4 ms·

This is a historically bad signal for market health but it's not all bad for hackers. More piranhas to watch out for but also more bizdev hustlers willing to he

by rgbrgb 12y ago

This is a historically bad signal for market health but it's not all bad for hackers. More piranhas to watch out for but also more bizdev hustlers willing to help sell and/or raise money. Edit: I've personally been taken advantage of by an Ivy B-schooler so the piranha thing is real. It was the typical thing you hear where I, an undergrad, had written a bunch of code with a verbal contract from the MBA student that I'd own 10-20% of the business. After a few weeks, when paperwork was being filed, I was informed that I'd get more like 1% to be the first engineer and finish building the MVP. It's not that MBAs are bad but a lot of the ones I've known have been indoctrinated into this way of thinking of creative people as resources to be harvested. It's not evil, it's approaching business like a game, knowing all the rules, and playing to win. It does look and feel evil when the rules are used against you before you know you're playing.

gaius 12y ago
Being an early employee is an incredibly bad deal. The first dozen people really should be equal partners, in writing.
- bigchewy 12y ago
  Then why would anybody start a company? why not just join as #12, once a ton of work has been done and you can anticipate, relative to when it was just an idea, the path of the company.
  - jonnathanson 12y ago
    We're speaking about expected values here. The expected value of joining a slightly de-risked startup as an early employee -- provided you don't get entirely screwed on equity, which is certainly a nontrivial risk -- is higher than the expected value of founding your own startup at T=0. This has a lot to do with things like risk, salary/equity mix, and the probability that your startup will actually succeed. Of course, the absolute value of a big win, should a win come along, is higher for the founder than for the early employee. But the early employee has more flexibility, and probably takes more swings at bat over the course of a given time period. He won't hit a homerun, but he may hit a series of doubles. The founder might hit a home run, or he might strike out. And on an unrelated note, the expected value of a stable job at a place like Google or Facebook is probably a lot higher than the expected value for either a startup founder or startup employee. This doesn't mean everyone should go BigCo and not mess around with startups. It just means people should figure out their personal risk-tolerance levels and ambitions, and act accordingly.
  - byoung2 12y ago
    The same reason people play the high stakes tables instead of penny slots...orders of magnitude more risk means orders of magnitude more reward.
- thirsteh 12y ago
  To my understanding, being an early employee is the best deal because they still get substantial equity, but don't face nearly the same level of risk as the founders. Somebody did the numbers on HN a while back and showed that you have a higher probability of making it rich by being an early employee than by founding your own startup. I'm afraid I have no idea how to find that thread, though.
  - byoung2 12y ago
    a higher probability of making it rich by being an early employee than by founding your own startup There are an order of magnitude more early employees than there are founders, so it makes sense...for every founder made rich, there are 10x as many early employees made rich.
  - WalterSear 12y ago
    FWIW, the salary charts on angel list show the average startup equity offers there going for a bit more than a point. If your hypothetical startup sold for $100 million dollars, after dilution and taxes, you could expect maybe $500k. In other words, ~$125k extra for each year of a 4 year vesting period. That's nice, but it's certainly not substantial - it's about equal to the salary you'ld expect at the same jobs. And, we are talking about a hundred million dollar, moonshot exit - in other words, vastly, vastly more than most startups can expect to make. Most early employees make a modest, very decent, pittance.
  - gaius 12y ago
    Substantial, not really. After a year or two, the salary you give up in return for equity will probably be more than the founder's initial stake, yet you will get 1% of 1% of any upside.
- WalterSear 12y ago
  I wouldn't call it a bad deal as much as a reality check. If you are expecting fuck-you levels of equity as early stage employee, the vast majority of startup job openings will disappoint: IMHO, this says more about people's unrealistic expectations than the fairness of startup shares.
lgieron 12y ago
How is that not evil?
- Chronic30 12y ago
  It is legal.
  - fyolnish 12y ago
    That doesn't make it not evil.
7Figures2Commas 12y ago
The MBA student you're speaking of wasn't nearly as shrewd as you make him or her out to be. If you are the sole author of the code in question, as a general rule, the intellectual property rights associated it inured to your benefit the minute you created the code. Absent a written agreement containing a work-for-hire and/or assignment clause (for good measure, it's common to see both), your piranha may have no teeth as far as asserting ownership over what you created. As for your comment about "rules are used against you before you know you're playing": regardless of role (technical, non-technical, etc.), everyone in this industry should educate himself or herself on the basics of IP and contract law, as well as the relevant areas of finance and tax. There are a ton of free high-quality resources online, so there's really no excuse not to get up to speed. The really good news is that in most cases, the shysters you're likely to encounter are not much more knowledgeable than the people they prey on, so a little bit of knowledge can offer a lot of protection.
S4M 12y ago
Out of interest, how did the startup pan out?
Ary3h 12y ago
It's not just that creative resources are harvested but they are harvested by board members using way too much fertilizer and then flash ripened in warehouses using methane gas. The product is shit, ends up mostly wasted, and leads to a monoculture that will feed only a select few in perpetuity.
WalterSear 12y ago
More inexperienced bizdev hustlers competing for the same money helps no one.
WalterSear 12y ago
It's almost the definition of evil. http://en.wikipedia.org/wiki/Eichmann_in_Jerusalem http://en.wikipedia.org/wiki/Eichmann_in_Jerusalem
raincom 12y ago
Which Ivy B-School? Columbia?

