
Benefits matter, or why I won't work for your Y Combinator startup - angryasian
http://mhalligan.com/benefits-matter-or-why-i-wont-work-for-your-y
======
edent
From a UK perspective - this post is nuts! I've worked with a few London based
startups (and interviewed for several).

Holiday 28 days minimum - as per law <https://www.gov.uk/holiday-entitlement-
rights/entitlement>

Rarely offered health care but - for all its flaws - our National Health
Service is pretty good.

Shares - yup, they're almost always going to be worthless.

Pension - every company has offered me at least 5% matched pension - some
more. The Government is mandating that even small employers will have to put
you in a pension scheme soon - which is good.

"Soft" benefits like gym membership / conferences / etc depend very much on
how confident the business is in itself. If it can afford them, it likely will
- because they know that people can get them at mega-corps.

Pay - ah, there's the kicker. Yes, most startups try to save on the salary
costs. Usually they get a pretty rude awakening when they try to hire someone
with more than 5 minutes' experience. So they try to make it better with "up-
titling". I could have been "Global Head of X" at a company barely looking at
sales outside the city.

Joining a start-up is fun. But, like a pyramid scheme, you've got to get in
early if you want to reap the share bonanza benefits.

I do wonder why the UK scene doesn't seem quite so vibrant - especially as
healthcare costs (which I understand to be the biggest burden in the US) are
essentially nil.

~~~
crusso
_I do wonder why the UK scene doesn't seem quite so vibrant_

You just go through a list of state-required benefits or drains on individual
risk taking and then you wonder at why the startup scene isn't quite so
vibrant?

Risk taking requires the ability to... uh... take risks.

~~~
amit_m
AFAIK Israel has more startups per capita than any other country in the world,
but the legally mandated benefits are very similar to those in the UK (with
slightly less vacation time).

Actually, I think some form of social safety net is supportive of very
entrepreneurs. From personal experience, the only people I know who quit their
job to work full time on a startup had significant savings from previous jobs.
Also it's quite common in Israel to start working on your startup while
getting unemployment benefits.

------
cletus
The problem here I think is the disparity between being the last cofounder
(15-30% equity before dilution typically) and being the first employee (1-2%)
vs working for a more established company. If you compare the compensation for
being an early employee in such a startup with working for an established
company (eg Google, Facebook) then I think you'll find the employee of the
latter will be better off in the long term 95% of the time and by a
significant margin (disclaimer: I work for Google).

Now some people and some ideas can genuinely attract people to work for
peanuts. I remember hearing about Square, then valued at $40m with their first
round of funding (IIRC) and thinking "man I'd give anything to work for them"
given the idea and the track record (Jack Dorsey basically).

The problem I think is that many startups think they have this kind of cachet
just because they worked for Facebook in 2006. Social proof counts for
something but it doesn't make you a great entrepreneur. Being a great
entrepreneur makes you a great entrepreneur and that means running some kind
of company that had some kind of impact (and, ideally, some significant exit).

Startups aren't for financial security. They are for the frontiermen who are
hoping to strike it rich in the gold rush. Most don't but some do.

To the OP: you make very valid points and given your circumstances and
preferences (and mine FWIW), I agree: working for an established company will
give you a far better expected financial outcome at lower risk.

EDIT: I should clarify that there are of course non-financial reasons to work
for a small startup. Less bureaucracy, it can be exciting, variety of work,
degree of impact and so on.

A lot of people are willing to make those tradeoffs and sacrifice some
financial return for the privilege. This isn't unique to the startup world.
Games programmers, for example, typically get paid crap (until you get to be
the lead developer on a big title and get a % of the revenue, etc).

All of this is simply supply and demand.

That all being said, living without health insurance in the US is incredibly
risky. Generally only large employers have the clout to negotiate good plans
with providers for reasonable premiums.

The other stuff (extra PTO, conferences especially, etc) are more luxuries
than necessities but they do of course contribute to the overall financial
outcome.

~~~
rohern
> Startups aren't for financial security. They are for the frontiermen who are
> hoping to strike it rich in the gold rush. Most don't but some do.

I think you mean "Founding a startup is for the frontiermen..." Being an
employee is not. Being an employee is a losing proposition far more often than
the 95% you cited.

~~~
guptaneil
It's a losing proposition, financially speaking. But it sure is a lot more fun
and satisfying working at a startup than a large corporation.

Although there aren't tangible or financial benefits for working at a startup,
there are definitely benefits that a large company simply can't provide, like
experience and independence. For someone in their early 20's straight out of
college, those benefits can outweigh the financial benefits of a big company.

~~~
Q6T46nT668w6i3m
_It's a losing proposition, financially speaking. But it sure is a lot more
fun and satisfying working at a startup than a large corporation._

Maybe. However, I think most us know people that love working for Apple,
Facebook, Microsoft, Google, et al.

Frankly, I think your independence claim is overstated—financial support is
crucial. Shigeru Miyamoto emphasized this perspective in a 2012 New Yorker
profile: “There’s a big difference between the money you receive personally
from the company and the money you can use in your job.”

[http://www.newyorker.com/reporting/2010/12/20/101220fa_fact_...](http://www.newyorker.com/reporting/2010/12/20/101220fa_fact_paumgarten?currentPage=all)

There’re many reasons to found a startup, very few to work for one.

