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Working at a startup is overrated, both financially and emotionally

• sbarre 5y ago
  It's important for anyone joining a startup to understand that the odds of success are overwhelmingly against you. For every successful startup we see on here and elsewhere, there are thousands that fail in obscurity, sometimes leaving people in ruins. Treat options/shares as a literal lottery. Assume your odds of winning are zero when making life choices. Also unless you're a very very early employee, those options/shares are likely to not be worth what you imagine they will be worth even if the company has a successful exit. Go into it with eyes open and realistic expectations if you choose to try it out.
  • swader999 5y ago
    I remember my CEO laughing at me buying my options when they vested. "Well Swader, you'll be able to wipe your as with those at least". Was a great guy, great company and a great bunch of people to work with. But facts are facts. We were successful but in a very competitive field so nothing was guaranteed.
    • sbarre 5y ago
      Indeed! You can still have a very rewarding experience in a startup, it's just rarely the "retire young and rich" outcome that I think a lot of people imagine it will be. As someone else also said, I wouldn't trade my startup years for anything, but it was just a job like any other, when take a macro view of my career.
    • rubyn00bie 5y ago
      I have always said I wish I had gotten toilet paper instead of options. Because at least I can wipe my ass with toilet paper, and at the start of the pandemic I’d have actually gotten rich. Next time I’m offered options I’m going to request TP instead and see how they take it haha.
      • sbarre 5y ago
        Yeah the last startup I worked at, I declined options altogether and just said pay me more.. It was a difficult conversation but in the end they agreed, and it worked out in my favour.
      • swader999 5y ago
        Hmmm... There might be an opportunity in combining these into one product.
  • dominotw 5y ago
    I don't understand why people list their options value under 'stock' in levels.fyi . I see lots of pre ipo company people give specific value to their options.
    • RhodesianHunter 5y ago
      I'm guessing because these companies are way past what any reasonable person would call a "startup" and are getting regular third party valuations.
  • sethammons 5y ago
    Yes, even when you win that lotto, it is not as much as you may imagine. I rode the SendGrid/Twilio rocket; engineer 12 at SendGrid. IPO and acquisition later, I’m still a decade out on even thinking of being able to retire or be financially independent. Don’t get me wrong, things are good. But early equity in a multi billion dollar company and I’m still having to work :)
    • ZephyrBlu 5y ago
      This doesn't add up to me. According to an article on Twilio the acquisition was ~$3B. Even 0.01% equity is 300k. Not "time to retire" money, but still a good chunk of change. Yet you're a decade out of even thinking about retirement?!
      • zebnyc 5y ago
        300k is not much money in SF Bay area. If you have a mortgage / looking for a new home, then homes can go upwards of 2 million. I am assuming that GP means they have not hit their target net worth to FATFire.
• hprotagonist 5y ago
  My expectation is that the total compensation i receive from any employer is limited to salary per paycheck, health benefits, maybe retirement matching, and that is it, startup or no.
  • jmartrican 5y ago
    And RSUs. I love me some RSUs.
    • hprotagonist 5y ago
      can’t say i’ve ever had the pleasure.
      • astrange 5y ago
        You gotta get that ESPP.
• blakesterz 5y ago
  As much as I agree with everything said in this article I wouldn't trade my years at a start up for anything. Both financially and emotionally it was awesome. I didn't get rich, and I worked way too much, but it was awesome. I loved the constant change and chaos. I learned so much, way more than I would've in any other type or work place. I made great friends too. It was as bad as the article, but it was way waaaay better too.
  • vinceguidry 5y ago
    Everybody’s got to make their bones somehow. The problem comes when you think you have to keep making them. Then you just get exploited your whole career.
  • BelenusMordred 5y ago
    This is relatable. It's incredibly satisfying building new things rather than maintaining decades old cruft, regardless of the paycheck, hours and stability. Also the joy of working in small nimble teams and the freedom to experiment with new technologies. Like everything in life these things are a tradeoff.
    • toomuchtodo 5y ago
      I will give you the other perspective. I get paid double what I’ve made at startups, for 35 hours a week, no overtime, no on call, and clear expectations of what success looks like for both myself and my team. I get six weeks of PTO (real weeks, not “unlimited”), 4 months off if we have another kid, and significant bonuses, while being fully remote. This is at what you’d call an “enterprise”. I am happy to keep existing lines of businesses in maintenance mode for the above comp. My work is just work, I find satisfaction outside of it. My comp and work life balance affords me the ability to indulge my curiosity and academic endeavors outside of work while also providing high quality of life to my family. As a friend once taught me, “Money and wealth are options, and options are freedom.”
      • sdfin 5y ago
        Is that 35 hour work week the one available in France? That sounds awesome, it allows a nice work/life balance.
• mad_ned 5y ago
  It also makes a huge difference if the startup is your primary source of income or not. My wife worked for several startups, all of which failed. But since I had a more stable paycheck, it wasn't so bad, and we just treated the extra startup income as a bonus, and had very low expectations on cashing in on the equity.
  • erwald 5y ago
    though at that point it sounds no different than a hobby, really.
    • amelius 5y ago
      This is the promise of UBI. Everyone can work on their hobby.
      • rriepe 5y ago
        I don't think mad_ned can afford all of us.
        • asddubs 5y ago
          they don't call him mad_ned because of his sound decision making
      • ghaff 5y ago
        Enjoy working on your hobby on the government's $1,000/month because that's what any remotely plausible basic income is going to be like.
        • lotsofpulp 5y ago
          UBI is not about working on any hobby you want. It’s about redistributing wealth so that people can negotiate for more of the pie since the current system relies on using the cumulative wealth of one’s ancestors to determine their bargaining power.
• jFriedensreich 5y ago
  On the other hand i think working corporate jobs is also still way overrated (even if it is maybe already rated low). Whenever I think this will be different i want to shoot myself after 1 or 2 months latest, working for a startup just is the lesser evil.
  • sbarre 5y ago
    It depends what you value.. Early in my career, I wanted experience with as many parts of the business as possible, I wanted to work on really hard problems and build really cool stuff, and I could take risks.. I was young and perfectly comfortable with a bad work/life balance because I had no other commitments. At this stage in my career, I value stability and work/life balance much more, and while I am still looking to solve hard problems, it's not at the urgent pace that startups demand, and how I define "hard problem" has changed too.
  • AdmiralGinge 5y ago
    Yeah, I think I'd be utterly "half a bottle of gin a night" miserable working in the average corporate environment. It's hard to put my finger on the precise reason, but that kind of environment just has absolutely zero appeal to me even though I'd be earning a fair bit more. Money's nice, but not hating your life is nicer. I'd make a rubbish Sisyphus.
  • villasv 5y ago
    _Having_ to work (instead of the privilege of working if you want on whatever you want) is the root of evils. Startup life isn’t working on what I want, it’s agile firefight every sprint. Corporate life wasn’t working when I wanted, it was plowing through the day unproductive and unmotivated.
• cudgy 5y ago
  What is success? The article assumes for the most part that success is mainly monetary, and further it makes the classic mistake of comparing success monetarily to companies like Facebook. Success is different depending on many factors. For example, if a person needs or likes guidance and structure, a startup is likely not a good fit, especially when they are inexperienced. There are some good points about the strong community in startups and how it can be used to encourage excessive work hours and lower pay. However, that same community feeling and sense of purpose is what I remember fondest from working at startups. In addition, startups give you access to other capable and driven people that you might create a startup of your own with … much less likely at a large company full of risk-averse employees who work on a small piece of the company’s “mission”. What personality type are you? The author likely comes from a structured, religious background and prefers the “certainty” of a corporate environment. Some of us were raised by hippies with little or no religion and high structure. People like that are miserable in highly structured environments in which gaining a sense of the “mission” is impossible. The main point here is that career decisions are highly personal and one person’s hell is another person’s heaven.
  • geofft 5y ago
    > However, that same community feeling and sense of purpose is what I remember fondest from working at startups. In addition, startups give you access to other capable and driven people that you might create a startup of your own with Depends a lot on the specific startup and specific big company. The 50-person startup I worked at right out of college never really found product-market fit, and tried many things, and the product I worked on (and deeply enjoyed working on technically) was always a second-class product to the business. And we were selling B2B software, so I was never motivated by wanting to change the world, just by wanting to ship some cool software. I get that same motivation at my current 1500-person employer, where I work on developer tools; I get to work on interesting technical problems, and the fruits of my work go to help people in, frankly, the same industry as most of our customers at the startup. I'm a little more involved in what out internal customers actually do and therefore find it more motivating to help them, though the work they do, per se, isn't interesting to me. And there are plenty of driven, passionate, and friendly people around who care about the same problems I care about, and it's much easier to find a few of those people and make a community when I've got orders of magnitude more people to try to work with.
