9 ms·

I think their salaries are 60-65k. Insurance/benefits for 20 something developers at a startup consists of ramen and free pizza on Mondays. That's actually a

by axiom 15y ago

I think their salaries are 60-65k. Insurance/benefits for 20 something developers at a startup consists of ramen and free pizza on Mondays. That's actually a very reasonable salary and keeps out the guys who are looking to collect fat paychecks working 35 hours/week. You want work/life balance and 100k+ per year? fine, go work at Google. If you want the upside that comes with working at a startup you need to be willing to take on some of the risk.

timr 15y ago
"That's actually a very reasonable salary and keeps out the guys who are looking to collect fat paychecks working 35 hours/week. You want work/life balance and 100k+ per year? fine, go work at Google. If you want the upside that comes with working at a startup you need to be willing to take on some of the risk." That's just a steaming pile of horseshit. I'm sorry to be so blunt, but I've been in this world for a while now, and nothing infuriates me more than when entrepreneurs try to delude employees (particularly younger employees) into working for far below market in exchange for promises of fairy farts and equity dreams. In a city where a one-bedroom apartment costs >$2,000 a month, $100k isn't a "fat" paycheck. It's right about average. And even if you choose to work below market, the <1% equity stake that most funded startups are going to offer you won't make it worth the opportunity cost in anything less than the most exceptional outcome. You say you're working for $60k a year in San Francisco? Yeah, I hope you're getting a founder-level equity, because you're living with roommates and eating ramen. I suppose the only plus side to this kind of nonsense is that any developer worth her salt will be poached within months by any one of the dozens of local startups that are looking for engineers and willing to pay market wages. Don't fall for it, kids: you deserve to be fairly paid, and get some equity.
- alnayyir 15y ago
  >Don't fall for it, kids: you deserve to be fairly paid, and get some equity. I did, thanks for spreading the messages.
- axiom 15y ago
  Funny how virtually zero successful startups have followed your model of paying people 100k+ at the beginning (first 1-2 years, pre-series A, or pre-profitability.) Probably just a coincidence though.
  - deleted 15y ago
    [deleted]
  - donw 15y ago
    Early-stage employees are often compensated with huge amounts of equity. I'm a fairly senior-level guy, and would happily trade a bigger salary for a large equity chunk at a startup, but we're talking a large chunk, bigger than a lot of companies are willing to give to non-founders. Let's say that I usually make $160k/year, and I'm willing to work for half that at a startup for four years, which means that I'm giving up $320k in income. I'm not going to do that for a chance at earning $320k, but I'll definitely do so for a 10% chance at earning $3.2M. Which means that if the company exits four years later at $50MM, I'd need a 6.4% equity stake to make my target. If the company exits for any less than $5M, I've lost money. Naturally, this is a simplified analysis of the situation, but it illustrates an important point. I know of a lot of startups that want to pay their employees peanuts, while at the same time giving them a tiny slice of the pie. None of these companies have been massively successful either, in part due to the best talent having zero interest in committing to a company where they aren't valued.
    - truthseeker 15y ago
      This is exactly the reason why I've never been interested in working for a startup. Learning experience? Yeah, I've got that working during the dotcom boom/bust cycle. Your reasoning is spot on but the numbers get even more unappealing once dilution in future rounds of financing kicks in. If you have the experience, be a co-founder at a startup with pretty big upside. If you can't find that, the 150K/year salaries are a much better deal than <5% equities.
- camz 15y ago
  I think your statement is pretty outlandish. How many people make over 100k in general regardless of your location. I live in Manhattan (probably the worst bang for your buck possible cities) and started as staff making 62K and that was pretty good. The national average is well below 60k for entire families. No one deserves anything. You need to work for what you want and equity is earned through sacrifice. You're not sacrificing anything if you're getting paid fairly by market wages. So please don't act so high and mighty. I have nothing against paying people high salaries for great talent, but I don't appreciate anyone thinking that they're earned the right to everything by simply being present at the moment. If you want equity then you should be sacrificing like founders do.