~~~
michaelochurch
_There’re many reasons to found a startup, very few to work for one._

There are good startups out there. I'm almost notorious for startup-bashing
because so many of them have awful cultures, but there _are_ decent small/new
companies out there. You'll probably have to look outside of VC-istan. VC-
istan seems to appeal to the Clueless (see: MacLeod hierarchy) young who will
jump at the chance to work "at a startup!" without discrimination.

I know someone who's actually looking at building a startup _without_ equity.
He will hold 100% of the stock, at least at first. Variable pay will be
profit-sharing. He wants this company to last 20+ years without acquisition,
so instead of putting the focus on a future cash-out, he wants people to be
rewarded continually for good work.

~~~
technotony
How's he doing with that offer? Is he at least paying market salary?

~~~
michaelochurch
He hasn't started it yet. He's bootstrapping. He plans on paying market to
slightly above, and being generous with annual bonuses (the profit-sharing).

Wall Street gets a bad rap for its bonuses, and there are some cultural
problems with it, but it's a better mechanism for compensation than what VC-
istan uses. Also, I think that Wall Street culture is less horrible than VC-
istan. On Wall Street, some people get butthurt about their bonuses, but you
don't have teams of 15 programmers where every single one is trying to become
VP/Eng and get a real slice.

~~~
eldavido
I've read a lot of your writing and agree with some of it.

Bootstrapping is attractive, but it's very hard to do. Also, as misguided as
employee equity grants might be, it has become the standard for compensation
in SV; that a company doesn't offer some token ownership definitely _will_
make it harder to hire.

I think it really boils down to, if you want to take part in "VC-istan" as a
founder/employee, move to SF, if not, go somewhere else, because it's just too
hard to hire/hold down an office/live in SF on bootstrapping.

------
ChuckMcM
I clicked through to his LinkedIn resume (always on the look out for solid
DevOps types).

I think it is great that Michael understands exactly what he wants in terms of
a compensation package. And for a variety of reasons, its pretty clear that a
"startup" isn't going to meet those needs. So he's currently "Contractor at
Self-Employed" which is also fine because you really do have a lot of
flexibility as a contractor that you don't have as a rank-and-file employee at
BigCo.

But the anger and the hurt, that is not healthy.

The impression that rant leaves me with is that Michael feels he brings great
value to the organization, and wants to be compensated commensurately with
that value. And yet nobody has agreed to his terms. It may be they can't
(reading his list is a lot of capital to invest in a single employee), it may
be they disagree about value, or it may be they have structural issues around
it (managing the expectations of other employees, Etc.) The "shut up and pay
me what I'm worth" mantra is not a healthy internal dialog, it instantly makes
you enemies with the very person you're trying to be friends with, the guy
with the job. Worse it focuses your effort on the wrong question.

Lets use a very simple analogy for how this can go wrong. Lets say you own a
bicycle, and one of the tires has a slow leak. You go into an "inflation"
store and the sales guy has really nice compressors, they've got pressure
values that are accurate to within 1/10th PSI, they have valves to deliver
exactly the right amount of inflation, large multi-gallon storage tanks to
deliver air efficiently and on time, and valves, a most wondrous universal
valving system that pretty much guarantees you will never have a tire that
this thing can't inflate. All for the low low price of $899. And the bike
rider says, "I really just need a hand pump, I'm prepared to pay $25 for
it..."

Now is our consumer some ignorant boob that can't see the value of a truly
fine tire inflation apparatus? No. And the sales guy shouldn't get mad if the
customer isn't willing to over pay so much to achieve their goal of keeping a
leaky tire from going flat.

The key is that it isn't that the tire inflator isn't "worth" the money, its
that the problem isn't worth the inflater's price. It would work, but the
extra cost doesn't bring extra value.

So Michael's rant might be he cannot find a company yet that has the size
problems that he can solve. No doubt there are such companies, but the larger
the problem size, the harder it is to connect with the person who is looking.

Some folks take the path of being 'under employed' to get at least some
benefits while they seek out the right spot, some start their own thing, but
yelling at the YC founders and insinuating that their goal in life is to
fleece their employees in the pursuit of their own success does Michael a
disservice.

~~~
jebblue
>> reading his list is a lot of capital to invest in a single employee

That single employee with his background represents millions of dollars per
year in revenue, he should be asking for more and you should get a clue.

~~~
ChuckMcM
Did you read his rant? He's currently self employed _and_ interviewing. I am
not unsympathetic to his cause, or his angst. But I don't understand your
assertion that he should be asking for even more compensation than he is, how
does asking for even more salary helps him out here, could you say more about
that? What exactly would be different if I were "more clued" ?

~~~
steven2012
If I were him, I would quickly delete his post. That post is likely to give
pause to many potential employers.

For what it's worth, I have 18 years experience, and I'm working very, very
happily for a YC 09 company. I'm fairly old school in my thinking, and I've
been through the Bust, so I've seen perks come and go. I just want a fair
salary, good colleagues, a boss that cares, and interesting and challenging
work. Perks are nice, but I don't feel entitled to any.

