17 ms·

Working for a startup makes less sense

• ec109685 7y ago
  > The two things I really like about working for smaller places or starting a company is you get very direct access to users and customers and their problems I don’t understand this at all. Big companies have lots of individual projects, where engineers get direct access to customers. At my big co, we all watch every App Store review come in, conduct thousands of interviews with customers and have a direct say on what gets built.
• buboard 7y ago
  There were a few recent Ask HNs on the subject: https://news.ycombinator.com/item?id=21709724 https://news.ycombinator.com/item?id=21709724 https://news.ycombinator.com/item?id=21641864 https://news.ycombinator.com/item?id=21641864 https://news.ycombinator.com/item?id=21645117 https://news.ycombinator.com/item?id=21645117 a larger question is : why can't startups make money
  • Enginerrrd 7y ago
    For a lot of them that's just not the primary goal. Honestly, I expect the next big success stories to break from this pattern of the silicon valley sickness of trying to grow a company at all costs by conning VC firms until they've got enough users and then sell the company or get another round of funding to try and figure out the whole "revenue" thing later. I think some old school thinking of more organic growth of a good idea with immediate revenue will see a resurgence.
• willbw 7y ago
  While I understand your sentiment, there is a 2015 Dan Luu article which goes into far more depth saying basically the same thing: https://danluu.com/startup-tradeoffs/ https://danluu.com/startup-tradeoffs/ I can see you just started writing on this blog so I don't want to discourage you, but I was struck by the formatting of your notes page and this post being so similar to Dan's along with the topic and content of this post. Keep writing but I would maybe suggest something with more of an original spin.
  • deleted 7y ago
    [deleted]
  • seattle_spring 7y ago
    It wasn't mentioned specifically, but I assume this post was written as a general response to "Working for Microsoft cost me $200 million" [1], which has been at the top of HN for most of the day. [1] https://blog.garrytan.com/working-for-microsoft-cost-me-200-dollars-million https://blog.garrytan.com/working-for-microsoft-cost-me-200-...
  • zainamro 7y ago
    Thanks for the comment - this was more in response to the recent article as mentioned by seattle_spring but thanks for sharing Dan’s writing, will take a read. In terms of the similar design, I actually optimized for the least amount of HTML / CSS necessary to put readable text on a page, I guess resulting in a similar look.
  • sayrer 7y ago
    I've always thought this problem to be overstated. It doesn't make financial sense to work for a startup, but the upside is that you get to work on something you care about (and even the startup salaries aren't that bad in the grand scheme).
    • amznthrowaway5 7y ago
      > the upside is that you get to work on something you care about As a counter example, I found this is far more true at big companies, where you can switch teams until you find one that fits your interest, then at a startup where you are expected to work on basic infra that the company doesn't handle. For the data/ML related jobs that I was looking for and the industry is moving towards, big companies have tons of valuable data that startups could only dream of acquiring.
      • sayrer 7y ago
        I like the Elad Gil take on this issue: at big companies, you can have more /impact/, for the reasons you state. At small companies, you have more control. That's in the high-growth handbook. :)
• seattle_spring 7y ago
  > Equity agreements should not be intentionally confusing or designed to screw over employees. Totally agree with this. Unfortunately I think there might be about 5 startups left if this idea were widely implemented.
  • alasdair_ 7y ago
    There are a bunch of things that “good” startups can do (and ARE doing in my experience) to make early stage equity worth it. For example, instead of a 90 day limit after leaving the company to choose to exercise options, many good startups are now offering ten years.
  • fortran77 7y ago
    Your odds of making money are much better with a young-ish but publicly traded company than with a startup. Even if a startup is successful, you won't see much money unless you were one of the founders or early investors. There's a million ways the stock options that early employees get can be made worthless (or worth-little).
    • vandyswa 7y ago
      I have BEEN one of the founders, and still didn't make any money off the ultimate sale. There are far too many games with share classes, VC-funded bridge loans, and preferred investor incentives. The only way to win is to not play the game.
  • TuringNYC 7y ago
    >> Equity agreements should not be intentionally confusing or designed to screw over employees. You should feel lucky if confusing is the problem. I think the bigger problem usually is -- you often cant see the cap table. If you cant see the cap table and the preferred overhang, there is no way to realistically understand where you stand in the scheme of things. Confusing can be overcome with some search, but "opaque" cannot be.
  • hinkley 7y ago
    There’s a fine line between bravery and stupidity. I can say as someone older than they were at the time that there was an element of wishful thinking about many of the founders I worked with, and even more so for some that I met in passing. Charismatic people who are deluding themselves just bring others along for the ride. They may not even know they’re being dishonest. People who have a way with words can be sucked in by their own words just as much as others can.
• rev0lutions 7y ago
  I love how the article ranked right above this one is titled "Downsides to working at a tech giant".
  • JKCalhoun 7y ago
    LOL, I noticed as well. As I was reading "Downsides to working at a tech giant" it occurred to me that the alternative to working for a tech giant is not necessarily a start-up: I would probably work for myself — freelance. So, in fact the two articles can both be right. ;-)
    • AnimalMuppet 7y ago
      You can also work in tech, for a company, but for something that is neither a giant nor a startup. There's plenty of such jobs out there. In fact, the majority of tech jobs probably fit that category
    • ConsiderCrying 7y ago
      They can be right even if your two options are either a startup or a tech giant. They have their downsides as does every job, even freelance. I like being freelance but getting the motivation in those first couple of weeks was pretty hard. I also found it tougher to sell my services because I never really had to do it before. Probably some other stuff I can't think of off the top of my head? I don't think any type of work is perfect although I'd go for freelance any day of the week.
  • jonny_eh 7y ago
    Written by a VC trying to get engineers to join the startups he's invested in.
    • eanzenberg 7y ago
      For a VC, scraping off net innovation minus startup-wages is a win. It's a lose for the employees, of course.
• kazinator 7y ago
  Working for a startup makes sense if you think it has good odds of making it, and you are in for a share of it.
  • IBCNU 7y ago
    Also - outside of the bay (I live in Chicago) you actually make more money working for a startup (at least I do) than for a larger company (as a senior engineer with a lot of early stage experience). I think it might be the nature of the market here.