• yawaworht1978 5y ago
  To work in a start up some times can be good, if you are a self starter and they appreciate that. Just never do it for "equity" unless you have enough money on the side. But to spend the vast majority of the career in a startup without being one of the founders is not recommendable I think.
  • nipponese 5y ago
    Yes, it’s hard to explain that some people just want to “run fast”, and can’t operate in any other workplace environment.
    • yawaworht1978 5y ago
      Hard to say which one's the worse place to be, hiding behind massive corporate walls or the ones hiding behind the " break it, apologize later" MO. The latter will not fare well in a corporate environment, unless backed up by managers. I simply alternative the environments when I get a decent proposal. I have seen successful startups turning into Byzantine corporations pretty fast. Bad things start to not be fixed anymore, instead more manpower with less quality is thrown at the issue, this is one of the tell tale signs that it is time to go if you want to learn something else. I have found that learning useful things on a job is more important than whether you are in a startup or in an established corporation. The moment you stop learning and no promotion is in sight, promote yourself, by changing companies if need be.
• user3939382 5y ago
  In my experience as a manager I’ve found that the two major motivating factors for most people are stability and vertical mobility, and that most people and organizations favor one at the expense of the other. Startups, especially early stage, are great for those who value the latter. You may not choose the opportunity for “two in the bush” but that’s the compensation some people want.
• marcinzm 5y ago
  In my experience startups, equity NOT included, pay worse than big tech companies but better than non-tech companies. So if you can get into big tech companies then that's better financially but if you can't then startups beat the alternative.
• markus_zhang 5y ago
  What about ownership? In a startup individuals can and often do take charge of a piece of business, be it technical or marketing or others, but in an existing business you won't have much ownership unless you start from the beginning (i.e. as a startup).
• geofft 5y ago
  > Rather than being treated as rare phenomenal outliers, these unicorn companies are a necessity for venture capital funds to be successful. So when a startup takes those venture dollars, they are almost always going for a big exit, or they’ll be pressured by their investors to hyper-growth their way toward one. Extreme risk, extreme reward. To expand on this: Venture capitalists are incentivized, by the nature of how they invest, to drive companies towards becoming unicorns and attempting the extreme-risk-extreme-reward scenario. If you put $10M towards a company, and it says "Great, we're stable and our employees are happy and productive and we're building the cool thing we wanted to build and we're about to get enough sales to break even" and it doesn't hire or grow, the investors won't see the $10M back for a very long time. That scenario is only slightly financially better than the company shutting down, and in practice, given that the investor needs to keep thinking about the company, being on its board, etc., it's not worth having that distraction. So even if your company would be successful, if it's VC-funded, it's going to get pushed to be either hyper-successful or to fail. And even if it's hyper-successful, it will probably experience mission drift. Early employees at Tiny Speck who wanted to build a neat MMORPG are probably very financially happy with Salesforce's acquisition of Slack, but all that remains of Glitch is a 404 page. (Read their shutdown announcement: https://www.glitchthegame.com/closing/ https://www.glitchthegame.com/closing/) So if you're going into the startup because you're mission-driven instead of profit-driven, remember that the people who decide your mission are ultimately profit-driven.
• hn_throwaway_99 5y ago
  I think this is a really good article, but I think that one of the things it misses is that a huge reason the math works out so badly for startup employees is because founders and VCs take the lion's share of the gains. I mean, in my experience at startups, founders typically own around 40% of the equity. The option pool for all other employees is around 10-20%. Now, I certainly believe startup founders deserve far more equity than anyone else, but this highlights that the risk/reward trade-off really only makes sense for founders. I mean, what founders risk in terms of opportunity costs and lower wages is usually only slightly more than very early stage employees, but their reward is ~10-30x. The reward, in rare cases, may also make sense for C level hires at proven startups that are already growing like gangbusters, because they'll get a ton of equity. For rank-and-file, though, the issue is that even if the startup hits it usually becomes more like a nice bonus than life defining wealth.
  • eecc 5y ago
    That’s what Wiener suggests in Uncanny Valley, when she describes the windfall when Microsoft bought the GitHub shares she had the option to buy during her time there. It wasn’t life-defining, plus she noticed that many other employees didn’t have enough savings to actually exercise.
    • adflux 5y ago
      Couldnt a bank front the cash to exercise the options? Not familiar with the matter but it seems like an easy thing to get a loan for
      • eecc 5y ago
        I guess it’s still a question of borrowing money for a speculative investment, you just get a significant discount that makes profit more likely. Depending on your indebtedness (outstanding student loans, mortgages) savings and current earnings a bank could still refuse to lend you enough money, if at all
        • 5y ago
• lalokaya 5y ago
  I wish I got that advise decades ago. I joined several startups in SF throughout my journey. Took me forever to realize that not all levels of hard are the same: - Working harder than most for 1% was not worth it. Small team comradery dissolved as soon as the company started going under. Sometimes founders screwed you over at the end. Nowadays I sometimes wonder why I worked so hard for other people's companies. - Working for FAANG pays well, but golden handcuffs are not for everyone. - Doing your own startup is super hard. Emotional roller coaster. It sucks all the time, until it doesn't. All of these are hard, but the last one forces you to learn skills you wouldn't have cared for otherwise. Again, not for everyone, but if I had to pick my "level of hard", that would be it.
  • amir734jj 5y ago
    > sometimes wonder why I worked so hard for other people's companies I have the same feeling. I'm working at FAANG now but I worked very hard when I was just starting my career for a small manufacturing company to create a e-commerce website. I can't work as hard as those days, I have a back problem and I'm much older now.
• throw123123123 5y ago
  Onne important point of startups that pay less than established companies is that it is the best way to get into the industry by outsiders. Sure, if you can choose a FAANG or similarly sized company, startups are not a great bet at all. But FAANG big as they are are a small fraction of the action.
  • moolcool 5y ago
    There's also the geographic restrictions if you want to work at a FAANG
  • thrav 5y ago
    This is a huge one, which won’t work in the best startups, but is a great strategy for someone trying to break in —- leverage a position at a cool tech, bad market fit, middling or even failing startup. When my Mountain View startup disbanded, most of the team dispersed into Google, Facebook, Salesforce, and other large soon-to-IPO companies. Almost everyone ended up in a better place, and many of us would’ve had a hard time doing so before we joined.
• tmcw 5y ago
  Little to argue with on the fundamentals here, but ending up in a place where everyone's winning move is to work for one of five unregulated monopolies is, ahem, a bummer, in a macro sense.
• sealeck 5y ago
  A little more nuance around different types of startups, goals, etc would go a long way.
• deleted 5y ago
  [deleted]
• geophile 5y ago
  This is mostly accurate but it misses one essential point. And so do many of the responses here. One of the reasons to work at a startup is to get a lot of responsibility for something interesting to you, the sort of thing that wouldn't come your way outside of a startup, for a long time, or maybe ever. The point in the article that comes closest to identifying this regards "calling", but that's not the same thing. I am 64, and worked in many startups, from 1988 through 2013. My main criteria for evaulating a startup were interesting work, and potential financial reward. I would also try to avoid companies whose business model didn't make sense to me. This worked out pretty well. I started out on an academic path, went to an industrial research lab in the 80s, and this led me to the startup world, where some ideas in software research were used as the basis of innovative products. I wasn't comfortable as a pure academic, and I loved writing software, so this was the right path for me. At each new company, my thought was: if the business fails, at least I've had fun and worked on interesting software. And this often worked out very well: - Startup 1: The company was building an innovative product, really a new category of software. I was given responsibility for one huge part of it, and this was my first job ever in which I was being paid to create software (as opposed to research). The company had a modest IPO. Nice payout. In my last couple of years, I started a new project which was rejected by the company. But this led to ... - Startup 2: I took a summer off, built software based on my ideas, and merged with a startup that had complementary ideas. We needed each other. So much fun. This company was acquired toward the end of the dotcom bubble. Nice payout. - Startup 3: Post bubble explosion, my choices were a consumer startup or interesting tech at a non-startup. I chose the consumer startup. Pretty dull, although fascinating from a sociological point of view. I left when I got bored and tech startups were happening again. Minor payout a few years later when they were acquired. - Startup 4: My favorite. Fascinating project, three key pieces, I built one of them. I also really enjoyed building the tools to support the development and troubleshooting work. Acquired by a huge company. Nice payout. - Startup 5: Really interesting idea. I loved the idea so much that I missed the fact it should have been a feature of a product, not a product by itself. Oops.
  • raspasov 5y ago
    This! My guess is this is more wealth and range of experience than 99% of the people on this forum. I encourage everyone to read this comment.
