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

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

#271

Post by atoav » Sat, May 22, 2021, 5:31 PM UTC

planet-and-halo wrote: post #231

atoav wrote: post #218

Earlier quoted context omitted.

> 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.

And what is true for the factory is also true for a film set.

The thing many dont realize is: If you have a good plan and follow it, you will very often have more freedom to try out new things than when your planning is chaotic or non-existent — because then literally every step is made out of fear, out of panic, to avoid pain or because other decisions froced you into something.

I say this because startups would argue about creativity and all that, but having worked aomw time both in art school and on film sets I can guarantee that the qell prepared always have more freedom than those who just try to figure things out as they go.

Thinking it is somehow more honorable to plan badly, throw peoples lifetime at the thing and getting a somewhat okayish result is really problematic in my eyes. Romantizing things that could have been solved by realistic (or even pessimistic) planning is not cool, it just shows me that you have no experience.

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

#272

Post by neilv » Sat, May 22, 2021, 5:34 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

Excellent point. And there can also be huge differences in non-monetary value that make the opportunity cost more worthwhile for founders.

If the startup fizzles, but the founders were spending most of their time getting startup founder experience, and building their professional network and personal brand, then the opportunity cost would probably be well-spent, despite the fizzle.

Of course, worthwhile experience value can definitely happen for junior non-founder ICs.

Worthwhile experience value can happen for already-experienced non-founder developers who can get experience/keyword in some very marketable thing they couldn't pick up on their own. (For example, the necessary capital expenditure means they couldn't get experience with Quantum Deep Learning Transhuman Interfacing from their kitchen table. Or they need a team of full-time collaborators to together accomplish something they couldn't do by just organizing hobbyists on an open source project.)

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

#273

Post by reikonomusha » Sat, May 22, 2021, 5:41 PM UTC

taurath wrote: post #258

softwaredoug wrote: post #193

10+ years ago part of the allure of tech startups was they really “got” what made technologists jobs fulfilling. Back then companies had management that had no idea how to build high quality software. There was lots of waterfall like process and TPS report style bureacracy. Fast forward to the present. FAANG companies dominate the economy. They pay well, offer upside in actual stock, AND most crucially: they do a bet…

The current stereotype among my circle in FAANG is that they move slowly and you’re more likely to be working on something dreadfully boring and also have few opportunities to branch out. That’s what keeps a lot of people going to startups though I agree with the OP the financial and work life arrangement gets less and less ideal.

More anecdotal experience, but I agree. Most people I know doing FAANG only “don’t hate” the work, but love the pay and benefits, and the fact that laying low rewards them. Quizzically, previously politically active friends have turned quite quiet about their beliefs and morals as soon as they started earning a fat paycheck from Facebook.

For a lot of people, vast amounts of money really is the most attractive aspect of a job.

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

#274

Post by reikonomusha » Sat, May 22, 2021, 5:46 PM UTC

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 work at a company that doesn’t offer a total compensation package competitive with a FAANG, but still definitely very healthy, and we do lose many straight-outta-college candidates all the time who are demanding base pay of $200k+ because “that’s what I’d get if I worked for Google.” After denying that, unfortunately, some candidates insinuate that being offered $1.x * 10^5 for an entry-level position is a shrewd ploy to brazenly take advantage of their valuable skills at low cost.

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

#275

Post by mycologos » Sat, May 22, 2021, 5:48 PM UTC

raspasov wrote: post #106

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.

It's a nice comment with an interesting point of view, but the "range of experience" is somewhat limited by the fact that their first four startup experiences ended in four "nice payouts", which is an amazing and atypical track record.

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

#276

Post by qqqwerty » Sat, May 22, 2021, 5:50 PM UTC

break_the_bank wrote: post #183

vinay_ys wrote: post #155

Earlier quoted context omitted.

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…

Yeah, something to consider is that FAANG salaries are an outlier. There is a bimodal distribution in tech salaries. Outside of tier 1 unicorns, no one comes close to FAANG salary. So when evaluating your options, using FAANG salaries as a comparison might not be the most fair benchmark. For example if you work in biotech, even as a programmer, you are probably looking at a salary about half of what a FAANG will pay. This holds true for a lot of other industries.

In general, I agree though. Early employees should either be compensated better or given more equity. In many cases, they have a more direct influence on the product than the founders, because the founders are focused on fundraising, sales, and hiring. And they also can have an outsized impact on company culture. If it was up to me, the first few hires would be getting 2-5% depending on experience, and I would even consider giving them a title of co-founder.

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

#277

Post by babaganoosh89 » Sat, May 22, 2021, 5:53 PM UTC

The best way to value startup equity is based on their last valuation. Then you can quickly compare the offer apples to apples to cash offers. Obviously startups don't like this when you figure out the 50k shares they offer you is only worth $10k a year at current valuation.

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

#278

Post by throwaway78123 » Sat, May 22, 2021, 5:54 PM UTC

NeverFade wrote: post #159

throwaway78123 wrote: post #99

Earlier quoted context omitted.

Not sure where you live, but in the US, options are typically granted with a strike price equal to the latest 409A valuation, which makes the grant neutral from a tax standpoint. I don't see a world where you have to pay lots of taxes for worthless options, unless someone really screwed-up (i.e. messed up the 409 Safe Harbor election etc...) Now... if you exercise the option, that is a different story. At least in th…

> Now... if you exercise the option, that is a different story. You exercise if you leave, and startup IPOs can take many years, and most startups don't have a compelling options package for you after the first 4 years anyway. So a senior engineer who got their full 4 year equity and wants to leave, which is the most typical scenario, will indeed have to exercise and get hit by the tax bill.

You only be hit by a tax bill if you chose to exercise the option, which only make sense if the stock is worth more than the strike. If you are "given" something that is worth more than $1, the IRS will want a piece of it.

If you worked at a startup (not a small business), the most likely outcomes after 4 years is either 1) Company went bust, 2) Company grew.

The option protects you from the not having to pay anything if scenario #1 happens. If scenario #2 happens, then you should be happy: you have an option to pay X for something that is usually worth multiples of X after 4 years.

I actually think the IRS is being nice not to tax the at-the-money option grant. They essentially assume zero time value, which would be quite high for a startup given the high volatility and the potentially long term for the option.

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

#279

Post by hmmokidk » Sat, May 22, 2021, 5:56 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…

It’s a risk you were capable of taking. People without family they can depend on cannot take these risks. If some of us fall we fall into homelessness, for others their parents just bail them out. The people that risk homelessness do not start startups.

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

#280

Post by zebnyc » Sat, May 22, 2021, 6:05 PM UTC

ZephyrBlu wrote: post #62

sethammons wrote: post #49

Earlier quoted context omitted.

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?!

300k is not much money in SF Bay area. If you have a mortgage / looking for a new home, then homes can go upwards of 2 million.

I am assuming that GP means they have not hit their target net worth to FATFire.