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Venture-capital infusions shrank Box founders’ stakes, ignited strife

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Re: Venture-capital infusions shrank Box founders’ stakes, ignited strife

#31

Post by gregcohn »

kareemm wrote: post #24
kzhahou wrote: post #21

> Aaron Levie and Dylan Smith are worth more than $100 million combined after turning the cloud software firm they started in a Berkeley, Calif., garage into Box Inc., with 1,200 employees and expected revenue of $285 million this year. ...But getting there took 10 years. This illustrates very well the disparity between founder and non-founder equity. It's considered a negative that Levie and Smith got only $100 mill…

This is why being a super early employee is one of the worst deals in tech: marginally less risk than the founders, long hours, minimal equity, and likely below-market salary. There are upsides, but outside of a few rare cases, I can't imagine joining a company at this stage.

It's very easy to justify turning down early-stage jobs with that mentality -- and I've turned down a number that would have made me retirement wealthy based on precisely that logic.

But now that I'm a founder I'd take issue with the "marginally less risk" comment. Quitting a six-figure job, forgoing income for a year-plus, taking the risks of never getting liftoff or financing, taking another year or more at way-below-market angel-funded salary... this is not "marginally more risk" than someone who comes in with a salary from day one at a company that is in motion. The early employee has much less opportunity cost (and -- worth noting -- can also pull out much more easily if things seem to be moving sideways).

Furthermore the theory of "implied pot odds" applies. You're not just getting the returns on the deal, you're getting all of the career and relationship equity of having been a key player on a huge success.

I would argue that early-stage roles, if you can tolerate the opportunity cost over the near term, are one of the better deals going, and likely (though only arguably) better than being an under-ready founder with a high likelihood of failure.

Re: Venture-capital infusions shrank Box founders’ stakes, ignited strife

#32

Post by devinhelton »

kareemm wrote: post #24
kzhahou wrote: post #21

> Aaron Levie and Dylan Smith are worth more than $100 million combined after turning the cloud software firm they started in a Berkeley, Calif., garage into Box Inc., with 1,200 employees and expected revenue of $285 million this year. ...But getting there took 10 years. This illustrates very well the disparity between founder and non-founder equity. It's considered a negative that Levie and Smith got only $100 mill…

This is why being a super early employee is one of the worst deals in tech: marginally less risk than the founders, long hours, minimal equity, and likely below-market salary. There are upsides, but outside of a few rare cases, I can't imagine joining a company at this stage.

If you can get into YC, or have a sellable product, or an idea you are obsessed with, or can get seed funding, then by all means, found a company.

But, from my observation of friends who have gone full-time on a startup project, and who tried to bootstrap it into a company, probably less than 1 out of 10 endeavors even makes it to a stage where it could pay anyone a partial market salary. So by joining a seed funded company that can pay you a bit of a money is already decreasing a lot of risk, the company has already made it through the first great filter.

The best positions in startup world are:

1) start a company if you have a good idea that you have a unique ability to execute on 2) join a company at seed stage, if you can get at least half market salary and 2-5% stock, and the founders seem top notch 3) join a company after its B round, when product market fit has been proved, and the company his hitting the mega growth part of its hockey stick

Re: Venture-capital infusions shrank Box founders’ stakes, ignited strife

#34

Post by rhizome »

BallinBige wrote: post #30
kareemm wrote: post #24

Earlier quoted context omitted.

This is why being a super early employee is one of the worst deals in tech: marginally less risk than the founders, long hours, minimal equity, and likely below-market salary. There are upsides, but outside of a few rare cases, I can't imagine joining a company at this stage.

first 5-10% of google and paypal employees MADE BANK

Those in the closest inner circles to get hired when they were coming up. It continues to pay to run in the right circles and know the right people.

Re: Venture-capital infusions shrank Box founders’ stakes, ignited strife

#35

Post by myth_buster »

curiouslurker wrote: post #4
vitalus wrote: post #3

Behind a paywall :(

google the headline to get a direct link!

