Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

There’s no such thing as “a startup within a big company”

hunterwalk.medium.com

Post reply on HN
Print view View original

181–190 of 326 posts

Re: There’s no such thing as “a startup within a big company”

#181

Post by buzzerbetrayed »

23iofj wrote: post #177
buzzerbetrayed wrote: post #174

Earlier quoted context omitted.

Yeah, I'm wondering the exact same thing. 1. Take a population of 100 people. There is a 50% chance that a random person from that population can create a successful business (obviously 50% is a made up number) 2. All 100 attempt to start a business. 50 succeed, 50 fail. 3. The 50 that failed now have a 25% of succeeding in their future business endeavors. The 50 that succeeded apparently have the same 50% of success…

> There is a 50% chance that a random person from that population can create a successful business... All 100 attempt to start a business. 50 succeed, 50 fail. This is the most glaring wrong assumption that causes your and GP's confusion. 90+% of startups fail. Note: "failure predicts failure but success does not predict success" could still be true even if business failure rates were >= 50%! But the fact that failur…

I know nowhere near 50% of startups succeed (and have heard the 90% failure rate many times). However, I don't think that is relevant to the mathematics of it.

Re: There’s no such thing as “a startup within a big company”

#183

Post by munificent »

somberi wrote: post #83
nojvek wrote: post #77

When I was at PowerBI in Microsoft, all the execs hailed it as Startup within Microsoft. Come work here instead of Uber. I worked like a dog, sometimes till 2am in morning. My manager would routinely ask us to come on weekends. I was naive, I thought we are growing customer base, this is what a startup looks like. The ultimate realization was in a startup you have equity, a decent amount in a good startup. At Microso…

I would like to offer an extended view from the wealth accumulation angle. True, equity builds wealth, but in a startup, since there is no floor protection, when the startup becomes worthless (can happen for any number of reasons, and often do), then one wishes one had taken a salary (and reinvested in stocks or as seed investment - ways to gain equity exposure). One could argue that PowerBI, in this example, gained…

> when the startup becomes worthless (can happen for any number of reasons, and often do), then one wishes one had taken a salary (and reinvested in stocks or as seed investment - ways to gain equity exposure).

Well, sure. And when the startup becomes worth billions, one wishes they had taken the options instead of a higher salary.

This is just an observation that having information lets you make better decisions. Unfortunately, most of the best information lives at a point in the future after we must make the decision.

Re: There’s no such thing as “a startup within a big company”

#184

Post by ptudan »

ryandrake wrote: post #169
moneywoes wrote: post #166

Earlier quoted context omitted.

Are these actually enforceable?

It probably doesn’t matter in practice. They will have more lawyers and more money to burn on legal process than you. Who will go bankrupt first fighting a legal battle between you and, say, Apple?

The only time they'd actually sue is if you made something worth money. in that case, there's a good chance you can get investors to pay the lawsuit.

Re: There’s no such thing as “a startup within a big company”

#185

Post by 23iofj »

buzzerbetrayed wrote: post #181
23iofj wrote: post #177

Earlier quoted context omitted.

> There is a 50% chance that a random person from that population can create a successful business... All 100 attempt to start a business. 50 succeed, 50 fail. This is the most glaring wrong assumption that causes your and GP's confusion. 90+% of startups fail. Note: "failure predicts failure but success does not predict success" could still be true even if business failure rates were >= 50%! But the fact that failur…

I know nowhere near 50% of startups succeed (and have heard the 90% failure rate many times). However, I don't think that is relevant to the mathematics of it.

Remember that these are correlational studies! They're not directly comparing raw counts of data points, they're checking for statistical significance.

It can be that

    COUNT(failure -> failure) > COUNT(success -> failure)
while also being the case that "there is not a statistically significant correlation between past success and future success".

Think about generating a dataset using the process you outline and then performing a statistical test for correlation on the resulting dataset.

Think about the percentages in step 2 and 3. If those get small enough, then there could be a statistically significant (failure, failure) correlation in your generated dataset and also not a statistically significant (success, success) correlation in your generated dataset.

The 90% number [0] explains how those percentages get small enough that (success, success) is not picked up by a significance test but (failure, failure) is.

You don't have to take my word for it, though. You can actually implement this process, run your favorite test for correlation, and verify that as those success probabilities get small you have the above effect.