  - usaar333 15y ago
    60k is a typical salary a founder will take in the Bay Area. It's 30k below what a good entry-level programmer would get at a more established firm. On that salary, you have to live with roommates. However, you'll have plenty of disposable income.
- temphn 15y ago
  > fairy farts and equity dreams. If your attitude towards the startup is that cynical, then you shouldn't be working for a startup. Go to bigco where they will pay you lots for doing nothing. Startups are difficult and need people who want to work hard and sacrifice in exchange for greenfield technical development, high responsibility, and high upside. By all means ask for more equity. But a startup is about the future, not about huge comfy salaries in the present day. This is especially true given that the economy is now headed back into the toilet. Tide is going out and many startups will die. Those that survive will be those in which neither founders nor employees are unduly greedy.
  - achompas 15y ago
    If your attitude towards the startup is that cynical, then you shouldn't be working for a startup. Go to bigco where they will pay you lots for doing nothing. This is just reality. Why make 60-65k at a given startup when you can make market wages at another startup?
  - deleted 15y ago
    [deleted]
  - thomasgerbe 15y ago
    'If your attitude towards the startup is that cynical, then you shouldn't be working for a startup. Go to bigco where they will pay you lots for doing nothing.' That's just as cynical. There are bigcos that have fantastic projects AND pay you, as well as startups that offer poor pay and little equity in exchange for lots of hot air. Unless it's Google or Facebook (or any other mature startup), I'd better be getting more than 2% if I'm being paid less than 50% of standard market rate. Otherwise, the equity is more of a nice bonus than the main selling point. You're right, many startups will die. All the more reason why people have to be careful about exchanging salary for equity.
  - Tichy 15y ago
    But what are the upsides of working for a startup? Working hard and long hours is not really sounding that attractive to me. Maybe it lures kids who want to test their limits?
- TheSkeptic 15y ago
  Dead on. The problem with equity is that at most venture backed companies, rank and file employees don't know what percentage of the company their equity package represents, or could represent in the future. Naive employees (most of them younger) chasing startup riches often like to think in terms of "If I own 1% of the company and it sells for $500 million I'll be rich!" but if you ask them what ownership interest their 75,000 stock options might represent, they won't be able to tell you. Employees who think "it's all about equity" would be wise to consider the following: 1. It should go without saying that if you're granted stock options, which is typical unless you're a founder, you don't actually own any portion of the company. A stock option is, obviously, simply an option to purchase stock at a fixed price at a future date. 2. Assuming your employment is at-will, you do not have control over the vesting of your stock options. You could be terminated at any time, including before a large portion (or even all) of your options vest. 3. Dilution is a fact of life at venture backed companies. If you join a company early, your expectation should be that you will be diluted, and significantly. This dilution can also be rapid (i.e. a dilutive new round of funding closes a month after you join the company). 4. There are plenty of ways the value of any equity you own (or may one day own) could be diminished. If your company is acquired, for instance, but the acquisition results in the exercise of a liquidation preference, it's conceivable that your equity will be be worthless, or of such minimal value as to be effectively worthless. Bottom line: if you're not making six-figures and aren't already independently wealthy, which covers most of the young folks who think equity is an apples-to-apples substitute for salary, accepting a significant pay cut for "equity" is sort of like planning your financial future around the assumption that you'll one day win the lottery. As they say, "one in the hand is worth two in the bush."
- klbarry 15y ago
  At least in NYC, you can easily, easily, easily live on 60k yearly, quite comfortably (your own one bedroom, eating out often, etc.) You can't live in Manhattan, but that is a pretty small sacrifice. I can't imagine SF is so much more expensive.
