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For a founder maybe , definitely not for employees . AI startups need not an insignificant amount of startup capital , you cannot just spend weekends to build
by manquer 3y ago
For a founder maybe , definitely not for employees .
AI startups need not an insignificant amount of startup capital , you cannot just spend weekends to build like you would a saas app . Model training is expensive so only wealthy individuals can even consider this route
Companies like that have no oversight or control mechanisms when management inevitably goes down crazy paths, also without external valuations option vesting structures are hard to ascertain value.
- teaearlgraycold 3y agoAs a counter-point, with no VCs there's more equity left for employees.
- hsjsbeebue 3y agoIf valued $2bn then even a 0.1% is $2m. Not bad.
- teaearlgraycold 3y agoEarly employees may have gotten 2-3% and are completely undiluted.
- hsjsbeebue 3y agoYes indeed! Probably furiously vesting now!
- khazhoux 3y agoAs a counter-counter-point that gets rarely discussed on HN, VCs aren't taking as much of the pie as people think. In a 2-founder, 4-engineer company, it wouldn't be unusual to have equity be roughly: 20% investors 70% founders 2-3% employees (1% emp1, 1% emp2, 0.5% emp3, 0.25% emp4) 7% for future employees before next funding round
- seanhunter 3y agoThis is not a fair comparison because you are not taking into account liquidation preferences. Those investors don't have the same class of equity as everyone else. That doesn't matter in the case of lights out success but it matters a great deal in many other scenarios.
- khazhoux 3y agoSure. My point was that most employees think that VCs take 80+%, and especially the first few employees usually have no idea just how little equity they have compared to the founders.
- killerstorm 3y agoYou can't run a sustainable business if you take VC money. VCs need an exit.
- alfiedotwtf 3y agoSometimes you need to say fuck the money, I’ve already got enough, and I just want to do what I enjoy. It may not be an ideal model for HN but damn not everything in life is about grinding, P/E ratios, and vesting schedules
- BhavdeepSethi 3y agoYeah, that's easier to say when you have enough. A lot of employees might not be in that privilege position. The reality for some of the folks might be addressing education loans, families to take care of, tuition for kids, medical bills, etc.
- tasuki 3y agoAlso oversize houses, expensive cars, etc...
- teaearlgraycold 3y agoI’m grateful to be debt free