Benefits matter, or why I won't work for your Y Combinator startup • Hacker News Board

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

#61

Post by revelation » Wed, Mar 20, 2013, 8:58 PM UTC

vhiremath4 wrote: post #24

nthj wrote: post #11

Earlier quoted context omitted.

> However, I'm told by people that myself and my colleagues are getting underpaid (we work at a startup). That's how “market rate“ works. A profession's salary has nothing to do with what you deserve and everything to do with how your specific combination of skills are valued by the free market.

I agree. I didn't phrase my comment correctly. I suppose what I'm really amazed by is the fact that those people don't seem to understand why I'm not angry about my situation. I don't know. Maybe it's because I've been lucky enough to have parents who have exposed me to extreme poverty at a young age (several trips to India). There are just too many wrongs in the world for someone like me to be complaining about not…

Yes, humility is important, but it doesn't mean you should be exploited by someone who has no such qualms at all.

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

#62

Post by aresant » Wed, Mar 20, 2013, 8:58 PM UTC

From the Author's bio:

"I'm just this guy who used to enjoy tech, now I would rather build bicycles. I still work in the tech industry, for the money, but I no longer call myself a "technologist"."

So points well made that a guy with children, in mid-career, and without much of a passion for the field he's working in finds a Y-Combinator offer to be less compelling than a more traditional package.

But I'm not sure what the takeaway should be for Y-Combinator companies.

I'm sure you could come up with a whole list of why it's compelling to join a Y-Combinator startup, the one that strikes me is that providing great value to a Y-Combinator start-up puts you in a great position to leverage your own attention from PG and crew.

So at some level the lesson here feels like how can Y-Combinator recruiters (or CEO recruiters) minimize distractions from candidates that ultimately don't want the job you're offering?

The answer is to highlight the tangible benefits of being part of a Y-Combinator startup while candidly addressing what "you're not" so the wrong candidates don't waste their time, or yours.

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

#63

Post by genericresponse » Wed, Mar 20, 2013, 8:59 PM UTC

arbuge wrote: post #35

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?

The expected value of 0.5% of the equity in that startup should be 0.5% of the valuation. That said, not everyone has the savings or investments to offset that level of risk. For someone with a "low" risk-tolerance, that value drops dramatically.

Remember risk in our (assumed rational) finance market is as much tied to your ability to have enough liquidity as it is to have a positive outcome.

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

#64

Post by nilkn » Wed, Mar 20, 2013, 9:00 PM UTC

swilk wrote: post #45

nilkn wrote: post #26

Earlier quoted context omitted.

It's his tone which comes off as entitled to me. Very, very entitled. He sounds like one cocky dude to me. Let's all take a moment to reflect on a few things. For instance, we are pretty lucky to be passionate about something which just happens to be pretty good at producing a lot of monetary value for companies, and consequently it's not too hard for us to convince companies to pay us a lot and give us great benefit…

All my finance friends make about 10x what my engineer friends make and work equally hard. If you compare engineers to lawyers, doctors, and executives we are very much underpaid.

I don't see the point. There's always going to be someone making far, far more money than you make. It doesn't matter if you're an engineer, a lawyer, a doctor, an executive, or the president of a country.

That doesn't mean that you should feel so inherently entitled to the compensation that you do get. While some executive may be making 10x your salary, you're probably making 10x the salary of someone else who works just as hard as you do.

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

#65

Post by apalmer » Wed, Mar 20, 2013, 9:01 PM UTC

He makes a pretty good argument really. You don't run a successful business with the mindset of 'i shouldn't be entitled', i have no idea why an employee shouldnt have the same mindset. Capitalism, your supposed to go after every tangible benefit possible, and minimize every cost possible.

How folks plan to run a business that way and yet feel its 'entitlement' for an employee to do the same thing is weird to me.

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

#66

Post by nilkn » Wed, Mar 20, 2013, 9:01 PM UTC

etchalon wrote: post #52

nilkn wrote: post #26

Earlier quoted context omitted.