Actually, the first perk in my career that I have completely head-over-heels
loved is our ZeroCater lunch service. I really look forward to lunch every
single day.

~~~
nicholassmith
From my reading of the article it says he's actually got an offer on the table
from another company, who have done the right thing. It might give pause to
many potential employers, but those aren't the employers that he wants anyway.

------
coolsunglasses
Based on how he's valuing his PTO, he's valuing his time at either $328, $218,
or $447 per diem.

I hope he's not valuing his PTO based on the salary he's getting.

I'm a 24 year old with no college degree and I currently cost about $800 per
day on contract. (Not hypothetical, billing at that rate right now.) I'd
rather make twice as much money consulting, pick my own damn healthcare plan,
go to whatever conferences I want without asking^H^H^H^H^H^Hbegging, and stash
that much more money towards runway.

I just left a YC company myself. I would only work for a YC company because it
was time for me to learn, it no longer is.

It's time for me to earn, so I'll contract until I get a business rolling.

If you approach working at a YC company like a piker, you're going to be
disappointed. It's an opportunity to build up a network and learn how startups
work so that you can eventually do your own thing. (IMHO anyway)

Employee equity is consistently pathetic. Not worth it.

It also doesn't seem like he's asking for what he wants. Does he not know how
to negotiate? Tell the YC founders what you want.

People are really bad at getting what they want unless it's offered to them on
a silver platter.

Edit: The whole post, frankly, seems like an advertisement for his
irrationality with regards to the expected value of perks.

~~~
etchalon
As a contractor, if you're taking in 800 dollars a day, and buying your own
health insurance, you are not taking in 800 dollars a day. In fact, your take
home pay is probably less than his (at least on the high-end of the per-diem).

1\. You're paying a higher marginal tax rate on your earnings than he is on
his salary. Self-employment tax is a real bitch.

2\. If you're buying your own health insurance, the benefits you get for the
price are undoubtable lower than the benefits he gets with his (paid for)
package, or you're paying through the nose. "Group plans" are generally
better, and cheaper, than individual plans.

3\. Should something terrible happen to you, or should you fail to find work
for awhile, you are not eligible for unemployment.

I see lots of folks swear by "being a contractor" when they're young, only to
start searching for a salaried position after a few bad experiences.

When I took over my company, the absolute first thing I did was switch every
"contractor" to a full-time employee. It's better for both parties.

~~~
coolsunglasses
I've been contracting for a long time, I know the risks and it's not just
about the money. It's about the self ownership.

Of course it's better for the company, they want the ability to coerce the
employee and hold their livelihood/healthcare hostage.

With my arrangement, I keep the same healthcare plan no matter who I'm working
for or what I'm doing.

~~~
etchalon
Huh?

You can basically always keep your health insurance. You just have to pay a
higher premium than your employer paid for it. They aren't "holding your
health care hostage", they're given you a benefit of being a part of a group;
a risk pool insurance companies are willing to give discounted rates to. Get
fired, or quit? Just call the insurance company and ask what it'd cost to keep
your coverage as is. There's generally ALWAYS an individual plan available
with the exact same benefit levels.

Health insurance used to be a hostage game due primarily to pre-existing
conditions. That's becoming less of an issue thanks to new laws (and if you
were employable, was never much of an issue anyway).

However, I did not mean "just" insurance. Contractor arrangements are terrible
for both the contractor and the company, in the long run.

~~~
coolsunglasses
I didn't mean just insurance either.

Independence and the ability to come and go as I please is more valuable to me
than whatever risk/reward calculation you're working with in your head.

~~~
etchalon
Eh. Personally, I was a contractor for a long time, and I realized that the
whole "independent" thing was total BS.

1\. I was never independent. I had a "client", or a "contractor", I was
obligated to fulfill. I only got paid if I did so, and I only got more
contract jobs if I did a good job.

2\. When one contract was over, I had to run out and find another one. While
doing so, I was making exactly nothing. If I timed things right, I'd go from
one contract to another, but that's not always possible, so I'd have a week or
so of dead time where I should have been making money, but didn't.

3\. If I was sick, there wasn't a team of structure in place to deal with it.
I was sick. I didn't get paid. It sucked. Often it meant I had to do double-
shift days to make up the lost time.

4\. There was absolutely no "reward". There was just a steady, sometimes
unsteady, stream of money, which worked out to about what I'd make salaried
somewhere after I factor in everything.

5\. As a salaried employee, I was still completely free to quit. No one could
"make" me stay at a job I hated. And there aren't many (if any) legal
ramifications of doing so. However, as a contractor, I might have a legal
obligation (literally a contract), and the client had a completely valid way
to sue me if I broke contract by not completing the work. Some clients
demanded real contracts for long-term projects, and that absolutely sucked.

6\. Founder spend payroll? Great. Contract abruptly ended. Scramble to find
more work, no idea when I'll get paid for the money they already owe.

Being a contractor doesn't make you free or independent in any way that a
salaried employee isn't.

The only way it works out is if you turn yourself into a business, and hire
other people. That's basically what I did, and even now, I'm not really
independent. I have employees/clients counting on me.

