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I've worked at two startups, including one YC. Both were acquired by larger tech companies. I was employee #3 at one and rebuilt most of a broken codebase in

• Iftheshoefits 12y ago
  You've identified one of the reasons I hesitate to put myself in the "startup labor market" for any startup that isn't well-funded. Even well-funded startups give me pause. I'm not interested in putting in founder-like work for entry-level employee-like compensation plus a lottery ticket. Unless the equity is meaningful and imbues the recipient with an actual, real voice in the direction of the company it's just a way to sidestep offering real compensation.
  • karmelapple 12y ago
    I'm curious: what is "founder-like work" to you? Is it 50–80 hour work weeks? Or does it mean 40 hours but making the initial, architectural decisions of a new piece of software? Serious question.
    • radicalbyte 12y ago
      My wife owns a Pharmacy* and works 50-60 hours a week, so I guess that "founder-like" work involves a similar time investment. * The medical sort, and here in Holland the Pharmacists require the same education as a medical doctor but specializing in pharmaceuticals not diagnosis.
    • Iftheshoefits 12y ago
      Either. In the first case, it's unreasonable to put in more than a couple of hours of overtime here and there for even market rate wages at any company, whether it's a startup or not. "Uncompensated (comp time doesn't count) overtime" is a euphemism for "exploitation." In the second, the employee is effectively creating at least one of the revenue generating engines of the business. He deserves to reap the rewards of his labor. That means more than below-market wages plus "startup bucks"/lottery tickets. The entire issue, as I see it, can be distilled to this: founders want employees who are taking significant risk, who will work for and treat the business like the founders themselves would, but who considers below-market wages plus "startup bucks" as great compensation, even when it is historically not.
  • alexandros 12y ago
    I'd be loathe to join a company where 10 people have a "real voice in the direction of the company". When you join an early team the only way is to trust the founder(s) as knowing what they're doing and listening to the team when there's a good point being made. The alternative is a recipe for politics from day 1.
    • Iftheshoefits 12y ago
      I wouldn't want to join a 10-founder startup, either. A follow-on to my comment would be that an engineer looking to work at a startup should almost never take options as a part of compensation, and should rarely take actual equity if it isn't sufficient to be on near-equal footing with the other founders' equity. Startups also shouldn't offer such crappy deals. They should pay the market rate, or slightly more because of the inherent risk in being an employee of a startup entails, and forgo the charade of stock grants (in any form).
    • davidw 12y ago
      I work at a small-ish company, and while, no, I don't have a "real voice in the direction of the company", I do have a voice in my corner of things: technical decisions. That makes me significantly happier than showing up and just being told what to use and do.
  • wprl 12y ago
    Agreed. I don't work for equity ever... don't feel like gambling with my livelihood.
• OmarIsmail 12y ago
  As a potential future founder what strategy will you employ in regards to compensation?
  • michaelochurch 12y ago
    Different person from GP. He could try this: http://michaelochurch.wordpress.com/2013/03/26/gervais-macleod-17-building-the-future-and-financing-lifestyle-businesses/ http://michaelochurch.wordpress.com/2013/03/26/gervais-macle...
  • jstrate 12y ago
    This is speculation but wont be hiring engineers until I can pay for it. I'd take a bonus instead of equity but I would rather the employee decide.
  • coffeemug 12y ago
    Pick a market where you can get to significant traction in less than a year with a founding team of 3-5. Split equity evenly between all founders, but do pick one CEO. Then work like hell to get to significant traction. Don't hire until series A. (If my current company doesn't work out, this is how I'll do it next time around)
    • webwright 12y ago
      I feel like I remember PG telling me that large founding teams (more than 3) were highly correlated with failure. If I were to guess why: The more relationships you have on the founding team, the more likely you are to have ONE of them blow up or have someone lose their nerve/interest. Early startups are fragile things. Seems like you could go with a hybrid approach (start with 2-3 founders, raise a small amount or self fund to hire 1-3 stars for small salary/high equity comp who couldn't go without a paycheck).
      • coffeemug 12y ago
        > I feel like I remember PG telling me that large founding teams (more than 3) were highly correlated with failure. They usually are, but the median is not the message. If it's a group of college friends coming together to start a company for the first time, 2-3 people is way better than 4-5. But if you've worked with a few people before, know them well, and know how to set up expectations on day one, you can successfully have a larger group of cofounders without worrying about conflict. (This is something I've discovered for myself, it doesn't mean it would work for everyone)
• hga 12y ago
  "Startup-bucks are even worse than a lottery ticket...." Also because if they are worth something, it's a motivation for the company to fire you before you can cash out. E.g. while the discrimination case against Google was settled out of court for undisclosed terms, whatever the motivation, the timing of the firing of Brian Reid 9 days before the company's IPO was clearly not an accident. (119,000 options, $10 million on the day of the IPO, lots more later: https://en.wikipedia.org/wiki/Brian_Reid_(computer_scientist)#Google https://en.wikipedia.org/wiki/Brian_Reid_(computer_scientist... ) Given that we're living in a mostly post-IPO world, you could well be better off never getting options....
