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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

#221

Post by michaelochurch »

zallarak wrote: post #162
pg wrote: post #133

This entire thesis is a red herring. I doubt we've ever had a conversation with a startup about what sort of benefits they should offer. Since the startups in a position to hire lots of people will presumably have raised money from later stage investors, if anyone is giving them advice about this, it would probably be them. FWIW, if anyone did ask my advice about what benefits to offer, I'd tell them to err on the si…

Interesting you say this, because when I was an employee at a YC company, I was told that YC partners thought I was overpaid (while making "below market" and working lots of overtime and heavily contributing, and basically using my necessity as leverage to negotiate what partners thought was an 'overpaid' salary). NOTE: I am very grateful for my time there, but I wanted to point this out.

I have no idea who you are or what company you worked for, but a lot of things are blamed on "investors" that are actually management's own detested ideas. It's a somewhat dishonest negotiation tactic: It's Not Up To Me.

It's unfair that YC is being singled out here. These are genuine VC-istan issues, not limited to YC startups.

All of the YC founders I know are great, but sample size is small.

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

#222

Post by mrkurt »

There's some awfully strange stuff in this particular post, though I generally agree that startups tend to lowball people on offers.

For instance:

> I turned them down because they were preparing to make me a below-market offer in exchange for what I expected to be an insulting amount of equity, and a non-existant benefits package.

There are three possible answers to an offer: yes, no, counter. It's really odd to focus this much on salary + benefits without even taking the time to counter. We're not-entirely-dissimilar from the YC company he was describing, and the simple truth is that we lack many on paper benefits because we haven't taken the time to formalize many of them. Which means there's lots of leeway to ask for stuff. There's no strict "3 conferences per year" but I'm pretty sure everyone in the company goes to any conference they want to (including Velocity, and ChefConf ... you might see them there).

> The YCombinator company probably didn't care enough to have their lawyer draw up the paperwork so that their employees can execute on their stock options from the first day to avoid AMT.

Really? I'm pretty sure the standard docs nearly all YC companies use are pretty solid, and they'll usually even have their lawyers help with an 83b election. There's a lot of math and snark based on a "probably" that's probably wrong.

> Both companies offer the same, worthless stock options of 0.50% of the company, before an expected dilution.

If they just raised at a $40mm valuation, 0.5% equity is literally worth $200k to them right now (in the sense that they could exchanged another 0.5% of the company for $200k). If they're anything like us, they don't want to give up equity anyway. We would happily give a higher salary with no equity to new hires.

Equity is really a chance to trade some salary for a large check if things go incredibly well. It's not the rational choice at early employee levels, but it's a chance to get a little of the risk/reward action. The reality is that higher equity levels (ie: founder levels) come with a huge amount of risk, which often isn't feasible for people that can pull large salaries.

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

#223

Post by walshemj »

lotsofpulp wrote: post #193
edent wrote: post #23

From a UK perspective - this post is nuts! I've worked with a few London based startups (and interviewed for several). Holiday 28 days minimum - as per law https://www.gov.uk/holiday-entitlement-rights/entitlement Rarely offered health care but - for all its flaws - our National Health Service is pretty good. Shares - yup, they're almost always going to be worthless. Pension - every company has offered me at least 5%…

>Pension - every company has offered me at least 5% matched pension - some more. The Government is mandating that even small employers will have to put you in a pension scheme soon - which is good. Not really. Accounting for pensions requires the ability to project economic and biological conditions 20-40 years into the future. Humans aren't capable of this yet, and it results in dealing with fudged numbers (see the…

edent was talking about DC pensions and not DB so DC is afordable.

And the Uk has some nice tax breaks for pensions tax relief at your highest rate of tax plus over $20k capita gains tax allowance per year. and you can shelter £12k every year from tax in ISA's

Even the basic share save is very tax efficient I know people who made $50k from a sing years share save at a big uk company - and thats the one everyone from the lowest clerical assistant gets.

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

#225

Post by aplusbi »

guptaneil wrote: post #211
argonaut wrote: post #207

Earlier quoted context omitted.

I call BS. Sure, you could spin it that way. You could also spin it the other way: a startup that doesn't offer benefits doesn't care about making their employees' lives easier, and thus not offering benefits is a negative signal to potential employees.

Just because a startup doesn't offer lots of monetary benefits doesn't mean it doesn't respect its employees. Generally, the advantage of a startup is that you get far greater independence and autonomy than in a large corporation. You have to personally weigh what matters to you more: money or independence. My point was that startups should favor employees who want independence more than money because as it has been…

You just pointed out why your argument fails - it's a poor indicator. A company that doesn't offer lots of benefits may or may not respect its employees. Likewise an employee willing to accept a below-market offer may or may not be committed to the vision.

