It's way easier to build up experience and get your hands on impressive projects than at behemoth corporations. FAANG is not what it's all cracked up to be for 95% of people joining these days
Working at a startup is overrated, both financially and emotionally
181–190 of 430 posts
Re: Working at a startup is overrated, both financially and emotionally
#182My son was part of a >$300M buyout. His half-percent netted him some hundred thousand. Didn't make up for the lower salary at a startup for the couple of years. The schemes VC's and founders use to skim all the fat are legion.
He's now starting his own company, doing something socially useful that he can be proud of. Got a good team and making good progress. Will see MVP in a couple months!
Re: Working at a startup is overrated, both financially and emotionally
#183Earlier quoted context omitted.
Also it's impossible for me to tell whether my below market base salary startup offer from a seed/series A startup is at market or not. Especially the equity bit, is 1% equity enough for the second employee(and engineer)? Especially when I am taking a 50% cut on base salary in addition to losing some very real liquid stocks.
If you are the second employee (first engineer) at a tech startup with a solo founder company, most likely you can get more than this. Nobody will give you more than what they have to unless you educate yourself and negotiate on your own behalf. You are taking the same risks as the founder and you being there is directly helping the founder raise funds and hire other engineers. Don't under-value yourself. Your previo…
In this particular scenario I'd be the second employee, not counting the two founders as employees.
I did similar math as you said and I didn't find the numbers fair. I figured how much would I be losing per year at the current valuation and my pay cut seemed more than what the investors got for the last round.
I wish there was more public information about startup salaries at various stages of employment, while the company is still a tiny company. Finding information about FANG salaries is so easy but startup salaries is tough.
Re: Working at a startup is overrated, both financially and emotionally
#184I 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…
Wealthy folks that can afford to start a company for little/no pay are always imagining some kind of moral superiority. I told a startup boss who tried that out on me e.g. "I'm risking my house too!". I said "you mean your 2nd house. I'm risking my first house. And my family's stability." He had nothing to respond to that.
Re: Working at a startup is overrated, both financially and emotionally
#185Earlier quoted context omitted.
Also it's impossible for me to tell whether my below market base salary startup offer from a seed/series A startup is at market or not. Especially the equity bit, is 1% equity enough for the second employee(and engineer)? Especially when I am taking a 50% cut on base salary in addition to losing some very real liquid stocks.
Back of the envelope: IIRC, the article indicates that there is a 1% chance of $1B. 1% chance of 1% of $1B is worth $100,000; if $100K is greater than what you're giving up then it is worth it. Two confounding factors: time and partial payouts. What if it takes 20 years to pay out? How does the range of possible payouts and probabilities change the valuation? That's where you establish your margin of safety and start…
Also that 1% would keep on diluting before the money would actually become liquid. I figured that the 1% would be 0.35% if the company had IPO'd in say 8 years. At a 1B valuation, I'd net 3Million before taxes, while the company would have gone from 6M to $1B in valuation. This didn't seem fair and I said no to this offer.
I'd have no financial regrets at the $1B valuation, but I'd if they make it to $10B/$100B.
Re: Working at a startup is overrated, both financially and emotionally
#186Earlier quoted context omitted.
This is relatable. It's incredibly satisfying building new things rather than maintaining decades old cruft, regardless of the paycheck, hours and stability. Also the joy of working in small nimble teams and the freedom to experiment with new technologies. Like everything in life these things are a tradeoff.
I will give you the other perspective. I get paid double what I’ve made at startups, for 35 hours a week, no overtime, no on call, and clear expectations of what success looks like for both myself and my team. I get six weeks of PTO (real weeks, not “unlimited”), 4 months off if we have another kid, and significant bonuses, while being fully remote. This is at what you’d call an “enterprise”. I am happy to keep exist…
Is that 35 hour work week the one available in France? That sounds awesome, it allows a nice work/life balance.
Re: Working at a startup is overrated, both financially and emotionally
#187Earlier quoted context omitted.
> 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
Everybody involved is taking some fraction of that risk. "No raises until we're profitable", "Here's stock to make up for the lower pay", "Lets cut benefits again to increase our runway" are all tall tales that essentially squeeze cash out of employees with empty promises.
When there's no way it will every even make up for the sacrifices of the employees, all those demands are empty noises. Just a way to fool folks in to making the founder rich. And nobody else.
Re: Working at a startup is overrated, both financially and emotionally
#188Earlier quoted context omitted.
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 ma…
So... why does your wife stay there?
Possibly golden handcuffs (the options are worth much in theory, but cannot be exercised or cashed in until IPO for instance). Another reason why it's often bad to be a normal employee in a startup when it comes to equity. The terms of the options are often against you.
Re: Working at a startup is overrated, both financially and emotionally
#189Earlier quoted context omitted.
I will give you the other perspective. I get paid double what I’ve made at startups, for 35 hours a week, no overtime, no on call, and clear expectations of what success looks like for both myself and my team. I get six weeks of PTO (real weeks, not “unlimited”), 4 months off if we have another kid, and significant bonuses, while being fully remote. This is at what you’d call an “enterprise”. I am happy to keep exist…
Is that 35 hour work week the one available in France? That sounds awesome, it allows a nice work/life balance.
US based multinational.
Re: Working at a startup is overrated, both financially and emotionally
#190I 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.
But they do. They pay salaries, benefits, overhead. Its a team that gets funded.