5 ms·

(money aside) That's the mistake in your reasoning. The money makes a talent acquisition significantly different from getting a job.

by pg 15y ago

nostrademons 15y ago
I'm curious what the average founder's take is in a talent acquisition. http://ycombinator.com/nums.html http://ycombinator.com/nums.html indicates that 80% of YC's acquisitions have been for <$10M - so does that work out to about $1-2M per founder, after investors and employees get their cut? Not chump change by any means, but skilled engineers in Silicon Valley can easily make $250K/year in total compensation. If a startup takes about 3 years of ramen wages to come to fruition and then the founders are locked up for another year while they vest, the plain old employee will have made about $1M in the time that the startup founder made maybe $2.5M. Startup founder is still ahead, but they took on all the risk of their startup failing and them getting nothing, and the difference is only about a factor of 2 instead of an order of magnitude.
- akkartik 15y ago
  I tend to think of offers in terms of how long I can live on the savings from a single year. If you make 100k and save 20k, you make 200k and save 120k[1]. It's not 2x but 6x. [1] I'm not considering taxes and so on, but the basic idea of leverage still applies.
  - nostrademons 15y ago
    That's a fair way of looking at it, but again, you need to compare equivalent lifestyles. If a startup founder lives on $30K/year because they were constrained to that for the 3 years they were growing their startup, you should compare that to an employee also living on $30K/year. In both cases, their expenses are negligible compared to their income. The employee banks about 7 years for every year he works (modulo taxes, which are not insignificant), while the startup founder banks nothing for the first 3 years and then banks 60-70 years in the final year.
- brandnewlow 15y ago
  Startup founder will also have no shortage of people willing to back her next company and a network of interesting people she can draw on for advice for life. Might that be even more valuable than the money?
  - diolpah 15y ago
    This is not always true. Plenty of founders who spend time working instead of networking end up with a sparse network and very few people even aware of their success.
    - rdl 15y ago
      Less true if you are the kind of startup which could get talent acquired in the first place. In the bay area at least, it would be really hard to be working on something worthwhile and remain totally sequestered from a network. The bigger problem is not getting caught up in it to the exclusion of spending time working. I'm sure it is different outside the bay area, and is absolutely different outside the USA.
- onewland 15y ago
  $250k easily? I think that's a level of skill that is not at all common. I'm not saying nobody gets paid that all, but developer compensation needs to be more realistically looked at on this forum. I'd say the majority make less than $100k, and $150k or more puts you in the top 5 percentile.
  - nostrademons 15y ago
    The level of skill needed to build a company from scratch and have it bought by Google is also not all that common. Apples-to-apples here: if you're going to compare a startup founder to an employee, you should compare them to someone of equal skill.
    - Hisoka 15y ago
      Anyone can "build" a company from scratch.... But it takes a lot to build a successful company from scratch, which isn't what Fridge did here. I mean, I know not everyone is a startup founder, but the costs and barriers to being one is pretty low these days... just start a website, say you're doing something special, and you can call yourself a "founder".
      - nostrademons 15y ago
        That's still missing the "and have it bought by Google" part. I know how low the barrier to entry for founding a company is - hell, I've done it myself - but there's still a fairly high bar to being acquired, or even aqhired.
    - iphoneedbot 15y ago
      Though, one can argue that being YC had more to do with it than just "skill". Maybe they are going to be great leaders within Google.. or maybe they'll just be yet another acqHired then leave as soon as possible.. Point is that -- if they are just a normal 'startup' -- they probably would not have been acquired if they didnt carry the YC brand perception with them
  - jsavimbi 15y ago
- pg 15y ago
  Yes, talent acquisitions tend to be 1-2m per founder. The founders make more after tax though because they pay long term capital gains tax rather than income tax. A talent acquisition is not usually the founders' first choice. What they get in return for the risk of the startup failing is the chance of a really big success. A talent acquisition is usually a backup plan. As a backup plan it's a pretty good deal. (A talent acquisition is sometimes the founders' first choice if it happens early enough. Then it's a better deal because the money is divided by less time.)
  - zackattack 15y ago
    >(A talent acquisition is sometimes the founders' first choice if it happens early enough. Then it's a better deal because the money is divided by less time.) I thought acquisitions were one of the last surviving relics of indentured servitude, besides universities. My guess is that it's still a better deal when you adjust for risk, likelihood of large success, and fully look at the expected value matrix. Though I'm skeptical that you can really discuss probability in the context of multiple people's talents, without historical data (the best proxy I see is that you were _chosen_ by pg or other tier 1 VC, and said VC has this historical record, etc.)
- suhail 15y ago
  You should note: founders do make a salary which lowers risk. We have to eat and pay the bills somehow. So the opportunity cost you speak of is simply the net loss of potential salary - startup salary. Founders probably take nothing in a year one, something small in year 2 (50-80), and year 2+ is variable. Another consideration is you learn a lot more than you generally would at a big company. There's a lot of value in knowledge and many (despite it sounding corny) deem that as invaluable--worth forgoing 100K/year in salary.
prpon 15y ago
I wonder how many of these talent acquisitions happen because of being related to YC? There are many startups out there with strong talent. Not many of them get acquired for talent reasons. How do talent acquisitions happen? Do they usually start with exploring partnership opportunities?

