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Working for a startup makes less sense, unless you are into the mission

jatins.gitlab.io

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Re: Working for a startup makes less sense, unless you are into the mission

#51

Post by jatins »

payne92 wrote: post #31

The blog post desperately needs "...for some people" appended. We are all solving for different things. Some want a shot at changing the world, some want to get rich, some want a job that (mostly) "doesn't come home with them", and many want to trade off between stress+anxiety and income+convenience. Others want to be always learning. Some have families and non-work commitments, others don't. For example: >>In my exp…

> there's often a better chance to learn general skills outside of (say) just development (dealing with users, writing content, devops, QA, teamwork, etc.)

I think this point of "multiple hats" is true only on paper. I can imagine a founder wearing multiple hats. First few engineers - still likely. But if you are like 30th engineer at a startup, you really are not wearing many hats.

"dealing with users" there are dedicated people in most companies who deal with users/customers. They are either PMs or Customer Success Engineers. Occasionally, you do interact with customers but I wouldn't say it's monumental.

"writing content" Again, there are dedicated technical writers who do that.

same for other roles.

Re: Working for a startup makes less sense, unless you are into the mission

#52

Post by jerf »

toomuchtodo wrote: post #34
strken wrote: post #13

Earlier quoted context omitted.

It's not quite the same. It might be closer to investing part of your salary in the same penny stock each week.

I’m confident one could do better with short duration out of the money options on SPX while working a comfy BigCo job than anyone here could with their ISO options. And you’re not wasting years of your life grinding to do it. No startups unless you’re the founder and you can iterate as a side project while collecting a check from someone else.

"I’m confident one could do better with short duration out of the money options on SPX while working a comfy BigCo job than anyone here could with their options."

Yeah... if you bound your losses by giving up at a certain point, that's true. And if you take your BigCo salary and subtract the startup salary, the result is a pretty big stake to put into the short-term options gambling game.

I'm not endorsing this plan... I'm observing that if this is a more financially sensible thing to do than work at a startup (in 2019), working at a startup must be a terrible idea...(!)

Re: Working for a startup makes less sense, unless you are into the mission

#53

Post by birken »

One thing that gets glossed over a lot with startups is that often times the technical skill level is really low. If you are a young engineer and you are hoping to learn technical skills, be very very careful about which startup you join because you might end up at one where nobody actually has any idea what they are doing. And if you yourself are in the learning phase of your career, you might not have the experience to figure out if the startup's technical situation is great or terrible.

At least one very important benefit of joining a big, reputable company is that the technical skill level will be good, the career coaching will be good and they probably will even have some sort of education pipeline set up for younger engineers to learn.

I always shudder when thinking about all of the new-grads who are seduced to join startups and then spend years learning terrible habits and churning out crap and get spit out no better than they began. At minimum if you spent a couple years at a larger, reputable company you'll always have a benchmark to compare with other opportunities.

Re: Working for a startup makes less sense, unless you are into the mission

#54

Post by legitster »

Completely missing are stable mid-size companies. They can be great! Lots of flexibility to do your own thing, with less corporate politics.

Unfortunately, market forces seem to be driving them out of the economy. Companies have to grow insanely big to justify their investments. And consumers increasingly don't want to shop at a 3rd or 4th player in a market.

Re: Working for a startup makes less sense, unless you are into the mission

#55

Post by thefujin »

jatins wrote: post #18
rubicon33 wrote: post #12

> That startup sold for 200 million dollars and, as the 10th engineer, I made ... 15000 dollars from that exit. Why so low?

I am the OP. I think it was because I was an overseas employee and the founders just didn't shell out equity to people who were not based out of US. I saw the equity distribution sheet that was disclosed after the acquisition as part of legal requirements and that was indeed true. IMO, equity represents ownership in the company and should not depend on purchase parity.