• seibelj 7y ago
  There is a lot of capital out there, what needs to happen is the number of startups shrink and the well funded ones pay more money - even more than google or FB pay. Simple as that! If you are sad that you can’t get a professional team on a $1mil seed, I have absolutely no empathy for you because I’m an employee and this is the free market. Now, if you really want to make it more enticing, some things that would move the needle for me other than comparable salaries (although more cash is #1): - Larger equity that automatically ups if it will be diluted, and the moment any shares vest I can sell them in the private market. - Transparent cap table. - If the founders take cash off the table, I can as well, and no preference for founders. - 10 years after leaving to exercise my shares. I don’t want to have a 3 month trigger that handcuffs me to prevent a giant cap gains bill on “paper money” when the fair market value is way higher. - Reasonable working hours. - Flexible work from home policy. But overall, go raise more and start offering more cash, because I assume 95% of startups are total failures.
• guelo 7y ago
  It's VCs' and founders' fault for always diluting employees on the big exits. If they want to gain back trust we need iron-clad poison-pill provisions that prevent employees from getting screwed out of their equity.
• aeternum 7y ago
  Yes you will probably make more at an established company, but your rate of growth can be much higher at a startup. I worked at a large tech company for 3 years before joining a startup, and learned more in the first month at the startup than the full 3 years at the large tech company. I was able to design and implement a service in a matter of days, whereas at the large tech company those 3 days would easily spent convincing people that the service is needed in the first place. Direct exposure to customers also is really interesting and changes you as an engineer. It's definitely a no guardrail environment, in the early days we had a bug that directly cost us a large customer pilot. No better teacher than experience, we did not make that mistake twice.
  • yoz-y 7y ago
    I've had kind of the opposite experience. At the startup we were really sluggish it was hard to learn anything because we were jumping into any possible business opportunity before even thinking about ROI because money was always tight. 80% of the time was wasted supporting clients and fixing bugs that were due to the fact that the product was shipped too early. I think the biggest difference is money. A well funded startup might be a boon but a struggling one will be a bane.
    • garry 7y ago
      There are lots of startups that aren't doing it right. The best thing someone working at one of those startups can do is probably quit and go someplace else. I think systemically one thing we need to do is help people make better decisions about where they spend their time. Especially for people who are good builders, they happen to also be the best people who can decide for themselves whether something is actually going to work.
    • neltnerb 7y ago
      The difference is whether you see learning to do meaningful things on a shoestring budget to be itself a useful skill. Boeing won't care if you save the project $5k by spending a week of your time coming up with a clever workaround. The week was more important than the $5k. Same for a high level role generally. But not getting work done for a week because your boss won't approve a $500 purchase... that would be frustrating and get old fast.
• jorblumesea 7y ago
  You can be compensated in other ways, but often I've found much of the work at startups can be no more interesting than their Big N counterparts. It might not even be faster paced. Your career growth might also be similar. In theory, for startups, you sacrifice pay for other facets. The reality is quite different. The work might be similar but you're paid 50-75% of your peers. That was my experience in startup land, at least. Few good challenges or career growth and half of what I felt like I was worth. Completely personal anecdote, but I felt I was sold some half truth, where I was promised career growth, interesting problems and flexibility, but got nothing that I couldn't have found at many Big N companies.
• chipuni 7y ago
  The tricks that companies have used to dilute engineers' equity and to have different classes of stock are coming back to bite those companies.
  • jedberg 7y ago
    To be fair it’s mostly been the VCs learning how to extract more value and forcing that on the companies. The VCs have naturally gotten better at what they do, which is bring returns to their LPs. The consequence is that they get more value from exits than they used to which comes at the expense of the employees and founders.
    • Infinitesimus 7y ago
      The founders agree to those terms though
      • jedberg 7y ago
        They don’t really have a choice if they want funding. Also that’s why the terms are usually good for founders and it employees.
• outime 7y ago
  It’s worth mentioning that this post is focused on USA and (unsurprisingly) highlights Bay Area. I’m sure the points exposed apply there but there are many other places in the USA and the rest of the world where this doesn’t apply and you can find good talent without needing to offer an exorbitant paycheck.
• mrkmcknz 7y ago
  Frequently in the UK I'm seeing options that are clawed back if you leave the company at any point. EMI options that can only be exercised under certain conditions such as an exit.
• gfodor 7y ago
  I've been out of startups for a few years now, but it always struck me that there is plenty of room in the cap table for employees, if founders and VCs realize they have to cut back. If founders and VCs gave a third to half of their companies to employees, instead of crushingly small option pools, this math would almost certainly shift. And the returns wouldn't be much worse for founders or VCs.
  • paulmendoza 7y ago
    The reason they don’t is because they already gave 50% to the investors. And it isn’t uncommon for companies with $30M or $1B exits for the founders to get nothing. I heard about a company recently where the company sold for $40M and the founders only owned 4% after years of raises. I doubt the founders got anything. Most of the time these companies are having trouble scaling sales.
    • gfodor 7y ago
      That’s why I included investors. One could imagine a regime change where, given the market for talent, both founders and investors realize the need to carve out more for hiring equity, and value companies accordingly, especially in the BS early rounds where it’s not based upon any real financial metrics.
• bilekas 7y ago
  Use your brain, when offered a role, do you like the product ? Do you believe in it ? Are they paying you a nice amount of money ? If you can only answer 1/3 please continue to the purgatory state.
• jacquesm 7y ago
  Captable slots for early employees range anywhere from 5 to 40% (collectively, not individually), depending on who the partners are and what the company does it might make sense to join a start-up. But it's better to be a founder and if you are risk averse then it is better to work for a big company with long term viability. This definitely isn't one size fits all and there are a lot of people that will happily try to sell you on their version of the story because 'it worked for them'.
