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How to Not Get Screwed over as a Software Engineer [video]

282 points by simonpure 3y ago

Xeoncross 3y ago
As a higher income earner I've always found it important to spend the money to ask a Lawyer, CPA, second Doctor, Mentor, Coache, Inspector, and other people focused on a certain niche in life what they think for the $100/hr (or whatever) fee they charge. Always been worth it. If you're focused on tech, make sure you've hired the right people to review your NDA's, startup contract, new home purchase, or workout routine. Don't risk millions on a startup IPO / house / loved one without dropping a few hundred on a second/third opinion. You've got the money. Don't cheap out on important things when you could have an all-star team backing you.
- munk-a 3y ago
  Especially if you're going through an IPO or ownership exchange - put every document in front of a lawyer and accountant. You don't want to miss your opportunity to sell or make a mistake on the taxes.
- jfim 3y ago
  How do you work with/find a lawyer? Do you have them on a retainer agreement?
  - dustingetz 3y ago
    upcounsel.com, cash hourly, contract review in usa will be like $300
  - Terretta 3y ago
    Find and work with a lawyer that helps engineers extract themselves from one firm to land at a specifically competing firm. Since most engineers don't hire lawyers, it may be easier to find a lawyer that does this for Firm Z, to pull people from competing firms A - Y. In either case, ideally they will have had to go to arbitration and/or court against the original employer. This person will know what to look for in masses of boilerplate to help you zero in on and fix the 10 words here and there that can change not just your comp but your career options. Expect from $300 - $750 / hr, depending on the size role you're lawyering, which tends to indicate the amount of legalese, traps, and foot guns at play.
  - sebmellen 3y ago
    https://upcounsel.com https://upcounsel.com is great for this. You basically post a “job” and get proposals from multiple lawyers with upfront pricing, deal structure, etc. and everything is negotiated through the platform.
- ChrisMarshallNY 3y ago
  Here's a submission that I made this morning (never made it out of new): https://news.ycombinator.com/item?id=38111370 https://news.ycombinator.com/item?id=38111370 It's an old video of a lecture Mike Monteiro (and his lawyer) did. Kinda speaks to this.
- slap_shot 3y ago
  I'll second the opinion of having your contracts reviewed, but will curb some expectations: most contracts (NDAs, employment agreements, home contracts etc) are fairly standard. There may be some small points to negotiate if they are off-market, but you had better have the leverage to negotiate.
  - wavemode 3y ago
    That's a valid thing to keep in mind with big corporations. But if you're joining as employee number 5, and they claim they aren't willing to negotiate on something you dislike in the contract because it's "standard", you should leave the interview. It's exactly what they're talking about in the linked video - you think you're joining as a valued partner, but you're clearly just a cog in the wheel.
  - paxys 3y ago
    If you get a SDE offer from Google then sure, there is probably no room for changes other than some adjustment to salary and stock. If you are employee #10 at a startup (which is what this video is about), everything is negotiable, and you are shooting yourself in the foot if you don't go over your contract with a magnifying glass and professional help.
- cyrialize 3y ago
  I like the mention of a workout routine. Trainers/physical therapists can help to figure out issues with your body and give you a list of stretches/exercises to help with it. I've spent my fair share of getting injured through lifting and each time I've bounced back because a video that a PT has shared has a patient with the same exact issue as me. I wonder how many injuries I could've avoided if I actually set up a session haha.
ldjkfkdsjnv 3y ago
How to get rich in tech as a mediocre programmer: 1. Transfer to a TPM/QA Manager role at somewhere like Amazon or Microsoft. Bar is much lower to get into this role. 2. Get hired into a higher level than you could in a SWE role. 3. Transfer within the company to being an SDM 4. Now you are one level higher, in a management role, that would have taken you 5+ years of grinding and some luck to get into. 5. Spend a few years in this role, switch to other big co, makikg 400-500k+ while bossing around engineers much smarter than you. ^This path is how people are doing it. Never take equity in a startup, never grind away as a mid level engineer, fighting with ten other engineers for one promotion. Edit: Adding one point to this, if you found a company with a non technical CEO, and the company sees some success, all the focus will be on the CEO. The CTO role is highly replaceable, and there is a massive power shift that occurs once there is traction with a "finished" product. The CEO, especially in B2B Saas, is the face of the company. So the CEO can sit on his hands the whole time the product is developed, but then does reap huge gains. There's no easy answer, as many engineers do not have the soft skills for the role. But arguably, they could run these businesses themselves.
- raincom 3y ago
  A great insight, indeed.
- nine_zeros 3y ago
  Do not work at Amazon or amazon-like companies. They are just not worth it from a mental health, wlb, or career perspective for engineers. Find engineering/product first companies. Big tech ain't it any longer.
  - teachrdan 3y ago
    What would you recommend instead?
    - munk-a 3y ago
      Work at a company making a product you believe in and with coworkers that you get along with.
satvikpendem 3y ago
