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Working for a startup makes less sense

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Re: Working for a startup makes less sense

#371

Post by tomaskafka »

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…

Or, you could go remote - $120-150k is an awesome package for a senior engineer or designer eg. in Czech Republic (where I live).

Re: Working for a startup makes less sense

#372

Post by jonny_eh »

rsecora wrote: post #336
viklove wrote: post #330

Earlier quoted context omitted.

The technical term is a coop, like REI.

Workers cooperatives are too risky, the liability in case of default is not limited in all legislations that i'm aware. There are successful cooperatives in most countries but those are the exception not the norm. It's always simpler, safer and more wise to incorporate.

Why can't the shares be given to employees? Why do the shares need to be owned by investors?

Re: Working for a startup makes less sense

#373

Post by sssdmmmm »

funded12345 wrote: post #151

> I think startups’ best bet is to make the most of the variables they can control outside of money and perks (if you lack the appropriate resources). This means being transparent and honest with candidates about all risks involved when joining a startup and factoring all this into the amount of equity they offer which should be something considerable. Even if the original founders have the best intentions, large equ…

Ditto to that, and add that this can happen at a larger scale even if you happen to find yourself working for one of those lucky unicorns, where late-stage VC will swoop in, inflate the valuation, and dilute the hell out of everybody holding ordinary shares.

Re: Working for a startup makes less sense

#374

Post by williamDafoe »

I have worked at 3 startups for 3 years of my career. At one, I was a founder and seed-venture investor; that one lasted 8 years. It was the only company NOT run by criminals. Total out-of-pocket costs to me (in 2019 dollars) : $45,000 in 2 startups for shares and for options. Total return : $0. Total discount to market salary that I worked for : 33%. In 2 out of 3 startups, the CEOs (1) stole all the money and fled the country, or (2) conned the VCs out of $2.5m and shut down the business the next day after the final funding round (all monies went directly into CEO bank accounts.) Ask me what I think about startups .... Fuck startups.

Re: Working for a startup makes less sense

#375

Post by williamDafoe »

scarmig wrote: post #153
sokoloff wrote: post #146

Earlier quoted context omitted.

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…

Imagine you have an engineer who could be working at BigTechCo; she works at your company a year, and then that raise you specify happens. Engineer continues to work there for three more years. Company amounts to little, acquired for $2MM, engineer gets nothing. Of course, everyone is disappointed. But it's still unfair for that engineer who gave up half a million dollars or more to work at the startup to get nothing…

Really that sums up the american dream, completely. Get rich by screwing the people whose hard labor built your enterprise, often based on "borrowed" software (Example: Microsoft 'borrowed' a source listing of a basic interpreter written at DEC.) It happens every day in the USA, and it's why conservatives love it so much.

Re: Working for a startup makes less sense

#376

Post by williamDafoe »

Apocryphon wrote: post #360
alasdair_ wrote: post #181

Earlier quoted context omitted.

This is a fair point and I’d never looked at it that way before. Thanks!

https://en.wikipedia.org/wiki/Lemon_socialism

We have a lemon socialism banking system. Obama made certain that 100% of bankers wiped out in 2007 paid NO PRICE for their recklessness; he prosecuted NO ONE.

Re: Working for a startup makes less sense

#377

Post by williamDafoe »

arcticbull wrote: post #208
alasdair_ wrote: post #179

Earlier quoted context omitted.

There are definitely startups that offer better equity terms - the last one I was at offered ten years to exercise after leaving. I hope the trend continues.

Pinterest started that around 2014 if memory serves and it became quite popular for startups to follow suit but recently less so and I’ve even seen some roll-backs; ultimately many startup employees don’t understand equity and don’t optimize for it.

Lyft also gave 7 years equity exercise terms starting around 2013, and it was part of the reason for having the IPO when it did, was because some of the early equity holders were getting near to seeing their shares expire.

Re: Working for a startup makes less sense

#378

Post by williamDafoe »

mghfreud wrote: post #110
ravedave5 wrote: post #54

Earlier quoted context omitted.

I've worked with startup employees who knew 15 technologies - all of them poorly. They had zero best practices because it was go fast 24/7. It was guys right out of school thrown right into the mix so they didn't get the guidance of more senior devs.

I just made a move to a small (~1000 people company) from Google and I feel you. The code quality is terrible, they do not write maintainable/modular code and worse, they do not do design. They suffer from this(there is always another corner case that they did not take into account because they did not communicate well with the customer) but they still do not take any steps towards the right direction.

What made you think that Google does design? In my experience, what they do at Google, is talk about the overall idea of what they are going to do, but they never did design, they never analyzed tradeoffs, and they never estimated project costs or long-term implications of the crap they threw at walls, at Google. They just pretended to do design, at Google.

Re: Working for a startup makes less sense

#380

Post by daveharig »

Value is built, not bought. If your idea of a successful startup is bringing together a group of high-priced mercenaries, then you have the wrong idea of what a successful startup is.

Every great product ever built was done with a team of missionaries. People joining together against all odds to try and usher something new (big or small) into the world. They would do it whether someone paid them or not. Even when the odds seem impossibly stacked against them. And more times than not, these small teams create something great. These kinds of teams have always, and will always beat the odds. Time and time again they have competed with and/or taken down the giants in their industry.

It’s an idea or goal that will just bite you and stick with you. It’s something you can’t put down. Each second of free time you have is spent working on it. That’s the kind of startup you belong in, and a reason to join one.

If you are evaluating a startup by financial metrics, then you don’t belong in a startup or that startup doesn’t belong in you.

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