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

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

#701

Post by inimino »

dunpeal wrote: post #365
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…

> If a funded company (series A, say) is offering you equity as a large part of comp, you have to ask yourself why the VCs don't buy back that equity for the cost of paying market rates for talent. Because the company wants to align your incentives with its own success, of course. That's the original reason why equity was offered to employees in SV, back in the good old chip-making days. According to your argument, e…

> startups need harder, more dedicated workers than the average company in the market.

I agree. So hire harder and more dedicated people. This is not impossible.

The idea that people will work harder for equity than they would for EV-equivalent cash is where we disagree.

If you have 5% of the company, and your direct contribution makes 5% of the difference in whether the company meets its objectives, setting aside whatever external market factors that are totally beyond your control--how motivating is this really? How motivating would it be to a more economically rational actor? Maybe this is the real reason why startup employees tend to skew younger...

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

#702

Post by [deleted] »

tim_sw wrote: post #663
rgossiaux wrote: post #656

Earlier quoted context omitted.

I don't quite understand. On the one hand you're saying that early employees should "demand market comp" and on the other you're saying that equity basically doesn't matter (and if you feel this way, it doesn't really make any sense to be joining a startup anyway). Are you conflating "compensation" with "salary"? "Market comp" for a good engineer with several years of experience in the Bay Area is something like 250k…

250-350k is low for Google and FB. It's more like 400-500k if you are senior, 500-700k if you are staff. This is including RSUs

[deleted]

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

#703

Post by cobookman »

gregcrv wrote: post #696
tim_sw wrote: post #663

Earlier quoted context omitted.

250-350k is low for Google and FB. It's more like 400-500k if you are senior, 500-700k if you are staff. This is including RSUs

How do you explain these numbers? http://www.h1bdata.info/index.php?em=&job=Senior+Software+En...

H1b data doesn't include rsu or bonus. Many are getting 16-17% bonus and ~50-150k/year in rsu.

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

#704

Post by ddebernardy »

spenczar5 wrote: post #347
ddebernardy wrote: post #239

Earlier quoted context omitted.

Your worldview will change when you've dependents. :-)

GP said "I kind of feel that to a first approximation, recommending against being an employee at a start up is the right advice." Are you saying you think startups are better for people with dependents? That's surprising to me, could you elaborate?

No, it was a response to OP writing he had no dependents so doesn't value job/income stability so much. He seems quite lucid about the fact that this might change the moment he'll have a dependents. I was merely confirming it will. :-)

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

#705

Post by dunpeal »

inimino wrote: post #694
dunpeal wrote: post #658

Earlier quoted context omitted.

> If a founder can't afford employees at market rate, they shouldn't be hiring yet. That's a little bit too strict, and as such is not a position founders are likely to accept. Sometimes they need employees before they can pay market rate, and market rate is pretty steep for a senior engineer in the Bay, for example, and most other areas startups are heavily recruiting. It's reasonable to offer generous equity for ea…

> Give them a realistic estimate of the risk they're taking, and the value they can get. Herein lies the problem. Founders are uniquely well-placed to evaluate the risk, and uniquely psychologically motivated to evaluate optimistically. Because of that, founders sell equity dear. If the generous equity offer is reasonable, then would be reasonable to make two offers, one with only cash and one with generous equity, i…

Again, you make it seem very cut and dry. It's not.

Suppose my startup is current worth $100m. According to you, I should be able to sell 0.5% of it for $500k and give that to the employee, or offer them that 0.5% directly, right?

Well, no. I can definitely offer them that 0.5% since I control the equity, but I can't just go to a VC and tell them "hey, here's 0.5% of my shares, now give me their fair value worth of $500k".

Ever been close to a startup raising money from VCs? It simply doesn't work that way. VC investment is a big, complex package deal. They're not just going to accept whatever shares you give them, and pay you. They have their own idea of how much equity they want, how much they're willing to pay for it, how much besides equity they want (control of the company, seats at the board, various forms of preferred stock and other guarantees, etc).

Also, fixed the typo, thanks.

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

#706

Post by dunpeal »

kentonv wrote: post #700
gregcrv wrote: post #696

Earlier quoted context omitted.

How do you explain these numbers? http://www.h1bdata.info/index.php?em=&job=Senior+Software+En...

Those are not Google and not Silicon Valley. Try: http://www.h1bdata.info/index.php?em=Google&job=Staff+Softwa... And keep in mind that base salary (what's reported on that page) is usually about half of total compensation. (Bonus and stock being the other half.) Also this appears to be the H1B database. I'm not sure how H1B salaries compare to the overall average.

> I'm not sure how H1B salaries compare to the overall average.