I think you should've mentioned this in your blog post, especially if you're comparing the money you've made from equity to new college grad salary at Facebook

Re: Working for a startup makes less sense, unless you are into the mission

#56

Post by citizen1493 »

Whats with the attack on Snapchat? Creating a social network that respects privacy, doesn't allow Russian trolls to influence our election and provides an alternative to the Instagram popularity content doesn't sound like a terrible mission to me.

Re: Working for a startup makes less sense, unless you are into the mission

#57

Post by ankit219 »

jatins wrote: post #51
payne92 wrote: post #31

The blog post desperately needs "...for some people" appended. We are all solving for different things. Some want a shot at changing the world, some want to get rich, some want a job that (mostly) "doesn't come home with them", and many want to trade off between stress+anxiety and income+convenience. Others want to be always learning. Some have families and non-work commitments, others don't. For example: >>In my exp…

> there's often a better chance to learn general skills outside of (say) just development (dealing with users, writing content, devops, QA, teamwork, etc.) I think this point of "multiple hats" is true only on paper. I can imagine a founder wearing multiple hats. First few engineers - still likely. But if you are like 30th engineer at a startup, you really are not wearing many hats. "dealing with users" there are ded…

If the company already has specialist people for all the roles, then it has already moved on from the traditional early stage startup where the rewards are higher and learning exponential.

Re: Working for a startup makes less sense, unless you are into the mission

#58

Post by smallgovt »

scarmig wrote: post #36
smallgovt wrote: post #32

Looking at any individual employee's outcome from a startup's exit is wildly unproductive because there is so much variance in startup outcomes. What you really want to know, as an employee, is what the expected value of your shares/options are. As a general rule of thumb, I'd recommend taking the valuation of the company's last financing round and halve it. Then, multiple this valuation by your projected ownership p…

High variance investments are typically supposed to be a minority of your portfolio. Startups force you into investing an outsized amount into them. That's not even touching on how the actual value and variance is unknown, and how startups prey on what amount to unsophisticated investors (the workers taking equity).

I agree with all your points, especially that many startups 'prey' on employees who don't really understand how startup economics work.

This is why I think it's important to distill general rules of thumb like the one I suggested. This will give employees a realistic perspective when evaluating startup offers.

For example, let's say your typical pre-series A 1st engineer hire gets $150K + 1% vested over 4 years. Instead of thinking about what your shares would be worth in the case of an IPO, just take the last company's valuation, halve it and multiply it by your ownership. So, if your startup's last raise was at $10M, your 1% stake is worth $50K.

If people start thinking in these terms, the level of disappointment will go way down because you start realizing that the expected value of employee equity is almost never that much to begin with.

Re: Working for a startup makes less sense, unless you are into the mission

#59

Post by fizwhiz »

acconrad wrote: post #21

As someone who was a 1st engineer of a startup that successfully exited I had what would be considered a good payout. When looking over the course of my career, however, it simply made up for the reduced salary I took for the years I worked there. It was a net-neutral outcome to be the 1st engineer at a startup that actually exited for a substantial (8-figure deal) outcome which already puts me in the minority. So no…

What's the Big 4 in this context? Generally that term applies to accounting firms (PWC, E&Y etc.)

Re: Working for a startup makes less sense, unless you are into the mission

#60

Post by klmr »

crazygringo wrote: post #17
rubicon33 wrote: post #12

> That startup sold for 200 million dollars and, as the 10th engineer, I made ... 15000 dollars from that exit. Why so low?

Yeah, that's 0.0075%. Versus a ballpark of a 10th engineer getting, say, 0.5%. Even a few rounds of dilution can't explain a drop of two orders of magnitude. I'm thinking the author either didn't pay attention or care or trusted too much in the initial offer, didn't stay long enough to vest most of it, didn't buy most of their options in the end, or all of the above?

That’s (substantially) more than I have as #5 at a startup. Truth be told I didn’t pay attention to this when joining because at the time they hadn’t yet set up their EMIs and I was told that negotiating for share options is pointless since their expected value is close to zero. So, if I had insisted I could probably have gotten more. But it’s neither unheard-of, nor even particularly rare from what I’ve heard (in the UK).
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