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Working for a startup makes less sense, unless you are into the mission

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Re: Working for a startup makes less sense, unless you are into the mission

#21

Post by acconrad »

As someone who was a 1st engineer of a startup that successfully exited I had what would be considered a good payout. When looking over the course of my career, however, it simply made up for the reduced salary I took for the years I worked there. It was a net-neutral outcome to be the 1st engineer at a startup that actually exited for a substantial (8-figure deal) outcome which already puts me in the minority.

So no, its not worth it and hasn't been worth it for some time (I was there nearly a decade ago)...

...financially.

However, what was worth it was the experience I gained. Being the 1st non-founder engineer means you own a whole stack or specialty and you have no one to lean on. You have to figure everything out. Doing so propelled my career immeasurably. Without that experience I'd still likely be a very mediocre engineer. As much as it wasn't a good financial decision it was a great decision in terms of upping my skills, becoming a harder worker, and building a network with VCs and the local engineering community.

I had already worked at the Big 4 prior to switching and I didn't thrive in that environment. The startup ecosystem provided me the opportunity to work hard, network, build skills, and give me the tools & learnings on how to start my own business.

Not everything is about money.

Re: Working for a startup makes less sense, unless you are into the mission

#22

Post by pbrb »

CryoLogic wrote: post #4

The comp packages at big tech companies are becoming insane. In Seattle it's not unreasonable for a senior software engineer with some good connections to be making 200-250k. With that comes life insurance, health insurance for your whole family, disability insurance, etc. That's more in cash AND benefits than a doctor.

I keep hearing they can get to close to double that, too.

Re: Working for a startup makes less sense, unless you are into the mission

#23

Post by halfway »

Aside from enthusiasm for the mission, or the chance to strike it rich, there is another important consideration: self-actualization. That is, how much do you need it?

In a way, self-actualization is like having your own personal mission. If things like impact, influence, autonomy, innovation, speed, and big challenges are important to you, than you'll probably be miserable at a well-established company, regardless of the compensation, WLB, T-shirts, pep rallies, etc.

Re: Working for a startup makes less sense, unless you are into the mission

#24

Post by seem_2211 »

CryoLogic wrote: post #4

The comp packages at big tech companies are becoming insane. In Seattle it's not unreasonable for a senior software engineer with some good connections to be making 200-250k. With that comes life insurance, health insurance for your whole family, disability insurance, etc. That's more in cash AND benefits than a doctor.

I think the question needs to be asked: will this last for the next 25-30 years? I really hope so, but unlike being a doctor, it's a lot more uncertain than we'd like it to be.

Re: Working for a startup makes less sense, unless you are into the mission

#25

Post by abhinai »

One point OP may have missed is learning opportunity. The opportunity to learn in a big company, any big company is simply not the same as that in a startup. You are always one of 50 people working on a feature that has already been spec'd out in great detail by some one else. Early in your career investing in learning and becoming a better engineer makes a lot of sense.

Re: Working for a startup makes less sense, unless you are into the mission

#26

Post by lambdasquirrel »

aggronn wrote: post #14

This is knitpicky, because OP's point may still stand, but as a founder, this is what comes to mind after reading this: When I hear "work for a startup", I don't assume that means "be the 10th engineer at a company". You might make some money at that point, but you're not going to get financial independence unless there's a billion dollar IPO. By BigCo standards, 10 engineers is a tiny startup. By venture/founder sta…

Okay, and as someone who has hitherto largely worked at startups (2/3rd of my career), let me tell you the counterpoint.

There is not a lot of risk from your perspective, but there is a large amount of risk for us.

At a startup, you push all you can towards steering the ship in the right technical direction. For example, unlike at a BigCo, you are likely to be that person who will write the technical debt that later-joining younger engineers will call you stupid for, but you did it while producting your startup to scale.

But you only get the pay-out if you actually manage to last until the exit. If you leave before then, because of politics or some failed product push or what-have-you, then you will have to exercise your options, which puts you in a bind in terms of financial risk. If you do exercise, you will be subject to dilution. If you'd stayed at the company, it's often the case that they continue to grant options to employees they want to keep.

So to "make it," you effectively have to grow into a BigCo employee anyway. At that point, what is really the point to working at a startup? Especially since your pay will be like half that of a BigCo? Especially since it's A LOT more stressful? Especially since you actually need your critical thinking skills to compensate for your founding team's shortcomings?

Now at a BigCo, you drink the kool-aid, you jump through the hoops (working at BigCo is more about jumping through hoops because that's how they "scale" things), but if you do all that, you're more or less set. You may have to "work" hard, but your life is on autopilot.

I've had this conversation with lots of folks who've been there, and I myself have helped build one company from the pre-10 engineers phase (more like 3 engineers phase) to something that had a real shot. To be quite frank, the financial incentives are certainly not there, and for most companies I see, I'm no longer sure about the growth/learning incentives either. It's just a bad deal, and you should care because by and large, the smart engineers who can make your boat float aren't going to work for a startup.

Re: Working for a startup makes less sense, unless you are into the mission

#27

Post by Analemma_ »

aggronn wrote: post #14

This is knitpicky, because OP's point may still stand, but as a founder, this is what comes to mind after reading this: When I hear "work for a startup", I don't assume that means "be the 10th engineer at a company". You might make some money at that point, but you're not going to get financial independence unless there's a billion dollar IPO. By BigCo standards, 10 engineers is a tiny startup. By venture/founder sta…

> “equity is about alignment, not risk compensation”

This seems like moving the goalposts to me, I have always heard the opposite: that the tradeoff of working at a startup for a reduced salary is supposed to be that you get equity to compensate. If the equity share is tiny by the time you get to engineer #10, fine, but engineer #10 should get near-market salary to compensate. Otherwise there’s no reason not to go work for BigCorp if you don’t buy the starry-eyed promises about innovation and unique experience.

Re: Working for a startup makes less sense, unless you are into the mission

#28

Post by sealthedeal »

I think the idea of "getting rich" is your first mistake. That seems like a terrible reason to do anything.

When I left Citi, I went to a startup so I could work at a small company and get away from politics. Ya the paycheck was ok, and stock was fine, but that company went under and I moved onto the next. The idea of "getting rich" was never in my head.

Also, when you start a company, if your goal is to "get rich" than you have already once again failed. You should have a completely separate sub set of goals that are pushing you forward. I.e. lifestyle, financial independence, changing an industry, doing what you love, etc.

Re: Working for a startup makes less sense, unless you are into the mission

#29

Post by kolbe »

crazygringo wrote: post #17
rubicon33 wrote: post #12

> That startup sold for 200 million dollars and, as the 10th engineer, I made ... 15000 dollars from that exit. Why so low?

Yeah, that's 0.0075%. Versus a ballpark of a 10th engineer getting, say, 0.5%. Even a few rounds of dilution can't explain a drop of two orders of magnitude. I'm thinking the author either didn't pay attention or care or trusted too much in the initial offer, didn't stay long enough to vest most of it, didn't buy most of their options in the end, or all of the above?

If the Lyft founders are entering the IPO with about 3.5% each, then I don't think it's crazy for 10th engineers these days to have less than a basis point.
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