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All you’re saying is that in the contemporary context it’s exceedingly foolish to be an employee at an early startup. The VCs and founders have optimized away a

All you’re saying is that in the contemporary context it’s exceedingly foolish to be an employee at an early startup. The VCs and founders have optimized away all the incentive. Eventually the message will reach even naive 22 year olds.

lupire 2y ago
There's a sucker born every September. You can find your comment in the HN archives as far back as 2010.
smeej 2y ago
I'd tweak this slightly: "It's exceedingly foolish to be an employee at an early startup for the money." I think there are a lot of us who struggle to fit the larger corporate mold who pretty much only thrive in the startup world. I can't speak for all of them, but I've been very willing to take the balance of lower cash compensation and a fistful of lottery tickets and not having 12 layers of middle management breathing down my neck over more liquidity. I guess I'm also blessed with inexpensive tastes, which helps, but I'm still able to live somewhere I love and do all the things I care to do, so it works out.
- p1esk 2y ago
  Why does everyone thinks startups don’t pay well? I have worked for various startups all my life, most of them well funded, and competing for talent with faangs. Yes, I could probably make more at Google but I don’t feel like I’m underpaid. At the last 3 startups my base salary was above 250k. I work remotely and I rarely work more than 30 hours a week.
  - bradleyjg 2y ago
    Early startup is the part you seem to be overlooking. A well funded startup with few or no runway concerns is a different calculation.
  - bradlys 2y ago
    I’d say you’re uncommon. I’ve never seen anyone who is a typical engineer making $250k/yr at a startup that’s below $1B valuation. Same for the amount of work you’re doing and that it’s remote with that compensation. It’s possible you’d be making $700k+/yr if you were at google. About triple what you are now.
    - gen220 2y ago
      I think one component of their point is that the marginal utility of money beyond $200k/year cash comp is quite small, especially if you (1) came to tech early in life (2) plan on staying in it for most of your working life. With that perspective, $200k/year and $700k/year both reduce to "well-paid". Also, a Staff title at a Seed or Series A startup can definitely ask for $250k/year, although they'd likely be trading off against equity grants.
      - whiplash451 2y ago
        I would revisit that calculation assuming you are drained at 45 instead of 60, including taxes and the opportunity cost of 500K x a few years at 3% rate for the next 15 years.
        gen220 2y ago
        That's pretty much exactly the calculation I'm positing. But actually with an even earlier terminus (late 30s or 40 at most). Assume an "effective" average pay (i.e. "net" pay + retirement and other deductions, inflation-adjusted to today's dollars and averaged over the course of your career) of $120k/year. From age 22 to 40, you've earned $2.16mm in inflation-adjusted-to-today dollars as a single earner. With a not-unreasonable average savings rate of 30%, not accounting for tax-advantaged growth or any growth at all, you'll come out with $650k of inflation-adjusted-to-today capital in savings. Realistically, this should end up invested in some kind of equity (housing, stocks, bonds, whatever). If you finance the purchase of a house at 30, you're only 10 years into a traditional 30-year mortgage at this point, for reference. So you're roughly 1/3rd of your way to owning all the equity in your home. That's fairly comfortably a $1mm home (home equity being 30% of your assets at 40). Of course, if you're DCA-ing into something that yields a modest average of 5%/year in inflation-adjusted returns, that $650k is closer to $1mm inflation-adjusted-to-today capital. And you still have 25 years at that point for your retirement savings to compound. And you can work part-time in something more fulfilling until retirement to supplement your income. YMMV, but