6 ms·

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 littl

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
  False. YC will connect you with investors and advisors who will do things like perpetuate a 10% employee pool and a 100x to 1000x multiple between CEO and IC compensation. While YC might not give classes about the provenance of these choices, YC founders will inevitably adopt them as they focus towards growth and sales. All YC has to do is be marginally more competitive with other VCs, who will do dumb shit like clawbacks, dilution, Private Equity sales etc.
choppaface 3y ago
Based on equity packages and outcomes I’ve seen, this video is a total sales video from YC to ICs as an attempt to rouse the hiring pipelines for YC companies in the face of this year’s layoffs. I myself had an offer from a YC company years ago that had some layoffs but essentially outperformed and raised a big Series D/E/F this year. Had I gone with the YC company, my equity even in their big raise would have been about $100k. And no guarantee I could have realized any or all of that gain in the raise. YC could be up-front and give this actual data in the video. Instead it’s primarily a specious talk show segment about how YC wants you the IC to think they’re on your side.
feoren 3y ago
> the company needs to exit/IPO at over $5 billion in order to make about $1 million I just don't understand who's signing a contract for 0.02% equity in a startup. How does this happen?
- tacker2000 3y ago
  Dilution, they don’t start with 0,02%

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
False. YC will connect you with investors and advisors who will do things like perpetuate a 10% employee pool and a 100x to 1000x multiple between CEO and IC compensation. While YC might not give classes about the provenance of these choices, YC founders will inevitably adopt them as they focus towards growth and sales. All YC has to do is be marginally more competitive with other VCs, who will do dumb shit like clawbacks, dilution, Private Equity sales etc.

choppaface 3y ago

Based on equity packages and outcomes I’ve seen, this video is a total sales video from YC to ICs as an attempt to rouse the hiring pipelines for YC companies in the face of this year’s layoffs. I myself had an offer from a YC company years ago that had some layoffs but essentially outperformed and raised a big Series D/E/F this year. Had I gone with the YC company, my equity even in their big raise would have been about $100k. And no guarantee I could have realized any or all of that gain in the raise. YC could be up-front and give this actual data in the video. Instead it’s primarily a specious talk show segment about how YC wants you the IC to think they’re on your side.

feoren 3y ago

> the company needs to exit/IPO at over $5 billion in order to make about $1 million I just don't understand who's signing a contract for 0.02% equity in a startup. How does this happen?

tacker2000 3y ago
Dilution, they don’t start with 0,02%