Accumulating capital becomes easier as you gain more capital, which is exactly why we need to abolish stock option pay packages and tax these people. Film at 11.
Silicon Valley's best kept secret: Founder liquidity
341–350 of 943 posts
Re: Silicon Valley's best kept secret: Founder liquidity
#342Earlier quoted context omitted.
Are you talking about 1% and no pay or 1% and a pay? If I'm getting no pay, I'm definitely a co-founder, but I'm getting a pretty good salary from day 0, I don't think that's too bad. Say you get offered $200k/y +1%, if things go well, in 4 years you got $800k in cash and your 1%. If things go south, you still got $800k, a cool title, worked on a hopefully interesting product with a nice team. Doesn't sound awful to…
Glad to see someone else say this. I feel like I'm crazy reading these replies about being ripped off. I've been working startups my whole career, earning salaries, working with good people and having fun at times. Sometimes the equity even pays out, but that's not my only financial "egg".
Startup founders often take salaries too
Re: Silicon Valley's best kept secret: Founder liquidity
#343I recently left a long career in FANG to roll the dice on an early startup. I was pretty surprised by the uneven terms between founders and early employees. From what I could tell the early employees takes more risk than the founders because they don't get that magic token dollar turning into their share of the founding equity event and have to pay the fictional valuation of the seed to convert their options. Dependi…
I did a similar thing to you. However, I do feel like cutting your teeth as a "founding engineer" at an early startup has 2 major benefits: 1. You get to see what it's like under the covers, as you said. It's not nearly as glamorous as it looks from the outside. And yes, as an early engineer, you share in a lot of the downside without nearly an equal share of the upside. 2. You get to leave. Unfortunately, the startu…
> Do those two points mean you should get a fraction of the equity (or rather, a fraction of the options) as the founder? Honestly... maybe. I've now seen a few founders fail. It can really be a career-killer.
And I have seen a few founders fail and enter bigger companies at a pretty high position. Not sure I would relate that to how much money they should get in case their startup is one of the lucky ones.
Re: Silicon Valley's best kept secret: Founder liquidity
#344Earlier quoted context omitted.
cause if you fail you have to let people go cause if you fail you have to tell your investors you lost money cause if you fail is a thought that’s always running through your head as you live it
This is not a real risk you're talking about, but small inconveniences. A risk is losing your house for example, or losing the ability to rent. Inconveniences are part of life anyway. Being the first engineer means you get all these inconveniences (tell your wife and your kids) plus real risks as above (taking a loan to buy the options and losing it)
“Letting people go” is taking on the risk of all of those people being let go losing the ability to rent or pay their mortgages. That seems like more than an inconvenience to me if you take one of the responsibilities of being an employer at all seriously.
Re: Silicon Valley's best kept secret: Founder liquidity
#345Posting from throwaway so I can be very open. I joined a YC startup as engineer #1 with close to $200k salary and 2% options vesting at the usual 4 years, with a 10 year window. I feel like this was bettern than usual, and for a while felt like I struck an awesome deal, but as time went on I realised I was building everything single-handedly, while getting (at best) 2%, which started to annoy me deep down. Over two y…
$200k? Do you live in a place where this is considered a bad salary?
Re: Silicon Valley's best kept secret: Founder liquidity
#346I was mentally, physically and emotionally worn out when I left my previous startup after being an early employee. Despite that I really wanted to stay and be part of what my friends and I were building. Had I had the chance to 'de-risk my life' with some equity to replenish my empty bank account, which was empty from taking an early employee salary, I may have been able to stay but in the end I had to get out. Getti…
the lottery ticket analogy doesn't quite hit the mark imho. I've been seeing really shitty vesting schedules more often these days. a year in an early stage startup is often more intense than years in larger companies, yet they feel the need to push vesting schedules like 5/15/30/50 on people. even if you do stick it out and exercise those options and eat the tax burden, those shares can still be ignored in an acquis…
Sorry I'm a total dumbo when it comes to startups, but what do you 'vest'? I thought vesting is for stock options (maybe stake?).
And your startup is not on the stock market, and won't ever be unless it gets a billion-dollar valuation.
Even stake might be worthless, if the company fails, despite you building a kickass backend for it.
Re: Silicon Valley's best kept secret: Founder liquidity
#347I was mentally, physically and emotionally worn out when I left my previous startup after being an early employee. Despite that I really wanted to stay and be part of what my friends and I were building. Had I had the chance to 'de-risk my life' with some equity to replenish my empty bank account, which was empty from taking an early employee salary, I may have been able to stay but in the end I had to get out. Getti…
> how little VCs actually value early employees
Do they even pretend that they care about anything other than money? Like... ever? Maybe to family and friends (not even sure), but I mean professionally?
Re: Silicon Valley's best kept secret: Founder liquidity
#348Secondary at Series A is very rare. Part of the reason more early employees don't get included in secondary sales is because of the Securities Exchange Act of 1934 14e-2. If you have more than 10 sellers involved, the transaction can be considered a tender offer, which triggers additional regulatory requirements and disclosures. > As of 4 months ago I left a very successful stealth startup (which grew to 40M in ARR i…
Especially 5 years down the road when you own ~30% of a $100M company - but you know there's a decent chance you'll walk away with very little, if not nothing - while your peers are all making ~$1M per year working 6 hour days at FAANG with a life partner, maybe kids, and a sizable net worth that isn't going away.
Sure, you've got a decent chance to rocket past them in wealth. But they've got everything they really want. You might have foregone your shot at a partner to build a company to mostly profit someone else who did nothing but write you a check. If you do have kids, you'll be old as hell raising them. All you'll have is extra stuff hardly anyone cares about - except maybe you - if you're the type of person chasing down a decimillion net worth.
I hope these people truly enjoy their boats and their third homes in Aspen! It sure is a lot of work to get them.
Re: Silicon Valley's best kept secret: Founder liquidity
#349I think it’s entirely reasonable for a founder to take money off the table. The founder possibly walks away from a 6-7 figure opportunity cost working for a big corporate or FAANG. In return they take zero salary. All of the money that begins to come in is then used to pay employees. Maybe they raise some funds and pay themselves a below market salary for years. A few years later they are over $1 million in opportuni…
In what world 6-7 figures at FAANG is something a founder is actually "walking away" from? First of all, it assumes everyone wants to work for those companies and assumes all founders could get such high paying jobs with a snap of the finger.
Not everyone can but most founders I know could be earning a very high salary in industry.
Re: Silicon Valley's best kept secret: Founder liquidity
#350Earlier quoted context omitted.
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?
This is not speculation, it is what multiple Canadians I've tried to poach have told me: they don't want to move to a country where one medical emergency can put them in 6 figures of debt
Not that our health care system is going that well these days but true.
Also being called a freaking non-resident "alien" is so demeaning, sorry I am human.