there is a very good chance that equity will actually be worth something to employers. But early stage startups can't do that so easily. Right now, it seems like working for an earlyish startup as an employee is just a bad value proposition across the board. Even if the startup will be successful, people are getting pitiful amounts of equity. I'm not sure that's very good for the industry, but maybe it's always been like this
- boulos 7y ago
  > how are you going to compete with companies that can compensate employees 2x what you can in fully liquid comp? In addition to lottery tickets, I would argue that for some people the answer is easier: purpose, people, and autonomy. At all of the bigger companies with the great, guaranteed pay, you are also one of many, quite likely a cog in a giant machine. By offering someone a real, visible impact on direction, outcomes, and even a purpose beyond steady (high) income, you can get some folks to join. Others will join just to be part of a small, hopefully excellent team or having autonomy. In a company of 5000, only 500 are in the top 10%, and you might work with very few. It's much easier for everyone to be good when you're a small team (I like the pg rowing analogy here).
  - cactus2093 7y ago
    The idea of having more purpose at startups sounds nice but really doesn’t add up to me. If you’re talking about the first employee at the company, even the first ~5 engineers, then yeah I buy it. The work is very different and there’s a lot of purpose while you are still pre product/market fit. But the problem is, if the startup is succeeding the work becomes similar to bigger tech companies pretty quickly - the PMs and designers are dictating exactly what to build, and as an engineer you show up and build that. If you were to leave, someone else could probably take over for you pretty easily. Even by like 5 or 10 engineers, the average engineer at a startup is already becoming a cog in the machine. But the startup is still a long way from being able to compete with FAANG on comp. Is it really worth sacrificing hundreds of thousands of dollars a year just to be a slightly different type of cog?
    - mahmoudimus 7y ago
      That's not accurate -- at least in startups that are on track to becoming successful. If you join a startup just to become a cog, do not join that startup. It does take about 6-9 months for an engineer to become impactful from a business sense. If you can wait out that time period, you should join and expect to have impact. If your ideas aren't valued and you're not getting the opportunity of ownership, then maybe you should leave to join another startup or go back to FAANG :)
  - opportune 7y ago
    Hmm, for me, unless I had an outsized position to gain from lots of autonomy, I would see that as a negative. Sounds like a lot of pressure to perform well without enough gain for it. Might as well just start my own company so I can have more upside.
- cactus2093 7y ago
  How much equity is enough to make sense though? Why is the current status quo not enough but 2x of it is? Ata series B startup, 2xing grants might mean typical equity compensation is worth $50k over 4 years instead of $25k (at the companies current valuation based on their last funding round, which seems like the only way you can really value it). The same engineer might be able to get a grant of $400k or more over 4 years at a FAANG company. It’s just hard to compete period, and there’s really just not enough equity to go around at a level that would be competitive. So I guess I come to a different conclusion than you, more equity to employees would be great and cover some of the gap but I think the only real solution is Bay Area startups need to start raising bigger rounds so they can pay market rate for the area, which is now set by the big companies and is insanely high as a result of the housing crisis. Or, don’t start a startup in the insanity that is California (or if you do, hire remote only).
  - balfirevic 7y ago
    > so they can pay market rate for the area, which is now set by the big companies and is insanely high as a result of the housing crisis. Are you saying that the scarcity of housing is the cause of big companies' high compensations?
    - cactus2093 7y ago
      Yes, it definitely is. There are obviously a lot of factors, and scarcity of engineering talent is a big one that makes it all possible. But the reason these numbers are so astronomically high, as in significantly higher than these same companies would pay the same engineer in another city, is because of housing prices due to the shortage.
ummonk 7y ago
Is it the VC status quo that is resulting in small equity grants? From what I've observed, it's mostly founders who skimp on equity grants, not so much VCs.
- novok 7y ago
  AFAIK A bunch of things founders would like to do often gets heavy push back from investors, which the founder giving the offer doesn't tell employees about.
- boulos 7y ago
  I believe so. First-time founders look to their investors for advice. For example, many VC firms have guidance on salary and equity ranges for hires based on where the company is (Series A, B, C, etc.). All the numbers are quite low. There's a straightforward argument: both founders and the investors really want the founders to have as much equity as possible to keep them engaged / dedicated / whatever. The founders out of personal interest ("I own 30% of this!") and the investors because it's perceived (perhaps correctly) that the moment the founder(s) pull back, the company is doomed. There's definitely a non-trivial premium that founders deserve, both for the increased work / pressure and reputational risk. But is it 10x greater? 100x? Many new hires get .25% in equity even early on, while a founder is unlikely to have less than 25% even post-Series-A financing unless there are several co-founders.

