6 ms·

Ha! Really close to a conversation I had with a recruiter back when I was looking. They were promising a ton of equity, and when I asked to see just a high le

by d23 5y ago

Ha! Really close to a conversation I had with a recruiter back when I was looking. They were promising a ton of equity, and when I asked to see just a high level picture of the finances to make sure basics like the amount of runway were reasonably long I was met with an awkward pause. It's really strange that companies not only expect you to take a massive risk on the "upside potential" and then won't even let you inspect the current state. So yeah: I'll just go with Google I guess /shrug

ryandrake 5y ago
I once interviewed for a software position at a risky looking small company, and I asked the CEO/owner if the books were available for me to verify their 1-5 year outlook before I moved my family across the country for the job. He looked totally shocked and gave a weirdly cagey “no”. I learned long after the fact that at first he was mortified and then later had a “wow who does he think he is” chuckle with the HR lady about me. They ended up making a barely acceptable offer because despite my horrible faux pas, I was a domain expert and they couldn’t keep staff for more than a year. And I accepted because I was 1 month away from being bankrupt and homeless. Lasted a year and a half. The business turned out to be solid but I left for greener pastures. I have no idea why owners are so cagey about the health of their businesses and funding sources, to potential employees. Especially when things are basically fine! He was bootstrapped and evidently had fine cash flow. Why is this a faux pas to ask? HN is full of entrepreneurs: why are you so offended when a candidate asks about cash flow or to see the cap table?
- kmonsen 5y ago
  I once interviewed with a startup and the equity part of the offer was only x number of options. So I was like, OK what is current/expected evaluation and how many shares outstanding, like what is the percentage I get. That was apparently "big company thinking" and they rescinded the offer just for asking this question (through the experienced recruiter).
  - jacquesm 5y ago
    evaluation -> valuation?
    - kmonsen 5y ago
      Yes :-)
- lovich 5y ago
  These are intelligent people and the actions don't make sense when you look at the details, like your example of being in a fine position. That only leaves unaccounted for variables at play, and the best I've been able to tell is that its a cultural gap between the execs and the plebs that plays out even at small startups. You see the same behavior in non tech companies when VPs find out what their senior software engineers are paid, and start getting upset at the similar salary level, even though that's the market price. Or in things like rules that only Execs get to fly first class. I had a an executive have HR look into me "breaking the rules" when he saw me in first class with him on the way to a company event after I paid to upgrade my own seat.
  - toomuchtodo 5y ago
    Hard to take the lizard brain out of the human.
    - urthor 5y ago
      Pretty much. Life is about observing the lizard brain rules. Never be the bearer of bad news for example, because even if people are polite about it, the lizard brain says stab the bearer of bad news.
- manquer 5y ago
  - Founders/management get defensive because they don't think they are so small that they cannot be trusted to pay you on time and when you ask for data it implies you don't trust their word that can taken as insulting/lack-of-confidence in them. - The other common reason is those numbers are confidential not just from employees, a competitor or investor who is evaluating a competitor could use it against you, so founders worry about that stuff, you may not take the offer and mention it to next company you talk to etc. - Few tech employees have the financial know-how to read financials, especially of startups . Most early stage investors rarely go through the actual books in any detail. - Measures like churn, CAC, ARR, MRR are the go-to metrics . The actual book numbers basis cash flow can be very bad although company is in decent health, this is why banks will not loan early-stage startups money unlike small businesses as startup numbers are not simply good enough by traditional metrics. - In small enough companies exposing the books to new employee will give rough idea of who is earning how much including the founders, and what else company is spending money on, keeping the information asymmetry can be seen as beneficial by founders.
  - urthor 5y ago
    The flipside is that most startups fail. 90% of startups have terrible numbers on the metrics like churn, CAC,ARR, MRR. Because most startups fail. So as a startup founder, unless you are ONLY looking for financially illiterate employees who are willing to get snowed, you need to show and tell. Often I think the employer doesn't realise that me, the software engineer, might not have the financial know how. But my buddy from college with a masters in finance, THEY do. I'm running the numbers past them.