  • paulbaumgart 12y ago
    I don't think we're in a post-IPO world. We were just in a temporary dip: http://www.nasdaq.com/article/ipo-count-reaches-218-a-posttech-bubble-record-cm311072 http://www.nasdaq.com/article/ipo-count-reaches-218-a-postte...
  • wprl 12y ago
    I'd rather be paid in barley than to have to deal with BS politics like this!
• msoad 12y ago
  I had similar experience with startups. With current conventions in startup labor market, only being a founder or or being at Facebook as number <10 employee pays off. Both are off my list because I'm not lucky enough to join the next Facebook and I'm not capable of founding a company myself at the moment. Getting sweet $170k salary with some bonus, massage, free food and shuttle is good enough for me.
  • deleted 12y ago
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  • rhc2104 12y ago
    You don't have to be one of the 10 first employees at Facebook to get paid: http://www.dailymail.co.uk/news/article-2072204/Facebook-IPO-create-1-000-millionaires-companys-rank-file.html http://www.dailymail.co.uk/news/article-2072204/Facebook-IPO... As a general rule of thumb, if a company is willing to do the extremely expensive action of acquihiring, they are willing to part a pretty high amount of equity of employees. Not acquihire-high of course, but a pretty good amount. Of course, it could be argued that they aren't "startups" by that point, but "growth companies."
    • jmcgough 12y ago
      You linked to the Daily Mail, which is a British tabloid and not really known for its factual accuracy.
      • deleted 12y ago
        [deleted]
• jowiar 12y ago
  The other issue with startup-bucks is their value is tied to situations that may affect your continued employment - They're not just a lottery ticket, they're a lottery ticket where "losing the lottery" and "losing your job" are correlated events, whereas if you're liquid, you can buy lottery tickets without this correlation.
  • ritchiea 12y ago
    There's not much job security elsewhere either
    • patio11 12y ago
      This is one of the things which we like to say about startups, but it doesn't stand up under scrutiny. The competing job offer is Google or another megacorp. What's their turnover for engineers in a year? 10%? 15%? The definitionally average startup has a higher turnover even if we restrict it to turnover caused by business failure, to say nothing of voluntarily or involuntarily losing one's job. If you exit a position with Google/etc, you have a network full of people who also spent the last couple of years at Google. You can easily lateral into jobs of comparable quality. If you exit a position with a failed startup, your lateral transfer is likely into another job which pays below market. Your immediate professional peers are also people trying to avoid the failure stigma. They may also be slightly busy looking for a job to help you with your own job search. If you work for Google for 2 years and then separate from them, your 401k increased by $30k in the interim and you probably have six figures sitting in the bank account. If your startup is shot out from under you, you may end up counting the number of ramen boxes in the pantry while hoping that the startup can make good on its final payroll check. If you work for a megacorp and are let go, it is highly likely that you were let go for firm- or individual-specific reasons rather than industry-wide calamity. This is very much not guaranteed in startups, where e.g. ebbs and flows of the capital market can cause a daisy cutter to hit the hiring pipelines at dozens of firms at once. You could lose your job at the same time that everyone else stops hiring. Ask the wizened veterans of the dot com bust who are, what, in their late 30s? Startups are meaningfully less secure than working at bigco. Anyone who says differently either doesn't understand them or is trying to sell you something.
• michaelochurch 12y ago
  Now I work at a large tech company in SV and wont be involved in another startup unless I'm a founder. You're making the right call. I'm probably older than you and I've done two startups. My career hasn't recovered from the lost time. Total waste. Most startups (by startup, I mean "company focused on such rapid growth that VC investment is mandatory") are pure shit. They fuck up your finances, drain your emotional reserve, and (unless you're a founder) often spit you into junior roles that you won't be able to stand after a taste of real autonomy. If you don't learn much, then you've wasted time. If you do learn a lot (which you can, with a good run as de facto CTO) then you still end up in a junior role, due to your lack of credibility on-paper, for which you're massively overqualified. That's the worst outcome, because you're better off actually being junior if you're in a junior role; overperformance is far more dangerous (in large companies) than underperformance.
  • redmaverick 12y ago
    overperformance is far more dangerous (in large companies) than underperformance. Why? Can you explain.
