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For all the startup founders and VCs in this conversation, you are cheap motherf*ckers. When I read that engineers and employees prefer FAANG companies because

For all the startup founders and VCs in this conversation, you are cheap motherf*ckers. When I read that engineers and employees prefer FAANG companies because they pay better, I want to remind you that it wasn't always like this. 10-15 years ago startups paid way better than big tech. Big Tech rewarded you by getting to specialize on problems and working at scale. The reason FB and Google pay well is because when they were startups, they were paying WELL! Let me ask you all this, if you could make the same (or more) money working at a startup that you make working at a big tech company for 4 years, would you pick the startup? The answer should be based on what kind of working style and project you prefer, not finances.

paxys 7y ago
> The reason FB and Google pay well is because when they were startups, they were paying WELL 100% this. Most people didn't work at Google or Facebook back in the day in the hopes of winning the lottery. Those companies paid really well, had the best benefits, culture, and mostly they were working on a ton of challenging problems unlike most of the "giant tech companies" of the time.
partyboat1586 7y ago
This hits home. I worked at 3 different small startups in my career. The first two failed and I left the last one for finances. I started contracting because it pays better but it's sapping my soul. I loved each one of those startups. I loved the people, the creative freedom and even just the vibe of trust and determination in the office. I loved the parts closer to the end even more because of the thrill of being on the edge. I didn't mind liquidation because I have a good recruiter and I was always ready to get back on the horse. Now I contract out days for an agency. I estimate predefined tasks and then execute them. I talk nicely and calmly to clients who don't do me the same courtesy. I work only with the technology I have the most experience with and don't have opportunity to try new tech. But I have to pay my rent and I have to start putting money away to eventually get on the property ladder so working at a startup isn't really an option for me any more.
opportune 7y ago
Absolutely this. A lot of startups these days skimp by hiring sub-FAANG SWEs with less than 5 yoe, and it shows in their products. Lack of product maturity, bad engineering (worst horror story I’ve heard recently is Wayfair), resume driven development / over-engineering / cargo culting, huge teams to work on simple features. All so they can hire two middle-skill 22 year olds instead of a skilled 35 year old. If you’re able to work at FAANG it is just bad financial sense to work at most startups unless you want to play the lottery. If a place offered 40-50hr/week, $250k salary, 15% target bonus AND generous RSUs/options it would be able to compete with FAANG. But not a lot of places do that, and those that do are often the very bubbly ones with uncertain futures
- camelspade 7y ago
  Who/what is a “sub-FAANG SWE”? Are you suggesting software engineers who don’t work at one of the FAANG’s are subpar? Apologies if I’m misunderstanding.
  - CydeWeys 7y ago
    I think it's more referring to compensation. If you're only offering half the pay of some of the alternatives, you're simply not going to get a shot at most of the highest-skilled job seekers. They will, sensibly, tend to go work for the highest-paying employers. Free market for labor and all that.
    - camelspade 7y ago
      I guess I can see that (to a certain extent), thanks for offering your explanation.
    - jmondi 7y ago
      What about all the skilled software engineers that DON'T want to live in SF.
      - boring_twenties 7y ago
austenallred 7y ago
Google and FB were paying less when they were founded than most startups I see today, adjusted for inflation. The difference is that now Google and FB pay way more. More than startups could ever dream of competing with. Everyone I know at FB or Google is making $225k+, with the average/median being around $300k/yr. Absolutely no way new startups can play ball with those salaries, and FB/GOOG certainly weren’t paying that as they got off the ground.
- nullspace 7y ago
  > The difference is that now Google and FB pay way more. More than startups could ever dream of competing with. Logically speaking, the only way that a company can pay more and still be profitable is if they produce value more efficiently. On a general, macro level. So, if startup founders cannot even dream of providing either cash or equity (adjusted to risk) comparable to the big-techs, does this mean that startups are no longer the best way for society to become more productive? I only see if two ways (again at the macro level) a) Startups are better than BigTech for society economically: so make sure you hire the best-of-the-best, and give them high equity, and later compensation when you have more cash. b) BigTech is better than startups for society economically: here, the proof is in the pudding, better hires leads to more profits, so hire the best of the best, and just give them mountains of cash. I feel like we're seeing b) for the last 5 - 6 years.
  - Apocryphon 7y ago
    Could it be because BigTech, collectively, have created an oligopoly? Perhaps making it easier for startups to compete is another reason for antitrust.
    - nojvek 7y ago
      BigTech is insanely big right now. Basically advertising and cloud are humongous cash cows. It’s a good time to work for BigTech and build some safety net. But then again it’s only Google and FB that pay above the line. Microsoft and Amazon salaries, last I checked were pretty subpar.
KoftaBob 7y ago
Startups paying better than tech giants seems counter intuitive to me. The giants can pay high salaries because they're hugely profitable and don't need to worry about being hyper efficient to make the most of VC money. Startups on the other hand, are still weak on the profitability part, but have massive room for growth when it comes to valuation. Therefore, the equity they can offer has way more potential value than stock in a large company that's averaging 5% growth or something. I don't see how a founder of a startup would benefit much from cheaping out on salaries for employees. The vast majority of the payout for founders is company value increasing, not how much of the VC money they keep.
- codingslave 7y ago
  Founders are not even giving enough equity for employees to match the income they lose not working for big tech. Its common to still make less on equity + salary after a successful exit compared to the yearly total compensation at big tech.
  - KoftaBob 7y ago
    Fair point. However another selling point of working at a startup vs a big company is the impact you get to have on a product. Being able to say you were one of 5 people that built out a core feature of Uber in its early days is immensely valuable for career trajectory. Once a company is large, it's hard to have that level of impact until you're a director/vp/etc.
- sjg007 7y ago
  Google makes so much money that it makes sense to overpay? I mean that keeps people from leaving and starting their own thing that might be competition to Google. Plus give them the resources inside Google and they might build something there.
techslave 7y ago
> The reason FB and Google pay well is because when they were startups, they were paying WELL! they most decidedly were not. everyone there was taking $25k if not $50k pay cuts to be part of it.
Grimm1 7y ago
The average turnover is a little over 2 years at BigTechCo so half of the people never see that 4year total compensation.
- mavelikara 7y ago
  That _position_ pays that much over the 4 years, irrespective of how many different people filled those positions in those years.
- dlp211 7y ago
  I doubt this very much.
  - Grimm1 7y ago
    https://www.inc.com/business-insider/tech-companies-employee-turnover-average-tenure-silicon-valley.html https://www.inc.com/business-insider/tech-companies-employee... You'd be wrong.
throwaway3563 7y ago
Exactly. There get so many startup positions advertised, even here on HN, where the job description summarizes as “build our product from the ground up” and the offere salary is below par and the offered equity is an insultingly low number like 0.2%.
- chii 7y ago
  It's because the founders think too highly of themselves, and have the thought that since it's their "idea", they deserve the lion's share of equity. Do not ever work for a startup where the founder(s) have this sort of mentality.
alexandercrohde 7y ago
I think the problem is that startups don't offer enough equity. Google offers a couple hundred thousand PLUS options worth > 100k present value. If a startup wants to pay you enough to compensate, the options need to be worth > 100k present value (even if this means 1% of the company). Otherwise you'd be better off working for google and buying equity in the startup rather than breaking your back working there.
- skrebbel 7y ago
  > and buying equity in the startup Yeah, just go to Walmart and find the startup equity behind the underwear to your left.