the marginal utility of money beyond $1mm in equity at 40 and $6k/month in expendable (on rental housing, food, travel, social events) income during your 20s and 30s is pretty small for most people. If you add a partner with any kind of income to the mix, it makes the marginal stress of earning more money even less appealing. Edit: the main thing you ought to avoid like the plague is lifestyle creep. Spending money on things with zero or vanishingly-small happiness ROI. Read this story every year or two, or whenever you get a raise at work. https://www.marxists.org/archive/tolstoy/1886/how-much-land-does-a-man-need.html https://www.marxists.org/archive/tolstoy/1886/how-much-land-...
- shortrounddev2 2y ago
  It's a difficult trade off I've found. Large tech companies are boring and slow and you deal with a lot of red tape and BS, and you feel utterly powerless in the security of your own job as economic tidal waves direct the momentum of layoffs and not your personal contribution. At a startup you have more autonomy and power over your personal position. I wrote 90% of the code that is generating company growth, released 2 months after a layoff. If I had taken longer to release that code or if my code didn't work the company would be in a worse financial position. But that also means a lot of personal stress. There aren't 4 layers of middle management to catch flak for you. If you fuck something up, you are directly responsible and depending on the environment that can result in some heated conversations. I also work way harder at a startup than I ever did for a big company
  - smeej 2y ago
    Those are the factors that make the tradeoff easy for me. I would vastly prefer direct accountability for my own fuckups, because that means I have the agency to do something to fix it. What makes me want to put my head through a wall is when I fuck up, and four layers of people above me are the only ones allowed to fix the thing, but they don't, so I keep catching flak for my fuckup without any way to stop it and fix the thing. I have many more heated conversations with those managers, which typically leads to the door. When I fuck something up, rarely is anyone more upset about that than I am. Nobody's dumping more heat on me than I am on myself, so bring on the heat-- as long as I have the agency to fix the problem.
ethagnawl 2y ago
> All you’re saying is that in the contemporary context it’s exceedingly foolish to be an employee at an early startup. As a rule, it is and always has been. For every unicorn piñata stuffed with winning lottery tickets, there are hundreds/thousands? of others whose employees walk away with nothing or less (debt, strained relationships, mental health issues, etc.) at worst or a job at AcquiHireCo at best.
- bradleyjg 2y ago
  There was always very high risk, so it was only ever for certain people. But in earlier iterations of SV it was possible to become generationally rich as an early employee. The VCs and founders have fixed the glitch. To put it another way: early employee equity was always a lotto but now the payout is like some lame scratch off instead of the powerball jackpot.
  - est31 2y ago
    The startups where employees get really rich still exist. I'm pretty sure the early employees of OpenAI are generationally rich for example. It's just that these companies very often are the darlings since their inception, get constantly talked about. Everyone wants to to invest in them and everyone wants to join them. So they have the ability to pick out the best talent, in other words, it's unlikely you'll be able to join that specific startup. But even 20 years ago, try getting into early Google. From what I heard they had extremely high bars for hiring as well and only lowered them once they got so large that the pool was exhausted. I'd argue that the total comp at the established companies for engineers has increased precisely because of competition from startups: to make the startup not be the better option. Does that mean that VCs are not taking a bigger slice than they used to? Absolutely not, but I wouldn't put the blame solely on them.