The only real "independence" comes from wealth that isn't generated or
dependent on labor.

~~~
coolsunglasses
I prefer working with clients to having a boss. I prefer having customers to
having a client. You're always answerable to someone or something, even if
it's begging daddy to refill that trust fund.

I add 2 months of runway for each week I work. Not exactly a big deal.

>Often it meant I had to do double-shift days to make up the lost time.

I'm starting to develop a picture of you under-billing, if you felt obligated
to do so.

>There was absolutely no "reward"

Can we just get to the part where we recognize we value different things and
move on?

>As a salaried employee, I was still completely free to quit.

Except for the part where if you're the type of person to prefer working on 5,
10, or 15 different things a year as opposed to one thing for 5 years, you're
penalized as an employee because you'll be seen as a job hopper. It does real
palpable damage to your career as a salaried employee to quit a job.

>Being a contractor doesn't make you free or independent in any way that a
salaried employee isn't.

That's plainly false.

This was always a waste of time, but now it's an expensive waste of time.

Troll somebody else who hasn't drunk your kool-aid.

~~~
etchalon
I'm not trolling. I'm literally talking about my experiences as a contractor
and the conclusions I've reached.

> I prefer working with clients to having a boss. I prefer having customers to
> having a client.

To me, it was just trading one noun for another.

> I'm starting to develop a picture of you under-billing, if you felt
> obligated to do so.

Projects have deadlines. This isn't a matter of under-billing, it's the fact
of life.

> Except for the part where if you're the type of person to prefer working on
> 5, 10, or 15 different things a year as opposed to one thing for 5 years,
> you're penalized as an employee because you'll be seen as a job hopper.

Not really. Go work for an agency that does lots of different things. I own a
digital agency, and we build lots and lots of different things every week. My
creatives/engineers can jump on stuff they're interested in (we actually
encourage that).

If you feel like you're more "free" as a contractor, great. Personally, I
found I thought that until I realized it was nonsense.

------
pg
This entire thesis is a red herring. I doubt we've ever had a conversation
with a startup about what sort of benefits they should offer. Since the
startups in a position to hire lots of people will presumably have raised
money from later stage investors, if anyone is giving them advice about this,
it would probably be them.

FWIW, if anyone did ask my advice about what benefits to offer, I'd tell them
to err on the side of generosity. I certainly tell them to err on that side
with equity grants.

~~~
guptaneil
I'd argue that being less generous with benefits is a good filter for hiring
candidates that are genuinely interested in what the startup's doing (which is
crucial in early employees) rather than somebody who's just looking for
another job, like the author.

Edit: To clarify, there is huge difference between offering no benefits and
offering fewer benefits than a large company. I'm not advocating treating
employees like crap. I'm saying that there is a potential benefit to startups
who don't try to compete on monetary benefits. Startups should provide as many
benefits as possible, but not worry about competing with the financial
packages that a large company can provide.

Also, if you disagree, please give your reasoning below. Downvoting to show
disagreement just seems lazy.

~~~
michaelochurch
Health insurance is non-negotiable and shouldn't have an employee
contribution. The rest of the benefits are more negotiable. 401k becomes
important in your 30s when you start realizing that you're not going to be
young forever. Conference budget is a nice-to-have but conferences shouldn't
come out of your vacation-- that's a fuck-you if they do.

Regarding compensation: the total package should be enough that people don't
worry about money. Ever. If you're doing your job, you may not make them rich
but you pay enough that people aren't worried about daily living expenses.

The issue here-- why benefits are so important-- is that VC-istan startups are
in such a state where the concerns of a 45-year-old with kids are seen as
freaky and unusual. There's a very large talent pool that's being overlooked.

~~~
wyclif
"There's no shortage of smart, hardworking engineers. There's a shortage of
smart, hardworking engineers willing to work for very little money." ~ David
"Pardo" Keppel

------
vnorby
I don't think it's fair to bunch all 400+ Y Combinator companies together like
this. You'll probably find good and bad benefits packages with the same
frequency across all small startups. Y Combinator certainly does not get their
hands dirty in the operational, HR, or recruitment strategies of their funded
companies; that's really up to the founders.

Perhaps what you want to say is that you don't like the benefits packages that
startups with young founders provide, because they don't understand what a
more senior engineer expects on that side of the compensation equation. That
might be more fair.

~~~
mikeg8
Best response I've seen. Right on the money

------
aresant
From the Author's bio:

"I'm just this guy who used to enjoy tech, now I would rather build bicycles.
I still work in the tech industry, for the money, but I no longer call myself
a "technologist"."

So points well made that a guy with children, in mid-career, and without much
of a passion for the field he's working in finds a Y-Combinator offer to be
less compelling than a more traditional package.

But I'm not sure what the takeaway should be for Y-Combinator companies.

I'm sure you could come up with a whole list of why it's compelling to join a
Y-Combinator startup, the one that strikes me is that providing great value to
a Y-Combinator start-up puts you in a great position to leverage your own
attention from PG and crew.

So at some level the lesson here feels like how can Y-Combinator recruiters
(or CEO recruiters) minimize distractions from candidates that ultimately
don't want the job you're offering?

The answer is to highlight the tangible benefits of being part of a
Y-Combinator startup while candidly addressing what "you're not" so the wrong
candidates don't waste their time, or yours.

~~~
phillmv
Listen, I know that once we turn forty we're all put out to pasture in the
Great Programmer Iceberg and left to fend for ourselves but:

I think the takeaway is, you're not building something sustainable if you
can't attract people with kids. Kids are a very natural and common lifecycle
event for people over the age of 25.

In terms of dollars and cents, the notion that you're building a team of
"world class talent" that doesn't include anyone over the age of 30 is silly.

Not that the vast majority of startups need world class talent, but that's
neither her nor there.