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

#226

Post by michaelochurch »

guptaneil wrote: post #175
pg wrote: post #133

This entire thesis is a red herring. I doubt we've ever had a conversation with a startup about what sort of benefits they should offer. Since the startups in a position to hire lots of people will presumably have raised money from later stage investors, if anyone is giving them advice about this, it would probably be them. FWIW, if anyone did ask my advice about what benefits to offer, I'd tell them to err on the si…

I'd argue that being less generous with benefits is a good filter for hiring candidates that are genuinely interested in what the startup's doing (which is crucial in early employees) rather than somebody who's just looking for another job, like the author. Edit: To clarify, there is huge difference between offering no benefits and offering fewer benefits than a large company. I'm not advocating treating employees li…

Health insurance is non-negotiable and shouldn't have an employee contribution. The rest of the benefits are more negotiable. 401k becomes important in your 30s when you start realizing that you're not going to be young forever. Conference budget is a nice-to-have but conferences shouldn't come out of your vacation-- that's a fuck-you if they do.

Regarding compensation: the total package should be enough that people don't worry about money. Ever. If you're doing your job, you may not make them rich but you pay enough that people aren't worried about daily living expenses.

The issue here-- why benefits are so important-- is that VC-istan startups are in such a state where the concerns of a 45-year-old with kids are seen as freaky and unusual. There's a very large talent pool that's being overlooked.

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

#227

Post by walshemj »

jbellis wrote: post #47
edent wrote: post #23

From a UK perspective - this post is nuts! I've worked with a few London based startups (and interviewed for several). Holiday 28 days minimum - as per law https://www.gov.uk/holiday-entitlement-rights/entitlement Rarely offered health care but - for all its flaws - our National Health Service is pretty good. Shares - yup, they're almost always going to be worthless. Pension - every company has offered me at least 5%…

On the flip side, I've seen insane (from a US standpoint) rules on vesting at UK startups, like "the company gets all your options back if you leave." Don't know if this is SOP or not.

Depends on the scheme. I was even allowed to vest mine early when I left BT and latterly Reed Elsevier - I even get to pump another 6 months into the Elsevier one. My options at 4.10 REL is currently 7.65

What you don't get is the insane tax liability on worthless shares which the USA has. In the UK you only pay tax on a gain -after subtracting your Capital Gains allowance

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

#228

Post by prince_hakeem »

Sorry kids, he's dead on balls accurate with his posting. I've been saying the same thing for years to startups that want to hire me. Risk/reward makes no sense for anyone but founders. The only way is if you're pretty sure they'll get acquired and you get a good bump in comp. from it. Otherwise nobody senior level should be working for any of these startups today. Go look at AngelList and see how pathetic these offers are for senior level people. Offers for the same money I made in 2000. Talent shortage my ass. More like moron that's a good developer shortage.

Feeling better everyday about bailing on the whole startup world and taking a job at a giant tech company. Way less stress, more money, time, and freedom.

Eff YC and eff the startups that are continually lowballing developer talent.

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

#229

Post by michaelochurch »

Q6T46nT668w6i3m wrote: post #210
guptaneil wrote: post #169

Earlier quoted context omitted.

It's a losing proposition, financially speaking. But it sure is a lot more fun and satisfying working at a startup than a large corporation. Although there aren't tangible or financial benefits for working at a startup, there are definitely benefits that a large company simply can't provide, like experience and independence. For someone in their early 20's straight out of college, those benefits can outweigh the fina…

It's a losing proposition, financially speaking. But it sure is a lot more fun and satisfying working at a startup than a large corporation. Maybe. However, I think most us know people that love working for Apple, Facebook, Microsoft, Google, et al. Frankly, I think your independence claim is overstated—financial support is crucial. Shigeru Miyamoto emphasized this perspective in a 2012 New Yorker profile: “There’s a…

There’re many reasons to found a startup, very few to work for one.

There are good startups out there. I'm almost notorious for startup-bashing because so many of them have awful cultures, but there are decent small/new companies out there. You'll probably have to look outside of VC-istan. VC-istan seems to appeal to the Clueless (see: MacLeod hierarchy) young who will jump at the chance to work "at a startup!" without discrimination.

I know someone who's actually looking at building a startup without equity. He will hold 100% of the stock, at least at first. Variable pay will be profit-sharing. He wants this company to last 20+ years without acquisition, so instead of putting the focus on a future cash-out, he wants people to be rewarded continually for good work.

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

#230

Post by Smudge »

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?

Median? $0.

Mean? Somewhere in-between $0 and your typical exit.

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