4 ms·

If you do the Math, 1% seems fair. The typical YC company raises a seed round at a valuation of around $20M. 1% of that with standard vesting terms equates to $

If you do the Math, 1% seems fair. The typical YC company raises a seed round at a valuation of around $20M. 1% of that with standard vesting terms equates to $50k/yr. If the typical founding engineer equity was 5%, that would equate to $250k/yr which would mean most startups would have greater total comp than Google.

duped 2y ago
1% at seed is not going to stay 1% at the first raise after dilution
- rgbrgb 2y ago
  If you have proven yourself indispensable then it definitely can via additional grants.
- malisper 2y ago
  The 50k/yr value of the 1% equity already prices in future dilution. Just because the equity is going to be less than 1% in the future doesn't mean it's not worth $50k/yr today
BeetleB 2y ago
> If you do the Math, 1% seems fair. The math is simple: As a founding engineer, I do almost the same amount of work as the founder (e.g. 90%), and get only 5% or less of the reward. If the founder is the main source of capital, I can understand. But if all the founder does is build the product and raise money, how different is (s)he from you?
- malisper 2y ago
  > As a founding engineer, I do almost the same amount of work as the founder (e.g. 90%), and get only 5% or less of the reward. If you believe you're doing 90% the work of a founder and getting paid 5%, then you should be an actual founder and get paid 20x as much as you be as a founding engineer
- shalmanese 2y ago
  What % of startups fail before they even get to the stage of being able to hire a founding engineer? You can either make the choice to be a founder and start before this selection filter or be a founding engineer and start after the selection filter. Of course, the odds are not static and some people genuinely do have a better RAROC by being a founder but most people overestimate their founder abilities vs the odds and feel like they're not fairly compensated at 1%, which is fine, most people shouldn't be founding engineers either. But there's a reason it's equilibrated around the 1% mark because early equity compensation is about risk, not effort.
mempko 2y ago
Why shouldn't a startup engineer earn more than an engineer at Google? Think about it, they take much much more risk. Their comp can go to zero. It's not liquid like a google engineer. Also they are creating something net-new that can benefit society in the long run. We want, as a society, to reward people for taking those kinds of risks! In other words, we need more startup engineers and less google engineers.
- malisper 2y ago
  Because Google's revenue is $2M/employee while a startup's will be $0/employee
  - mempko 2y ago
    You do understand equity scales with the success of the startup right? It's not cash.
bpt3 2y ago
You forgot to account for the likelihood that 1% is liquid at any point with a valuation close to or higher than the current one.
- malisper 2y ago
  That's already priced in
naet 2y ago
A lot of startups don't ever get a YC seed round or $20M valuation. There's a significant risk that your equity ends up being worthless.

duped 2y ago

1% at seed is not going to stay 1% at the first raise after dilution

rgbrgb 2y ago
If you have proven yourself indispensable then it definitely can via additional grants.
malisper 2y ago
The 50k/yr value of the 1% equity already prices in future dilution. Just because the equity is going to be less than 1% in the future doesn't mean it's not worth $50k/yr today

BeetleB 2y ago

> If you do the Math, 1% seems fair. The math is simple: As a founding engineer, I do almost the same amount of work as the founder (e.g. 90%), and get only 5% or less of the reward. If the founder is the main source of capital, I can understand. But if all the founder does is build the product and raise money, how different is (s)he from you?

malisper 2y ago
> As a founding engineer, I do almost the same amount of work as the founder (e.g. 90%), and get only 5% or less of the reward. If you believe you're doing 90% the work of a founder and getting paid 5%, then you should be an actual founder and get paid 20x as much as you be as a founding engineer
shalmanese 2y ago
What % of startups fail before they even get to the stage of being able to hire a founding engineer? You can either make the choice to be a founder and start before this selection filter or be a founding engineer and start after the selection filter. Of course, the odds are not static and some people genuinely do have a better RAROC by being a founder but most people overestimate their founder abilities vs the odds and feel like they're not fairly compensated at 1%, which is fine, most people shouldn't be founding engineers either. But there's a reason it's equilibrated around the 1% mark because early equity compensation is about risk, not effort.

mempko 2y ago

Why shouldn't a startup engineer earn more than an engineer at Google? Think about it, they take much much more risk. Their comp can go to zero. It's not liquid like a google engineer. Also they are creating something net-new that can benefit society in the long run. We want, as a society, to reward people for taking those kinds of risks! In other words, we need more startup engineers and less google engineers.

malisper 2y ago
Because Google's revenue is $2M/employee while a startup's will be $0/employee
- mempko 2y ago
  You do understand equity scales with the success of the startup right? It's not cash.

bpt3 2y ago

You forgot to account for the likelihood that 1% is liquid at any point with a valuation close to or higher than the current one.

malisper 2y ago
That's already priced in

naet 2y ago

A lot of startups don't ever get a YC seed round or $20M valuation. There's a significant risk that your equity ends up being worthless.