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

jatins.gitlab.io

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

#161

Post by askafriend »

LargeWu wrote: post #156
eanzenberg wrote: post #88

Earlier quoted context omitted.

What was your equity grant by %?

They were ISO's, I only knew how many shares I was granted, but by the time of the exit, following several rounds of funding, it ended up being around 0.02%.

This is the context everyone needs to share when telling their story of startup compensation.

It very much looks like you got screwed on equity even before dilution.

An early and somewhat senior employee should be getting anywhere from 0.5% to 1%. If the company is high quality, raised funding on standard terms and is actually successful, you'll still get diluted but not down to 0.02%.

Your comp sounds off by an order of magnitude based on what I can infer.

The fact that you didn't know how many total shares were outstanding at the time you were granted your ISO options is more proof that you likely got screwed.

Not all startups are like this.

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

#162

Post by sanderjd »

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…

FWIW: I kind of feel the opposite. Or at least I think the experience is a real trade-off. The skills I gained as a first employee at a startup were more along the lines of business and marketing. The engineering skills required were pretty trivial: manage a small Heroku setup, write early backend and frontend app boilerplate, spin up an initial db schema, integrate CSS from a contract designer, work on email templates, set up analytics, etc. Most startups never get big enough to start hitting the really tough challenges. On the other side of the coin, when I joined a big four company, I was immediately dropped onto a team with the challenges that come with huge scale and have grown more from that experience. I may have a skewed perspective because I already learned most of the skills I exercised as a first employee by being an early member of a team at an established small company, but I think even so the point stands; I was able to grow similarly with a bit more pay and a lot more stability without being at a startup. You're right about meeting investors though, but I'd argue that having a network of investors is not (or at least should not be) a requirement to be a software professional.

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

#163

Post by sidlls »

luminati wrote: post #141

Honest question: Why does every blog post that talks about working with a startup, always pick Facebook and Google for the comparison? Both these companies are extreme outliers (probably in the history of business!). Their outsized pay comes from their outsized profits, which comes from selling your data. I find it very ironic, that these very same people who diss startups love dissing Google and FB as being evil, bu…

Those places (IBM, Oracle, etc.) also tend to pay much better than startups, have better equity packages, and more room to learn things. Just look at angel.co. It's common to see everything from "no salary" to "$90k", plus equity, in the listings for Bay Area startups. It's much more rare to see salaries above about $150k. These days working for a startup doesn't make any sense at all, for any reason, unless you're literally a founder (with double-digit equity).

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

#164

Post by askafriend »

kolbe wrote: post #29
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?

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.

That doesn't tell the whole story. There's a dual class share structure and even with the 7.5%, they retain majority control of the company.

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

#165

Post by jonathankoren »

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…

The problem with this thinking is that you’re assuming that the founders are taking all the risk. They’re not.

Series As implode all the time, as do Bs. In the end the equity is worth nothing. If you’re lucky, you might walk away with it being almost a wash compared to taking a job at an established public company.

I think of the startup I was recently pitched. Two non-technical founders said they raised some money, and now needed to hire people to actually do the actual thing they promised they could do. These founders, brought nothing to the table beyond an idea, and not even an original idea, since I actually know three different startups already in that exact space that have an actual product and customers.

I laughed at him. Why should anyone join him? I’m taking as much risk as him, providing more value, and then get a tiny fraction of the equity? It’s basically a scam, because they’re not providing anything of value, and yet they’re the only ones that are going to walk away with anything after the inevitable aquihire.

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

#166

Post by autotune »

sanderjd wrote: post #162
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…

FWIW: I kind of feel the opposite. Or at least I think the experience is a real trade-off. The skills I gained as a first employee at a startup were more along the lines of business and marketing. The engineering skills required were pretty trivial: manage a small Heroku setup, write early backend and frontend app boilerplate, spin up an initial db schema, integrate CSS from a contract designer, work on email templat…

The more interesting skills someone learns when implementing Heroku is when they learn it doesn't scale and the challenges in migrating off of it.

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

#167

Post by sys_64738 »

Start ups are a lottery. A few hit it big while most don't. Even then, the owners make the real gains while employees are typically rounding errors.

The best advice I have for startups is to try it early in your career to see if it's for you. The number of older folks I've seen who jumped to a startup and lived to regret it is almost 100%

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

#168

Post by opportune »

If the OP liked startups so much I think they should have just tried to be a founder. It doesn't take a lot of math to realize non-founders usually get a pretty bad deal. Unless someone is particularly enamored with startups or can't get a job at a well-paying bigco (which there's no shame in, but let's call a spade a spade) it's pretty clear your 10% chance at realizing But since bigcos have so greatly outstripped startups in terms of the compensation packages they can offer, that's why I think all but the most technically challenging startups should GTFO of the bay area. Your compensation package probably won't be able to compete so you probably won't end up with very good talent, on average. So just go somewhere in the interior of the country and pay above-market there for engineers who maybe could have got hired by bigcos but wanted to stay in their area.

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

#169

Post by sokoloff »

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…

For early stage startups, consider an 83(b) election for better tax treatment on exit.

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

#170

Post by jorblumesea »

luminati wrote: post #141

Honest question: Why does every blog post that talks about working with a startup, always pick Facebook and Google for the comparison? Both these companies are extreme outliers (probably in the history of business!). Their outsized pay comes from their outsized profits, which comes from selling your data. I find it very ironic, that these very same people who diss startups love dissing Google and FB as being evil, bu…

Even "B tier" tech companies such as finance firms, travel firms (booking.com, expedia) pay significantly better. Their stock is also worth something and will continue to be worth something.
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