This video format is a way to reach some people, though it's like a sales pitch, and not as "linkable" and clearly prescriptive as it could be. Ideally, there's a canonical YC bible that everyone knows about and consults, whether or not doing YC. Which says things like "equal equity" for the founders, what's the current best thinking on deals should be for founding engineers, early hires, interns, etc. Avoid people h…
How to Not Get Screwed over as a Software Engineer [video]
241–250 of 257 posts
Re: How to Not Get Screwed over as a Software Engineer [video]
#242This video format is a way to reach some people, though it's like a sales pitch, and not as "linkable" and clearly prescriptive as it could be. Ideally, there's a canonical YC bible that everyone knows about and consults, whether or not doing YC. Which says things like "equal equity" for the founders, what's the current best thinking on deals should be for founding engineers, early hires, interns, etc. Avoid people h…
https://www.ycombinator.com/library
That's a flood of marketing podcasts, not a bible.
Re: How to Not Get Screwed over as a Software Engineer [video]
#243Earlier quoted context omitted.
And then his accountant/advisor said something like, "If you'd told me you were going to buy a nightclub, there are easier ways to lose all your money."
you know the best way to have a million dollars in the Rock'n Roll world? A. start with two million !
In JWZ's case, IIRC, he actually had this exchange with an accountant/advisor.
But it seems to have worked out OK for him.
Andreessen has made a lot more money since then, but JWZ got to build up many aspects of something cool that he cared about, and also occasionally still write some code on the side.
Re: How to Not Get Screwed over as a Software Engineer [video]
#244Earlier quoted context omitted.
> But getting "founding engineer" level equity on the order of 0.5% (before dilution!) seems to basically be a scam, where you're working 2x the amount for lower salaries than the market, 0.5% at an early stage with below market compensation, no refreshers with future rounds, negligible comp increase with future rounds, and below-market salary is indeed a scam. A lot of startups are happy to operate this way. On the…
Yeah that's wild. I was a founding engineer once, and got 15% via a sweat equity agreement. No way I'd be considered a co-founder for under 1%.
Founding engineer usually implies that you’re getting paid because the company has raised funds or has significant income.
Getting 15% is only really possible as a cofounder or if you’re joining as the only engineer before they have money to pay anyone. I assume that’s why you said “sweat equity agreement”.
There can only be 100% total, so giving everyone from cofounders and the engineering team 15% would max out at 6 parties total, assuming no investors and the remainder goes to a pittance of an option pool for new hires. Unless you never plan to grow the company the math just doesn’t work.
If you joined pre-money and took pure equity as compensation while building the company from scratch then you’re more traditionally called a co-founder.
Re: How to Not Get Screwed over as a Software Engineer [video]
#245Earlier quoted context omitted.
> But getting "founding engineer" level equity on the order of 0.5% (before dilution!) seems to basically be a scam, where you're working 2x the amount for lower salaries than the market, 0.5% at an early stage with below market compensation, no refreshers with future rounds, negligible comp increase with future rounds, and below-market salary is indeed a scam. A lot of startups are happy to operate this way. On the…
Serious question: if you're truly being paid a market-rate salary -- e.g. roughly as much as you could make at any other VC-funded enterprise, any FAANG company, etc, not the same $110k/yr you'd make at a bank or consulting firm -- why would you get any equity? The whole point of equity is that you have skin in the game and "work harder" (whatever that means) to make the company a success. At least in the early days…
> market-rate salary -- e.g. roughly as much as you could make at any other VC-funded enterprise, any FAANG company
From my experience, the group of people seeking FAANG jobs or prestigious roles at big companies doesn’t have all that much overlap with the group of people who like to build early stage startups.
Some people really liking going into a huge machine of a company, doing a lot of meetings and planning documents and consensus-building, playing the office politics game, and working with huge teams where everyone gets a narrowly defined slice of responsibility that they’ll be evaluated on 12 months from now in their performance review. These people usually struggle at startups and leave anyway.
Other people can’t stand anything resembling big company operations and won’t be working for FAANG or Series D behemoths for very long even if they’re making $400K or more.
