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The simple truth is that working for the equity of an unproven start-up is a gamble, and statistically unlikely to pay off. And sadly more and more start-ups ar

The simple truth is that working for the equity of an unproven start-up is a gamble, and statistically unlikely to pay off. And sadly more and more start-ups are undermining access to equity in shady ways. Not that one should never work for a start up on the hopes it breaks big, but we should also never forget that the successes are outliers, by a massive margin. Just understand the trade-offs of your decision and the probabilities involved with your decision.

thecleaner 7y ago
I mean this is really not talked about more frequently. At this point, with all the shady tactics that most startups now pull, it would appear that only an idiot would really want to be swindled this way. Furthermore, this is not something that will go away since with less IPOs actually being successful and a mature tech market, hoarding the most value you can from your company seems to be in vogue these days.
- dang 7y ago
  It's the leading response on HN to the topic, so I'd say it's talked about frequently.
- chaos_emergent 7y ago
  > Furthermore, this is not something that will go away since with less IPOs actually being successful and a mature tech market You’re implying that less successful IPOs mean less liquidity options for private company employees. That increasingly isn’t the case as private markets opens up to sales of startup equity. Success is no longer the same as an IPO and the number of companies that are becoming successful and the cumulative value in those companies are both increasing
stoicShell 7y ago
> statistically unlikely to pay off > probabilities involved with your decision While this is a good general approach to life IMHO as well — if you mean "be rational, not just emotional" and "work on your cognitive biases, seek objectivity" — it might also prove terribly counterproductive in this context. It would take a book or five but briefly: - you just can't use statistics when they say "95% fail", otherwise you just don't do startups, ever. With that mindset, joining an established company is more likely to "succeed" for you and maximize serenity. - another stat for you: most entrepreneurs fail "about twice" before making it, i.e. you'll probably fail 1-3 times for sure before entering the 5% of those who create a profitable business. Trick #1, thus: you can roll the dice several times (consider 2-5 years per "real try"). - most valuable ideas were either not identified (rarely) or not well executed (often) before someone eventually nails a product. You thus iterate quickly on the market (MVP, feedback, lean cycles, etc) to find your best fit curve, to hone in on the product that works. Chances are you'll find a local minimum, not "the best", you'll pivot, you'll reconsider, you'll maybe focus entirely on a subsystem, a 'feature' become 'product' — think how Docker, the company, appeared after the same name product. The reality is that a "fast scaling startup" a la California is rare and a moonshot most often — unicorns and all that — but a diligently conducted, ground, sustained effort to make a business growing organically to reach sustainability for you and a few others in 2-5 years is a realistic goal (but all things considered, e.g. probably not on your first try, likely 10 years after you began for the first time). I don't want to claim that it's easy to create a business, it's by far harder than working the jobs in most cases; but SMBs make up anywhere from 80 to 90% of our economies, they're the real bread and butter of our collective wealth, and these 'small' entrepreneurs are our true heroes. Not many of them make it big, and that's the 'gamble' you speak of, but it's not the only way, nor is it at all required to go down that path.
- senordevnyc 7y ago
  You just can't use statistics when they say "95% fail", otherwise you just don't do startups, ever. With that mindset, joining an established company is more likely to "succeed" for you and maximize serenity. Actually, you certainly can do that. Most people do. And depending on what you're optimizing for, it seems pretty rational to me. Another stat for you: most entrepreneurs fail "about twice" before making it, i.e. you'll probably fail 1-3 times for sure before entering the 5% of those who create a profitable business. Trick #1, thus: you can roll the dice several times (consider 2-5 years per "real try"). Yes, but that's for founders, not employees. If "success" here is defined as "made more in risk-adjusted income as early-stage startup employee than I would have made as big tech company employee", I doubt any early stage employees are "successful". Every failed startup you participate in (2-5 years of your life gone) adds to the opportunity cost "debt" you have to make up once one succeeds.
  - stoicShell 7y ago
    As I see it, if it comes down to such criteria to decide which path you'll take — i.e. you're in tech for the money — then it makes no sense to dabble in startups. Statistics clearly don't lie in this regard. What I meant however was a bit meta: those who are deeply cut for entrepreneurship and startups are not motivated by money first or even at all; they thus don't and shouldn't care about statistics aiming at maximizing personal benefit... to a founder, "personal benefit" is more about getting things done, creating the dream. They'd rather optimize for long-term success (the kind that's much harder to take away from you, that creates real value). Wealth, personal or collective, is but a consequence of a successful economic endeavor. As an employee, you'd choose to work for a startup because there's something in it that corporations money can't buy for you. There's no bet if you already believe in the work, you will get what you want every single day on the job. Different values, different goals, different rewards for different people I guess.
    - senordevnyc 7y ago
      those who are deeply cut for entrepreneurship and startups are not motivated by money first or even at all From working with many, many founders, this isn’t my experience at all.