• csa 7y ago
  I think the questions/issues around this topic don’t really make sense: A. Why are we comparing an employee situation at a FAANG company with what should be a co-founder situation? If someone is an engineer that can make something happen at a startup, they should probably be a co-founder rather than an employee. B. Why are tech center startups trying to hire coders of a certain skill level that will be incredibly expensive due to local competition? If a startup is looking for skilled coders to implement the vision of the co-founding engineers that can make things happen, then there are plenty of remote coders in non-tech-center areas that will do a bang up job for a reasonable price. Note that many of these remote coders don’t want to or cannot come to a tech center. I assume that this is an issue because many/most startups are not good at hiring, on-boarding, managing people, managing remote workers, etc. C. Related to issue B, why play the micro-equity game with coders at all when they should either be co-founders or they (as remote workers) can be paid a satisfactory wage without equity bait? D. Why is this conversation comparing a job with (relatively speaking) a lot of hierarchy and politics at a FAANG with a job that should have a flat structure and a great deal of autonomy? These jobs cater to two different groups of people — the ones who like the former probably won’t like the latter, and the opposite is true as well. There are subtle sides to this (e.g., do your time at a FAANG to develop a network), but many people who succeed at startups are not folks you want working at a large company — they will go nuts, and they will drive the people around them crazy. This whole conversation is bizarre to me. I think there are three relatively simple choices: 1. Take a company job if you’re a company person — that is, someone who likes structure and hierarchy. It might not be trendy to admit it, but many/most elite school grads fall into this category. 2. If you prefer things like autonomy, being close to the customer, and being a generalist, then go to a startup. Plan on leaving once it hits a certain size. 3. If you have a plan for an alternate path that includes both, then go for it — specialist work at FAANG, FAANG then startup founder, startup employee then startup founder, etc. Just know what you’re getting into, because it can be awfully tough to walk away from $300k annual comp as a 25 yo. Most people I’ve known clearly fall into one of these categories barring some sort of life-changing event.
• Thorentis 7y ago
  I think another reason that people are wary of joining start ups, is they've realised that: a) The market is now incredibly saturated, and being an early equity owner in a start up that will be worth billions is very rare now. Gone are the days of a unicorn every month or two. b) People have noticed the trend of FAANG companies buying up start ups, and that this is the goal of many (most?) start ups today. Reach critical mass, get a good valuation and customer reviews, get bought out by tech giant. If you want to work on the most viable new products, just join a tech giant and work on one of the projects they've acquired. (Or wait till the company is bought and join them if they are still independantly run at which point they're not really a start up anymore)
  • kareemm 7y ago
    > Gone are the days of a unicorn every month or two. My friend, I've been building software professionally for big companies and small since 2001. There were never days where there was a unicorn every month or two.
    • Thorentis 7y ago
      I didn't mean that a company became a unicorn every month or two, but it seemed that companies were founded quite frequently that later went on to become unicorns.
  • deleted 7y ago
    [deleted]
• scarmig 7y ago
  1) People say you learn a lot more in a startup than in a BigTechCo. I don't think this is true: I've gotten far more skills during BigTechCo stints than at startups. YMMV. 2) A new grad at a startup gets, what, $100k in salary and some equity? If we're talking a three year stint at a startup, you're effectively asking a worker to invest ~$500k in exchange for that hypothetical equity. In the broadest strokes (obviously everything depends on the deal), what kind of equity does an angel get for half a million dollars, and how does it compare to the amount of equity the new grad gets? And it bears pointing out that that new grad equity is subject to all kinds of games and deception. Of course, the usual response is "you just have to be smart enough not to be scammed!" Perhaps, but I know tons of people (including myself) who are apparently just too dumb not to be scammed but are still smart enough to be gainfully employed at a safe job.
  • ravedave5 7y ago
    I've worked with startup employees who knew 15 technologies - all of them poorly. They had zero best practices because it was go fast 24/7. It was guys right out of school thrown right into the mix so they didn't get the guidance of more senior devs.
    • mghfreud 7y ago
      I just made a move to a small (~1000 people company) from Google and I feel you. The code quality is terrible, they do not write maintainable/modular code and worse, they do not do design. They suffer from this(there is always another corner case that they did not take into account because they did not communicate well with the customer) but they still do not take any steps towards the right direction.
      • chris_t_98 7y ago
        What sector is the small company? Why did you decide to move there from google?
        • mghfreud 7y ago
• lpolovets 7y ago
  My experience: engineering at Startup #1 for 2 years, then Google for 3 years, then Startup #2 for 4 years, and now I've been working with seed stage companies as a VC for the last 7 years. The amount I earned as an engineer was highest at Startup #1 (got lucky!), significantly lower at Google, and a little lower than that at Startup #2. Startup #2 is still chugging along, which could eventually make it on par with or a little superior to working at Google. But money isn't everything. Startup #2 was the place where I learned the most. I was senior enough to be single-handedly responsible for large projects like a distributed search engine and a logging and analytics service. Sure, my search engine was a POS compared to Google's, but at Google I would've worked on a part of a feature of a component of the search engine whereas at a startup I got to build the whole thing from scratch. I'm almost 40 now, and that search engine is still by far the most fun and educational engineering project I've ever worked on. Aside from learning potential and financial comp, there are other factors like team camaraderie, independence, etc. I keep in touch with way more people from the two small startups than I do with Google colleagues. Google had a good culture, but the startups were much tighter knit. Finally, I think articles advocating for startups vs. big companies are a little like trying to convert someone to atheism or Christianity with a blog post. It doesn't really work that way. Some people are wired for startups: they love them and spend their careers at small companies and don't understand why big companies are attractive. Other people are more drawn to big companies where the company itself has a huge impact, the teams are well-staffed and have lots of resources, and the employees get higher salaries and lots of other benefits. When these people try working at a startup, they often hate it and quickly go back to another large company. Neither big nor small companies are objectively the best, but if you factor in personal happiness then often one type of company is the best for you.
  • DrAwdeOccarim 7y ago
    I've noticed the same thing in biotech startups. Some people are meant to be part of smaller, bootstrapping companies and others are meant to be part of more established, good business corporations. The most interesting people are the ones who get in early and stick with it, growing along with the company.
    • 7y ago
• jedberg 7y ago
  My career path has been startup, public tech, startup, public tech, startup. I got lucky that the public techs both had the largest stock growth in their history while I worked there. All the money I ever made was at the public companies. I also learned a lot of cool, very specialized skills and got to do a lot of “ohhh so cool” type stuff. Almost all of the knowledge I learned that allowed me to be successful at the big companies I learned at the startups, and most of the friends I made at work that I still talk to were at startups. Both environments offer something unique. I usually tell young people to start at a big company with a well known mentorship program and then quickly move to a startup to learn a bunch of practical skills. But YMMV.