thomasgerbe 15y ago
Well, what percentage of equity would that likely be for an engineer?
- axiom 15y ago
  Every developer at my company owns 2%+. That's just me though, I don't know what inDinero offers but I'm sure it's not too far off.
  - trussi 15y ago
    How long do you vest that equity for?
    - petenixey 15y ago
      It's designed to vest at the same rate that the employee adds value. For the sake of simplicity it's almost always set up to be four years with a one year cliff. i.e. at month 11, the employee has no options, at the end of month 12 they have 25% of their options and then from there on in the options vest at the end of each month so that at month 18 they have 37.5% of their options. At the end of 4 years they have the right to buy all their options. It can vary depending on the employee and what they negotiate upfront but unless they are bringing something that is of particular one-off value (a rolodex of clients for instance) there are not many reasons to change the standard 4+1 format.
  - TheSkeptic 15y ago
    1. Were your developers granted actual stock, or were they granted options? 2. Your company is angel-backed. If and when it wants or needs to raise additional funds, is the company obligated to protect said developers from dilution? Assuming that you're a typical angel-backed company, the answers to these questions are "stock options" and "no." Which would mean that: 1. Your developers don't own anything. 2. Your developers don't have an equity interest (or potential equity interest) that they can trust will actually represent a specific percentage interest in ownership if and when their options are exercised. I don't mean to pick on you, but your comment highlights two things: 1. Just how loosely the word own[ership] is used when it shouldn't be. 2. How percentages are used to inaccurately describe potential equity stakes when those potential equity stakes cannot be reliably translated into percentage-based (potential) ownership interests.
ctide 15y ago
That 80k was over 18 months, and you're not including social security tax (which is another 10%) plus a computer, etc. 60-65k / year engineers will affect your burn WAY more than 80k over 18 months.
- axiom 15y ago
  Oh I missed the 18 months part. I wonder if she meant 80k per year or per 18 months, because if it's the latter then that is pretty low actually. I guess if you're a YC startup then you can attract good talent based on the brand (which is enviable.)
runT1ME 15y ago
Do you have actual evidence of this? Can you point out a superstar engineer who will work for 65k + options? I can't think of any, and I know quite a lot of developers. I haven't even heard of one working for that little.
- rokhayakebe 15y ago
  I am genuinely curious. What is it that a 150K developer can usually do for the average (CRUD) product that a 65K engineer cannot do? Note: I am an amateur-programmer, so I really have no idea.
  - iam 15y ago
    I don't think a "superstar" engineer would work for the average (CRUD) product to begin with.
  - deleted 15y ago
    [deleted]
  - trussi 15y ago
    A $150k developer can handle setting up and managing the infrastructure, build scalable products, manage a team of $65k developers and be able to build a product from scratch (incredibly hard to do). A $65k developer can follow directions. There's no such thing as a successful CRUD product anymore. Everything has been commoditized.
  - simonw 15y ago
    Build something in a week instead of a month.
    - rokhayakebe 15y ago
      Speed (among other things, I guess). I have been asking this question for a while, and this is possibly the best acceptable answer yet.
  - runT1ME 15y ago
deleted 15y ago
[deleted]
daniel-cussen 15y ago
But you're right, it does keep out the "guys who are looking to collect a fat paycheck working 35 hours/week." I didn't know that that was a problem, though; I haven't met anyone like this. I have met people who prefer a steady paycheck right now because they're not in a position to do otherwise. They're definitely open to doing so (or founding a company) down the road. I'd like to point out there were not a lot of people willing to take the leap and join a startup ~4 years ago. There are many more founders around now, both technical and business, and they're not a limiting factor in the startup reaction to the degree they were four years ago.[1] Now I'd say it's leaning toward technical employees, and the employee equity pool may reflect that by growing from 20 to 25, or even 30%. [1] I'm eyeballing, and judging from hanging out in the valley. Sam Altman said technical founders were the limiting factor in startups about four years ago in startup school.