One of the top comments on the YouTube video attached to the article talks about how someone wasted their 20s working as the founding engineer (employee #6 of a 6-person startup) and when the company exited for $100 MM, they only got 100k and are still working at 40 years of age while the other 5, presumably having cofounder-level equity, are retired. This is the true risk of startups, and, if you're looking to maximize your earnings, it's best to either join a big tech company or start your own startup owning most of the equity, perhaps as a side hustle while you grow it enough to be profitable. But getting "founding engineer" level equity on the order of 0.5% (before dilution!) seems to basically be a scam, where you're working 2x the amount for lower salaries than the market, all while having some nebulous carrot dangling in front of you for a reward that may never come, most likely, or even if it does, the value is so small as to not make up even on a per-hour basis the amount you spent working at the startup.
- deleted 3y ago
  [deleted]
- Berone 3y ago
  The path to getting into these founder / c-suite roles is those founding engineer roles in which you can learn how to scale and operate these ventures. The founding engineer role at 0.5% is not meant to be a role to retire on, but a stepping stone to those bigger roles.
  - satvikpendem 3y ago
    Not really, it's better to just start your own startup instead, there is not much need to spend years as a founding engineer before becoming a founder, you might learn some skills but it's nothing you can't learn yourself, as evidenced by the people who are first time founders who did not previously work at a startup. If you get to some scale and get acquired (or even shut down), you can leverage that for future higher positions that a founding employee would not get you.
    - Berone 3y ago
dauertewigkeit 3y ago
Industry wide, not even in startups, the people who get screwed the most are the ones working under the hood. I am not even talking about the disparity between SWEs and C-suites. I'm talking within the engineering domain. The closer you are to the application side the more credit you get for the effort, even if it might have only been possible through the hard work of recent under the hood technological advances. A prime example is deep learning. The people getting all the credit are the AI researchers. Now I am not trying to discredit them. But a huge part of what made the recent training of large models possible are all the other advances. All the dedicated PyTorch/C++/CUDA/MPI code that is written just to be able to scale on a HPC cluster, for example. Those people are handsomely rewarded, but they aren't getting the Chief AI scientist recognition, despite it probably being just as hard if not harder to write all the optimized code to enable and facilitate LLMs in the first place. Before I got into deep learning I was into numerics. Numerics people get typical SWE salaries, but they aren't getting FANNG level salaries, even though their code is powering the simulations across whole industries that ultimately enable many of them to operate at all. Now I am sure somebody will debate me on the "getting screwed" part, but it sure feels as if, the ones who use a technical library and build an application on top of it, get the recognition both for their own work and also get part of the recognition that should due-fully be bestowed on the author of the library. But maybe this is how the entirety of society works, but one should still be conscious of this phenomenon. If we all stand on the shoulders of giants, then maybe we should also name the giants in the acknowledgements section.
- dogman144 3y ago
  I think this depends on what you view as “getting screwed.” If the under the hood line engineers aren’t getting wild compensation for products they built generating wild compensation for the engineers/researchers working on the end product, yes that is a fair point. If it’s these engineers not getting the recognition of Chief AI scientist and so on, that’s misguided I think. There is nothing worse than working under a technical SME who doesn’t know leadership, and also “product,” broadly defined. I’ve worked on both sides of the issue and org leadership is a defined skill set the same way optimized code is. Unless the backend engineers display that leadership ability, their closeness to the internals of the technology doesn’t justify them running how the technology gets deployed. It is the same as if you found a startup. During the ideation sessions with whatever VC buys into you, there is 5% discussion of tech, or better yet - checkbox the product mvp works. 95% who are you going to sell this to and have you spoken to them? Different skills. When tech is a business, the tech knowledge starts to matter less, or is only a portion of the picture. The individuals that grasp that do well, SWEs who ignore this don’t IMO.
purpleblue 3y ago
It's funny that YC is posting this video, because as far as I can tell, YC teaches its founders to keep most of the equity for themselves, and dole out as little equity as possible to their employees. Back during the dotcom days, most employees, from secretaries to engineers, got extremely rich from options when the company IPOed. These days, in order to make a life-changing amount of money at a YC startup as an employee, the company needs to exit/IPO at over $5 billion in order to make about $1 million. I was at a YC company for 4.5 years as an early engineer, and I ended up with less than $100,000 from my options. I would have made 10x that had I taken a FAANG offer with considerably less work and risk.
- AlexErrant 3y ago
  > At YC, we tell our founders to be generous with equity, and even suggest giving 10% to the first 10 employees. https://www.ycombinator.com/blog/filter-by-equity-at-yc-startups#:~:text=At%20YC%2C%20we%20tell%20our%20founders%20to%20be%20generous%20with%20equity%2C%20and%20even%20suggest%20giving%2010%25%20to%20the%20first%2010%20employees https://www.ycombinator.com/blog/filter-by-equity-at-yc-star....
  - satvikpendem 3y ago
    0.5% - 1% each is also what I've seen, but sadly that is really not enough, especially after rounds of dilution. See my top comment about "founding engineers": https://news.ycombinator.com/item?id=38116759 https://news.ycombinator.com/item?id=38116759
- timfsu 3y ago
  As a YC founder, YC doesn't teach founders anything when it comes to how to split equity. The economics you're describing is a function of (overly) high valuations in private markets, which leads to equity grants that don't appreciate very much when liquidity happens. This is great for folks that got in early (founders and early investors) and bad for everyone else.
