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Having only worked for larger companies (RSU stage), I'm curious what the typical breakdown of founder to early employee to investor to later employee equity looks like. I'm sure it differs pretty wildly, but I'd love to know what a 'typical' case for mid-to-late-stage start up looks like.
Employee 1: ~1%
Employee 10: ~0.1%
Employee 1000: 0.01%
I'm extrapolating from past experiences in SaaS companies where I was employee number X and X has varied fairly widely.
How common is this? How many founders that raise series A are liquidating? What are the amounts typically?
I’d also push for allowing early exercise along with secondary sales restricted only by a short right-of-first-refusal period.
> allowing early exercise along with secondary sales restricted only by a short right-of-first-refusal period Do you mean cashless exercise?
Early exercise is purchasing shares before your options vest, making you a shareholder sooner and solving a bunch of tax issues. The company retains the right (basically the obligation) to repurchase any unvested shares should you leave the company before fully vesting.
The best startups have a concept which is summed up thusly: “We all go to the pay window at the same time.” It’s ok for founders to take a little bit of money off of the table if they extend that to their employees as well. Asymmetry is where things get weird. I’ve seen many founders who got deep into the fundraising cycles without ever realizing they could take a cent out. VCs will constantly tell you to let it all…
Making less money isn't really the risky part about founding a startup. The risky part is missing out on years of other life experiences, stressing (or losing) your closest personal relationships, failing and feeling personally responsible for disappointing everyone you convinced to believe in you, and developing an anxiety disorder (or worse) from chronic long-term stress. Author's suggestion that they could have ta…
The employees bear the burden too, if they're working their asses off at an early stage startup they believe in the cause just as much. Viewing founders as somehow magically special is a symptom of the broader misguided hero worship the US has right now.
We are talking SV here, and that's very different from my European experience. I've known of founders in Scandinavia who walked out from startups that weren't doing so bad and that could have gone for another round of investment because they were earning as much as a bus driver, had zero savings, and were experiencing burn out after almost a decade of work. Maybe that bit of SV culture that lets founders be on par wi…
For funded startups - at least with a healthy seed round, the investors expected us to burn fast and hard in order to prove our hypothesis or fail trying as quickly as possible, but they also expected us to not pay ourselves very much. As we found product-market fit and raised Series rounds, it was understood that we would pay ourselves competitive salaries.
Being stuck at the seed stage for 10 years is not healthy - neither in Europe, nor in Silicon Valley.
The best startups have a concept which is summed up thusly: “We all go to the pay window at the same time.” It’s ok for founders to take a little bit of money off of the table if they extend that to their employees as well. Asymmetry is where things get weird. I’ve seen many founders who got deep into the fundraising cycles without ever realizing they could take a cent out. VCs will constantly tell you to let it all…
I have seen a lot of companies, a lot of rounds. I have known zero founders who have turned down an option to take money off the table (and zero A raises that offered that to employees). I love the idea of your universe, though.
Also Elon famously put 200 million of his own money into Tesla and SpaceX to keep it afloat, which is the opposite of cashing out early.
Love the movement and glad there are founders out there pushing the envelope for their team. (aside: 51 points but only 1 comment? It's a front-page worthy article, but sort of feels like there's some vote gaming happening. I've never seen 50 points w/ 1 comment.)
On this post, I started reading, then paused to hurry back and upvote on HN, to do my part to keep it from falling off the front page, before I returned to finish reading.