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Silicon Valley's best kept secret: Founder liquidity

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Re: Silicon Valley's best kept secret: Founder liquidity

#111

Post by jahewson »

adastra22 wrote: post #79
hn_throwaway_99 wrote: post #58

Earlier quoted context omitted.

Obviously everything is local. 40k is about $20/hr, which where I live is just a tad above what new fast food workers make. Fresh CS grads make more than $100k (or at least they did, obviously the past year and a half has been brutal). This is not in SV.

In most of the world (even just considering developed nations) fresh CS grads do not make more than $100k. Senior software engineers don't even make that much anywhere in Europe or most of Canada.

They definitely do, take a look at how much big US tech companies pay in London.

Re: Silicon Valley's best kept secret: Founder liquidity

#112

Post by quartesixte »

adastra22 wrote: post #107
mtremsal wrote: post #102

Earlier quoted context omitted.

A significant portion of startups that raise a Seed round (or equivalent) never get to a Series A. Maybe 30 to 50% fail at this stage.

Are we talking about just YC-style internet/app startups? Two of my startups have been deep tech where you can't do shit without a Series A, and the third was crypto in the start of that boom where VCs were begging to lead your Series A. So maybe I just work in a vastly different field.

Yeah deep-tech (which I am also in) plays on a different scale when it comes to funding rounds, simply because of how expensive hardware is and how big the headcount gets to just make MVPs.

My friends in software startups balk at the sheer burn rate and funding rounds at mine. $100mm for a Series A is unheard of in software.

Thank you Thiel for setting the bar so high (the famous, "you need $1billion in total capital to successfully pull off hardware startups" quote).

Re: Silicon Valley's best kept secret: Founder liquidity

#113

Post by golly_ned »

I wish I had known so much more about this before joining a hot AI startup a few years ago. It raised its Series C at $850MM valuation. The business was doing terribly; investment was exclusively speculative with no business success to speak of.

The founders made tons of cash. Layoffs ensued. They're still kicking; they've pivoted to Gen AI which has given them new life. I had no idea how terrible the deal was. I regret so much about that time and the opportunity cost of joining that place.

Re: Silicon Valley's best kept secret: Founder liquidity

#114

Post by jahewson »

selestify wrote: post #95
adastra22 wrote: post #79

Earlier quoted context omitted.

In most of the world (even just considering developed nations) fresh CS grads do not make more than $100k. Senior software engineers don't even make that much anywhere in Europe or most of Canada.

Why the disparity? Especially with Canada - no language barrier and no time zone differences. Why doesn’t the free market equalize Canadian dev wages with American ones?

How much do Canadian tech companies earn per employee? There’s your answer.

Re: Silicon Valley's best kept secret: Founder liquidity

#116

Post by adastra22 »

jahewson wrote: post #111
adastra22 wrote: post #79

Earlier quoted context omitted.

In most of the world (even just considering developed nations) fresh CS grads do not make more than $100k. Senior software engineers don't even make that much anywhere in Europe or most of Canada.

They definitely do, take a look at how much big US tech companies pay in London.

> take a look at how much *big US tech companies* pay in London

Re: Silicon Valley's best kept secret: Founder liquidity

#117

Post by kolinko »

atomicnumber3 wrote: post #67
parentheses wrote: post #32

Earlier quoted context omitted.

I can share some details. 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.

This always seems like a huge scam to me. Employee 1 gets 1%? It seems unfair from multiple perspectives. One is just a straight up naive sense of fairness. If I'm going to be in the trenches with you, I had better be able to see my ownership % in a pie chart with my glasses off. If we're out here both making chairs and when we sell a chair for $100, you get $85 (assuming someone took one of the standard-ish seed rou…

If you don’t believe a startup can be the next Stripe, then you definitely shouldn’t take 1% and work as one of the first employees.

Also, the risk profile and expectations are vastly different between founders and first employees. E.g. founders are expected to not quit unless the company collapses completely, first employees can quit whenever they wish. Also, if the runway is short, founders work for free and can even go into debt, whereas employees have a stable salary.

Re: Silicon Valley's best kept secret: Founder liquidity

#119

Post by JumpCrisscross »

varenc wrote: post #84

I always thought there was another reason for VCs encouraging founders to sell shares: giving them a taste of wealth. If you're a founder that sold 2M in stock a year ago and a 200M acquisition offer comes along, you'd be less tempted now that you appreciate the difference between small millions and big millions. If you thought you had a real chance of going much bigger, having cash already makes you more willing to…

> another reason for VCs encouraging founders to sell shares: giving them a taste of wealth

VCs are wealthy. Some of them weren't born wealthy. The best among them recognise that removing the worry about e.g. paying rent will make a better CEO.

Re: Silicon Valley's best kept secret: Founder liquidity

#120

Post by [deleted] »

molsongolden wrote: post #46
JumpCrisscross wrote: post #23

Earlier quoted context omitted.

Does anyone restrict 83b elections? Is that even allowed?

Not a restriction of the 83b election but a restriction of when you can exercise. Without early exercise you are stuck exercising as you vest so there’s more likely to be a taxable spread between your option strike price and the value of the stock. With early exercise you are exercising and making the 83b election when there’s no taxable spread.

[deleted]
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