~~~
jimray
This is so well stated. It's something I (age 34, married, no kid(s) (yet))
think about a lot. I live and work in a city (San Francisco) and in an
industry (web developer) where being 10 years older than the median age of my
neighbors and colleagues feels like a liability. I feel like I've just figured
a few important things out and I'm already past my prime.

------
Zimahl
_Here's what a good benefits package looks like from a company who cares about
attracting senior employees, and not just college kids:

\- Agreement to pay for 3 conferences per year(Surge, Velocity, and ChefConf),
an $18k/year benefit \- $2500/year FSA, Employer funded \- 401k, 5% match. (II
end up with $24,750/year in my 401K plan) \- Full health insurance for myself
and my daughter, no Premium \- Health club membership \- $150/month Clipper
card budget \- 30 days of PTO, a $9,840/year benefit_

I work in the Portland area and have had the opportunity to work at some
pretty great companies around here but there is no way to get much other than
the 401k benefit (and even then a 5% match may not happen) and maybe the
health club membership.

Health insurance will sometimes cover yourself but once you add a spouse
and/or kids it's going to cost the company a lot more so there is going to be
a premium. I currently work downtown and my company covers my parking (which
isn't cheap) but others haven't.

I don't know about the Bay area but there is no way you'd get 30 days of PTO
from anywhere here, I've never heard of that even from a non-profit I
interviewed with once.

~~~
jaggederest
I've worked for 3 startups in Portland that offered those benefits.

I now work remotely for a Fortune 100 that gives me a major portion of those
benefits, plus a higher salary.

It can be done, my Portland-based comrade. I'll buy you a beer sometime if you
like.

~~~
Zimahl
I can see one or two of those things being covered but even 30 days of PTO?
That's 6 weeks per year that you won't be in the office. Portland (OR), USA,
right? Not Portland, Spain/France/Norway? :P

~~~
jaggederest
Correct. Two of the three had no specified rules besides "take some", but I
took a lot. Work got done, nobody cared.

------
jedberg
I always advise folks who are looking to work for a startup to value their
stock at $0. Will you be happy and enjoy the work you are doing for the salary
and benefits alone?

~~~
bm1362
I agree; as a new grad I don't think about the money (it's all good!) but more
so the experience- Will I learn from these people? Will it make me a better
engineer?

The two most important factors IMO: the tech and the team.

------
mrkurt
There's some awfully strange stuff in this particular post, though I generally
agree that startups tend to lowball people on offers.

For instance:

> I turned them down because they were preparing to make me a below-market
> offer in exchange for what I expected to be an insulting amount of equity,
> and a non-existant benefits package.

There are three possible answers to an offer: yes, no, counter. It's really
odd to focus this much on salary + benefits without even taking the time to
counter. We're not-entirely-dissimilar from the YC company he was describing,
and the simple truth is that we lack many on paper benefits because we haven't
taken the time to formalize many of them. Which means there's lots of leeway
to ask for stuff. There's no strict "3 conferences per year" but I'm pretty
sure everyone in the company goes to any conference they want to (including
Velocity, and ChefConf ... you might see them there).

> The YCombinator company probably didn't care enough to have their lawyer
> draw up the paperwork so that their employees can execute on their stock
> options from the first day to avoid AMT.

Really? I'm pretty sure the standard docs nearly all YC companies use are
pretty solid, and they'll usually even have their lawyers help with an 83b
election. There's a lot of math and snark based on a "probably" that's
probably wrong.

> Both companies offer the same, worthless stock options of 0.50% of the
> company, before an expected dilution.

If they just raised at a $40mm valuation, 0.5% equity is _literally_ worth
$200k to them right now (in the sense that they could exchanged another 0.5%
of the company for $200k). If they're anything like us, they don't want to
give up equity anyway. We would happily give a higher salary with no equity to
new hires.

Equity is really a chance to trade some salary for a large check if things go
incredibly well. It's not the rational choice at early employee levels, but
it's a chance to get a little of the risk/reward action. The reality is that
higher equity levels (ie: founder levels) come with a huge amount of risk,
which often isn't feasible for people that can pull large salaries.

~~~
danielweber
_If they just raised at a $40mm valuation, 0.5% equity is literally worth
$200k to them right now_

True for a stock grant, but these are stock options.

~~~
mrkurt
The strike price on options is usually really low relative to fund raising
valuations. It's not vastly different than an equity grant, at least in the
cases where it matters (ie: good ones). I think everyone would prefer to just
give actual equity, but the tax implications are pretty terrible for the
recipient.

~~~
danielweber
If the strike price isn't the current valuation, that's technically a taxable
event. Probably no one will care because there is no liquid market to prove
the valuation.

------
apalmer
He makes a pretty good argument really. You don't run a successful business
with the mindset of 'i shouldn't be entitled', i have no idea why an employee
shouldnt have the same mindset. Capitalism, your supposed to go after every
tangible benefit possible, and minimize every cost possible.

How folks plan to run a business that way and yet feel its 'entitlement' for
an employee to do the same thing is weird to me.