I believe there are browser extensions that let you configure referrer on per site basis. Hence for WSJ if you set google, it would bypass paywall.

Re: Venture-capital infusions shrank Box founders’ stakes, ignited strife

#37

Post by saryant »

kareemm wrote: post #24
kzhahou wrote: post #21

> Aaron Levie and Dylan Smith are worth more than $100 million combined after turning the cloud software firm they started in a Berkeley, Calif., garage into Box Inc., with 1,200 employees and expected revenue of $285 million this year. ...But getting there took 10 years. This illustrates very well the disparity between founder and non-founder equity. It's considered a negative that Levie and Smith got only $100 mill…

This is why being a super early employee is one of the worst deals in tech: marginally less risk than the founders, long hours, minimal equity, and likely below-market salary. There are upsides, but outside of a few rare cases, I can't imagine joining a company at this stage.

As someone who just spent two years as employee #1 at a startup before being fired last month, I don't regret it, and while my salary was below market, it wasn't too bad and I had a lot of fun. I went in with no full-time software experience (second job after college, first was a dead end job at one of the big consulting firms) and was able to build a serious set of projects and influence technical decisions that are now paying off—I now have expertise in stacks that people are willing to pay for. I view those two years as building experience and a reputation in the right communities, now I'm cashing in on that.

I don't think I could've gained that same level of responsibility anywhere short of founding my own company, which I considered but ultimately never came up with anything worth pursuing. I'm grateful that those founders were willing to take a risk on me, even though it didn't work out.

Re: Venture-capital infusions shrank Box founders’ stakes, ignited strife

#38

Post by nosuchthing »

declan wrote: post #25
kzhahou wrote: post #21

> Aaron Levie and Dylan Smith are worth more than $100 million combined after turning the cloud software firm they started in a Berkeley, Calif., garage into Box Inc., with 1,200 employees and expected revenue of $285 million this year. ...But getting there took 10 years. This illustrates very well the disparity between founder and non-founder equity. It's considered a negative that Levie and Smith got only $100 mill…

Everything you say is correct. But on the other side of the ledger, the later Box employees presumably received market-rate salaries, and I suspect that many of the 1,200 employees are salespeople who may well bring in more in commission than the average software engineer makes in salary. Also on the other side of the ledger, I could rewrite your comment to: A founder at a tier 1 company might have millions of dollar…

Strawman..

Founders of failed business plans are not in the same boat as early employees of successful businesses who contributed unique work that helped build the company to its success.

Re: Venture-capital infusions shrank Box founders’ stakes, ignited strife

#39

Post by bfuller »

gkoberger wrote: post #5

Stories like this make me think it's almost not worth starting a company. Give 1,200 talented people an awesome place to work, be CEO of a company you truly enjoy leading, provide thousands of companies with a service that makes their lives easier, entertain 150k Twitter followers, make a bunch of your employees first-time millionaires, make millions for your investors, make yourself more money than you'll ever be ab…

If I woke up with 50 million dollars, no matter the situation, I would not consider myself a failure

Re: Venture-capital infusions shrank Box founders’ stakes, ignited strife

#40

Post by kzhahou »

BallinBige wrote: post #30
kareemm wrote: post #24

Earlier quoted context omitted.

This is why being a super early employee is one of the worst deals in tech: marginally less risk than the founders, long hours, minimal equity, and likely below-market salary. There are upsides, but outside of a few rare cases, I can't imagine joining a company at this stage.

first 5-10% of google and paypal employees MADE BANK

The founders of google landed on approximately $30 BILLION split two ways. There was a lot of talk around IPO that Google was minting a thousand millionaires, but a million is still 1000x smaller than a billion.

The lesson we can take from Google (which did make a lot of people a lot of money) is that once the company reaches many many billions in public valuation, then yes, a good number of employees will get rich despite the lopsided equity distribution.

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