by axiom 15y ago

timr 15y ago

"That's actually a very reasonable salary and keeps out the guys who are looking to collect fat paychecks working 35 hours/week. You want work/life balance and 100k+ per year? fine, go work at Google. If you want the upside that comes with working at a startup you need to be willing to take on some of the risk." That's just a steaming pile of horseshit. I'm sorry to be so blunt, but I've been in this world for a while now, and nothing infuriates me more than when entrepreneurs try to delude employees (particularly younger employees) into working for far below market in exchange for promises of fairy farts and equity dreams. In a city where a one-bedroom apartment costs >$2,000 a month, $100k isn't a "fat" paycheck. It's right about average. And even if you choose to work below market, the <1% equity stake that most funded startups are going to offer you won't make it worth the opportunity cost in anything less than the most exceptional outcome. You say you're working for $60k a year in San Francisco? Yeah, I hope you're getting a founder-level equity, because you're living with roommates and eating ramen. I suppose the only plus side to this kind of nonsense is that any developer worth her salt will be poached within months by any one of the dozens of local startups that are looking for engineers and willing to pay market wages. Don't fall for it, kids: you deserve to be fairly paid, and get some equity.

alnayyir 15y ago
>Don't fall for it, kids: you deserve to be fairly paid, and get some equity. I did, thanks for spreading the messages.
axiom 15y ago
Funny how virtually zero successful startups have followed your model of paying people 100k+ at the beginning (first 1-2 years, pre-series A, or pre-profitability.) Probably just a coincidence though.
- deleted 15y ago
  [deleted]
- donw 15y ago
  Early-stage employees are often compensated with huge amounts of equity. I'm a fairly senior-level guy, and would happily trade a bigger salary for a large equity chunk at a startup, but we're talking a large chunk, bigger than a lot of companies are willing to give to non-founders. Let's say that I usually make $160k/year, and I'm willing to work for half that at a startup for four years, which means that I'm giving up $320k in income. I'm not going to do that for a chance at earning $320k, but I'll definitely do so for a 10% chance at earning $3.2M. Which means that if the company exits four years later at $50MM, I'd need a 6.4% equity stake to make my target. If the company exits for any less than $5M, I've lost money. Naturally, this is a simplified analysis of the situation, but it illustrates an important point. I know of a lot of startups that want to pay their employees peanuts, while at the same time giving them a tiny slice of the pie. None of these companies have been massively successful either, in part due to the best talent having zero interest in committing to a company where they aren't valued.
  - truthseeker 15y ago
    This is exactly the reason why I've never been interested in working for a startup. Learning experience? Yeah, I've got that working during the dotcom boom/bust cycle. Your reasoning is spot on but the numbers get even more unappealing once dilution in future rounds of financing kicks in. If you have the experience, be a co-founder at a startup with pretty big upside. If you can't find that, the 150K/year salaries are a much better deal than <5% equities.
camz 15y ago
I think your statement is pretty outlandish. How many people make over 100k in general regardless of your location. I live in Manhattan (probably the worst bang for your buck possible cities) and started as staff making 62K and that was pretty good. The national average is well below 60k for entire families. No one deserves anything. You need to work for what you want and equity is earned through sacrifice. You're not sacrificing anything if you're getting paid fairly by market wages. So please don't act so high and mighty. I have nothing against paying people high salaries for great talent, but I don't appreciate anyone thinking that they're earned the right to everything by simply being present at the moment. If you want equity then you should be sacrificing like founders do.
- usaar333 15y ago
  60k is a typical salary a founder will take in the Bay Area. It's 30k below what a good entry-level programmer would get at a more established firm. On that salary, you have to live with roommates. However, you'll have plenty of disposable income.
temphn 15y ago
> fairy farts and equity dreams. If your attitude towards the startup is that cynical, then you shouldn't be working for a startup. Go to bigco where they will pay you lots for doing nothing. Startups are difficult and need people who want to work hard and sacrifice in exchange for greenfield technical development, high responsibility, and high upside. By all means ask for more equity. But a startup is about the future, not about huge comfy salaries in the present day. This is especially true given that the economy is now headed back into the toilet. Tide is going out and many startups will die. Those that survive will be those in which neither founders nor employees are unduly greedy.
- achompas 15y ago
  If your attitude towards the startup is that cynical, then you shouldn't be working for a startup. Go to bigco where they will pay you lots for doing nothing. This is just reality. Why make 60-65k at a given startup when you can make market wages at another startup?
- deleted 15y ago
  [deleted]
- thomasgerbe 15y ago
  'If your attitude towards the startup is that cynical, then you shouldn't be working for a startup. Go to bigco where they will pay you lots for doing nothing.' That's just as cynical. There are bigcos that have fantastic projects AND pay you, as well as startups that offer poor pay and little equity in exchange for lots of hot air. Unless it's Google or Facebook (or any other mature startup), I'd better be getting more than 2% if I'm being paid less than 50% of standard market rate. Otherwise, the equity is more of a nice bonus than the main selling point. You're right, many startups will die. All the more reason why people have to be careful about exchanging salary for equity.
- Tichy 15y ago
  But what are the upsides of working for a startup? Working hard and long hours is not really sounding that attractive to me. Maybe it lures kids who want to test their limits?
TheSkeptic 15y ago
Dead on. The problem with equity is that at most venture backed companies, rank and file employees don't know what percentage of the company their equity package represents, or could represent in the future. Naive employees (most of them younger) chasing startup riches often like to think in terms of "If I own 1% of the company and it sells for $500 million I'll be rich!" but if you ask them what ownership interest their 75,000 stock options might represent, they won't be able to tell you. Employees who think "it's all about equity" would be wise to consider the following: 1. It should go without saying that if you're granted stock options, which is typical unless you're a founder, you don't actually own any portion of the company. A stock option is, obviously, simply an option to purchase stock at a fixed price at a future date. 2. Assuming your employment is at-will, you do not have control over the vesting of your stock options. You could be terminated at any time, including before a large portion (or even all) of your options vest. 3. Dilution is a fact of life at venture backed companies. If you join a company early, your expectation should be that you will be diluted, and significantly. This dilution can also be rapid (i.e. a dilutive new round of funding closes a month after you join the company). 4. There are plenty of ways the value of any equity you own (or may one day own) could be diminished. If your company is acquired, for instance, but the acquisition results in the exercise of a liquidation preference, it's conceivable that your equity will be be worthless, or of such minimal value as to be effectively worthless. Bottom line: if you're not making six-figures and aren't already independently wealthy, which covers most of the young folks who think equity is an apples-to-apples substitute for salary, accepting a significant pay cut for "equity" is sort of like planning your financial future around the assumption that you'll one day win the lottery. As they say, "one in the hand is worth two in the bush."
klbarry 15y ago
At least in NYC, you can easily, easily, easily live on 60k yearly, quite comfortably (your own one bedroom, eating out often, etc.) You can't live in Manhattan, but that is a pretty small sacrifice. I can't imagine SF is so much more expensive.

