Ask HN: Pros and cons of working at a startup in 2018? • Hacker News Board

Re: Ask HN: Pros and cons of working at a startup in 2018?

#631

Post by Cofike » Tue, Jun 12, 2018, 3:43 AM UTC

pm90 wrote: post #576

praptak wrote: post #154

Earlier quoted context omitted.

Startups require crazy hours and solid dedication. If you put that into a career at a big software company, even with average talent, you will reach the level which yields that kind of money.

No you absolutely won't, unless you luck out and end up on a good team. Big companies are notoriously bad about rewarding hard working and talented engineers. That is in fact one of the main reasons people leave them (including yours truly).

If startups don't reward engineers and neither do big companies, then what does?

Re: Ask HN: Pros and cons of working at a startup in 2018?

#632

Post by _9vpl » Tue, Jun 12, 2018, 3:49 AM UTC

There is a lot of talk in the comments about amount/value of startup equity vs FAANG companies, but having founded and worked with numerous startups, there seems to be an overall lack of transparency when it comes to equity. It's not just how much (percentage), but how are you even measuring that percentage? Fully-diluted shares or current outstanding? What are the liquidity preferences of the VCs? 1x, 2x, 3x? Beyond the rare chance of the company even exiting, there are so many terms that most engineers are completely oblivious to, and the startups are usually not there to inform you.

Re: Ask HN: Pros and cons of working at a startup in 2018?

#633

Post by kentonv » Tue, Jun 12, 2018, 3:56 AM UTC

As a former startup founder, I tend to agree that most startups are low-balling early employees. These employees over-value their stock by imagining what it would be worth if the company reaches $1B valuation. It really is a lottery ticket.

But in my opinion, the answer is more pay, not more equity.

Employees should get market comp, period. Doesn't matter how early-stage the startup is. If a founder can't afford employees at market rate, they shouldn't be hiring yet. They could perhaps offer to take people on as co-founders -- with an appropriately equal share.

People looking to join early-stage startups as employees should be extremely skeptical of equity. Obviously, you want to take some. But if a small chance of getting super-rich is your goal, you should start your own startup. If you are going to make bets, bet on yourself, not on someone else, because you know yourself much better than you know anyone else, and wise bets are all about having information no one else has. Yes, non-founding early-stage employees can have a big impact on a company, but they are still beholden to the founders -- if something goes wrong, they can fire you but you can't fire them. Making a big bet while letting someone else hold the cards is just too risky.

Instead, demand market comp. Do not join a startup that won't offer you market comp. It's not worth it.

Re: Ask HN: Pros and cons of working at a startup in 2018?

#634

Post by alex_young » Tue, Jun 12, 2018, 3:57 AM UTC

KirinDave wrote: post #627

nieksand wrote: post #2

Just a few cons.... The big players have drastically pushed up developer comp. The "maybe" money that might come from a best-case startup exit isn't holding up well against the RSUs of the big players. I have friends pushing total comp north of 400K / year at the usual suspect companies. Over a five-year-span-till-liquidity your "maybe" money is competing against a near-guaranteed $2M in comp. Equity grants for early…

Is that "$400k in base salary and max bonus?" or is that "$400k a year in base salary, max bonus, considering benefits and stock grants which are taxed heavily unless they're held 2 years?" I very much dislike the habit of people not explaining what goes in the knapsack.

RSUs are taxed at vesting. There is no tax advantage in holding them after they are released.

Re: Ask HN: Pros and cons of working at a startup in 2018?

#635

Post by bittcto » Tue, Jun 12, 2018, 3:59 AM UTC

acconrad wrote: post #129

I was the first engineer at a TechStars startup that did have a successful exit (I was there about 5 years before the exit). If there is something I want YC to know, it's this: You helped create the culture of founder empowerment. You have the power to evolve that narrative to those that sacrifice as early employees. Tell the world that early employees deserve a lot more equity. Tell the world that early employees co…

TLDR: 30 years experience, I learned: don’t go work for a SV style startup. Be a founder, even if you have no experience. Don’t take VC money for more than %10 of your equity in total. Better off, right out of school, founding a company and failing than working for a startup, especially if they take VC.

It’s lopsided against the founders too. They might walk away with big checks but the risk is too high.

This is the problem with the SV model. VCs take way too much off the table, founders and employees are not adequately compensated.

This is partly YCs fault because they basically groom startups and usher them into the maw of VCs while glorifying the exploitative VC model. But that model makes YC partners rich st startups expense.

Founders and employees in the SV model sell themselves way short. This is also why so many startups are BS non-innovative companies— they are chasing funding rather than the future.