    • sitkack 12y ago
      You alienate yourself with respect to your peers and your boss will think you are trying to take their job. Nearly everyone around you will consider you a threat. That is my take and my experience from that statement. The best thing to do after having been tainted by startup education is to go into consulting.
      • michaelochurch 12y ago
        You alienate yourself with respect to your peers and your boss will think you are trying to take their job. Nearly everyone around you will consider you a threat. Bingo. You fucking nailed it. The best thing to do after having been tainted by startup education is to go into consulting. How easy is that? I'm considering that avenue for myself, largely because I'm sick of office politics, re-orgs, and other time-wasting bullshit. With a consulting arrangement, there's no expectation (on either side) of a long-term deal and I think that's better, because most companies renege on their side of the social contract (e.g. investing in their people's careers.) How do consultants find good ($100+ per hour) work? If I could get the same take-home pay as a consultant, I'd do it in a heartbeat. I'm honest enough to know that I'm not a team player (unless I assemble the team) but I do great work and I'd rather be in a place where that's respected.
• deanmoriarty 12y ago
  Just out of curiosity and to better compare your experience with the one from the article, what were the numbers in percentage?
• marvin 12y ago
  Has anyone stopped to think what a massive failing of the startup part of the industry this is? Practically everything I read online indicates that if you consider your stock options to have any value at all even in a moderately successful company, you are a major sucker and about to get exploited. Surely this must reduce the quality of the talent pool available to new startups, as the experienced developers conclude that other options are a better use of their time.
  • wwweston 12y ago
    Clearly Sam Altman and a few other people in thread have stopped to think about this. :) Part of what he's telling people here is "look, your competition for the engineers who can help you deliver includes Google and Facebook, your expected value has to be comparable to what they can offer." Of course, that's still talking about equity, which gets back to the fact that it really is best to treat your equity as little better than a lottery ticket -- something with the possibility of turning into a modest bonus and the remote chance of making you wealthy. > experienced developers conclude that other options are a better use of their time. Which I suppose is part of the reason the startup labor pool skews young. Occasionally, though, experienced developers get bored and need new opportunities too.
    • humanrebar 12y ago
      The labor pool skews young in SV and NYC, possibly because the only way to keep the cost of living down is to have multiple roommates, which does not work for someone with a family. In more suburban places, the age distribution seems in line with an industry that is as new as software is.
  • hga 12y ago
    It's also a failure of the country's political and economic system, at least if you believe that a series of actions and laws culminating in Sar-Box ended the IPO exit shortly after the turn of the century. Other exits tend to be lots harder (my father had a specialty arranging them, and, hmmm, in the '60s also arranged an IPO...) and tend to leave much less money on the table.
  • 12y ago
• mattm 12y ago
  Agree with this from my experience. I'll just take the higher salary and use it to fund my own ideas which I control 100%. Equity without say into decision making is practically worthless.
• pyrrhotech 12y ago
  Can't like this one enough. Very similar experience over my career here
• bane 12y ago
  I worked at a few also and managed to get a little money out of options, but nothing to write home about. I think after one company sold I got my payout and bought a new computer and a nice dinner and that was it. I'm actually sitting on a huge pile of vested options at a company I left a few years ago, but I'm unlikely to ever exercise them during a sale because the strike price is almost guaranteed to be higher than they're worth. I also know quite a few folks working a big startup sitting on lots of options, except the startup is on something like a G round of financing so they're likely diluted to worthless. Most of them started working there right out of college and don't understand how it works, and the company salary caps employees...it's a cool place to work but they're likely to get screwed if they're ever acquired/IPO. One thing I've learned after working at quite a few startups as a non-founder is this, ignore the options and try and get the best possible salary you can. If you get some options, that's cool, but don't count on them for anything.
  • jknightco 12y ago
    Maybe I'm mistaken, but I believe you only have 90 days after leaving a company to purchase vested options. I may be wrong, however.
    • bane 12y ago
      Mine have a 2016 expiration date. It just depends on the grant agreement.
      • maaku 12y ago
        Be careful, there are laws which govern this, not just the grant agreement. Caveat emptor.
    • jorde 12y ago
      To my knowledge, stock options are usually granted as ISO which have the 90 day cap. If they get converted to NSO, the cap can be longer but tax treatment is different.
• jayvanguard 12y ago
  > Startup-bucks are even worse than a lottery ticket, because of tax complications and money required to cover strike price. There is also a major information asymmetry. They know the ins-and-outs of the stock types and likely acquisition scenarios. It is not likely you are going to go over the company financials and corporate documents during the interview process. You just have to hope they treat you fairly.