  - choppaface 3y ago
zoogeny 3y ago
The intro of that video hit hard and hurt. I have literally been in that position where I built the analytics page, which marketing asked for, and I can see the analytics for the analytics and no one has even checked the page. And so I chime in asking if anyone else has noticed that our big product release is not going anywhere and its like crickets. You realize that from your position that you have no ability to hold others accountable. I mean, if the release had happened and there had been technical issues you would have gotten called out and raked over the coals. But conversely, when the release was technically flawless but the business side tanked then no one is held responsible. What frustrates me even more is when the non-technical people are acting like they want your input. They are actively soliciting feedback and even talking about empowerment but all of the critical decisions are being made behind closed doors. It is clear they know that any sane and technically competent senior contributor needs agency so they try their best to provide an illusion since they want to keep the actual control. I can even understand it. Their investors demand a prominent VP of sales or marketing and that VP demands their own agency as a requirement to work at the startup. There is only so much control to give out and the technical guy is the one shut out. One of their points relating to how you know things are working really hit me. If you have fair equity and you have a seat at the table and things are still not working, then maybe you are the problem. But on the other side, if the founders are not giving you a seat at the table even when you are making it clear that you require it then maybe they don't respect you. I believe that it is a mistake to believe that merely working harder will earn that respect.
- fatherzine 3y ago
  "you have no ability to hold others accountable" -- true for all levels of the human stack
  - yoyohello13 3y ago
    This makes no sense. People in power can absolutely hold other's below them accountable, but if you're the low person on the totem pole it becomes much harder.
    - 3y ago
_yf4k 3y ago
After having worked at four startups, including two as CTO, I have zero remaining equity or financial upside from any of the startup equity. This is the bitter take away, your equity will most likely amount to nothing unless the company is on a clear path to IPO/ acquisition or a promise of share buy back during the time you're at the company. This is a higher bar than simple profitability. The reason you work at a startup is because you 1. seek to start a company in the future and want to index on the mistakes of the startup you work at 2. want to grow in responsibility/ leadership because you're bored at BigTech 3. want to learn more and apply the learnings, hopefully also experiencing the exhilaration that comes from hockey stick growth The advice to my younger self would be to ignore startup equity if you're an employee for all practical purposes. The only concrete indicator that equity signals is the trust your founders have in you.
- alexawarrior2 3y ago
  Amen brother/sister. Was founder, co-founder, early employee, or investor in eleven startups, ten of which went out of business or were bought with no net equity earnings for myself, one of them had a $250m exit from which I netted $130k, after seven years. It's not that retirement-level-net-earnings startups never happen, just that they happen only about 1 out of every 1000 times on average according to my research. The exception being, every additional $1m of net worth you have before you found increases your odds of success, up to around 50% success rate with a net worth over $10m (going towards HNWI territory). So being middle class your startup investments are lottery-level, but if you're already rich they're more of a calculated investment. tl;dr only capitalists - the existing 1% - have an odds-on shot at startup success
  - satvikpendem 3y ago
    > only capitalists - the existing 1% - have an odds-on shot at startup success By the VC definition of "startup," which is not universal. This is why I advocate for bootstrapping on the side until the revenue exceeds your salary. Pieter Levels famously did so and many others are also generating $10k or $20k+ MRR and living well. They can always sell that cashflowing asset for a 5x multiple and enter the HNWI territory, or they can simply keep the company on the backburner while they do other stuff.
Joel_Mckay 3y ago
1. Acknowledge you are not an expert at everything. Talk with your own Lawyers who read the contracts, Accountants that know local tax events, and former employees before agreeing to anything. “Strategic Truth” often means no one may lie to you knowingly, but this can still cost you during acquisition. Example: IP sold to another stealth company the founder owns for $10, so what is that 7% share/option worth again. That's right... you got nothing… saw several people get conned this way. 2. Avoid accumulating legal encumbrances at large firms... overly broad NDAs, contracts, and Patent/Copyright obligations can get nasty. You may be signing things long after you leave a firm for zero pay, get fired to claw away equity 2 months before IPO after a 10 year career, or incur dozens of term revisions over years slowly bleeding off contract value. In general, many countries also interpret the identical contract differently depending where it was signed. Example: In Canada anything you build while working at a firm can be claimed by said firm unless explicitly excluded in your contract, and in the USA it is generally implicit that any IP unrelated to company operations is your own. Most employees will roll over like a dead wale, as they likely don’t have enough capital to fight a legal battle. One may think they know better as they ignore #1, but they are provably wrong. 