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

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

#231

Post by planet-and-halo » Sat, May 22, 2021, 4:29 PM UTC

atoav wrote: post #218

rcruzeiro wrote: post #125

Earlier quoted context omitted.

It's funny how often I got rejected after saying that I am not 24/7 available and that I believe that, if someone needs to have this kind of availability, it means that something in the company is not working and needs to be fixed. The words they used in the rejections were always something like: "we feel like you are not willing to put enough skin in the game" or "everyone else sees the opportunity here is is willin…

> if someone needs to have this kind of availability, it means that something in the company is not working and needs to be fixed. The crazy thing is, they think they can just throw manhours at bad planning and somehow make it work. You can literally plan well, have a good life and still come out ahead of these chaotic organizations that make everybody run in circles out of pure panic. I have seen this so often in fi…

I read a book by a consultant who said he could immediately gauge how well a factory was operating by looking at how relaxed the average workers were. The most efficient factories almost looked like nothing was happening, because they had a smooth and efficient process and knew how to calmly handle emergencies.

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

#232

Post by ad404b8a372f2b9 » Sat, May 22, 2021, 4:29 PM UTC

hinkley wrote: post #201

rcruzeiro wrote: post #125

Earlier quoted context omitted.

It's funny how often I got rejected after saying that I am not 24/7 available and that I believe that, if someone needs to have this kind of availability, it means that something in the company is not working and needs to be fixed. The words they used in the rejections were always something like: "we feel like you are not willing to put enough skin in the game" or "everyone else sees the opportunity here is is willin…

They say “skin in the game” but they mean “skin in the machine”. These sorts of word games work on young naive people, especially young men. Maybe we need to broadly educate people that this sort of exploitation is not okay...

The valley is a machine, caked with blood, running on flesh.

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

#233

Post by ernopp » Sat, May 22, 2021, 4:30 PM UTC

cudgy wrote: post #17

What is success? The article assumes for the most part that success is mainly monetary, and further it makes the classic mistake of comparing success monetarily to companies like Facebook. Success is different depending on many factors. For example, if a person needs or likes guidance and structure, a startup is likely not a good fit, especially when they are inexperienced. There are some good points about the strong…

Spot on.

I've been working in startups for 10 years (my whole career so far) because I was optimising for learning, not financial return. I made the bet that startups would be the fastest way to learn (breadth of tasks, workload, exposure to more senior people etc) and I am allergic to larger company bureaucracy.

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

#234

Post by luca3v » Sat, May 22, 2021, 4:30 PM UTC

rahulpadalkar wrote: post #212

> Say you have a 2% chance of picking a unicorn and being a member of the founding team. That 2% is honestly way too high for most people, and perhaps a bit low for others, but a good median to anchor on. $10M * 2% = $200K. And realistically you’re only going to get that this tranche of equity every 3-4 years at most, so that’s a risk-adjusted value of $50–$66k. I didn't understand this math, 2% is the chance of it b…

$200k is your expected equity payoff if you have a 2% chance that your equity is going to be worth $10M and a 98% chance that it's going to be worthless, which is the simplified model used in that back-of-the-envelope calculation

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

#235

Post by ryanSrich » Sat, May 22, 2021, 4:30 PM UTC

rantwasp wrote: post #216

ryanSrich wrote: post #204

Earlier quoted context omitted.

If you want to make the argument that working for anyone other than yourself is wage slaving I won’t fight you. The difference to me though is that you typically own (or have the right to own given enough commitment) significantly more of a startup than a FAANG. Granted, your chances of owning anything of value is low, but that’s a risk I’m willing to take over making Bezos and Zuckerberg that much richer. Knowing I’…

you’re making Bezos richer while you get rich yourself. the 2nd part is important

Forgoing the latter is worth not doing the former imo. Again, unless we’re talking millions per year, which 99% of FAANG employees aren’t making. The best one could hope for is high six figures, probably toping out around $800-$900k after 15 years.

As I said though, this only makes sense if your goal is money. I personally don’t value money over other things like mental health and enjoying my work. I know I would have much worse mental health, and hate what I do at a FAANG.

