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Understanding Startup Offers

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Re: Understanding Startup Offers

#51

Post by joshuamorton »

qqtt wrote: post #3

It would be interesting to see some analysis comparing pre-IPO offers versus standard FAANG-style engineering offers and see what the monetary difference actually is. In the not-so-distant past, start ups were pretty much the only avenue to secure a multiple-million dollar personal liquidity event, in the off chance you join a successful start up, work your tail off, and the company gets to a point where that exit ha…

Dan Luu wrote about this a few years ago: https://danluu.com/startup-tradeoffs/ (from 2015, but has been updated a bit since then).

I think the big challenge is that accurately evaluating a startup offer is very, very difficult. And it can be really, really contextual. As an example, I know someone who worked at a company that went public fairly recently, and their result was vastly worse than the EV of a big company, but they also had a below average startup EV because they left the company and didn't purchase all of their options when they left.

With Google or Facebook, the question is really just stock growth and grant sizes.

With startups its growth and grant sizes, yes, and the expected type of liquidity event(s) and the time horizon on that event and your plans and company culture over that time horizon, also any additional funding rounds can markedly affect things and...

Re: Understanding Startup Offers

#53

Post by lostdog »

preseedthrwwy wrote: post #8
qqtt wrote: post #6

Earlier quoted context omitted.

With things like dilution mattering and stock options being popular vehicles for early stage start up it would be really interesting and elucidating to have practical examples to compare against. It's easy to understand a FAANG style offer in this context. You join Google in 2017, you get RSUs pegged at 800$ a share valuation, about 150k$ a year vesting, by 2021 those shares are worth 2800$ so you've earned about 2.1…

throwaway for obvious reasons.. I joined a seed company w/ a $10m valuation in early 2014, starting offer was 1%. after series a, b, c, and some smaller retention grants, I had about 0.4%. Left before fully vesting, so ended up with 0.3%. Company was acquired for $4b and I made $12m. After taxes, netted about $7.5m Joined another seed company with $10m valuation in 2016, starting offer was 3%. after a few dilutive fu…

Wow! What companies do you like right now ;)

Re: Understanding Startup Offers

#54

Post by noodle »

nostrademons wrote: post #41
qqtt wrote: post #3

It would be interesting to see some analysis comparing pre-IPO offers versus standard FAANG-style engineering offers and see what the monetary difference actually is. In the not-so-distant past, start ups were pretty much the only avenue to secure a multiple-million dollar personal liquidity event, in the off chance you join a successful start up, work your tail off, and the company gets to a point where that exit ha…

"In the not-so-distant past, start ups were pretty much the only avenue to secure a multiple-million dollar personal liquidity event" I'm actually not sure this is true, and wondering if this was reporting bias. When a startup exits for a billion and all the employees get rich, you hear about it on the news, and you can do the equity calculation yourself based on public funding round press releases. When a big compan…

I think it's true if you add the caveat "only avenue for an average person". Not everyone gets the big liquidity event in the startup game, but also very few people actually get multimillion dollar comp packages at well established post-IPO companies despite how much it seems to get discussed here.

Re: Understanding Startup Offers

#55

Post by Hermitian909 »

clpm4j wrote: post #16
synergy20 wrote: post #11

Chatted with some early-stage-then-IPO-ed engineers yesterday, I asked "aren't your company IPO-ed and you should have retired?", the answer is, after multiple dilutions in rounds of fund raises, his options ended up worth just a few thousands, not useful at all. There is no way the startup you have been working for will keep your interest a priority, and you never know if your share will reach zero in the process of…

I think the main advantage of working at a startup is when you're relatively young and inexperienced - you're being compensated in the experience and accelerated job titles that you can then leverage to ramp up your career by joining other companies or starting your own. Getting an exit is a cherry on top.

Even this is becoming less valuable as bigger companies start to invest in training and mentorship.

Three people I know how graduated college recently working at big companies have senior engineers dedicating multiple hours a week to mentorship and a lot of learning opportunities. They're growing much faster than junior engineers thrown into the deep end IMO.

The faster title advancement doesn't mean much IMO. Working at a big company I can say that outside of a certain group of other big companies we just don't trust titles to have any correlation to abilities.

Re: Understanding Startup Offers

#56

Post by ctvo »

esonderegger wrote: post #46
qqtt wrote: post #3

It would be interesting to see some analysis comparing pre-IPO offers versus standard FAANG-style engineering offers and see what the monetary difference actually is. In the not-so-distant past, start ups were pretty much the only avenue to secure a multiple-million dollar personal liquidity event, in the off chance you join a successful start up, work your tail off, and the company gets to a point where that exit ha…

One of the things I rarely see mentioned when discussing career prospects of startups vs large corporations is how different their hiring filters are. If you are self-taught, lacking credentials, and don't live in a major market, it can be difficult to get in the door at a FAANG. Whereas start-ups can be much more likely to take a chance on someone with a non-conventional background. So for some of us, large corporat…

> If you are self-taught, lacking credentials, and don't live in a major market, it can be difficult to get in the door at a FAANG. Whereas start-ups can be much more likely to take a chance on someone with a non-conventional background.

