Want to found a startup? Work at one first

I haven't worked at a startup. I have worked at two FAANGs (F+G). So I can't speak to the actual experience of this but when considering options, startups, particuarly very early stage startups, seemed like such a terrible value proposition.

There could be qualitative benefits and I think this is why a lot of people go this route. Things like less structure and a bigger feeling of impact.

But your equity is most likely going to be worth exactly $0 and the upside isn't really that high. For every Craig Silverstein there are 100,000 people who got nothing. Look back at any HN thread where people are asked about their exits (as an employee) and it's sobering. $10-20k after 4-5 years is disturbingly common.

A first employee if they have a lot of pull might get what? 0.5%? Maybe 1% if they're a rock star? It gets worse than that because your equity and founder equity (let alone the investor's equity) aren't the same. Theirs will have things like liquidation preferences and participating preferred. Yours may well just disappear on dilution or the kiss of death: a down round.

If your startup gets bought in the sub-$100 million range, the acquirer might avoid paying out employees by giving signing bonuses to the founders to join as VPs and pay out the investors while paying pennies on the dollar to common shareholders. This may have changed but there were rules around acquiring companies for less than ~$60 million that meant it was much better to buy the company for $60m and pay founder signing bonuses for another $40 million rather than acquiring it for $100 million and that $40 million difference is coming out of your pocket.

On top of all that, you, as an employee, will have very limited opportunities to liquidiate your equity prior to an IPO that will probably never happen (you'll get acquired instead and that company may well be public). Founders and investors may sell some of their equity on future rounds. Sometimes employees will have access to this but often they won't.

Now compare this to the FAANG path. It's pretty easy to get to $400k+ total comp for really not that much stress and very little uncertainty. You'll never make $100 million this way (unless you become an SVP+) but let's face it, your startup isn't making you $100 million either.

Honestly, things like this read like VC propaganda just trying to keep the pipeline of warm bodies fed. Outliers are used to sell this well I have some outliers too: Jeff Bezos, Larry Page, Sergey Brin, Steve Jobs and Steve Wozniak. None of them worked for a startup first.

The power of anecdotes and survivor bias.

I wonder how many start ups fail because of lack of start up experience or ... product just didn't take off?

Not to say experience is bad but I suspect the latter happens most of the time despite whatever experience there is.

The needs of a startup are quite different than (and often conflicting or opposite to) the needs of a stable, large company. So if you have learned "what good looks like" elsewhere and have no first-hand experience in a high-growth environment, then you as a founder may be prone to decisions that are a poor fit in the context of a startup, which by definition is a high-growth. Launching an "ordinary" (i.e. non-high-growth) new business in an established niche will have much more overlap with previous work experience at some corporation than trying to get product-market fit for a startup.

I don't see a lot of people arguing that vest and rest at FAANG is going to bring you more money and less stress - in the vast majority of cases - than working in a startup.

It's just that some people would rather have the stress, freedom and excitment that come with working at a startup, rather than completing their OKR to avoid being put on a PIP at the next PSC. Even if that means earning less money - on average.

I've worked at multiple startups before starting my own, some were more useful than others. In my experience only in lead or above positions do you actually get exposure to these things - a random IC doesn't really get much insight into the company's finances, raising, negotiations, hiring, etc.

From those I was a lead at I got some valuable experience (including what not to do) & also contacts (some former director/C-level people I'm still in touch with). I still learned the vast majority from actually having to handle it myself in my own startup but I think I would have learned even less (in that particular area) if I was working at amazon or google before instead.