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> If 1 out of 250 ends up being a $100B company, 0.25% of equity you earn per year is $1M in cash. Try to beat that working at Facebook. Let's say it takes 10

> If 1 out of 250 ends up being a $100B company, 0.25% of equity you earn per year is $1M in cash. Try to beat that working at Facebook. Let's say it takes 10 years for the unicorn to reach $100B and you've accumulated 0.25% equity per year for those 10 years (unlikely that you finish with 2.5% fully-diluted unless you were a founder, but let's go with it anyway). $250M cash after 10 years, but there is a 1/250 chance of this being the case, so the expected value of the $250M is (1/250 * $250M) = $1M = $100k/year over the ten years. Let's see if Facebook can beat that: Even if you're E4 at Facebook for the whole 10 years (not even career level), you would average $264k/year, which is a guaranteed $2.64M over 10 years, excluding stock growth and promotions. Average E5 jumps to $385k/year. Source: https://www.levels.fyi/company/Facebook/salaries/Software-Engineer/E4/ https://www.levels.fyi/company/Facebook/salaries/Software-En.... So even the E4 option beats the expected value quite nicely, excluding promotions and stock growth (assuming the startup pays you less than $164k/year, which it likely will). There are plenty of reasons to work at a startup, but given the choice between a top 5 tech company and a startup, you will 99.99999% of the time not make more money at the startup. (Edited to fix math)

murgindrag 5y ago
Your math is wrong: * 0.25% of 100B is 250M, not 10M. * 2.5% of 100B is 2.5B. OP's math, if you believe the assumptions, was right. Of course, the value of money goes down over time, since there's less time to spend it. I would rather have 10M at age 25 than 10B at age 80. One of the downsides of startups is you need to go through a few before you get to a successful exit, and as you point out, unicorn exits take a decade. 250 startups to wealth would mean you'd be wealthy long after you were dead. I'm not sure it's 250 startups, but it's also usually not 1. OP was wrong about Facebook having a hard time beating 1M per year. I know plenty of people at FAANG above that. It's competitive but not impossible. As for me, I'm making a modest salary (less than you make, most likely) at a job where I'm having the time of my life. I do impactful, meaningful, interesting things with all of my life. It's hard to beat that. Money is a means to an end, and if you're already there, it's not rational to optimize for wealth. The only downside is possibility of loss of job, but if my job had the equivalent of tenure (e.g. I could keep doing this for the rest of my life), I wouldn't worry about money at all. But money has risks too.
- a4a4a4a4 5y ago
  oops you are correct, I misread OPs message. I would say 0.25% equity is possible at exit, if you started very early and the founders were kind with dilution/top-ups (which is unfortunately not very common). Then I would still stand by everything I wrote.
- fatnoah 5y ago
  >OP was wrong about Facebook having a hard time beating 1M per year. I know plenty of people at FAANG above that. It's competitive but not impossible. You are correct. In my 22+ year career, 17 of them were spent at startups, including a stint as VP Eng at the last one. Two of those were acquired (including the VP Eng role) and one is still going strong. This year at FB, I'll be paid the equivalent of what I was paid in my last 4 startup years combined, INCLUDING my proceeds from my company being acquired. It's a totally different world though. Once I have enough saved to handle college and retirement, I fully expect to go back to the energy, excitement, and sense of common purpose of startup life.
  - murgindrag 5y ago
    FYI: Big companies which aren't Facebook can have energy, excitement, and sense-of-common-purpose. It's less common than in the sixties, when companies like HP were like families, but companies like that still do exist.
    - fatnoah 5y ago
      Totally agree, but my anecdotal experience is that I've felt those things at all three startups and none of the six big companies I've been at. It exists in BigCo land, but I think it's a little harder to find.
- nthngtshr 5y ago
  > OP was wrong about Facebook having a hard time beating 1M per year. I know plenty of people at FAANG above that. It's competitive but not impossible. It's competitive but not impossible. What are the chances that a person reaches that kind of salary? And how does it compare to chances of person making it big in startups? I don't know, because I don't have the data, but intuitively I think the chances and expected value for both is pretty close. E.g if you're a smart person and a good engineer you're likely to land a good paying FAANG job or become an early employee at a hot startup.

murgindrag 5y ago

Your math is wrong: * 0.25% of 100B is 250M, not 10M. * 2.5% of 100B is 2.5B. OP's math, if you believe the assumptions, was right. Of course, the value of money goes down over time, since there's less time to spend it. I would rather have 10M at age 25 than 10B at age 80. One of the downsides of startups is you need to go through a few before you get to a successful exit, and as you point out, unicorn exits take a decade. 250 startups to wealth would mean you'd be wealthy long after you were dead. I'm not sure it's 250 startups, but it's also usually not 1. OP was wrong about Facebook having a hard time beating 1M per year. I know plenty of people at FAANG above that. It's competitive but not impossible. As for me, I'm making a modest salary (less than you make, most likely) at a job where I'm having the time of my life. I do impactful, meaningful, interesting things with all of my life. It's hard to beat that. Money is a means to an end, and if you're already there, it's not rational to optimize for wealth. The only downside is possibility of loss of job, but if my job had the equivalent of tenure (e.g. I could keep doing this for the rest of my life), I wouldn't worry about money at all. But money has risks too.

a4a4a4a4 5y ago
oops you are correct, I misread OPs message. I would say 0.25% equity is possible at exit, if you started very early and the founders were kind with dilution/top-ups (which is unfortunately not very common). Then I would still stand by everything I wrote.
fatnoah 5y ago
>OP was wrong about Facebook having a hard time beating 1M per year. I know plenty of people at FAANG above that. It's competitive but not impossible. You are correct. In my 22+ year career, 17 of them were spent at startups, including a stint as VP Eng at the last one. Two of those were acquired (including the VP Eng role) and one is still going strong. This year at FB, I'll be paid the equivalent of what I was paid in my last 4 startup years combined, INCLUDING my proceeds from my company being acquired. It's a totally different world though. Once I have enough saved to handle college and retirement, I fully expect to go back to the energy, excitement, and sense of common purpose of startup life.
- murgindrag 5y ago
  FYI: Big companies which aren't Facebook can have energy, excitement, and sense-of-common-purpose. It's less common than in the sixties, when companies like HP were like families, but companies like that still do exist.
  - fatnoah 5y ago
    Totally agree, but my anecdotal experience is that I've felt those things at all three startups and none of the six big companies I've been at. It exists in BigCo land, but I think it's a little harder to find.
nthngtshr 5y ago
> OP was wrong about Facebook having a hard time beating 1M per year. I know plenty of people at FAANG above that. It's competitive but not impossible. It's competitive but not impossible. What are the chances that a person reaches that kind of salary? And how does it compare to chances of person making it big in startups? I don't know, because I don't have the data, but intuitively I think the chances and expected value for both is pretty close. E.g if you're a smart person and a good engineer you're likely to land a good paying FAANG job or become an early employee at a hot startup.