141–150 of 207 posts
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See generally: http://www.paulgraham.com/wealth.html (My favorite pg essay, mostly because the bit about measurement and leverage is wildly instrumentally useful even if you agree with no other conclusion of the essay.)
And if you don't have time, just read the part about the Pie Fallacy :-)
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This is a side effect of companies filling coffers via investors instead of via customers. If you're part of a high growth company with reasonable earnings, that sales multiple means you'll likely get a taste of the action. If you're in a high growth VC funded company with no revenue, then that multiple goes to the VC and maybe one or two people they might like to work with again. You can restate this via all sorts o…
Indeed. If the company is a "real business" with actual customers and real profitable finances then those shares can be worth something. If it's all a bunch of VC backed fluff, well then good luck. At that point it's just a game of selling these virtual units to others wheeling and dealing in similar pumped up virtual fluff. There are lots of ways the 'options' holders get diluted and made irrelevant and are in effec…
A somewhat dual question, can anyone offer advice on what to look for when negotiating an offer with an early-stage startup with a view towards achieving an outcome in this range? What are some red-flags in an equity offer that suggest it won't be worth what it seems? What are some reasonable stipulations/demands to make as the employee, to protect yourself and your stake? I've been told that there are so many loopho…
Picking at the Founder+epsilon stage is not easy -- if you are doing that, pick serial-winners.
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What types of positions offer large pre-IPO grants? How were you hired? (referral from friend already working there or were you headhunted or what?) Were you aware of the IPO plans before applying, and is this the sort of strategy that is repeatable?
I was just an individual contributor dev. I was hired as a referral, though other folks we hired, even after me but before the IPO made out well. I was aware of the IPO plans, though the price I was given was about 3x less than what it ended up getting to after the IPO, and it's now 6x less. In that sense, I was extremely lucky - if it had been at the original price and stayed there, I don't think it would have been…
Employees at Facebook and Google who are high achievers (top 2-5% generally) make hundreds of thousands of dollars a year in equity. I am one such lucky son of a bitch and know many others.
I'm well over 500k in cash after taxes at this point.
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Critiques of Paul Graham and YC lose me the instant they suggest that they're rigging the system for venture capitalists. I've got friends in YC, I've worked closely with YC companies for years, I know several people at YC, and the evidence overwhelmingly suggests that their intentions are (a) good and (b) founder-aligned. I'm pretty sure they're wrong about a couple things --- particularly the stuff that comes from…
I don't think there are many who would seriously suggest that YC/PG have bad intentions but survivor bias can have exactly the same effect. So can a "big picture" view: a 90% probability of failure might not seem nearly so bad to someone who can hedge by investing (not necessarily just $) in hundreds of companies. Expectation maximization is much more appealing when you have enough trials to get one of them off the g…
I'm at the bottom end of that range - here are my real numbers for one real option vesting story (on a throwaway): 1. I quit an engineering job at a bigco to become engineer #2 (employee #3) at a startup where I was given about 1.5%. I joined just after their initial fundraise. 2. I took a huge pay cut - from $120k in total comp at bigco to $60k at startup. 3. The startup was acquired roughly 2.5 years later by a lar…
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Right, PG's advice is not useful for all founders, just the 1 out of every 10 that makes it big. The others are supposed to nut up and get over it. His advice does, however, benefit every venture capitalist.
"1 out of every 10"? That sounds high to me. Is it based on YC-backed founders, founders in general, or totally made up?
Some of the stories:
- In 3 years before a big IPO to turn around sales at a non-tech company.
- A few 10x (100x?) engineers who joined Apple around 2000 and 2001, sticking around for the long ride up.
- Junior Engineer (~Employee #30) at a big ERP company that had a massive IPO a few years later.
In most of the cases they were expecting "new house" money rather than "new life" money. In all the cases, they are still doing roughly the same jobs before the windfall. In all but the last case they were very talented workaholics surrounded by similar minded folks. Of course they also lucked into the right opportunity.