Working for a startup makes less sense, unless you are into the mission • Hacker News Board

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

#131

Post by aggronn » Tue, Mar 26, 2019, 7:08 PM UTC

jacobn wrote: post #45

Analemma_ wrote: post #27

Earlier quoted context omitted.

> “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 wo…

> "You should be able to pay market, and equity is about alignment not risk compensation."

I think the parent didn't see those as connected in my post. To clarify, in my OP, I meant it how you read it: After a Series A, you should be pretty close to market salary, and as a result, equity is about alignment not risk.

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

#132

Post by mi100hael » Tue, Mar 26, 2019, 7:14 PM UTC

eanzenberg wrote: post #75

throwaway93289 wrote: post #40

Earlier quoted context omitted.

> 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. Employee #1 of a startup that sold for 9 figures chiming in. I loved the people I worked with (until we got to around 70+ and bureaucracy/meetings grew)…

Not sure how to reconcile the fact that a) you had golden handcuffs because of the exercise tax and b) the amount u got was embarrassingly low. Was your strike price too large or something? Obviously you made a lot of money if you couldn't afford the taxes up front.

Typically exercising options gets taxed as regular income on the difference between option strike price & fair market value.

If OP had something like $300k of options, that'd be about a $100k tax bill assuming the strike price was appropriately low. Not a very big payout on a 9-figure exit, but also not pocket change for the taxes.

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

#133

Post by finnh » Tue, Mar 26, 2019, 7:16 PM UTC

everdev wrote: post #79

acconrad wrote: post #21

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…

> 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. This is such an important point for people to know when they're joining startups. You're basically investing in the startup. If you're going to be an investor it's good to know what your alternative investments are. If you put $50k in the sto…

8% return on average is abnormally high.

But, on the other hand - the chance of retaining even 1% of a startup that exits for >50M is very small. By the time of an exit, almost no engineers will have anywhere near that equity.

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

#134

Post by toomuchtodo » Tue, Mar 26, 2019, 7:17 PM UTC

crazygringo wrote: post #102

cdoxsey wrote: post #77

Working for a startup absolutely makes sense. The unstated assumption here is that you have a pile of offers from Amazon, Google, Microsoft, etc along with some from startups and you have to make a decision about which to go with. I suppose my experience might be unusual, but I don't think that's typical. You've got an offer on the table, and your choice is to go with it, or reject it and hope you're given an offer b…

Likewise, there's nothing preventing you from taking an offer at a startup, continuing to interview and taking a job at a big company whenever, even if it's only 2 or 3 months later. I mean, try not to make a habit of it, and give the first place a chance to fully match the salary/RSU's. But I've seen it happen before, and while the first startup won't be happy with you, it's not going to have any long-term consequen…

Good advice. Always Be Interviewing. The business is going to be constantly interviewing new talent, you do a disservice to yourself to not be doing the same of other companies.

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

#135

Post by xondono » Tue, Mar 26, 2019, 7:17 PM UTC

zapita wrote: post #42

acconrad wrote: post #21

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…

There is still a financial aspect though: that rapid increase in responsibility and experience most probably translated to higher income at your next jobs. And there is a compounding effect each time you change jobs, so the earlier you were in your career when you worked at a startup, the more you gain from it financially over the course of your career. I think we have selection bias on Hacker News because many of th…

This.

I do hardware (sch/pcb) design in spain, I’m in a lead position in a small company.

When I look at what I’ve built, I have experience with technologies that most of my college mates are still mystified with (e.g. DDR4 or x64 architecture).

Most electronics in europe are industrial/power electronics, and most engineers spend their days doing what amounts to paperwork. In contrast I’ve had to ship new designs on a biweekly basis to keep things afloat, I’ve had to set up databases to keep track of our parts (something most hardware engineers don’t even understand), I’ve had to write reliable python scripts since our build process depended on it... the list goes on.

From my experience interacting with US engineers, you don’t even realize how little some “Engineers” in the old continent actually know.