~~~
khuey
Everyone wants capitalism to apply to their inflows and not to their outflows.

------
danso
> _Though they brag about their "Unlimited Vacation" (today's buzzword), they
> offered only 15 days of PTO, standard for any professional job in the United
> States._

Has anyone ever tried to take advantage of "Unlimited Vacation" at an early
startup? I mean, sincerely tried to invoke that contractual promise as a way
to take 3+ weeks consecutively?

~~~
selectout
Not me personally but an engineer at my current startup is taking 5 weeks off
but the typical "Unlimited Vacation" also mentions as long as you get your
work done. So they will be taking 5 weeks off traveling the world, but they
are still getting work done (not the typical hours by any means, but getting
what needs to be done accomplished).

~~~
PeterisP
5 weeks travelling and doing work = 0 weeks vacation. It is really great, it
is flextime+great office+telecommuting which are all nice things; but it's
apples-and-oranges compared to a vacation.

I mean, all the psych research says that it takes at least 4+ days until
people really get work off their mind, and the work-mindset starts a few days
before returning. So vacations start to be effective at a minimum of 2
consecutive, uninterrupted weeks (coincidentally a legal requirement in a
bunch of countries). If you're taking vacation in small blocks or continue to
think about work on vacation, then you and the company lose the working days
spent, but aren't getting the expected recovery/productivity/burnout-
prevention/etc benefits for which vacations are actually implemented.

~~~
droithomme
Agreed. Working from the beach in Thailand and getting all your work done is
no different than working from your house in Oakland and getting all your work
done which is no different from working at the coffee shop across the street
from work and getting all your work done.

Classifying any of these as "employee is out taking vacation time" is a giant
spin.

------
wbharding
As a CEO/Founder running a business that is revenue-sensitive, my developer-
side completely agrees with the "FYPM" attitude of OP.

Every story I see about the supposed "tech talent crunch" makes me wince at
the fact that the average web developer salary is about the same from when I
started my company five years ago to now. If there's really a shortage, the
makers ought to be getting paid: in dollars, not kool aid.

This isn't even to mention the "glory deficit" that goes with being an
employee. With today's incubator explosion, any decent technologist can own
50%+ of their own company. If they're going to work for yours, you'd better
pay them. And spend more time glorifying those who want to work as a team,
rather than those that chase the CEO/Founder glory (a common blog post written
by CEOs, Founders and VCs).

------
johndavi
It's really not (only) that "benefits matter," but that this kind of
comprehensive yet simple calculus is missing when most people consider a
startup gig.

Whenever I lost or was on the verge of losing an employee to a startup, it was
pretty convincing to walk them through what "hey, you get a whole percent of
the company!" really means, even in a nine figure acquisition... and then
compare that totally-at-risk, totally unlikely result (as the OP does) to the
much better, and not-at-risk, salary + bonus from Large Company.

Difference is of course when you pick that lottery winner and 1% post-dilution
is actually something. And that's what everyone's playing, right?

------
lubujackson
The takeaway from this is if you want to build a startup run by adults (gray
neckbeards), these are their concerns. Forget the foosball and lunches, focus
on healthcare for families and gym memberships.

It's not 1995 anymore. Now there ARE candidates who have been there and done
that. It's clearly better to have employees with startup experience who don't
operate always in crisis mode.

------
devmvc
I totally agree. Have seen the same in Germany, with both US and German
startups, both in Hamburg and Berlin. They talk all the time how cool is to
work in nice locations in the city have a great Mac and being part of
something great. I have always visited such an interviews, because wanted to
be a part of these startup environment. However getting 30% less salary and no
real benefits, except for talking to hipsters all day long, has never been the
purpose of my life.

------
arbuge
Just curious on the part where he says that the stock is most likely
worthless. Are there any hard numbers on the average outcome of YC startups,
and startups in general?

I mean, all else being equal, what is the expected value of 0.5% of the equity
of the average startup at stage X these days?

