4 ms·

I think this is true in many ways but lately I've realized there is a sweetspot of career (pre or just barely L5 at FAANG) and startup (founder previously succe

I think this is true in many ways but lately I've realized there is a sweetspot of career (pre or just barely L5 at FAANG) and startup (founder previously successful, raised well from top funds, early traction) where it can make sense. Just as an example maybe your TC is currently $250k and you get an offer for a startup at $165k salary and 0.3% over 4 years of a series A company valued at $40m. That's a TC of $195k but your salary is still pretty good and if you think the startup is promising, it's basically a way to "invest" your time in it. The math starts breaking down if your opportunity cost gets high. However out of the people I've known who have worked at startups, a decent chunk of them made much more money than they would have at FAANG (and yes, for some of them, lifechanging amounts as just low/mid level engineers). So it makes sense to treat the equity/options as $0 for financial planning/budgeting purposes for sure, but from an expected value standpoint, I don't think it does.

necubi 6y ago
If you're L5 at FAANG you're going to be making more like $400k, so the math starts to break down pretty quickly.
- opportune 6y ago
  Yes, that's what I meant by "pre or just barely L5 at FAANG".
- shostack 6y ago
  Only certain roles. Not everyone is getting that at L5.
  - alfalfasprout 6y ago
    That's pretty low for software L5 at FB/GOOG/NFLX. Probably not AMZN.
alfalfasprout 6y ago
Yeah, I agree that there's definitely a time when it can make sense. From what I can tell it's either at the very beginning or much later in your career though. In the beginning of your career, a startup that has solid senior eng talent means you get a good mentor and a big playground where you can really "get your feet wet" and learn a lot, fast. Frankly, in a way that I think is really difficult to do at most FAANGs nowadays where a large number of things are abstracted away. L5 (and equivalents) are terminal levels at most FAANGs and most engineers don't make staff or above. I think it's pretty common for engineers that get the vibe their current team isn't going to let them reach L6+ to bounce to a startup. This is where typical startup offers (even for "staff" level eng) aren't going to include enough equity for it to be worthwhile. Here, the "non-monetary" factors really need to be huge for it to really make sense as a career move. So I'm really not convinced as your "run of the mill" L5 engineer that going to a startup is ever going to monetarily be the rational choice. You really have to value something else. Again, the math here is totally different when you're talking L6+ (or effectively performing/hireable at that level)
NationalPark 6y ago
I worked in early stage (seed, pre-seed, and series A mostly) startups for 10+ years before finally realizing that the math isn't even close. Now I work at a FAANG. In your example, $250k is actually pretty low. An engineer at that level can expect to make $350-$400k, and the RSUs are almost as good as cash. But where it really bites you is, as you mentioned, the opportunity cost. If you're getting 0.3%, you're a fairly early employee. A profitable (for you) acquisition or IPO is 5-10 years away, and that $165k salary is not going to dramatically increase in the meantime. In opportunity cost, you (and I'm being very general here) end up paying $2-5m for the chance of that equity being worth something (consider that your compensation will grow as you become more senior at the Big Tech Company, and that you can invest that money). If you are lucky and have good health, you can make that bet perhaps 4 or 5 times in your life, plus some false starts that fail or become obvious zombies within 3-5 years. To come out on top, you need one of those companies to really knock it out of the park. 1 in 5 startups do not knock it out of the park. And when they do, it's mostly unrelated to the work you're doing - it has a lot more to do with strategy, market conditions, and luck. I like the suggestion someone else referenced. You can angel invest your FAANG cash and get a pretty similar risk/reward to being an early engineer, but without leaving all that money on the table and without the added hours and stress of being an early startup engineer.
- opportune 6y ago
  I also work at a FAANG, $250k was just my fake number example of L4 averaged across FB/G (where that would be low) and Amazon/Apple (where it would be average-high). Didn’t expect people to get so fixated on that, heh

necubi 6y ago

If you're L5 at FAANG you're going to be making more like $400k, so the math starts to break down pretty quickly.

opportune 6y ago
Yes, that's what I meant by "pre or just barely L5 at FAANG".
shostack 6y ago
Only certain roles. Not everyone is getting that at L5.
- alfalfasprout 6y ago
  That's pretty low for software L5 at FB/GOOG/NFLX. Probably not AMZN.

alfalfasprout 6y ago

Yeah, I agree that there's definitely a time when it can make sense. From what I can tell it's either at the very beginning or much later in your career though. In the beginning of your career, a startup that has solid senior eng talent means you get a good mentor and a big playground where you can really "get your feet wet" and learn a lot, fast. Frankly, in a way that I think is really difficult to do at most FAANGs nowadays where a large number of things are abstracted away. L5 (and equivalents) are terminal levels at most FAANGs and most engineers don't make staff or above. I think it's pretty common for engineers that get the vibe their current team isn't going to let them reach L6+ to bounce to a startup. This is where typical startup offers (even for "staff" level eng) aren't going to include enough equity for it to be worthwhile. Here, the "non-monetary" factors really need to be huge for it to really make sense as a career move. So I'm really not convinced as your "run of the mill" L5 engineer that going to a startup is ever going to monetarily be the rational choice. You really have to value something else. Again, the math here is totally different when you're talking L6+ (or effectively performing/hireable at that level)

NationalPark 6y ago

I worked in early stage (seed, pre-seed, and series A mostly) startups for 10+ years before finally realizing that the math isn't even close. Now I work at a FAANG. In your example, $250k is actually pretty low. An engineer at that level can expect to make $350-$400k, and the RSUs are almost as good as cash. But where it really bites you is, as you mentioned, the opportunity cost. If you're getting 0.3%, you're a fairly early employee. A profitable (for you) acquisition or IPO is 5-10 years away, and that $165k salary is not going to dramatically increase in the meantime. In opportunity cost, you (and I'm being very general here) end up paying $2-5m for the chance of that equity being worth something (consider that your compensation will grow as you become more senior at the Big Tech Company, and that you can invest that money). If you are lucky and have good health, you can make that bet perhaps 4 or 5 times in your life, plus some false starts that fail or become obvious zombies within 3-5 years. To come out on top, you need one of those companies to really knock it out of the park. 1 in 5 startups do not knock it out of the park. And when they do, it's mostly unrelated to the work you're doing - it has a lot more to do with strategy, market conditions, and luck. I like the suggestion someone else referenced. You can angel invest your FAANG cash and get a pretty similar risk/reward to being an early engineer, but without leaving all that money on the table and without the added hours and stress of being an early startup engineer.

opportune 6y ago
I also work at a FAANG, $250k was just my fake number example of L4 averaged across FB/G (where that would be low) and Amazon/Apple (where it would be average-high). Didn’t expect people to get so fixated on that, heh