paxys 7y ago

> The reason FB and Google pay well is because when they were startups, they were paying WELL 100% this. Most people didn't work at Google or Facebook back in the day in the hopes of winning the lottery. Those companies paid really well, had the best benefits, culture, and mostly they were working on a ton of challenging problems unlike most of the "giant tech companies" of the time.

partyboat1586 7y ago

This hits home. I worked at 3 different small startups in my career. The first two failed and I left the last one for finances. I started contracting because it pays better but it's sapping my soul. I loved each one of those startups. I loved the people, the creative freedom and even just the vibe of trust and determination in the office. I loved the parts closer to the end even more because of the thrill of being on the edge. I didn't mind liquidation because I have a good recruiter and I was always ready to get back on the horse. Now I contract out days for an agency. I estimate predefined tasks and then execute them. I talk nicely and calmly to clients who don't do me the same courtesy. I work only with the technology I have the most experience with and don't have opportunity to try new tech. But I have to pay my rent and I have to start putting money away to eventually get on the property ladder so working at a startup isn't really an option for me any more.

opportune 7y ago

Absolutely this. A lot of startups these days skimp by hiring sub-FAANG SWEs with less than 5 yoe, and it shows in their products. Lack of product maturity, bad engineering (worst horror story I’ve heard recently is Wayfair), resume driven development / over-engineering / cargo culting, huge teams to work on simple features. All so they can hire two middle-skill 22 year olds instead of a skilled 35 year old. If you’re able to work at FAANG it is just bad financial sense to work at most startups unless you want to play the lottery. If a place offered 40-50hr/week, $250k salary, 15% target bonus AND generous RSUs/options it would be able to compete with FAANG. But not a lot of places do that, and those that do are often the very bubbly ones with uncertain futures

