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How to Build an Iconic Company – Keith Rabois [audio]

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Re: How to Build an Iconic Company – Keith Rabois [audio]

#21

Post by logicslave »

arcticbull wrote: post #18
logicslave wrote: post #16

Earlier quoted context omitted.

On an exit, its not uncommon for founders to have 20-50x the payout compared to the earliest employees. Are you telling me the founders took 20-50x the risk/provided that much more in value?

50X the risk is a tough one, often founders aren't paid, and opportunity cost is just so high today. If a 30-year old engineer is looking to make a jump, a senior IC role at $BIGCO pays $500-750K/yr starting, with significant refreshers each year, cash bonuses and promotion path to even more. The average time to liquidity for a successful startup is 7 years. Assuming the founders take small or negligible salary for t…

a senior IC role at $BIGCO pays $500-750K/yr starting

At age 30:

This is really only at Facebook and Netflix. Its more like 375-450k at Google/Amazon/MSFT/smaller tech companies.

Facebook and Netflix together definitely employ less than 40k engineers. Of which, no more than 10,000 are ICs with starting comp greater than 500k.

So youre really talking about 10k people between those two companies, throw in the other FAANG, and its less than 40k people.

Of those people, few have the well rounded ability to start a tech company and launch a product end to end, with the sales, product, design, tech etc.

Your post makes no sense and is talking about unicorns that dont really exist.

Re: How to Build an Iconic Company – Keith Rabois [audio]

#22

Post by arcticbull »

mdon wrote: post #20
arcticbull wrote: post #14

Earlier quoted context omitted.

Not to mention ISOs are far better for employees than NSOs. Moving to RSUs actually reduces the risk and reward for employees as switching over, startups usually cut the grant size substantially (as they are issuing instruments that have intrinsic value at issue rather than no intrinsic value at issue). tl;dr: Founder shares >>> ISO > NSO >> RSU in terms of risk and reward.

ISOs are not universally better. They have a 24 month time requirement while NSOs only have a 12 month requirement.

I believe selling within the 24 month window is considered a disqualifying disposition which effectively just converts your ISOs into NSOs [1]

[1] https://www.mystockoptions.com/content/what-is-a-disqualifyi...

Re: How to Build an Iconic Company – Keith Rabois [audio]

#23

Post by arcticbull »

logicslave wrote: post #21
arcticbull wrote: post #18

Earlier quoted context omitted.

50X the risk is a tough one, often founders aren't paid, and opportunity cost is just so high today. If a 30-year old engineer is looking to make a jump, a senior IC role at $BIGCO pays $500-750K/yr starting, with significant refreshers each year, cash bonuses and promotion path to even more. The average time to liquidity for a successful startup is 7 years. Assuming the founders take small or negligible salary for t…

a senior IC role at $BIGCO pays $500-750K/yr starting At age 30: This is really only at Facebook and Netflix. Its more like 375-450k at Google/Amazon/MSFT/smaller tech companies. Facebook and Netflix together definitely employ less than 40k engineers. Of which, no more than 10,000 are ICs with starting comp greater than 500k. So youre really talking about 10k people between those two companies, throw in the other FAA…

You don't think someone who's smart, talented, and with diverse enough experience/background to found a startup and lead it to an exit would be capable of a staff engineer role at Facebook? What would you consider a fair point of comparison then?

Re: How to Build an Iconic Company – Keith Rabois [audio]

#24

Post by steffi3690 »

ditonal wrote: post #7

To his point about finding undiscovered talent, VCs are obsessed with finding people they can underpay via selling them on their “vision” and “impact”. They claim they can’t compete with Google and Facebook on comp, but the truth is they don’t even try to do so by offering fair equity deals. Instead they use rigged instruments like common ISOs with liquidation preference and 90 day exercise windows to intentionally s…

He is talking about hiring Stanford students in the year 1999. 20 years ago that was considered out of the box.

Re: How to Build an Iconic Company – Keith Rabois [audio]

#25

Post by jashmatthews »

emteycz wrote: post #13
logicslave wrote: post #12

Earlier quoted context omitted.

Startups in some sense are risky financial vehicles aimed at transferring wealth generated by employees to founders and investors.

How much risk do the employees carry? If it is that easy, why don't the employees start a business too?

Lack of access to capital.

