
Ask HN: Is it worth taking a 25% paycut to join a startup? - sreedhar
I am working in a pretty comfortable job working on a COBOL based software. The one thing that bothered me all these years is my lack of exposure to all the newer technologies.<p>I started interviewing and I have got an offer from a startup. But the offer is almost 25% less. They say they will add 20% of the salary in stock vesting over some time.<p>The advantage is that I will be get exposure to all the new technologies.<p>Is it worth it? Thanks!
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joezydeco
Do you have a family to support? Can you handle a cut in pay like this for a
long time? What happens if the startup misses a paycheck or two?

Do you need solid healthcare and/or other benefits? Because you're probably
not going to get that.

Do you enjoy wearing multiple hats - simultaneously?

 _The advantage is that I will be get exposure to all the new technologies._

That's the one plus. And that's about it. Unless it's something you can learn
at home in your free time.

 _They say they will add 20% of the salary in stock vesting over some time._

Take some of the cash salary and buy lottery tickets. It's worth about the
same "over time".

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sreedhar
Thanks for the msg. Yes, I do have a family, home loan etc to pay for every
month. So, it will be tough if they miss a salary. I will have to dig into my
savings. They don't have any bonus or other benefits. And i need to travel
more for this.

I think I can wear multiple hats. That should not be an issue.

hmm... i will have to think more on this.

The fact is I am not happy with my current job.

~~~
epc
So, stay in your current job, set aside the 25% of your income you'd be losing
by going to this startup, build up your savings, and find a company willing to
hire you at or above your current salary.

Don't subsidize a startup by taking a pay cut, and especially don't do it by
digging into your savings, unless you're going to be one of the founders and
get a larger equity grant to begin with.

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eksemplar
No. Startups aren’t worth it if you’re not running it.

As far as newer techs go, well, how many have COBOL already outlived? It’ll
outlive a lot of them yet.

HN is a great place for FOMO, but reality is often different. In my country
90% of everything is run on JAVA, C# or PHP. Front ends are typically
something a little more modern like angular or react, but you won’t get a
front end job if you can’t also do C#, JAVA or PHP.

If all these new techs really mattered, you wouldn’t still be working on COBOL
after all. And you can always play around with them on your free time.

I mean WASM is a fun example, if it picks up, then everyone who’s spent the
past decade ignoring JS won’t have missed out of anything, because they can
just build their web app with WASM.

If you want to try something different, that’s another story, but don’t take a
pay cut that you don’t have to because if FOMO.

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badpun
I'd need the startup to pay me 25% MORE than the comfortable job to even
consider it. Startups can be pretty demanding and stressful.

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uargkajirhtrkcu
I'm 18 yrs experienced, tech role (C++, semi-conductors).

I landed a job in a reputed tier1 semi-vendor out of college. I worked there
for about 8 years. Work was (technically) fantastic, pay was very good. But I
had scratch the itch..

Left the company to join a startup (at that time, 2 yrs in operation). Took
50% paycut, but my wife stopped working at the same time, so effectively 75%
paycut. My plan was to work for approx 3 yrs and see what I'd like to do next.
Nearly 10 yrs down, I'm still here. My pay is still about 60% of what I'll get
if I quit today and join elsewhere (I'm reasonably confident of that
statement). My cumulative loss in monies over 10 years, taking into account
growth due to investment as well, comes to nearly 7 times my annual salary.

So yes - not a financially wise decision. In retrospect (even though I didn't
think of it that way earlier), it is a very selfish decision - missed family
vacations, higher financial stress, budget stays, ... all to scratch the itch.

I have mentally written off the amount. I'll never get it back.

I'm still here due to few reasons: a. My salary even though much lower than
what I can get, is still "sufficient" for most purposes b. I get to jump into
very interesting problems - work on topics I wouldn't have been able to, had I
been in a regular corporate environment. c. I have stocks - which potentially
can give me back a good return if and when we exit. d. I still believe in the
story we are selling. e. I add significant value to the company. My leaving
the company will effectively devalue my own stocks. f. I have lots of work-
life flexibility.

I'm not going to advice you - it is your decision. But, a. It is very likely
that you will never recover that 25% of salary loss b. Your stocks may make it
harder to jump ship later. And it is no better than monopoly currency - until
the startup exits. Which may take forever - and may never happen (don't listen
to what they say). c. You will likely face a much more challenging work
environment - including activities that are not core development. Your time
with Excel spreadsheets and Powerpoint may increase. I don't mean that as a
bad thing!

~~~
sreedhar
Thank you very much for the detailed advice and sharing your personal
experience. Really appreciate it.

I am in my late 30s. So, I think it is probably not worth it considering all
the uncertainties.

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tixocloud
A recruiter friend who normally works with startups have always advised me to
treat stock options as a bonus and never a true consideration.