(money aside) That's the mistake in your reasoning. The money makes a talent acquisition significantly different from getting a job.

by pg 15y ago

(money aside) That's the mistake in your reasoning. The money makes a talent acquisition significantly different from getting a job.

nostrademons 15y ago

I'm curious what the average founder's take is in a talent acquisition. http://ycombinator.com/nums.html http://ycombinator.com/nums.html indicates that 80% of YC's acquisitions have been for <$10M - so does that work out to about $1-2M per founder, after investors and employees get their cut? Not chump change by any means, but skilled engineers in Silicon Valley can easily make $250K/year in total compensation. If a startup takes about 3 years of ramen wages to come to fruition and then the founders are locked up for another year while they vest, the plain old employee will have made about $1M in the time that the startup founder made maybe $2.5M. Startup founder is still ahead, but they took on all the risk of their startup failing and them getting nothing, and the difference is only about a factor of 2 instead of an order of magnitude.

akkartik 15y ago
I tend to think of offers in terms of how long I can live on the savings from a single year. If you make 100k and save 20k, you make 200k and save 120k[1]. It's not 2x but 6x. [1] I'm not considering taxes and so on, but the basic idea of leverage still applies.
- nostrademons 15y ago
  That's a fair way of looking at it, but again, you need to compare equivalent lifestyles. If a startup founder lives on $30K/year because they were constrained to that for the 3 years they were growing their startup, you should compare that to an employee also living on $30K/year. In both cases, their expenses are negligible compared to their income. The employee banks about 7 years for every year he works (modulo taxes, which are not insignificant), while the startup founder banks nothing for the first 3 years and then banks 60-70 years in the final year.
brandnewlow 15y ago
Startup founder will also have no shortage of people willing to back her next company and a network of interesting people she can draw on for advice for life. Might that be even more valuable than the money?
- diolpah 15y ago
  This is not always true. Plenty of founders who spend time working instead of networking end up with a sparse network and very few people even aware of their success.
  - rdl 15y ago
    Less true if you are the kind of startup which could get talent acquired in the first place. In the bay area at least, it would be really hard to be working on something worthwhile and remain totally sequestered from a network. The bigger problem is not getting caught up in it to the exclusion of spending time working. I'm sure it is different outside the bay area, and is absolutely different outside the USA.
onewland 15y ago
$250k easily? I think that's a level of skill that is not at all common. I'm not saying nobody gets paid that all, but developer compensation needs to be more realistically looked at on this forum. I'd say the majority make less than $100k, and $150k or more puts you in the top 5 percentile.
- nostrademons 15y ago
  The level of skill needed to build a company from scratch and have it bought by Google is also not all that common. Apples-to-apples here: if you're going to compare a startup founder to an employee, you should compare them to someone of equal skill.
  - Hisoka 15y ago
    Anyone can "build" a company from scratch.... But it takes a lot to build a successful company from scratch, which isn't what Fridge did here. I mean, I know not everyone is a startup founder, but the costs and barriers to being one is pretty low these days... just start a website, say you're doing something special, and you can call yourself a "founder".
    - nostrademons 15y ago
      That's still missing the "and have it bought by Google" part. I know how low the barrier to entry for founding a company is - hell, I've done it myself - but there's still a fairly high bar to being acquired, or even aqhired.
  - iphoneedbot 15y ago
    Though, one can argue that being YC had more to do with it than just "skill". Maybe they are going to be great leaders within Google.. or maybe they'll just be yet another acqHired then leave as soon as possible.. Point is that -- if they are just a normal 'startup' -- they probably would not have been acquired if they didnt carry the YC brand perception with them
- jsavimbi 15y ago
pg 15y ago
Yes, talent acquisitions tend to be 1-2m per founder. The founders make more after tax though because they pay long term capital gains tax rather than income tax. A talent acquisition is not usually the founders' first choice. What they get in return for the risk of the startup failing is the chance of a really big success. A talent acquisition is usually a backup plan. As a backup plan it's a pretty good deal. (A talent acquisition is sometimes the founders' first choice if it happens early enough. Then it's a better deal because the money is divided by less time.)
- zackattack 15y ago
  >(A talent acquisition is sometimes the founders' first choice if it happens early enough. Then it's a better deal because the money is divided by less time.) I thought acquisitions were one of the last surviving relics of indentured servitude, besides universities. My guess is that it's still a better deal when you adjust for risk, likelihood of large success, and fully look at the expected value matrix. Though I'm skeptical that you can really discuss probability in the context of multiple people's talents, without historical data (the best proxy I see is that you were _chosen_ by pg or other tier 1 VC, and said VC has this historical record, etc.)
suhail 15y ago
You should note: founders do make a salary which lowers risk. We have to eat and pay the bills somehow. So the opportunity cost you speak of is simply the net loss of potential salary - startup salary. Founders probably take nothing in a year one, something small in year 2 (50-80), and year 2+ is variable. Another consideration is you learn a lot more than you generally would at a big company. There's a lot of value in knowledge and many (despite it sounding corny) deem that as invaluable--worth forgoing 100K/year in salary.

prpon 15y ago

I wonder how many of these talent acquisitions happen because of being related to YC? There are many startups out there with strong talent. Not many of them get acquired for talent reasons. How do talent acquisitions happen? Do they usually start with exploring partnership opportunities?