This is why you’ll see companies like Oxide Semiconductor pay $200K, accept only the best candidates, and still have people lining up to apply.
If the only thing that matters to someone is cash, moving to a Tier 1 city and joining FAANG to play the game is just what you do. Just don’t be surprised when you find yourself surrounded by other people who care primarily about playing the game to maximize their comp, because they’re doing the same thing.
Re: How to Not Get Screwed over as a Software Engineer [video]
#246One of the top comments on the YouTube video attached to the article talks about how someone wasted their 20s working as the founding engineer (employee #6 of a 6-person startup) and when the company exited for $100 MM, they only got 100k and are still working at 40 years of age while the other 5, presumably having cofounder-level equity, are retired. This is the true risk of startups, and, if you're looking to maxim…
I think there is a clear mismatch between how founders and employees value equity. The advice on the internet is to always ignore the equity component, but founders are definitionally there because they think the thing they are building will be worth something, otherwise they should still be working somewhere else.
I think the actual takeaway here is that people who go to work at startups should be far more discerning about the company they are working for than when they are getting paid in liquid stock.
I think early employees should also be willing to bail early if it's not growing at a rate that justifies the stake they get.
I wonder how sensitive the HN crowd is to the specific % number here. Do you think 1% is a meaningfully better amount of equity for employee #6 (assuming this is the first non-founder)? Does front-loading vesting (eg, 35, 35, 20, 10) change your thoughts at all?
Re: How to Not Get Screwed over as a Software Engineer [video]
#247One of the top comments on the YouTube video attached to the article talks about how someone wasted their 20s working as the founding engineer (employee #6 of a 6-person startup) and when the company exited for $100 MM, they only got 100k and are still working at 40 years of age while the other 5, presumably having cofounder-level equity, are retired. This is the true risk of startups, and, if you're looking to maxim…
Keep in mind it's not just the percentage, but whether it will be possible to keep any of it. I've done five startups now and my conclusion is I'll only consider joining a startup at two points: In the beginning, when the share valuation is less than a penny. The valuation is low, do an early exercise of all shares up front and file an 83b. Now, as you vest, you actually own the shares. So you can leave the company i…
How do you feel about options that can be exercised for 7+ years after you leave? Does that change your calculus at all.
Re: How to Not Get Screwed over as a Software Engineer [video]
#248After having worked at four startups, including two as CTO, I have zero remaining equity or financial upside from any of the startup equity. This is the bitter take away, your equity will most likely amount to nothing unless the company is on a clear path to IPO/ acquisition or a promise of share buy back during the time you're at the company. This is a higher bar than simple profitability. The reason you work at a s…
4. You'd like to work on advanced technology without a "PhD from CMU". Think CockroachDB, Druid/Imply, StarTree/Trino, ClickHouse (Hadoop/Cloudera a long time ago, Spark/Databricks when it was much smaller).
You don't need an advanced degree to work on these technologies at big tech either.
Re: How to Not Get Screwed over as a Software Engineer [video]
#249Watch the video, take it to heart.
- 1. Go to workatastartup [0], click on "Has equity range" and maybe "Company Stage: Seed".
- 2. Say "Ohh...FFS", go back to linkedin say "FFS" and throw your hands in the air.
- 3 ...
- 4. Do not collect 200 do not pass go. No F.PROFIT.
Re: How to Not Get Screwed over as a Software Engineer [video]
#250Earlier quoted context omitted.
Keep in mind it's not just the percentage, but whether it will be possible to keep any of it. I've done five startups now and my conclusion is I'll only consider joining a startup at two points: In the beginning, when the share valuation is less than a penny. The valuation is low, do an early exercise of all shares up front and file an 83b. Now, as you vest, you actually own the shares. So you can leave the company i…
How do you feel about options that can be exercised for 7+ years after you leave? Does that change your calculus at all.
Yes, that would make mid-growth startups more attractive to join. I know a few startups have done that but I haven't encountered one yet.
Also, wasn't there a scandal a few years ago of a startup that promised that and later canceled? So would have to see the contractual wording carefully.