Big Tech Company Salaries Are Hurting Startups • Hacker News Board

Re: Big Tech Company Salaries Are Hurting Startups

#291

Post by pbecotte » Wed, Mar 29, 2017, 11:50 PM UTC

alpha_squared wrote: post #260

mring33621 wrote: post #241

Earlier quoted context omitted.

I used a very simple model for my estimate: 5 years to exit * 20K yr opp cost = 100K total opp cost I think my payback should be twice my total opp cost, so I want 200K at exit 1% chance of exit at 600M valuation after those 5 years I would expect my initial equity to be diluted to 50% of original value. Hence, I want 6.7% equity at the beginning of the 5 years. Note that, IMHO, I am being very conservative in calcul…

> 1% chance of exit at 600M valuation after those 5 years Ah, I see, I wouldn't have taken that into account since I'm not sure it quite works out that way. It seems you've intertwined probability with opportunity cost, is that correct? EDIT: Thanks for the breakdown, by the way! I really appreciate the insight.

He did it correctly... Except he didn't account for the time value of money, which would have made the salary side even stronger.

Re: Big Tech Company Salaries Are Hurting Startups

#292

Post by pbecotte » Wed, Mar 29, 2017, 11:50 PM UTC

nugget wrote: post #247

mring33621 wrote: post #241

Earlier quoted context omitted.

I used a very simple model for my estimate: 5 years to exit * 20K yr opp cost = 100K total opp cost I think my payback should be twice my total opp cost, so I want 200K at exit 1% chance of exit at 600M valuation after those 5 years I would expect my initial equity to be diluted to 50% of original value. Hence, I want 6.7% equity at the beginning of the 5 years. Note that, IMHO, I am being very conservative in calcul…

Alternatively you could have accrued the salary deficit as convertible debt that would roll into the next funding round, at a discount -- which is a bit more anchored than estimating a 1% chance of exit at $600M valuation (if you were serious about wanting the job, which it sounds like you mostly weren't).

Is this something anyone has done? Seems like you would need lawyers to draw that up, but it appeals to me on a philosophical level...

Re: Big Tech Company Salaries Are Hurting Startups

#293

Post by AlexC04 » Thu, Mar 30, 2017, 12:03 AM UTC

phil21 wrote: post #85

AlexC04 wrote: post #63

Earlier quoted context omitted.

Ugghh... this exactly. I recently turned down a "we will fly you to the west coast" interview with one of the big five because I couldn't be bear the idea of spending weeks preparing for the 4-8 hour day of whiteboard coding (only to not get selected anyways). Spent the time hanging out with my girlfriend instead. Worth every minute.

I think you almost played this right, with one caveat. You should have taken the flight to the west coast and done the interview, with minimal (hour or two) to no prep at all. Why? First, you never know. Maybe they legitimately want your skillset - why fake up some crap you hate for a job you don't need? Second, you'll get practice taking interviews in a very low pressure situation. Worst-case they laugh at you and y…

Failure really hurts me on a psychological level. I don't have any interest in half assing stuff. If I can't crush it, I don't want to play.

The cost of the flight & hotel is pretty trivial in the grand scheme of things. By that I mean relative to stuff like going to a place you want to see, the value of spending a vacation day, etc...

I do agree that the meeting smart people is fun... but the full on crash-and-burn on an algorithm + whiteboard interview would really have a massive negative impact on my confidence & self-esteem. Not worth it.

Re: Big Tech Company Salaries Are Hurting Startups

#294

Post by tutufan » Thu, Mar 30, 2017, 12:06 AM UTC

st3v3r wrote: post #268

bradleyjg wrote: post #184

Earlier quoted context omitted.

Of course it means a lower salary. There are some number of jobs out there and most of them don't want remote workers. Job applicants that are willing to take jobs that forbid remote work can also apply to those that permit remote work, while workers that will only look at jobs that allow remote work can only apply to the small subset that allow it. It's straightforward micro-economic exercise to see that the when yo…

"Of course it means a lower salary." Why? How does the value of the work I provide change based on where I'm located? Is an if statement somehow different if done in the Bay Area vs the Midwest?

What does the value of your work have to do with your salary, though?