thecleaner 7y ago

I mean this is really not talked about more frequently. At this point, with all the shady tactics that most startups now pull, it would appear that only an idiot would really want to be swindled this way. Furthermore, this is not something that will go away since with less IPOs actually being successful and a mature tech market, hoarding the most value you can from your company seems to be in vogue these days.

dang 7y ago
It's the leading response on HN to the topic, so I'd say it's talked about frequently.
chaos_emergent 7y ago
> Furthermore, this is not something that will go away since with less IPOs actually being successful and a mature tech market You’re implying that less successful IPOs mean less liquidity options for private company employees. That increasingly isn’t the case as private markets opens up to sales of startup equity. Success is no longer the same as an IPO and the number of companies that are becoming successful and the cumulative value in those companies are both increasing

stoicShell 7y ago

> statistically unlikely to pay off > probabilities involved with your decision While this is a good general approach to life IMHO as well — if you mean "be rational, not just emotional" and "work on your cognitive biases, seek objectivity" — it might also prove terribly counterproductive in this context. It would take a book or five but briefly: - you just can't use statistics when they say "95% fail", otherwise you just don't do startups, ever. With that mindset, joining an established company is more likely to "succeed" for you and maximize serenity. - another stat for you: most entrepreneurs fail "about twice" before making it, i.e. you'll probably fail 1-3 times for sure before entering the 5% of those who create a profitable business. Trick #1, thus: you can roll the dice several times (consider 2-5 years per "real try"). - most valuable ideas were either not identified (rarely) or not well executed (often) before someone eventually nails a product. You thus iterate quickly on the market (MVP, feedback, lean cycles, etc) to find your best fit curve, to hone in on the product that works. Chances are you'll find a local minimum, not "the best", you'll pivot, you'll reconsider, you'll maybe focus entirely on a subsystem, a 'feature' become 'product' — think how Docker, the company, appeared after the same name product. The reality is that a "fast scaling startup" a la California is rare and a moonshot most often — unicorns and all that — but a diligently conducted, ground, sustained effort to make a business growing organically to reach sustainability for you and a few others in 2-5 years is a realistic goal (but all things considered, e.g. probably not on your first try, likely 10 years after you began for the first time). I don't want to claim that it's easy to create a business, it's by far harder than working the jobs in most cases; but SMBs make up anywhere from 80 to 90% of our economies, they're the real bread and butter of our collective wealth, and these 'small' entrepreneurs are our true heroes. Not many of them make it big, and that's the 'gamble' you speak of, but it's not the only way, nor is it at all required to go down that path.

senordevnyc 7y ago
You just can't use statistics when they say "95% fail", otherwise you just don't do startups, ever. With that mindset, joining an established company is more likely to "succeed" for you and maximize serenity. Actually, you certainly can do that. Most people do. And depending on what you're optimizing for, it seems pretty rational to me. Another stat for you: most entrepreneurs fail "about twice" before making it, i.e. you'll probably fail 1-3 times for sure before entering the 5% of those who create a profitable business. Trick #1, thus: you can roll the dice several times (consider 2-5 years per "real try"). Yes, but that's for founders, not employees. If "success" here is defined as "made more in risk-adjusted income as early-stage startup employee than I would have made as big tech company employee", I doubt any early stage employees are "successful". Every failed startup you participate in (2-5 years of your life gone) adds to the opportunity cost "debt" you have to make up once one succeeds.
- stoicShell 7y ago
  As I see it, if it comes down to such criteria to decide which path you'll take — i.e. you're in tech for the money — then it makes no sense to dabble in startups. Statistics clearly don't lie in this regard. What I meant however was a bit meta: those who are deeply cut for entrepreneurship and startups are not motivated by money first or even at all; they thus don't and shouldn't care about statistics aiming at maximizing personal benefit... to a founder, "personal benefit" is more about getting things done, creating the dream. They'd rather optimize for long-term success (the kind that's much harder to take away from you, that creates real value). Wealth, personal or collective, is but a consequence of a successful economic endeavor. As an employee, you'd choose to work for a startup because there's something in it that corporations money can't buy for you. There's no bet if you already believe in the work, you will get what you want every single day on the job. Different values, different goals, different rewards for different people I guess.
  - senordevnyc 7y ago
    those who are deeply cut for entrepreneurship and startups are not motivated by money first or even at all From working with many, many founders, this isn’t my experience at all.