3. Avoid predatory VCs if possible. Ask yourself what these people actually bring to your firm, if they think you are gullible enough to table personal assets, or if a one time top up was worth 34% of your firm. If it is just working capital from a douche in a cheap suite... than seriously reconsider your growth plan. Example: You are small and thirsty… and never saw what share dilution does to founders. Again, talk with your own legal/finance people before agreeing to anything. 4. Make sure someone doesn’t swap paper stacks on you before signing, or give you a old unedited “wish-list” version as a copy. Professional cons span all professions, know card tricks, and people still do ethically dubious things when relatively small sums are involved. 5. Everything is always pleasant in the beginning, but if the legal paperwork is sloppy... things can get very ugly later. Part of being honest and candid up front... is putting into writing what peoples expected obligations are to each other and the firm. Example: Large rapid revenue growth has torn friends and families apart... as even a $100m can drive some people to recreate a history that never actually happened. 6. Most techs at Startups have 6 jobs, and being smug ain't one of them. Some advice for business ops.. stay in your lane, as you are also not as mission critical as people may have suggested. 7. YMMV, ask several random people… each bring differing perspectives. Everyone I respect initially disagrees with my opinions a first... can take a few years to reach consensus for the truly smart. Have a wonderful day, and build something awesome =)
deleted 3y ago
[deleted]
neilv 3y ago
This video format is a way to reach some people, though it's like a sales pitch, and not as "linkable" and clearly prescriptive as it could be. Ideally, there's a canonical YC bible that everyone knows about and consults, whether or not doing YC. Which says things like "equal equity" for the founders, what's the current best thinking on deals should be for founding engineers, early hires, interns, etc. Avoid people having to piece together and reconcile conflicting information from various other materials and messaging, from YC and elsewhere. It could become accepted fair and reasonable practices, if it hits those well. Which could break with some things YC has done in the past, then reconsidered. Maybe it could have such a ring of truth that people accept it despite YC's potential biases/conflicts. Somewhat like we go to levels.fyi to see what to expect from a FAANG, we could go to the YC bible to see what what to expect from a startup (or to do in a startup that we found). (I'm thinking of YC for this, since they have the influence, and considerable track record of earning trust.)
- ahstilde 3y ago
  https://www.ycombinator.com/library https://www.ycombinator.com/library
  - neilv 3y ago
    That's a flood of marketing podcasts, not a bible.
focom 3y ago
interesting
paxys 3y ago
I have seen so many of their examples happen first hand in the industry. - Lead engineer works 100 hour weeks to keep the company running for a below-market salary and 0.05% equity while the founders and product/sales leads constantly sell shares on the secondary market, buy fancy toys and travel the world. - Technical cofounder gets a 3% equity because the "business guy" came up with the idea and deserves the other 97%. - Early engineers are offered seemingly good equity but end up with lower class shares that are first to be diluted away, and an exit below some magic number thought up by founders/VCs earns them nothing because preferred shares get first dibs. The startup game is probably not right for you as a software engineer if you don't have a "type A" personality and aren't willing to have uncomfortable conversations and fight to get your fair share. Otherwise you are just a resource to be exploited.
- yu3zhou4 3y ago
  Thx, I just learned about Type A / Type B thanks to you mentioning this
  - cutemonster 3y ago
    Maybe you'd find the Big Five personality model interesting as well (if you haven't seen), in particular assertiveness vs agreeableness
    - yu3zhou4 3y ago
      Thanks. I have some experience with Big Five and MBTI, but I’m not satisfied with them since they are too general in what they describe and also they’re not scientific enough imho. I’d be happy to see more rigorous research in this area because it could be both useful for self-development and it sometimes might help to understand oneself as well. And it’s also fun to do these assessments :p I’m curious of your take on these tests
      - dukeyukey 3y ago
        The Big Five are legit, worked out through decades of psychology analysis and studies. MBTI is astrology for nerds.
bjornsing 3y ago
I don’t think I’ve ever seen two people laugh so much over such a sad topic… Also, I think it’s a mistake to talk about exploitation and blame when your startup is not working. Honestly, most startups don’t work out and it’s not really anybody’s fault. It’s kind of the default.
- tmarsden 3y ago
  Injecting humor into a dark or sad situation is very common. It's a way to lighten the mood a bit when the topic is difficult. People joke about death for example and that's a much more serious topic than a startup cap table.
  - bjornsing 3y ago
    I’m all for some black humor. But this felt very “forced” to me.
- Ancalagon 3y ago
  I really agree, it was kind of disconcerting that they were having so much fun with it. Lots of people have worked very hard in their careers expecting these kinds of plays to pan out for them and hoping for fairness from business folks and it doesn't work out that way.
sergiotapia 3y ago
Whatever you do, find someone who has walked the walk and been and ASK FOR HELP. ASK FOR GUIDANCE. ASK MULTIPLE PEOPLE. They are 99% more than happy to help! DON'T ASSUME ANYTHING! Let me put this again since it's so important: IN BUSINESS DON'T ASSUME ANYTHING.
blmayer 3y ago
I wish I had seen this 5 years ago, just before being one "founding engineer". Wonderful talk, thanks for posting this.
vlod 3y ago
Watch the video, take it to heart. - 1. Go to workatastartup [0], click on "Has equity range" and maybe "Company Stage: Seed". - 2. Say "Ohh...FFS", go back to linkedin say "FFS" and throw your hands in the air. - 3 ... - 4. Do not collect 200 do not pass go. No F.PROFIT. [0] https://www.workatastartup.com/companies https://www.workatastartup.com/companies