• groby_b 7y ago
  I have a very straightforward suggestion for startups: Focus on the engineers who've put in a decade or more at the big companies. They are, given the exorbitant salaries, financially set enough to afford the startup risk, and there's a good chance they'd like to see some more agility again. But 1) you'll need to stop lowballing equity for hires, and 2) you need to get used to the idea that it's not going to be an extension of university life - these people have all better things in their spare time than playing beer pong. Bonus points: Offer an office instead of cubicle mania. Bonus bonus points: Make sure you hire a diverse workforce from the get-go.
• Answerawake 7y ago
  "To make the situation worse, the very good engineers, the ones who could truly help build a tech company from the ground up from day 1, were getting offers so exorbitant they could not possibly fathom to turn them down." Ok I have seen this written every now and then. What does this person look like and how do I become one given a willing to sacrifice everything else? I can not find a good answer to this question. Everybody seems to have their own opinion.
  • rmah 7y ago
    First, be smart. Very very smart. And be able to demonstrate your smartness at the drop of a hat under stressful conditions. Second, attend a top tier "name" university like MIT, Stanford or Carnegie Mellon and major in a related discipline. Third, do some side work in your chosen field that can be shown off to prospective employers. Fourth, learn how to present yourself well (for interviews and such). That's generally speaking, of course. Exceptions exist.
    • senordevnyc 7y ago
      Eh, I really don’t think this is representative. I’m a self-taught iOS dev who has only ever been self-employed and I just got a $420k / job from a public company. And I’m smart, but not some unfathomable genius. I think every engineer should at least do some mock interviews on data structures, algos, and system design (there are TONS) of free study resources and then do a round of interviews. You only need one yes.
      • savrajsingh 7y ago
        Congrats dude! All salary or salary and equity?
        • senordevnyc 7y ago
          $220k cash, $200k equity (or whatever it’s worth in 12 months!)
• avl999 7y ago
  It has always been mindboggling to me that startups are still so all in on the Bay Area. Most problems mentioned in the article go away if/when you are willing to staff developers in an area that is not as ridiculous in terms of cost of living as the Bay area. According to StackExchange data, the 50th percentile pay for a Full Stack Developer with a Bachelors degree and 3 years experience (a profile that would seem reasonable for a startup hire) in the Bay area is $140k, whereas in the St Louis and Minneapolis it is $89k. Not sure why for many startups Bay area seems to be the only option. If they staffed their developers in a place like St Louis they'd be able to avoid the SF salaries and still pay in the 75th percentile for the market and the developers would have more purchasing power making $115k in the midwest or Raleigh than they do in the bay area making $145k.
  • harimau777 7y ago
    From the perspective of a potential employee, taking a job in a lower paid part of the country seems like a bad idea. You would generally be giving up some quality of life and neither debt nor savings care about cost of living. Although maybe it would work if some of the second tier cities agreed to pay off the debt and contribute to the savings of people that agree to work there.
  • hibikir 7y ago
    Being a developer in St. Louis, the median developer that makes 85k here is not really the kind you’d find at a good Bay Area company. When you look for the good ones, they often have competing remote offers with salaries not that different from the bay: The biggest difference is that nobody gives real, useful, valuable RSUs the way FAANG does. Barring one of those jobs, the trade off is pretty appealing for developers. The problem for a startup here is money and customers. There is some local money, but in practice, you will be raising from firms in SF or Boston. To do that well, you will be sending a founder on trips a high percentage of their time: Our CEO was out 50 percent of the time this year. It’s OK with three founders or a small team already, but the seed stage is very rough, especially for a solo founder. There is also the matter of customers. If you are doing B2B for startups, or straight sales to developers, the market isn’t here. Consumer? Any physical bits are not going to grow the fastest here. Do you want to start selling to large masses of people with little time and loss of disposable income? Not the best test market. So you better be doing something that is better done from here. An agriculture startup, with farms across the river, for instance. Still, it will be rare for this to be your ideal location there. Still, I wish for more startups here, but the negatives are very visible, and we have very few success stories that tell people it’s worth trying.
• senordevnyc 7y ago
  Strongly agree with this. I just did about seven weeks of interviewing in NYC for senior iOS roles, at both startups and big tech companies. To be frank, it was a total shitshow. Especially on the startup side. Here’s some of the bullshit I faced interviewing at early stage companies before accepting an offer literally 2.5x as high as the (multiple) offers that startups made. 1. Shitty equity: one startup wanted me to be engineer #7 and completely own the mobile app and strategy, which is the single point of interaction for their customers. They offered me 0.1% and spun some story about how much it would be worth when they were worth $800mm. Their last valuation was about $35mm. Even if their numbers were real, I’d still make more at a big tech company in equity alone. They also made it clear they wouldn’t budge. 2. Bad work/life balance: the big tech company where I accepted apparently has no issue with people taking off whatever time they need (avg is about 25 days per year), working normal 40 hour weeks, and working from home if needed. By contrast, the startups felt way more restrictive here. 3. Terrible interview process: almost all these startups had pretty disorganized process. Worse: they did the standard whiteboard algorithms interviews, whereas multiple bigger tech companies had more iOS-specific interview loops. Even worse, the startups tended to have a higher bar for hiring than the bigger tech companies. This one is subjective and could be random or misperception on my part too. 4. Most infuriating of all, all of these startups (except coinbase) had a 60-90 day option exercise window for employees who left before a liquidity window. Let me be clear: fuck you if you think this is fair. IPO might be 7-10 years out and if I stay and add value for anything short of that, you’re going to ask me to take a huge risk to exercise my options (and pay the taxes) on your probably worthless stock, otherwise you’ll just keep it? Fuck you. The entire thing left a bad taste in my mouth. It’s pretty clear that these founders and investors don’t give much of a fuck about their talent, and watching them get squeezed by big tech companies offering sky high comp fills me with glee. Be a founder, investor, or big co employee. Fuck being an employee for a startup so they can bleed you dry.
  • v1l 7y ago
    Is there any way I can contact you? My email is in my profile. I'm working on something to make the interview process and the offer piece a lot more transparent. I've been part of terrible interview/offer loops too, and the problem aggravates me to no end. I'd love to speak with you.
• Myrmornis 7y ago
  It seems to me that most companies start to gain a tedious/conventional/corporate atmosphere once they get to more than, I don't know exactly, somewhere in 100-400 employees. At that point the company has acquired, in addition to those who care purely about building companies and building software and building hardware and physical processes, a middle layer of conventional auxiliary staff, and nice though everybody may be, the company just becomes a standard corporate office environment. Many people (especially those who have enjoyed academic environments) strongly don't like such atmospheres, and for those many people this is a pretty strong incentive to work at small companies.