Better model: - slicing pie with no bonus for money contributions- this rewards people fairly. - crowd funding, consultancy funding, boot strapping, angel money with no liquidation preferences, and no VC termsheet BS.

Having founded and worked for startups for 30 years, I won’t ever take a meeting with a VC again. I have not met any good ones (and people who say theirs is great are generally just kissing ass to keep money flowing.)

Worse- the number one cause of failures of startups in my experience is bad strategic decisions forced on them by VCs. The number two cause is conflict among the founders, and the number one cause of that conflict is VCs trying to force a bad decision in the company (and one of the founders realizing it.)

Re: Ask HN: Pros and cons of working at a startup in 2018?

#636

Post by egl2019 » Tue, Jun 12, 2018, 4:00 AM UTC

avip wrote: post #205

thetrb wrote: post #176

Earlier quoted context omitted.

What also comes into the picture here is the extremely high cost of living in the Bay Area. Even startups have to offer $200k in non-"maybe" compensation to make sure people can afford living here. Even a relatively small size startup with 50 people now already has $10 million in salary costs per year (not even counting taxes, benefits, etc.). So overall the balance is tilted very much in favor of the big companies t…

Which raises the ancient Quan - why are startups so reluctant, as a species, to establish remote teams? How come VCs are even allowing their investees to pay bubbly rents and wages?

Go read Ronald Coase's "The nature of the firm". And if your work _can_ be structured to minimize the transaction costs, you might as well go to a low-wage country rather than mess with a remote, medium-wage team. I worked with one company that had all of their engineering team in Pakistan. The SV-based VP engineering never saw his team face-to-face. They had a huge cost advantage.

Re: Ask HN: Pros and cons of working at a startup in 2018?

#637

Post by inimino » Tue, Jun 12, 2018, 4:02 AM UTC

tlb wrote: post #533

inimino wrote: post #345

Earlier quoted context omitted.

> "In terms of market rate salary, the startup will never match FAANG." > "if enough people were educated on how much a bad deal being an early employee was, we could tip the scale a bit." Yes. The reason why startup compensation is much lower are because of perception (people aren't rational) and only a shift in perception will shift the balance. The reason why equity is not the solution is that the default outcome…

You're assuming that VCs can evaluate the prospects of a company better than potential employees. The reverse is often true, especially for startups where the main risks are technical.

The main risks are never technical, except in hindsight.

Re: Ask HN: Pros and cons of working at a startup in 2018?

#638

Post by archagon » Tue, Jun 12, 2018, 4:04 AM UTC

john_moscow wrote: post #92

nieksand wrote: post #2

Just a few cons.... The big players have drastically pushed up developer comp. The "maybe" money that might come from a best-case startup exit isn't holding up well against the RSUs of the big players. I have friends pushing total comp north of 400K / year at the usual suspect companies. Over a five-year-span-till-liquidity your "maybe" money is competing against a near-guaranteed $2M in comp. Equity grants for early…

I think the open secret is that in 2018 most people who go work for startups are those who simply couldn't get a better offer from one of the big players.

Seems like a sad and shitty way to think about other people.

Re: Ask HN: Pros and cons of working at a startup in 2018?

#639

Post by docker_up » Tue, Jun 12, 2018, 4:07 AM UTC

mkirklions wrote: post #67

swimorsinka wrote: post #12

Earlier quoted context omitted.

+1 to this. 10 years ago you couldn't make 400K at Google, Facebook, Microsoft, etc. Now you can. Startups made a lot more sense when your opportunity cost was 50-150K per year.

I wonder how sustainable this is. Its 400k while their stock price is crazy high. But If we really are in a tech bubble, that money is back to the typically 80-120k of most tech jobs.

Facebook and Google and others make their money globally. They don't actually make a lot of money from Silicon Valley that's just where their workers are. I can't think of a more diversified, protected stream of income than one of the FANGs right now, even if the US has a recession, there are still countries around the world that will be doing better.

Re: Ask HN: Pros and cons of working at a startup in 2018?

#640

Post by alfredallan1 » Tue, Jun 12, 2018, 4:08 AM UTC

acconrad wrote: post #568

narag wrote: post #473

Earlier quoted context omitted.

As the startup gets traction and more money from VCs, wouldn't it be wise to give raises in cash to early employees?

Most companies don't give 50% raises when you finally raise money (which is to say, most companies won't simply bring you up to market if you came in super early).

No, but if you came in super early, wouldn’t you have (negotiated at the start) more equity anyways? A super early employee with decent equity ought to be treated as a late stage founder - so if the founders don’t take 50% raises, neither should the super early employee with decent equity. It would of course be silly for someone super early to not negotiate significantly more equity than the usual couple of basis points (0.0x % of the company)