282 points by simonpure 3y ago

As a higher income earner I've always found it important to spend the money to ask a Lawyer, CPA, second Doctor, Mentor, Coache, Inspector, and other people focused on a certain niche in life what they think for the $100/hr (or whatever) fee they charge. Always been worth it. If you're focused on tech, make sure you've hired the right people to review your NDA's, startup contract, new home purchase, or workout routine. Don't risk millions on a startup IPO / house / loved one without dropping a few hundred on a second/third opinion. You've got the money. Don't cheap out on important things when you could have an all-star team backing you.

munk-a 3y ago
Especially if you're going through an IPO or ownership exchange - put every document in front of a lawyer and accountant. You don't want to miss your opportunity to sell or make a mistake on the taxes.
jfim 3y ago
How do you work with/find a lawyer? Do you have them on a retainer agreement?
- dustingetz 3y ago
  upcounsel.com, cash hourly, contract review in usa will be like $300
- Terretta 3y ago
  Find and work with a lawyer that helps engineers extract themselves from one firm to land at a specifically competing firm. Since most engineers don't hire lawyers, it may be easier to find a lawyer that does this for Firm Z, to pull people from competing firms A - Y. In either case, ideally they will have had to go to arbitration and/or court against the original employer. This person will know what to look for in masses of boilerplate to help you zero in on and fix the 10 words here and there that can change not just your comp but your career options. Expect from $300 - $750 / hr, depending on the size role you're lawyering, which tends to indicate the amount of legalese, traps, and foot guns at play.
- sebmellen 3y ago
  https://upcounsel.com https://upcounsel.com is great for this. You basically post a “job” and get proposals from multiple lawyers with upfront pricing, deal structure, etc. and everything is negotiated through the platform.
ChrisMarshallNY 3y ago
Here's a submission that I made this morning (never made it out of new): https://news.ycombinator.com/item?id=38111370 https://news.ycombinator.com/item?id=38111370 It's an old video of a lecture Mike Monteiro (and his lawyer) did. Kinda speaks to this.
slap_shot 3y ago
I'll second the opinion of having your contracts reviewed, but will curb some expectations: most contracts (NDAs, employment agreements, home contracts etc) are fairly standard. There may be some small points to negotiate if they are off-market, but you had better have the leverage to negotiate.
- wavemode 3y ago
  That's a valid thing to keep in mind with big corporations. But if you're joining as employee number 5, and they claim they aren't willing to negotiate on something you dislike in the contract because it's "standard", you should leave the interview. It's exactly what they're talking about in the linked video - you think you're joining as a valued partner, but you're clearly just a cog in the wheel.
- paxys 3y ago
  If you get a SDE offer from Google then sure, there is probably no room for changes other than some adjustment to salary and stock. If you are employee #10 at a startup (which is what this video is about), everything is negotiable, and you are shooting yourself in the foot if you don't go over your contract with a magnifying glass and professional help.
cyrialize 3y ago
I like the mention of a workout routine. Trainers/physical therapists can help to figure out issues with your body and give you a list of stretches/exercises to help with it. I've spent my fair share of getting injured through lifting and each time I've bounced back because a video that a PT has shared has a patient with the same exact issue as me. I wonder how many injuries I could've avoided if I actually set up a session haha.

ldjkfkdsjnv 3y ago

How to get rich in tech as a mediocre programmer: 1. Transfer to a TPM/QA Manager role at somewhere like Amazon or Microsoft. Bar is much lower to get into this role. 2. Get hired into a higher level than you could in a SWE role. 3. Transfer within the company to being an SDM 4. Now you are one level higher, in a management role, that would have taken you 5+ years of grinding and some luck to get into. 5. Spend a few years in this role, switch to other big co, makikg 400-500k+ while bossing around engineers much smarter than you. ^This path is how people are doing it. Never take equity in a startup, never grind away as a mid level engineer, fighting with ten other engineers for one promotion. Edit: Adding one point to this, if you found a company with a non technical CEO, and the company sees some success, all the focus will be on the CEO. The CTO role is highly replaceable, and there is a massive power shift that occurs once there is traction with a "finished" product. The CEO, especially in B2B Saas, is the face of the company. So the CEO can sit on his hands the whole time the product is developed, but then does reap huge gains. There's no easy answer, as many engineers do not have the soft skills for the role. But arguably, they could run these businesses themselves.

raincom 3y ago
A great insight, indeed.
nine_zeros 3y ago
Do not work at Amazon or amazon-like companies. They are just not worth it from a mental health, wlb, or career perspective for engineers. Find engineering/product first companies. Big tech ain't it any longer.
- teachrdan 3y ago
  What would you recommend instead?
  - munk-a 3y ago
    Work at a company making a product you believe in and with coworkers that you get along with.

