5 ms·

90% of the time you hear of start-up employees getting "screwed", it's because the investors and founders are trying to recover their investments through an acq

90% of the time you hear of start-up employees getting "screwed", it's because the investors and founders are trying to recover their investments through an acquihire or IP sell off. Cliffs on investments reduce the risk premium and lower the cost of money which is used to pay for the employees salaries. Founders (excluding previous successes) most likely draw a "survival" salary for many years. It's also a very demanding job, so good luck optimizing expenses at home. Employees are paid livable salaries plus options on common stock, which in a true runaway scenario will be worth something. It's unfortunate that employees lose out on their lottery tickets, but that's really what option grants are. If you want more negotiating power, position yourself as a technical cofounder and accept the survival salary.

supernova87a 6y ago
I see, so start driving the wagon instead of riding it, and be the one doing the screwing?
- LoSboccacc 6y ago
  it's the investors that drive the wagon, only the tiniest minority of founders in the software space are truly independent.
colordrops 6y ago
So in summary you are saying it makes no sense to be an employee at a startup. There's no upside except for "lottery winners".
- mav3rick 6y ago
  This is so obvious to anyone who spent 2 minutes thinking about working at a startup.
- MAGZine 6y ago
  Founding engineers may take 1%. Go plug the numbers in for yourself on tldroptions.io and see what the return looks like. That said, on the most rocketcorny of rocketcorns the growth curve continues and being an employee in series A or B can be a nice payday. But for the vast, vast majority of companies (VAST!), your share will be worth little, and more often than not, less than what you will make just going to work at a FAANG. Startups have other innumerable benefits, but in terms of compensation, those benefits are (unfortunately) just that.
- trytozoom 6y ago
  I've seen a ton of this on HN for the past couple of years, "Go work for FAANG, startups are worthless." As someone who has started a company, gotten it funded, and would like to hire high quality engineers, this is deeply disheartening. I've tried to hire a few people, offering them market rate or close to it for base salary (_very_ rough ballpark 150-200K for 2-5y experience) and a decent chunk of equity (highly variable, for VP level I've offered up to 2%, there's a salary equity tradeoff though). These seem like fair offers, but often I'll get, "actually I'm really a cofounder so I should be getting double digit equity." That's fine, except 1.) I have 15% of the company in my option pool, so no I can't do that unless I effectively want to give nothing to everyone after that person. 2.) At the risk of sounding aggrieved: I spent all of my savings to get this off the ground and funded, am taking a far below market salary, and you want to get that sort of equity with none of that risk? When I'm pretty sure you wouldn't be talking to me if I didn't have a nice war chest? What should someone in my position be doing to entice top notch people to join us? Yes it takes a leap of faith that what we're doing is interesting (please trust me that it is), and that someday stock worth 10s or 100s of K will be worth 100s or 1Ms. But if nobody is willing to take that leap, then companies like mine and many others will die. If it's all about cash and comfort, then FAANG will have won and innovation will slow. I'm really willing to listen, what can I do to solve this dilemma of a necessarily limited option pool AND inability to say, "yeah my stock is provably worth $100s a share and I can pay 75-90th percentile of market base."
  - Hydraulix989 6y ago
    In the Zoox case, the founders allegedly subverted the rightful 1Ms payout of the early employees. You sound like a trusthworthy person, but there are so many other cases of this happening besides Zoox, and it's very difficult to predict peoples' moral reactions to life-changing amounts of money ahead-of-time. At the end of the day, it's up to the CEO to make sure everyone gets treated fairly.
    - trytozoom 6y ago
      Good point. I hope I get the opportunity to test this hypothesis, but right now I can't imagine that mattering to me. I've made decisions recently where my thought process literally was, "Ok so if we win big, I'll have a slightly smaller yacht." It's not that hard to treat your people well. I fully recognize it's easy to say now, and I hope I stick to it when given the chance. More interesting than currently easy promises is: how do you interview the founders to maximize the chance that they're not greedy assholes?
- AmericanChopper 6y ago
  There’s nothing wrong with working in a startup, if the salary is decent. The only risk you’re taking is that it might go under, but then again, a well established company might lay you off too. You’re only really taking a risk if you’re working for equity, with compensation that you wouldn’t have accepted if not for that equity.
- 0xfaded 6y ago
  This is an extremely rational statement if you want a stable desk job and to maximize expected lifetime earnings.

supernova87a 6y ago

I see, so start driving the wagon instead of riding it, and be the one doing the screwing?