    - bradleyjg 2y ago
      Re: openAI We’ll see when it happens. If I had to name a company most likely to have massive landmines buried in front of common stock cashing out, it would be at the top of the list.
mbesto 2y ago
> All you’re saying is that in the contemporary context it’s exceedingly foolish to be an employee at an early startup. As long as naive 22 year olds think have that one friend that stuck around long enough to cash out on an IPO, then yes. On a risk-adjusted basis, this has basically always been the case - you're better off working at FAANG.
- kelnos 2y ago
  I hear this a lot, but most people -- even otherwise-startup people, even if they interview -- don't get to work at a FAANG. And I think starting now at a FAANG is a lot less lucrative than people seem to think for the average (or even above-average) employee. Certainly nowhere near as lucrative as it was 7-10 years ago or more.
shmel 2y ago
If you only care about money, sure. I have plenty of friends working in FAANG. For some mysterious reason any time I ask them about work, they say something along the lines "ehh... it's fiiiine. Paycheck is pretty good though". Okay, not all, but perhaps 95%. And half of them work massive overtime on regular basis. I can get behind working weekends when you hope to change the world. They often say things like: "yeah, I have to work 60-70h per week because I don't want my boss to yell at me". Those who work normal hours say: "there is not much work to do really, we literally have meetings about meetings to fill the day. I wish I had some real work to do". I truly hope that higher TC compensates for that.
- closeparen 2y ago
  The Bay Area housing market is too competitive for this. If you’re renting a room in your early 20s then sure just have fun, any tech job should cover it. If you want to own a place to raise a family in by your 30s, and you don’t have some exogenous source of wealth, you’re going to need every dollar of liquid compensation you can possibly get.
  - shmel 2y ago
    Or you can just live somewhere else. The world doesn't end at Bay Area.
    - closeparen 2y ago
      Sure but this thread is about technology startups. The jobs you can get anywhere are business IT departments.
tivert 2y ago
> All you’re saying is that in the contemporary context it’s exceedingly foolish to be an employee at an early startup. The VCs and founders have optimized away all the incentive. Eventually the message will reach even naive 22 year olds. My startup idea is a firm that uses generative AI to flood the internet with pro-startup, pro-VC, pro-founder propaganda, so that message will never reach the naive 22 year olds. Personally, I think it's like saving the environment, since naive 22 year olds are precious resource we cannot allow to be destroyed.
kelnos 2y ago
I wouldn't even say "contemporary"; people have been saying this (and I believe it's been true) for decades. But overall that statement is making a lot of assumptions. It's assuming money is the main priority for everyone. Sometimes the priority is to have a ton of autonomy and influence on product direction, not have to deal with 8 layers of management, and have an actual, large, often-measurable impact on the company's success. It's assuming that the alternative is that anyone can work at a FAANG, and be in the higher tiers of salary they offer for their quite-above-average employees (hired today, not 10 or 20 years ago). Most competent, talented people won't pass an interview at a FAANG. Of those that do, many of them will not immediately be making $500k/yr. These points are especially true for 22 year olds, naive or otherwise. I was going to make a comment about working your ass off at a startup vs. working 9-5 at a more established company, but I know plenty of people at FAANGs who work 50- or 60-hour weeks, every week, and often put in time on weekends. Granted, I would agree that pretty much everyone at a small/early startup is going to be working long hours, while a large number of people at a FAANG are going to enjoy a nice, relaxing life outside of work, so they're not at all equivalent in that regard.