~~~
jodi
Here are a couple ways that common stock can become worthless: \- The most
obvious and common, the company fails / does not exit \- The company raises
money and the investors have liquidation preferences. This means that the
investor is guaranteed to make 3 times what they put in when the company is
acquired. So, for example, if you raise 10 million dollars and your investors
have 3x liquidation preferences, you have to sell the company for over 30
million before common shareholders see any money at all. So in this situation
(and it is common), the common stock is essentially worthless.

~~~
danielweber
Even with a 1X multiplier, that preferred stock still has a good chance to
give the 1% employee getting the shaft.

Let's say that there are 5 board members, and 3 of them are VC reps. Those VC
companies have 50% of the company, with dibs on the first $50 million. Now,
it's time to sell the company.

Pretend the company could be worth between $0 million and $100 million. Figure
out what the VCs are likely to sell the company for, remembering that they get
100% of the first $50 million and 0% of the next $50 million.

------
confluence
I'll repost a previous comment for the benefit of the HN community concerning
exactly this situation for start-up employees from
<https://news.ycombinator.com/item?id=5255362> (great discussion there btw),
for those who missed it the first time around (hope that's ok):

...

Here are a few tips for others startup employees:

1\. Take the least amount of stock possible - your startup is statistically
unlikely to succeed. It'd be better to bump your salary up $10-20K than to get
the stock.

2\. Unless it's liquid - it's worthless.

3\. Valuations pre-cashflow - are useless. Anybody can value anything at
insane levels using just one dollar. I value HN at $1 billion by offering to
buy only 1 share of 1 billion in common stock for $1 right now. See the
implicit valuation leverage. I took a dollar, then invented the billion.

4\. If you work for a "nasty" startup - one which people can consider to be
negative long term to one or more parties - expect eventual collapse or flat
line growth (Zynga/Groupon).

5\. Companies exist to make management, investors and founders rich - they
hold the vast majority of the stock - and benefit greatly from path dependence
and network effects. You on the other hand don't. Expect to be screwed at any
time.

Think of it like this. Managers/founders of most companies are pretty dipshit
- how is it that they can own so much more stock? Simple. Be there earlier!
Akin to how old money works. Imagine if you were the first person to squat
land near what has now become Manhattan. You'd easily be worth hundreds of
millions. There is obviously some skill in researching, predicting, working
and acquiring land that will soon appreciate in value. But it's not worth
nearly that much. Path dependence, luck and network effects do that. See GFC
boom and that dumbass cousin who made and almost certainly lost millions in
housing to understand how this works out.

Startups really aren't that different to a speculative investment in a house
during boom times. Once you understand this - a lot of things start to make a
hell of a lot more sense.

6\. PG says be relentlessly resourceful. That's useful. But even better is to
be relentlessly cynical.

Free t-shirts? Just an easy way to drop your salary and indoctrinate you -
scratch that - it's a god damn uniform - freedom be damned! Free food? You
took a $30-$40K pay cut to take the damn job - the food isn't worth a tenth of
that + you're now working during lunch hours! Free hardware? That's only
$2-$4K.

Hackathons? That's just work during your free time - or if it's during work
time, it's a startup product you should own, but don't. More days off? Aren't
you already working 60+ hours a week today! Culture shit after work? That's
just more indoctrination. Gym membership? Only $200-500 - peanuts! Flexible
work hours? That just means work more, but do it at times that aren't 9-5.
Parental leave? Big companies and Europe have had that for ages.

Oh, and that culture fit crap? That's just discrimination - rebranded! What?
You don't like what other late 20s upper-class educated males like? Be gone
heathen!

End advice.

Not saying big companies or government jobs are any better. But at the very
least you're already cynical about those things and demand to get paid well
enough in risk-adjusted terms.

~~~
temphn
"Relentlessly cynical", you sound like a great person to hire!

Someone like you shouldn't work for a startup. Go and work for a big company,
go poison the atmosphere there. It's just not a good fit on both ends. If
they're cheating you so bad, if it's so obviously a bad deal, why do you even
care? In your view, startups suck and no one makes a lot of money or learns
anything, so you aren't missing much.

Go work at Oracle and be happy with your 401k.

~~~
untog
Oh, please. Everyone should be cynical about the work arrangements they get
into, because let's face it, the company as a whole doesn't care about you.
You are a replaceable resource. If you believe otherwise then you are
hopelessly naive.

I remember talking to a friend of mine who had to fire half his workforce in
order to give his company six months more runway to succeed- he was absolutely
devastated about it. Those coworkers were his friends and allies. He still did
it, though. To a certain extent it wasn't even his choice.

------
vivekajayshah
Startups benefits don't have to suck! Our company has worked with dozens of
startups to provide amazing benefits - for usually less than 3-4% of employee
salaries.

Check us out: <http://www.simplyinsured.com>

------
rohern
I think the most interesting question raised by this article is, "Why are the
smart people graduating from college willing to get shafted by startups?"

Why are schools failing to teach engineers about caring for their own careers?
I do not think most business majors would put up with kind of crap. They are
all taught to negotiate for salary and to get high earnings early as a basis
for later demands. They also understand how stock options work and that 0.5%
over a four-year vesting cycle with no protection in the event of acquisition
is an atrociously bad deal.

~~~
dopamean
Someone else here mentioned something about joining a startup because it can
be a great opportunity to learn. Maybe you can get something out of it other
than money that is very valuable. This kind of thinking would appeal to a
young kid straight out of college and perhaps not to a 40 year old with kids
who wants to buy a house. Different strokes...

------
zallarak
I think the fear people have in choosing a larger company is that they're
going to miss out on working with smart people on interesting problems, having
work-ownership, etc. This was my personal fear.

I've worked at 2 early-stage "prestigious enough" startups and now work at a
much larger company that offers a much better work-life
balance/salary/benefits/etc. What I've found is that contrary to my fears, it
does indeed have "smart people, interesting problems to work on", etc. -
without the BS you have to deal with at smaller and/or unprofitable startups
(bad benefits, hours, etc.). To be fair, it's harder to find larger companies
that offer this, and the one I'm at isn't massive, it's no more than 50
people.

Unless invalidated startups begin offering better equity packages (because
most can't usually afford to pay market salaries) they are going to see talent
leave. It baffles me to think that companies think they can get away with
this. And to those engineers who accept below-market salaries and small equity
packages I ask you to question why - know that even if you work your *ss off
and the product succeeds, your equity payout is probably in the tens of
thousands at most - a typical bonus for a lot of entry/mid-level software
engineers.

------
eliben
I've always found it amusing how very important $150/month Clipper passes are
deemed by devs earning $200K salaries.