thomasgerbe 15y ago

Well, what percentage of equity would that likely be for an engineer?

axiom 15y ago
Every developer at my company owns 2%+. That's just me though, I don't know what inDinero offers but I'm sure it's not too far off.
- trussi 15y ago
  How long do you vest that equity for?
  - petenixey 15y ago
    It's designed to vest at the same rate that the employee adds value. For the sake of simplicity it's almost always set up to be four years with a one year cliff. i.e. at month 11, the employee has no options, at the end of month 12 they have 25% of their options and then from there on in the options vest at the end of each month so that at month 18 they have 37.5% of their options. At the end of 4 years they have the right to buy all their options. It can vary depending on the employee and what they negotiate upfront but unless they are bringing something that is of particular one-off value (a rolodex of clients for instance) there are not many reasons to change the standard 4+1 format.
- TheSkeptic 15y ago
  1. Were your developers granted actual stock, or were they granted options? 2. Your company is angel-backed. If and when it wants or needs to raise additional funds, is the company obligated to protect said developers from dilution? Assuming that you're a typical angel-backed company, the answers to these questions are "stock options" and "no." Which would mean that: 1. Your developers don't own anything. 2. Your developers don't have an equity interest (or potential equity interest) that they can trust will actually represent a specific percentage interest in ownership if and when their options are exercised. I don't mean to pick on you, but your comment highlights two things: 1. Just how loosely the word own[ership] is used when it shouldn't be. 2. How percentages are used to inaccurately describe potential equity stakes when those potential equity stakes cannot be reliably translated into percentage-based (potential) ownership interests.

ctide 15y ago

That 80k was over 18 months, and you're not including social security tax (which is another 10%) plus a computer, etc. 60-65k / year engineers will affect your burn WAY more than 80k over 18 months.

axiom 15y ago
Oh I missed the 18 months part. I wonder if she meant 80k per year or per 18 months, because if it's the latter then that is pretty low actually. I guess if you're a YC startup then you can attract good talent based on the brand (which is enviable.)

runT1ME 15y ago

Do you have actual evidence of this? Can you point out a superstar engineer who will work for 65k + options? I can't think of any, and I know quite a lot of developers. I haven't even heard of one working for that little.

rokhayakebe 15y ago
I am genuinely curious. What is it that a 150K developer can usually do for the average (CRUD) product that a 65K engineer cannot do? Note: I am an amateur-programmer, so I really have no idea.
- iam 15y ago
  I don't think a "superstar" engineer would work for the average (CRUD) product to begin with.
- deleted 15y ago
  [deleted]
- trussi 15y ago
  A $150k developer can handle setting up and managing the infrastructure, build scalable products, manage a team of $65k developers and be able to build a product from scratch (incredibly hard to do). A $65k developer can follow directions. There's no such thing as a successful CRUD product anymore. Everything has been commoditized.
- simonw 15y ago
  Build something in a week instead of a month.
  - rokhayakebe 15y ago
    Speed (among other things, I guess). I have been asking this question for a while, and this is possibly the best acceptable answer yet.
- runT1ME 15y ago

deleted 15y ago

[deleted]

daniel-cussen 15y ago

But you're right, it does keep out the "guys who are looking to collect a fat paycheck working 35 hours/week." I didn't know that that was a problem, though; I haven't met anyone like this. I have met people who prefer a steady paycheck right now because they're not in a position to do otherwise. They're definitely open to doing so (or founding a company) down the road. I'd like to point out there were not a lot of people willing to take the leap and join a startup ~4 years ago. There are many more founders around now, both technical and business, and they're not a limiting factor in the startup reaction to the degree they were four years ago.[1] Now I'd say it's leaning toward technical employees, and the employee equity pool may reflect that by growing from 20 to 25, or even 30%. [1] I'm eyeballing, and judging from hanging out in the valley. Sam Altman said technical founders were the limiting factor in startups about four years ago in startup school.