lupire 2y ago

There's a sucker born every September. You can find your comment in the HN archives as far back as 2010.

smeej 2y ago

I'd tweak this slightly: "It's exceedingly foolish to be an employee at an early startup for the money." I think there are a lot of us who struggle to fit the larger corporate mold who pretty much only thrive in the startup world. I can't speak for all of them, but I've been very willing to take the balance of lower cash compensation and a fistful of lottery tickets and not having 12 layers of middle management breathing down my neck over more liquidity. I guess I'm also blessed with inexpensive tastes, which helps, but I'm still able to live somewhere I love and do all the things I care to do, so it works out.

p1esk 2y ago
Why does everyone thinks startups don’t pay well? I have worked for various startups all my life, most of them well funded, and competing for talent with faangs. Yes, I could probably make more at Google but I don’t feel like I’m underpaid. At the last 3 startups my base salary was above 250k. I work remotely and I rarely work more than 30 hours a week.
- bradleyjg 2y ago
  Early startup is the part you seem to be overlooking. A well funded startup with few or no runway concerns is a different calculation.
- bradlys 2y ago
  I’d say you’re uncommon. I’ve never seen anyone who is a typical engineer making $250k/yr at a startup that’s below $1B valuation. Same for the amount of work you’re doing and that it’s remote with that compensation. It’s possible you’d be making $700k+/yr if you were at google. About triple what you are now.
  - gen220 2y ago
    I think one component of their point is that the marginal utility of money beyond $200k/year cash comp is quite small, especially if you (1) came to tech early in life (2) plan on staying in it for most of your working life. With that perspective, $200k/year and $700k/year both reduce to "well-paid". Also, a Staff title at a Seed or Series A startup can definitely ask for $250k/year, although they'd likely be trading off against equity grants.
    - whiplash451 2y ago
      I would revisit that calculation assuming you are drained at 45 instead of 60, including taxes and the opportunity cost of 500K x a few years at 3% rate for the next 15 years.
      - gen220 2y ago
        That's pretty much exactly the calculation I'm positing. But actually with an even earlier terminus (late 30s or 40 at most). Assume an "effective" average pay (i.e. "net" pay + retirement and other deductions, inflation-adjusted to today's dollars and averaged over the course of your career) of $120k/year. From age 22 to 40, you've earned $2.16mm in inflation-adjusted-to-today dollars as a single earner. With a not-unreasonable average savings rate of 30%, not accounting for tax-advantaged growth or any growth at all, you'll come out with $650k of inflation-adjusted-to-today capital in savings. Realistically, this should end up invested in some kind of equity (housing, stocks, bonds, whatever). If you finance the purchase of a house at 30, you're only 10 years into a traditional 30-year mortgage at this point, for reference. So you're roughly 1/3rd of your way to owning all the equity in your home. That's fairly comfortably a $1mm home (home equity being 30% of your assets at 40). Of course, if you're DCA-ing into something that yields a modest average of 5%/year in inflation-adjusted returns, that $650k is closer to $1mm inflation-adjusted-to-today capital. And you still have 25 years at that point for your retirement savings to compound. And you can work part-time in something more fulfilling until retirement to supplement your income. YMMV, but the marginal utility of money beyond $1mm in equity at 40 and $6k/month in expendable (on rental housing, food, travel, social events) income during your 20s and 30s is pretty small for most people. If you add a partner with any kind of income to the mix, it makes the marginal stress of earning more money even less appealing. Edit: the main thing you ought to avoid like the plague is lifestyle creep. Spending money on things with zero or vanishingly-small happiness ROI. Read this story every year or two, or whenever you get a raise at work. https://www.marxists.org/archive/tolstoy/1886/how-much-land-does-a-man-need.html https://www.marxists.org/archive/tolstoy/1886/how-much-land-...
shortrounddev2 2y ago
It's a difficult trade off I've found. Large tech companies are boring and slow and you deal with a lot of red tape and BS, and you feel utterly powerless in the security of your own job as economic tidal waves direct the momentum of layoffs and not your personal contribution. At a startup you have more autonomy and power over your personal position. I wrote 90% of the code that is generating company growth, released 2 months after a layoff. If I had taken longer to release that code or if my code didn't work the company would be in a worse financial position. But that also means a lot of personal stress. There aren't 4 layers of middle management to catch flak for you. If you fuck something up, you are directly responsible and depending on the environment that can result in some heated conversations. I also work way harder at a startup than I ever did for a big company
- smeej 2y ago
  Those are the factors that make the tradeoff easy for me. I would vastly prefer direct accountability for my own fuckups, because that means I have the agency to do something to fix it. What makes me want to put my head through a wall is when I fuck up, and four layers of people above me are the only ones allowed to fix the thing, but they don't, so I keep catching flak for my fuckup without any way to stop it and fix the thing. I have many more heated conversations with those managers, which typically leads to the door. When I fuck something up, rarely is anyone more upset about that than I am. Nobody's dumping more heat on me than I am on myself, so bring on the heat-- as long as I have the agency to fix the problem.

ethagnawl 2y ago

> All you’re saying is that in the contemporary context it’s exceedingly foolish to be an employee at an early startup. As a rule, it is and always has been. For every unicorn piñata stuffed with winning lottery tickets, there are hundreds/thousands? of others whose employees walk away with nothing or less (debt, strained relationships, mental health issues, etc.) at worst or a job at AcquiHireCo at best.

