6 ms·

Is it Time for You to Earn or to Learn?

118 points by sgman 14y ago

joshmlewis 14y ago
A lot of peoples eyes glaze over when they go into startups because they hear all the success stories. It can definitely happen in this field, but most people don't realize what it takes. I hate that starting a company is becoming almost trendy now and everyone is trying it. Edit: and I guess on one hand innovation and providing jobs is good but for everyone to want to do it now is a little crazy.
- k-mcgrady 14y ago
  >> I hate that starting a company is becoming almost trendy now and everyone is trying it. I don't think that's true, it just looks that way inside our tech bubble. If I look at the 100 people I know best (all in their early/mid twenties) only myself and 3-4 others have started businesses. I've stuck at it for about 5 years now, the others only lasted between 1 month and 4 months. I don't know for sure but I believe most businesses that are started are still local service businesses (barber, butcher, convenience store etc.) which you wouldn't think from reading the tech press everyday.
- samsolomon 14y ago
  >> I hate that starting a company is becoming almost trendy now and everyone is trying it. I think it is fantastic that people want to create companies. After all entrepreneurs take risks to create jobs, value and wealth.
  - mbetter 14y ago
    I created my company to buy office supplies.
- obviouslygreen 14y ago
  Honestly, as soon as you've started a company and actually worked at it for a little while, you realize how little that means. A company is a legal entity; it's easy and (can be) cheap to establish. Building a business is a totally different matter, and I don't think people understand how different the two are. My guess is that most rational people who attempt the former learn to respect the latter, and either do a better job the second time (or, rarely, figure it out the first time) or decide they're better off working for someone else. Of course, that formula fails as soon as some gasbag gets VC money for spouting the right spin... but hopefully that's a very, very small minority. :)
- flyinRyan 14y ago
  > I hate that starting a company is becoming almost trendy now and everyone is trying it. I hate that taking an office job was ever trendy and that most people do it.
dgreensp 14y ago
It goes without saying that you won't get personally rich from any contract or investment without running the numbers. However, many employees consider it pretty enriching to work in a start-up environment for $200k+/year of salary and stock options, where the stock option portion is generally going up. If you actually join early enough to get 0.25% of a company, like immediately post VC raise, usually the "success" scenario you talk about is not selling for 3x the current valuation. (I wonder how many companies that sell for that are actually "failures" but with well-connected VCs that can make a sale.) And can we stop talking about "success" like a lottery? There are many Bay Area companies with actual business models making good revenue and growing it steadily into the multiple millions. I'm sure the early employees will make out just fine. I'm sure the founders would be interested in applying this "you're basically rolling the dice" model of business to their companies.
- michaelochurch 14y ago
  Startup jobs at $200k are fairly rare, and not really accessible unless you're an executive implant. At least in New York, very few startup boards will sign off on an engineer salary at that level. 0.25 percent of a post-A company is pretty weak sauce. You should value equity at a fraction of what investors do. First, investors are diversified. You're not. Second, their stake gets the VCs control and an excuse to hand out executive positions to their underachieving, middle-aged friends. Yours doesn't. Third, your equity comes with a cliff and I can name a couple startups that are notorious for firing people days before cliff.
  - dgreensp 14y ago
    To clarify, I meant $200k including the current value of the stock options that vest in a year. I'm also writing with engineers in mind rather than executives, and based on Bay Area salaries.
    - michaelochurch 14y ago
      I don't think that's a meaningful number. As I said, investors have plenty of reasons to value the equity at a higher level than an employee. If you "cliff out" an investor, you go to jail. If you do that to an employee, that's fair game.
michaelochurch 14y ago
I already brought some Indignation Sauce to this topic: http://michaelochurch.wordpress.com/2012/07/08/dont-waste-your-time-in-crappy-startup-jobs/ http://michaelochurch.wordpress.com/2012/07/08/dont-waste-yo... Mark Suster is right about the financials. You won't get rich. I will go further. The VC-istan startup promise is empty. You probably won't get investor contact unless you negotiate for it. Why would they help you get the connections needed to be a founder, when the alternative is that you not get those and never be a competitive threat? Many of these VC-istan firms develop horrible cultures as the engineers realize they won't get the leadership opportunities they were promised, because those are going to go out to entice new hires. You get a lot of ill-advised code throw-outs that exist only because someone was promised, in hiring, that he'd have that authority... so he uses it on the first day without even knowing what's being tossed. I don't think you should use "learning" as justification for taking a bad deal. Not if you don't know the people, because how do you know if you're going to learn anything? In general, higher pay tends to lead to higher-quality projects, not for the obvious reasons, but for this: your salary is how much it costs your boss to waste your damn time. If you're a founder or a key hire and you trust the people involved, it's different but, in general, don't use "these are my learning years" to justify an awful deal.