H1B salaries are typically lower than average. Why do you think companies spend millions lobbying for more H1Bs? To pay them more than average? :-)

Also, keep in mind Google only has to disclose base salaries for these H1Bs. For a staff engineer, most of the total comp would be in bonus pay and especially RSUs. They can easily be making $400k or more through those means.

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

#707

Post by didibus »

manigandham wrote: post #433
ironjunkie wrote: post #370

Earlier quoted context omitted.

That narrative is completely false. Initially there is definitely a bit more work//risk, but don't forget that they also get all the benefits associated to it, even early in the life of the startup: Social//network connection with other entrepreneur that will always give them a fallback job in case the startup fails. They are also seen as brilliant individuals and market themselves so much more then normal employees.

A bit more? You vastly underestimate the effort involved. And who's guaranteeing all these fallback jobs? Other founders just hire failed entrepreneurs so they can stick together? That's a great way to lose money. You must be reading about the 0.01% of founders who get all the attention and the fluffy feel-good startup posts because this is definitely not how it works. And yes, more risk deserves more reward, why is…

> And yes, more risk deserves more reward, why is that even controversial?

I think the argument is that the current reward to an early employee is a joke compared to the risk their taking, given the other job options available to them.

So its not that the founder shouldn't be rewarded fairly for their risk, but that early employees are not. Thus the answer to this thread is just that being an EE isn't worth it.

I think that makes sense, an EE should end up making more money then a non EE for the same effort/time. Otherwise, why would you risk ending up making less in case the startup fails?

So say a startup has 10% chance of success. On failure, the EE loses 200K compared to non EE jobs. That's a 9 in 10 chance of making 200k less, so maybe the 1 in 10 chance should give at least a 9 time payout, where the EE would end up making 1800k in case startup succeeds.

Otherwise, you'd be crazy to accept an EE job, unless you just can't find any other non EE work.

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

#708

Post by grosjona »

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…

I agree. There is a culture that founders are special but everyone else is replaceable which makes it self-fulfilling. If a founder leaves, it's bad and VCs won't invest in the startup - However, if a top engineer leaves, no big deal, they're only an engineer...

For me personally, I have a really bad perception of incubators, venture capitalists and big tech corporations. It's all a zero sum game to increase concentration of wealth in the hands of the few but there is little meritocracy behind it.

In a high traction startup, founders are often the dumbest people in the company but they get treated like they're genius visionaries. I've even heard really smart colleagues/engineers say stuff like "A good CEO needs to be enthusiastic and shouldn't be too smart" - For me this sentence means that we've accepted that the system is not a meritocracy but we've found a way to rationalize it.

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

#709

Post by gaius »

manigandham wrote: post #375
gaius wrote: post #327

Earlier quoted context omitted.

Because founders take at least 100x the risk of an early employee, and 100x the personal risk and commitment. Absolute rubbish. Considering the opportunity cost, lost benefits and so on compared to a BigCo an early stage employee is easily going to be 6-figures in, and probably working 80+ hours a week. All so the founders can toss them a few scraps from the feast. Meaningful equity participation or big-company pay a…

What's rubbish is thinking that people don't have personal responsibility. If someone who can "easily" get 6-figures and the luxurious benefits of a BigCo decide to work for a startup instead, then that's their choice and there's no moral judgement needed.

that's their choice and there's no moral judgement needed

Sure. And when you hear VC backed companies whining that hiring is soooooo hard, now you know why.

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

#710

Post by kentonv »

dunpeal wrote: post #699
kentonv wrote: post #690

Earlier quoted context omitted.

> Sometimes they need employees before they can pay market rate, But you don't get to have something just because you need it. That's not how it works. You need to raise more money, so that you can afford to pay the employees. It's not fair to make the employees act as unofficial investors in your company, and then give them a deal that the real investors wouldn't accept. > giving out 0.01% even to earliest employees…

> It's not fair to make the employees act as unofficial investors in your company, and then give them a deal that the real investors wouldn't accept. Which is why I'm saying they should be offered a deal that investors would accept. Demanding everyone pay market rate is just unrealistic. Never going to happen. I'm proposing a realistic, possible change. > I hope that's an exaggeration and no one actually goes that lo…

> Which is why I'm saying they should be offered a deal that investors would accept.

> Demanding everyone pay market rate is just unrealistic.

But they're the same thing! If investors would accept it, then you could just as easily have the investors buy the equity, and then pay the employee with it.

So if it's totally unrealistic that founders would actually pay market, how could it be realistic that they'd offer equivalent equity?

> First ad I clicked on from Angel List front page:

> https://angel.co/everlane/jobs

> $130k salary and 0.01% equity.

That's not an early-stage startup, that's a company with >200 employees and a valuation in the hundreds of millions.

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