3 ms·

Uhm, I did read the article, and no, 'putting in' 50k by getting a lower salary is not 'being an investor to all intents and purposes'. For one because the inve

by roel_v 15y ago

Uhm, I did read the article, and no, 'putting in' 50k by getting a lower salary is not 'being an investor to all intents and purposes'. For one because the investor brings cash, the guy just work and time. Now you can argue that cash is 'fungible' and how the real value comes from the employees - blah blah blah the market says otherwise.

earbitscom 15y ago
The investors invests $500k NOW, usually with no ability to take their money back. The employee invests $136 each day with the option to leave and cut their losses anytime.
- foobarbazoo 15y ago
  ^^ This. Plus, the employee is coming on AFTER a substantial fund raising round, and should not expect the same terms since the company is already validated (and capitalized); thus, the "investment" risk is reduced. I also agree with the other posters: "paycheck" employees are not good hires early on in a startup.
- Silhouette 15y ago
  > The employee invests $136 each day with the option to leave and cut their losses anytime. (a) That depends on where you are. (b) You are ignoring the opportunity cost to the employee (though admittedly this is consistent with the original article). (c) You are ignoring the potential adverse consequences on the employee's future career of being associated with a failed start-up, leaving a job early to chase dreams, etc. (Please don't tell me that it's better to have a CV showing you worked at several failed start-ups than it is to have a solid track record of demonstrable good results at established companies. That is the kind of fiction that only people in the start-up community manage to believe.)
- praptak 15y ago
  "The investors invests $500k NOW," Fair point - the value invested by the employee should be discounted, but: "usually with no ability to take their money back" Actually, the investors have more ability to take their money back than the employee. The investors can at least sell what's left of the company, while the investment by the employee is unrecoverable.
Silhouette 15y ago
> Now you can argue that cash is 'fungible' and how the real value comes from the employees - blah blah blah the market says otherwise. "The market says x so it must be true" is a lousy argument. Markets get distorted all the time by unequal bargaining positions, one side having better information than the other, etc. If markets were even close to accurate, consider that the range of pay for professional software developers would vary by at least a factor of 10 just around the middle of the bell curve. And if you're hiring employee #1 to join a small team of founders, you want someone who is at least at the top of that range.
- roel_v 15y ago
  What? I'm not saying 'the market says x so it must be true' - I'm saying 'the market sets the price and it has set at in such a way that one can deduce that it values cash over labor'. In other words, coming by cash is harder than coming by somebody who does whatever it is that the guy in the article would be doing (presumably programming). Which is a statement that is entirely reasonable, objective and morally neutral.
  - Silhouette 15y ago
    > In other words, coming by cash is harder than coming by somebody who does whatever it is that the guy in the article would be doing (presumably programming). Which is a statement that is entirely reasonable, objective and morally neutral. Sure, and all I'm saying is that it won't necessarily remain the case if the obvious distortion in the market today is fixed by better informing software developers (or early employees generally, for that matter) of their true worth. That seems to be exactly what this article is trying to do.
- roel_v 15y ago
  Wait I forgot about this part: "If markets were even close to accurate, consider that the range of pay for professional software developers would vary by at least a factor of 10 just around the middle of the bell curve." That's ludicrous, because you're taking a narrow (and objectively wrong) definition of 'market' and 'market value'. The spread in pay is much lower than you suggest it should be because the market discounts for the difficulty in quantifying the marginal added value between programmers that you suggest exists - in other words, it's too hard for employers to find out about this difference, and hence there is less room in willingness to pay (well that's talking from assumptions that are favorable to your argument - I think the much more rational explanation is that the '10 times difference' myth is a programmer circle jerk) (I'm a programmer myself)
praptak 15y ago
"blah blah blah the market says otherwise" The market says the employee could make twice as much elsewhere. Just sayin.

by roel_v 15y ago

earbitscom 15y ago

The investors invests $500k NOW, usually with no ability to take their money back. The employee invests $136 each day with the option to leave and cut their losses anytime.

foobarbazoo 15y ago
^^ This. Plus, the employee is coming on AFTER a substantial fund raising round, and should not expect the same terms since the company is already validated (and capitalized); thus, the "investment" risk is reduced. I also agree with the other posters: "paycheck" employees are not good hires early on in a startup.
Silhouette 15y ago
> The employee invests $136 each day with the option to leave and cut their losses anytime. (a) That depends on where you are. (b) You are ignoring the opportunity cost to the employee (though admittedly this is consistent with the original article). (c) You are ignoring the potential adverse consequences on the employee's future career of being associated with a failed start-up, leaving a job early to chase dreams, etc. (Please don't tell me that it's better to have a CV showing you worked at several failed start-ups than it is to have a solid track record of demonstrable good results at established companies. That is the kind of fiction that only people in the start-up community manage to believe.)
praptak 15y ago
"The investors invests $500k NOW," Fair point - the value invested by the employee should be discounted, but: "usually with no ability to take their money back" Actually, the investors have more ability to take their money back than the employee. The investors can at least sell what's left of the company, while the investment by the employee is unrecoverable.

Silhouette 15y ago

> Now you can argue that cash is 'fungible' and how the real value comes from the employees - blah blah blah the market says otherwise. "The market says x so it must be true" is a lousy argument. Markets get distorted all the time by unequal bargaining positions, one side having better information than the other, etc. If markets were even close to accurate, consider that the range of pay for professional software developers would vary by at least a factor of 10 just around the middle of the bell curve. And if you're hiring employee #1 to join a small team of founders, you want someone who is at least at the top of that range.

roel_v 15y ago
What? I'm not saying 'the market says x so it must be true' - I'm saying 'the market sets the price and it has set at in such a way that one can deduce that it values cash over labor'. In other words, coming by cash is harder than coming by somebody who does whatever it is that the guy in the article would be doing (presumably programming). Which is a statement that is entirely reasonable, objective and morally neutral.
- Silhouette 15y ago
  > In other words, coming by cash is harder than coming by somebody who does whatever it is that the guy in the article would be doing (presumably programming). Which is a statement that is entirely reasonable, objective and morally neutral. Sure, and all I'm saying is that it won't necessarily remain the case if the obvious distortion in the market today is fixed by better informing software developers (or early employees generally, for that matter) of their true worth. That seems to be exactly what this article is trying to do.
roel_v 15y ago
Wait I forgot about this part: "If markets were even close to accurate, consider that the range of pay for professional software developers would vary by at least a factor of 10 just around the middle of the bell curve." That's ludicrous, because you're taking a narrow (and objectively wrong) definition of 'market' and 'market value'. The spread in pay is much lower than you suggest it should be because the market discounts for the difficulty in quantifying the marginal added value between programmers that you suggest exists - in other words, it's too hard for employers to find out about this difference, and hence there is less room in willingness to pay (well that's talking from assumptions that are favorable to your argument - I think the much more rational explanation is that the '10 times difference' myth is a programmer circle jerk) (I'm a programmer myself)

praptak 15y ago

"blah blah blah the market says otherwise" The market says the employee could make twice as much elsewhere. Just sayin.