It's his tone which comes off as entitled to me. Very, very entitled. He sounds like one cocky dude to me. Let's all take a moment to reflect on a few things. For instance, we are pretty lucky to be passionate about something which just happens to be pretty good at producing a lot of monetary value for companies, and consequently it's not too hard for us to convince companies to pay us a lot and give us great benefit…

The market is what the market is. While it may not be "socially equitable", senior developers are currently the perfect combination of high-demand and low-supply. It is not "entitled" to demand to be paid the maximum value the market will bear for your skills. It is stupid to do otherwise.

I never said it was entitled to want to be paid the market value. Entitlement is a personality trait, not an aspect of rationality or reasoning.

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

#67

Post by potatolicious » Wed, Mar 20, 2013, 9:02 PM UTC

seeingfurther wrote: post #44

jroseattle wrote: post #31

Earlier quoted context omitted.

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 c…

If the risk isn't being compensated, I'm with you on that point. That's Bullshit! But the... "founders have a much greater risk/reward ratio than employees", that is not a fallacy in most cases. In my own case, I've been working for 18 months with no salary and I don't consider myself unique. Most founders go down the same long long road before they bring on their first employee. I've learned that most employees (if…

> "dismiss the amount of risk founders take on to get a company to the point of even being able to make their first hire."

I don't think this is really the issue. The issue is that the economics of startups don't really work if you expect below-market salaries to be a thing.

Founders shoulder tremendous risk and (the smart ones) live on starvation-level salaries for months, if not years, before they bring on their first employee. Sure - and they deserve to be compensated appropriately via equity.

Employees, having taken on only minimal risk, don't deserve much equity at all - equity at this point is a bonus and a motivator to act in the company's best interests.

This works great. The problem comes along when we bring in sub-market salaries. The reduction in salary or benefits demands an increase in equity - equity coming directly out of the founders.

And here's where it all falls apart: to make up for below-market compensation, the amount of equity that would be rationally required would mean too little equity to account for founder risk. The numbers simply do not add up.

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

#68

Post by jodi » Wed, Mar 20, 2013, 9:04 PM UTC

arbuge wrote: post #35

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?

Here are a couple ways that common stock can become worthless: - The most obvious and common, the company fails / does not exit - The company raises money and the investors have liquidation preferences. This means that the investor is guaranteed to make 3 times what they put in when the company is acquired. So, for example, if you raise 10 million dollars and your investors have 3x liquidation preferences, you have to sell the company for over 30 million before common shareholders see any money at all. So in this situation (and it is common), the common stock is essentially worthless.

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

#69

Post by nthj » Wed, Mar 20, 2013, 9:04 PM UTC

vhiremath4 wrote: post #24

nthj wrote: post #11

Earlier quoted context omitted.

> However, I'm told by people that myself and my colleagues are getting underpaid (we work at a startup). That's how “market rate“ works. A profession's salary has nothing to do with what you deserve and everything to do with how your specific combination of skills are valued by the free market.

I agree. I didn't phrase my comment correctly. I suppose what I'm really amazed by is the fact that those people don't seem to understand why I'm not angry about my situation. I don't know. Maybe it's because I've been lucky enough to have parents who have exposed me to extreme poverty at a young age (several trips to India). There are just too many wrongs in the world for someone like me to be complaining about not…

> There are just too many wrongs in the world for someone like me to be complaining about not being able to save up for shiny new product X, Y days earlier

I don't complain when a startup can't afford me, it's just business.

But I also don't work for them.

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

#70

Post by euroclydon » Wed, Mar 20, 2013, 9:04 PM UTC

FD3SA wrote: post #29

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…

As you've noted here, it seems like most startups support the traditional executive/employee status divide, but with better marketing. Using startup culture as a substitute for benefits, compensation and autonomy within a company is now standard practice. Unfortunately, it just a variation of the old Sociopath/Clueless/Loser paradigm (I am a frequent patron of your blog). I recently discovered a blog with some intere…

Is there anything going on on that blog these days? The analysis of The Office was captivating, but I can't even find those posts by Googling for them...

What's the URL?