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

#236

Post by neilsharma » Sat, May 22, 2021, 4:31 PM UTC

auspex wrote: post #217

neilsharma wrote: post #175

I've been an early engineer (first 3) at a startup. I didn't stick around long enough to vest for reasons, but in hindsight, it wouldn't have been worth it financially even if I had. They eventually got acquired by a big brand name Silicon Valley company after 4-5 years for an undisclosed amount. My 0.4% plus salary wouldn't even break $200k/year in total unless the company sold for a fair amount above $100M. Later i…

At the end of the day it is a lot harder to come up with an idea, find market traction, convince people to invest in you than it is to become the third employee. Additionally, a 100M exit isn't always a win. It depends on how much money was invested / spent to get there as well.

I agree; founders should have substantially more equity than any one early employee. But its not just about which is harder to start as (founder or early employee), but also the time/energy/emotion invested over years to bring the company to a successful scenario. Being a third employee is still pretty hard if you are working 60-80hrs/week for years and making major life sacrifices.

And you're right; $100M exit isn't always a win. That was a somewhat arbitrary milestone I used to do quick math.

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

#237

Post by an_opabinia » Sat, May 22, 2021, 4:32 PM UTC

hn_throwaway_99 wrote: post #76

an_opabinia wrote: post #65

Earlier quoted context omitted.

> 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.

You're being downvoted, but as the author of the post you responded to, I don't really disagree. I've been an early employee and have learned I don't have the temperament or skills to be a founder. My primary argument is just that if founders and VCs don't loosen their purse strings, though, they will find employees are wising up about wealth distribution in a startup and will see they have better options elsewhere,…

> I don't have the temperament or skills to be a founder

If only everyone were as mature and introspective.

> are wising up about wealth distribution... will see they have better options elsewhere

Truthfully, all those people will discover is that the distribution of educational pedigrees - the real predictor of "better options elsewhere" - is far stickier, nepotistic and unfair than a 9 percentage point difference in equity.

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

#238

Post by johnrob » Sat, May 22, 2021, 4:33 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…

Worth noting that this is an exceptional track record - 4 of 5 startups with a paying acquisition. Great story, but it’s not likely the normal result of doing 5 startups :)

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

#239

Post by hn_throwaway_99 » Sat, May 22, 2021, 4:35 PM UTC

hluska wrote: post #133

hn_throwaway_99 wrote: post #116

Earlier quoted context omitted.

The issue is you are taxed on them when you exercise them before you can actually sell them to get the money to pay the taxes.

I don't see how that is an issue. Exercising options is a form of income. Why not pay tax on income?

When you exercise startup options:

1. Usually there is no liquid market, so for lack of a better term, the valuation is made up.

2. Related to point one, with no liquid market, there is no option to sell the options the raise the money to pay the taxes.

3. There are often restrictions (e.g. lockup periods) that legally restrict you for selling from a specific period. You are forced to take on the risk that the stock doesn't crash, often with much less info or freedom than investors and execs.

In fact, in the US, normally startup options are ISOs (incentive stock options) so theoretically they are NOT taxed on exercise. The issue is that AMT (google it) actually nullifies that ISO tax benefit in most instances, and AMT only has stuck around because Congress can not function to deliver reasonable tax policy.

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

#240

Post by _hyn3 » Sat, May 22, 2021, 4:39 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…

> what founders risk in terms of opportunity costs and lower wages is usually only slightly more than very early stage employees

Very early stage employees (before VCs get involved and impose the 10-20% option pool that you allude to) tend to get an outsized offering. (and, to me, a pre-VC employee sounds an awful lot like a co-founder, unless they're not committed heart-and-soul the way the founder is.)

You might not be aware of the risks that a founder experiences versus a pre-VC employee. These risks are substantial. Many are not even quantifiable. Everyone likes to joke about rewarding failure, but the reality is that the reputational risk is very high.

If you are instead talking about post-VC very early employees, there is an even wilder difference in the risk that those employees shoulder by taking a job with a VC-backed company compared to the founders.

Let's face it; working for and/or founding a startup is really, really tough and possibly even hazardous to your health. It's not for everyone. In fact, it's really not for almost anyone. But it's one of the few shots at winning a lottery where you can actually change the rules of the game while you're playing it.