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> There are a few warnings that go along with working for equity. Another warning: Equity can be expensive. It can cost a lot of money to keep that equity when you leave the startup. I was at a startup for 2 years and had 2% vested equity. I left the company 2 months ago. If I want to keep my equity, I have to exercise my stock options and pay ~$30k within the next month. If I don't, the equity disappears forever.
> There are a few warnings that go along with working for equity. Another warning: Equity can be expensive. It can cost a lot of money to keep that equity when you leave the startup. I was at a startup for 2 years and had 2% vested equity. I left the company 2 months ago. If I want to keep my equity, I have to exercise my stock options and pay ~$30k within the next month. If I don't, the equity disappears forever.
There's a third option: you can sell some or all of your equity to an investor. Companies don't like to talk about them, but I've seen more and more of these transactions happening, and they can be great for everyone involved: the employee gets a payday and eliminates her risk, and the investor gets access to a company she would not have otherwise been able to.
There are millions of people in the US alone that would jump at the chance of taking a good startup job or creating a startup themselves. They don't need convincing. But startups don't want to hire them and investors don't want to fund them. Because they're poor, under-educated, and different. They also make up the majority of the smart and talented people. It would require actual effort and understanding to work wit…
If there are "millions of people" smart and talented enough to start a successful startup, or join one early, this sounds like a spectacular business opportunity. After all, everyone knows doing a startup is easy and riskless if you just have enough smarts and talent. Startups don't require any skill or effort beyond that. We therefore conclude that the reason there aren't millions of people involved in startups is a…
The point, that I understood, from the parent is that the job (SV?) culture is highly homogenized and that there isn't enough outreach to skilled people who don't "fit". Did I misunderstand? If I didn't, do you not believe there's any amount of truth to this?
Earlier quoted context omitted.
Having the opportunity to take on a larger role earlier in a company's lifespan has a lot of allure to me - you get a lot of valuable experience that a larger company would be loathe to offer to not as experienced employees. For an example, I am a senior/lead software engineer with only about 2 years of professional experience. However, my experience has been increasingly high quality, and allows me to move up at my…
"a senior/lead software engineer with only about 2 years of professional experience" Has the term senior lost all meaning?
> My 20-year-old self didn’t consider joining a startup—or founding one—as a career option, but I hope you will. I would think that the startup environment, and the job environment in general, is much different in 2015 than in 1993 , which puts the framing analysis as a post-rationalization that's essentially comparing apple-and-oranges. > And lastly, you will probably have to work long hours. But that wouldn’t have…
> Isn't one of the primary criticisms of modern startups that they abuse naive fresh-out-of-college graduates? Precisely. A 20 year old should go out and get a job and gain some experience in a space and then, maybe , they'll be able to identify and solve a real-world problem. I had very little sense as a 20 year old. And yet, judging by some of the articles I read here, I was positively worldly compared to some of t…
And also then, maybe, they'll be able to judge whether a particular startup is solving a worthwhile problem and has a hope to succeed.
"Yes, startups are very risky, and they often fail. But when they don’t fail, their stock can become quite valuable."
The startup I worked for actually was pretty successful by most measures. In fact, I've now worked for two "successful" startups as a relatively early employee -- one acquired for XX M and another for XXX M. When all was said and done, I would have made more had I gone to a company like Google. You will get diluted, the investors will get their liquidation preference, part of the acquisition will go to retention incentives, and whats left over will be a fraction of the numbers you see in the media. Literally, the only way you will make anything comparable to a founder exit is if the company IPOs and becomes Facebook.
Also, most big companies give large stock grants. When I graduated, the stock grants Google was giving to recent grads would now be worth well into the 6 figure range. Not life changing money, but comparable to what you would get in a decent sized exit at a startup. I'd also add that joining a company like AirBnb is not the same as joining a startup. I'd imagine the AirBnb experience would have more in common with joining Google than joining Zip-tify-io-ly.
"It’s also a form of education. And at a startup, you learn a lot faster about how companies work and how to make a great product than at a big company."
