When a Unicorn Startup Stumbles, Its Employees Get Hurt • Hacker News Board

Re: When a Unicorn Startup Stumbles, Its Employees Get Hurt

#151

Post by Balgair » Wed, Dec 23, 2015, 6:30 PM UTC

arbitrage314 wrote: post #140

Balgair wrote: post #134

Earlier quoted context omitted.

Thanks for the comment, but 'investing' 100k, a sum FAR more than almost anyone reading the comment will ever see in their own bank accounts, is not 'investing' for most of us. Diversity and spreading the risk is bread and butter for almost all of us. Throwing 100k into a company you believe in' is a greater gamble than almost any reader could ever justify to their spouse and expect to stay married. You live in a ver…

Yeah, good point--I'd recommend investing only $10k or $20k if possible. One of my points, though, is that you are effectively investing $100k in the company by taking a crap deal to work there (e.g., via a $25k pay cut over 4 years of work). For that $100k, you're getting much less than you would get by simply straight-up investing $100k.

I see and agree to your point, taking that kind of cut in salary is an investment of that magnitude. However, there are not many people that could even afford to put 2k, let alone 10k into a company. For most, putting in the time to help a friend, possibly valuing the time at 10k and giving that to them for free, is a much easier and safer bet. I know that makes little sense in terms of dollars, but no-one I know of, save some very busy consultants, have anywhere near 10k to 'invest'. However, most folk I know of have a few weekends and hour after work to 'invest' and help a friend out, possibly worth 10k in time.

Re: When a Unicorn Startup Stumbles, Its Employees Get Hurt

#152

Post by antoinevg » Wed, Dec 23, 2015, 6:30 PM UTC

The only thing that scares me more than the current information asymmetry between investors and startup employees is the thought of the kind of structures engineers can come up with when their livelihood is at stake!

Re: When a Unicorn Startup Stumbles, Its Employees Get Hurt

#153

Post by balls187 » Wed, Dec 23, 2015, 6:33 PM UTC

askafriend wrote: post #113

arbitrage314 wrote: post #111

I'm going to keep repeating this comment until the world hears it--I think most people joining startups are being taken advantage of without realizing it. Sorry to be repeating myself: If you're primarily interested in making money, or if you love the startup but not the compensation, you should NOT work at that startup. If you're a good developer, you can get a better deal by working at an established company and si…

Can you explain how you were able to invest 100k into a startup without being an angel investor?

Specific to the US, my interpretation:

Prior to SECs recent ruling which allows companies to sell shares (aka securities) by crowd funding, companies are allowed to sell shares to Accredited Investors, the definition of which is regulated by the SEC. Further, they can also sell shares to non-accredited investors, but with added due diligence required by the company.

An individual can meet the definition of an accredited investor, without being an "Angel Investor." Angel Investor is a term for someone who is known for, as part of a financial strategy, investing their own money to startups.

Re: When a Unicorn Startup Stumbles, Its Employees Get Hurt

#154

Post by arbitrage314 » Wed, Dec 23, 2015, 6:34 PM UTC

DocSavage wrote: post #146

arbitrage314 wrote: post #121

Earlier quoted context omitted.

Most startups are more than happy to take your money. Just email or meet with the founders, explain your enthusiasm for the company, and you're usually good to go! For higher-profile deals, though--e.g., Uber--you wouldn't be able to invest such a small amount.

Doesn't this just apply to those with either sufficient net worth or earned income to qualify as an accredited investor? Or have you heard of startups taking the money of some new graduate making less than $200k/year with insufficient net worth?

Yeah, typically you have to make at least $200k/year or have a net worth of $500k (the term is "accredited investor").

Thanks to a new law, though, you no longer have to be accredited to invest small amounts.

Re: When a Unicorn Startup Stumbles, Its Employees Get Hurt

#155

Post by czbond » Wed, Dec 23, 2015, 6:36 PM UTC

acconrad wrote: post #133

arbitrage314 wrote: post #111

I'm going to keep repeating this comment until the world hears it--I think most people joining startups are being taken advantage of without realizing it. Sorry to be repeating myself: If you're primarily interested in making money, or if you love the startup but not the compensation, you should NOT work at that startup. If you're a good developer, you can get a better deal by working at an established company and si…

I think I asked this from you in another thread - but this advice feels difficult to follow. Are you in SF? Do you work at a company like Netflix which is known for paying very high salaries? Or are you not fully a developer, but in management? Because national labor statistics show that even the top quartile of salaries is still much lower than this, so I'm not sure how realistic it is for even the HN crowd to just…

The number is "high" as a single datapoint, but only due to an inflated SanFran economy. A $250k SF job adjusted to where I live in Dallas is actually considerably less than I make. I would need nearly $370k in SF dollars to do the same thing.