- deleted 14y ago
  [deleted]
- lucian303 14y ago
  "In general, higher pay tends to lead to higher-quality projects, not for the obvious reasons, but for this: your salary is how much it costs your boss to waste your damn time." The only metric to judge any job by, in my experience.
- dasil003 14y ago
  I really enjoyed your article. It clearly contains a lot more wisdom than Suster's. Still, I think you underestimate how little one can learn in a big company. It all depends what team you land on and who your manager is, and it can be a huge crapshoot. At least at a startup you have a guarantee that the company needs to focus on fundamentals and you will never be chastised for thinking about the business case for what you are doing (obviously this is not strictly true, but those kinds of startups tend to die fast). At a big company you may be assigned to a team doing something irrelevant that exists purely for political reasons. Your boss is as likely as not to be [Gervais Principle] clueless and the only thing you learn is corporate politics. That might help your earning potential down the road, but it won't make you a better engineer. Sure if you get on the AWS team at Amazon or work at Google or Facebook you get an opportunity to work with tech that a startup could never lay their hands on, but those jobs are hardly the corporate average. You're right that it's no justification for taking a poor package at a startup, but I think the median startup job is much better than the median corporate job in terms of engineering education.
wheaties 14y ago
I'm learning at my current job and it just keeps coming. I hate to admit it but the amount you need to learn just to get an idea of what you didn't know before you knew it is staggering. If you're young enough, I say learn as much as you can. Don't waste those few years at companies that won't develop you as a person. You can only push so many cogs before you get jaded.
joonix 14y ago
Sounds about right, but then who is buying all of those overpriced $2M cottages in Palo Alto in cash?
- lucian303 14y ago
  Not engineers.
- beachstartup 14y ago
  it takes relatively few sales to define pricing in a real estate market.
mrchess 14y ago
The problem is the way company structures are currently set up, where founders get the majority of ownership, and employees just get the pool. What does this mean? To me it means that the way a company structures itself needs to change. More ownership needs to be given to employees, and founders need to get less. That how I want to start my next company. Double the options pool, and lower the founder equity. Just because your employee #1 and it was my idea doesn't mean I get to dilute your share of the company but that big of a margin. We'll all be doing a ton of work. That being said, can someone tell me why this might be a bad idea? :)
graycat 14y ago
As usual, Mark tells a good story by leaving out a lot. So, he has "(0.5%) eventually sell for $150 million or more". Okay, so what? Is his argument that the chances of an entrepreneur are just a lottery draw with winning odds of 0.5%? If so, then that's misleading. Why? Because it shouldn't be a lottery draw. Instead, the entrepreneur should know more than just a lottery draw. The entrepreneur should have done some good, careful, solid, and quite likely effective planning so that when, based on the additional information he has and the planning he has done, he goes for the $150 million or more, his chances are quite good, hopefully well over 50%. If he can't plan that well, then he needs to learn how or get into another game. VCs, including Mark, won't teach how to do such planning, won't help with the planning, won't evaluate the planning, and, instead, will just report the figure of 0.5% from just looking in simple terms at all the e-mail they receive or some such. Although the odds may have looked like 0.5% from 50,000 feet up, it is quite possible that for the winners down on the ground the odds looked and were much better than that. Net, it is quite possible to see a large need, think of a good solution, find a way to provide that solution, and plan a business to deliver that solution, even with some new, advanced technology, all with quite high probability -- all over our economy, all around the world, in many industries, people do such planning and execution with quite high probability. E.g., when Intel decides to move from line width of some x nanometers to 0.66 x nanometers and build a $2 billion plant to