bradleyjg 2y ago
There was always very high risk, so it was only ever for certain people. But in earlier iterations of SV it was possible to become generationally rich as an early employee. The VCs and founders have fixed the glitch. To put it another way: early employee equity was always a lotto but now the payout is like some lame scratch off instead of the powerball jackpot.
- est31 2y ago
  The startups where employees get really rich still exist. I'm pretty sure the early employees of OpenAI are generationally rich for example. It's just that these companies very often are the darlings since their inception, get constantly talked about. Everyone wants to to invest in them and everyone wants to join them. So they have the ability to pick out the best talent, in other words, it's unlikely you'll be able to join that specific startup. But even 20 years ago, try getting into early Google. From what I heard they had extremely high bars for hiring as well and only lowered them once they got so large that the pool was exhausted. I'd argue that the total comp at the established companies for engineers has increased precisely because of competition from startups: to make the startup not be the better option. Does that mean that VCs are not taking a bigger slice than they used to? Absolutely not, but I wouldn't put the blame solely on them.
  - bradleyjg 2y ago
    Re: openAI We’ll see when it happens. If I had to name a company most likely to have massive landmines buried in front of common stock cashing out, it would be at the top of the list.

mbesto 2y ago

> All you’re saying is that in the contemporary context it’s exceedingly foolish to be an employee at an early startup. As long as naive 22 year olds think have that one friend that stuck around long enough to cash out on an IPO, then yes. On a risk-adjusted basis, this has basically always been the case - you're better off working at FAANG.

kelnos 2y ago
I hear this a lot, but most people -- even otherwise-startup people, even if they interview -- don't get to work at a FAANG. And I think starting now at a FAANG is a lot less lucrative than people seem to think for the average (or even above-average) employee. Certainly nowhere near as lucrative as it was 7-10 years ago or more.

shmel 2y ago

If you only care about money, sure. I have plenty of friends working in FAANG. For some mysterious reason any time I ask them about work, they say something along the lines "ehh... it's fiiiine. Paycheck is pretty good though". Okay, not all, but perhaps 95%. And half of them work massive overtime on regular basis. I can get behind working weekends when you hope to change the world. They often say things like: "yeah, I have to work 60-70h per week because I don't want my boss to yell at me". Those who work normal hours say: "there is not much work to do really, we literally have meetings about meetings to fill the day. I wish I had some real work to do". I truly hope that higher TC compensates for that.

closeparen 2y ago
The Bay Area housing market is too competitive for this. If you’re renting a room in your early 20s then sure just have fun, any tech job should cover it. If you want to own a place to raise a family in by your 30s, and you don’t have some exogenous source of wealth, you’re going to need every dollar of liquid compensation you can possibly get.
- shmel 2y ago
  Or you can just live somewhere else. The world doesn't end at Bay Area.
  - closeparen 2y ago
    Sure but this thread is about technology startups. The jobs you can get anywhere are business IT departments.

tivert 2y ago

> All you’re saying is that in the contemporary context it’s exceedingly foolish to be an employee at an early startup. The VCs and founders have optimized away all the incentive. Eventually the message will reach even naive 22 year olds. My startup idea is a firm that uses generative AI to flood the internet with pro-startup, pro-VC, pro-founder propaganda, so that message will never reach the naive 22 year olds. Personally, I think it's like saving the environment, since naive 22 year olds are precious resource we cannot allow to be destroyed.

kelnos 2y ago

I wouldn't even say "contemporary"; people have been saying this (and I believe it's been true) for decades. But overall that statement is making a lot of assumptions. It's assuming money is the main priority for everyone. Sometimes the priority is to have a ton of autonomy and influence on product direction, not have to deal with 8 layers of management, and have an actual, large, often-measurable impact on the company's success. It's assuming that the alternative is that anyone can work at a FAANG, and be in the higher tiers of salary they offer for their quite-above-average employees (hired today, not 10 or 20 years ago). Most competent, talented people won't pass an interview at a FAANG. Of those that do, many of them will not immediately be making $500k/yr. These points are especially true for 22 year olds, naive or otherwise. I was going to make a comment about working your ass off at a startup vs. working 9-5 at a more established company, but I know plenty of people at FAANGs who work 50- or 60-hour weeks, every week, and often put in time on weekends. Granted, I would agree that pretty much everyone at a small/early startup is going to be working long hours, while a large number of people at a FAANG are going to enjoy a nice, relaxing life outside of work, so they're not at all equivalent in that regard.