satvikpendem 3y ago

One of the top comments on the YouTube video attached to the article talks about how someone wasted their 20s working as the founding engineer (employee #6 of a 6-person startup) and when the company exited for $100 MM, they only got 100k and are still working at 40 years of age while the other 5, presumably having cofounder-level equity, are retired. This is the true risk of startups, and, if you're looking to maximize your earnings, it's best to either join a big tech company or start your own startup owning most of the equity, perhaps as a side hustle while you grow it enough to be profitable. But getting "founding engineer" level equity on the order of 0.5% (before dilution!) seems to basically be a scam, where you're working 2x the amount for lower salaries than the market, all while having some nebulous carrot dangling in front of you for a reward that may never come, most likely, or even if it does, the value is so small as to not make up even on a per-hour basis the amount you spent working at the startup.

deleted 3y ago
[deleted]
Berone 3y ago
The path to getting into these founder / c-suite roles is those founding engineer roles in which you can learn how to scale and operate these ventures. The founding engineer role at 0.5% is not meant to be a role to retire on, but a stepping stone to those bigger roles.
- satvikpendem 3y ago
  Not really, it's better to just start your own startup instead, there is not much need to spend years as a founding engineer before becoming a founder, you might learn some skills but it's nothing you can't learn yourself, as evidenced by the people who are first time founders who did not previously work at a startup. If you get to some scale and get acquired (or even shut down), you can leverage that for future higher positions that a founding employee would not get you.
  - Berone 3y ago

dauertewigkeit 3y ago

Industry wide, not even in startups, the people who get screwed the most are the ones working under the hood. I am not even talking about the disparity between SWEs and C-suites. I'm talking within the engineering domain. The closer you are to the application side the more credit you get for the effort, even if it might have only been possible through the hard work of recent under the hood technological advances. A prime example is deep learning. The people getting all the credit are the AI researchers. Now I am not trying to discredit them. But a huge part of what made the recent training of large models possible are all the other advances. All the dedicated PyTorch/C++/CUDA/MPI code that is written just to be able to scale on a HPC cluster, for example. Those people are handsomely rewarded, but they aren't getting the Chief AI scientist recognition, despite it probably being just as hard if not harder to write all the optimized code to enable and facilitate LLMs in the first place. Before I got into deep learning I was into numerics. Numerics people get typical SWE salaries, but they aren't getting FANNG level salaries, even though their code is powering the simulations across whole industries that ultimately enable many of them to operate at all. Now I am sure somebody will debate me on the "getting screwed" part, but it sure feels as if, the ones who use a technical library and build an application on top of it, get the recognition both for their own work and also get part of the recognition that should due-fully be bestowed on the author of the library. But maybe this is how the entirety of society works, but one should still be conscious of this phenomenon. If we all stand on the shoulders of giants, then maybe we should also name the giants in the acknowledgements section.

dogman144 3y ago
I think this depends on what you view as “getting screwed.” If the under the hood line engineers aren’t getting wild compensation for products they built generating wild compensation for the engineers/researchers working on the end product, yes that is a fair point. If it’s these engineers not getting the recognition of Chief AI scientist and so on, that’s misguided I think. There is nothing worse than working under a technical SME who doesn’t know leadership, and also “product,” broadly defined. I’ve worked on both sides of the issue and org leadership is a defined skill set the same way optimized code is. Unless the backend engineers display that leadership ability, their closeness to the internals of the technology doesn’t justify them running how the technology gets deployed. It is the same as if you found a startup. During the ideation sessions with whatever VC buys into you, there is 5% discussion of tech, or better yet - checkbox the product mvp works. 95% who are you going to sell this to and have you spoken to them? Different skills. When tech is a business, the tech knowledge starts to matter less, or is only a portion of the picture. The individuals that grasp that do well, SWEs who ignore this don’t IMO.

purpleblue 3y ago

It's funny that YC is posting this video, because as far as I can tell, YC teaches its founders to keep most of the equity for themselves, and dole out as little equity as possible to their employees. Back during the dotcom days, most employees, from secretaries to engineers, got extremely rich from options when the company IPOed. These days, in order to make a life-changing amount of money at a YC startup as an employee, the company needs to exit/IPO at over $5 billion in order to make about $1 million. I was at a YC company for 4.5 years as an early engineer, and I ended up with less than $100,000 from my options. I would have made 10x that had I taken a FAANG offer with considerably less work and risk.

AlexErrant 3y ago
> At YC, we tell our founders to be generous with equity, and even suggest giving 10% to the first 10 employees. https://www.ycombinator.com/blog/filter-by-equity-at-yc-startups#:~:text=At%20YC%2C%20we%20tell%20our%20founders%20to%20be%20generous%20with%20equity%2C%20and%20even%20suggest%20giving%2010%25%20to%20the%20first%2010%20employees https://www.ycombinator.com/blog/filter-by-equity-at-yc-star....
- satvikpendem 3y ago
  0.5% - 1% each is also what I've seen, but sadly that is really not enough, especially after rounds of dilution. See my top comment about "founding engineers": https://news.ycombinator.com/item?id=38116759 https://news.ycombinator.com/item?id=38116759
timfsu 3y ago
As a YC founder, YC doesn't teach founders anything when it comes to how to split equity. The economics you're describing is a function of (overly) high valuations in private markets, which leads to equity grants that don't appreciate very much when liquidity happens. This is great for folks that got in early (founders and early investors) and bad for everyone else.
- choppaface 3y ago