• notjustanymike 5y ago
  I personally work for startups because I prefer building and owning big projects over maintaining someone else's cog in the corporate clocktower. I'm not interested in working on the "retention" team, or the "console ad integration" team. I want to build the main thing and feel like I make an impact every day I go to work. It is possible to do that at a larger business but the odds are stacked against me. Google has a history of killing large projects, and the thought of two years work being cancelled by an accountant because it didn't make enough money just sounds draining on a completely different emotional level.
  • rrdharan 5y ago
    The average engineer at a startup is far more likely to work on something for two years that ends up being pointless, and canceled, by economics, when the entire startup fails.
    • WJW 5y ago
      Or even if the startup is successful, because no initial MVP survives 10x userbase growth. Every company I've ever worked for was constantly reworking parts of the codebase that were "good enough" 2-3 years ago but aren't anymore.
    • cblconfederate 5y ago
      But if you view your work as something that you do primarily for yourself, you end up with a net gain
• hewrin10 5y ago
  Reason 4 for joining a startup is very underrated. Not all of us studied CS in fancy schools
• anon12345678910 5y ago
  I did it, took a lot of risk and it has paid off somewhat. I chose to work at an early stage startup, in my home country (which is known to be adverse to entrepreneurship), in a very monopolized market, even though I could’ve easily moved abroad and joined a big company. Despite all the odds it worked out for me financially and I’m proud of what we achieved, but I realize it was basically gambling. My advice is to take a shot at it if you’re young, but try to aim on ambitious startups so you can balance the slim odds with huge potential upside.
• annoyingnoob 5y ago
  I've worked at several startups. If you are new to stock options, I think that the different ways those options can work and be diluted is the hardest part to grok. Personally, I never had to 'take a haircut in comp' to work at a startup, but I've had bad stock deals. I would say that each of my startup experiences had some dark times, it wasn't always easy by any measure. At the same time, each of those experiences provided a lot of personal growth and opened other opportunities for me.
• k__ 5y ago
  For some people it's just that they like to try new stuff. I did employment and self-employment with consulting. Trying a product business is simply an interesting new step.
• christiansakai 5y ago
  This is why I just do crypto. Say what you want about crypto, but the risk reward ratio is easily exceeding lotteries and startup lotteries. Edit: and I do it while working at one of the tech giants. Paycheck goes to crypto.
• podric 5y ago
  I heard that being an early startup employee is also a great way to fast-track to a leadership/management position, as compared to working at a big corporation. Is there any truth to that?
  • parsley27 5y ago
    I think that is true in the case of the growth startup I work at; probably 25% of the leadership started out as early individual contributors, and if things go as expected over the next few weeks, I will be making my first big step toward leadership after just six months at the company. I never had any internal career growth at other jobs in larger or more established orgs.
• dleslie 5y ago
  I generally agree, having worked for a number of startups most of the concerns seem valid; however, there is a unique arrangement that has benefited me: As a Canadian, I can generally make a higher wage working for an American startup than working for anything local. Usually I can expect 1.5x to 2x over the mean local rate for my skills and experience; and since I don't _need_ health benefits and I enjoy guaranteed parental leave and such, it works out quite well. I'm happy, and the startup is happy because _I'm still paid less than an equivalent American_.
  • cmrdporcupine 5y ago
    Yah there's another aspect to that, too, which is that American startups are in my experience better managed than in Canada and the investment and startup community far better in the US. After working at a local startup it becomes clear that most of the founders all know each other, went to private school together, etc. etc. it's kinda gross. A bit over a decade ago I worked at one, had a bad experience, and then went to work for a New York HQ'd late stage startup -- higher pay, good management, decent people, decently managed, and was acquired by Google a year later.
  • sinablk 5y ago
    That's interesting. I've just started working for a Canadian startup based in Vancouver and the pay is actually "fair" Canadian market price for someone of my experience level. Not sure if it's a difference in culture but my small team (a mix of Canadians and Americans) is super respectful of people's personal time. e.g. no texting during after-work hours even with tight and critical deadlines. You're also free to run a personal errand during work as long as you deliver on your tasks at the end of the day. And since it is an interesting work with lots of learning opportunities, a lower pay (compared to an American startup) is a nice trade-off for me if I get a more relaxed work environment. Although I'm sure this is not true of all startups in either country. I'd love to connect with you and share experiences. Feel free to message me on Discord (Tag in my profile).
• flippinburgers 5y ago
  Underpaid and overworked. That is what one gets out of startups. I unfortunately seem to be permanently stuck grinding for startups (10+ years). Don't do it to yourself. It isn't worth it.
  • tolbish 5y ago
    Might I ask why it is infeasible to apply for a job at a non-startup?
    • mcguire 5y ago
      When your CV is a list of failures, it becomes self-reinforcing?
      • bradlys 5y ago
        You can join FAANG and similar. I've had almost nothing but failures on my resume and I was able to interview all the time. It's just about grinding LC and system design - which is really tough and time consuming.
• ShiftPrintBlog 5y ago
  Social enterprise/public tech startups more often than not are very warm places but then the financial/ESOP discussion become something else
• sreeramb93 5y ago
  This is india specific, I chase startups which are best bet at implementing govt policy or is it a problem that I am facing. 1. One was recruiting phase as median age of India is low and adds overwhelming number of new workers every day. Google uses it. 2. Second one was a fintech during digital india phase. 3. SAAS with global sales and high scale (rpm) All three were hard and very fullfilling. I made a lot of money with fintech one and learned a lot on engineering at scale with third one. In the first one, I made lifelong friends and got to meet important people, attended VC talks and part of decisions like hiring PM as new grad, VC was very involved with CEO about it. Something my salary could not quantify. If I were to do it again, do it well with patience rather than arrogance and anger against founders.
• kingsuper20 5y ago
  I was just musing about how the definition of 'startup' has changed. I've worked in a couple plus a few post-startup small companies, but they always involved a fairly expensive piece of boutique hardware. At best, stock options might mean a decent bonus after a few years and you work as long as they pay you. You take the job because it's interesting and because it's more fun to lay track than to fix it. Using folding tables is always better than dealing with some middle managers three ring binder of yearly performance review. Seriously, just how many startups in the last ten+ years involve anything but some sort of internet service/social media/advertising software construct with (usually) the hope of selling the company? It all sounds kind of depressing.
  • cmrdporcupine 5y ago
    Yes, for sure, back in the 90s I fantasized about getting to work for a company like that. Just working on really neat tech, and getting to have some creative input and some technical excitement. I'm sure companies like this exist still, but the term "startup" and the investment around it seems to have been swallowed up into the kinds of things you mention.
    • kingsuper20 5y ago
      Looking around, I've been really blessed by putting together a full career of that very sort of thing. Some things you have to watch, especially if you are selling domain knowledge as an employee, is that products in a given subindustry will tend to become cheaper/higher volume/lower margin over time, the push for Asian manufacture always becomes a reality, and as companies age they acquire the anchor of supporting and repeating old products.
  • novok 5y ago
    Now it's ikea LINNMON reinforced cardboard tables, but same ethic :P
• SilurianWenlock 5y ago
  The math changes if you live in London/Europe where the big company salaries are much lower
• lbacaj 5y ago
  The article is good but it’s missing a big point that equity in startups is tied to risk taken not to contributions. Many people, including myself, make this mistake the first round at startups. The mistake of believing if you work hard the outcome will be good. I wrote an article a little while back on how this relationship works and how it follows a logarithmic and exponential relationship, risk and equity, and how human minds are terrible at understanding those scales. For anyone interested: https://louiebacaj.com/equity-and-risk/ https://louiebacaj.com/equity-and-risk/
• moron4hire 5y ago
  I firmly believe that one should never, ever take a pay cut to work at a startup. We've all heard the numbers, 80% of startups fail in the first year, by year 5 it's 90%. If you're taking a pay cut, you're not building savings for the inevitable thin times. When the startup fails, you're going to have a period of zero pay while you look for a new job. How long is that period going to be? If anything, one should be demanding more money. And this is especially true if the field is one you're excited about working in. You're putting yourself at an emotional disadvantage. You're more likely to put up with missed paychecks because you're supposedly "working your dream job". And when you end up in a bad situation, if you don't have a cushion of cash to fall back on, it could very well sour your view of your "dream".
