Working at a startup is overrated, both financially and emotionally • Hacker News Board

Re: Working at a startup is overrated, both financially and emotionally

#61

Post by anon12345678910 » Sat, May 22, 2021, 2:29 PM UTC

I did it, took a lot of risk and it has paid off somewhat.

I chose to work at an early stage startup, in my home country (which is known to be adverse to entrepreneurship), in a very monopolized market, even though I could’ve easily moved abroad and joined a big company.

Despite all the odds it worked out for me financially and I’m proud of what we achieved, but I realize it was basically gambling.

My advice is to take a shot at it if you’re young, but try to aim on ambitious startups so you can balance the slim odds with huge potential upside.

Re: Working at a startup is overrated, both financially and emotionally

#62

Post by ZephyrBlu » Sat, May 22, 2021, 2:29 PM UTC

sethammons wrote: post #49

sbarre wrote: post #2

It's important for anyone joining a startup to understand that the odds of success are overwhelmingly against you. For every successful startup we see on here and elsewhere, there are thousands that fail in obscurity, sometimes leaving people in ruins. Treat options/shares as a literal lottery. Assume your odds of winning are zero when making life choices. Also unless you're a very very early employee, those options/…

Yes, even when you win that lotto, it is not as much as you may imagine. I rode the SendGrid/Twilio rocket; engineer 12 at SendGrid. IPO and acquisition later, I’m still a decade out on even thinking of being able to retire or be financially independent. Don’t get me wrong, things are good. But early equity in a multi billion dollar company and I’m still having to work :)

This doesn't add up to me. According to an article on Twilio the acquisition was ~$3B.

Even 0.01% equity is 300k. Not "time to retire" money, but still a good chunk of change. Yet you're a decade out of even thinking about retirement?!

Re: Working at a startup is overrated, both financially and emotionally

#63

Post by annoyingnoob » Sat, May 22, 2021, 2:30 PM UTC

I've worked at several startups. If you are new to stock options, I think that the different ways those options can work and be diluted is the hardest part to grok. Personally, I never had to 'take a haircut in comp' to work at a startup, but I've had bad stock deals.

I would say that each of my startup experiences had some dark times, it wasn't always easy by any measure. At the same time, each of those experiences provided a lot of personal growth and opened other opportunities for me.

Re: Working at a startup is overrated, both financially and emotionally

#64

Post by jsonne » Sat, May 22, 2021, 2:30 PM UTC

jasode wrote: post #34

airstrike wrote: post #28

Earlier quoted context omitted.

> The author likely comes from a structured, religious background How on God's green Earth did you jump to that conclusion? Can't it just be a matter of personal preference, as you said it yourself?

>>> The author likely comes from a structured, religious background >How on God's green Earth did you jump to that conclusion? The author wrote: "From the ages of 19-21, I spent my time as a missionary for the Church of Jesus Christ of Latter-Day Saints, popularly known as the Mormon church. I worked 12 hours a day for two years straight with only Christmas and Mother’s Day off. [...] For this job, I was paid a total…

Ironic because Utah is becoming a tech hot spot driven in part by the large Mormon presence.

Re: Working at a startup is overrated, both financially and emotionally

#65

Post by an_opabinia » Sat, May 22, 2021, 2:31 PM UTC

hn_throwaway_99 wrote: post #36

I think this is a really good article, but I think that one of the things it misses is that a huge reason the math works out so badly for startup employees is because founders and VCs take the lion's share of the gains. I mean, in my experience at startups, founders typically own around 40% of the equity. The option pool for all other employees is around 10-20%. Now, I certainly believe startup founders deserve far m…

> I mean, what founders risk in terms of opportunity costs and lower wages is usually only slightly more than very early stage employees, but their reward is ~10-30x.

A first employee is, by another definition, someone to whom a professional investor would not give money.

Re: Working at a startup is overrated, both financially and emotionally

#66

Post by selimthegrim » Sat, May 22, 2021, 2:32 PM UTC

jsonne wrote: post #64

jasode wrote: post #34

Earlier quoted context omitted.

>>> The author likely comes from a structured, religious background >How on God's green Earth did you jump to that conclusion? The author wrote: "From the ages of 19-21, I spent my time as a missionary for the Church of Jesus Christ of Latter-Day Saints, popularly known as the Mormon church. I worked 12 hours a day for two years straight with only Christmas and Mother’s Day off. [...] For this job, I was paid a total…

Ironic because Utah is becoming a tech hot spot driven in part by the large Mormon presence.

