6 ms·

A few days ago I moderated a panel discussion at the Computer History Museum with the founders of Dropbox, Evernote, and Wildfire. I asked whether it was worth

by pg 15y ago

A few days ago I moderated a panel discussion at the Computer History Museum with the founders of Dropbox, Evernote, and Wildfire. I asked whether it was worth dealing with outside recruiters, and they all said no. They all had recruiters working for them in house. In fact between 3% and 5% of their employees were recruiters. They said the best source of people initially were the friends of the founders and the first employees (which is one reason it's helpful to have gone to a good CS school) and that as soon as you've exhausted this source you should start hiring recruiters.

dpritchett 15y ago
pg, I'm curious about the advice you give to YC founders on identifying and recruiting early employees. Based on tutorspree's job posting they need roughly the same level of technical skills as a founder but they're getting a maximum of 3% equity and a below-market NYC salary. I'd guess the founders are getting 5-10x the equity and a salary that's not too far off from the one offered above. Is this package consistent with your advice? Does it generally work out well for the companies in question?
- tptacek 15y ago
  Equity grants are based on risk, not ability. Sometimes, very talented technical people are assuming extra risk due to opportunity cost; perhaps some other startup is offering comparable equity but has a longer runway and/or more traction. If those people are good at negotiating, they get better equity grants. A few factors play in to the gulf between founder and early employee equity: * Founders have by definition committed to the idea before it had any traction at all. More risk. * Founders have spent more time at the company than employees. Each day spent at the startup, in addition to accruing compensable effort, carries opportunity cost (not to hop ship to some other company) and thus more risk. * Founders have often worked, at least for a time, at zero salary. More risk. * Founders that can get their companies funded, accepted into YC, or bootstrapped to market traction can presumably do that again somewhere else --- again implying they're accepting the opportunity cost of committing to one startup instead of starting another. Most employees, regardless of ability, can't say that. It's important to remember that founding teams have drastically different compensation packages than employees do; it's almost an apples/oranges comparison. You want to remember this not to empathize with the founders but to keep in mind how different their incentives are from yours.
  - dpritchett 15y ago
    I would counter that equity grants are ultimately based on negotiating leverage rather than on risk or ability, each of which are important components of the negotiation picture. As a founder of a hypothetical company, I wouldn't offer more than 3% to an employee either if I could succeed without making that sacrifice. I completely understand the value proposition for a founder - pg has outlined it in exhaustive detail over a decade's essay writing. I'm not sure I've seen where he outlines the upside of taking a sub-market salary in exchange for low-single-digit equity. My best guess is that early-employee startupping is an investment in one's network and skills: The company, like all startups, is likely to fail. Your equity has a low chance of paying off. On the upside, you're getting startup-tier technical experience that would be dramatically harder to come by in a BigCo job. And best of all, you're gaining entry into the professional networking world of startup founders and the extended YC family. I don't mean to imply that early employees are getting shafted or that they are inherently owed large equity stakes, I'm just working my way to an understanding of exactly what the value proposition is for someone in this position.
    - tptacek 15y ago
      It's kind of a banal observation to say that if you can do better than 3% / $70k in NYC, you shouldn't accept a 3% / $70k offer "just because it's a startup". But it's a valid observation, so, there you go.
      - dpritchett 15y ago
        I must've overstated my case. I've never worked in a technology startup and I'm only trying to suss out the motivations behind the different classes of players. There's plenty of ink spilled about VCs and founders, but not so much about early employees. I assume the people entering into these arrangements are rational players comfortable with their possible outcomes, and I'd like to better understand the deals. Please don't take my observations upthread as dismissive or authoritative. I certainly don't have the startup experience to make such claims. I have no reason to mistrust pg (or you for that matter) and I'm genuinely hoping for digestible explanations. Perhaps I shouldn't have asked on HN but rather through a private channel.
cperciva 15y ago
as soon as you've exhausted this source you should start hiring recruiters. Did they present any evidence to support this position, or does "should" in this case just mean that this is what they did? There have been a few times when I've talked to technical people at startups and come away thinking "if it weren't for Tarsnap, I'd totally go work for them". In contrast, every time I talk to a recruiter, I come away thinking "if this is the sort of people they have at X, there's no way in hell I'd ever want to work there". I'm not sure what the best solution is here, but it seems that recruiters are far from perfect.
- tptacek 15y ago
  When a smart small company hires a recruiter, part of the goal is to have recruits never really realize they're talking to recruiters. Presumably most YC recruiters aren't randomly cold calling people; instead their job might involve a lot more of "setting up circumstances so that the right person in their company is likely to end up talking to Colin Percival".
  - cperciva 15y ago
    Aha! Good to know that there are such things as good recruiters out there, even if I've never encountered them (knowingly, at least).
    - tptacek 15y ago
      Most of the time, when people complain about recruiters, they're complaining about dialing-for-dollars cold-call transactional recruiters. Recruiting is a special form of sales/marketing, and most businesses wouldn't expect randomly calling people on the phone to be their best early sales strategy. But that doesn't mean they don't do sales; they just execute on an early sales strategy. Jeff Cox's _Selling The Wheel_ is a good, if somewhat patronizing, summary of the different sales strategies companies use at different stages of the adoption curve for their offerings. The same insight applies to recruiting.
- harryh 15y ago
mathattack 15y ago
Completely true. It's always worth paying up for good engineers. Good engineers with lots of friends - even more so.
Peroni 15y ago
This is exactly what's killing the recruitment industry. More and more companies are realising the value of having a decent inhouse recruitment team. Personally I believe it's a positive movement. If you look at some of the most attractive companies such as Google & Facebook, they all have their own internal recruitment team and they rarely engage outside recruiters simply because their own team is immensley talented. On that note, if anyone wants to capitalise on pg's insight and wants to hire a talented recruiter, I am really keen to shift to in-house recruitment!
Flenser 15y ago
as soon as you've exhausted this source you should start hiring recruiters. Presumably the quality of the first recruiter you hire will have a significant impact if they are going to be bringing in other recruiters as well. So how do you hire a good recruiter?

