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100K is not more than enough to live on, if you live in the Valley and have a family (say 3 kids) then 100K barely buys you a comfortable lifestyle. I know that

100K is not more than enough to live on, if you live in the Valley and have a family (say 3 kids) then 100K barely buys you a comfortable lifestyle. I know that is not the point of this thread but so much focus of these discussions seems to pivot around a 22 year old college dropout who lives with roommates in a shared apartment. When you reach a certain point, say your mid-30s and you have kids your financial obligations can extend far beyond what people think is necessary to 'live on'. You have retirement contributions, savings for college, long term care for family (most people believe it or not, have to help their parents out at some point).

ska 12y ago
And that's why in the latter case, an early stage startup may not be for you. You join later, with a higher salary, when it has stabilized and looks to be going somewhere. And without the risk, you don't expect the equity to offset it. Pretty simple, really.
- Iftheshoefits 12y ago
  An equity offering of 1-5% doesn't offset the reduced salary. That equity typically doesn't imbue the recipient with the same authority as the founders' equity imbues them. Yet, for example, Hire #1 in a two-founder startup is pretty darn close to sharing 1/3 rd of the risk as the founders. It's just that his risk is assumed to be amortized over the term of his tenure and slightly reduced by a salary, so it has the appearance of being significantly less than it really is, even though neither component of that assumption is valid.
  - paulbaumgart 12y ago
    Being able to raise a seed round is a non-trivial hurdle and is not something most engineers can do. Compensation isn't really about risk (which is low for everyone involved given the current employment market), it's about value and opportunity cost.
  - danbmil99 12y ago
    I agree with the logic that gives very early employees 3-5% equity stakes. Any more than that I think is unfair to founders and angels -- there is real value in getting even a reduced salary. Most founders have worked for a year or two without any cash comp, at something that may look absolutely ridiculous on a resume. That is a humongous risk. Those coming in after that risk, plus the risk of failing to raise the seed money, are IMSHO taking about an order of magnitude less risk, therefore the 3-5-ish percent number makes sense. Don't even get me started on this idiotic "we put 15% aside for employees" crap. Fogedaboudit. $80 to DE and you've got 10 million more shares to play with. Not my fault you failed to get the arithmetic right the first time around.
diziet 12y ago
A 22 old college dropout who lives with roommates in a shared apartment can live in $50,000 a year or less, even in the Valley. As a sibling comment mentioned, working at startups, especially early stage startups, isn't for everyone. If a person has major financial obligations a more steady job with less uncertainty (and less potential for upside) is probably the best fit.

ska 12y ago

And that's why in the latter case, an early stage startup may not be for you. You join later, with a higher salary, when it has stabilized and looks to be going somewhere. And without the risk, you don't expect the equity to offset it. Pretty simple, really.

Iftheshoefits 12y ago
An equity offering of 1-5% doesn't offset the reduced salary. That equity typically doesn't imbue the recipient with the same authority as the founders' equity imbues them. Yet, for example, Hire #1 in a two-founder startup is pretty darn close to sharing 1/3 rd of the risk as the founders. It's just that his risk is assumed to be amortized over the term of his tenure and slightly reduced by a salary, so it has the appearance of being significantly less than it really is, even though neither component of that assumption is valid.
- paulbaumgart 12y ago
  Being able to raise a seed round is a non-trivial hurdle and is not something most engineers can do. Compensation isn't really about risk (which is low for everyone involved given the current employment market), it's about value and opportunity cost.
- danbmil99 12y ago
  I agree with the logic that gives very early employees 3-5% equity stakes. Any more than that I think is unfair to founders and angels -- there is real value in getting even a reduced salary. Most founders have worked for a year or two without any cash comp, at something that may look absolutely ridiculous on a resume. That is a humongous risk. Those coming in after that risk, plus the risk of failing to raise the seed money, are IMSHO taking about an order of magnitude less risk, therefore the 3-5-ish percent number makes sense. Don't even get me started on this idiotic "we put 15% aside for employees" crap. Fogedaboudit. $80 to DE and you've got 10 million more shares to play with. Not my fault you failed to get the arithmetic right the first time around.

diziet 12y ago

A 22 old college dropout who lives with roommates in a shared apartment can live in $50,000 a year or less, even in the Valley. As a sibling comment mentioned, working at startups, especially early stage startups, isn't for everyone. If a person has major financial obligations a more steady job with less uncertainty (and less potential for upside) is probably the best fit.