manufacture at 0.66 x nanometers, do you believe that the project is high risk with only 0.5% chance of success? BS. Intel has taken many such steps in their history, and so far they may have had some delays and some kinks to iron out but never really had an actual failure. E.g., recently movie director James Cameron got in a specially designed 'boat' and took a little side trip to the bottom of the Mariana Trench, about six miles down or some such. No one, not even all the world together, has a lot of experience building 'boats' to go six miles down. So, what he did was essentially for the first time. Thus, he needed a lot of quite good planning. And he came up alive. Lesson: Planning to attack the unknown for the first time is possible. The great old lesson was the Wright Brothers. Langley had just fallen into the Potomac River. But the Wright Brothers took a train from Ohio to Kitty Hawk and flew apparently with little or no doubt. Why? Good planning. How? They built the first quite good wind tunnel and, thus, had some good data (although they missed Reynolds number) on wing lift and drag. They also knew horsepower and thrust of their propellers. They had the weight of their plane and passenger. They understood the crucial role of three axis control and had a good enough solution. A little arithmetic, and it was clear that they should be successful. And they were. First time. Planning is doable. Sorry, Mark. Let's put it this way, drawing from Mark's post: He did point out correctly that a house in the area will set one back about $2 million. Well, if making that much money is as difficult as Mark suggests, then house prices should fall! Are we learning yet, e.g., how to earn? A good, old lesson, especially in business, is "Always look for the hidden agenda.". So, VCs are in the business of buying parts of young companies. So, as a buyer, they want more inventory to select from. So, Mark can tell CxOs that their slot is for just chump change and that they need to be CEO and get some VC funding. And if they were a real man, they'd d be paying cash for a $2 million house, and for that they'd need to be a CEO with VC funding. For more, a buyer wants to tell the seller that their product isn't very good, e.g., has only 0.5% chance of being worth $150+ million. So, maybe such is part of Mark's agenda. Then telling entrepreneurs how actually to plan a $150+ million exit, with some significant probability, is not part of the agenda.
kahawe 14y ago
>If you really want to earn you need to be in the top 3-4 in the company. Best to be a founder. Very few people can do this. It’s a rare skill. Be realistic about your skills, background and ideas. As an addendum to this: be realistic what this means in terms of work-life balance or whatever you want to call it. Any executive position that lets you EARN will not only take up large chunks of your life but it will basically become your life. You will have to be available almost 24/7, you will be having phone conferences on the weekends, you will be checking your smartphone constantly, getting ready for meetings, you will be going through tons of paper, you will be having a LOT of unpleasant conversations with all sorts of people for all sorts of reasons. And you will have to put up with the particular kind of people these positions of power typically attract. And remember, the further at the top, the lonelier it gets and especially in large organizations you will have to protect yourself from all sorts of politics and other shenanigans. There is a reason burn-out, heart attack and psychological issues are so extremely prevalent amongst managers. So before you do make that decision to EARN, you should talk to friends or other people in similar positions and get a feel for what their whole life is like - then decide if that's for you. Money is one thing but what is that nice little place in an exotic country worth when you die from a heart attack at age 50 or 60? (source: my best friend's partner holds an executive position for an S&P500 company; another friend took over the successful family business)
- nopassrecover 14y ago
  Sounds exactly like consulting, or the experience of friends who have worked as startup employees (all the work with few of the perks).
jwwest 14y ago
Everything seems to come back to that good ol' fashioned advice: "Do what you love and the money will follow" It's pretty cliche, but the point is that you need to actually enjoy what you're doing and worry less about the money (unless you're in love with money, in which case go get a job on Wall Street). Sure, the chance to cash out big is a huge plus, but as Mark pointed out unless you're a founder it's very unlikely. This is most likely a contributing factor to the talent crunch in the Bay Area. No one wants to take the chance on being the #1 or #2 engineering employee since the odds are weighed heavily against you. I imagine most sane people would look at it like this: C-level / Founder: Risky, less salary now but larger option grants. Lots of hours. Early employee: Riskiest. Less salary and less options. More hours. Later employee: Least risky. Salary approaching market rate. No significant options. Hours that approach a normal work week (~40).