What you've proven above is that

    COUNT(failure -> failure) > COUNT(success -> failure)
But just because this is true doesn't mean that there will be a statistically significant success -> success correlation.

Again, the most fundamental reason that can happen is because failure rates are over 50% [0].

--

[0] I mentioned in my first comment you can get this result even with a 50% failure rate. How? Companies and founders aren't 1:1, founders drop out of the data generation process, etc. You can play with that to create similar effects even in extreme cases like failure rates dropping to 50% but it'd be a bit contrived.

Re: There’s no such thing as “a startup within a big company”

#186

Post by CobrastanJorji »

ryandrake wrote: post #157
ma2rten wrote: post #110

Earlier quoted context omitted.

You can have payouts proportional to success even in big companies. Google famously payed $120M to Anthony Levandowski. This is because there was an agreement in place to pay projects in X based on the value that they create.

True, but this is a vanishingly small edge case. You generally have to be a certain person to negotiate something like this with a big company. Surely the "Ninth Cog Engineer From The Left" at Waymo will not have the negotiating power to get this kind of profit-sharing or pay-for-value comp package.

I recall reading somewhere that Waymo had retention problems due to many of the early engineers were given so much money that they simply no longer cared to work. I don't know how true that is, but I believe it.

Re: There’s no such thing as “a startup within a big company”

#187

Post by lotsofpulp »

ryandrake wrote: post #169
moneywoes wrote: post #166

Earlier quoted context omitted.

Are these actually enforceable?

It probably doesn’t matter in practice. They will have more lawyers and more money to burn on legal process than you. Who will go bankrupt first fighting a legal battle between you and, say, Apple?

It does matter in practice in California.

Re: There’s no such thing as “a startup within a big company”

#188

Post by Kranar »

ashtonkem wrote: post #147
scruple wrote: post #133

Earlier quoted context omitted.

> most startup options end up being worth less than the salary that one could’ve gotten at a non-startup I took a lower salary to work at a startup I "believed" in. We were eventually acquired and my options were in the low six-figures when exercised. I worked there for 6 years. If I average the options profit and add it to my base salary, I'd have still been underpaid in the local area for my skills and experience l…

> I never worked like a dog for the place in my story, at least. It had a very sane work/life balance. For sure not every single startup overworks it’s employees, and not every overworked employee works at a startup. But there is a very common (but not universal!) trend for startup employees to be encouraged to overwork themselves so that their options will be worth more in the long run. Your mileage may vary, as you…

I don't know how common it actually is. You hear about the startups that overwork employees far more than you hear about startups where people have a good work life balance, but there could be many reasons including the big one being that happy people who live well balanced lives don't tend to talk about it.

Re: There’s no such thing as “a startup within a big company”

#189

Post by drewzero1 »

This reminds me of the story of Saturn within General Motors. As I understand it, it was created to compete with popular imports like Honda and was given a long leash from GM to be "a different kind of car company" (in the words of their marketing). The first generation of cars were a lot different from any of GM's previous compact offerings. GM started reining in Saturn and moving toward badge engineering. Eventually it became the same kind of car company, because at the very top it always was.

Re: There’s no such thing as “a startup within a big company”

#190

Post by FartyMcFarter »

harikb wrote: post #164
DebtDeflation wrote: post #103

Earlier quoted context omitted.

>The ultimate realization was in a startup you have equity, a decent amount in a good startup. At Microsoft it was a base salary and set amount of stock. I joined a startup in 1999. There were 3 founders and I was employee #2 after that. I received a ton of options (this was before RSUs became popular). We had a great product and a great team, but 18 months later ran out of money and unfortunately it was right after…

The thing most people forget about options & RSU is that one is taking away a big chunk of the TC and delay it to a future year. Even when you hate your job, you will be hesitant to leave the company because of FOMO and sunk cost fallacy That said, anecdotally, every one of my close circle of friends made decent amount money from equity (one of the many companies they worked at did very well) - far higher than the 10…

> The thing most people forget about options & RSU

These two are very different things and they shouldn't be conflated. If you have FAANG RSUs vesting every few months or every year, you can convert them to cold hard cash on a regular basis.

Options in a startup, or a company that isn't traded publicly are a different animal.

Post reply on HN