Re: Big Tech Company Salaries Are Hurting Startups

#295

Post by pbecotte » Thu, Mar 30, 2017, 12:09 AM UTC

throwaway2016a wrote: post #35

comstock wrote: post #28

Earlier quoted context omitted.

Increasing equity is great, but in general my view is that increased equity does two things: 1. It compensates for the increased risk of working for a startup (you don't have as much runway as google, might fail to raise your next round). 2. It gives the employee a stake in the company, and aligns their interests with making the company successful. I.e. Not just doing whatever they're told, failing to raise potential…

I actually agree with you. I am in disagreement with our CEO on that one. But unfortunately it's all we can afford to give so at least it is something. I have had a number of heart to hearts with devs to make sure their expectations on stock options are set right.

This statement makes no sense. If you feel that the company doesn't pay enough, there are two possibilities. 1. You get paid way more then your teams rate, proving the CEO is not being truthful (there is more money if people negotiate hard enough) 2. You are also underpaid and are doing yourself a disservice by staying

Re: Big Tech Company Salaries Are Hurting Startups

#296

Post by tutufan » Thu, Mar 30, 2017, 12:22 AM UTC

jessaustin wrote: post #229

snarf21 wrote: post #30

Earlier quoted context omitted.

I agree but the problem is also the money. A lot of the VCs want to talk about how many ex GOOG and FB engineers who graduated from MIT that they have building their next unicorn. They don't have the same story talking about three state school graduates from Kansas who may be just as talented and have a better product. They also never want to fly to Kansas, like ever. I've lived through this working at a startup in c…

Very few people fly to Kansas. There isn't really a major airport in the state.

Technically true, though everyone on this board thinks Kansas City is in Kansas...

Re: Big Tech Company Salaries Are Hurting Startups

#297

Post by WalterSear » Thu, Mar 30, 2017, 12:29 AM UTC

st3v3r wrote: post #266

WalterSear wrote: post #183

Earlier quoted context omitted.

Increase the equity for early employees by roughly an order of magnitude and aggressively protect their, still relatively small piece of pie, from dilution.

Agreed. If you dilute a single employee's equity by any amount, you do not deserve to have that employee. Period.

Dilution is inherent aspect of equity financing. However, due to the extremely small amount of equity that employees receive in exchange for such a large amount of their overall resources, the effect on their personal outcome is disproportionately affected by the dilution that occurs with series.

To the point where the risk and reward involved make it a losing proposition. As a rule of thumb, I anticipate the value of employee options to diminish by an order of magnitude between the angel round and IPO/sale. This would make an initial stake of 0.5% in a company that sells for 100 million dollars to be worth $50,000, before taxes.

Re: Big Tech Company Salaries Are Hurting Startups

#298

Post by emodendroket » Thu, Mar 30, 2017, 12:35 AM UTC

Oh boo hoo. Companies pay these kind of salaries because they can extract significantly more value from the work than what they are paying.

Re: Big Tech Company Salaries Are Hurting Startups

#299

Post by sokoloff » Thu, Mar 30, 2017, 1:03 AM UTC

michaelbuckbee wrote: post #80

RamshackleJ wrote: post #68

Earlier quoted context omitted.

I'm always curious about companies who talk about "caring about things other than just money". Maybe I'm missing somethings but if you are a for-profit company by definition you care about money, any claims other wise feel like marketing.

To me the big non monetary currency is time. Average US commute time is about half an hour [1], add to that another 15 minutes on each side for context switching and "settling in" and it's an easy 10 hours a week at least you're saving. Remote work isn't for every job or person, but the financial difference would need to be significant to drag me back into an office. 1 - https://www.washingtonpost.com/news/wonk/wp/20…

I find I have context switching and settling in time just as much (sometimes more) at my home office as I do at my office office. (IOW, I don't think I'd be inclined to count it as a cost of commuting.)

Re: Big Tech Company Salaries Are Hurting Startups

#300

Post by owyn » Thu, Mar 30, 2017, 2:12 AM UTC

TeeWEE wrote: post #170

What is the net income over a 150k salary in San Fransisco?

In California/SF the net take-home is about 8k/month on that salary. Average 1 bedroom rent is about $3000. Knock down another ~1000 per month for average things like a car, parking, phone, internet etc and your spendable take home is about half the actual paycheck.

Congrats, you're really making $50k a year!