• cmrdporcupine 5y ago
  Fun story, I worked at as employee #3 or #4 or something at a startup many years ago, and it was fun at first, trying out various product ideas and strategies and pivoting a lot. Then the first serious funding crunch came, and the founder ran out of money to pay us, so we worked for a month without compensation. Except during this unpaid period the founder took off to Costa Rica to "work on his vacation" while we continued to work in the office with delayed pay. He came from a wealthy background, while I had a young child and a pregnant wife at home and a mortgage to pay. So he didn't really get it, I think, when I raised a stink. I was offered more stock options and a higher title to retain me (without that title being communicated to anybody else). But a mark was put on me for my whining and my attitude and the founder's attitude toward me took a turn. He pivoted again, and I was either fired or I quit (I was already interviewing elsewhere and had an offer) depending on who you talk to. Through some hand waving the ability to buy the options disappeared, though I couldn't be bothered. He built that business up, and a few years later he sold for an OK sum. But the business itself was dubious, I doubt the company that acquired his business kept any talent or tech worth anything and he's now living in Costa Rica. The people I know who worked there and were there from day one certainly didn't get rich. So yeah, that's when my attitude towards startups in general changed significantly. I used to be very interested and motivated by being early in the process in a company and getting to be technically creative and involved in the decision making and architecture, and I loved the feeling of coding like crazy and really pounding metal on something greenfield. But honestly, it's not worth it when you start to see the kinds of people and egos involved. So I'm getting older and maybe I'm not the ultimate talent that a startup today would be looking for, but there are plenty of other people like me who've been burned in this game and their advice would most likely be: don't bother. This isn't the 80s or 90s, you're not likely to change the world tech wise, and you're unlikely to get rich out of it, and jobs at FAANGs are soul sucking boredom in many ways, but they'll treat you well. (FWIW I went from there to a later stage 50-100 person company that was acquired by Google a year later and did OK out of that, but that was a properly managed company run by ethical human beings.)
  • gnicholas 5y ago
    > acquired by Google a year later and did OK out of that What does it mean to "do OK" in an acquisition by FAANG a year after you joined? I would assume if you didn't think a liquidity event was coming soon, this would be seen as a windfall (assuming you were retained).
• domano 5y ago
  Man, if i look at the numbers people are throwing around i start to think that Europe is another planet. Well at least we have better social benefits all around i guess.
  • wreath 5y ago
    We do indeed have better social benefits. But are they really benefits for a SWE in 2021? The social benefits in Europe are great for people with low-mid salaries but as an SWE, I'd rather take a US salary with less social benefits than a European salary.
    • astrange 5y ago
      Benefits for a SWE in the US are probably better so long as you stay one. (My medical benefits are better and cheaper than the universal ones in other countries I’m a citizen of.) In retirement you might be better too. The US does have a lot of welfare, it’s just mainly targeted at the old and poor.
• 1billionstories 5y ago
  100%
• jhbao 5y ago
  This article isn’t about if you should join a startup vs. a big company. It’s about if you should join a startup vs. a FAANG company, which offers outrageous compensation & benefits. From that perspective, FAANG is the obvious choice 99% of the time. The more and apt comparison would be if you should work at a startup vs. a corporate job at a HP or Qualcomm. At those type of companies, compensation is not competitive (they often off-shore), benefits are tight, and the work is not interesting. It could very well be argued that a startup, even with high probability of failure, would be more fulfilling.
  • hashkb 5y ago
    Does anyone consider FAANG to be startups? I'm confused by your comment.
    • dinkleberg 5y ago
      No, what they are saying is that people present a false dilemma where your options to work are either at a FAANG or at a startup. Most people work at non-FAANG companies. If you're going to do a write-up on relative merits of working at a startup vs a larger company things are going to lean heavily in favor of the FAANG because the overall risk to compensation is much more favorable. But if you compare a startup to a more standard tech company then each side will have more pros and cons.
      • ergocoder 5y ago
        Ya, if we compare startups with say Walmart or Bank of America or InfoSys, startups probably win.
    • bdcravens 5y ago
      No, and I don't think that's the parent is suggesting that. They are saying if you are looking for a challenging, highly rewarding role, FAANG is a better fit than startups.
  • deleted 5y ago
    [deleted]
• claaams 5y ago
  I'm at a start up and the owner has no intention of going public lol. Oops
• itake 5y ago
  The author also fails to mention the stock option trap. I've seen offers at early state companies like this: * $150k base (take-home $100k) * $30k/yr options that expire 3 months after you leave or 10 years. You have to either set aside 30% of your take-home to invest in a extremely high risk single stock or you're chained to your desk until the company exits. If you golden handcuff your way to an exit, you better hope the exit happens before the 10 year mark when your options expire.
  • hluska 5y ago
    The ten year expiry is an IRS rule for issuing an ISO.
    • itake 5y ago
      Interesting. didn't know that.
• femiagbabiaka 5y ago
  Almost everything mentioned about startups here has an equivalent trade off at large companies. It’s particularly amusing that he mentions Facebook towards the end as a potential place to work, given the pockets of high stress and long hours that I’ve heard about from folks who have worked there. Most of FAANG is no different. In comparison, most startups that I’ve worked at valued work life balance highly. Every workplace has trade offs, it’s the nature of the thing. The compensation imbalances at large companies are bad as well, for example, it’s just that the total increase in company income allows for much more competitive packages overall. Really this is more of a question of: what do you want out of a job and career? If you want to maximize compensation, go for that BigCo job. But that isn’t the only valid thing to maximize for, which the snark about “higher callings” towards the end misses. Higher autonomy, less complex organizational politics, More ownership of big problems, potential for better alignment between your values and the companies mission, etc. etc.
  • jchonphoenix 5y ago
    Having been at FB as well as multiple startups that became unicorns, I can tell you the "high stress" at FB is nothing compared to startups. On a whole, FB is a great place to work with very solid WLB. My theory on the FB comments is because a lot of employees at FB have not worked elsewhere and compare to friends at Google or Microsoft. If you compare FB to startups or even finance, you're working significantly less with less aggressive targets and pressure.
    • femiagbabiaka 5y ago
      At large companies the culture and expectations are not uniform across business units. Which is why I was careful to specify pockets vs. a global experience. As far as your experiences, now it is anecdote vs. anecdote, nothing to be disputed there.
      • jchonphoenix 5y ago
        Agree, but I've been inside multiple pockets of FB including one that is consistently considered one of the worst. Even if did not compare to startups. Anecdata can be very reliable if you understand the source
• SilurianWenlock 5y ago
  Are the odds worth it if you are a founder or cant work at a FAANG in the USA?
• GiorgioG 5y ago
  In the best of circumstances working for a startup is akin to playing the lottery. I worked at a startup almost a decade ago and I took (nearly) no equity in exchange for a much higher salary. The startup failed not long after I left. If you just want the experience of working at a startup, go for it. But don't do it expecting any financial reward beyond of your salary.
• alecco 5y ago
  The key thing I recommend is to *prioritize who you want to work for* (or have as clients). People who will care about your well-being. Find what they need and try to match your skills. I had my own startup at some time, and worked for both other people's startups and for big corps. I used to maximize career and CV over quality of life. I was easy prey to assholes/takers/sociopaths. Burned 15 years of my life without much to show. On the upside, I really appreciate now working for good bosses and good leaders. I could easily earn 1.5-2x in a soulless corporate job. But I know my current employer would go out of its way to try to not screw me over while the 2x employer will throw me under the bus the second I stop being useful. You can study or do research on your spare time. Good bosses will understand if you eventually move on. And some might even help you progress against their convenience.
• SergeAx 5y ago
  The article is quite comprehensive and well written. There's also a lot of assumptions and false alternatives, like that people work to maximize financial outcome or that there's an equalprobable choice between working for startup or for FAANG. My opinion is to try working for early stage startups while one is young and idealistic, choosing it by heart, thus maximizing its chances to success. Getting familiar with different techs and stacks. Getting a good networking while visiting meetups and hackathons. Even if the startup won't fly, it will help to get much more interesting position in established company later.
• davidw 5y ago
  I would love to see more small-ish companies in a niche with a good product, and competent people that are maybe slowly growing, but not on the rocket ship ride. That kind of environment has always felt like a place where you can get good work done.
  • cmrdporcupine 5y ago
    Exactly! But it could be that a company like that is just really hard to run now. Investment very difficult to get and potential talent eaten up by FAANGs.
• dboreham 5y ago
  jwz pointed this out long ago.
• zallarak 5y ago
  I've worked at 3 startups, founded 2, and worked at 1 bigco. 2/3 startups had excellent returns in the form of equity. Life changing over time. Startups: 66% hit rate. Bigco was mentally draining and sucked. Bigco: 0% hit rate. Starting the first company was a failure, but the second one seems to be doing pretty well. 50% hit rate.
• nt2h9uh238h 5y ago
  Startups are the most efficient organisations in the economy. Because you have to get shit done and can't fuck around. A lot of people love to fuck around and do "fake work". Only output and impact matter. Hard work is "hard", and at startups you can't hide "not working". It sounds pedantic but that's quite the reality, a lot of people just don't know what "work" feels like, and don't want to do it.
