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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

#261

Post by danielweber »

jodi wrote: post #68
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 t…

Even with a 1X multiplier, that preferred stock still has a good chance to give the 1% employee getting the shaft.

Let's say that there are 5 board members, and 3 of them are VC reps. Those VC companies have 50% of the company, with dibs on the first $50 million. Now, it's time to sell the company.

Pretend the company could be worth between $0 million and $100 million. Figure out what the VCs are likely to sell the company for, remembering that they get 100% of the first $50 million and 0% of the next $50 million.

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

#262

Post by bearmf »

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…

The benefits described by OP are not that crappy. Lost of large companies also have employee contributions for health insurance, especially for family members. $100 for employee+child is actually quite cheap. He acts as if what he was offered was somehow insulting (though we don't know the salary offered). 15-20 days vacation is also standard, not 30 days.

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

#263

Post by eurodance »

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%…

The UK will be in recession in < 1 year.

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

#264

Post by unclebucknasty »

donall wrote: post #71
mmt wrote: post #56

Earlier quoted context omitted.

>Health insurance is a goddamn mess and a company can't expect to get it right in an afternoon, but it is important. How about just throwing money at the problem and outsourcing to someone like Trinet? Even if the company doesn't contribute much to premiums, I've always liked, as an employee, having Trinet.

I have had a series of bad experiences with Trinet. Not so bad that it's ruined my life, but bad like "I can't believe this is the best we can do for HR". I like the idea of outsourcing that sort of thing so we can focus on the hacking, but I feel like that particular space is ripe for disruption (to use a clichéd term).

I don't know about the quality of their service, but damn if their salespeople don't spam/harass the crap out of small business owners.

Not a good look for a company trying to sell a service that requires credibility.

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

#265

Post by wyclif »

michaelochurch wrote: post #226
guptaneil wrote: post #175

Earlier quoted context omitted.

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…

"There's no shortage of smart, hardworking engineers. There's a shortage of smart, hardworking engineers willing to work for very little money." ~ David "Pardo" Keppel

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

#266

Post by michaelochurch »

technotony wrote: post #238
michaelochurch wrote: post #229

Earlier quoted context omitted.

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!" witho…

How's he doing with that offer? Is he at least paying market salary?

He hasn't started it yet. He's bootstrapping. He plans on paying market to slightly above, and being generous with annual bonuses (the profit-sharing).

Wall Street gets a bad rap for its bonuses, and there are some cultural problems with it, but it's a better mechanism for compensation than what VC-istan uses. Also, I think that Wall Street culture is less horrible than VC-istan. On Wall Street, some people get butthurt about their bonuses, but you don't have teams of 15 programmers where every single one is trying to become VP/Eng and get a real slice.

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

#267

Post by oijaf888 »

twakefield wrote: post #127

"That $375k would then be subject to 63% taxes, netting me $138,750, or a 20% down-payment on my piece of the american dream. The other company does the right thing, so I only see a 15% capital gains tax" A bit of an aside but could someone elaborate on this? Is the OP referring to an 83(b) election? If so, isn't that his responsibility (of course, the company should advise him to do this). Or is this referring to so…

Yeah I didn't understand that either, unless as the other commenter mentioned they allow you to do a cashless exercise as you vest, however you are still possibly subject to AMT. AFAIK all ISOs are possibly subject to AMT whereas if you convert it to a NSO its just regular income.

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

#268

Post by oijaf888 »

sybhn wrote: post #92

A side question on his net calculation, how did he end up with 63% tax rate? anyone care to elaborate

Just using rough numbers: 33% federal income tax 6.2% on the first 113K for Social Security 1.45% for Medicare 9.3% for CA state income tax Plus any local taxes? Gets to about 50% there.

I know in NYC when the company I was with sold, my total tax rate was 52% on it.

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

#269

Post by euroclydon »

wr1472 wrote: post #111
euroclydon wrote: post #70

Earlier quoted context omitted.

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?

http://www.ribbonfarm.com/2009/10/07/the-gervais-principle-o...

Thanks. So why did I (and 'FD3SA) think Ribbon Farm was Michael O Church, when it's Venkat?

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

#270

Post by dchichkov »

mikeash wrote: post #246
llimllib wrote: post #136

Earlier quoted context omitted.

> working for an established company will give you a far better expected financial outcome at lower risk. Tiny, tiny nit: that final phrase is redundant. Calculating an expected financial outcome includes the risk. Agree with everything you're saying.

The risk also needs to be considered separately, though. For example, which of these is better compensation? $100,000/year or Each year, there is a 0.1% chance that you will be paid $1 billion. Simple math tells us that the second one has a 10x higher expected financial outcome. But few people would actually consider that to be better compensation. Lower risk is better, to an extent that can outweigh a higher expecte…

I'm sorry, but there is a 0% chance that an employee will be paid $1 billion. An employee is just a hired hand and has zero control and zero information about how money is being distributed. Once that kind of money is on the table, there would certainly be some way for people controlling the company to change that outcome, so an employee will never see that kind of money. And it will be done. Just business. Nothing personal.
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