Working for a startup makes less sense • Hacker News Board

Re: Working for a startup makes less sense

#231

Post by Alex3917 » Tue, Dec 24, 2019, 5:07 AM UTC

jandrewrogers wrote: post #217

Alex3917 wrote: post #130

Earlier quoted context omitted.

> Some kinds of startups are effectively impossible to build given current structural constraints on financing them There are a lot of things that are impossible to raise money for, that are possible to bootstrap. If you're willing to work on something for 5 or 6 years without getting paid, there are lots of opportunities that open up that have high barrier to entry because they essentially can't be copied by venture…

Very few people can afford to bootstrap 5-6 years, that is a privileged position, most viable startups will never be executed if that is the filter. Some startups require many man-years of engineering effort before they can produce an MVP, so after 5-6 years they may have no material traction. Furthermore, startups have a shelf-life beyond which they become borderline un-investable solely by virtue of age. There are…

If you do 4 - 6 months of consulting per year then it's very doable, assuming you're a developer.

Re: Working for a startup makes less sense

#232

Post by etrk » Tue, Dec 24, 2019, 5:13 AM UTC

jefftk wrote: post #150

harimau777 wrote: post #69

Earlier quoted context omitted.

I think it's fair to say that someone who can get that sort of job right out of college probably should. However, I'm not sure that the vast majority of engineers can do that.

When I started at Google my first three full years were $213k, $233k, $287k ( https://www.jefftk.com/money ). Some of this was stock growth (which is not guaranteed and I was lucky there) but I think this sort of pay is reasonably typical for people who are considering a FAANG offer.

You didn't join straight out of school.

Re: Working for a startup makes less sense

#233

Post by simula67 » Tue, Dec 24, 2019, 5:17 AM UTC

sokoloff wrote: post #146

throwaway7951 wrote: post #126

Earlier quoted context omitted.

> Fuck being an employee for a startup so they can bleed you dry. Could not agree more, and this is my stance which I will happily share with anyone who cares to listen. I was first employee (and only engineer) at a startup which dangled 'equity' in front of me but didn't deliver. Contract was so full of gotchas that the path to me seeing some sort of actual payoff was astronomically unlikely. 90 day exercise windows…

Liquidation preferences for investors putting actual cash into a business exist for a reason. Suppose I have a company idea, maybe an early prototype and manage to raise $2MM at $10MM post-money valuation. The investors have a 20% stake for their investment. If I decide the next day, “Nah, it’s not going to work; let’s close the company and distribute the assets to the shareholders,” it would be manifestly unfair for…

No, it is not manifest. Investors should ideally not invest in companies that are not "Going Concerns"[1][2]. If the company fails, all investors (including employees who invest with their time and energy) should bear the losses. The increased risk is what usually justifies the outsized returns.

[1] https://en.wikipedia.org/wiki/Going_concern

[2] https://ssfllp.com/going-concern-rules-company/

Re: Working for a startup makes less sense

#234

Post by jandrewrogers » Tue, Dec 24, 2019, 5:17 AM UTC

techsin101 wrote: post #227

jandrewrogers wrote: post #125

I've had a related discussion with a few VCs in recent months. Some kinds of startups are effectively impossible to build given current structural constraints on financing them, creating an adverse selection for startups that fit the classic model rather than startups with the highest expected ROI. Broadly speaking, engineers will work at a discount to market-clearing wages of maybe 20% if they really like the startu…

Open source technology that requires 500k skills so all can share in cost

Open sourcing does not share the cost of $500k engineers. People using open source typically aren't paying the wages of the people that wrote the code. There is minimal financial upside to contributing to open source for most people.

The challenges that open source faces are closely related to this subject. Many vibrant parts of the software world -- open source, startups, et al -- are essentially dependent on engineers willing to write code for the compensation (direct or indirect) offered. When it no longer makes sense for good engineers to write that code, everyone will suffer from their lack of contributions.

Re: Working for a startup makes less sense

#235

Post by pnako » Tue, Dec 24, 2019, 5:19 AM UTC

EdwardDiego wrote: post #211

buzzkillington wrote: post #194

Earlier quoted context omitted.

Kubernetes is a solution worse than the problem. Microservices are unix pipes but slower. AI is linear algebra that costs x1000 because of the brand name. There is no revolution in software. We are just building crud as high and as fast as we can because the quality of developers tends to zero as the number of developers increases.

> Kubernetes is a solution worse than the problem. I disagree. Maybe it's because we haven't gone "full Kubernetes" where every cronjob is now a Kubernetes cronjob, or what have you, but for all the complexity we've had to overcome, we've seen substantial benefits. For example, autoscaling instances of my data pipeline apps based on Kafka lag. Was it complex? Yes. We had to expose Kafka topic lag as a metric to Prome…

How much data do your "data pipeline apps" process with Kafka, Kubernetes and probably other K-named things?

Re: Working for a startup makes less sense

#236

Post by candybar » Tue, Dec 24, 2019, 5:24 AM UTC

jandrewrogers wrote: post #221

AndrewKemendo wrote: post #177

Earlier quoted context omitted.