by rgbrgb 12y ago

gaius 12y ago

Being an early employee is an incredibly bad deal. The first dozen people really should be equal partners, in writing.

bigchewy 12y ago
Then why would anybody start a company? why not just join as #12, once a ton of work has been done and you can anticipate, relative to when it was just an idea, the path of the company.
- jonnathanson 12y ago
  We're speaking about expected values here. The expected value of joining a slightly de-risked startup as an early employee -- provided you don't get entirely screwed on equity, which is certainly a nontrivial risk -- is higher than the expected value of founding your own startup at T=0. This has a lot to do with things like risk, salary/equity mix, and the probability that your startup will actually succeed. Of course, the absolute value of a big win, should a win come along, is higher for the founder than for the early employee. But the early employee has more flexibility, and probably takes more swings at bat over the course of a given time period. He won't hit a homerun, but he may hit a series of doubles. The founder might hit a home run, or he might strike out. And on an unrelated note, the expected value of a stable job at a place like Google or Facebook is probably a lot higher than the expected value for either a startup founder or startup employee. This doesn't mean everyone should go BigCo and not mess around with startups. It just means people should figure out their personal risk-tolerance levels and ambitions, and act accordingly.
- byoung2 12y ago
  The same reason people play the high stakes tables instead of penny slots...orders of magnitude more risk means orders of magnitude more reward.
thirsteh 12y ago
To my understanding, being an early employee is the best deal because they still get substantial equity, but don't face nearly the same level of risk as the founders. Somebody did the numbers on HN a while back and showed that you have a higher probability of making it rich by being an early employee than by founding your own startup. I'm afraid I have no idea how to find that thread, though.
- byoung2 12y ago
  a higher probability of making it rich by being an early employee than by founding your own startup There are an order of magnitude more early employees than there are founders, so it makes sense...for every founder made rich, there are 10x as many early employees made rich.
- WalterSear 12y ago
  FWIW, the salary charts on angel list show the average startup equity offers there going for a bit more than a point. If your hypothetical startup sold for $100 million dollars, after dilution and taxes, you could expect maybe $500k. In other words, ~$125k extra for each year of a 4 year vesting period. That's nice, but it's certainly not substantial - it's about equal to the salary you'ld expect at the same jobs. And, we are talking about a hundred million dollar, moonshot exit - in other words, vastly, vastly more than most startups can expect to make. Most early employees make a modest, very decent, pittance.
- gaius 12y ago
  Substantial, not really. After a year or two, the salary you give up in return for equity will probably be more than the founder's initial stake, yet you will get 1% of 1% of any upside.
WalterSear 12y ago
I wouldn't call it a bad deal as much as a reality check. If you are expecting fuck-you levels of equity as early stage employee, the vast majority of startup job openings will disappoint: IMHO, this says more about people's unrealistic expectations than the fairness of startup shares.

lgieron 12y ago

How is that not evil?

Chronic30 12y ago
It is legal.
- fyolnish 12y ago
  That doesn't make it not evil.

7Figures2Commas 12y ago

The MBA student you're speaking of wasn't nearly as shrewd as you make him or her out to be. If you are the sole author of the code in question, as a general rule, the intellectual property rights associated it inured to your benefit the minute you created the code. Absent a written agreement containing a work-for-hire and/or assignment clause (for good measure, it's common to see both), your piranha may have no teeth as far as asserting ownership over what you created. As for your comment about "rules are used against you before you know you're playing": regardless of role (technical, non-technical, etc.), everyone in this industry should educate himself or herself on the basics of IP and contract law, as well as the relevant areas of finance and tax. There are a ton of free high-quality resources online, so there's really no excuse not to get up to speed. The really good news is that in most cases, the shysters you're likely to encounter are not much more knowledgeable than the people they prey on, so a little bit of knowledge can offer a lot of protection.

S4M 12y ago

Out of interest, how did the startup pan out?

Ary3h 12y ago

It's not just that creative resources are harvested but they are harvested by board members using way too much fertilizer and then flash ripened in warehouses using methane gas. The product is shit, ends up mostly wasted, and leads to a monoculture that will feed only a select few in perpetuity.

WalterSear 12y ago

More inexperienced bizdev hustlers competing for the same money helps no one.

WalterSear 12y ago

It's almost the definition of evil. http://en.wikipedia.org/wiki/Eichmann_in_Jerusalem http://en.wikipedia.org/wiki/Eichmann_in_Jerusalem

raincom 12y ago

Which Ivy B-School? Columbia?