Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Just how much is that 2% really worth?

tejusparikh.com

Post reply on HN
Print view View original

121–130 of 158 posts

Re: Just how much is that 2% really worth?

#121

Post by ranran876 »

lhnz wrote: post #35

Instead of working for a big company you could just freelance and temporarily contract out to large companies. You get all of the $$$ but also the flexibility for high-optionality events afforded to you from copious free time to build startups and side projects (as well as time to network with others.) In my opinion it is far better to secure a high salary and the free-time and autonomy to work on your own higher-ris…

My impression (and I may be wrong) is that you need to be pretty connected or have some a very niche skill-set to be able to freelance for a living.

I'm a full-time C++ programmer and I'd love to freelance, but I wouldn't know where to even start.

Maybe this makes more sense for web developers

Re: Just how much is that 2% really worth?

#122

Post by CodeMage »

eloff wrote: post #82
onion2k wrote: post #7

My advice to people who want to work in a startup is always very simple: Ignore any equity. If you'd take the job without any equity then take the job. If the equity is part of your reason for taking the job, you probably shouldn't take it. Base rate neglect[1] means we are terrible at evaluating the probability of equity being valuable. For every story about someone making millions out of their equity when the start…

I know you're not being serious about the bank thing, but I just want to say, if you're a programmer and you love what you do, and you're good enough to be choosy, don't work for anyone (especially banks!) whose main job is not software. There are a few exceptional companies, but mostly it's a good rule of thumb. Working for Dilbert's pointy haired boss is just not a recipe for happiness - who cares if it pays well.…

> [...] if you're a programmer and you love what you do, and you're good enough to be choosy, don't work for anyone (especially banks!) whose main job is not software.

I cannot agree enough with this. I know it's anecdotal, but I've had more than ten jobs in my career so far and the only exception to what you're saying was an initiative by a highly technical and visionary director (later VP), which was scrapped as soon as he left the company.

The point I'm trying to make is that it sure is possible to have a really fun and challenging job as a programmer in a non-software company, but it's a stroke of luck you should never, ever rely on and it won't last. At least, that's according to my experience so far.

Re: Just how much is that 2% really worth?

#123

Post by singingfish »

dreese wrote: post #99
btilly wrote: post #87

Earlier quoted context omitted.

The difference between an employee and an investor is that the investor puts their eggs in many baskets, and an employee puts all of their eggs in one basket. So investors get diversification of risk while employees do not. Therefore consistently accepting low probability but potentially high return choices on average works out well for investors and not for employees. And in fact investors push this way - their ince…

'Seriously, the difference between "last founder" and "first employee" is so huge that people who can derive their day to day motivation from equity should be founders.' I think this is spot-on.

hmm, I just got a gig where we want to cut a salary/equity deal (we're checking each other out for mutual fit via hourly at first). I will be in no way a founder, but it appears to me that my job will be in significant part to get the code into a state where it's in a state for handover for acquisition.

So I don't think it's quite that clear cut.

Re: Just how much is that 2% really worth?

#124

Post by pnmahoney »

cellis wrote: post #100
pnmahoney wrote: post #56

Earlier quoted context omitted.

The best in finance have most of their compensation on a perfomance-bonus basis. so for a highly sought after trading associate (real example, really high valued financial institution), get 100k base but also getting forward guidance for a 200k bonus at an absolute minimum - e.g. if not turning out to be completely incompetent.

And the best in software make tens of millions. What is your point? If we're comparing outliers, software engineers at software firms win by a long shot.

I think you've misunderstood my point, and in the process of doing that you've made one about which you are, in my experience, wrong.

1.) My point was to answer (here, I'm quoting)

> And it doesn't seem clear that finance firms pay that well: > The average base salary for a software engineer at a finance firm is $92,000

by saying (and here I'm quoting the first sentence of my post)

> The best in finance have most of their compensation on a perfomance-bonus basis.

which is a relatively straightforward clarification, and on which point I went on to cite 100k base + 200k bonus.

As to the second point?

2.) I've yet to meet anyone "software engineers at software firms" who "make tens of millions". Or maybe that's just biased to my age group? But the best from my circles turned a 200+ offer to found a startup, and then a year after that didn't work out, has since taken a 300+ offer. I can assure the level of talent required for something like this is, indeed, atypical.

But I also can't say that you're wrong, since I can't say I'm familiar with every outlier case. Just that your experience has been different?

Well, at risk of sounding nasty, I actually don't think what you're talking about -- again, people working as software engineers at software firms making annual incomes measured in multiple 8-figures -- exists anywhere, even as an outlier.

Re: Just how much is that 2% really worth?

#125

Post by cellis »

pnmahoney wrote: post #124
cellis wrote: post #100

Earlier quoted context omitted.

And the best in software make tens of millions. What is your point? If we're comparing outliers, software engineers at software firms win by a long shot.

I think you've misunderstood my point, and in the process of doing that you've made one about which you are, in my experience, wrong. 1.) My point was to answer (here, I'm quoting) > And it doesn't seem clear that finance firms pay that well: > The average base salary for a software engineer at a finance firm is $92,000 by saying (and here I'm quoting the first sentence of my post) > The best in finance have most of…

The "tens of millions" (for outliers) is exaggerated, I'll give you that. What I meant to say, perhaps a bit more tactfully was that if you're an above average software engineer capable of getting a Wall St/Hedge fund type job, you will also have options of riding "rocketships" where your equity package can turn out to be several-millions to tens of millions. And your base pay these days will also not be anything small, although perhaps not as large as Wall St.