This is a good summation of the current challenges with startups that are attempting to compete on technical merit. I know this first hand as I started a computer vision company right around 2012 when the "AI" boom was really picking up steam. I would never dream today of starting a very technical company because every major will poach your talent (happened to me), invest in your competitors or attempt to acquire you…

Your points are well taken, and I have thought about them at length because I like to build startups in areas where this situation is the norm. One unorthodox strategy, which I've discussed with investors, is funding early stage such that you can pay comp that BigCo can't easily compete with -- their scale works against them. In early stage, the absolute amount of capital is trivial (and there are trillions sloshing…

I think we may be past the point where even this would work - too many startups are offering deals that are transparently awful in a way that discredits the startup ecosystem at large. I've gotten a few early-stage startup offers recently and every single one came out to be over a 50% paycut (even accepting their generous valuations) despite the fact that I made it relatively clear where the total comp needs to be for me to move forward and I was assured that at the end of the process they would be willing to make it work.

Meanwhile, if you apply the same math to the founders and their equity, in every single case they are paying themselves multiples of what they are offering me and significantly above their own market value, despite them not having done anything yet beyond getting seed funding.

What then happens is that startups like these end up getting what they pay for - they get the appropriate level of talent at market price. This maybe a market-optimal result but the cumulative effect of all these startups doing this is that most top people have sort of written off "working at a startup" as a reasonable career option, because of pay and what pay implies about the talent level of the people they would work with. This hurts all startups, even those that are willing to pay up to get the right talent. And if top engineers won't even consider your company, offering top-tier comp may backfire - you run the risk of overpaying for the same talent you could've gotten at a lower price. It's hard to break out of this cycle - consider how the same few schools are able to persistently attract the best students - and I suspect the entire startup ecosystem is trapped in it.

Re: Working for a startup makes less sense

#237

Post by jandrewrogers » Tue, Dec 24, 2019, 5:28 AM UTC

Alex3917 wrote: post #231

jandrewrogers wrote: post #217

Earlier quoted context omitted.

Very few people can afford to bootstrap 5-6 years, that is a privileged position, most viable startups will never be executed if that is the filter. Some startups require many man-years of engineering effort before they can produce an MVP, so after 5-6 years they may have no material traction. Furthermore, startups have a shelf-life beyond which they become borderline un-investable solely by virtue of age. There are…

If you do 4 - 6 months of consulting per year then it's very doable, assuming you're a developer.

That means you are spending even less time on your startup. I've been there and done that. And despite eventually raising $20+M in VC (I was extremely lucky), it was a horrible idea that I've never repeated since (raising subsequent VC). The failure modes associated with this are well understood and nearly impossible to avoid.

Short version: you can either generate project revenue or product revenue. You build a fundamentally different company to do either, so if you spend a significant portion of your time in project mode, the time you spend in product mode is usually moot. Consulting companies are project companies, through and through. The widely regarded truism that project companies cannot be transformed into product companies exists for a reason.

I'd love for this to not be the case but I've lived it so many times that I thoroughly understand the reality of it.

Re: Working for a startup makes less sense

#238

Post by gfodor » Tue, Dec 24, 2019, 5:38 AM UTC

paulmendoza wrote: post #225

gfodor wrote: post #35

I've been out of startups for a few years now, but it always struck me that there is plenty of room in the cap table for employees, if founders and VCs realize they have to cut back. If founders and VCs gave a third to half of their companies to employees, instead of crushingly small option pools, this math would almost certainly shift. And the returns wouldn't be much worse for founders or VCs.

The reason they don’t is because they already gave 50% to the investors. And it isn’t uncommon for companies with $30M or $1B exits for the founders to get nothing. I heard about a company recently where the company sold for $40M and the founders only owned 4% after years of raises. I doubt the founders got anything. Most of the time these companies are having trouble scaling sales.

That’s why I included investors. One could imagine a regime change where, given the market for talent, both founders and investors realize the need to carve out more for hiring equity, and value companies accordingly, especially in the BS early rounds where it’s not based upon any real financial metrics.

Re: Working for a startup makes less sense

#239

Post by Bella-Xiang » Tue, Dec 24, 2019, 5:39 AM UTC

I really agree with your opinion, especially the words in the last paragraph. I am working in a startup now for half a year, in which all the rules you mentioned is done well, so as a fresh graduate, I never regret working for a startup. There, I have learned a lot of different skills that definitely will be my great treasures in the future. So, for the fresh graduates, I think working for a startup makes great sense that helps them find their true value.

Re: Working for a startup makes less sense

#240

Post by s1artibartfast » Tue, Dec 24, 2019, 5:42 AM UTC

colordrops wrote: post #191

account73466 wrote: post #102

I feel like it is hard for people to say what they truly love before they have at least $1M in their bank account. If you have FU money, your view on working at a FAANG vs building a startup can change. You will find it easier to know what you truly LOVE.

$1M is not FU money for someone in a major metropolitan US city with kids.

If someone doesn't hit FU at $1M in the bank, you probably never will, which is ok.

$1M is about 20 years of coast on a modest bay area mortgage + family healthcare.