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The Problem With Founders

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Re: The Problem With Founders

#31

Post by ChuckMcM »

gipp wrote: post #21
ChuckMcM wrote: post #4

Earlier quoted context omitted.

I like your idea. I expect if they implemented it they would see that the article gets it wrong on a number of levels. Take any successful company, Google, Intel, Apple, Facebook, LinkedIn, Yahoo!, Microsoft, Boeing, any of them. Now compile a list of the first 10 - 100 employees. Now take the net worth for those individuals and compare it to the rest of the world. You'll find it lands north of the 99th percentile. Y…

What’s a shorthand way to see this? Credit really only goes to founders when a startup exits for less than $250 million. Under a $1 billion, a handful of the early employees will be able to receive credit. And above $1 billion, the number of early employees who can claim credit continually increases with exit value all the way up to a Google or Facebook, where people will mention and receive acknowledgment for even t…

It is right there, and the author is confused. Not everyone cares about "credit", and if you're 100 person start up exits for 4-5x what you've raised to date, its a good day for all the employees.

The "hollywood" people as I call them, the people who want their name in the credits, are not the people you want to aspire to be. Its the people who everyone who has worked with knows they are the 'real deal.' When I did interviews at Google one of my goals was to separate out the people whose mission in life was "to work at Google" from the people whose mission was to do "." The former are the 'star struck' ones, the latter are there to do something useful.

When you are in a successful start up, it becomes a bigger company, the people who were there with you and helped build it all know who did good and who didn't. There is no reason at all to be mentioned in Tech Crunch, it adds no value to get 'credit.'

Re: The Problem With Founders

#32

Post by flipped_bit »

michaelochurch wrote: post #8
ChuckMcM wrote: post #4

Earlier quoted context omitted.

I like your idea. I expect if they implemented it they would see that the article gets it wrong on a number of levels. Take any successful company, Google, Intel, Apple, Facebook, LinkedIn, Yahoo!, Microsoft, Boeing, any of them. Now compile a list of the first 10 - 100 employees. Now take the net worth for those individuals and compare it to the rest of the world. You'll find it lands north of the 99th percentile. Y…

The Valley has changed. If you started in the 1990s, you got real equity and housing costs were low. You could get into the low millions just by working hard and living frugally. It was a different time-- more egalitarian and far more engineer-driven. The question is: if you're 22-25 now and move into the Bay, do you have a good chance of ending up a made man (or woman)? The answer is "no". It's been overrun by MBA c…

I fully agree with you and I have my theories:

1) The early 2000 dot-com crash + the Enron crash that changed the regulatory landscape to make it harder for companies to IPO. This has resulted in start-ups being formed for the pure purpose of the acquisition route - fund, and flip strategy.

2) I see the Netscape IPO as the transition point - I like to call the eras, BN and AN (before-Netscape, and after-Netscape) which coincided with the commericialization of the internet. Netscape IPO with its cult of the young founder started this trend.

All you have to do is list the companies that were formed in the BN vs the AN era, and get a feel of the 'engineering quotient' of these companies. Of course it also coincides with software overshadowing hardware companies where the former requires less upfront capital than the latter.

The capital requirements have gone down even further thanks to virtulization and consolidated infrastructure services like AWS.

3) Paradoxically larger involvement of the state. All the UC system and other universities occurred due to the threat of the cold war. Almost all the success of technology companies since the 1980s' can be traced back to the investments made in the earlier decades in universities (eps. in STEM fields), infrastructure (inter-state highways) and so forth.

How the same forumula can be replicated is going to be a challenge. Some signs like allowing private companies like Space-X to compete and augment govt. agencies might be the first steps - it will create new markets that will drive innovation.

The American triangular replationship between the State, Universities, and Private Enterprise are the 3 legs of the proverbial stool, and when one or the other legs weakens, the whole edifice starts to stumble.

