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Benefits matter, or why I won't work for your Y Combinator startup

mhalligan.com

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Re: Benefits matter, or why I won't work for your Y Combinator startup

#31

Post by jroseattle »

seeingfurther wrote: post #20

Every thing comes down to risk vs reward. Founders risk it all to found companies and rightfully have the greatest reward. Startup employees haven't risked as much but their risk is compensated with appropriate equity the earlier they join and the more risk they take on in the form of lower salary and benefits. YC definitively reduces risk and increases the potential for reward. It's easier for YC companies to raise…

Heh, well kind of.

I've learned that founders have a much greater risk/reward ratio than employees. The ratio is really not even close. The assumption that founders risk it "all" is a fallacy. The assumption that employees have less risk is also inaccurate. It depends on the situation, sure -- but I know plenty of startups founded by people who can crash and burn and not have their livelihood affected.

As for "risk compensated with appropriate equity", I'd have to say that most early-stage employees get screwed. The only case where early-stage pans out with commensurate reward at the employee level is when a company goes public. Given that most successful exits nowadays are through acquisition, most early employees are simply hosed.

Re: Benefits matter, or why I won't work for your Y Combinator startup

#32

Post by droithomme »

michaelochurch wrote: post #7

The prestige asset generated by YC is interesting, because I bet it's going to have an unintended consequence of increasing the social difference between founders and employees. If you're a YC founder, you're in the club. You were picked. It's great if you succeed; if you fail, you have a network. If you're a YC employee, you're just an employee of a small startup. YC founders seem, at least from this, to be blind to…

I agree with all you say here.

I've been disappointed with the response when I have commented on such matters in the past. Responses are typically along the lines of, "I guess you're just not good enough" and "Not all of us just care about money."

Re: Benefits matter, or why I won't work for your Y Combinator startup

#33

Post by fusiongyro »

coolsunglasses wrote: post #2

Based on how he's valuing his PTO, he's valuing his time at either $328, $218, or $447 per diem. I hope he's not valuing his PTO based on the salary he's getting. I'm a 24 year old with no college degree and I currently cost about $800 per day on contract. (Not hypothetical, billing at that rate right now.) I'd rather make twice as much money consulting, pick my own damn healthcare plan, go to whatever conferences I…

Another way of looking at it is that he's trading ~$500 per day for less risk. You're in a position to soak risk, and he isn't. It doesn't make either of you irrational.

Re: Benefits matter, or why I won't work for your Y Combinator startup

#34

Post by niggler »

michaelochurch wrote: post #7

The prestige asset generated by YC is interesting, because I bet it's going to have an unintended consequence of increasing the social difference between founders and employees. If you're a YC founder, you're in the club. You were picked. It's great if you succeed; if you fail, you have a network. If you're a YC employee, you're just an employee of a small startup. YC founders seem, at least from this, to be blind to…

"I bet it's going to have an unintended consequence of increasing the social difference between founders and employees."

I bet it exacerbates the current problem of too many startups fighting for too few competent people. There's no surprise here that working for a startup is usually a raw deal (worst of both worlds).

I wonder if the lessons of 1999-2001 were forgotten. Makes sense, given that it's been more than a decade.

Re: Benefits matter, or why I won't work for your Y Combinator startup

#35

Post by arbuge »

Just curious on the part where he says that the stock is most likely worthless. Are there any hard numbers on the average outcome of YC startups, and startups in general?

I mean, all else being equal, what is the expected value of 0.5% of the equity of the average startup at stage X these days?

Re: Benefits matter, or why I won't work for your Y Combinator startup

#36

Post by coolsunglasses »

niggler wrote: post #34
michaelochurch wrote: post #7

The prestige asset generated by YC is interesting, because I bet it's going to have an unintended consequence of increasing the social difference between founders and employees. If you're a YC founder, you're in the club. You were picked. It's great if you succeed; if you fail, you have a network. If you're a YC employee, you're just an employee of a small startup. YC founders seem, at least from this, to be blind to…

"I bet it's going to have an unintended consequence of increasing the social difference between founders and employees." I bet it exacerbates the current problem of too many startups fighting for too few competent people. There's no surprise here that working for a startup is usually a raw deal (worst of both worlds). I wonder if the lessons of 1999-2001 were forgotten. Makes sense, given that it's been more than a d…

They weren't forgotten, that's why it's so hard to hire.

