481–490 of 943 posts
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do investors allow that
They don't control it.
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You don't start there, but you can get there as you level up. A lot of that would be because the stock on your RSU grants goes up while you work there though. I don't think many SWE have 7 figure targeted comp (highest levels, yes). But plenty get there with refreshers and stock appreciation.
Explain the math on leveling up. Each year, Meta hires more Jrs than there exist L7+'s at the entire company.
Microsoft in the Ballmer years (early/mid 2000s) had this problem. Promising L65/L66/L67 (probably equiv to L5/6 at AMZN) would leave because the next step was full. All the "partners" were hanging around and not making room for the next gen of leaders.
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The bigger secret is that stock sold in secondary sales by founders and employees is usually common stock, and the purchasers will often get the right to convert this to preferred stock. This means that the company is instantly encumbered with a greater liquidation preference, without the increase in balance sheet to offset it.
I used Founders Preferred shares to get liquidity at the A (for a now defunct startup). In our case, we offered all vested employees the option of selling in the same round on the same terms. I personally don’t recall any disclosure requirements at 10 people; however, we didn’t have that many participate so perhaps it didn’t apply. In general, Founders Preferred does layer on the preference stack but also hopefully b…
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>5 years down the road you own 20% of a $1M What a horrible fate. They only got five years of salary plus 200k extra. I'll include them in my prayers (just kidding, I don't pray).
They also probably worked many 100 hour weeks while they could've earned more and worked a lot less with less stress
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This is the model, you can see a lot of early stage founders looking for a "founding engineer" which is really just an excuse to pay founder salaries for 1% of the company rather than 50%. If the founding engineer quits without buying their options, then the founding team recoups the 1% equity. Its a recipe for the founding engineer to be burned out and pushed out.
This reminds me of how I have seen a few asks lately for roles where a company is looking for a CTO for their “AI startup”. How an “AI startup” (whatever that might actually mean) can _start up_ without a CTO is beyond me, and raises some very big red flags about what that company might be up to.
Posting from throwaway so I can be very open. I joined a YC startup as engineer #1 with close to $200k salary and 2% options vesting at the usual 4 years, with a 10 year window. I feel like this was bettern than usual, and for a while felt like I struck an awesome deal, but as time went on I realised I was building everything single-handedly, while getting (at best) 2%, which started to annoy me deep down. Over two y…
I suspect it’s more about the culture than the numbers. You say on one hand, oh I’d probably stay for 3% more, yet, you don’t see the point to earn another 1%. Your salary is pretty good man. Meanwhile they are burning $250K every month into smoke
10% is not realistic. That’s the whole employee options pool. I mean imagine if at your current job, someone worked there for a year before you, then walked away with more than your entire current equity grant, never to be heard from again. That’s what you’re describing.
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Especially 5 years down the road when you own ~30% of a $100M company - but you know there's a decent chance you'll walk away with very little, if not nothing - while your peers are all making ~$1M per year working 6 hour days at FAANG with a life partner, maybe kids, and a sizable net worth that isn't going away. Sure, you've got a decent chance to rocket past them in wealth. But they've got everything they really w…
Ok, please argue in good faith here. Maybe 1 or 2 people who aren’t executives are pulling in that kind of money from FAANGs.
(1) The opportunity cost to the founder of taking early liquidity:
If a founder cashes out 10% of their position for $500k @ $25M Series A valuation, that de-risks a lot of their personal life. But when the startup ends up selling for $250M, that $500k of 'early' selling would have been worth $5M (less any dilution between rounds) - hard not to regret the choice in that case even if hedging is going to be the correct choice 99% of the time.
(2) Meaningful vs. not-meaningful amounts:
From my prev example, the founder sells 10% of their position for $500k. Well, if all employees were allowed to sell up to 10% of their positions too, would that even matter to them? If you were an employee and had $200k total value in your options, and you could sell 10%, you're getting $20k. Not really enough to de-risk your life although still might be welcome (and employees would appreciate having the choice).
(3) Sellers need buyers:
In order for there to be a seller of shares, there needs to be a buyer. The founder is effectively choosing his buyer and future business partner by taking investment and choosing to give that buyer more control over the corp by selling him even more shares (his personal shares). The buyer wants to make the founder happy and de-risk their downside so they can be more aggressive or big-picture or whatever, plus is happy to own more of the company assuming it's a hot round.
But what does the buyer want to achieve by purchasing the employees shares? Just to own a little bit more % of the corp? For amounts that might not even matter for the employees and may de-incentivize them?
It's all very complicated and perhaps there are nuances that make every situation unique.
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> making ~$1M per year working 6 hour days at FAANG Can you say more on this? I didn't realize FAANG TCO was quite that high. Maybe it's time to swallow some pride and take the adtech money after all...
The average SUCCESSFUL founder is in their earlier 30s. At that point - you should be at least L4 (probably L5) at FAANG. Salaries are about ~$450k at that level and age. In 5 years, if you work even a fraction of as hard as you need to be a successful founder, you should be L7 - salaries are usually >$800k at that point. No, it is not like any average slacker straight out of college in 5 years can get to a $1M salar…
https://www.levels.fyi/companies/google/salaries/software-en...
The best startups have a concept which is summed up thusly: “We all go to the pay window at the same time.” It’s ok for founders to take a little bit of money off of the table if they extend that to their employees as well. Asymmetry is where things get weird. I’ve seen many founders who got deep into the fundraising cycles without ever realizing they could take a cent out. VCs will constantly tell you to let it all…
It's not in the interest of the VC that the founders have financial security. Well at least the type of VC's that have come up in since the dot com boom where it was not about building viable businesses but getting sold to the highest bidder when the founder is under financial pressure to sell they can strong arm him into easily compared to a founder that is financially secure and interested in building and running a…