4) Larger numbers of H1Bs who are legalized indentured labor that makes it harder for them to be confrontational with their employers. Note I myself went thru. the process, so I am not your garden-variety bigot here. My answer to this is to streamline the immigration process to: a) Delink H1Bs' from a spnosoring employer. Allow H1Bs' to freely move to any companies to allow a more fluid labor market.

b) Allow H1Bs' to start companies - i.e. if they get VC funded (as founders, co-founders or early founding member teams), they get immediate upgrade to green cards. DHS can keep a list of certified VCs' where this program can apply, and it can also get a % of equity as a one-time fee (along with other concrete fees), so the immigration department can be self-sustaining, and overall encourge more entrepreneurship.

c) Reduce the 6 year process to 3 years for H1Bs to acquire green-cards, and remove country-based quotas (a holdover from 1920s regulations to limit immigrants were certain undesired countries which is really an anachronism in todays globalized economy).

Note from an IRS pespective, you are as good as a American citizen or a green-card holder after the 6 months residing in the US - i.e. you are submitting full taxes as anyone else, and IRS treats you as a resident.

Re: The Problem With Founders

#33

Post by gomesnayagam »

it is like, if you have standup comedian talent , people around you will notice invariably and force you to enter into the arena, similarly if you possess entrepreneurship skill obviously including your family can support you... there you take the first step...otherwise enjoy the world of piece...

Re: The Problem With Founders

#34

Post by thu »

Articles like these always repeat it is hard to hire in the SV. I got a few interviews to do remote working for such startups and some of them said it was not possible to work with me only four days per week (I'd like a part time job). If talent is so rare, why is it better to go with zero hours instead of four days ? (Or maybe I just suck at something they don't want to say and telling me about the part-time requirement is easier.)

Re: The Problem With Founders

#35

Post by madaxe_again »

ChuckMcM wrote: post #4
TheBiv wrote: post #3

I have to commend TC for writing an article like this, as they are largely the biggest vehicle for turning founders into Hollywood-esque stars and boasting founders as being disruptive (heck, their own conference is called Disrupt). The central principle of realizing that there are more people behind a startup and we should cherish them as well, is an absolutely awesome thought!! I just hope that the vision for how w…

I like your idea. I expect if they implemented it they would see that the article gets it wrong on a number of levels. Take any successful company, Google, Intel, Apple, Facebook, LinkedIn, Yahoo!, Microsoft, Boeing, any of them. Now compile a list of the first 10 - 100 employees. Now take the net worth for those individuals and compare it to the rest of the world. You'll find it lands north of the 99th percentile. Y…

You're making the same mistake as most, however, which is seeing "Google, Intel, Apple, Facebook, LinkedIn, Yahoo!, Microsoft, Boeing, any of them" as typical startups.

They aren't. They're the 1 in a billion exception - so for you to then talk of exceptions is... exceptional!

Re: The Problem With Founders

#36

Post by walshemj »

te_chris wrote: post #6
ChuckMcM wrote: post #4

Earlier quoted context omitted.

I like your idea. I expect if they implemented it they would see that the article gets it wrong on a number of levels. Take any successful company, Google, Intel, Apple, Facebook, LinkedIn, Yahoo!, Microsoft, Boeing, any of them. Now compile a list of the first 10 - 100 employees. Now take the net worth for those individuals and compare it to the rest of the world. You'll find it lands north of the 99th percentile. Y…

I think you are correct about the big companies, but I didn't get the feeling that's who the author was addressing. They seemed to be addressing the new up and comers with founders who are stingy with equity and bad at sharing the limelight with their staff.

yeh I think that's the point if a large incumbent Telco's share options are returning £80k tax fee (that's the standard one every employee gets not key technical staff).

a start up is going to have to do a lot better than that and more open about the cap table and dilution protection - id expect if they had a good 10x exit I would expect at least 1/2 a mil.

Back in 2000 one vc backed company I was working for every member of staff was a dollar millionaire on paper at one point - pity the coop didn't buy us out :-(

Re: The Problem With Founders

#37

Post by ScottBurson »

Stratoscope wrote: post #18
thecage411 wrote: post #12

Earlier quoted context omitted.

Do founders get the 'fame' ? Sure, is that a good thing or a bad thing? Sometimes it makes you a target. I was amazed at how much Eric Schmidt paid for personal security (its in the 10Q) he can afford it of course but really? You have to hire ex-special forces types because you're too tempting a kidnapping target? I personally would much rather be anonymously wealthy than 'target on your back' wealthy. Eric Schmidt a…

Steve Jobs was a good example of what you're talking about. Ask people around Palo Alto and they will tell you stories about running into him in town. Like the time I was sitting out on the patio at La Strada, within arm's reach of the University Avenue sidewalk, and I looked over at the next table and there were Steve and his daughter having a quiet dinner just like anyone else. And no security forces in sight. And…

Wow, I never knew about that. Gripping story.