Re: How to Build an Iconic Company – Keith Rabois [audio]

#27

Post by logicslave »

arcticbull wrote: post #23
logicslave wrote: post #21

Earlier quoted context omitted.

a senior IC role at $BIGCO pays $500-750K/yr starting At age 30: This is really only at Facebook and Netflix. Its more like 375-450k at Google/Amazon/MSFT/smaller tech companies. Facebook and Netflix together definitely employ less than 40k engineers. Of which, no more than 10,000 are ICs with starting comp greater than 500k. So youre really talking about 10k people between those two companies, throw in the other FAA…

You don't think someone who's smart, talented, and with diverse enough experience/background to found a startup and lead it to an exit would be capable of a staff engineer role at Facebook? What would you consider a fair point of comparison then?

"would be capable of a staff engineer role at Facebook"

Completely different skill sets. The founder can be scrappy with web programming, knowing a myriad of frameworks and some really good css. He's good at selling, networking, getting people on board with his vision. Maybe his real value comes from his domain knowledge, which lets him succeed where others couldnt.

Its a completely different job. The staff engineer could start a database startup, cofound some highly technical startup. But his highly developed technology skills just arent that valuable in an early stage company. Hes not worth 500k at a startup. He doesnt provide the same value he does at Facebook.

Re: How to Build an Iconic Company – Keith Rabois [audio]

#28

Post by arcticbull »

logicslave wrote: post #27
arcticbull wrote: post #23

Earlier quoted context omitted.

You don't think someone who's smart, talented, and with diverse enough experience/background to found a startup and lead it to an exit would be capable of a staff engineer role at Facebook? What would you consider a fair point of comparison then?

"would be capable of a staff engineer role at Facebook" Completely different skill sets. The founder can be scrappy with web programming, knowing a myriad of frameworks and some really good css. He's good at selling, networking, getting people on board with his vision. Maybe his real value comes from his domain knowledge, which lets him succeed where others couldnt. Its a completely different job. The staff engineer…

I actually disagree with your characterization of the role at FB, however, what would you consider to be a better way to model opportunity cost?

Re: How to Build an Iconic Company – Keith Rabois [audio]

#29

Post by PragmaticPulp »

ditonal wrote: post #7

To his point about finding undiscovered talent, VCs are obsessed with finding people they can underpay via selling them on their “vision” and “impact”. They claim they can’t compete with Google and Facebook on comp, but the truth is they don’t even try to do so by offering fair equity deals. Instead they use rigged instruments like common ISOs with liquidation preference and 90 day exercise windows to intentionally s…

> VCs are obsessed with finding people they can underpay via selling them on their “vision” and “impact”. They claim they can’t compete with Google and Facebook on comp, but the truth is they don’t even try to do so by offering fair equity deals

It’s not the VCs, it’s the founders making these calls.

Most VCs have no problems with their companies paying market rate for top talent. It’s usually the founders who think they can extend their runway and minimize their own equity solution by minimizing compensation.

Its often the founders, not the VCs, who try to negotiate for smaller employee equity pools.

Re: How to Build an Iconic Company – Keith Rabois [audio]

#30

Post by PragmaticPulp »

logicslave wrote: post #21
arcticbull wrote: post #18

Earlier quoted context omitted.

50X the risk is a tough one, often founders aren't paid, and opportunity cost is just so high today. If a 30-year old engineer is looking to make a jump, a senior IC role at $BIGCO pays $500-750K/yr starting, with significant refreshers each year, cash bonuses and promotion path to even more. The average time to liquidity for a successful startup is 7 years. Assuming the founders take small or negligible salary for t…

a senior IC role at $BIGCO pays $500-750K/yr starting At age 30: This is really only at Facebook and Netflix. Its more like 375-450k at Google/Amazon/MSFT/smaller tech companies. Facebook and Netflix together definitely employ less than 40k engineers. Of which, no more than 10,000 are ICs with starting comp greater than 500k. So youre really talking about 10k people between those two companies, throw in the other FAA…

Well said.

It’s important to acknowledge that these highly compensated positions do exist in unique scenarios for extraordinary people. They are attainable for someone with sufficient drive, dedication, and luck.

However, it’s equally important to acknowledge just how rare and unique those positions really are across the industry. $750K compensation isn’t a routine occurrence for engineers just going about their lives.

I’m part of a group mentoring program for CS college students. Some of their compensation expectations are completely out of touch with reality due to comments like this. We encourage everyone to do their research and negotiate, of course, but it’s getting frustrating to watch people distraught because they think their $180K TC offer in SV is a “lowball offer” or who think they’re going to get Netflix level compensation from some random company in their small Midwest home town.

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