118 points by sgman 14y ago

A lot of peoples eyes glaze over when they go into startups because they hear all the success stories. It can definitely happen in this field, but most people don't realize what it takes. I hate that starting a company is becoming almost trendy now and everyone is trying it. Edit: and I guess on one hand innovation and providing jobs is good but for everyone to want to do it now is a little crazy.

k-mcgrady 14y ago
>> I hate that starting a company is becoming almost trendy now and everyone is trying it. I don't think that's true, it just looks that way inside our tech bubble. If I look at the 100 people I know best (all in their early/mid twenties) only myself and 3-4 others have started businesses. I've stuck at it for about 5 years now, the others only lasted between 1 month and 4 months. I don't know for sure but I believe most businesses that are started are still local service businesses (barber, butcher, convenience store etc.) which you wouldn't think from reading the tech press everyday.
samsolomon 14y ago
>> I hate that starting a company is becoming almost trendy now and everyone is trying it. I think it is fantastic that people want to create companies. After all entrepreneurs take risks to create jobs, value and wealth.
- mbetter 14y ago
  I created my company to buy office supplies.
obviouslygreen 14y ago
Honestly, as soon as you've started a company and actually worked at it for a little while, you realize how little that means. A company is a legal entity; it's easy and (can be) cheap to establish. Building a business is a totally different matter, and I don't think people understand how different the two are. My guess is that most rational people who attempt the former learn to respect the latter, and either do a better job the second time (or, rarely, figure it out the first time) or decide they're better off working for someone else. Of course, that formula fails as soon as some gasbag gets VC money for spouting the right spin... but hopefully that's a very, very small minority. :)
flyinRyan 14y ago
> I hate that starting a company is becoming almost trendy now and everyone is trying it. I hate that taking an office job was ever trendy and that most people do it.

dgreensp 14y ago

It goes without saying that you won't get personally rich from any contract or investment without running the numbers. However, many employees consider it pretty enriching to work in a start-up environment for $200k+/year of salary and stock options, where the stock option portion is generally going up. If you actually join early enough to get 0.25% of a company, like immediately post VC raise, usually the "success" scenario you talk about is not selling for 3x the current valuation. (I wonder how many companies that sell for that are actually "failures" but with well-connected VCs that can make a sale.) And can we stop talking about "success" like a lottery? There are many Bay Area companies with actual business models making good revenue and growing it steadily into the multiple millions. I'm sure the early employees will make out just fine. I'm sure the founders would be interested in applying this "you're basically rolling the dice" model of business to their companies.

michaelochurch 14y ago
Startup jobs at $200k are fairly rare, and not really accessible unless you're an executive implant. At least in New York, very few startup boards will sign off on an engineer salary at that level. 0.25 percent of a post-A company is pretty weak sauce. You should value equity at a fraction of what investors do. First, investors are diversified. You're not. Second, their stake gets the VCs control and an excuse to hand out executive positions to their underachieving, middle-aged friends. Yours doesn't. Third, your equity comes with a cliff and I can name a couple startups that are notorious for firing people days before cliff.
- dgreensp 14y ago
  To clarify, I meant $200k including the current value of the stock options that vest in a year. I'm also writing with engineers in mind rather than executives, and based on Bay Area salaries.
  - michaelochurch 14y ago
    I don't think that's a meaningful number. As I said, investors have plenty of reasons to value the equity at a higher level than an employee. If you "cliff out" an investor, you go to jail. If you do that to an employee, that's fair game.

michaelochurch 14y ago

I already brought some Indignation Sauce to this topic: http://michaelochurch.wordpress.com/2012/07/08/dont-waste-your-time-in-crappy-startup-jobs/ http://michaelochurch.wordpress.com/2012/07/08/dont-waste-yo... Mark Suster is right about the financials. You won't get rich. I will go further. The VC-istan startup promise is empty. You probably won't get investor contact unless you negotiate for it. Why would they help you get the connections needed to be a founder, when the alternative is that you not get those and never be a competitive threat? Many of these VC-istan firms develop horrible cultures as the engineers realize they won't get the leadership opportunities they were promised, because those are going to go out to entice new hires. You get a lot of ill-advised code throw-outs that exist only because someone was promised, in hiring, that he'd have that authority... so he uses it on the first day without even knowing what's being tossed. I don't think you should use "learning" as justification for taking a bad deal. Not if you don't know the people, because how do you know if you're going to learn anything? In general, higher pay tends to lead to higher-quality projects, not for the obvious reasons, but for this: your salary is how much it costs your boss to waste your damn time. If you're a founder or a key hire and you trust the people involved, it's different but, in general, don't use "these are my learning years" to justify an awful deal.