  • rantwasp 5y ago
    hah. nope. you are simplifying things a lot. working hard does not mean shit. whenever you hear someone saying they want hard workers you should turn around and run. delivering results is where it’s at. people do this at startups and companies of all sizes. nobody is gonna keep you and pay you if it does not make financial sense. what happens in the case of a startup is that a lot of corners are cut in order to get something out the door and gain customers/marker share. it’s do or die. but: this corner cutting has its cost that, if successful, you will pay back with interest in the later stages. it’s not good or bad. it just is what it is. bigger companies have more structure and are better about both optimizing for cost (ie we don’t want to build something that will cost us X now and 100X over the next 5 years) and optimizing for risk (if X leaves or we learn about Y market factor we should be able to keep going without going bankrupt). the “what work feels like” is some bs. you define what work is for you and diminish other people that just don’t know the feeling. please.
  • gorbachev 5y ago
    I guess you haven't worked at a dysfunctional startup. Dude...there are all kinds of startups, as there are all kinds of other types of companies. Good and bad. With incompetent or competent bosses. There are plenty of people who fuck around at startups. Plenty.
  • jdhdhdush7363 5y ago
    Lol! It is possible to work hard but expend time and effort in the wrong things. Startups, especially if founding teams fo not have deep industry experience, spend a lot of time reinventing the wheel and rediscovering various footguns because they often cannot afford experienced professionals who know better. So there is quite a bit of wasted motion at startups. Working hard != working smart
• stephc_int13 5y ago
  A starving wolf asks a very well-fed dog what he should do to be bulky too. The dog advises him to put himself at the service of a human: the services rendered, he will be spoiled. The wolf then realizes that the dog has a wound where the human puts a leash on it. When he finds out that this injury is from the object depriving him of his freedom, he decides to run away with his freedom and return to the woods. This animal fable opposes two animals similar in morphology but which have two different lifestyles: one is wild and the other is domestic. This confrontation allows La Fontaine to present two conditions: the insecurity linked to freedom and the comfort linked to servitude. https://fr.wikipedia.org/wiki/Le_Loup_et_le_Chien https://fr.wikipedia.org/wiki/Le_Loup_et_le_Chien
  • mcguire 5y ago
    If the wolf is truly starving, the only thing he is free to do is search for his next meal---at least until he becomes too weak to do that. Freedom requires some level of security.
• neilsharma 5y ago
  I've been an early engineer (first 3) at a startup. I didn't stick around long enough to vest for reasons, but in hindsight, it wouldn't have been worth it financially even if I had. They eventually got acquired by a big brand name Silicon Valley company after 4-5 years for an undisclosed amount. My 0.4% plus salary wouldn't even break $200k/year in total unless the company sold for a fair amount above $100M. Later in my career, I have had offers at seed stage companies. The compensations were marginally better than the one described above, but most still needed to 10-15x in value over 4 years just so the annualized comp would match the base annual comp at various series C/D companies I also had offers at. Given the risk, often poor culture, rampant inexperience in leadership, and long hours, the upside is only worth it as an early employee if the company is a unicorn. And every founder says their company will be a unicorn... After starting a few (failed) companies myself, I've come to adopt the mindset that the total equity allocated to the founding team (pre-seed + seed + maybe series A) should be around 20-25%. Everyone after should get 15-20%. In the event of a $100M exit, there should be no scenario in which the founders/investors walk away with a win financially, but the early employees do not. The early employees took the same risk and secured that win, and thus should be rewarded accordingly. Edit: fixed grammar and re-ordered sections
  • auspex 5y ago
    At the end of the day it is a lot harder to come up with an idea, find market traction, convince people to invest in you than it is to become the third employee. Additionally, a 100M exit isn't always a win. It depends on how much money was invested / spent to get there as well.
    • neilsharma 5y ago
      I agree; founders should have substantially more equity than any one early employee. But its not just about which is harder to start as (founder or early employee), but also the time/energy/emotion invested over years to bring the company to a successful scenario. Being a third employee is still pretty hard if you are working 60-80hrs/week for years and making major life sacrifices. And you're right; $100M exit isn't always a win. That was a somewhat arbitrary milestone I used to do quick math.
• ryanSrich 5y ago
  I’m biased because I run a startup and have only ever worked at startups. But I’d say it basically comes down to different strokes. If you’re in it just for the money AND you have the background and interviewing skills to get a job at a FAANG then you’re better off doing that, you’ll make far more money. For me though, there’s not many salaries that don’t end in “million” that you could pay me to work at a FAANG. Not only because I mentally couldn’t deal with the people (see Apple’s latest debacle), but because your impact is essentially meaningless. Working on some tiny little fraction of a fraction of a feature means I’d basically have to not give a shit about my job. At that point you’re just a wage slave. A well paid one, sure. Additionally, building a successful company is one of the most rewarding things you can do. True American capitalism is a thing of beauty. Taking an idea, building a product, and creating value. Working at a startup is a good first step in building your own.
  • JoeAltmaier 5y ago
    Wow and a startup employee is different? Not a wage slave? So many more compromises in work quality and delivery get made at a startup vs FAANG. Not building a quality product. Building an MVP that fools a few early adopters to part with their money. Then sell out and cash in (not you; the founders). Ok not a wage slave, because the wage isn't worth it. To work overtime without compensation or really any hope of compensation, to help somebody else win the lottery. Just a sucker I think.
    • ryanSrich 5y ago
      If you want to make the argument that working for anyone other than yourself is wage slaving I won’t fight you. The difference to me though is that you typically own (or have the right to own given enough commitment) significantly more of a startup than a FAANG. Granted, your chances of owning anything of value is low, but that’s a risk I’m willing to take over making Bezos and Zuckerberg that much richer. Knowing I’m contributing to their wealth is not something I’d care to live with. But again, different strokes, as I said.
      • rantwasp 5y ago
• asdev 5y ago
  It's way easier to build up experience and get your hands on impressive projects than at behemoth corporations. FAANG is not what it's all cracked up to be for 95% of people joining these days
• JoeAltmaier 5y ago
  My son was part of a >$300M buyout. His half-percent netted him some hundred thousand. Didn't make up for the lower salary at a startup for the couple of years. The schemes VC's and founders use to skim all the fat are legion. He's now starting his own company, doing something socially useful that he can be proud of. Got a good team and making good progress. Will see MVP in a couple months!
• softwaredoug 5y ago
  10+ years ago part of the allure of tech startups was they really “got” what made technologists jobs fulfilling. Back then companies had management that had no idea how to build high quality software. There was lots of waterfall like process and TPS report style bureacracy. Fast forward to the present. FAANG companies dominate the economy. They pay well, offer upside in actual stock, AND most crucially: they do a better job giving more fulfilling tech work than most startup Who wants to work at a startup where management likely sucks? They might have no real track record building good tech or empowering great technologists. You’d rather have your 40 hr / week FAANG job doing what you love, spend time with your kids and family, where you know the balance of risks means you’ll likely end up in a position of upper middle class life (if not outright wealthy...)
  • taurath 5y ago
    The current stereotype among my circle in FAANG is that they move slowly and you’re more likely to be working on something dreadfully boring and also have few opportunities to branch out. That’s what keeps a lot of people going to startups though I agree with the OP the financial and work life arrangement gets less and less ideal.
    • reikonomusha 5y ago
      More anecdotal experience, but I agree. Most people I know doing FAANG only “don’t hate” the work, but love the pay and benefits, and the fact that laying low rewards them. Quizzically, previously politically active friends have turned quite quiet about their beliefs and morals as soon as they started earning a fat paycheck from Facebook. For a lot of people, vast amounts of money really is the most attractive aspect of a job.
    • throwaway052221 5y ago
      This stereotype doesn’t hold true for Facebook. On excitement: As a software engineer you get to choose the team (out of 100s) you join after completing bootcamp. Unless you intentionally choose something boring I just don’t see this being the norm! You are also free, and often encouraged, to switch teams every few years. On velocity: This may be more subjective but as someone who has worked at 2 startups and founded another I’ve not noticed too much difference in pace. It’s been a very fulfilling experience for me.
• encoderer 5y ago
  Startups shouldn’t be romanticized so much, but it can be a good job. A good startup experience can help you figure out what you really like to work on. In a big company things are already specialized — it’s pretty hard to be a data engineer and move over to the android team. Not impossible, but hard. That’s why people say you go to startups to “learn” — because in our line of work you learn by doing and in a startup you can usually do a lot.
• tarkin2 5y ago
  Between working for a startup and a corp, I can't say I have massive emotions either way now. I'd definitely suggest working for a startup at one point, but not for too long, while taking care of your physical and emotional state.
• rohanstake 5y ago
  It depends. If you want to learn a lot, get a sense of startup, have great founders, bootstrapped company then startup is a good idea. Especially at the start of your career. But if you are late in your career with family, responsibilities and health issues - then startup isn't the best place to work. I hope - you decide weighing everything and enjoy the process.