• Aeolun 7y ago
  How about you just start giving your first engineers a bit more equity?
• robsinatra 7y ago
  Dunning and Kruger explained how people drastically overestimate their value. The author won't be earning what he thinks he deserves, isn't working on projects he thinks he deserves, and doesn't get the promotions he thinks he deserves wherever he goes. His reality may never change for him and that's his cross to carry.
• youeseh 7y ago
  I've said this before and I'll say it again. Never accept a lower salary in exchange for equity. Salary is your market rate for providing labor. Equity is what you get for taking on the risk of being out of a job sooner than later. So with that in mind, if the equity and bonuses in BigTechCo are a sure deal, then it may be worth negotiating for more when you join a startup. Don't sell yourself short.
• guimonz 7y ago
  The problem is getting paid in common stock. A pay cut is money that, instead of making, the employee is investing in the early-stage startup. That's no different than the money the investor is putting in. Employees should get preferred stock in the amount of their pay cut.
• Apocryphon 7y ago
  Sounds like wealth inequality doesn't just affect private individuals- it's affecting corporations themselves!
• EGreg 7y ago
  My main question is how do you attract developers to join your open source project? Wordpress and RoR and all those other projects? Instead of startups I want to attract people to a project to change the world just like the OP is saying. But where to find the first few developers who would do it not for the money?
• account73466 7y ago
  I feel like it is hard for people to say what they truly love before they have at least $1M in their bank account. If you have FU money, your view on working at a FAANG vs building a startup can change. You will find it easier to know what you truly LOVE.
  • deleted 7y ago
    [deleted]
  • pickdenis 7y ago
    > I feel like it is hard for people to say what they truly love before they have at least $1M in their bank account. [edited to protect your feelings] Are you saying that simple introspection is hard? I completely disagree, because separating extrinsic motivation (I do this for money) from intrinsic motivation (I do this for fun) really isn't that hard.
    • account73466 7y ago
      Instead of being rude, you could try to formulate your point without attacking a straw man.
      • pickdenis 7y ago
        What you're saying basically amounts to "people are blinded to what they love by their need for financial security". This may be true on some level, but anyone can see through it with a modicum of introspection. Or am I giving the average person too much credit?
        • s1artibartfast 7y ago
          I'm not the original commenter, but I think you are vastly oversimplifying the situation. Most jobs are not black and white in one category or the other. There are people who will never be completely happy with any job, and there are local maxima, where one might not reasonably expect a better fit to exist. >Or am I giving the average person too much credit? Another consideration is that this is an irrelevant question for your average person, or even 99.9% of the population.
• librish 7y ago
  It seems like start-ups could catch up, at least somewhat, by offering more stock. Right now founders are still ending up with an order of magnitude or more stock than the first few employees. There are certainly situations where that makes sense but if the founders are adding extreme value compared to the first few employees perhaps they should only end up with twice as much stock. That would free up a lot of equity for early employees.
  • sokoloff 7y ago
    > if the founders are adding extreme value compared to the first few employees perhaps they should only end up with twice as much stock Why would this be the case? If they’re adding relatively extreme value, why should they only get 2x the equity?
• throwaway112234 7y ago
  Here's where I've been: - worked at a startup out of college for 85k max plus significant equity (never amounted to anything). Stayed too long. - worked at a later-stage startup starting at 120k, peaking at 130k. Got some stock options there (haven't amounted to anything yet) - took a job at FAANG starting at 400k, plus some stock options. Currently at this job for > 600k base. Plus stock options. While at FAANG, I created a tool that we open-sourced. I've had several VCs contact me to see if I want to try turning that into a company, but by my math it would be a lot of work for no gain over what my salary already is. I already get paid to work on this OSS thing, but I also get to work on other things - and on the OSS thing it's pretty clear cut what I need to prioritize, since my priority user base works with me at FAANG. For me, startups have a 0/2 track record of delivering value. Being able to net more than I make as an IC seems pretty unlikely, and trying would be a whole lot of pain and sacrifice. The "faster growth as a founder" idea seems to be conditioned on the assumption that you'll succeed enough to pay yourself more than you make now, and/or be able to exit at an amount that will make up for the opportunity cost of getting paid well in the meantime while having a sane work/life balance. YMMV.
  • yibg 7y ago
    So Nflx.
  • wh-uws 7y ago
    > "faster growth as a founder" idea seems to be conditioned on the assumption that you'll succeed enough to pay yourself more than you make now, and/or be able to exit at an amount that will make up for the opportunity cost of getting paid well in the meantime while having a sane work/life balance.... I posit its even more than that. It's a meme / propaganda by the survivors with their bias and those who hope to follow in their footsteps. Also what's also interesting is you posted your comment to a throwaway while the others parroting that talking point were happy to reveal themselves at least pseudonomusly. I'm pretty sure why. You don't want to burn your shot if you want to have another go at the startup thing and have people be able to read you saying you wouldn't be fully committed. I fully respect that. The only reason I point it out is to show how Silicon Valley the larger VC ecosystem is an echo chamber around this ethos. My guess as to why is how would they recruit the next generation without that?
• Grimm1 7y ago
  I believe this post does a very good job of bringing the elephant in the room into the discussion. The current structure of equity compensation for early-stage startup companies is simply not enticing enough to get people to choose that over the salary and predictable path of BigTechCos. I love working in startups and even I, when presented with the choice, pad the salary knowing that throughout the funding rounds, if the startup is lucky, any fractional percent that I have will be so diluted that I'm likely to walk away with nothing to show for the work I put in beside the cash I opted for, hopefully, some new connections and some learnings. While some of the more successful startups can compete with those companies on base salary it is just not enough necessarily to convince the top talent that you are the right move for their career. That said there are ways to improve this such as the increased transparency OP wrote about in their post. We should also give more equity to early employees and have favorable terms around vesting for these employees and better timing around the loss of options after leaving a company. Of course this negatively impacts founder equity and potentially investors as well. But to me, worrying about that negative impact to founders and investors comes off as short sighted on part of the investors and founders. Ensuring your early employees will be taken care of means they'll work harder for your company and this will increase the chance you'll survive long enough to see an event that makes anyone a return on their investment. The numbers are so overwhelmingly stacked against startups that worrying about the couple million less you'll have because you gave out 1-1.5% equity to your early employees is really silly, very much chicken before the egg. Instead we currently have the weird known but unspoken fact that your early employees will likely get nothing in a liquidity event while still asking them to put their all into your company which is unethical at best and downright manipulative and harmful at worst. So yeah startups are in a weird place. This doesn't even touch on companies that just stay private forever which is another issue all together.