    - manquer 5y ago
      The upside to employees is very limited , that is the point of the post. the upside will be low unless you join very early stage and get decent amount of equity or join as a founding engineer or the company you join becomes valued at 10s of billions which is of course rare otherwise there is very little upside. Almost always FANNG level companies will pay you close or better what you would make best case in most startups with much less risk and far better work life balance. The reasons I have found people are most happy with are non financial, like can’t join big tech/ great dev but poor leet coder, learning opportunities, much more senior role , switch skills, less red tape to get things done, stepping stone to starting your own etc. You can’t quantify that , for some it is worth the risk and the paycuts , for others it isn’t. Most startup recruiters or founders probably won’t pitch that picture to prospective employees, independent of their ability to pay you economics is going to be favorable in big tech any day compared to most startups .
- bombcar 5y ago
  Probably the same reason most people are reluctant to admit their salary in public.
- deleted 5y ago
  [deleted]
WalterBright 5y ago
On the other hand, I know a fellow who thought the startup had no future, and wanted a higher salary in lieu of options. Management said ok. A couple years later, the ship came in, and it was a big payday for the other employees, but not him. He was furious.
- zeroonetwothree 5y ago
  Why would he be furious at his own decision? I can understand regret, but anger seems misplaced.
  - WalterBright 5y ago
    It's pretty normal for people who chose the safe path to be angry when those around them hit the jackpot.
    - HWR_14 5y ago
      It's also normal when people choose the riskier path and people who choose the safe path profit more. If the company went bust after 4 years, everyone with worthless stock options would be made at the guy who managed to cash out a higher salary.
  - HWR_14 5y ago
    Almost certainly anger at himself that then he transferred onto others.
jacquesm 5y ago
I'm pretty sure they were totally floored that you asked that question. They probably expected a starry eyed response and a 'where do I sign, master'.
jollybean 5y ago
The thing is, the vast majority of people asking the question will have no idea how to interpret it, and there are actually legitimate issues with privacy there. I mean - I think it's fully legit for people to have a 'broad sense of the state of the company' - and companies should be prepared to speak to it in some way. But not exactly in the way people are asking. If financing rounds are public, then at least there's that, and it's possible to 'very crudely guess' where companies are at.
- morgante 5y ago
  > there are actually legitimate issues with privacy there ~Every interview process I've gone through required an NDA at some point. > I mean - I think it's fully legit for people to have a 'broad sense of the state of the company' - and companies should be prepared to speak to it in some way. But not exactly in the way people are asking. A "sense of how the company is doing" is not anywhere near enough. The company can be doing extremely well and that still doesn't give me any indication what (for example) 10,000 shares are worth. If a company won't provide at a minimum the percentage your equity grant represents and valuation at last funding round, you should rightfully value stock at $0.
  - jollybean 5y ago
    You're talking about two different things, which gives credence to my point that 'interviewee doesn't know what they are asking'. The 'health of the company' and the 'valuation of you shares' are completely different things. On your last point: "a minimum the percentage your equity grant represents and valuation at last funding round" - yes, they should probably do that. Because otherwise, the value of that equity could be anything, it's impossible to know what 10 000 shares means. But that doesn't tell you anything about the company. Private valuations are mostly fantasy. You'll want to get a sense if the company is healthy, and even 'burn rate' isn't so much the right question, it's probably new customers. If the company is growing in terms of revenues and customers, it's probably the most positive signal of all not only in terms of stability, but also the actual value of the equity in then i.e. 'if it will be worth something'. Finally, NDA's are not a very good protection, everything is still 'need to know'.
morgante 5y ago
This is a great signal of which companies value their employees or not. In my experience, all the good startups are transparent in helping employees evaluate equity offers. Ex. all YC companies I interviewed at were happy to share info on outstanding share count, valuations, and even preferred stock. Meanwhile other lesser startups (often run by finance types) thought I was insane to even ask. It's clear which group actually values engineers.