zoogeny 3y ago

The intro of that video hit hard and hurt. I have literally been in that position where I built the analytics page, which marketing asked for, and I can see the analytics for the analytics and no one has even checked the page. And so I chime in asking if anyone else has noticed that our big product release is not going anywhere and its like crickets. You realize that from your position that you have no ability to hold others accountable. I mean, if the release had happened and there had been technical issues you would have gotten called out and raked over the coals. But conversely, when the release was technically flawless but the business side tanked then no one is held responsible. What frustrates me even more is when the non-technical people are acting like they want your input. They are actively soliciting feedback and even talking about empowerment but all of the critical decisions are being made behind closed doors. It is clear they know that any sane and technically competent senior contributor needs agency so they try their best to provide an illusion since they want to keep the actual control. I can even understand it. Their investors demand a prominent VP of sales or marketing and that VP demands their own agency as a requirement to work at the startup. There is only so much control to give out and the technical guy is the one shut out. One of their points relating to how you know things are working really hit me. If you have fair equity and you have a seat at the table and things are still not working, then maybe you are the problem. But on the other side, if the founders are not giving you a seat at the table even when you are making it clear that you require it then maybe they don't respect you. I believe that it is a mistake to believe that merely working harder will earn that respect.

fatherzine 3y ago
"you have no ability to hold others accountable" -- true for all levels of the human stack
- yoyohello13 3y ago
  This makes no sense. People in power can absolutely hold other's below them accountable, but if you're the low person on the totem pole it becomes much harder.
  - 3y ago

_yf4k 3y ago

After having worked at four startups, including two as CTO, I have zero remaining equity or financial upside from any of the startup equity. This is the bitter take away, your equity will most likely amount to nothing unless the company is on a clear path to IPO/ acquisition or a promise of share buy back during the time you're at the company. This is a higher bar than simple profitability. The reason you work at a startup is because you 1. seek to start a company in the future and want to index on the mistakes of the startup you work at 2. want to grow in responsibility/ leadership because you're bored at BigTech 3. want to learn more and apply the learnings, hopefully also experiencing the exhilaration that comes from hockey stick growth The advice to my younger self would be to ignore startup equity if you're an employee for all practical purposes. The only concrete indicator that equity signals is the trust your founders have in you.

alexawarrior2 3y ago
Amen brother/sister. Was founder, co-founder, early employee, or investor in eleven startups, ten of which went out of business or were bought with no net equity earnings for myself, one of them had a $250m exit from which I netted $130k, after seven years. It's not that retirement-level-net-earnings startups never happen, just that they happen only about 1 out of every 1000 times on average according to my research. The exception being, every additional $1m of net worth you have before you found increases your odds of success, up to around 50% success rate with a net worth over $10m (going towards HNWI territory). So being middle class your startup investments are lottery-level, but if you're already rich they're more of a calculated investment. tl;dr only capitalists - the existing 1% - have an odds-on shot at startup success
- satvikpendem 3y ago
  > only capitalists - the existing 1% - have an odds-on shot at startup success By the VC definition of "startup," which is not universal. This is why I advocate for bootstrapping on the side until the revenue exceeds your salary. Pieter Levels famously did so and many others are also generating $10k or $20k+ MRR and living well. They can always sell that cashflowing asset for a 5x multiple and enter the HNWI territory, or they can simply keep the company on the backburner while they do other stuff.

Joel_Mckay 3y ago

1. Acknowledge you are not an expert at everything. Talk with your own Lawyers who read the contracts, Accountants that know local tax events, and former employees before agreeing to anything. “Strategic Truth” often means no one may lie to you knowingly, but this can still cost you during acquisition. Example: IP sold to another stealth company the founder owns for $10, so what is that 7% share/option worth again. That's right... you got nothing… saw several people get conned this way. 2. Avoid accumulating legal encumbrances at large firms... overly broad NDAs, contracts, and Patent/Copyright obligations can get nasty. You may be signing things long after you leave a firm for zero pay, get fired to claw away equity 2 months before IPO after a 10 year career, or incur dozens of term revisions over years slowly bleeding off contract value. In general, many countries also interpret the identical contract differently depending where it was signed. Example: In Canada anything you build while working at a firm can be claimed by said firm unless explicitly excluded in your contract, and in the USA it is generally implicit that any IP unrelated to company operations is your own. Most employees will roll over like a dead wale, as they likely don’t have enough capital to fight a legal battle. One may think they know better as they ignore #1, but they are provably wrong. 3. Avoid predatory VCs if possible. Ask yourself what these people actually bring to your firm, if they think you are gullible enough to table personal assets, or if a one time top up was worth 34% of your firm. If it is just working capital from a douche in a cheap suite... than seriously reconsider your growth plan. Example: You are small and thirsty… and never saw what share dilution does to founders. Again, talk with your own legal/finance people before agreeing to anything. 4. Make sure someone doesn’t swap paper stacks on you before signing, or give you a old unedited “wish-list” version as a copy. Professional cons span all professions, know card tricks, and people still do ethically dubious things when relatively small sums are involved. 5. Everything is always pleasant in the beginning, but if the legal paperwork is sloppy... things can get very ugly later. Part of being honest and candid up front... is putting into writing what peoples expected obligations are to each other and the firm. Example: Large rapid revenue growth has torn friends and families apart... as even a $100m can drive some people to recreate a history that never actually happened. 6. Most techs at Startups have 6 jobs, and being smug ain't one of them. Some advice for business ops.. stay in your lane, as you are also not as mission critical as people may have suggested. 7. YMMV, ask several random people… each bring differing perspectives. Everyone I respect initially disagrees with my opinions a first... can take a few years to reach consensus for the truly smart. Have a wonderful day, and build something awesome =)