Re: The Problem With Founders

#38

Post by x0x0 »

ChuckMcM wrote: post #4
TheBiv wrote: post #3

I have to commend TC for writing an article like this, as they are largely the biggest vehicle for turning founders into Hollywood-esque stars and boasting founders as being disruptive (heck, their own conference is called Disrupt). The central principle of realizing that there are more people behind a startup and we should cherish them as well, is an absolutely awesome thought!! I just hope that the vision for how w…

I like your idea. I expect if they implemented it they would see that the article gets it wrong on a number of levels. Take any successful company, Google, Intel, Apple, Facebook, LinkedIn, Yahoo!, Microsoft, Boeing, any of them. Now compile a list of the first 10 - 100 employees. Now take the net worth for those individuals and compare it to the rest of the world. You'll find it lands north of the 99th percentile. Y…

I'm actually surprised you're making this mistake -- you've pulled out once a generation companies and are generalizing from there. With these select companies, all the early employees get rich; this is totally true. But again, these come along once every 5 years at best. So what? It's still lottery tickets.

Hell, I remember reading (and I wish I'd saved the source) that the US makes roughly 5 billion dollar companies per year. And even at a billion dollar company the first 100 employees won't be rich (where rich is > $1mm after taxes after vcs take their share). So your statistics are just wildly delusional. And remember, $1mm these days isn't even buy a modest house in the peninsula money.

Now of course, live well within your means has been good advice since, well, forever.

   Annual income twenty pounds, annual expenditure nineteen six, result 
   happiness. Annual income twenty pounds, annual expenditure twenty pound 
   ought and six, result misery.
Just as true as when Dickens wrote it in 1850.

Re: The Problem With Founders

#39

Post by ChuckMcM »

x0x0 wrote: post #38
ChuckMcM wrote: post #4

Earlier quoted context omitted.

I like your idea. I expect if they implemented it they would see that the article gets it wrong on a number of levels. Take any successful company, Google, Intel, Apple, Facebook, LinkedIn, Yahoo!, Microsoft, Boeing, any of them. Now compile a list of the first 10 - 100 employees. Now take the net worth for those individuals and compare it to the rest of the world. You'll find it lands north of the 99th percentile. Y…

I'm actually surprised you're making this mistake -- you've pulled out once a generation companies and are generalizing from there. With these select companies, all the early employees get rich; this is totally true. But again, these come along once every 5 years at best. So what? It's still lottery tickets. Hell, I remember reading (and I wish I'd saved the source) that the US makes roughly 5 billion dollar companie…

I've worked for many of those companys, Intel -> Sun -> { startups } -> NetApp -> Google -> {startup}. I find it hard to call them 'once a generation' as I've seen several in my singular generation.

That said, from the ones I worked at, the first 100 employees of every tech company (and that is important as Tech companies give out lots of equity, others do not) that hit a billion dollar + valuation have made at least a million dollars from their participation. Most multiple millions. That has simply been my experience, and I completely agree its just a data point. It would be fun to have someone with more time to dig to make up that list of 100 of every tech company that is worth more than a billion dollars and check the millionaire/not millionare box. I'd love to see the chart.

Re: The Problem With Founders

#40

Post by x0x0 »

ChuckMcM wrote: post #39
x0x0 wrote: post #38

Earlier quoted context omitted.

I'm actually surprised you're making this mistake -- you've pulled out once a generation companies and are generalizing from there. With these select companies, all the early employees get rich; this is totally true. But again, these come along once every 5 years at best. So what? It's still lottery tickets. Hell, I remember reading (and I wish I'd saved the source) that the US makes roughly 5 billion dollar companie…

I've worked for many of those companys, Intel -> Sun -> { startups } -> NetApp -> Google -> {startup}. I find it hard to call them 'once a generation' as I've seen several in my singular generation. That said, from the ones I worked at, the first 100 employees of every tech company (and that is important as Tech companies give out lots of equity, others do not) that hit a billion dollar + valuation have made at least…

I take something completely different from your list: everybody should follow you around =P. You certainly have much better judgement than me.
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