by d23 5y ago

ryandrake 5y ago

I once interviewed for a software position at a risky looking small company, and I asked the CEO/owner if the books were available for me to verify their 1-5 year outlook before I moved my family across the country for the job. He looked totally shocked and gave a weirdly cagey “no”. I learned long after the fact that at first he was mortified and then later had a “wow who does he think he is” chuckle with the HR lady about me. They ended up making a barely acceptable offer because despite my horrible faux pas, I was a domain expert and they couldn’t keep staff for more than a year. And I accepted because I was 1 month away from being bankrupt and homeless. Lasted a year and a half. The business turned out to be solid but I left for greener pastures. I have no idea why owners are so cagey about the health of their businesses and funding sources, to potential employees. Especially when things are basically fine! He was bootstrapped and evidently had fine cash flow. Why is this a faux pas to ask? HN is full of entrepreneurs: why are you so offended when a candidate asks about cash flow or to see the cap table?

kmonsen 5y ago
I once interviewed with a startup and the equity part of the offer was only x number of options. So I was like, OK what is current/expected evaluation and how many shares outstanding, like what is the percentage I get. That was apparently "big company thinking" and they rescinded the offer just for asking this question (through the experienced recruiter).
- jacquesm 5y ago
  evaluation -> valuation?
  - kmonsen 5y ago
    Yes :-)
lovich 5y ago
These are intelligent people and the actions don't make sense when you look at the details, like your example of being in a fine position. That only leaves unaccounted for variables at play, and the best I've been able to tell is that its a cultural gap between the execs and the plebs that plays out even at small startups. You see the same behavior in non tech companies when VPs find out what their senior software engineers are paid, and start getting upset at the similar salary level, even though that's the market price. Or in things like rules that only Execs get to fly first class. I had a an executive have HR look into me "breaking the rules" when he saw me in first class with him on the way to a company event after I paid to upgrade my own seat.
- toomuchtodo 5y ago
  Hard to take the lizard brain out of the human.
  - urthor 5y ago
    Pretty much. Life is about observing the lizard brain rules. Never be the bearer of bad news for example, because even if people are polite about it, the lizard brain says stab the bearer of bad news.
manquer 5y ago
- Founders/management get defensive because they don't think they are so small that they cannot be trusted to pay you on time and when you ask for data it implies you don't trust their word that can taken as insulting/lack-of-confidence in them. - The other common reason is those numbers are confidential not just from employees, a competitor or investor who is evaluating a competitor could use it against you, so founders worry about that stuff, you may not take the offer and mention it to next company you talk to etc. - Few tech employees have the financial know-how to read financials, especially of startups . Most early stage investors rarely go through the actual books in any detail. - Measures like churn, CAC, ARR, MRR are the go-to metrics . The actual book numbers basis cash flow can be very bad although company is in decent health, this is why banks will not loan early-stage startups money unlike small businesses as startup numbers are not simply good enough by traditional metrics. - In small enough companies exposing the books to new employee will give rough idea of who is earning how much including the founders, and what else company is spending money on, keeping the information asymmetry can be seen as beneficial by founders.
- urthor 5y ago
  The flipside is that most startups fail. 90% of startups have terrible numbers on the metrics like churn, CAC,ARR, MRR. Because most startups fail. So as a startup founder, unless you are ONLY looking for financially illiterate employees who are willing to get snowed, you need to show and tell. Often I think the employer doesn't realise that me, the software engineer, might not have the financial know how. But my buddy from college with a masters in finance, THEY do. I'm running the numbers past them.
  - manquer 5y ago
    The upside to employees is very limited , that is the point of the post. the upside will be low unless you join very early stage and get decent amount of equity or join as a founding engineer or the company you join becomes valued at 10s of billions which is of course rare otherwise there is very little upside. Almost always FANNG level companies will pay you close or better what you would make best case in most startups with much less risk and far better work life balance. The reasons I have found people are most happy with are non financial, like can’t join big tech/ great dev but poor leet coder, learning opportunities, much more senior role , switch skills, less red tape to get things done, stepping stone to starting your own etc. You can’t quantify that , for some it is worth the risk and the paycuts , for others it isn’t. Most startup recruiters or founders probably won’t pitch that picture to prospective employees, independent of their ability to pay you economics is going to be favorable in big tech any day compared to most startups .
bombcar 5y ago
Probably the same reason most people are reluctant to admit their salary in public.
deleted 5y ago
[deleted]

WalterBright 5y ago

On the other hand, I know a fellow who thought the startup had no future, and wanted a higher salary in lieu of options. Management said ok. A couple years later, the ship came in, and it was a big payday for the other employees, but not him. He was furious.

zeroonetwothree 5y ago
Why would he be furious at his own decision? I can understand regret, but anger seems misplaced.
- WalterBright 5y ago
  It's pretty normal for people who chose the safe path to be angry when those around them hit the jackpot.
  - HWR_14 5y ago
    It's also normal when people choose the riskier path and people who choose the safe path profit more. If the company went bust after 4 years, everyone with worthless stock options would be made at the guy who managed to cash out a higher salary.
- HWR_14 5y ago
  Almost certainly anger at himself that then he transferred onto others.

jacquesm 5y ago

I'm pretty sure they were totally floored that you asked that question. They probably expected a starry eyed response and a 'where do I sign, master'.

jollybean 5y ago

The thing is, the vast majority of people asking the question will have no idea how to interpret it, and there are actually legitimate issues with privacy there. I mean - I think it's fully legit for people to have a 'broad sense of the state of the company' - and companies should be prepared to speak to it in some way. But not exactly in the way people are asking. If financing rounds are public, then at least there's that, and it's possible to 'very crudely guess' where companies are at.

morgante 5y ago
> there are actually legitimate issues with privacy there ~Every interview process I've gone through required an NDA at some point. > I mean - I think it's fully legit for people to have a 'broad sense of the state of the company' - and companies should be prepared to speak to it in some way. But not exactly in the way people are asking. A "sense of how the company is doing" is not anywhere near enough. The company can be doing extremely well and that still doesn't give me any indication what (for example) 10,000 shares are worth. If a company won't provide at a minimum the percentage your equity grant represents and valuation at last funding round, you should rightfully value stock at $0.
- jollybean 5y ago
  You're talking about two different things, which gives credence to my point that 'interviewee doesn't know what they are asking'. The 'health of the company' and the 'valuation of you shares' are completely different things. On your last point: "a minimum the percentage your equity grant represents and valuation at last funding round" - yes, they should probably do that. Because otherwise, the value of that equity could be anything, it's impossible to know what 10 000 shares means. But that doesn't tell you anything about the company. Private valuations are mostly fantasy. You'll want to get a sense if the company is healthy, and even 'burn rate' isn't so much the right question, it's probably new customers. If the company is growing in terms of revenues and customers, it's probably the most positive signal of all not only in terms of stability, but also the actual value of the equity in then i.e. 'if it will be worth something'. Finally, NDA's are not a very good protection, everything is still 'need to know'.

morgante 5y ago

This is a great signal of which companies value their employees or not. In my experience, all the good startups are transparent in helping employees evaluate equity offers. Ex. all YC companies I interviewed at were happy to share info on outstanding share count, valuations, and even preferred stock. Meanwhile other lesser startups (often run by finance types) thought I was insane to even ask. It's clear which group actually values engineers.