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Working at a startup is overrated, both financially and emotionally

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

#261

Post by taurath »

PragmaticPulp wrote: post #180
jhbao wrote: post #138

This article isn’t about if you should join a startup vs. a big company. It’s about if you should join a startup vs. a FAANG company, which offers outrageous compensation & benefits. From that perspective, FAANG is the obvious choice 99% of the time. The more and apt comparison would be if you should work at a startup vs. a corporate job at a HP or Qualcomm. At those type of companies, compensation is not competitive…

I'm part of a mentoring group for recent college grads. One of our biggest challenges is that much of the conversation on HN, Twitter, Blind, and other sites assumes that FAANG admission is guaranteed. This becomes a major struggle for juniors when they realize that there aren't any FAANG offices in their location. Many others apply to FAANG but don't receive offers, which is devastating if every HN comment, medium a…

They also know that the money/prestige they start making at the beginning of their career can vastly change their trajectory in economic terms. I would argue that the chance of making $500k/yr 10 years into their career will be vastly different if someone goes to FAANG vs a Microsoft temp role.

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

#262

Post by PragmaticPulp »

nrp wrote: post #206
PragmaticPulp wrote: post #180

Earlier quoted context omitted.

I'm part of a mentoring group for recent college grads. One of our biggest challenges is that much of the conversation on HN, Twitter, Blind, and other sites assumes that FAANG admission is guaranteed. This becomes a major struggle for juniors when they realize that there aren't any FAANG offices in their location. Many others apply to FAANG but don't receive offers, which is devastating if every HN comment, medium a…

I fully agree that the fervor around FAANG is unhealthy. However, if you are just at the start if your career, that is the best time to move to wherever the jobs you are interested in are, rather than restricting yourself to what is available near where you currently are. There will be folks that have obligations preventing that, but most recent college grads should have little holding them from moving.

This comment is a good summary of the problem I was describing: It's easy to say that anyone who can get a FAANG job should get a FAANG job, but if circumstances don't line up, what else? That's where many students draw a blank, because all of the advice they've consumed revolves around FAANG job offers that may not arrive.

Statistically, more people are rejected than accepted by FAANG companies. A lot of my mentoring time is spent helping students figure out what's next when their primary FAANG plan doesn't (or can't) work out.

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

#263

Post by hibikir »

barrkel wrote: post #69
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.

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.

But that is a large problem today, because you have no idea when, if ever, the liquidity event is going to happen. There are companies that spend a whole lot of time private, and if said company is going well, it's going to be growing so fast that in 4 years, it might be unrecognizable. Even if you love the job you joined, you might hate the equivalent a few years later, and you probably still don't have a liquidity event.

Quite a few years ago, a well known company was sending offers where the exercise cost of the shares was around $200k, plus whatever fun you'd have with AMT at exercise time. The company still hasn't seen an IPO, and I know quite a few people that didn't exercise their entire allocation just because it was just way too expensive for something illiquid... and that was with a company that was going (and still is!) going very well. Today you'll find companies that went for a decade without a liquidity event, and where a whole lot of options that were well in the money went back to the company, unused.

Options would be far more worthwhile if there was a standing offer to, on departure, sell the options back to the company at departure time, but we all know this isn't how it works. So you end up in situations when two people join a company and leave at the same time, and their savings separate their final outcomes by 8 figures, because one could buy the shares and wait the necessary X years for the liquidity event, when someone else couldn't.

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

#264

Post by taurath »

neilsharma wrote: post #236
auspex wrote: post #217

Earlier quoted context omitted.

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…

Hard work unfortunately only has marginal value in this economy. The real money is in being able to get other people to invest in you. The idea even matters less than your ability to convince investors.

Startup employees are often quite screwed from a promises made perspective.

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

#266

Post by pydry »

PragmaticPulp wrote: post #180
jhbao wrote: post #138

This article isn’t about if you should join a startup vs. a big company. It’s about if you should join a startup vs. a FAANG company, which offers outrageous compensation & benefits. From that perspective, FAANG is the obvious choice 99% of the time. The more and apt comparison would be if you should work at a startup vs. a corporate job at a HP or Qualcomm. At those type of companies, compensation is not competitive…

I'm part of a mentoring group for recent college grads. One of our biggest challenges is that much of the conversation on HN, Twitter, Blind, and other sites assumes that FAANG admission is guaranteed. This becomes a major struggle for juniors when they realize that there aren't any FAANG offices in their location. Many others apply to FAANG but don't receive offers, which is devastating if every HN comment, medium a…

I imagine being under mountains of student debt makes them more nervous.

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

#267

Post by geophile »

johnrob wrote: post #238
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 :)

I am aware of that. I was extremely lucky.

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

#268

Post by runarberg »

rjzzleep wrote: post #101
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 ma…

Thank you for sharing. As a worker passionate about labor rights, I believe sharing these stories is an important step in raising awareness to what happens when we waive our labor rights.

In a just society these kind of labor violations would be as criminal as a bank robbery. There would be prison time involved and the victims would be paid, both for the value of the work that was stolen from them, plus compensation for the crime committed.

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

#269

Post by wreath »

domano wrote: post #98

Man, if i look at the numbers people are throwing around i start to think that Europe is another planet. Well at least we have better social benefits all around i guess.

We do indeed have better social benefits. But are they really benefits for a SWE in 2021? The social benefits in Europe are great for people with low-mid salaries but as an SWE, I'd rather take a US salary with less social benefits than a European salary.

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

#270

Post by vmception »

ptero wrote: post #107
vmception wrote: post #79

Earlier quoted context omitted.

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…

You missed the point that many people with good finances are denied credit. They cant get a $75,000 loan. Thats the only point I was making. The person provided no insight whatsoever and was unable to see that their experience is different.
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