• deleted 7y ago
  [deleted]
• ec109685 7y ago
  Isn’t this also a function of the limited runway VC’s give to startups. If they 10x’d the amount of funding for seed and series A, startups could afford to hire the best. It would add a lot more risk, but given the outsized rewards, it would still be profitable for some VC’s. Otherwise, there will be lots of ideas left un-persued because many experienced engineers will not want themselves or their employees to live (in relative terms) an ascetic lifestyle while perusing their dream.
• bariswheel 7y ago
  If the cost of housing was substantially lower, perhaps these great engineers would work for startups that could really use their talent, as they might not care as much to being millionaires so they can afford what's considered a middle class home for their family in most other places besides SF/Bay Area.
• jandrewrogers 7y ago
  I've had a related discussion with a few VCs in recent months. Some kinds of startups are effectively impossible to build given current structural constraints on financing them, creating an adverse selection for startups that fit the classic model rather than startups with the highest expected ROI. Broadly speaking, engineers will work at a discount to market-clearing wages of maybe 20% if they really like the startup. This is not necessarily an issue if you are well-funded and require ordinary levels of skill from your engineering team, which is most startups. Some types of software startups can't be built without a team of engineers where the market-clearing wages are typically more like $500k-1M. Even at a 20% discount to market, the amount of capital involved just for headcount is far too large for early stage investors, and startups that try to fit within the capital they can raise by getting by with less qualified engineers always fail at technical execution. Consequently, startups that have this property are effectively un-investable because there is not enough capital available in the early stages to achieve technical viability even though they may be great investments in the abstract. This wasn't a serious issue a decade ago, but it is spreading to a larger set of startups as wages rapidly escalate. Given a long-term glut of capital, this could be addressed in principle by designing a model that modifies the distribution of capital/equity over time to accommodate startups that have difficulty financing the initial wage gap. As the startups grow, one would expect the average wages to start reverting toward the mean, but these startups won't get out of the gate without that initial investment in capable and very expensive engineers. I've had interesting and productive discussions around this, it is seen as a way to bring fresh blood into an early stage pipeline that is drying up. It is obvious to almost everyone that the classic model of how you finance and build a startup team is breaking down in the current market environment, with an adverse impact on expected returns.
  • lpolovets 7y ago
    > Some kinds of startups are effectively impossible to build given current structural constraints on financing them I generally agree with this, except I would change "impossible" to "exceptionally hard." You're right that a lot of startups innovating on deep tech need to hire people who would earn $500k+ elsewhere, and that a typical startup can't afford that. However, very exceptional founders can often raise unusually large rounds early on. I.e. some founders can raise a $10m or $20m "seed" round at inception, which allows them to afford to pay $500k salaries. It's the top 1% or 0.1% founders within their fields, but it is possible. (Source: I'm a VC)
• api 7y ago
  Maybe startups should try cities like Pittsburgh, Columbus, Atlanta, Knoxville, etc. Lots of talent that will work for less for the simple reason that the cost of living is not so stupidly high. Hell even SoCal, Portland, Austin, and Chicago are bargains compared to NYC or worse SF. Problem is that all the capital is in NYC and SF, and they still prefer to invest locally. At this point VCs should just skip the middle man and cut checks directly to landlords and property speculators.
• tanilama 7y ago
  Well said. Startups can't really compete with MGAFA those days. Not the people, not the resources. For domain like ML, it is hard to imagine what you can realistically achieve outside of working in those companies.
• grumpy8 7y ago
  YC has been saying that for a while, but great & early employee need way more equity; they're the one who change the game.
• INT_MIN 7y ago
  I work at a startup and have for 2 years since graduating college. Its quite hard to gauge my true value. I know that for the area (according to Stackoverflow's salary numbers) it seems competitive, but big N companies are moving in to Culver City which may be changing that. Since starting, I've seen engineers who can't hack it leave or get fired. I've been the one engineer who has been productive and seen our projects to completion. Our team has gotten stronger over the past 2 years however and I feel that we are in a good position. In this way, I feel that I am valuable, but I have nothing to compare myself to. Working at a startup I've also learned an extremely broad area of knowledge, much of this completely on my own. I'm often worried that that may hurt me if I apply at a larger company and that hiring managers would question my fit.
• jgelsey 7y ago
  Actually, my observation over the last 20 years of being a venture investor, bigco acquirer and startup CEO (including at a unicorn) is that the risk-adjusted $ compensation is the same at a startup and at bigco. Startups just have more beta in the comp. You learn a lot more at a startup and hence it's the experience you want if you hope to do your own startup. If you just care about short-term $ then absolutely stay at bigco. If you want experiences unavailable at bigcos and are willing to take the chance of making less, but also the chance of making 10X+ more, do startups.
  • senordevnyc 7y ago
    Show your work, because I flat out do not believe you. Just the fact that you were investing in these startups, acquiring them, and working as a CEO at a unicorn indicates that you have a vastly skewed perception of the typical startup.
  • peripitea 7y ago
    >The risk-adjusted $ compensation is the same at a startup and at bigco. Startups just have more beta in the comp. I work with startups, and while this may have been true 10-20 years ago I can't imagine how you would think it's true now. As the sibling comment says, I'd love to see your work, i.e. a remotely plausible example case with numbers illustrating how startup EV would approach bigco EV.
• geofft 7y ago
  > And, to be clear, I’m not saying that one should or should not place money or perks above everything Why not? The whole premise of venture capitalism is that money is an appropriate common denominator for what is valuable in the world, that the best way to change the world is through establishing a legal entity whose goal is to make money, that once you have lots of money the best thing you can do is to put that money to further use instead of directly engaging your own technical skills. Why do we tell potential employees at startups "money isn't everything" but potential founders "you'll make more money this way" and potential funders "please, sir, some money"? The startup ecosystem is a way for venture capitalists to get richer, and to incentivize the people who can directly help them get richer. Evidently it's not enough - so maybe they should incentivize the people who help them indirectly get richer. If money isn't everything, don't join a startup or a big company, go to grad school, where you can actually work on whatever you want. Or go work for a big company for several years and retire, or find a half-time consulting gig, or something.
