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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?

#721

Post by jessehu »

saryant wrote: post #692
tayo42 wrote: post #628

Earlier quoted context omitted.

how did you get that much? Hired as senior with a lot of rsu? is it mostly rsu after the jump the last few weeks? If I got to senior I wouldn't be making that much based off what Im being told about comp increases. I must have gotten a shit deal when I joined lol

I worked here during the years when the stock was in the toilet and managed to get some retention grants that have turned into a tidy sum. Plus I joined as a SWE1 so there are two promos in there.

After your startup and Google experience, you were hired as an SWE1? Also, curious if the experience of the startup or subsequent integration was perhaps more valuable than the opportunity cost.

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

#722

Post by kentonv »

dunpeal wrote: post #717
kentonv wrote: post #710

Earlier quoted context omitted.

> 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 equ…

> 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. See my [response to inimino]( https://news.ycombinator.com/item?id=17291045 ). It's absolutely not the case that if I have $100m worth of stock according to some valuation, I can just go out and sell any amount of that for what you'd expect based on the valuat…

> See my [response to inimino](https://news.ycombinator.com/item?id=17291045).

Yes I responded there.

> That's way below market.

I agree the salary looks lame but none of this conversation is about companies at that stage.

Equity packages in percentage terms are obviously going to be much smaller for later-stage companies, since there is much less risk baked into them. 0.01% of a company valued at $200m is equivalent to 1% of a company valued at $2m.

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

#723

Post by dunpeal »

kentonv wrote: post #716
dunpeal wrote: post #705

Earlier quoted context omitted.

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 $…

> Suppose my startup is current worth $100m. Then you're way beyond the stage any of this conversation is about... But let's say you said a smaller number. > Well, no. I can definitely offer them that 0.5% since I control the equity, ... no you can't. You can grant equity out of the option pool, which you defined in collaboration with your investors. If you want to grow the pool you're going to have to talk to them f…

> You can grant equity out of the option pool, which you defined in collaboration with your investors.

Obviously I'm simplifying here, but overall yes, it's far easier for a startup to give equity than cash, for the reasons I mentioned.

Especially if I'm an early stage startup, maybe after a small seed round, I will surely have enough options in the pool, or investors lenient enough to let me issue these extra stock in the unlikely case I'll need them.

> I have raised money from VCs.

So you know how unrealistic it is to raise VC rounds just to support salaries for a handful of new engineering hires.

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

#724

Post by angersock »

manigandham wrote: post #418
sidlls wrote: post #379

Earlier quoted context omitted.

"while employees can always quit and go work somewhere elsewhere." This is an exaggeration at best. For the vast majority of employees there is a lead time to begin employment at most places. Typically this will be a minimum of one month (interviews + decision + org readiness to onboard). By the way, it applies equally to founders as you describe (anecdotally I've seen a number of founders get regular jobs while they…

How is that an exaggeration? I talked about the ability for them to go to another company. Founders cannot just leave and have a much greater lead time if they lose it all. What social connections do you think founders get that employees somehow dont? And what is this worth? So founding a company and losing everything is fine because you make some friends? If you talk to any entrepreneurs, you'll quickly realize you'…

It's only a lonely road because of decisions they made themselves.

Maybe if they stopped treating themselves like some anointed class and shared the equity with their employees instead of viewing them like lower-class citizens it wouldn't be so hard to find comrades.

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

#725

Post by goatherders »

So much good input here, and as a person outside of SV I am sad for those that chase the brass ring without realizing it is on someone else's finger. I agree that if you are hiring early employees at below market rate because you cant pay market rate then you shouldn't be hiring employees. But that's worthless input because there will always be a person willing to take the low paying job thinking it will pay off. For shame and oh well.

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

#726

Post by aiisahik »

I was a lawyer for a big SV law firm for 2.5 years doing company options, VC funding rounds and M&A. Then I was an early employee and engineer for a startup 5 years. I've seen this from multiple angles and the folks with a lot of startup experience will tell you that it's not worth the money - you're doing it mostly for non-monetary rewards. Engineers deciding between FAANG or a startup should not kid themselves with founder hype.

What can YC do to help? - Provide transparency in the form of data, particularly into outcomes. For a typical YC graduating startup, what % of them have an exit within 4 or 6 years? What is the distribution of outcomes for a 1% common stock holder? Only then can engineers properly value their options. Founders will typically multiply the equity by the last funding valuation or $1 billion and claim that is how the employee's options should be valued. Only someone like YC has the access to do this type of analysis. - There's a lot of incompetence and bad behavior by founders that investors and outside board members don't see. If you really want to understand what is going on, always have an inside channel. You should also provide these inside channels to all interested board members and investors. Not everyone is willing to do talk but someone usually is and ex-employees are usually willing to. You don't have to always do something about it but failing to talk to employees and only relying on founders to tell you what's going on is just sticking your heads in the sand. - Options are broken. No employee should be required to fork out $50k to buy something that (1) they already worked very hard for, (2) potentially has no value, (3) will completely forfeit if they can't come up with the cash in a month, and (4) may even have to pay additional taxes to acquire. There are a few ways YC can help: (a) Establish a standard among new YC companies docs, stating that employees should have up to 12 months after termination to purchase the shares. Better yet, establish a standard such that employees should be allowed to keep vested options and not exercise until a liquidity event, no matter when that might be. If you guys set that standard, then maybe other companies may follow suit. (b) Advocate a change to tax laws so that exercising options does not have such negative AMT tax consequences, except when there is a liquidity event.

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

#727

Post by avip »

egl2019 wrote: post #636
avip wrote: post #205

Earlier quoted context omitted.

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.

It reads as if you equate the term "remote" with "remote (US)". The term "remote team" most obviously implies your pool of developers includes the entire earth (bar some language/timezone difficulties).

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

#728

Post by goatherders »

kentonv wrote: post #690
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…

> 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…

"You dont get something just because you need it"

Huge applause.

"You need to raise more money"

Crowd falls silent.

How about trying to sell something and generate revenue. I long ago stopped subscribing to Startup Porn but I remain baffled as to how seemingly smart people are so intoxicated by it that the notion of building an actual business is an afterthought.

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

#729

Post by angersock »

inimino wrote: post #682
_m96l wrote: post #380

Earlier quoted context omitted.

> It's a job. Early employees working 12-14 hour days are not doing themselves or the startup any favors. I worked in early stage startups. There is absolutely a strong sense of a small, intimate team working hard for a common goal. Nobody is claiming or treating it as "a job". When the founders were asking the whole team to regularly work entire weekends before launch, nobody said it was "a job". > If the market wer…

> The reality is that startups need people to work harder, sacrifice more of their lives There's probably two areas where we might disagree here. One is that "sacrificing more of their lives" leads to better outcomes. Reasonable people can disagree on whether, or under what circumstances, 80-hour weeks and weekends at the office actually do help the company. When you are a founder, it is hard not to work all day ever…

For early engineers, dealing with the beginnings of software and corporate systems and seeing how they can shape them up, the temptation to work long hours is at least as bad.

Don't act like founders are unique in this affliction.

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

#730

Post by goatherders »

dunpeal wrote: post #705
inimino wrote: post #694

Earlier quoted context omitted.

> 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 $…

If its worth 100 million it isnt a startup.
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