4 ms·

As a former employee #1, I can say all it leads to is killing yourself and bitterness, lack of control and resentment. In my case I even had a decent outcome b

As a former employee #1, I can say all it leads to is killing yourself and bitterness, lack of control and resentment. In my case I even had a decent outcome but you'll always feel like you got screwed because you're off from the founders by an order of magnitude at least. Better to just angel invest if you have the means or start your own company where you have more upside.

kevstev 4y ago
I feel the same- I did not have a decent outcome, aside from being able to say I built all of this stuff, essentially myself, with our team eventually only being 5 devs total. I would say that I will not ever work again for a company that does not have market fit without a few whole percentage points at MINIMUM.
- deleted 4y ago
  [deleted]
- beambot 4y ago
  Unless you're a senior executive, it's unlikely you'll get whole percentage points for a post-PMF startup... Just looked on OptionImpact: Senior-most individual contributor (SWE 6) at a post-SeriesA startup indicates a 50th percentile equity grant at 0.28%. If you go all the way up to 90th percentile, you get to 1.1%. Beyond SeriesB+, there are no full-percentage point grants for IC Software Engineers. Managers & Directors have similar equity grants post-SeriesA. CTO post-SeriesA is 1.5% (50th) and 3.75% (90th). VP Eng is 0.8% (50th) and 2.1% (90th). So even as an exec, whole percentage points aren't a foregone conclusion. YMMV, but that's the data.
  - kevstev 4y ago
    My wording may have been unclear in retrospect- I meant that I would not take a position in a firm that did not have market fit unless it was for whole percentage points. If they have market fit, it's a different story.
debarshri 4y ago
Being employee 1 and getting ESOP is an investment vehicle. It is a bet you are taking, it might work out or it might not. Statistically, it does not work out most of the time. Like any investment, earlier you are, better your returns are. Thats what happens to the founders. It might be that you are better engineer, sales guy than the founders but they were invested into idea of the company earlier that you.
- enahs-sf 4y ago
  To add some color to my story, I was employee #1 at a startup that got acquired after 2 years and gave me 2 years of rest and vest. Then engineer #4 at a "hot YC startup" that went from series A to series D in <4 years. my illiquid 18 months of trying to navigate the politics of a hyper-growth company is "worth" significantly more than what I got for 2 years of 9-9/6. I affected basically zero change there, but by virtue of being early on the rocket, my stock has appreciated massively in value. I feel more proud of working at the former as I designed and scaled the system from scratch, but would I have been better off doing a hit and run on 2-3 of these "hot" YC companies for a year at a time? Not sure.
- yourapostasy 4y ago
  > Like any investment, earlier you are, better your returns are. The big caveat here is "earlier" means "founder early", not "employee early". By and large, unless you have the same founder-class shares and shareholder rights, you are participating in a lottery just like the founders, except you're even more in the dark than they are, and you are taking on even more downside and less upside than they do. By design. This might have been tolerable back in say the 80's or 90's when losing a few years of your life to a startup might not have an appreciable effect upon your future lifestyle, and everything was still so new that the experience gained still could cover a noticeable fraction of the entire field's domain knowledge. But I don't advise it for young adults today any longer when even a few years makes a noticeable impact upon a future acquisition timeline of housing/shelter and retirement, with rampant asset inflation under a functional gerontocracy for the foreseeable future. I don't see how the numbers pencil out at this time for employees, even taking the probabilistic distributions into account. I sure would like to be shown an alternative win-win perspective though, as I think startups are nifty. The startups will be fine though, as there will always be starry-eyed youngsters swarming to startups no matter what, but I wish there were better outcomes with how far the industry has matured and accumulated wealth of all types, than the same dilutive structures we see over and over today. It would accelerate the rate of change.

kevstev 4y ago

I feel the same- I did not have a decent outcome, aside from being able to say I built all of this stuff, essentially myself, with our team eventually only being 5 devs total. I would say that I will not ever work again for a company that does not have market fit without a few whole percentage points at MINIMUM.

deleted 4y ago
[deleted]
beambot 4y ago
Unless you're a senior executive, it's unlikely you'll get whole percentage points for a post-PMF startup... Just looked on OptionImpact: Senior-most individual contributor (SWE 6) at a post-SeriesA startup indicates a 50th percentile equity grant at 0.28%. If you go all the way up to 90th percentile, you get to 1.1%. Beyond SeriesB+, there are no full-percentage point grants for IC Software Engineers. Managers & Directors have similar equity grants post-SeriesA. CTO post-SeriesA is 1.5% (50th) and 3.75% (90th). VP Eng is 0.8% (50th) and 2.1% (90th). So even as an exec, whole percentage points aren't a foregone conclusion. YMMV, but that's the data.
- kevstev 4y ago
  My wording may have been unclear in retrospect- I meant that I would not take a position in a firm that did not have market fit unless it was for whole percentage points. If they have market fit, it's a different story.

debarshri 4y ago

Being employee 1 and getting ESOP is an investment vehicle. It is a bet you are taking, it might work out or it might not. Statistically, it does not work out most of the time. Like any investment, earlier you are, better your returns are. Thats what happens to the founders. It might be that you are better engineer, sales guy than the founders but they were invested into idea of the company earlier that you.

enahs-sf 4y ago
To add some color to my story, I was employee #1 at a startup that got acquired after 2 years and gave me 2 years of rest and vest. Then engineer #4 at a "hot YC startup" that went from series A to series D in <4 years. my illiquid 18 months of trying to navigate the politics of a hyper-growth company is "worth" significantly more than what I got for 2 years of 9-9/6. I affected basically zero change there, but by virtue of being early on the rocket, my stock has appreciated massively in value. I feel more proud of working at the former as I designed and scaled the system from scratch, but would I have been better off doing a hit and run on 2-3 of these "hot" YC companies for a year at a time? Not sure.
yourapostasy 4y ago
> Like any investment, earlier you are, better your returns are. The big caveat here is "earlier" means "founder early", not "employee early". By and large, unless you have the same founder-class shares and shareholder rights, you are participating in a lottery just like the founders, except you're even more in the dark than they are, and you are taking on even more downside and less upside than they do. By design. This might have been tolerable back in say the 80's or 90's when losing a few years of your life to a startup might not have an appreciable effect upon your future lifestyle, and everything was still so new that the experience gained still could cover a noticeable fraction of the entire field's domain knowledge. But I don't advise it for young adults today any longer when even a few years makes a noticeable impact upon a future acquisition timeline of housing/shelter and retirement, with rampant asset inflation under a functional gerontocracy for the foreseeable future. I don't see how the numbers pencil out at this time for employees, even taking the probabilistic distributions into account. I sure would like to be shown an alternative win-win perspective though, as I think startups are nifty. The startups will be fine though, as there will always be starry-eyed youngsters swarming to startups no matter what, but I wish there were better outcomes with how far the industry has matured and accumulated wealth of all types, than the same dilutive structures we see over and over today. It would accelerate the rate of change.