LoSboccacc 6y ago
it's the investors that drive the wagon, only the tiniest minority of founders in the software space are truly independent.

colordrops 6y ago

So in summary you are saying it makes no sense to be an employee at a startup. There's no upside except for "lottery winners".

mav3rick 6y ago
This is so obvious to anyone who spent 2 minutes thinking about working at a startup.
MAGZine 6y ago
Founding engineers may take 1%. Go plug the numbers in for yourself on tldroptions.io and see what the return looks like. That said, on the most rocketcorny of rocketcorns the growth curve continues and being an employee in series A or B can be a nice payday. But for the vast, vast majority of companies (VAST!), your share will be worth little, and more often than not, less than what you will make just going to work at a FAANG. Startups have other innumerable benefits, but in terms of compensation, those benefits are (unfortunately) just that.
trytozoom 6y ago
I've seen a ton of this on HN for the past couple of years, "Go work for FAANG, startups are worthless." As someone who has started a company, gotten it funded, and would like to hire high quality engineers, this is deeply disheartening. I've tried to hire a few people, offering them market rate or close to it for base salary (_very_ rough ballpark 150-200K for 2-5y experience) and a decent chunk of equity (highly variable, for VP level I've offered up to 2%, there's a salary equity tradeoff though). These seem like fair offers, but often I'll get, "actually I'm really a cofounder so I should be getting double digit equity." That's fine, except 1.) I have 15% of the company in my option pool, so no I can't do that unless I effectively want to give nothing to everyone after that person. 2.) At the risk of sounding aggrieved: I spent all of my savings to get this off the ground and funded, am taking a far below market salary, and you want to get that sort of equity with none of that risk? When I'm pretty sure you wouldn't be talking to me if I didn't have a nice war chest? What should someone in my position be doing to entice top notch people to join us? Yes it takes a leap of faith that what we're doing is interesting (please trust me that it is), and that someday stock worth 10s or 100s of K will be worth 100s or 1Ms. But if nobody is willing to take that leap, then companies like mine and many others will die. If it's all about cash and comfort, then FAANG will have won and innovation will slow. I'm really willing to listen, what can I do to solve this dilemma of a necessarily limited option pool AND inability to say, "yeah my stock is provably worth $100s a share and I can pay 75-90th percentile of market base."
- Hydraulix989 6y ago
  In the Zoox case, the founders allegedly subverted the rightful 1Ms payout of the early employees. You sound like a trusthworthy person, but there are so many other cases of this happening besides Zoox, and it's very difficult to predict peoples' moral reactions to life-changing amounts of money ahead-of-time. At the end of the day, it's up to the CEO to make sure everyone gets treated fairly.
  - trytozoom 6y ago
    Good point. I hope I get the opportunity to test this hypothesis, but right now I can't imagine that mattering to me. I've made decisions recently where my thought process literally was, "Ok so if we win big, I'll have a slightly smaller yacht." It's not that hard to treat your people well. I fully recognize it's easy to say now, and I hope I stick to it when given the chance. More interesting than currently easy promises is: how do you interview the founders to maximize the chance that they're not greedy assholes?
AmericanChopper 6y ago
There’s nothing wrong with working in a startup, if the salary is decent. The only risk you’re taking is that it might go under, but then again, a well established company might lay you off too. You’re only really taking a risk if you’re working for equity, with compensation that you wouldn’t have accepted if not for that equity.
0xfaded 6y ago
This is an extremely rational statement if you want a stable desk job and to maximize expected lifetime earnings.