• globular-toast 5y ago
  This makes me think of the composition fallacy[0]. There is another, more specific, term called the "apex fallacy". The idea is that people have a tendency to see only the most successful representatives of a particular group and infer that the group as a whole has an advantage. [0] https://en.wikipedia.org/wiki/Fallacy_of_composition https://en.wikipedia.org/wiki/Fallacy_of_composition
• oncethere 5y ago
  I agree that the math is very poor for early employees. I went through the best case scenario and it still wasn't worth it. I joined a startup just after their series A. I was offered what they said was a lot of equity (1/2000 of the company). I ended up with the best case scenario: it grew like crazy and 8 years later went public at a multi-billion dollar valuation. My shares had gone up more than 100x. My payout was good, but financially not worth it. The company raised a bunch along the way (I stopped counting after series G) so I got diluted a fair bit. I also took a lower than market salary for the time I spent there (which was of course justified by the fact the company was growing so fast and people were jumping to hop on a rocket ship). I ended up with low 7 figures, which, yes, is amazing, but I actually would have had more at any FAANG company during that same period. So who really got paid? The founders and the executive team (no matter when they joined). It was a good experience, but startups, financially, are not a great move.
• gcheong 5y ago
  Most people I know working for a startup as an employee are doing it mainly because that was the job they could get at the time they were looking not because they were deliberately looking to join a startup. Whether it’s financially or emotionally optimal is usually secondary to basic survival or at least not wanting to have to deal with current tech hiring practices longer than one has to.
• rahulpadalkar 5y ago
  > Say you have a 2% chance of picking a unicorn and being a member of the founding team. That 2% is honestly way too high for most people, and perhaps a bit low for others, but a good median to anchor on. $10M * 2% = $200K. And realistically you’re only going to get that this tranche of equity every 3-4 years at most, so that’s a risk-adjusted value of $50–$66k. I didn't understand this math, 2% is the chance of it being a unicorn. 1% of 1B is 10M is the amount you might get if the startup sells for 1B. what does 2% of 10M signify?
  • luca3v 5y ago
    $200k is your expected equity payoff if you have a 2% chance that your equity is going to be worth $10M and a 98% chance that it's going to be worthless, which is the simplified model used in that back-of-the-envelope calculation
• hinkley 5y ago
  Many of the things I think I would enjoy about working for a startup are actually the qualities I enjoy about working on a small team. Not at startups retain the small team mentality for long. Not all small teams are at startups. Plenty of large companies build small teams for new ideas but they too have the problem of often not staying small for long. Empire building is a hell of a drug. But you can often see this coming and I’ve known a couple people who were very good at moving horizontally within a company every few years to avoid most of these sorts of problems.
• softwaredoug 5y ago
  Are there VC firms that invest labor instead of direct capital? It seems they could have a group of amazing, employed devs ready to hit the ground running, then continue on if the VC firm continues to invest. They could train the next tier of tech talent when the company could pay more competitive salaries, then step back to go to the next investment. This VC firm could give real equity in the firm to the techies, meaning the technologist could also benefit in the upside of whatever unicorns the firm invested in...
  • csa 5y ago
    I think that this is generally more common in PE (investing with both capital and key labor roles) than VC. That said, good VCs often have vast formal and informal networks of folks they can tap to work with a specific start up. Whether that talent is reliably good or not is a different issue.
• flybrand 5y ago
  There are a lot of great things about being in a startup, and many people have done well financially and personally with that career path. It's also true that a great deal of the promotion of this career path is propaganda that benefits owners - both founders and financiers.
• mikeappell 5y ago
  Stories like this make me glad my company has yet to accept VC money. We're a five-person legal tech startup and the work environment is far and away the best I've ever experienced. Granted, I've only been a developer in total for four or five years now (including almost three here), but of all the jobs I've had it's the best. My CTO/supervisor is amazing: smart, funny, likable and with a management style that works for me amazingly well. Mostly hands off, but fully available for deep dives on technical subjects when necessary. At this point I've earned enough trust to be able to just get shit done with minimal oversight, though we do check in daily at least, and keep each other apprised of what we're up to, or interesting things we've come across. The lack of external forcing agents is probably a win for us at this point. Obviously there's benefits to having a pile of money to burn: we'd probably hire several more developers and really work to hone our product. But for a team with two full-time developers and a really great designer, not to mention extremely smart and talented leadership and sales teams, we're doing great, and ship features at a pace that seems to put to shame similar companies with much larger teams and far more money. Honestly, I have no idea what they're doing with their time. Still working on that product-market fit though... Anyway, tl;dr I feel like I hit the jackpot here.
• yawaworht1978 5y ago
  If the whole c level does not work the same hours and the reward is not reasonably near the horizon and the extra time is not compensated, then you are being exploited, will never see a reward materialize and your salary is diluted. Jump ship as far and as soon you can.
• xivzgrev 5y ago
  Great article. One point it kind of touches on but misses is the higher risk of “growing pains” / incompetence in startup land. Leadership, processes (lack there of) etc can all be lacking / poor. Anything from poor strategic judgement to shitting the bed on equity valuation (eg I once joined a “rocket ship” that valued its shares at $50 a piece. I realize of course share price is a function of outstanding shares but given startups want to minimize their share price, it didn’t seem well managed at all)
• wgyn 5y ago
  This is compellingly well-written but wrong, in my opinion. There's been a steady trickle of articles on the top of Hacker News that make essentially the same argument: your odds of choosing a successful startup are miniscule (2% in this one). I think this does people considering startups a disservice. The conditional chance of picking a successful company to join is way higher than 2%, or whatever the median success rate of all startups is. In particular, I think really intellectually curious, ambitious, hard-working people can, for the most part, identify each other. This is really different from reading about valuations or what other people think in the news, which leads to a lot more noise. If you meet a bunch of people at the company, you can assess the their caliber for yourself. While it's not a perfect predictor of success, it's at least the case that such people are usually working on cool, worthy projects. Based on this, it's possible to get conviction on a group before their likely success becomes common knowledge—granted it's getting harder to do this because of how much money is floating around. To put it another way, there are a handful of companies out there right now at Series A/Series B with a dense accumulation of talent. It's probably a reasonable bet to try and join them before they hit unicorn valuations, when room for growth is smaller. And in these cases, you could be #10-#40 at a relatively de-risked company and have a really great outcome. On the flip side, if you even remotely enjoy learning and autonomy, working at Google/Apple/Amazon/etc is probably a great way to set yourself up for existential frustration. It's not even a great financial proposition. Even at $500k/yr, it's 20 years—a whole working life—to make it to $10m, the hypothetical number from the article. Even if your first startup doesn't make it after 2-3 years, you can try again a few times and still come out ahead. This is a classic pg argument—I can't remember which essay—but the point of a startup is to compress decades of working life. Caveat: I happened to join a startup whose success changed my life both financially and in terms of career trajectory. I'm very biased. But this is also why I feel passionately that this article's advice is bad.
  • derekdahmer 5y ago
    > Even at $500k/yr, it's 20 years—a whole working life—to make it to $10m Just one nitpick here, FAANG companies have 2-5x’d in the last five years so with $250k of equity in this example would have had an actual comp of $750k-1.5m/year which would leave you set-for-life rich in just 5-10 years no matter which one you chose. If you have access to a FAANG job and are optimizing for expected return you have to ask yourself - is it more likely this billion dollar company doubles in value or a seed stage startup that you have 0.5% of becomes a billion dollar company?
• acconrad 5y ago
  So what is the solution for startups now? I’ve worked the whole gamut from FAANG to 1st employee (and founder of a side project startup) and I just don’t know how they compete anymore. We need innovation and new companies. But for my own side project I can’t imagine hiring someone. I either are hiring if we become wildly successful or we just get acquired with our founding team and still make an outsized outcome. It’s a grim outlook for startups but we need them
• acconrad 5y ago
  So where do startups go from here? I feel like all I hear about is how bad it is and FAANG is now the ideal. A crazy thought for a forum whose parent company’s sole income is generated by creating and funding new startups. So what are we going to do about it?
• jp57 5y ago
  This reminds me of the recent post linked on HN about "why it's a bad idea to write books." One thing I think people miss is that founding a startup, or working at an early-stage startup, belongs to a class of financially irrational aspirations that includes other things like rock-star, novelist, actor, and professional athlete. For all these careers, the financial rewards are distributed according to a power law. A few superstars take a massively disproportionate share of rewards while the expected ROI is negative across all aspirants. I stress "financial" rewards because for many of these pursuits there are intangible rewards that make it worth it even for the "losers". I spent most of my 20s playing in rock bands and legitimately trying, and failing, to "make it". During that time I had a day job, so I was working constantly either at the band or at my day job, and really not doing much else. I wouldn't trade that time in my life for anything, despite the fact that it cost me money both out-of-pocket and in opportunity cost, and only perhaps a few hundred people now remember my band. On the other hand, I had no family to support during that time, and I was willing to live a low-rent bohemian lifestyle. Early-stage startups are probably the same: the camaraderie, the esprit-de-corps, and the joy of building things are the reward. It's important to enter into these risky pursuits with your eyes open and understand that the most important rewards you receive won't be financial. If those intangibles aren't important to you, or if the base level of financial security you need is higher than that of a bohemian lifestyle, then you should look for something else.