How so? Recursion doesn’t scream full of Mormons to me.

Re: Working at a startup is overrated, both financially and emotionally

#67

Post by rrdharan » Sat, May 22, 2021, 2:33 PM UTC

notjustanymike wrote: post #53

I personally work for startups because I prefer building and owning big projects over maintaining someone else's cog in the corporate clocktower. I'm not interested in working on the "retention" team, or the "console ad integration" team. I want to build the main thing and feel like I make an impact every day I go to work. It is possible to do that at a larger business but the odds are stacked against me. Google has…

The average engineer at a startup is far more likely to work on something for two years that ends up being pointless, and canceled, by economics, when the entire startup fails.

Re: Working at a startup is overrated, both financially and emotionally

#68

Post by wayoutthere » Sat, May 22, 2021, 2:33 PM UTC

eecc wrote: post #58

adflux wrote: post #51

Earlier quoted context omitted.

Couldnt a bank front the cash to exercise the options? Not familiar with the matter but it seems like an easy thing to get a loan for

I guess it’s still a question of borrowing money for a speculative investment, you just get a significant discount that makes profit more likely. Depending on your indebtedness (outstanding student loans, mortgages) savings and current earnings a bank could still refuse to lend you enough money, if at all

If you’re making a high enough salary to be getting enough options that you can’t afford to exercise them, you’re making enough to borrow about $100k.

I had no trouble getting an uncollateralized loan at a reasonable rate for $75k; and I had $100k in student debt, a $500k mortgage and little else in the way of assets. And when I say “no trouble” I mean I applied for the loan, was approved 30 minutes later and had the money in my bank account within 2 hours. That loan is paid off now, but if your income is high enough banks will lend you money on that alone (I was making an equivalent salary to a principal developer at the time).

Re: Working at a startup is overrated, both financially and emotionally

#69

Post by barrkel » Sat, May 22, 2021, 2:35 PM UTC

eecc wrote: post #47

hn_throwaway_99 wrote: post #36

I think this is a really good article, but I think that one of the things it misses is that a huge reason the math works out so badly for startup employees is because founders and VCs take the lion's share of the gains. I mean, in my experience at startups, founders typically own around 40% of the equity. The option pool for all other employees is around 10-20%. Now, I certainly believe startup founders deserve far m…

That’s what Wiener suggests in Uncanny Valley, when she describes the windfall when Microsoft bought the GitHub shares she had the option to buy during her time there. It wasn’t life-defining, plus she noticed that many other employees didn’t have enough savings to actually exercise.

The way it should happen with a liquidity event is that you simultaneously exercise your options and sell them, pay off the taxes and bank what's left over.

Savings should only come into it if you're leaving before the liquidity event.

Re: Working at a startup is overrated, both financially and emotionally

#70

Post by NeverFade » Sat, May 22, 2021, 2:35 PM UTC

hn_throwaway_99 wrote: post #36

I think this is a really good article, but I think that one of the things it misses is that a huge reason the math works out so badly for startup employees is because founders and VCs take the lion's share of the gains. I mean, in my experience at startups, founders typically own around 40% of the equity. The option pool for all other employees is around 10-20%. Now, I certainly believe startup founders deserve far m…

Bingo. As a senior engineer, I get startup offers at the Staff-Principal levels, and even those grant no more than 0.1-0.5% equity at most, on top of ~$180-200k salary.

That simply isn't competitive with big established companies like FAANG that offer me $400k+, far better career growth prospects, and far lower risk.

For most startups, the equity will be worthless, and the whole company will either shut down or get acquired, which means you won't have a straightforward career path no matter how hard you work and how many impressive accomplishments you achieve. Meanwhile your friends over at FAANG will be earning twice as much and climbing the promotion ladder simply for doing a good job.

Finally, let's not forget the abhorrent tax treatment that screws you, especially as a senior engineer: while your options will likely end up worthless, you'll have to pay tax for them as if they're worth their weight in gold. That puts a whole new level of risk on the already bad and risky deal of working at startups.

It's beyond me how that tax treatment was allowed to continue given how bad it is for startups, and how much it advantages big established companies that are already deep in anti-trust territory, though I guess that could also be the answer to why it's still the rule.