deleted 14y ago
[deleted]
lucian303 14y ago
"In general, higher pay tends to lead to higher-quality projects, not for the obvious reasons, but for this: your salary is how much it costs your boss to waste your damn time." The only metric to judge any job by, in my experience.
dasil003 14y ago
I really enjoyed your article. It clearly contains a lot more wisdom than Suster's. Still, I think you underestimate how little one can learn in a big company. It all depends what team you land on and who your manager is, and it can be a huge crapshoot. At least at a startup you have a guarantee that the company needs to focus on fundamentals and you will never be chastised for thinking about the business case for what you are doing (obviously this is not strictly true, but those kinds of startups tend to die fast). At a big company you may be assigned to a team doing something irrelevant that exists purely for political reasons. Your boss is as likely as not to be [Gervais Principle] clueless and the only thing you learn is corporate politics. That might help your earning potential down the road, but it won't make you a better engineer. Sure if you get on the AWS team at Amazon or work at Google or Facebook you get an opportunity to work with tech that a startup could never lay their hands on, but those jobs are hardly the corporate average. You're right that it's no justification for taking a poor package at a startup, but I think the median startup job is much better than the median corporate job in terms of engineering education.

wheaties 14y ago

I'm learning at my current job and it just keeps coming. I hate to admit it but the amount you need to learn just to get an idea of what you didn't know before you knew it is staggering. If you're young enough, I say learn as much as you can. Don't waste those few years at companies that won't develop you as a person. You can only push so many cogs before you get jaded.

joonix 14y ago

Sounds about right, but then who is buying all of those overpriced $2M cottages in Palo Alto in cash?

lucian303 14y ago
Not engineers.
beachstartup 14y ago
it takes relatively few sales to define pricing in a real estate market.

mrchess 14y ago

The problem is the way company structures are currently set up, where founders get the majority of ownership, and employees just get the pool. What does this mean? To me it means that the way a company structures itself needs to change. More ownership needs to be given to employees, and founders need to get less. That how I want to start my next company. Double the options pool, and lower the founder equity. Just because your employee #1 and it was my idea doesn't mean I get to dilute your share of the company but that big of a margin. We'll all be doing a ton of work. That being said, can someone tell me why this might be a bad idea? :)

