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

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

#101

Post by rjzzleep » Sat, May 22, 2021, 2:53 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…

From my own household/wife I have a person who's worked her ass off for a hugely incompetent CEO who has a majority stake. When I say ass off I mean 12-14 hours a day even on weekends. A promise of unlimited holidays and then coercing all employees to work during government mandated holidays and now he's trying to scam her out of her less than 1% options by coercing her to write a maternity leave policy that would make sure she doesn't get to vest. This is a sequoia invested company.

I don't think this company has even 10% of equity allocated for all the other employees. No way it's that much. She's sacrificed her own health, the health of her child and her personal relationships for someone who's coerced a bunch of people who are to scared to talk to a lawyer into a bunch of labour law violations.

When I myself interview with startups and they try to sell me on their BS vision fantasies, I tell them that I'm not available 24/7. I'm not on call duty either and if they have issues with that I'm happy to use my experience to help them transform/automate their business into a situation where they are more efficient and don't need to burn out their employees. Some people respect this as a sign of experience and others, especially the valley considers this not aligning with their "values".

This is exploitation plain and simple. They cheat their employees into thinking taking abuse is acceptable, because that's what you have to do to change the world. If anything such people change the world for the worse if you ask me.

EDIT: also, due to the lack of experience it's clear that some of the directions actually come top down from whatever VC is involved in it.

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

#102

Post by skohan » Sat, May 22, 2021, 2:53 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 think what's also missing from the equation here is the fact that part of the reason which startup compensation is not competitive is because FAANG salaries have been set in such a way to attract talent which might otherwise go to startups.

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

#103

Post by derwiki » Sat, May 22, 2021, 2:53 PM UTC

NeverFade wrote: post #70

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 a…

Why especially as a senior eng?

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

#104

Post by vinay_ys » Sat, May 22, 2021, 2:54 PM UTC

adflux wrote: post #51

eecc wrote: post #47

Earlier quoted context omitted.

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.

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

Regular startup employees borrowing and buying their stock options is far riskier than them borrowing to do options trading in publicly traded stock markets because they have very little information about their company's future prospects.

What goes on between the founders, board, current investors and likely future investors is likely known to very few amongst them, if at all.

Even if you believe strongly in the product and know the market-fit is bang on, you don't know if the option is currently priced correctly.

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

#105

Post by jt2190 » Sat, May 22, 2021, 2:56 PM UTC

hellcow wrote: post #83

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…

> what founders risk in terms of opportunity costs and lower wages is usually only slightly more than very early stage employees Maybe this is different for others, but my co-founder and I spent 2 years bootstrapping before we got our first customer. We gave up 2 years of wages and consumed our savings to do this with no assurance of success, and even after that first customer it was another full year before we had a…

> Years of time and money.

Exactly. Additionally, any of that money that you could have saved during those first two years would have had more time (obviously) for interest to compound than any savings you make today [1], so that "lost interest" needs to be factored into the equation as well.

[1] https://www.investopedia.com/terms/t/timevalueofmoney.asp

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

#106

Post by raspasov » Sat, May 22, 2021, 2:57 PM UTC

geophile wrote: post #52

This is mostly accurate but it misses one essential point. And so do many of the responses here. One of the reasons to work at a startup is to get a lot of responsibility for something interesting to you, the sort of thing that wouldn't come your way outside of a startup, for a long time, or maybe ever. The point in the article that comes closest to identifying this regards "calling", but that's not the same thing. I…

This!

My guess is this is more wealth and range of experience than 99% of the people on this forum.

I encourage everyone to read this comment.

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

#107

Post by ptero » Sat, May 22, 2021, 2:57 PM UTC

vmception wrote: post #79

wayoutthere wrote: post #68

Earlier quoted context omitted.

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…

If you’ve ever taken any risk with credit and failed or simply had a disruption in income anytime in the last 10 years prior you would have been denied. Its nice everything worked out for you, that has nothing to do with your ability to perceive a simple solution available to you.

The only risk is that one exercises the options, but by the time one sells the shares (which they got as the result of exercising options), the price of the stock falls below the strike price. To avoid this risk, do a quick sell after exercise. This makes risk minimal; in case of bigger companies effectively zero.

Bigger risk comes in if someone wants to do an exercise and hold to sell much later, which can bring tax advantages. But this is a different game entirely. In the case of employee with little spare cash (to the tune of borrowing money for the exercise), not doing exercise and sell is really leaving money on the table. My 2c.

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

#108

Post by [deleted] » Sat, May 22, 2021, 2:59 PM UTC

hellcow wrote: post #83

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…

> what founders risk in terms of opportunity costs and lower wages is usually only slightly more than very early stage employees Maybe this is different for others, but my co-founder and I spent 2 years bootstrapping before we got our first customer. We gave up 2 years of wages and consumed our savings to do this with no assurance of success, and even after that first customer it was another full year before we had a…

[deleted]

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

#109

Post by itake » Sat, May 22, 2021, 2:59 PM UTC

The author also fails to mention the stock option trap. I've seen offers at early state companies like this:

* $150k base (take-home $100k)

* $30k/yr options that expire 3 months after you leave or 10 years.

You have to either set aside 30% of your take-home to invest in a extremely high risk single stock or you're chained to your desk until the company exits.

If you golden handcuff your way to an exit, you better hope the exit happens before the 10 year mark when your options expire.

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

#110

Post by lotsofpulp » Sat, May 22, 2021, 3:02 PM UTC

ghaff wrote: post #87

lotsofpulp wrote: post #42

Earlier quoted context omitted.

UBI is not about working on any hobby you want. It’s about redistributing wealth so that people can negotiate for more of the pie since the current system relies on using the cumulative wealth of one’s ancestors to determine their bargaining power.

At least you're candid that it's about taking money from people against their will. Most advocates couch UBI in terms like unleashing individual creativity and things like that.

I’m also candid about my current lifestyle being based on taking things from people against their will.

Their will probably was not to pick strawberries in a foreign nation or clean beers spilled surfaces at 11pm or not being able to breastfeed their infant because they need to go slap hamburgers together for $15 an hour.

I assume not all of those people willingly got drunk and high and got caught engaging in crime in their teens and 20s and willingly threw away their economic opportunities.