As an entrepreneur who's looking to build a team, I completely understand that
they will try to sell you on their vision and all the benefits and wonderful
things you get for being part of a startup. But you'll have to ask yourself if
you feel that the vision is something you believe in as well? What stage is
the startup at the moment? What's the founders' exit strategy? What is their
philosophy on engineering/corporate culture?

~~~
sreedhar
The startup is around for more than 7 years. Less than 15 people in the team.
They got some funding recently and another partnership. Hence they are trying
to grow their team.

The domain has some overlap with what I do. So, they will definitely gain from
that from me. I think the Founders' exit strategy is to get acquired by some
other big player.

They have been growing their product slowly as and when they get feature
requests from their clients.

~~~
tixocloud
I would be slightly wary about the leadership if they have been around for 7
years with less than 15 people and thinking of being acquired.

Acquisitions usually happen because of tech, customers, or talent. Are there
any assets within the company that you feel would be worth acquiring? If this
event doesn’t happen, your stock options are virtually worthless. Equally
important is checking the price they are offering to you for the options - my
strike price was set so high at a previous company that the options were just
worthless because we were never going to sell for that high.

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amirathi
Sounds like more established tech companies might be a better fit for you at
this time.

\- They can afford the time while you ramp up on new technologies, frameworks
etc. A typical startup would expect you to be productive in month 1 (if not
Day/Week 1)

\- Their interview process would look for fundamental data structures,
algorithms, problem solving etc. Very little emphasis on specific programming
languages and such. This would play to your advantage.

\- Better pay (in terms of cash) & more job stability. I read somewhere that
you have family, home loan etc so this could be important.

After a few years at a established tech company setup, you might be in a
better position to 1) negotiate a better salary at a startup of your choice
and 2) be able to contribute to the startup more quickly.

~~~
sreedhar
Thank you very much for the solid advice.

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corybrown
A big issue with startups today is that it takes longer and longer to get any
kind of liquidity (5 years is very quick these days).

So, in the small chance your startup works out, you only get that equity pay
day after half a decade at best.

Is the experience worth the risk and opportunity cost? Depends on your
situation

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dyeje
If your goal is to use new technologies, sure. Personally, I would probably
never take a new job with a paycut. Also, are you aware that the COBOL market
is so hot right now that companies are paying alot of money to bring devs out
of retirement? Perhaps you should be looking at those opportunities. Save
enough money and you can work on whatever technology you like at your leisure.

[https://thenextweb.com/finance/2017/04/10/ancient-
programmin...](https://thenextweb.com/finance/2017/04/10/ancient-programming-
language-cobol-can-make-you-bank-literally/)

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segmondy
Take that 25% invest it in the market, you will probably get a better return.

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PeOe
If you can handle the cut, then yes. It's awesome to work in a startup. You
can learn so many things, more than just your work area. The colleagues are
more like a family and you will do more things together. You have also times
where you need to work more but you can be more creative and you are able to
offer more ideas which can help the startup flourish.

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asab
A few years ago I made a similar choice to work for a startup. It didn't work
out; I learned that it's probably not worth it unless for me unless I know and
am comfortable with the founders, as well as believe in the mission. Less than
that brings a lot of uncertainty, compared to a stable high salary I might
otherwise earn.

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a-saleh
Well, I would compare the market-rate first. I.e. if you are one of those
legendary cobol-cowboys, used to several thousands dollars a man-day, it is
likely that the market-rate for i.e. backend dev in most other technology
stacks will be lower. At least look at glassdoor?

If the pay seems under the market-rate, negotiate or let it be.

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mbrodersen
No. There is a 99.999% chance the startup will fail => your stock will be
worth nothing. And they probably expect you to work 80+ hours => your actual
hour rate will be even less than what you are making now (assuming you are
currently working standard 40 hours).

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tmaly
I think you are taking a big risk with little chance for reward.

That being said, you could use the startup to really learn some new skills
then transfer back to a comfortable job where those skills are needed.

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Antoninus
Only if you want to gain experience wearing many hats. (source: I took 40%
paycut to work at startup for a year)

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gpm
Is it 25% less because they are a startup, or 25% less because you're no
longer using your expertise in COBOL?

~~~
sreedhar
It is 25% less because i will no longer use my COBOL experience but will start
working on node js, python etc. I will contribute with my domain knowledge. so
it is a win-win.

May be they have a budget!

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epc
No.

~~~
epc
Let's say you make 100000 today. They're offering you 75000 plus 15000 (20% of
75000) in equity which is likely vested over four years with a one year cliff.

So, you stay four years. You've earned 300000 and now have 15000 in equity.
Yes, they may well offer you more equity over time, but you don't know that
today. You've foregone 100000 in income (or more), and the 15000 in equity is,
in the best case scenario, worth much more on secondary markets, but only if
there is a buyer. In the worst case scenario, the company shuts down some time
over the next four years and you are now unemployed, out the equity they
granted, and the income you've lost.

There are better ways to learn new technologies than subsidizing a company
with your talents.

~~~
joezydeco
I'm kind of puzzled by this offer. Are they offering him $15,000 in shares
based on the valuation that day? That year? When?

And wouldn't it all just get diluted to hell in the years after that?

The whole thing reeks of bullshit.

~~~
epc
I’m guessing 100% here that it’s the number of options or RSUs roughly equal
to 15% of the salary. Even if it was 20% of the current salary it isn’t a good
deal.