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

#136

Post by ankit219 » Tue, Mar 26, 2019, 7:22 PM UTC

dahfizz wrote: post #113

ankit219 wrote: post #49

Earlier quoted context omitted.

Assuming he is from India, there might not be a translation to a high income job. Salaries in India frequently follow a %age increase in the last role, regardless of the position they are hiring for. There are some exceptions, like the global cos which would pay according to job, and some startups which would have salary bands, but mostly, its about how much can we increase from the last role.

> Assuming he is from India, That's kind of a weird assumption to make.

Based on this.

> However, to me, it’s dubious how many startup successes, especially in India, have been great for, say, 20th to 50th engineer at those companies. Swiggys, Olas and Paytms of the country are infamous for not giving good (or any, these days) equity to engineers.

I wasnt sure, hence stated the assumption. Did not want it to come across as a prejudice. Apologies if it did.

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

#137

Post by rubicon33 » Tue, Mar 26, 2019, 7:22 PM UTC

cik wrote: post #72

crazygringo wrote: post #17

Earlier quoted context omitted.

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?

This number makes complete sense. I was a 'key employee' once upon a time - in a startup that had just raised f&f, and I received a FULL 2% (unheard of for Canada). Fast forward through the (usual) reality of 6 rounds of dilution, and my 2% was worth less than 0.02%. If the startup went from a $2M valuation to $200M (as it did) then my take would have been $40K. Do with that what you will.

Something I am always curious about is, was your company / CEO open and honest with you about how your shares were doing? If you worked somewhere for 5 years, it could be easy to think you're safe but meanwhile the CEO is diluting your equity to fractions of what it originally was? Don't they have to report that to employees?

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

#138

Post by kelnos » Tue, Mar 26, 2019, 7:22 PM UTC

lambdasquirrel wrote: post #26

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…

> So to "make it," you effectively have to grow into a BigCo employee anyway.

This is an excellent point. I know quite a few people who joined my company before I did (~50 people when I joined), stayed for a couple years, but didn't have the temperament to grow into the process, politics, and red tape that inevitably started accumulating, and left. Some of them didn't have the resources (or foresight) at the time to exercise their options, and got nothing, even though they put in a couple years when it was very risky to work there. I did stick around for the long haul, and it's paid out very well, but it still makes me a little sad to think of some of the earlier contributors who laid the foundation, but IMO weren't compensated enough for it.

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

#139

Post by badatshipping » Tue, Mar 26, 2019, 7:24 PM UTC

Work for a good startup. Having job hopped a half dozen times in the Bay Area (to play the salary game) my experience has been that most startups are not doing anything new, have no sense of innovation, care more about quickly shitting out a crappy product than ever following up on the “iterate to something good” part, and are for the most part run by either clueless business types, or by programmers who think programming is just a tool, it’s impossible to be 10x better than average, etc. Craftsmanship and excellence are rare.

Go work for a company that’s actually going to be worth lots of money someday. I like the quote about how burnout comes not from working too hard but from losing too much over and over.

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

#140

Post by JesseAldridge » Tue, Mar 26, 2019, 7:25 PM UTC

The problem is there is very, very little equity given to early employees. I went to one of YC's "work at a startup" events and Sam Altman himself got on stage and called out basically every company there for this very issue (assuming I interpreted him correctly).

I looked into joining several startups as employee #1, both at this event, on AngelList, and by talking to random people who cold emailed me -- and it seems like an offer of 1% equity would be considered generous. I thought that seemed totally crazy and when I asked founders why they didn't offer more, they always said the same thing: "We have one slice for the founders, one slice for the investors, and one slice for every employee we are going to hire going forward, so we can't offer more than 1%."

If you're friends with the founders and they know you have the skills, and they trust you to work hard, you could get something like 5-10% as employee #1. That's really the only sort of deal you should consider. But if you're just some random dude with a decent resume, you're way better off taking a more traditional job at an established company where your compensation is relatively predictable.