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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

#591

Post by fragmede »

corry wrote: post #488

Three interesting part of the discussion: (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…

to put it bluntly asf, you're being poor (and I'm being insensitive). what's $500k going to do for you if you come from a rich family? you already have your rent paid for until you die, and vacations paid for. all you have to do to do is put up with your annoying family, which isn't the worst if you've been through therapy. your mom or dad's abusive? if you've been through enough family therapy, that's not a problem.

if you ask you mom or dad, whichever believes in you, they have enough money to fund your dreams (if you care enough to ask) of joining or starting a startup to become an (x) CEO/salesman/builder/marketer/whatever for whatever you want to build, and that includes signing onto some startup that won't pay you a living wage until it fail-exists for $5 million and everyone goes to burning man/Berlin/ibiza on the founders dime (including rent for everyone N months).

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

#592

Post by gedy »

AlwaysBCoding wrote: post #585

The situation I recently went through reads like a horror story: > was the founding engineer at a startup, essentially do co-founder work for 18 months getting the company off the ground. > company is a breakout success, raises a large growth round. > founders each take a couple of million dollars off the table in secondaries, no option for employee liquidity. > founders start thinking about early employees as "probl…

Not to put you on spot, but this behavior is unprofessional, and you should name names IMHO.

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

#593

Post by carbocation »

AlwaysBCoding wrote: post #585

The situation I recently went through reads like a horror story: > was the founding engineer at a startup, essentially do co-founder work for 18 months getting the company off the ground. > company is a breakout success, raises a large growth round. > founders each take a couple of million dollars off the table in secondaries, no option for employee liquidity. > founders start thinking about early employees as "probl…

I'm focusing on a tiny technical detail here but from the description, it sounds like the ISOs weren't set up with an 83(b) election which is another bummer.

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

#594

Post by gopher2000 »

Finbarr wrote: post #520
ditonal wrote: post #514

Earlier quoted context omitted.

You’re obviously overstating the FAANG SWE lifestyle. But beyond that, it’s interesting you picked FAANG SWE and not startup SWE as the basis of your comparison. The whole premise of the article is that startup employees are often sold a bag of goods about equity and upside that’s simply a terrible deal. Not terrible in the sense that it’s highly risky, but that it doesn’t even come close to compensating for that ris…

Let's not forget that FAANG companies were all startups at one point. Early employees at those companies experienced significant upside. Startups can be very high risk, and in rare cases, extreme upside.

The argument that a startup could be the next FAANG is anchored in lottery-like odds.

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

#595

Post by gopher2000 »

foobarian wrote: post #406
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…

> 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...

See levels.fyi. The pay levels for FAANG companies are fairly accurate. But you'd have to be something like L7/E7 level at a Meta/Google to break $1M.

Also note that some comp numbers get heavily inflated by people incorporating stock value increasing between the equity was first issued and the stock actually vested.

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

#596

Post by onlyrealcuzzo »

dclowd9901 wrote: post #580
onlyrealcuzzo wrote: post #558

Earlier quoted context omitted.

> Going from L5-L7 is _not_ trivial It is trivial compared to growing a company successfully from $10M valuation to $100M valuation + an exit.

[citation needed] Frankly, many more aspects of trying to grow your career from l5-l7 are out of your hands than they are when you're at a startup.

The vast majority of startup success is luck...

There are literally thousands of people going from L5-L7 at the major tech companies per founder successfully exiting a >$100M company.

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

#597

Post by gopher2000 »

dclowd9901 wrote: post #583
rbranson wrote: post #487

Earlier quoted context omitted.

Incorrect. See: https://www.levels.fyi/companies/facebook/salaries/software-...

I was under the impression we were talking about ICs here -- your link shows that an upper-middle IC that you'd expect to be choosing between early startup or FAANG will see something around 450 a year, which tracks much closer to what I'd expect.

You said 1 or 2 people who aren't executives. There's way more than 1-2 E7s at Meta, as an example.

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

#598

Post by goalonetwo »

In my 20s I joined a couple startups as "early engineer" or "founding engineer".

I quickly realized those are the absolute worst positions to be in. You take almost as much risk as the founders but almost none of the upside. One startup died, the other one sold for 100m$. Out of that I saw 400k$ as an exit. Not too bad but even with that exit I ended up making way less than if I joined a FAANG. In both cases the founders made millions (through the exit or through liquidity)

Now I'm a realist. Either you create/found a startup or it's not worth joining one as an employee. You have way more upside at a FAANG/pre-IPO mid-life startup that already found a great product market fit.

Essentially, founders are pushing a crazy narrative of Startups being worth it to early employees because they need them. It was sometimes fun but I wish I just joined a FAANG like most of my friends, I would have a couple millions by now if I did.

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

#600

Post by smeej »

shortrounddev2 wrote: post #324
smeej wrote: post #265

Earlier quoted context omitted.

I'd tweak this slightly: "It's exceedingly foolish to be an employee at an early startup for the money. " I think there are a lot of us who struggle to fit the larger corporate mold who pretty much only thrive in the startup world. I can't speak for all of them, but I've been very willing to take the balance of lower cash compensation and a fistful of lottery tickets and not having 12 layers of middle management brea…

It's a difficult trade off I've found. Large tech companies are boring and slow and you deal with a lot of red tape and BS, and you feel utterly powerless in the security of your own job as economic tidal waves direct the momentum of layoffs and not your personal contribution. At a startup you have more autonomy and power over your personal position. I wrote 90% of the code that is generating company growth, released…

Those are the factors that make the tradeoff easy for me. I would vastly prefer direct accountability for my own fuckups, because that means I have the agency to do something to fix it.

What makes me want to put my head through a wall is when I fuck up, and four layers of people above me are the only ones allowed to fix the thing, but they don't, so I keep catching flak for my fuckup without any way to stop it and fix the thing. I have many more heated conversations with those managers, which typically leads to the door.

When I fuck something up, rarely is anyone more upset about that than I am. Nobody's dumping more heat on me than I am on myself, so bring on the heat-- as long as I have the agency to fix the problem.

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