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A conversation with Shel Kaphan, Amazon’s first employee (2016)

blog.ycombinator.com

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Re: A conversation with Shel Kaphan, Amazon’s first employee (2016)

#21

Post by grogenaut »

eastdakota wrote: post #15
raldi wrote: post #13

I'm confused about the part where Bezos was considering Washington and Nevada because he was looking for a state with no sales tax. As far as I can google, both of those states have had a substantial sales tax for many decades — Washington's is one of the highest in the country! What am I missing?

Was about where consumer base/population was. In Amazon’s early years, you only paid taxes in state where you were located. If they’d setup shop in CA then they’d pay sales tax on all shipments to CA (~20% of early sales). By setting up outside CA/NY (their two earliest markets) they’d have a competitive pricing advantage over any competitors set up in either. Arguably, this regulatory “loophole” gave Amazon a huge h…

Don't forget being able to poach from Microsoft

Re: A conversation with Shel Kaphan, Amazon’s first employee (2016)

#22

Post by switch11 »

vinhboy wrote: post #14

What kind of person flies across the country to meet complete strangers, then ask those strangers to move with them to another state to start a business in a completely new frontier. What's like the percentage of people who takes on that kind of wild Hail Mary pass and win it all? Also I am curious, as single-track minded Software Engineers, how do we protect ourselves from the super smart and super driven Bezos of t…

you can't

software engineers are not very socially adept and can't read people who are predatory

it's even worse with 'save the world' type software engineers

* the only thing you can do is make sure you get some stock

even then most predatory business side founders will make adjustments (the way Zuckerberg did) to take most of the stock for themselves

also percentage of people who win taking that kind of Wild Hail MAry pass

every startup is a wild Hail Mary pass

So you will get some really crazy 'starting scenarios'

Talk to anyone who started a successful company. There were always moments where chances of success went to 0.0001%

and apart from the founder/founders/ a few employees who drank the Kool Aid, no one else thought there was any chance left

Re: A conversation with Shel Kaphan, Amazon’s first employee (2016)

#23

Post by deanCommie »

juskrey wrote: post #11
RcouF1uZ4gsC wrote: post #9

Earlier quoted context omitted.

It seems that being employee #1 is a sucker of a deal with a lot of the same downsides as being a founder without the huge upside of being a founder.

Employee does not take any risk. He says in the interview he was working with number of failing startups before. They failed, but they've paid his fixed project or hourly salary nevertheless. Moreover, many of those people are willing to hire someone good who is available for temporary jobs, and hence paying very competitive rates, at the same time surviving on canned tuna themselves. I've been #1 techie in many fail…

That's a very absolutist view of risk.

A founder may only be investing an amount in the venture that does not affect their own quality of life. They could have other wealth or means, and losing the entire investment would not be catastrophic. They might have a personal runway of several years before they have to give up and get a day job.

Meanwhile, the early employee at a startup is far from without risk themselves. They are almost certainly not well paid (until the last decade of multi-Billion-dollar Unicorns, startups were NEVER known to pay well). They are also likely not making meaningful savings or even eating into them in the hope of hitting it big. They are almost certainly sacrificing a substantial part of their personal life just as the founder is, risking personal relationships and health.

Re: A conversation with Shel Kaphan, Amazon’s first employee (2016)

#24

Post by hobofan »

juskrey wrote: post #11
RcouF1uZ4gsC wrote: post #9

Earlier quoted context omitted.

It seems that being employee #1 is a sucker of a deal with a lot of the same downsides as being a founder without the huge upside of being a founder.

Employee does not take any risk. He says in the interview he was working with number of failing startups before. They failed, but they've paid his fixed project or hourly salary nevertheless. Moreover, many of those people are willing to hire someone good who is available for temporary jobs, and hence paying very competitive rates, at the same time surviving on canned tuna themselves. I've been #1 techie in many fail…

Founders often also take on relatively little risk (or all the same risk of an early employee).

The amount of money they put at stake can be very little, either living off Ramen which is cheap, or coming from a previous venture, then it's negligible. You should generally follow the same principle as investing in stocks: "Never invest money that you can't afford to lose."

A lot of people also see a risk to reputation due to failed startups, but for the first 1-2 it doesn't really matter, and as long as you raise _some_ early round and have good explanations/takaways for why it failed, and you didn't pull anything shady, it will only increase your reputation.

