5 ms·

Some info based on my experience in startup land: It's pretty standard for (non-executive) startup employees to receive about 0.25% equity in the company. That

by mrshoe 17y ago

Some info based on my experience in startup land: It's pretty standard for (non-executive) startup employees to receive about 0.25% equity in the company. That equity usually vests over 4 years. This is true even for very early employees. So, if your startup is acquired by Google for $20MM, which is a pretty favorable outcome, you get $50k. Considering the vesting, that's less than $13k per year. If you instead went to work for a Big Company, heaven forbid, the difference in your salary and bonus would probably more than make up for that equity. The far more common outcome, of course, is that your equity is worth nothing. The incredibly uncommon outcome is that your 0.25% is worth a million dollars or more. In almost all cases (these days, at least), the only people to win big in the startup lottery are the founders and the VCs. That said, founding a company is very risky and difficult, and there's a high probability of failure. Previous startup experience can go a long way to increase your odds of success if you ever do decide to found your own. It's much easier to learn all the hard lessons while building someone else's company. Then you can take that knowledge and swing for the fences yourself.

akeefer 17y ago
To expand on your last point there: if you do work for a startup, pay attention to everything, and learn from all the things that get done well and all the things that don't. There's a lot to learn and a lot to screw up. For example: Did you hire well? Did you grow the team too slowly or too quickly? Did your development process work well? Did it adapt as your product and team matured? Was the management transparent in the right ways? If the company grew, how did it handle the addition of new employees, new customers to support, and new or larger product offerings? How was your employee retention and burnout? And so on . . . There are invaluable lessons that you can really only learn by going through those things, and you can still learn them (and perhaps even be more objective about it) when you're not a founder. And if your startup isn't transparent enough that you can learn those sorts of lessons, you should consider that a major strike against it.
- nostrademons 17y ago
  > you can still learn them (and perhaps even be more objective about it) when you're not a founder. I wonder, sometimes, how true that is. I went into the startup world for exactly that reason: I wanted to start my own company eventually, knew that I didn't have the knowledge or experience to do it immediately, so I figured I'd learn the ropes on somebody else's dime. I picked companies that would give me a lot of responsibility, and ones where I could directly observe what the founders did and why they did it. And I took careful mental notes whenever something worked well or didn't work well, and resolved to do the same thing (or not do it) when I started my own company. And then I actually did start my own company, and found that I made nearly every mistake that my old bosses had made, I just made them in new ways, and stopped making them a little quicker. I found there're three main problems with the "learn how to start your own company by working at someone else's company" school of thought: 1.) There are many more ways to fail than there are to succeed. Therefore, if you pick any random strategy out of a random company, and you don't yet know whether the company is failing or succeeding, it's probably a failing strategy. Orson Scott Card once said, "There are a million wrong ways to tell a story, and a thousand right ways." That's probably true of entrepreneurship too, just multiply the numbers by a few orders of magnitude. 2.) If you haven't yet worked at a successful company, you probably don't know how to tell the difference between a successful strategy and a failing one. A lot of the things I respected most about my past employers turned out to be mistakes. For example, one of them was big on code ownership, and seeing how hard coders worked at getting their code running, I thought it was a great way to encourage people to take pride in the code they produce. Another was building a platform for financial apps, and I thought they were geniuses for their strategic insight - after all, they get recurring revenue and their customers can't easily switch away. It was only after I tried building a platform myself that this reached the top of the list for "things startups should never do" - and given the number of YC startups that get funded with their own webapp platforms, I guess lots of other founders haven't yet learned that either. 3.) Many times mistakes don't look like mistakes, because the circumstances that surround them are different. Very occasionally, they aren't mistakes, because the circumstances that surround them are different. For example, while I was building my platform to create casual games, I thought I'd sidestep all the complexity & adoption problems my financial employer had faced, because I was purposely limiting the scope of my platform to games and wasn't trying to have it do everything. I found that no, the platform part really was the problem, and no matter how much I polished it up, that approach just didn't work.
holygoat 17y ago
This, in a nutshell, is why I have turned down every offer so far to leave my corp job (attained through acquisition, amusingly) for a startup. The equity offered was simply inadequate to make up for the massive increase in effort required. Plot the compensation over time, and I'm much better off now, especially considering the other things I've been able to accomplish while not being on a 90-hour week startup deathmarch.

by mrshoe 17y ago

akeefer 17y ago

To expand on your last point there: if you do work for a startup, pay attention to everything, and learn from all the things that get done well and all the things that don't. There's a lot to learn and a lot to screw up. For example: Did you hire well? Did you grow the team too slowly or too quickly? Did your development process work well? Did it adapt as your product and team matured? Was the management transparent in the right ways? If the company grew, how did it handle the addition of new employees, new customers to support, and new or larger product offerings? How was your employee retention and burnout? And so on . . . There are invaluable lessons that you can really only learn by going through those things, and you can still learn them (and perhaps even be more objective about it) when you're not a founder. And if your startup isn't transparent enough that you can learn those sorts of lessons, you should consider that a major strike against it.

nostrademons 17y ago
> you can still learn them (and perhaps even be more objective about it) when you're not a founder. I wonder, sometimes, how true that is. I went into the startup world for exactly that reason: I wanted to start my own company eventually, knew that I didn't have the knowledge or experience to do it immediately, so I figured I'd learn the ropes on somebody else's dime. I picked companies that would give me a lot of responsibility, and ones where I could directly observe what the founders did and why they did it. And I took careful mental notes whenever something worked well or didn't work well, and resolved to do the same thing (or not do it) when I started my own company. And then I actually did start my own company, and found that I made nearly every mistake that my old bosses had made, I just made them in new ways, and stopped making them a little quicker. I found there're three main problems with the "learn how to start your own company by working at someone else's company" school of thought: 1.) There are many more ways to fail than there are to succeed. Therefore, if you pick any random strategy out of a random company, and you don't yet know whether the company is failing or succeeding, it's probably a failing strategy. Orson Scott Card once said, "There are a million wrong ways to tell a story, and a thousand right ways." That's probably true of entrepreneurship too, just multiply the numbers by a few orders of magnitude. 2.) If you haven't yet worked at a successful company, you probably don't know how to tell the difference between a successful strategy and a failing one. A lot of the things I respected most about my past employers turned out to be mistakes. For example, one of them was big on code ownership, and seeing how hard coders worked at getting their code running, I thought it was a great way to encourage people to take pride in the code they produce. Another was building a platform for financial apps, and I thought they were geniuses for their strategic insight - after all, they get recurring revenue and their customers can't easily switch away. It was only after I tried building a platform myself that this reached the top of the list for "things startups should never do" - and given the number of YC startups that get funded with their own webapp platforms, I guess lots of other founders haven't yet learned that either. 3.) Many times mistakes don't look like mistakes, because the circumstances that surround them are different. Very occasionally, they aren't mistakes, because the circumstances that surround them are different. For example, while I was building my platform to create casual games, I thought I'd sidestep all the complexity & adoption problems my financial employer had faced, because I was purposely limiting the scope of my platform to games and wasn't trying to have it do everything. I found that no, the platform part really was the problem, and no matter how much I polished it up, that approach just didn't work.

holygoat 17y ago

This, in a nutshell, is why I have turned down every offer so far to leave my corp job (attained through acquisition, amusingly) for a startup. The equity offered was simply inadequate to make up for the massive increase in effort required. Plot the compensation over time, and I'm much better off now, especially considering the other things I've been able to accomplish while not being on a 90-hour week startup deathmarch.