by boulos 7y ago

opportune 7y ago

I have not been in the software industry as long as other people on this site, but I think this is a pretty worrying trend, and eventually, founders are going to have to yield more equity to employees. If your startup involves technically challenging work that requires good engineers, how are you going to compete with companies that can compensate employees 2x what you can in fully liquid comp? The only way is through more equity. Of course cash-rich late stage startups can do that, and they can also convince people that there is a very good chance that equity will actually be worth something to employers. But early stage startups can't do that so easily. Right now, it seems like working for an earlyish startup as an employee is just a bad value proposition across the board. Even if the startup will be successful, people are getting pitiful amounts of equity. I'm not sure that's very good for the industry, but maybe it's always been like this

boulos 7y ago
> how are you going to compete with companies that can compensate employees 2x what you can in fully liquid comp? In addition to lottery tickets, I would argue that for some people the answer is easier: purpose, people, and autonomy. At all of the bigger companies with the great, guaranteed pay, you are also one of many, quite likely a cog in a giant machine. By offering someone a real, visible impact on direction, outcomes, and even a purpose beyond steady (high) income, you can get some folks to join. Others will join just to be part of a small, hopefully excellent team or having autonomy. In a company of 5000, only 500 are in the top 10%, and you might work with very few. It's much easier for everyone to be good when you're a small team (I like the pg rowing analogy here).
- cactus2093 7y ago
  The idea of having more purpose at startups sounds nice but really doesn’t add up to me. If you’re talking about the first employee at the company, even the first ~5 engineers, then yeah I buy it. The work is very different and there’s a lot of purpose while you are still pre product/market fit. But the problem is, if the startup is succeeding the work becomes similar to bigger tech companies pretty quickly - the PMs and designers are dictating exactly what to build, and as an engineer you show up and build that. If you were to leave, someone else could probably take over for you pretty easily. Even by like 5 or 10 engineers, the average engineer at a startup is already becoming a cog in the machine. But the startup is still a long way from being able to compete with FAANG on comp. Is it really worth sacrificing hundreds of thousands of dollars a year just to be a slightly different type of cog?
  - mahmoudimus 7y ago
    That's not accurate -- at least in startups that are on track to becoming successful. If you join a startup just to become a cog, do not join that startup. It does take about 6-9 months for an engineer to become impactful from a business sense. If you can wait out that time period, you should join and expect to have impact. If your ideas aren't valued and you're not getting the opportunity of ownership, then maybe you should leave to join another startup or go back to FAANG :)
- opportune 7y ago
  Hmm, for me, unless I had an outsized position to gain from lots of autonomy, I would see that as a negative. Sounds like a lot of pressure to perform well without enough gain for it. Might as well just start my own company so I can have more upside.
cactus2093 7y ago
How much equity is enough to make sense though? Why is the current status quo not enough but 2x of it is? Ata series B startup, 2xing grants might mean typical equity compensation is worth $50k over 4 years instead of $25k (at the companies current valuation based on their last funding round, which seems like the only way you can really value it). The same engineer might be able to get a grant of $400k or more over 4 years at a FAANG company. It’s just hard to compete period, and there’s really just not enough equity to go around at a level that would be competitive. So I guess I come to a different conclusion than you, more equity to employees would be great and cover some of the gap but I think the only real solution is Bay Area startups need to start raising bigger rounds so they can pay market rate for the area, which is now set by the big companies and is insanely high as a result of the housing crisis. Or, don’t start a startup in the insanity that is California (or if you do, hire remote only).
- balfirevic 7y ago
  > so they can pay market rate for the area, which is now set by the big companies and is insanely high as a result of the housing crisis. Are you saying that the scarcity of housing is the cause of big companies' high compensations?
  - cactus2093 7y ago
    Yes, it definitely is. There are obviously a lot of factors, and scarcity of engineering talent is a big one that makes it all possible. But the reason these numbers are so astronomically high, as in significantly higher than these same companies would pay the same engineer in another city, is because of housing prices due to the shortage.

ummonk 7y ago

Is it the VC status quo that is resulting in small equity grants? From what I've observed, it's mostly founders who skimp on equity grants, not so much VCs.

novok 7y ago
AFAIK A bunch of things founders would like to do often gets heavy push back from investors, which the founder giving the offer doesn't tell employees about.
boulos 7y ago
I believe so. First-time founders look to their investors for advice. For example, many VC firms have guidance on salary and equity ranges for hires based on where the company is (Series A, B, C, etc.). All the numbers are quite low. There's a straightforward argument: both founders and the investors really want the founders to have as much equity as possible to keep them engaged / dedicated / whatever. The founders out of personal interest ("I own 30% of this!") and the investors because it's perceived (perhaps correctly) that the moment the founder(s) pull back, the company is doomed. There's definitely a non-trivial premium that founders deserve, both for the increased work / pressure and reputational risk. But is it 10x greater? 100x? Many new hires get .25% in equity even early on, while a founder is unlikely to have less than 25% even post-Series-A financing unless there are several co-founders.