I also happen to know quite a few finance guys at top tier shops who are not quite cracking google-level compensation, even all in. But this is all anecdotal, and may not be representative of shops you're talking about.

Re: Just how much is that 2% really worth?

#126

Post by majani »

IgorPartola wrote: post #40
onion2k wrote: post #7

My advice to people who want to work in a startup is always very simple: Ignore any equity. If you'd take the job without any equity then take the job. If the equity is part of your reason for taking the job, you probably shouldn't take it. Base rate neglect[1] means we are terrible at evaluating the probability of equity being valuable. For every story about someone making millions out of their equity when the start…

So why the hell do startups bother offering equity? It seems like for the founders there are only downsides in offering it, while for the employees there is no upside at all. Perhaps a better model for a two founder startup looking for a first employee is to just find a third partner who will only take equity (that is in double digit percentages), then actually start paying only salaries to person 4+.

in my case I built the product and got sales going on my own. Lived EXTREMELY frugal for the next two years and stashed away six figures of profits. At that point I decided to bring people on at market rate salaries. Investors were impressed and since the need was on their end, they gave me quite a sizeable first round of investment, which I used to hire more people at market rate

Re: Just how much is that 2% really worth?

#127

Post by dasil003 »

IgorPartola wrote: post #112
dasil003 wrote: post #108

Earlier quoted context omitted.

I think people who equate startup equity with lottery tickets don't really belong in startups to begin with. The whole point of working at a startup is that you go there and you make it succeed. Now of course there is still luck involved, and you shouldn't be so naive as to blindly take every founder's change-the-world pitch at face value, but whether you are a founder or early employee you have to believe that you c…

There is a huge difference between making a startup succeed and a sale that pays out to you. A startup can get sold for lots of money but if during that sale your stock is not set up to be paid out, you lose. As an employee you can make a difference for whether the sale happens or not. You have very little control over how it happens.

Seems like you're moving the goal posts. I acknowledged luck in the equation, but how the sale happens has a lot to do with the founders, that is the people you decided to fall in with. Again, it's different from a lottery ticket because you can have knowledge about the founders, their track record and there modus operandi. The average first time startup employee might not have a clue, but that doesn't mean it's impossible to gain good insight that you can apply in your decision to join as an employee.

Re: Just how much is that 2% really worth?

#128

Post by thecage411 »

acgourley wrote: post #83
josh33 wrote: post #30

Don't forget taxes will take a large chunk of any payout away. Sometimes as much as 50% when you factor in state taxes.

If you get an early stock grant and file your 83(b) you'll actually be taxed as long term capital gains.

Not necessarily, it only starts the long term capital gains clock: you still need to hold the stock for a year and have the grant be at least two years in the past to qualify.

Also, the company may not allow you to early exercise. Ask them before accepting an offer!

Re: Just how much is that 2% really worth?

#129

Post by eloff »

adrianhoward wrote: post #104
eloff wrote: post #82

Earlier quoted context omitted.

I know you're not being serious about the bank thing, but I just want to say, if you're a programmer and you love what you do, and you're good enough to be choosy, don't work for anyone (especially banks!) whose main job is not software. There are a few exceptional companies, but mostly it's a good rule of thumb. Working for Dilbert's pointy haired boss is just not a recipe for happiness - who cares if it pays well.…

"I know you're not being serious about the bank thing, but I just want to say, if you're a programmer and you love what you do, and you're good enough to be choosy, don't work for anyone (especially banks!) whose main job is not software. " I'd disagree with that. Some of the most entertaining bits of work I've ever done were for companies whose main job wasn't software. The problem isn't companies who aren't focusse…

Yes, there are exceptions, and the converse doesn't hold. But it works as a simplification when you're hunting for a job. You're right that the underlying problem is finding work where you're valued and, I'll add, where you work with great people. If pointy haired boss did the hiring, your coworkers are likely going to be inept to add to your misery.

Re: Just how much is that 2% really worth?

#130

Post by rhizome »

htormey wrote: post #119
dreese wrote: post #95

Earlier quoted context omitted.

I don't think it negates my point. It's just that I don't follow my own advice perfectly. :) It's also a little similar to how founders essentially work for free in exchange for lots of ownership. If, as an employee, I can work for less money now, then I'm taking a bigger risk betting on the outcome of the company. Startups often want to minimize cash flow, and some employees are interested in helping out with that i…

I'm not sure I see your point. Isn't what you are describing the risk reward ratio: http://www.investopedia.com/terms/r/riskrewardratio.asp By trading salary (you could get paid more at a big co) for equity you are inherently making a financial decision by investing the difference. Keeping these things seperate is not the same as not thinking about them. If you are talking taking about taking a pay cut to work with p…

Isn't it the case that they have been decoupled such that a prospective employee could negotiate for a higher salary than that which was calculated on the risk/reward see-saw, merely by saying they have to protect themselves from a Zynga option-clawback scenario? It's not a hypothetical.
Post reply on HN