Re: Benefits matter, or why I won't work for your Y Combinator startup

#37

Post by Zimahl »

Here's what a good benefits package looks like from a company who cares about attracting senior employees, and not just college kids:

- Agreement to pay for 3 conferences per year(Surge, Velocity, and ChefConf), an $18k/year benefit - $2500/year FSA, Employer funded - 401k, 5% match. (II end up with $24,750/year in my 401K plan) - Full health insurance for myself and my daughter, no Premium - Health club membership - $150/month Clipper card budget - 30 days of PTO, a $9,840/year benefit

I work in the Portland area and have had the opportunity to work at some pretty great companies around here but there is no way to get much other than the 401k benefit (and even then a 5% match may not happen) and maybe the health club membership.

Health insurance will sometimes cover yourself but once you add a spouse and/or kids it's going to cost the company a lot more so there is going to be a premium. I currently work downtown and my company covers my parking (which isn't cheap) but others haven't.

I don't know about the Bay area but there is no way you'd get 30 days of PTO from anywhere here, I've never heard of that even from a non-profit I interviewed with once.

Re: Benefits matter, or why I won't work for your Y Combinator startup

#38

Post by coolsunglasses »

fusiongyro wrote: post #33
coolsunglasses wrote: post #2

Based on how he's valuing his PTO, he's valuing his time at either $328, $218, or $447 per diem. I hope he's not valuing his PTO based on the salary he's getting. I'm a 24 year old with no college degree and I currently cost about $800 per day on contract. (Not hypothetical, billing at that rate right now.) I'd rather make twice as much money consulting, pick my own damn healthcare plan, go to whatever conferences I…

Another way of looking at it is that he's trading ~$500 per day for less risk. You're in a position to soak risk, and he isn't. It doesn't make either of you irrational.

That's a fair statement, but I'm trying to fight a different sort of risk than going without a paycheck.

Re: Benefits matter, or why I won't work for your Y Combinator startup

#39

Post by potatolicious »

seeingfurther wrote: post #20

Every thing comes down to risk vs reward. Founders risk it all to found companies and rightfully have the greatest reward. Startup employees haven't risked as much but their risk is compensated with appropriate equity the earlier they join and the more risk they take on in the form of lower salary and benefits. YC definitively reduces risk and increases the potential for reward. It's easier for YC companies to raise…

> "Startup employees haven't risked as much but their risk is compensated with appropriate equity the earlier they join and the more risk they take on in the form of lower salary and benefits."

This is the part where we wave our hands and drop a smoke bomb.

You're theoretically right, but it never works out that way. For all intents and purposes, in the current state of the tech economy, there is no inherent risk to working for a startup. If my company went belly-up today I'll bounce off the floor juuuust fine.

Equity at this point is not being given in exchange for the risk of the company failing, it's given as a tool to decrease other forms of compensation.

And it's a shitty trade. Founders know it and experienced employees know it. The only people who are falling for this are the fresh-faced college grads who think 0.1% pre-dilution of your startup will make them rich.

But lots of engineers get convinced to take huge pay cuts in exchange for a pittance in equity, and to forego huge amounts of benefits that are worth real cash.

"Compensated with appropriate equity" is bullshit. If this was standard operating procedure we wouldn't be walking around acting like sub-1% pre-dilution is worth anything whatsoever.

Re: Benefits matter, or why I won't work for your Y Combinator startup

#40

Post by niggler »

coolsunglasses wrote: post #36
niggler wrote: post #34

Earlier quoted context omitted.

"I bet it's going to have an unintended consequence of increasing the social difference between founders and employees." I bet it exacerbates the current problem of too many startups fighting for too few competent people. There's no surprise here that working for a startup is usually a raw deal (worst of both worlds). I wonder if the lessons of 1999-2001 were forgotten. Makes sense, given that it's been more than a d…

They weren't forgotten, that's why it's so hard to hire.

"They weren't forgotten, that's why it's so hard to hire."

The labor force remembers, but the startups seemed to have forgotten

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