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• gumby 5y ago
  I'm glad to read this. I have only worked in the startup environment over the last 30 years. I don't miss the big company environment and what I see from my GF (FAANG, plus one F50 brick and mortar) just reinforces that. But a lot of people choose startup jobs because they read (or saw on TV!) a romanticized version. As described in this article the very things that make it so great aren't the things that most people want...and if you try to blend in too much of the big company thing too early the company doesn't usually make it. It it much more fun to work with people who are really into that environment so anything that steers unhappy people away is better for everyone. I worked with a guy who had an extreme version of this: his limit was about a dozen people. And looking at his linkedIn he's since worked at some amazing major companies....always at the very beginning. It's just his thing.
• scott_meyer 5y ago
  Doing a bunch of math about payoffs and probabilities completely misses the most important point: When joining a startup you are a minority investor. The value of your options depends 100% on the integrity of the majority investors.
• magsnus 5y ago
  Fatfire[1] did a pretty thorough analysis of paths for financial success that ties in to this somewhat. [1] https://www.reddit.com/r/fatFIRE/comments/bxa3qz/guide_for_new_readers_probability_income/ https://www.reddit.com/r/fatFIRE/comments/bxa3qz/guide_for_n...
• babaganoosh89 5y ago
  The best way to value startup equity is based on their last valuation. Then you can quickly compare the offer apples to apples to cash offers. Obviously startups don't like this when you figure out the 50k shares they offer you is only worth $10k a year at current valuation.
• ttul 5y ago
  I don’t think you’re doing it right if you’re going to work in a startup out of a desire for enormous riches. The odds are tiny that you’ll end up better off financially than you would working for Google and collecting huge RSUs. Do it because the startup excites you, and be okay with things if the startup fails and you are out of a job. Because the economics likely won’t work out, you’ll have to derive value in other ways.
• ChicagoDave 5y ago
  If you don't want to work for a startup, then don't. Many people find value in the experience whether we got paid or not. I'd rather work my ass off for a startup than spend money on an MBA. I've been a part of five startups. One of them (and the financial collapse) resulted in ruining me financially in 2009, but it was my choice. No one told me to take the job. Three were mine (two failed, one is in hypothesis mode). The other was with a millionaire and it also failed. I learned to look at things differently because of all of those experiences and my value as a consultant today is because of those experiences. I know you can get screwed over by sketchy founders and unscrupulous venture capitalists. You should absolutely understand where you stand going in. Stock options are 100% worthless unless you have a startup that succeeds and you have a founder that is honest in their intentions. Even real equity can be diluted, so that's no guarantee. But there are always cases where the first few hundred employees make a life's worth of wealth in a few years. I hate these articles bitching about the startup world. If you're gonna bitch, maybe go take a job at a nice safe boring mega-corporation that will maybe just destroy your soul. You'll get paid on time and you'll work 40hr weeks, have PTO, health benefits. If that's what you want, then just go do that.
  • throwaway78123 5y ago
    Agreed. One of the key issue is that most people do not know or understand how the equity piece works, leaving the door opened for abuse. It doesn't have to be complicated. Two things to check if one is granted equity or options: - What is the rough value of the stock when granted? 409A is the tool for that although it is usually quite conservative, which is good for the recipient. - Do I have the same class of stock as management/founders: ensures no funny business around dilution.
• compsciphd 5y ago
  I make it very simple. you don't work at a startup to maximize the size of your wallet (at least in the short term). straight up. most startups fail. most startups pay below market. you have to value the equity at 0 at all times till its actually worth something and then it simply is a nice (or very nice) bonus. you only work for a startup if 2 conditions hold 1) the pay is sufficient for your needs (and this is not just in an immediate sense of making ends meet, but also a long term sense of being able to save for future goals / retirement). 2) the job is something you really want to do and you cannot get that experience elsewhere at a more established company. i.e. if 2 doesn't hold, why would you take less pay than elsewhere? if 1 doesn't hold, you are making a bad long term financial decision for yourself, by essentially accumulating an actual or virtual debt (need to makeup retirement contributions or other savings) that you will have to pay back in the future. the #2 point can lead to earning more money in the long term even if the startup fails (i.e. the personal growth can outweigh experience you'd get elsewhere), but this is far from guaranteed. But even then, you shouldn't put yourself in "debt" to do that.
• zebnyc 5y ago
  Unrelated, but does anyone know what happens to employee options if there is an exit before the employee's start date?
  • ferdowsi 5y ago
    Depends if the employee has signed an options agreement and those options have been approved by the board. At a recent gig I started up a few weeks before an exit. My options had not yet officially been granted by the board. My company granted my equity but they didn't have to.
• nthngtshr 5y ago
  I only ever worked at startups, always one of the first employees. Different projects, from consumer stuff to enterprise computer vision tech. Most of those companies failed. One was a moderate success (~100M valuation), and when a liquidity event came I made a decent chunk of money. I love small companies, I love the chaos, I love having that bond around some crazy idea that might never work. I love being in the know about how things work and why people buy our product and all of that. I used to want to work at Google. I have a few friends that do and the common thing I hear is that it is fun at the beginning but then it gets boring. Things move slowly, people are less excited about work and there's a lot of red tape. Not saying that it's inherently bad, it's just a tradeoff. I could see myself being into that kind of work at some point in life. --- One thing that people often miss in these conversations is that if a company is failing it doesn't take a long time to figure it out. If you join a startup and it's tanking or you think the founders are incompetent, you can quit and go try another one. That's more or less what happened to me. I stayed for 2 months at one company, 8 months at another, one company I almost started with some people but quickly realized we'd fail because none of us knew the problem space. Then I worked at a successful startup for 5 years and we all made money. Another reason to work at a startup is if you ever want to start your own company. Starting a company consists of doing a lot of different things, so it helps if you have some prior experience with them. I learned a ton of random things working at startups, from interacting with lawyers to doing content marketing. I recently started a company and I talk to other founders a lot and I think people who worked at startups before are better prepared compared to people who come out of large companies.
• hintymad 5y ago
  I don't think the author is comparing apple to apples. Instead of contrasting joining startups and joining FAANGs, we should really compare joining top-notch startups with joining FAANGs. That is, just like good companies are scarce, so are good startups. Look back, and we can see that those who join square, pinterest, airbnb, uber (before early 2015), facebook (before its IPO) all did really well. By the way, Netflix circa 2008 was still in a sense a startup, as they were still being threatened by blockbuster and most doubted their streaming initiative and the company had fewer than 150 engineers. Even those who joined Uber in 2016 or later got something back. Uber's success did give halo to its employees. As a result, many became senior managers or directors or staff engineers in other reputed companies, even though they had started their career only 3 or 4 years before. The trick to land on a promising startup is taking sunken cost seriously. Switch to a different company decisively and swiftly once you are convinced that the company has a bad leadership. And trust me, there will be many signs. Take Uber after 2016, for instance, you would see 1. Head of HR reported to this hot-head VP, who was the buddy of the CEO; 2. CFO told employees that they RSU hold period was a year instead of 6 months and the reason is for employees' own good; 3. CEO told employees that he didn't want to go IPO simply because he didn't want the employees to check stock price all day. 4. Uber copies pretty much every policy from Amazon yet could execute well and everyone was launching project for promotion and the company had more than 800 services. 5. CEO forced managers to A/B test packages to see how low a package can go to hire people. 6. Company splurged 10s of millions hosting extravagant parties for 4 days straight in Vegas for bogus metrics like total number of trips; 7. HRs used number of people hired as the key metric to boast that Uber was the fastest-growing company. See? When you see so much distrust from the top, you should just jump ship, and use the halo you get from UBER to land on a different top startup, whatever that is, and rinse (in case you ended up joining WeWork).
• shrubby 5y ago
  I got out from the last startup. Started sleeping better immediately when I knew I was about to sign the termination. Founders wanted to be famous & millionaires and there was no meaning to be found. The pay wasn't a critical thing in my suffering. Now I'm making a third less and feeling ten times better.
• Animats 5y ago
  If you're good enough to get into Google/Facebook/someone who pays at that level at a good engineering salary level, going to work for a start up is probably a net lose. At least until you're far enough along to do your own startup.
• s17n 5y ago
  People work at startups because they want crazy hours and stress. It's fun. You get a bond with your coworkers that you can't get any other way. If that doesn't appeal to you then yeah you shouldn't work at a startup. But tbh I've never met these mythical people who joined a startup thinking that it was actually a rational financial decision - everyone I know did it because they wanted an intense experience.