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neilv 3y ago

This video format is a way to reach some people, though it's like a sales pitch, and not as "linkable" and clearly prescriptive as it could be. Ideally, there's a canonical YC bible that everyone knows about and consults, whether or not doing YC. Which says things like "equal equity" for the founders, what's the current best thinking on deals should be for founding engineers, early hires, interns, etc. Avoid people having to piece together and reconcile conflicting information from various other materials and messaging, from YC and elsewhere. It could become accepted fair and reasonable practices, if it hits those well. Which could break with some things YC has done in the past, then reconsidered. Maybe it could have such a ring of truth that people accept it despite YC's potential biases/conflicts. Somewhat like we go to levels.fyi to see what to expect from a FAANG, we could go to the YC bible to see what what to expect from a startup (or to do in a startup that we found). (I'm thinking of YC for this, since they have the influence, and considerable track record of earning trust.)

ahstilde 3y ago
https://www.ycombinator.com/library https://www.ycombinator.com/library
- neilv 3y ago
  That's a flood of marketing podcasts, not a bible.

focom 3y ago

interesting

paxys 3y ago

I have seen so many of their examples happen first hand in the industry. - Lead engineer works 100 hour weeks to keep the company running for a below-market salary and 0.05% equity while the founders and product/sales leads constantly sell shares on the secondary market, buy fancy toys and travel the world. - Technical cofounder gets a 3% equity because the "business guy" came up with the idea and deserves the other 97%. - Early engineers are offered seemingly good equity but end up with lower class shares that are first to be diluted away, and an exit below some magic number thought up by founders/VCs earns them nothing because preferred shares get first dibs. The startup game is probably not right for you as a software engineer if you don't have a "type A" personality and aren't willing to have uncomfortable conversations and fight to get your fair share. Otherwise you are just a resource to be exploited.

yu3zhou4 3y ago
Thx, I just learned about Type A / Type B thanks to you mentioning this
- cutemonster 3y ago
  Maybe you'd find the Big Five personality model interesting as well (if you haven't seen), in particular assertiveness vs agreeableness
  - yu3zhou4 3y ago
    Thanks. I have some experience with Big Five and MBTI, but I’m not satisfied with them since they are too general in what they describe and also they’re not scientific enough imho. I’d be happy to see more rigorous research in this area because it could be both useful for self-development and it sometimes might help to understand oneself as well. And it’s also fun to do these assessments :p I’m curious of your take on these tests
    - dukeyukey 3y ago
      The Big Five are legit, worked out through decades of psychology analysis and studies. MBTI is astrology for nerds.

bjornsing 3y ago

I don’t think I’ve ever seen two people laugh so much over such a sad topic… Also, I think it’s a mistake to talk about exploitation and blame when your startup is not working. Honestly, most startups don’t work out and it’s not really anybody’s fault. It’s kind of the default.

tmarsden 3y ago
Injecting humor into a dark or sad situation is very common. It's a way to lighten the mood a bit when the topic is difficult. People joke about death for example and that's a much more serious topic than a startup cap table.
- bjornsing 3y ago
  I’m all for some black humor. But this felt very “forced” to me.
Ancalagon 3y ago
I really agree, it was kind of disconcerting that they were having so much fun with it. Lots of people have worked very hard in their careers expecting these kinds of plays to pan out for them and hoping for fairness from business folks and it doesn't work out that way.

sergiotapia 3y ago

Whatever you do, find someone who has walked the walk and been and ASK FOR HELP. ASK FOR GUIDANCE. ASK MULTIPLE PEOPLE. They are 99% more than happy to help! DON'T ASSUME ANYTHING! Let me put this again since it's so important: IN BUSINESS DON'T ASSUME ANYTHING.

blmayer 3y ago

I wish I had seen this 5 years ago, just before being one "founding engineer". Wonderful talk, thanks for posting this.

vlod 3y ago

Watch the video, take it to heart. - 1. Go to workatastartup [0], click on "Has equity range" and maybe "Company Stage: Seed". - 2. Say "Ohh...FFS", go back to linkedin say "FFS" and throw your hands in the air. - 3 ... - 4. Do not collect 200 do not pass go. No F.PROFIT. [0] https://www.workatastartup.com/companies https://www.workatastartup.com/companies