by pg 15y ago

dpritchett 15y ago

pg, I'm curious about the advice you give to YC founders on identifying and recruiting early employees. Based on tutorspree's job posting they need roughly the same level of technical skills as a founder but they're getting a maximum of 3% equity and a below-market NYC salary. I'd guess the founders are getting 5-10x the equity and a salary that's not too far off from the one offered above. Is this package consistent with your advice? Does it generally work out well for the companies in question?

tptacek 15y ago
Equity grants are based on risk, not ability. Sometimes, very talented technical people are assuming extra risk due to opportunity cost; perhaps some other startup is offering comparable equity but has a longer runway and/or more traction. If those people are good at negotiating, they get better equity grants. A few factors play in to the gulf between founder and early employee equity: * Founders have by definition committed to the idea before it had any traction at all. More risk. * Founders have spent more time at the company than employees. Each day spent at the startup, in addition to accruing compensable effort, carries opportunity cost (not to hop ship to some other company) and thus more risk. * Founders have often worked, at least for a time, at zero salary. More risk. * Founders that can get their companies funded, accepted into YC, or bootstrapped to market traction can presumably do that again somewhere else --- again implying they're accepting the opportunity cost of committing to one startup instead of starting another. Most employees, regardless of ability, can't say that. It's important to remember that founding teams have drastically different compensation packages than employees do; it's almost an apples/oranges comparison. You want to remember this not to empathize with the founders but to keep in mind how different their incentives are from yours.
- dpritchett 15y ago
  I would counter that equity grants are ultimately based on negotiating leverage rather than on risk or ability, each of which are important components of the negotiation picture. As a founder of a hypothetical company, I wouldn't offer more than 3% to an employee either if I could succeed without making that sacrifice. I completely understand the value proposition for a founder - pg has outlined it in exhaustive detail over a decade's essay writing. I'm not sure I've seen where he outlines the upside of taking a sub-market salary in exchange for low-single-digit equity. My best guess is that early-employee startupping is an investment in one's network and skills: The company, like all startups, is likely to fail. Your equity has a low chance of paying off. On the upside, you're getting startup-tier technical experience that would be dramatically harder to come by in a BigCo job. And best of all, you're gaining entry into the professional networking world of startup founders and the extended YC family. I don't mean to imply that early employees are getting shafted or that they are inherently owed large equity stakes, I'm just working my way to an understanding of exactly what the value proposition is for someone in this position.
  - tptacek 15y ago
    It's kind of a banal observation to say that if you can do better than 3% / $70k in NYC, you shouldn't accept a 3% / $70k offer "just because it's a startup". But it's a valid observation, so, there you go.
    - dpritchett 15y ago
      I must've overstated my case. I've never worked in a technology startup and I'm only trying to suss out the motivations behind the different classes of players. There's plenty of ink spilled about VCs and founders, but not so much about early employees. I assume the people entering into these arrangements are rational players comfortable with their possible outcomes, and I'd like to better understand the deals. Please don't take my observations upthread as dismissive or authoritative. I certainly don't have the startup experience to make such claims. I have no reason to mistrust pg (or you for that matter) and I'm genuinely hoping for digestible explanations. Perhaps I shouldn't have asked on HN but rather through a private channel.

cperciva 15y ago

as soon as you've exhausted this source you should start hiring recruiters. Did they present any evidence to support this position, or does "should" in this case just mean that this is what they did? There have been a few times when I've talked to technical people at startups and come away thinking "if it weren't for Tarsnap, I'd totally go work for them". In contrast, every time I talk to a recruiter, I come away thinking "if this is the sort of people they have at X, there's no way in hell I'd ever want to work there". I'm not sure what the best solution is here, but it seems that recruiters are far from perfect.

tptacek 15y ago
When a smart small company hires a recruiter, part of the goal is to have recruits never really realize they're talking to recruiters. Presumably most YC recruiters aren't randomly cold calling people; instead their job might involve a lot more of "setting up circumstances so that the right person in their company is likely to end up talking to Colin Percival".
- cperciva 15y ago
  Aha! Good to know that there are such things as good recruiters out there, even if I've never encountered them (knowingly, at least).
  - tptacek 15y ago
    Most of the time, when people complain about recruiters, they're complaining about dialing-for-dollars cold-call transactional recruiters. Recruiting is a special form of sales/marketing, and most businesses wouldn't expect randomly calling people on the phone to be their best early sales strategy. But that doesn't mean they don't do sales; they just execute on an early sales strategy. Jeff Cox's _Selling The Wheel_ is a good, if somewhat patronizing, summary of the different sales strategies companies use at different stages of the adoption curve for their offerings. The same insight applies to recruiting.
harryh 15y ago

mathattack 15y ago

Completely true. It's always worth paying up for good engineers. Good engineers with lots of friends - even more so.

Peroni 15y ago

This is exactly what's killing the recruitment industry. More and more companies are realising the value of having a decent inhouse recruitment team. Personally I believe it's a positive movement. If you look at some of the most attractive companies such as Google & Facebook, they all have their own internal recruitment team and they rarely engage outside recruiters simply because their own team is immensley talented. On that note, if anyone wants to capitalise on pg's insight and wants to hire a talented recruiter, I am really keen to shift to in-house recruitment!

Flenser 15y ago

as soon as you've exhausted this source you should start hiring recruiters. Presumably the quality of the first recruiter you hire will have a significant impact if they are going to be bringing in other recruiters as well. So how do you hire a good recruiter?