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Silicon Valley's best kept secret: Founder liquidity

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Re: Silicon Valley's best kept secret: Founder liquidity

#491

Post by pydry »

boringg wrote: post #413
doodda wrote: post #247

This post has managed to piss off everyone: employees who didn't realize founders were getting liquidity events while they're still sitting on their more-often-than-not valueless equity, and founders who feel they've earned it and don't like the implication they haven't.

Good point. Its interesting to see the comment thread here. The part to me that I see as surprising is dismissal of the stress of taking VC money and being a founder. It is a job thats incredibly demanding. Which is eye opening to me that that's how people see it. If it was so easy why aren't there more of them and more companies? Early employee is tough - unless the company is on a significant trajectory the options…

>The part to me that I see as surprising is dismissal of the stress of taking VC money and being a founder. It is a job thats incredibly demanding.

Sounds like you're dismissing the idea that being an early employee is hard.

Re: Silicon Valley's best kept secret: Founder liquidity

#492

Post by Thorrez »

onlyrealcuzzo wrote: post #348
Finbarr wrote: post #66

Secondary at Series A is very rare. Part of the reason more early employees don't get included in secondary sales is because of the Securities Exchange Act of 1934 14e-2. If you have more than 10 sellers involved, the transaction can be considered a tender offer, which triggers additional regulatory requirements and disclosures. > As of 4 months ago I left a very successful stealth startup (which grew to 40M in ARR i…

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…

>while your peers are all making ~$1M per year working 6 hour days at FAANG

I highly doubt ALL your peers are making that much. And I think the people making $1M per year at FAANG tend to work much more than 6 hour days. You have to be very productive to get $1M per year.

Re: Silicon Valley's best kept secret: Founder liquidity

#493

Post by davedx »

randerson wrote: post #433
geepeeyoudata wrote: post #316

Earlier quoted context omitted.

I worked at a Series A startup as an employee, and wont be doing that anymore. Early engineers have all the risk (lose job the second things go bad) but little upside. They would offer 500 options, or 1000 options, or 30,000 options -- but when you look at the prices, that was worth $100-$10,000. Why would anyone take all this risk, and lower base salaries for that lottery ticket?! Secondly, they wont share the cap t…

My experience was similar, right down to the $10,000 worth of options. Eventually the company went public and those options would have been worth $5M if I'd had the foresight (and cash) to exercise them (which I didn't). The co-founders did not have exercise costs or AMT of course. It is an unfair system indeed. I'd encourage those seeking to be early engineers to go work at a FAANG for a few years before joining a s…

Wait, you couldn’t find the 10k cash to exercise 5m worth of options?

Re: Silicon Valley's best kept secret: Founder liquidity

#494

Post by boringg »

owlstuffing wrote: post #430
boringg wrote: post #400

Earlier quoted context omitted.

I don't know why you are trying to make this a me vs them situation. Both situations are difficult in different ways and they are all real businesses. "Your biggest challenge is walking into a room full of rich dudes and schmoozing for your pay cheque." - Sounds like you are trolling or alternatively incredibly naive. "If you start a real business you can expect to take on debt". ... Real business? Come on. No one in…

> I don't know why you are trying to make this a me vs them situation. In terms of economic disparity it _is_ very much an us vs them situation. Consider the optics over the last 20+ years. The middle class and their small businesses have been decimated while former VC funded companies hoover up their futures on Wall Street. The level of risk involved starting an average small business is much closer to home compared…

This isn't a me vs them. Who is hoovering up the ice cream futures? Different business model, different businesses. Both are difficult. Being a founder of a VC based company is difficult and being a builder of a retail brick and mortar is difficult. It isn't zero sum and both can exist in the same economy trying to make this a Me Vs Them narrative is totally BS.

Making a wedge where there isn't one is disingenuous.

Re: Silicon Valley's best kept secret: Founder liquidity

#495

Post by ilamont »

oblio wrote: post #385
koalaman wrote: post #266

I recently left a long career in FANG to roll the dice on an early startup. I was pretty surprised by the uneven terms between founders and early employees. From what I could tell the early employees takes more risk than the founders because they don't get that magic token dollar turning into their share of the founding equity event and have to pay the fictional valuation of the seed to convert their options. Dependi…

You have the current unicorns, basically anything from about the time YC started, and then you have the old school unicorns. For comparison, Microsoft IPOed in 1986: > The company's 1986 initial public offering (IPO) and subsequent rise in its share price created three billionaires and an estimated 12,000 millionaires among Microsoft employees. https://en.wikipedia.org/wiki/Microsoft I would really, really want to kn…

an estimated 12,000 millionaires

One of them is my neighbor, an early Microsoft employee. She basically retired in her 30s.