http://money.cnn.com/calculator/pf/cost-of-living/

Re: When a Unicorn Startup Stumbles, Its Employees Get Hurt

#156

Post by bryanlarsen » Wed, Dec 23, 2015, 6:37 PM UTC

Balgair wrote: post #134

arbitrage314 wrote: post #111

I'm going to keep repeating this comment until the world hears it--I think most people joining startups are being taken advantage of without realizing it. Sorry to be repeating myself: If you're primarily interested in making money, or if you love the startup but not the compensation, you should NOT work at that startup. If you're a good developer, you can get a better deal by working at an established company and si…

Thanks for the comment, but 'investing' 100k, a sum FAR more than almost anyone reading the comment will ever see in their own bank accounts, is not 'investing' for most of us. Diversity and spreading the risk is bread and butter for almost all of us. Throwing 100k into a company you believe in' is a greater gamble than almost any reader could ever justify to their spouse and expect to stay married. You live in a ver…

Many people who join startups have "invested" an opportunity cost of similar magnitude. If the company they're working for goes south, they've lost the better salary they could have had at the larger company, they've lost their job, they've lost their health insurance, they've lost their equity they have in their company, et cetera.

That doesn't seem like much in today's hot market, but ask anybody who went through a crash how much a stable job is worth.

If you're not comfortable investing ~100K in a startup, you probably shouldn't join one.

Re: When a Unicorn Startup Stumbles, Its Employees Get Hurt

#157

Post by kenko » Wed, Dec 23, 2015, 6:39 PM UTC

jerf wrote: post #41

Is there some other industry where, when a company stumbles, its employees don't get hurt? I live in Michigan, and when the car industry "stumbled" everyone I locally know at least knew someone who got hit, at the very very least with long-term stagnant wages even as their responsibilities amped up to cover the missing people, and they were the ones who came out relatively unscathed. I mean, the details of the articl…

ditonal's comment (currently below yours) is relevant here. Doesn't look like they stumbled to me!

https://news.ycombinator.com/item?id=10784180

Re: When a Unicorn Startup Stumbles, Its Employees Get Hurt

#158

Post by rwmj » Wed, Dec 23, 2015, 6:39 PM UTC

jackgavigan wrote: post #72

It's interesting to compare this article with the coverage of the acquisition at the time. "When Good Technology announced Friday that it had sold itself to its long-standing rival BlackBerry for $425 million in cash, it was a moment of triumph for Good CEO Christy Wyatt." - http://uk.businessinsider.com/how-christy-wyatt-sold-good-to...

She made out like a bandit with $6m and no need to turn up to work ever again, so for her I'm sure it was pretty triumphant.

The fact that the very first action of the acquiring company was to give her enough money to never come back tells you all you need to know about her ability as CEO.

Re: When a Unicorn Startup Stumbles, Its Employees Get Hurt

#159

Post by arbitrage314 » Wed, Dec 23, 2015, 6:40 PM UTC

tostitos1979 wrote: post #150

arbitrage314 wrote: post #140

Earlier quoted context omitted.

Yeah, good point--I'd recommend investing only $10k or $20k if possible. One of my points, though, is that you are effectively investing $100k in the company by taking a crap deal to work there (e.g., via a $25k pay cut over 4 years of work). For that $100k, you're getting much less than you would get by simply straight-up investing $100k.

Would you mind sharing a few things: - age - Bay area/NYC or somewhere else? - how do u deal with taxes, 401K contributions and still have 100K leftover? I am possibly overcontributing 401K (maxing the 18K allowed by the IRS) and certainly overpaying rent (bay area :[). How the heck does one manage to save/invest 100K even at that salary? As a soon to be father, I need to get my act together asap.

I'm 30 years old, and my rent is about $1200/month (I'm married, which helps cut down on costs).

After taxes, $250k becomes $150k. After rent, food, staying alive, some travel, etc., I'm left with about $100k disposable per year. Like most of you, I don't really have nice things, fancy clothes, etc.

I would continue to max out contributions to retirement accounts, though! You can invest in startups via IRAs and Roth-IRAs (I have done it).

Re: When a Unicorn Startup Stumbles, Its Employees Get Hurt

#160

Post by mtberatwork » Wed, Dec 23, 2015, 6:41 PM UTC

rebootthesystem wrote: post #107

justinph wrote: post #67

Earlier quoted context omitted.

At least with the auto industry, the unions were able to offer some protections for the worker. How many programmers belong to a union?

> How many programmers belong to a union? Thankfully none. One of the main reasons the car companies stumbled are unions. The whole thing has degenerated to insanity squared. For example, GM had a clause in their contract requiring them to not fire employees displaced by technology or automation. In other words, if you improve your workflow and process and can do the same work with 25 people instead of 100, you can't…

I'm having a hard time taking the links seriously. The WSJ article is behind a paywall so I am unable to read it. However, it's dated 2006 which would mean it was authored at the height of Wall Street "shenanigans" (for lack of a better term) while the Forbes article appears to be a canned editorial written by the Ayn Rand Institute.