graycat 14y ago

As usual, Mark tells a good story by leaving out a lot. So, he has "(0.5%) eventually sell for $150 million or more". Okay, so what? Is his argument that the chances of an entrepreneur are just a lottery draw with winning odds of 0.5%? If so, then that's misleading. Why? Because it shouldn't be a lottery draw. Instead, the entrepreneur should know more than just a lottery draw. The entrepreneur should have done some good, careful, solid, and quite likely effective planning so that when, based on the additional information he has and the planning he has done, he goes for the $150 million or more, his chances are quite good, hopefully well over 50%. If he can't plan that well, then he needs to learn how or get into another game. VCs, including Mark, won't teach how to do such planning, won't help with the planning, won't evaluate the planning, and, instead, will just report the figure of 0.5% from just looking in simple terms at all the e-mail they receive or some such. Although the odds may have looked like 0.5% from 50,000 feet up, it is quite possible that for the winners down on the ground the odds looked and were much better than that. Net, it is quite possible to see a large need, think of a good solution, find a way to provide that solution, and plan a business to deliver that solution, even with some new, advanced technology, all with quite high probability -- all over our economy, all around the world, in many industries, people do such planning and execution with quite high probability. E.g., when Intel decides to move from line width of some x nanometers to 0.66 x nanometers and build a $2 billion plant to manufacture at 0.66 x nanometers, do you believe that the project is high risk with only 0.5% chance of success? BS. Intel has taken many such steps in their history, and so far they may have had some delays and some kinks to iron out but never really had an actual failure. E.g., recently movie director James Cameron got in a specially designed 'boat' and took a little side trip to the bottom of the Mariana Trench, about six miles down or some such. No one, not even all the world together, has a lot of experience building 'boats' to go six miles down. So, what he did was essentially for the first time. Thus, he needed a lot of quite good planning. And he came up alive. Lesson: Planning to attack the unknown for the first time is possible. The great old lesson was the Wright Brothers. Langley had just fallen into the Potomac River. But the Wright Brothers took a train from Ohio to Kitty Hawk and flew apparently with little or no doubt. Why? Good planning. How? They built the first quite good wind tunnel and, thus, had some good data (although they missed Reynolds number) on wing lift and drag. They also knew horsepower and thrust of their propellers. They had the weight of their plane and passenger. They understood the crucial role of three axis control and had a good enough solution. A little arithmetic, and it was clear that they should be successful. And they were. First time. Planning is doable. Sorry, Mark. Let's put it this way, drawing from Mark's post: He did point out correctly that a house in the area will set one back about $2 million. Well, if making that much money is as difficult as Mark suggests, then house prices should fall! Are we learning yet, e.g., how to earn? A good, old lesson, especially in business, is "Always look for the hidden agenda.". So, VCs are in the business of buying parts of young companies. So, as a buyer, they want more inventory to select from. So, Mark can tell CxOs that their slot is for just chump change and that they need to be CEO and get some VC funding. And if they were a real man, they'd d be paying cash for a $2 million house, and for that they'd need to be a CEO with VC funding. For more, a buyer wants to tell the seller that their product isn't very good, e.g., has only 0.5% chance of being worth $150+ million. So, maybe such is part of Mark's agenda. Then telling entrepreneurs how actually to plan a $150+ million exit, with some significant probability, is not part of the agenda.

kahawe 14y ago

>If you really want to earn you need to be in the top 3-4 in the company. Best to be a founder. Very few people can do this. It’s a rare skill. Be realistic about your skills, background and ideas. As an addendum to this: be realistic what this means in terms of work-life balance or whatever you want to call it. Any executive position that lets you EARN will not only take up large chunks of your life but it will basically become your life. You will have to be available almost 24/7, you will be having phone conferences on the weekends, you will be checking your smartphone constantly, getting ready for meetings, you will be going through tons of paper, you will be having a LOT of unpleasant conversations with all sorts of people for all sorts of reasons. And you will have to put up with the particular kind of people these positions of power typically attract. And remember, the further at the top, the lonelier it gets and especially in large organizations you will have to protect yourself from all sorts of politics and other shenanigans. There is a reason burn-out, heart attack and psychological issues are so extremely prevalent amongst managers. So before you do make that decision to EARN, you should talk to friends or other people in similar positions and get a feel for what their whole life is like - then decide if that's for you. Money is one thing but what is that nice little place in an exotic country worth when you die from a heart attack at age 50 or 60? (source: my best friend's partner holds an executive position for an S&P500 company; another friend took over the successful family business)

nopassrecover 14y ago
Sounds exactly like consulting, or the experience of friends who have worked as startup employees (all the work with few of the perks).

jwwest 14y ago

Everything seems to come back to that good ol' fashioned advice: "Do what you love and the money will follow" It's pretty cliche, but the point is that you need to actually enjoy what you're doing and worry less about the money (unless you're in love with money, in which case go get a job on Wall Street). Sure, the chance to cash out big is a huge plus, but as Mark pointed out unless you're a founder it's very unlikely. This is most likely a contributing factor to the talent crunch in the Bay Area. No one wants to take the chance on being the #1 or #2 engineering employee since the odds are weighed heavily against you. I imagine most sane people would look at it like this: C-level / Founder: Risky, less salary now but larger option grants. Lots of hours. Early employee: Riskiest. Less salary and less options. More hours. Later employee: Least risky. Salary approaching market rate. No significant options. Hours that approach a normal work week (~40).