Don't self select out of these jobs. I've been an interviewer at FAANGs. We take talent where we can and count ourselves lucky.

Our recruiters call everyone given enough time. Reach out to one directly on LinkedIn for an even better chance at an initial screening call. Ask for a referral from someone already working there in your wider network. Ask for a referral from Blind. Ask for a referral from HN.

From there it's your ability to pass the interview, not any set of credentials (different thread please on the interview process).

Re: Understanding Startup Offers

#57

Post by leetcrew »

esonderegger wrote: post #46
qqtt wrote: post #3

It would be interesting to see some analysis comparing pre-IPO offers versus standard FAANG-style engineering offers and see what the monetary difference actually is. In the not-so-distant past, start ups were pretty much the only avenue to secure a multiple-million dollar personal liquidity event, in the off chance you join a successful start up, work your tail off, and the company gets to a point where that exit ha…

One of the things I rarely see mentioned when discussing career prospects of startups vs large corporations is how different their hiring filters are. If you are self-taught, lacking credentials, and don't live in a major market, it can be difficult to get in the door at a FAANG. Whereas start-ups can be much more likely to take a chance on someone with a non-conventional background. So for some of us, large corporat…

I just went through the job search again, and I found the exact opposite to be true. for context, I went to a regionally-known (at best) state university and have just a few years of experience at a small company you've probably never heard of. so not quite "self-taught" but pretty far from what you'd think of as a the typical FAANG employee.

I applied to at least twenty roles at startups and small/medium-sized companies that seemed like a good fit for my skills and wrote thoughtful cover letters for each one. not a single one of those employers responded, not even to reject.

I also applied to a couple FAANGs, thinking it was a pretty long shot. but I ended up getting two on-sites, one of which I converted to an offer. there's definitely some truth to what people say about the unreasonable/irrelevant DS/algo problems, but I found it comforting to know for once what I was actually being assessed on.

not sure whether I got lucky with the FAANGs, unlucky with the smaller companies, or what, but just thought I'd share that anecdote. not the outcome I was expecting at the beginning of the process.

Re: Understanding Startup Offers

#58

Post by ctvo »

synergy20 wrote: post #11

Chatted with some early-stage-then-IPO-ed engineers yesterday, I asked "aren't your company IPO-ed and you should have retired?", the answer is, after multiple dilutions in rounds of fund raises, his options ended up worth just a few thousands, not useful at all. There is no way the startup you have been working for will keep your interest a priority, and you never know if your share will reach zero in the process of…

> Chatted with some early-stage-then-IPO-ed engineers yesterday, I asked "aren't your company IPO-ed and you should have retired?", the answer is, after multiple dilutions in rounds of fund raises, his options ended up worth just a few thousands, not useful at all.

Assuming series a engineering role, .30 - .50%, even after dilution, for an IPO'd company, we're assuming 1BN+, to walk away with a "few thousands" is hard to calculate.

A few hundred thousands is more likely (taxes) and even that isn't a worthwhile trade-off for most folks. It'd need to be in the millions to make it more attractive than big tech at the moment.

Re: Understanding Startup Offers

#59

Post by xtracto »

fasteddie wrote: post #18

This is a great, clean explainer. Series B seems to be the sweet spot to me if you would like to avoid working at a FAANG but want similar EV in your comp package, assuming you are decently good at guessing winners. At that point the company is meaningfully de-risked but the equity offers are still pretty good for mid-career folks that you end up with millions in a good exit.

I've come to prefer post-Series A startups. In my experience Series B tended to be the moment where the startup beings to establish "controls" and bureaucracy for things. It is when you start setting OKRs, it is when you start having 2 or more tiers of mid-management and "policy documents" start flying around.

For me, post Series A is the sweet spot when there are exciting problems to solve and you still have good leeway to make things happen without too much red tape.

Re: Understanding Startup Offers

#60

Post by nostrademons »

noodle wrote: post #54
nostrademons wrote: post #41

Earlier quoted context omitted.

"In the not-so-distant past, start ups were pretty much the only avenue to secure a multiple-million dollar personal liquidity event" I'm actually not sure this is true, and wondering if this was reporting bias. When a startup exits for a billion and all the employees get rich, you hear about it on the news, and you can do the equity calculation yourself based on public funding round press releases. When a big compan…

I think it's true if you add the caveat "only avenue for an average person". Not everyone gets the big liquidity event in the startup game, but also very few people actually get multimillion dollar comp packages at well established post-IPO companies despite how much it seems to get discussed here.

The startups that succeed do not generally have average early employees. Remember that founding a startup and successfully taking it to a large exit is a decidedly non-average outcome; the average startup fails miserably.

I think that if you're seeking non-average wealth you should first strive to be non-average. There are a number of pathways to exceptional wealth, but all of them require being exceptional in some way.

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