Re: A conversation with Shel Kaphan, Amazon’s first employee (2016)

#25

Post by vasco »

switch11 wrote: post #22
vinhboy wrote: post #14

What kind of person flies across the country to meet complete strangers, then ask those strangers to move with them to another state to start a business in a completely new frontier. What's like the percentage of people who takes on that kind of wild Hail Mary pass and win it all? Also I am curious, as single-track minded Software Engineers, how do we protect ourselves from the super smart and super driven Bezos of t…

you can't software engineers are not very socially adept and can't read people who are predatory it's even worse with 'save the world' type software engineers * the only thing you can do is make sure you get some stock even then most predatory business side founders will make adjustments (the way Zuckerberg did) to take most of the stock for themselves also percentage of people who win taking that kind of Wild Hail M…

> software engineers are not very socially adept and can't read people who are predatory

There's no need to project this onto all software engineers, it works for a joke in big bang theory but even there they needed canned laughter.

Re: A conversation with Shel Kaphan, Amazon’s first employee (2016)

#26

Post by juskrey »

hobofan wrote: post #24
juskrey wrote: post #11

Earlier quoted context omitted.

Employee does not take any risk. He says in the interview he was working with number of failing startups before. They failed, but they've paid his fixed project or hourly salary nevertheless. Moreover, many of those people are willing to hire someone good who is available for temporary jobs, and hence paying very competitive rates, at the same time surviving on canned tuna themselves. I've been #1 techie in many fail…

Founders often also take on relatively little risk (or all the same risk of an early employee). The amount of money they put at stake can be very little, either living off Ramen which is cheap, or coming from a previous venture, then it's negligible. You should generally follow the same principle as investing in stocks: "Never invest money that you can't afford to lose." A lot of people also see a risk to reputation…

This is none of the employee's business to assess founder's risk exposure, he/she does not not lend money to them, but takes away from instead.

By taking an employee founder is effectively paying monthly, mind that, very expensive, insurance which provides free hands at any moment when needed. Employee's benefit is immediate, unconditional and guaranteed. The opposite of being an owner of business.

Re: A conversation with Shel Kaphan, Amazon’s first employee (2016)

#27

Post by petemc_ »

headmelted wrote: post #18
guiambros wrote: post #2

For those interested, I just watched the excellent PBS Documentary "Amazon Empire: The Rise and Reign of Jeff Bezos". Available for free [1], and Shel Kaphan is one of the several former and current employees interviewed by the Frontline investigative reporters. [1] https://www.youtube.com/watch?v=RVVfJVj5z8s

Speaking as someone not from the States, do folks over there generally realise how exceptionally good of a resource PBS is? Been watching SpaceTime with Matt O’Dowd with my kids and it’s utterly terrific.

Second this, eons is also amazing.

Re: A conversation with Shel Kaphan, Amazon’s first employee (2016)

#28

Post by hobofan »

juskrey wrote: post #26
hobofan wrote: post #24

Earlier quoted context omitted.

Founders often also take on relatively little risk (or all the same risk of an early employee). The amount of money they put at stake can be very little, either living off Ramen which is cheap, or coming from a previous venture, then it's negligible. You should generally follow the same principle as investing in stocks: "Never invest money that you can't afford to lose." A lot of people also see a risk to reputation…

This is none of the employee's business to assess founder's risk exposure, he/she does not not lend money to them, but takes away from instead. By taking an employee founder is effectively paying monthly, mind that, very expensive, insurance which provides free hands at any moment when needed. Employee's benefit is immediate, unconditional and guaranteed. The opposite of being an owner of business.

> he/she does not not lend money to them, but takes away from instead

The employee takes money from the company, not the founder. Those two are only the same for the pre-seed phase of a startup. It's also unlikely that any people are employed before some investment round has been raised.

Once some investment is raised, the money comes predominantly from the investors and not from the founder. At that point the risk for the founder is mostly gone.

I'm not saying that there is no risk at all for the founders, just that it's concentrated in the pre-seed phase of a startup.

> This is none of the employee's business to assess founder's risk exposure

If you are asking me to join your very-early-stage startup, you can bet your ass that I'm going to probe you on your risk exposure.

Re: A conversation with Shel Kaphan, Amazon’s first employee (2016)

#29

Post by exdsq »

switch11 wrote: post #22
vinhboy wrote: post #14

What kind of person flies across the country to meet complete strangers, then ask those strangers to move with them to another state to start a business in a completely new frontier. What's like the percentage of people who takes on that kind of wild Hail Mary pass and win it all? Also I am curious, as single-track minded Software Engineers, how do we protect ourselves from the super smart and super driven Bezos of t…

you can't software engineers are not very socially adept and can't read people who are predatory it's even worse with 'save the world' type software engineers * the only thing you can do is make sure you get some stock even then most predatory business side founders will make adjustments (the way Zuckerberg did) to take most of the stock for themselves also percentage of people who win taking that kind of Wild Hail M…

Zuckerberg was a developer which kind of breaks this argument...
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