camelspade 7y ago
Who/what is a “sub-FAANG SWE”? Are you suggesting software engineers who don’t work at one of the FAANG’s are subpar? Apologies if I’m misunderstanding.
- CydeWeys 7y ago
  I think it's more referring to compensation. If you're only offering half the pay of some of the alternatives, you're simply not going to get a shot at most of the highest-skilled job seekers. They will, sensibly, tend to go work for the highest-paying employers. Free market for labor and all that.
  - camelspade 7y ago
    I guess I can see that (to a certain extent), thanks for offering your explanation.
  - jmondi 7y ago
    What about all the skilled software engineers that DON'T want to live in SF.
    - boring_twenties 7y ago

austenallred 7y ago

Google and FB were paying less when they were founded than most startups I see today, adjusted for inflation. The difference is that now Google and FB pay way more. More than startups could ever dream of competing with. Everyone I know at FB or Google is making $225k+, with the average/median being around $300k/yr. Absolutely no way new startups can play ball with those salaries, and FB/GOOG certainly weren’t paying that as they got off the ground.

nullspace 7y ago
> The difference is that now Google and FB pay way more. More than startups could ever dream of competing with. Logically speaking, the only way that a company can pay more and still be profitable is if they produce value more efficiently. On a general, macro level. So, if startup founders cannot even dream of providing either cash or equity (adjusted to risk) comparable to the big-techs, does this mean that startups are no longer the best way for society to become more productive? I only see if two ways (again at the macro level) a) Startups are better than BigTech for society economically: so make sure you hire the best-of-the-best, and give them high equity, and later compensation when you have more cash. b) BigTech is better than startups for society economically: here, the proof is in the pudding, better hires leads to more profits, so hire the best of the best, and just give them mountains of cash. I feel like we're seeing b) for the last 5 - 6 years.
- Apocryphon 7y ago
  Could it be because BigTech, collectively, have created an oligopoly? Perhaps making it easier for startups to compete is another reason for antitrust.
  - nojvek 7y ago
    BigTech is insanely big right now. Basically advertising and cloud are humongous cash cows. It’s a good time to work for BigTech and build some safety net. But then again it’s only Google and FB that pay above the line. Microsoft and Amazon salaries, last I checked were pretty subpar.

KoftaBob 7y ago

Startups paying better than tech giants seems counter intuitive to me. The giants can pay high salaries because they're hugely profitable and don't need to worry about being hyper efficient to make the most of VC money. Startups on the other hand, are still weak on the profitability part, but have massive room for growth when it comes to valuation. Therefore, the equity they can offer has way more potential value than stock in a large company that's averaging 5% growth or something. I don't see how a founder of a startup would benefit much from cheaping out on salaries for employees. The vast majority of the payout for founders is company value increasing, not how much of the VC money they keep.

codingslave 7y ago
Founders are not even giving enough equity for employees to match the income they lose not working for big tech. Its common to still make less on equity + salary after a successful exit compared to the yearly total compensation at big tech.
- KoftaBob 7y ago
  Fair point. However another selling point of working at a startup vs a big company is the impact you get to have on a product. Being able to say you were one of 5 people that built out a core feature of Uber in its early days is immensely valuable for career trajectory. Once a company is large, it's hard to have that level of impact until you're a director/vp/etc.
sjg007 7y ago
Google makes so much money that it makes sense to overpay? I mean that keeps people from leaving and starting their own thing that might be competition to Google. Plus give them the resources inside Google and they might build something there.

techslave 7y ago

> The reason FB and Google pay well is because when they were startups, they were paying WELL! they most decidedly were not. everyone there was taking $25k if not $50k pay cuts to be part of it.

Grimm1 7y ago

The average turnover is a little over 2 years at BigTechCo so half of the people never see that 4year total compensation.

mavelikara 7y ago
That _position_ pays that much over the 4 years, irrespective of how many different people filled those positions in those years.
dlp211 7y ago
I doubt this very much.
- Grimm1 7y ago
  https://www.inc.com/business-insider/tech-companies-employee-turnover-average-tenure-silicon-valley.html https://www.inc.com/business-insider/tech-companies-employee... You'd be wrong.

throwaway3563 7y ago

Exactly. There get so many startup positions advertised, even here on HN, where the job description summarizes as “build our product from the ground up” and the offere salary is below par and the offered equity is an insultingly low number like 0.2%.

chii 7y ago
It's because the founders think too highly of themselves, and have the thought that since it's their "idea", they deserve the lion's share of equity. Do not ever work for a startup where the founder(s) have this sort of mentality.

alexandercrohde 7y ago

I think the problem is that startups don't offer enough equity. Google offers a couple hundred thousand PLUS options worth > 100k present value. If a startup wants to pay you enough to compensate, the options need to be worth > 100k present value (even if this means 1% of the company). Otherwise you'd be better off working for google and buying equity in the startup rather than breaking your back working there.

skrebbel 7y ago
> and buying equity in the startup Yeah, just go to Walmart and find the startup equity behind the underwear to your left.