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Isn't that the broadly accepted value proposition for working at a startup? You accept greater job insecurity than more established companies, and lower salary

Isn't that the broadly accepted value proposition for working at a startup? You accept greater job insecurity than more established companies, and lower salary than more established companies, but in return you get the opportunity to receive a larger slice of the proceeds from a "good" exit. It's like buying a lottery ticket. You don't sign on with Meta expecting a great exit, but you gamble that you might see a great exit when you sign on with Series-B-R-Us. I'm not saying I agree with the gp here that the workers were wronged, but the widespread assumption is that startups pay less than more established companies. And I agree completely that the gamble did not pay off for anybody here. The investors lost money, the workers lost money, the founders lost money. And that's the risk you take on when you make that kind of investment. I've definitely declined further interviews with companies with something to the effect of "I don't have the stomach to be in an early stage startup right now".

vidarh 3y ago
> Isn't that the broadly accepted value proposition for working at a startup? It's a common negotiating tactic. As I said, I've only once (in 30 years) accepted less, and then I owned 25% of the company prior to the investment. Sometimes they do mean it, but far less often than people think. > You accept greater job insecurity than more established companies This is true, and a reason to not accept a lower salary because you are more in need of an ability to maintain or expand your cushion. > and lower salary than more established companies, There are certainly companies that want you to think this is just the way it is. And it depends on what you compare against. You won't get FAANG salaries at a startup, but most people don't work at FAANG's. Some startups will not hire at non-FAANG market rates either. If you have the skills to be attractive to them, however, odds are you don't have to settle, and that includes choosing other startups. Unless you're convinced this specific startup is the next Google, odds are it's a bad bet to concentrate your risk by accepting a trade like that. Most of the time you'd be better off getting a market-rate salary and investing the money in a way that spreads your risk. > but in return you get the opportunity to receive a larger slice of the proceeds from a "good" exit. It's like buying a lottery ticket. The problem is that it is exactly like buying a lottery ticket: The odds are extremely heavily against you and most such jobs do not provide enough shares to be worth it when you factor in likely dilution and things like liquidation preferences and the very, very high odds that the company will fold before any exit event. If the company is pre-seed and you're offered 5-10%+ and a guaranteed (in writing!) salary increase after the A round maybe. If you're coming in as employee 10+ after A and you're being offered sub .1%, sure you could win the lottery, but you could also find another startup and get the lottery ticket and* the salary, and put the extra salary in an index fund and be far more likely to get a high return. I'm not saying there aren't ever deals that are worth it, but put another way: If you accept a lower salary for shares, you're investing in the company. Have you done the calculations of risk-adjusted potential returns and done the due diligence you would if you were to put money on the table? If not, why not? It's the same thing. Unless you're really sold on that startup in particular to the point where if you weren't hired you'd like to participate in their investment round with your own cash, it's likely not just a bad deal, but you're concentrating your risk. > I'm not saying I agree with the gp here that the workers were wronged, but the widespread assumption is that startups pay less than more established companies. Most tech workers also don't negotiate their salaries. I've hired dozens over several decades, and I've had less than I can count on one hand actually try to negotiate, and in each case, we went back with a higher offer. Conversely, I've never accepted a first offer. I've sometimes walked because we were too far apart, but I've never had a prospective employer decline to up their initial offer. I've been offered substantially higher pay than the CEO by startups who did want to pay below-market but were more concerned about getting the right person. My experience is that if you can get offers, you can get offers from startups at market rate, and it's down to whether or not you consider that investment worthwhile if it had been separated from the employment. If you struggle, and a startup offering below market is the only option, sure, don't be too proud, I wouldn't be either if times were tough.
Dayshine 3y ago
Uh, I'm working for a startup because it pays more then more established companies and provides better benefits. I'm not sure why I would work for less unless I was founder, or it was a charity or other public good.
- riehwvfbk 3y ago
  This is definitely uncommon. Startup cash compensation for engineers in SV is about 1/2 of a large tech company's.
  - mavelikara 3y ago
    Base or TC?
    - riehwvfbk 3y ago
      Depends on how you value your lottery tickets. The value I assign to them is 0 until proven otherwise.

vidarh 3y ago

> Isn't that the broadly accepted value proposition for working at a startup? It's a common negotiating tactic. As I said, I've only once (in 30 years) accepted less, and then I owned 25% of the company prior to the investment. Sometimes they do mean it, but far less often than people think. > You accept greater job insecurity than more established companies This is true, and a reason to not accept a lower salary because you are more in need of an ability to maintain or expand your cushion. > and lower salary than more established companies, There are certainly companies that want you to think this is just the way it is. And it depends on what you compare against. You won't get FAANG salaries at a startup, but most people don't work at FAANG's. Some startups will not hire at non-FAANG market rates either. If you have the skills to be attractive to them, however, odds are you don't have to settle, and that includes choosing other startups. Unless you're convinced this specific startup is the next Google, odds are it's a bad bet to concentrate your risk by accepting a trade like that. Most of the time you'd be better off getting a market-rate salary and investing the money in a way that spreads your risk. > but in return you get the opportunity to receive a larger slice of the proceeds from a "good" exit. It's like buying a lottery ticket. The problem is that it is exactly like buying a lottery ticket: The odds are extremely heavily against you and most such jobs do not provide enough shares to be worth it when you factor in likely dilution and things like liquidation preferences and the very, very high odds that the company will fold before any exit event. If the company is pre-seed and you're offered 5-10%+ and a guaranteed (in writing!) salary increase after the A round maybe. If you're coming in as employee 10+ after A and you're being offered sub .1%, sure you could win the lottery, but you could also find another startup and get the lottery ticket and* the salary, and put the extra salary in an index fund and be far more likely to get a high return. I'm not saying there aren't ever deals that are worth it, but put another way: If you accept a lower salary for shares, you're investing in the company. Have you done the calculations of risk-adjusted potential returns and done the due diligence you would if you were to put money on the table? If not, why not? It's the same thing. Unless you're really sold on that startup in particular to the point where if you weren't hired you'd like to participate in their investment round with your own cash, it's likely not just a bad deal, but you're concentrating your risk. > I'm not saying I agree with the gp here that the workers were wronged, but the widespread assumption is that startups pay less than more established companies. Most tech workers also don't negotiate their salaries. I've hired dozens over several decades, and I've had less than I can count on one hand actually try to negotiate, and in each case, we went back with a higher offer. Conversely, I've never accepted a first offer. I've sometimes walked because we were too far apart, but I've never had a prospective employer decline to up their initial offer. I've been offered substantially higher pay than the CEO by startups who did want to pay below-market but were more concerned about getting the right person. My experience is that if you can get offers, you can get offers from startups at market rate, and it's down to whether or not you consider that investment worthwhile if it had been separated from the employment. If you struggle, and a startup offering below market is the only option, sure, don't be too proud, I wouldn't be either if times were tough.

Dayshine 3y ago

Uh, I'm working for a startup because it pays more then more established companies and provides better benefits. I'm not sure why I would work for less unless I was founder, or it was a charity or other public good.

riehwvfbk 3y ago
This is definitely uncommon. Startup cash compensation for engineers in SV is about 1/2 of a large tech company's.
- mavelikara 3y ago
  Base or TC?
  - riehwvfbk 3y ago
    Depends on how you value your lottery tickets. The value I assign to them is 0 until proven otherwise.