• funded12345 7y ago
  > I think startups’ best bet is to make the most of the variables they can control outside of money and perks (if you lack the appropriate resources). This means being transparent and honest with candidates about all risks involved when joining a startup and factoring all this into the amount of equity they offer which should be something considerable. Even if the original founders have the best intentions, large equity up front is unlikely to give you a big payday. Since, in the traditional VC model the drive is to move toward bigger rounds (A, B, C, etc) and investors get paid back first. So even if you do start with 10%, you'll probably only end up with a low % percent after 3-4 rounds. The important thing to note is that this whole thing bamboozles our brains because of unicorn survivor bias. We feel like unicorns and $100m dollar companies are the norm but nothing could be further from the truth. The chance of being part of unicorn is about 0.006% last I checked. The chance of being part of a $100m+ company is in low single digits (of all startups). If it ends up just making a few million revenue investors will drop it (because not 10x enough) and you're 2-3% will be worth very little. If ends up stagnating at $5m for a few years investors will drop it (because not 10x enough). The overwhelmingly most likely outcome of you getting a large chunk like 10% up front is, when all is said and done, after 5-7 years you'll walk away with a few hundred thousand (before tax) if you are lucky. In my case I was on founding team. Started out with 10% equity. Co. is now 7 years old. After a merger (diluted by 40%), $10m investment (diluted more), $4m strategic investment (diluted more), then investors taking money off the table first for an exit event - I stand to make $100k if we sell at $20m and $600k if we sell at $40m (currently valued at $20mish and has been for 2 years). That's pre tax.
  • Vadoff 7y ago
    Ouch. Being an senior engineer at a FAANG would give you 800k in RSUs over 4 years (initial grant + refreshers), a staff engineer position 1.5M... considering almost 8 years of work, that's probably at least 1.5-3M in RSUs (without considering stock appreciation, which can easily be quite significant).
  • sssdmmmm 7y ago
    Ditto to that, and add that this can happen at a larger scale even if you happen to find yourself working for one of those lucky unicorns, where late-stage VC will swoop in, inflate the valuation, and dilute the hell out of everybody holding ordinary shares.
• leoh 7y ago
  I like this piece and I agree that startups can be great. But the first half of the essay, the hook of the essay, was contingent upon the author declining a $70k check from Thiel and noting that he walked away from $200 million; and the end of the essay suggested that one shouldn't work at a startup for the money (and you really shouldn't, it's unlikely it'll make you much).
• antcas 7y ago
  The consensus on HN is pretty clearly towards being a founder or working at Bigtech Co vs being an employee at a startup. So, if you're a founder, how do you tip the equation to make working at your startup attractive to talent who presumably also read HN? What would make you interested in joining a startup as an employee?
• nayuki 7y ago
  The blog post echoes sentiments in TechLead's video last month about the same topic: https://www.youtube.com/watch?v=Btbvv9kfLqo https://www.youtube.com/watch?v=Btbvv9kfLqo "Software Engineer Salaries in 2020. How much do programmers make?"
• geophile 7y ago
  I worked at software startups in the Boston area from 1988 through 2013, so perhaps my comments are not relevant to this day and age. But what I read in that note sounded awfully familiar. In the mid 90s, Microsoft was buying up talent left and right, in whatever area they wanted to go into. My field is databases, and I developed expertise in the integration of query languages with programming languages. I got an obscenely lucrative offer from Microsoft, and decided to turn it down. It was a dumb decision, financially, but actually worked out fine on that front. However, I'm sure that Microsoft enticed many promising software developers to work for them instead of startups. (A few names do come to mind.) This problem was completely solvable then, and the same technique would work now. The problem is that VCs don't want to solve it. They want software developers cheap. They give miniscule amounts of equity, and bias the terms so that those tiny stock option grants almost never pay off very well, (e.g. liquidation preferences). Except, perhaps, for the chief architect, and one or two very senior developers, we are viewed as disposable, interchangeable cogs. There are great reasons to work for a startup, other than equity. I am very happy with my 25 years doing just that. But equity is definitely a factor. Contrary to what they would have you believe, VCs are extremely risk-averse, certainly compared to the developers who are sacrificing the best years of their lives for their companies and the chance of a financial win.
• Bella-Xiang 7y ago
  I really agree with your opinion, especially the words in the last paragraph. I am working in a startup now for half a year, in which all the rules you mentioned is done well, so as a fresh graduate, I never regret working for a startup. There, I have learned a lot of different skills that definitely will be my great treasures in the future. So, for the fresh graduates, I think working for a startup makes great sense that helps them find their true value.
• exabrial 7y ago
  I work for startups because generally there's not useless word docs and red tape. You can have a fully reproducible engineering cycle without all the nasty forms. I can't find the link but a while ago hacker news how to link to an article about useless jobs at large companies. Reminds me a lot of this.
• luke_heine 7y ago
  Awesome post! Also this is where nailing PMF is so Important too before hiring
• PanosJee 7y ago
  It's fun to watch the Bay losing its startup spirit and becoming a land of mega corporates. It might resemble Atlanta in 20-30 years. There are so many other places where joining a startup is the best option you have (excluding remote gigs). I guess most startups will become remote-first and lure people who care either about the team or the problem being solved. Building a startup employer brand will be of paramount importance.
  • lotsofpulp 7y ago
    > It might resemble Atlanta in 20-30 years. Or it might indicate a lower probability of creating another company that produces FAANGM levels of cash flow.
• JDiculous 7y ago
  Agreed, if you're living in SF or NYC I don't see the point in working at a startup unless you're just really passionate/optimistic about the work/company or are getting some other perks you wouldn't get at a FAANG. Personally I work for startups, but only because they let me work remotely, something I wouldn't be able to do at any FAANG. I would only go back to an office job to work at a FAANG, since compared to a startup the money, "exit ops", work life balance, and job security are probably going to be way better. If startups want to be more competitive and have access to more talent, then they'd be wise to open to hiring remote workers. Otherwise they're going to struggle to compete with FAANG type companies. Remote is the one perk that FAANG companies don't offer, and unfortunately probably won't for the foreseeable future short of some serious cultural change.