Re: Silicon Valley's best kept secret: Founder liquidity

#496

Post by algobro »

onlyrealcuzzo wrote: post #348
Finbarr wrote: post #66

Secondary at Series A is very rare. Part of the reason more early employees don't get included in secondary sales is because of the Securities Exchange Act of 1934 14e-2. If you have more than 10 sellers involved, the transaction can be considered a tender offer, which triggers additional regulatory requirements and disclosures. > As of 4 months ago I left a very successful stealth startup (which grew to 40M in ARR i…

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…

Sir if you live in USA and do not take a dip into the VC money swimming pool, you are stupid, because crazy people with stupid ideas routinely get to $100 Million valuations, like no other place on earth.

Its like going to Disney Land and saying "Oh i'll just sit at the coffee shop". Some people are here for the ride. Some people like the 9 to 5. Like you, obviously. Why dont you go start corporate-drone-news.org, this board is for hackers and founders.

Re: Silicon Valley's best kept secret: Founder liquidity

#497

Post by boringg »

pydry wrote: post #491
boringg wrote: post #413

Earlier quoted context omitted.

Good point. Its interesting to see the comment thread here. The part to me that I see as surprising is dismissal of the stress of taking VC money and being a founder. It is a job thats incredibly demanding. Which is eye opening to me that that's how people see it. If it was so easy why aren't there more of them and more companies? Early employee is tough - unless the company is on a significant trajectory the options…

>The part to me that I see as surprising is dismissal of the stress of taking VC money and being a founder. It is a job thats incredibly demanding. Sounds like you're dismissing the idea that being an early employee is hard.

>>"Early employee is tough".

^^ Literally in my comment.

Re: Silicon Valley's best kept secret: Founder liquidity

#498

Post by nbardy »

I’ve got a job as a ML Researcher without a degree. I have experience building multimodal generative products. Because I was able to learn on the job at startups. I get to work on the problems of my dreams for the rest of my life now.

10 years ago the only jobs for machine learning were for PhDs at big companies. If you want to join a nascent industry and you’re not a top college graduate you have to find a way in the back door.

Don’t do startups for the money do it for the career growth.

10 years in startups out of college.

Even with two good exits. I didn’t make much money as an early employee, even in success, compared to FAANG peers.

If I went to big companies I most likely end up doing a lot of web development and Im rich off the stock market.

Re: Silicon Valley's best kept secret: Founder liquidity

#499

Post by Thorrez »

throaway893 wrote: post #431
onlyrealcuzzo wrote: post #348

Earlier quoted context omitted.

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…

You are completely detached from the real world. Even in super rich countries like the US there are a lot of people without savings, living paycheck to paycheck. Most/all software engineers outside the US can only dream of ever earning that much money. And yet here you are, worrying that you'll end up only slightly richer than people earning ~$1M per year.

>And yet here you are, worrying that you'll end up only slightly richer than people earning ~$1M per year.

onlyrealcuzzo is comparing 2 things:

* Being a founder and working mega hours and having no life (e.g. no spouse or kids) and having a decent chance of losing most of your money as the company fails.

* Working at FAANG and making a lot of money while not having to work too much.

onlyrealcuzzo is saying the second option is better.

Re: Silicon Valley's best kept secret: Founder liquidity

#500

Post by wnolens »

koalaman wrote: post #266

I recently left a long career in FANG to roll the dice on an early startup. I was pretty surprised by the uneven terms between founders and early employees. From what I could tell the early employees takes more risk than the founders because they don't get that magic token dollar turning into their share of the founding equity event and have to pay the fictional valuation of the seed to convert their options. Dependi…

I almost left for an ultra early startup, still running on seed money. They offered a typical SDE2-Senior salary + 1%. I was kind of offended. I'd be inventing their core technology (which didn't exist yet and which their CTO wasn't fit to do) and probably interviewing every engineer and growing them.

Even IF they achieved a 100-300M exit, after dilution I would be compensated at best par with a FANG Senior over about 5-7y.

I was pretty excited about joining and would have been all-in. So I asked for 2-3% and was denied. Looking back, I'm glad because even 3% isn't worth it. Not when the founders are taking 10x.

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