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• jerzyt 5y ago
  One of the biggest risks for a startup is becoming a consulting firm. Once you do that, you won't be able to scale up. Been there, done that. That's why the FAANGs are so successful - they have millions of clients, without a single one who could control their destiny.
• dang 5y ago
  This article is responding to the romantic version of the startup story that was popular 10-15 years ago, in the early heyday of YC and HN. In that sense it is 10 years out of date. There has been since at least one major wave, which was characterized by disillusionment and cynicism about startups ("just buy a lottery ticket", "startup equity isn't worth the paper it's printed on", etc.). This became standard fare on HN and until recently was probably the dominant view. That has become old hat in its own right—you can tell that such a wave is in its later stages when the comments become predictable, and then compensate for that by getting snarkier. When information gets worn out through repetition, comments have to add in extra spice to get interesting again—though not necessarily the good form of 'interesting'. It's too soon to tell but I think we might be at the beginning of another wave now—a more balanced weighing of pros and cons. Many comments in this thread are good examples of that. There's another dynamic too, which I've not yet seen anyone comment on: these waves are staggered geographically. This became obvious to me when looking at the geography of HN comments (judging by IP geolocation). These waves don't get started and then subside in lockstep all over the world—rather, they exist in different stages in different locations. It took years for the romantic story to make its way to certain locations, and those places are now in the early stages of the cynical wave. Other parts of the world are still in the crest of the romantic phase. This creates unfortunate misunderstandings where someone in one of those areas posts an enthusiastic startup story, of the kind that was popular on HN in say 2008, and then gets blasted with flames by people in locations where the cynical wave is strong. I hope I'm guessing correctly that the next wave is more balanced and nuanced, because I think we need to look beyond "startups: yay or nay" to asking when they make sense, when they don't, and what changes the ecosystem could make to make them make more sense...if that makes sense.
  • NeverFade 5y ago
    This is an interesting take, and largely correct, but you describe these "waves" as if they are some literary or artistic trends that just play themselves out, and not takes on a very real situation, which is what they really are. Yes, the 2nd wave of cynicism is now well-established, the comments are predictable and preaching-to-the-choir. However, has it become any less correct or accepted? This isn't literature or art where folks will become disenchanted with a take purely because it has become cliche. IMHO the answer is "no". This take has indeed become so established, that it is now simply taken for granted, as the foundation for discussion on sites like Blind. Everyone understands that startups now provide less value to their employees than top tech companies (FAANG etc), the startup culture in the US is doing nothing to address this (senior engineers are still getting crumbs of equity, your total compensation at a startup will still be far lower than FAANG, there is effectively zero concern for providing the long-term career growth you'd get in top tech, etc), so nobody takes startups seriously as an option unless they are among the handful of well-known unicorns. Everyone is targeting top tech ("FAANG") and pre-IPO unicorns and that's it. It's widely accepted that you'd look at any non-unicorn non-pre-IPO startups only as a fallback option after completely failing to get an offer from any of the above. Even then, you'd constantly try to ascend to the real winning options, and any call from a FAANG recruiter will take you away from the startup role you had to settle for. I believe startup culture can change that, but it will take much effort and actual sacrifice (e.g. reserving more equity for employees). Until then, startups will remain a strictly less desirable option, and just because everyone now knows and agrees on this take doesn't make it any less true. I anything, it's becoming more entrenched and harder to change.
• silexia 5y ago
  This is the most accurate description of VC and PE backed companies for employees I have seen.
• akomtu 5y ago
  Reading all these grumpy comments made me think that there's a well.. startup opportunity for a counsel type firm that gives consultations to would be employees and guides them thru the startups minefield for an extra fee. This service would partner with law and accountings firms and terms would be a fixed 500 usd fee for a more or less standard consultation and an offer review, plus 5% of stock options gains should the employee make the bank later. I bet SV and all VCs will hate this firm with passion.
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• SZJX 5y ago
  A friend of mine joined Snowflake (and rejected some FAANG offers) when it had ~40 engineers, i.e. when it could still well be called a "startup". He can literally retire after his options are fully vested, just 4 years after he joined (barring some catastrophic event to Snowflake withinin a couple of years' time horizon). AFAIK aiming for late-stage startups has been a common strategy for people trying to strike gold. Maybe it's less valid nowadays? But it doesn't seem to make sense to me to say that working for a startup is always worse than working for FAANG. "Overrated" it could be, and many startups, especially early-stage ones, suffer from a huge amount of uncertainty for people aiming for the liquidity event, which they may well underestimate. But I can't imagine anybody, by working at FAANG, getting the amount of money he is now projected to get. Another interesting (and non-US-centric) factor for me is the flexibility a startup can offer in terms of your work and compensation, especially in an era where going remote seems to be an unstoppable trend. If the company is willing to pay all employees the same amount of salary, regardless of where they live in the world, it could be a no brainer for somebody not living in the US to work for such a startup. The salary they get can easily exceed Google L4 total pay (e.g. in the UK and in Germany, not to mention in most other countries). Of course, many companies such as GitLab aggressively adjust their salary according to where you work from, but I've seen more and more companies that don't. It will be very interesting to see how the market sorts itself out in a few years' time: Seems to me the proliferation of remote work could result in US salary and remote salary meeting somewhere in the middle.
• nickfromseattle 5y ago
  >When I first started learning about technology companies in college, someone showed me a video of Elon Musk buying a one-million-dollar McClaren supercar after selling his first company. The clip is a classic of startup lore. He states that three years prior he was “sleeping on the office floor,” and now here he is buying one of the world’s most luxurious vehicles. I know an early employee at Zip2 who told me some amazing Elon Musk stories. One of the stories relates to the quote aebove. Elon Musk spent almost all his money on this McClaren - to the point he couldn't even afford the insurance on it. But, this person claims it was an incredibly smart move - because it allowed Elon to start hanging with other super car owners, who were also the movers & shakers of SV at the time - like Jerry Yang, the CEO of Yahoo. This network would prove invaluable to everything Elon did after Zip2.
• kirso 5y ago
  The interesting point in this that resonated is the elephant in the room that no one is every addressing which is background. For 99% of people FAANG is out of reach... I am talking about globally. In fact that most of the people don't even get the chance to interview there and won't go through gatekeepers is what makes a lot of people go to startups. One of my best professional experiences was randomly joining a company with 0 revenue and going towards series A, opening offices in every continent. Did skills get me there? No... pure luck and wondering around the world searching for better opportunities with no-name school in 3rd world country and random career background where I knew in fact FAANG wouldn't every even spend more than a second on the resume.
• lyd 5y ago
  Sad to see articles like this. Just because startups aren't for you, it doesn't mean it's not for everyone. Consider that all great companies today were startups sometime ago, I consider startups in tech are a majority source of innovation and disruption. Yes joining a startup is risky, and it may not justify the effort if all your focus is the financial return. But some ones will have to do it, make better products or services, and enable others to do even greater things.
• wyiske 5y ago
  I worked at a startup about 10 years ago, and it was probably the most bureaucratic place I’ve ever worked. I was the 3rd employee, but my stock was negligible - incidentally the company wasn’t very transparent about this; When the offer was made they said, we’ll give you 5000 shares which sounded like a decent amount. I asked how many shares were issued and the guy replied just 7 million, but the important thing is how much each share will be worth (still 0). This is in London where this is probably quite common. The sad thing was it was one of the most interesting places and domains I’ve worked, and if the company launched while I was there, it probably would have been acquired (like all our competitors). The founder was quite innovative but think was scared to launch and had a new idea/approach to market every few months. Eventually I lost faith, and being expected to work late every evening knowing my options were tiny killed all motivation. As the author said, I calculated the expected value, decided it’s no longer worth it and left. The moment that changed my outlook was when they decided not to approve my leave (I had already booked and didn’t expect any issues since I had mentioned it in conversation a few months before). If I had stayed, I would haven’t enjoyed all the travelling and experiences I’ve had, earning more and working less. The company is still going, and probably a long way off from having any exit. A few months after I left, some incompetent recruiter tried to hire me for my previous role at a £30k increase in salary. Having said that, I would definitely join an early stage startup again, if the work was interesting, but would expect at least 1% and decent salary next time.
• notacoward 5y ago
  I think software engineering as a profession would be a lot better off, and a lot of people would be happier, if more people made sure they got some real variety in their first ten years or so. Work at a startup and at a FAANG (if you can). Work at a company that needs software developers but don't have that as their primary business. You'll be miserable and probably not last long, but it will give you perspective. Work at a hardware company. Try different markets, different technical specialties, different roles, different stages of development. Careers are long. You might be surprised at which combination ends up appealing to you, then you can spend the majority of your career being happier. Between greater ability to focus and all the contacts you made earlier, you'll probably climb higher in the end too.