• anovikov 7y ago
  Better solution is to make do with as little staff as possible. Lower headcount makes management overhead and friction inefficiencies lower and saves you money big time. And this is something big companies can't replicate. This is how a startup was supposed to be: do one thing and do it perfectly, with as few people as possible.
• JackPoach 7y ago
  Many new startups (with massive VC backing), aren't really startups
• cryptica 7y ago
  I agree that the game is clearly rigged in favor of corporations at this stage. If money is what you're after then joining a big company is by far the most rational choice. Eventually, big tech companies will realize this and start significantly lowering wages until new engineers are paid the same as blue collar workers. The reality is that new startups do not disrupt corporations; they feed them. The only way I can see to end corporate dominance is with blockchain tech because it can disrupt the incentive structures that feed corporarions. The new generation of developers can build a new financial system using cryptocurrency as the decentralized foundation in which to store value.
• vectorEQ 7y ago
  i'd say if a start-up is hiring outside of founders / stock offerings then they are no longer a startup and should offer somewhat realistic wages. before that time, people accept to get paid less with prospect of their stock options exploding and that compensating for the lack of initial wages. that being said, if a person wants to work at a startup, i'd say they already accept that the wage will be much lower than at some big corporate or company who is making good income already. it seems a bit if not a lot silly to me that someone would join a startup in the early phases but then demand a corporate salary. startups are kind of a popular term, but think about it... people used to actually build stuff and then get funded / success, instead of wanting funding upfront without any actual effort put in (thats exaggerating i know). A lot of startups these days though really ask for ALOT of money from investors without having even an MVP or viable product yet. I can't see why someone would pay for just an idea ... it seems a lazy way to make a startup. Building something, prove it works, and investors will have no issue to invest?
• afinlayson 7y ago
  I've worked at 3 big tech companies and 3 startups. 2 got bought out, the other is going strong. I made more money off 1 year of bonus at Google than I did with any of the successful startups. It's not because I did anything wrong (I was Eng #1 at one, First iOS Lead at another and Lead for the 3rd) It's because I was building someone else's vision for the promise that that my stock will be worth something. When a company gets bought even if you have a high % when it gets funding, it will be diluted. If the company doesn't do refreshers often enough you will be working long hours for close to free. The charming CEOs will talk about how they plan to change the world, the sleazy ones will tell you they are a sure thing (and what will you do with your millions). That makes no difference, it's just a lottery ticket. You have to decide how much of your career to put on that ticket. Startups are a wild ride, and a thrill to join, you'll learn a lot, and have a great chance of coming out learning more than you'd learn as a entry level at a big company. Don't for a second think you have the winning lottery ticket, because if your number doesn't come up you'll left with memories and the paper it wasn't written on. PS I'd argue if you have a group / team, build your own vision. Go big, we have enough insta-wecha-snapple sauce out there. Build something that will have real impact. And if you don't have the Team / Vision / Risk tolerance go somewhere they'll pay you what you are worth. Maybe you'll be even meet some of those you want to build a team for whats next.
• chrshawkes 7y ago
  A few things developers are waking up to... burnout, working evenings and weekends, a life outside of code, having children or families, master in a specific field vs jack of all trades (master of none), money is more important than free snacks, working your butt off to watch all the credit go to the founders (as well as the money), long term stability, benefits and retirement is much less risky than hoping for an equity payout I feel the startup founders should enjoy reaping what they have sown.
• edem 7y ago
  A few years ago I decided to start working for a startup because I wanted to try out the experience. It was a late-stage startup with no VC money and they had good prospects for a possible acquisition. I did the math and I figured that it might work out for me. 2 years later it turned out that they have been talking about a possible acquisition for the last 3 years, but nothing happened. I also checked the company's public information and it turned out that they weren't that transparent about the shares. I was told that I get 0.5% worth of shares (they refused to tell me the total amount of shares) and what I saw is that it was true: I had 0.5% of the outstanding shares. But in case of an acquisition, they are free to dilute them 5-fold because the authorized shares are 5 times as much as the outstanding ones. So I decided to join a big company which is paying almost 2 times more right off the bat and I also get additional shares each year. I made a calculation and even if the old company gets acquired I get less money (it is just a rough estimation) than I get at the new company. And that's still a big if. I think that I still started from a much better situation than most of the other folks working for startups. This company produces profit, they have a business model I believe in and there is no VC to please. Most of the startups are in a much worse situation. I will never work for a startup again.
• vjktyu 7y ago
  A solution could be to let engineers work for multiple companies at once and laws to prevent employers from penalizing such behaviour.
• williamDafoe 7y ago
  I have worked at 3 startups for 3 years of my career. At one, I was a founder and seed-venture investor; that one lasted 8 years. It was the only company NOT run by criminals. Total out-of-pocket costs to me (in 2019 dollars) : $45,000 in 2 startups for shares and for options. Total return : $0. Total discount to market salary that I worked for : 33%. In 2 out of 3 startups, the CEOs (1) stole all the money and fled the country, or (2) conned the VCs out of $2.5m and shut down the business the next day after the final funding round (all monies went directly into CEO bank accounts.) Ask me what I think about startups .... Fuck startups.
• deleted 7y ago
  [deleted]
• daveharig 7y ago
  Value is built, not bought. If your idea of a successful startup is bringing together a group of high-priced mercenaries, then you have the wrong idea of what a successful startup is. Every great product ever built was done with a team of missionaries. People joining together against all odds to try and usher something new (big or small) into the world. They would do it whether someone paid them or not. Even when the odds seem impossibly stacked against them. And more times than not, these small teams create something great. These kinds of teams have always, and will always beat the odds. Time and time again they have competed with and/or taken down the giants in their industry. It’s an idea or goal that will just bite you and stick with you. It’s something you can’t put down. Each second of free time you have is spent working on it. That’s the kind of startup you belong in, and a reason to join one. If you are evaluating a startup by financial metrics, then you don’t belong in a startup or that startup doesn’t belong in you.
• skqr 7y ago
  Just hire abroad. Working in a completely remote environment is entirely feasible, and it's actually in many, many ways, more comfortable and productive.