NOT-TRUE-AT-ALL. If you go to work at Google, you can still work on a new product. The big difference is that at Google you will be surrounded by experts in their fields. You will learn what it takes to build a scalable product, how to build things in a modular and parallelizable way, solid coding practices, how to work on a team etc.
At a startup you "might" learn those things, but you very easily might not. My experience is that a lot startups carry massive technical debt. Their products tend to be hacked together because they didn't have an expert in (python, javascript, databases etc.) when they built the product. So, worse than not learning a lot, you might be learning exactly how not to build a product and spending all your time cleaning up spaghetti code. Plus, at Google, your product might immediately be in the hands of millions of people. The vast majority of startups never even find a product-market fit.
Bottom line, in my opinion it makes no sense to join a small startup as an employee from either a financial or career perspective. If I had it to do over again, I would have gone to a more established company with name-recognition out of school and built savings, skills, a social life and connections. After a couple years at one of those companies, you can write your ticket to any role in the industry, including founder of a VC-backed startup. You'll have an insane network, enough savings runway to build your idea and actually have time to enjoy your early 20's social life.
The risk of a startup has moved from investors to founders and now from founders to employees. Investors diversify their investments to minimize the risk. They don't really care if a particular startup they invested in will fail. They have tons of other investments... Now with this new generation of "entrepreneurs" who start five startup at a time, they are not too afraid of startup failure either. They did diversify…
I generally agree with you that investors and founders mitigate their risk through diversity and networking. However, I wouldn't single out employees as "the only one who really loses when a startup fails." Like you said, choosing a Google-like startup is tough, and most founders believe theirs will be incredibly successful when they hire early employees. But I can think of at least one example where the employee of…
The only way I personally would work for a startup is if I could purchase supplemental unemployment insurance. I know you can get unemployment insurance on various loans (mortgage, car, credit cards, etc), and state unemployment pays a small amount. But I would like to see an option where the startup pays an insurance company to cover my full salary for up to a year (or until a job is found) after a business folds.
Earlier quoted context omitted.
Having the opportunity to take on a larger role earlier in a company's lifespan has a lot of allure to me - you get a lot of valuable experience that a larger company would be loathe to offer to not as experienced employees. For an example, I am a senior/lead software engineer with only about 2 years of professional experience. However, my experience has been increasingly high quality, and allows me to move up at my…
"a senior/lead software engineer with only about 2 years of professional experience" Has the term senior lost all meaning?
Based on the post above, Bahamut's senior title is also a function of the responsibilities he's dealing with - in this case, building the first viable product of the company at an architectural level, and overseeing the completion of major features from start to finish. Just like the crop of startup CEOs in YC, his title has nothing to do with his previous experience. If the leadership of the company has decided he's fit to train new engineers and prioritize tasks for them, the "lead" description is apt too.
I'm sure there are much more skilled CEOs and much more skilled lead developers at other companies, but it's completely impractical to compare people based on internal titles. We're talking about descriptions of an employee's role in the context of his or her own company - don't read anything more into titles than that.
Graduates fresh out of college have the one thing that's most important for long-term wealth accumulation on their side: time. Take two scenarios, for instance, both assuming retirement age of 65 and a long-term average stock market return of 7% annually. Scenario one: Smart 20-year-old college grad accepts an offer to go work for Big Tech, Consulting, whatever. Their salary allows them to pay down any student loan d…
For instance, $1,000 from 1969 was worth the equivalent of over $6,000 in 2014 (45 years later, same as "start work at 20, retire at 65" examples)
So the benefits of investing, while not poor, are substantially less impressive than they appear from the raw numbers. That $21,000 of 2060 dollars might only buy as much as $3,500-4,000 in 2015, when that first $1,000 was invested.
Where do you learn more? It depends on the startup and the industry. If it's a YC startup with a pair of 21-year-olds at the helm? I'd actually say mainstream industry. Now, if you compare co-founder to call center -- definitely go co-founder, but:
1) Call center is an unusually bad job. 2) The type of person hired by a call center is unlikely to get a startup job, unless the startup sucks at hiring. Seriously.