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Fair enough. Being employed by a startup is akin to taking a vow of poverty. But it's not about getting "utterly screwed". It's about making a rational decisio

Fair enough. Being employed by a startup is akin to taking a vow of poverty. But it's not about getting "utterly screwed". It's about making a rational decision that some things in life are worth more than financial reward. Working at a startup has a multitude of non-financial benefits. You'll work with the latest new technologies. You'll play a key role in a small team. You'll be forced to learn all kinds of new skills. You'll meet lots of people. You'll acquire a sense of ownership and confidence that you may never feel when working in a large corp. If you've got a family to raise and you're worried about your retirement savings, by all means, follow the math and don't expose yourself to the near-certain financial ruin of a startup. But if you're young, adventurous, or simply value interesting work over a high salary, it can be a lot of fun to get utterly screwed with your measly 2%. I enjoyed my last shot.

hythloday 15y ago
Aren't all of your upsides shared more strongly by the founders, who also benefit more from a positive outcome? It seems to me that if you accept the arithmetic in the GP post is correct (which a lot of people don't), being an employee is almost never a good idea.
- sunnysideup 15y ago
  Some people are great coders or marketers, but just dont have ideas for a startup of their own yet! For them is being employee #1 a great training.
  - deleted 15y ago
    [deleted]
  - reinhardt 15y ago
    No idea why this was downvoted but it rings true to me. I can't imagine myself as a (co)founder, even employee #1/2 is pushing it. And still I'd rather get screwed over financially in a startup hacking on stuff I find interesting than slaving away at a MegaCorp doing "enterprise" CRUD apps.
- joblessjunkie 15y ago
  As an employee, I collect salary from Day One. I also don't have to invest any of my personal savings in the company. Thus, my risk is much lower than a founder's.
  - hythloday 15y ago
    Well, no, your risk--the probability that things go tits up--is the same as the founders': you're working for the same company, after all, and you have even less ability to influence the course of events. Your expected opportunity cost in the case of failure is smaller--like you say, you draw salary as soon as you start (though the salary is often less than market rate). I will point out that employees are usually less well-informed than founders about a company tanking, so will usually have a couple of months lag in looking for another job, and that "I was employee 3 at Vunge Games" doesn't sound nearly as good as "I founded Vunge Games" when you're at interviews. Your expected payoff in the case of success is probably at least an order of magnitude smaller, and from anecdotal evidence seems to not be much more than it takes to make up the market wage shortfall over the course of your employment. This isn't intended to be pedantry--I figure that all of them (but especially the expected opportunity cost) are likely to vary based on region and are worth noting as hidden costs. But from my perspective, being an early employee at a start-up is a bit of a mug's game when the alternative is bootstrapped founding from corporate employment.
    - paol 15y ago
      The definition of risk you're using is incorrect. Roughly, risk = probability x consequence. The probability of a startup failing is the same for the founders as for the employees. The consequence is not.
      - hythloday 15y ago
        Ah, I wasn't aware of that definition. Thanks, that's a nice mental model.
HalibetLector 15y ago
You're also ignoring the non-financial downsides: high stress, long hours and no life outside of the startup. Suggesting that startups are inherently interesting misses the fact that a great many of them are rehashes of previous successful startups, which makes one startup feel just like that other startup you just left. The sense of ownership is also highly variable. It depends on how much of a control freak the technical founder is. Personally, I choose startups because of the high tolerance most startups have for individuality. I work from home in the mornings, have a standing desk at work and take walks in the middle of the day without anybody freaking out.

hythloday 15y ago

Aren't all of your upsides shared more strongly by the founders, who also benefit more from a positive outcome? It seems to me that if you accept the arithmetic in the GP post is correct (which a lot of people don't), being an employee is almost never a good idea.

sunnysideup 15y ago
Some people are great coders or marketers, but just dont have ideas for a startup of their own yet! For them is being employee #1 a great training.
- deleted 15y ago
  [deleted]
- reinhardt 15y ago
  No idea why this was downvoted but it rings true to me. I can't imagine myself as a (co)founder, even employee #1/2 is pushing it. And still I'd rather get screwed over financially in a startup hacking on stuff I find interesting than slaving away at a MegaCorp doing "enterprise" CRUD apps.
joblessjunkie 15y ago
As an employee, I collect salary from Day One. I also don't have to invest any of my personal savings in the company. Thus, my risk is much lower than a founder's.
- hythloday 15y ago
  Well, no, your risk--the probability that things go tits up--is the same as the founders': you're working for the same company, after all, and you have even less ability to influence the course of events. Your expected opportunity cost in the case of failure is smaller--like you say, you draw salary as soon as you start (though the salary is often less than market rate). I will point out that employees are usually less well-informed than founders about a company tanking, so will usually have a couple of months lag in looking for another job, and that "I was employee 3 at Vunge Games" doesn't sound nearly as good as "I founded Vunge Games" when you're at interviews. Your expected payoff in the case of success is probably at least an order of magnitude smaller, and from anecdotal evidence seems to not be much more than it takes to make up the market wage shortfall over the course of your employment. This isn't intended to be pedantry--I figure that all of them (but especially the expected opportunity cost) are likely to vary based on region and are worth noting as hidden costs. But from my perspective, being an early employee at a start-up is a bit of a mug's game when the alternative is bootstrapped founding from corporate employment.
  - paol 15y ago
    The definition of risk you're using is incorrect. Roughly, risk = probability x consequence. The probability of a startup failing is the same for the founders as for the employees. The consequence is not.
    - hythloday 15y ago
      Ah, I wasn't aware of that definition. Thanks, that's a nice mental model.

HalibetLector 15y ago

You're also ignoring the non-financial downsides: high stress, long hours and no life outside of the startup. Suggesting that startups are inherently interesting misses the fact that a great many of them are rehashes of previous successful startups, which makes one startup feel just like that other startup you just left. The sense of ownership is also highly variable. It depends on how much of a control freak the technical founder is. Personally, I choose startups because of the high tolerance most startups have for individuality. I work from home in the mornings, have a standing desk at work and take walks in the middle of the day without anybody freaking out.