221–230 of 521 posts
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> Good faith decisions go a long way, if they believe in the founder that 800k becomes an investment to be front-of-line for his next company. Or its the cost of a lesson to stay away.
He did plan to retire so I don't think he would have needed them. It's more of a see you never type of situation.
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It averages out to $420k/yr. There's this sentiment on HN that "all you have to do" is get a job at a big tech company and you'll make a million dollars a year. It's idiotic, and not true. Yes, there are people who make $500k+ writing code in a cubicle for 40 hours a week. They are the vast, vast, vast minority compared to the people a) making $100-200k doing the same thing; b) making that $500k+ doing everything but…
To make those figures doing "ad work" at FB or Google you probably have to come in as a VP or higher, which already comes towards the end of a very long career arc.
VPs likely make millions.
I thought this was a key insight, and I'm happy the author is frank about it. Some people enjoy building things from scratch, others enjoy taking a good idea and scaling it. IMO, both are hard problems and its good that he bailed before trying to go down that route.
Years ago Jonathan was in a position where we needed to buy back his shares in a company in which he invested early. He could have asked for a much higher price, and instead he graciously agreed to a different outcome - he understood the situation and did the right thing.
Glad to see that General Catalyst did the same in relation to Baremetrics, writing off their investment. These things don't go unnoticed. Sometimes reputation is way more important than a few more bucks for your LPs.
I really appreciate the lack of “our incredible journey” platitudes in here.
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Is someone making 450k in SV (renting a home, commuting hours each way, having to fly to see family) really living a better life than someone making 150k in, say Birmingham? Where they could work from home, live close to family, have a bike commute? It's not for me (or you) to decide for others, however :) . I just think there are many more dimensions than raw salary to consider. You could work like a dog for 5 years…
I won't weigh in on your "is it better" question, but if you make 450k a year in the Bay Area you definitely do not need to commute hours each way and you can probably afford to buy a home if you want.
Can someone please explain why the investors were not able to recoup their initial investment of 800K$ when the company sold for 4 million? Thanks in advance.
It wasn’t a growth story, so from that point of view it was dead money for the VCs anyway. But why would they agree to the founder’s payout at their expense?
Either the VCs are very impressed with this founder and plan to participate in his next company, or they’re fed up and just wanted to be rid of him.
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Can you elaborate how charity is not a moral good?
In this case, charity would distort incentives by softening the outcome of bad decision-making. Each of those employees signed up for a salary and equity. That equity turned out to be of very little value to them in the end, probably less than they were hoping for. If they all got paid out anyway, they would not have learned that small equity stakes can turn out meaningless, and that exits are way less profitable for…
They might then go on to create something of massive value which the world never would have had if they simply did not have the financial means to do so.
Remembering the "charity" they received in helping build the business that enabled them to succeed as founders they then pass that same "charity" on to their own employees upon a successful exit, kickstarting a cycle of innovation that spreads much farther.
There's an argument that "that's not the way the world is" but the world is as compassionate or dispassionate as we make it. Personally I'd like to see it move towards a point where taking everything just because you can isn't viewed as acceptable.
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As a Belgian, I can't help but look at these numbers in disbelief. 100-200k/annum for churning out code 40 hours a week? Where do I sign up for this? I'm the best paid employee I know, work insane hours, and I'm not even in that bracket. Addendum: it's very rare to make more than twice the average wage in Belgium as an employee. It's a different matter if you're self employed.
Same here in the UK. I know a couple of guys in the UK who are essentially just coding all day, in full time jobs, making £100k a year. BUt it's very rare IMO, I'm not even on 50% of that.
At one place where I worked with a permanent contract, the consultants were billing at 800-1200 gbp per day depending on seniority. There was agency cut of course but overall they made real well. this is when working at the same office at the same hours right next to me, just like an employee.
I haven’t been in the UK since a while so I hear that now things changed so you can no longer pretend to run a company when being essentially an employee.
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A $3.7M windfall is enough for most Americans to never work again. Assuming he keeps ~$3M after taxes and can earn a conservative return of 4%/yr in investments, that's $120k/yr just from his investments. Many Americans live on far less. Also, he lives in Alabama, where cost of living is quite low.
It’s highly likely he gets to keep all or most of the $3.7M under the Qualified Small Business Stock (QSBS) tax exemption.
For reference, in California it is ~10%.