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If you want to make "big money," you should pretty much avoid WORKING at startups at all costs. Instead, get a high-paying job at an established company, and in
by arbitrage314 12y ago
If you want to make "big money," you should pretty much avoid WORKING at startups at all costs. Instead, get a high-paying job at an established company, and invest the difference in the startup's equity.
I've considered lots of startup jobs because I believed strongly in the companies. Every single time, however, I was able to get a larger chunk of the company by keeping my current job and simply investing.
To give an example, my current job pays about $250k, and one year, I invested $100k of that into a startup, leaving me with ~$150k of salary. This $150k + startup equity was a better deal than the startup was offering in both salary and equity. Plus, equity bought as an investor is much less tax toxic than equity options received as an employee of a startup.
On the other hand, most people who work at startups aren't interested in money. If that's you, that's totally cool, and I respect that!
- burger_moon 12y agoThis may be a really stupid question, but how do you cash out your investments in these startups? Do you have to wait for them to get bought out or can you sell your stake in the company to other investors?
- arbitrage314 12y agoHi burger_moon! There are a couple of options: 1. Attempt to sell back to the company 2. Sell your shares to an independent buyer that you've found (the company typically has right of first refusal, which just means they're allowed to outbid the independent buyer) 3. Wait until the IPO, and sell them on the open market. 4. Sell your shares on EquityZen, SharesPost, or something similar.
- burger_moon 12y agoThanks for the reply. Have you sold any of your investments so far? What process did you go through if you did?
- arbitrage314 12y agoEvery sale I've done so far has been to my network of friends/colleagues. Most people are eager to get some slight financial exposure to the startup world as part of a well-diversified portfolio. There were two steps required: (1) the person I sold to had to be an accredited investor (2) I had to give the company right of first refusal (which required writing a quick letter and waiting 30 days)
- giuscri 12y agoCan I ask you what is you current job?, the one that pays you $250k per year.
- arbitrage314 12y agoHi giuscri! I work as a developer at a large company (e.g., think Google, Facebook, Goldman Sachs, IBM, etc.).
- giuscri 12y agohow did you get there?, i mean what is your career path? i'm a CS student, i would be very glad to listen to your story. i know it may sounds rude, but i'm sincere. if you want, send me an email to giuscri <at> gmail <dot> com :)
- brational 12y agoIf you check out reddit /r/cscareerquestions and do some searches you will find tons of information about this.
- conjecTech 12y agoYour comment assumes your presence/work has no impact on the success of the startup, which is an unfortunate thing to assume. Otherwise the two equity stakes have different payoff expectations.
- arbitrage314 12y agoYep, that's a good point. If the startup will be less successful without you, then it's not a perfect arbitrage opportunity. This would be especially true if the company were small or starting out. For most established companies, however, I think the difference of one person is typically quite low.