301–310 of 413 posts
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You're certainly not paying for 24 people's salaries for 3 years with a $3m investment unless the company hits profitability very quickly (within the first year).
In fairness, it's more like Qtr1:5FTE, Q3:10, Q5:15, Q7:20 and so on.
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I prefer Wall Street's model of annual profit sharing. VC-istan: you can get dicked out of your bonus for reasons you don't understand (liquidation preferences, vesting resets and cliffing) or that are purely political and lose 6 years' worth of expected bonus. Wall Street: you can get dicked out of your bonus for reasons you don't understand or that are purely political and lose 11.9 months' worth of expected bonus.…
It's perhaps even more clear if you just work in sales rather than engineering for a tech company. Then you have predefined, measurable performance goals and are paid for meeting or exceeding for them each quarter.
> The first is a founder pledge that they will do everything in their power to let common holders sell into secondary markets above a certain valuation And that is where any company, big or small, would lose me. I've been burned too many times by all kinds of people -- from co-worker to VP -- promising to do "everything in their power" to do this or that. Weasel words like those are worth nothing at all.
I am not sure I understand Aaron's point in this. Is it "We should pay people more?" But isn't that really a question of whether or not you can find people who will work for the salary your offering? If you can't you raise what your willing to pay until you find someone who will right? Or is it "We should make options always remunerative?" In which case they aren't really options are they? They are just salary so why…
The pay to perform model could work, but that would raise burn quite a lot, which is something startups should be very careful about.
End of the day, options are an imperfect way to incentivize employees, and they work better when both sides are thinking about them right.
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Startups aren't a roll of the dice where they are all the same with equal probabilities of success. Make good decisions. Join the right team.
Here's what 20 years of experience working for startups has taught me: -- Either be a founder if you want to be there in the early days. -- Or join a "sure thing". EG: Google, Twitter, Facebook about a couple years before they went public were already household names and really well known. I don't know how much upside you get joining a sure thing like that, but that's how you make sure your options will come into mon…
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"it's worth $0 until you exit" Are lottery tickets worth $0 until the drawing happens? No. They are worth $2, or the price you paid for them. Likewise, pre-exit options do have value (as you note), but it is nonsense to simultaneously say they are worth $0. Maybe the reason this is harder to grok is options don't have an established market price like lottery tickets do. Their early-stage value is simply a negotiation…
> No. They are worth $2, or the price you paid for them. Depends how you're defining worth. The ticket has multiple "worths". The first is probably around $2 which is what you could theoretically sell it to someone else for. The second is the expected value of the payout based on the prizes, odds and number of tickets sold. This worth could be $1 or $1.74 or it could be greater than $2 (think about the case where the…
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> I'd work my ass off without options, but the options really make it easy to say "I will do everything in my power to make this succeed" instead of "I'd rather go spend time with my friends tonight" Just curious: are you under 25? Not meant as ad hominem -- I know tons of engineers who have this attitude from 22-25, but the closer I get to 30 the more I realize on a deep level that I'm going to die someday and I hav…
To work hard doesn't necessarily mean long hours.
My favorite learning experience (from a startup perspective) is also the one I think was the biggest failure. So much tech and a lot of dedication on my part, but looking back, the lost time with my wife. All of it really due to a lack of planning and an over commitment by management expecting engineering to step up. I don't ever recall being asked for estimates, just what needed to be done. I was in my tunnel at the time, building things.
I look back and the pre-devops, "devops" call at 1pm on a Saturday (after a 60+ hour week, they didn't have / hire sys admins before launching) was basically the end of line for me. Thankfully, the wife and I were driving back down 1 from SF to the Central Coast. We took our time and nourished the lack of coverage.
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Definitely not under 25. I've built startups for many people over the years (both as full time as a consultant/contractor), and at this point look at work on someone else's idea as dollars first, equity is gravy. Why? Early engineers take a hit on salary and any equity stake is quickly diluted. It is pretty common for engineers post series-A to potentially end up with a higher equity stake than someone that came in a…
Forgive my assumption. So when you're referring to equity in a company, you're talking about a founder-sized chunk of the company and not the 0.1-0.5% pittance that an engineer hired under a technical co-founder would receive? If so, that makes total sense -- and I think in both cases, whether 0.5% or 20%, it's best to view equity as gravy -- but 0.5% of a pre-Series A company should not be a reason to work 70 hour w…
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Not exactly true. You can get pretty rich in ~15 years if you save and invest a good percentage. The average American consumer is incapable of doing this, of course. Why save when you can spend, spend, spend?
Let's say that you get paid $100k for 5 years, then $150k for 5 years, and then $200k for 5 years. Nominal. So you take home $80k, $120k, $150k. You invest half of your take-home salary, so $40k, $60k, $75k. You invest everything at 4% real return. That about $1 million after those fifteen years. It's....... pretty rich, sure. It's also a LOT of savings. I'd say it's possible to get rich on salary if your salary gets…