------
seeingfurther
Every thing comes down to risk vs reward. Founders risk it all to found
companies and rightfully have the greatest reward. Startup employees haven't
risked as much but their risk is compensated with appropriate equity the
earlier they join and the more risk they take on in the form of lower salary
and benefits. YC definitively reduces risk and increases the potential for
reward. It's easier for YC companies to raise funding (allowing them to pay
market salary and benefits faster) and they have been vetted so we can assume
the idea and team have a better shot at success. If you want to work in
startups, working for a YC company is a better risk vs reward scenario as
compared to a non-YC company. In regards to the post, just ask for more equity
in scenario 1. IMHO the first 10 engineers should roughly own all of the "20%"
first round option pool and should be able to get the company to an exit,
massive profits or the next round. EDIT: last sentence for clarity.

~~~
potatolicious
> _"Startup employees haven't risked as much but their risk is compensated
> with appropriate equity the earlier they join and the more risk they take on
> in the form of lower salary and benefits."_

This is the part where we wave our hands and drop a smoke bomb.

You're theoretically right, but it never works out that way. For all intents
and purposes, in the current state of the tech economy, there is _no inherent
risk_ to working for a startup. If my company went belly-up today I'll bounce
off the floor juuuust fine.

Equity at this point is not being given in exchange for the risk of the
company failing, it's given as a tool to decrease other forms of compensation.

And it's a shitty trade. Founders know it and experienced employees know it.
The only people who are falling for this are the fresh-faced college grads who
think 0.1% pre-dilution of your startup will make them rich.

But _lots_ of engineers get convinced to take _huge_ pay cuts in exchange for
a pittance in equity, and to forego huge amounts of benefits that are worth
_real cash_.

"Compensated with appropriate equity" is bullshit. If this was standard
operating procedure we wouldn't be walking around acting like sub-1% pre-
dilution is worth _anything whatsoever_.

~~~
waterlesscloud
I've been amazed the typical equity for early employees has stayed as low as
it has for as long as it has.

~~~
doktrin
I would replace "early employees" with "early _engineers_ ". Not sure why,
precisely, but it wouldn't surprise me if negotiating prowess played a role.

Companies I've worked for in the past would _never_ dole out more than 1% to
engineers, but dropped anywhere from 2-5% on sales / biz-dev / managers. In
one case, the engineers had actually been with the company for years and
working at half-market wages prior to the non-technical hires.

~~~
throwawayhooray
Engineers/designers are not as good at negotiating than people in sales/biz-
dev.

------
kevingibbon
I've never understood why startups position themselves this way? If you have
10M in the bank pay your employees what they fucking deserve! In an internet
startup your engineers are all you actually have. Ideas are worth nothing.

Living in San Francisco is expensive as fuck. You should do everything to make
your employees lives easier so they can concentrate more time to work.

------
frostli
The assumption in the post is: he doesn't really believe in those companies.
He only thought the company will go at most 2X of the current valuation and
will never have a chance to go IPO itself.

In the start-up world, if you don't think the company is going to grow then
what's the point joining the team? It sounds like the author is looking for
settling down, a stable income which is more suitable with bigger companies
like Google.

It's weird to compare two different kinds of companies. High risk high return,
low risk low return always holds. He's looking for something with low risk and
of course, he doesn't want to work with any Y Companies. No right or wrong
tho, personal choice.

------
just2n
> I'm not going to mention salaries, but I'm a senior engineer with 20 years
> of experience and can command a pretty good salary.

Why is it everyone is still afraid or committed to upholding this "taboo"
about talk regarding salaries? Companies LOVE this. What's fair? Fuck if I
know. I don't know what anyone else makes but my close friends, and that's a
tiny sampling.

While you're sharing advice, why intentionally spread ignorance? "Fuck you,
pay me" you say. But what if my asking price is unbeknownst to me below market
for someone of my experience, work ethic, age, and talent? That has an impact
on both me AND you. Think about it.

------
johnnyg
You could have written a post comparing your experience with YC offered
salary/benefits to non-YC/non-start up offers.

It could have been good for people job hunting or interested generally at an
"inside look" at the market.

There's nothing wrong with looking at all your free market offers and making
your choice.

For some reason I can't understand though, you crossed the line into "YC
companies owe me better". They don't. They owe you what ever offer they seem
reasonable if they took the time you interview you. You owe them consideration
of their offer and an answer. That's the dance.

------
gambiting
The thought that in the US your health insurance depends on your workplace
makes me a little sick inside.

------
onan_barbarian
You have to wonder about someone who has interviewed with "about a dozen" YC
companies and turned them all down for the same reason.

If the pattern is that obvious, what's he doing going back for interviews
4..12?

In a shock development, apparently YC companies don't slaver over "senior"
employees who have stuff like this in their profiles: "I'm just this guy who
used to enjoy tech, now I would rather build bicycles. I still work in the
tech industry, for the money, but I no longer call myself a "technologist"."

Wow, you can really feel the passion.

------
aashaykumar92
Benefits, or lack thereof, is your central point. I'm not quite sure that by
comparing a YC-startup to another startup in the same round of funding,
especially in the later rounds, it says much about YC or their founders. In
fact, I'd argue there is no correlation. When a company has been backed by
several investors, the founders don't usually carry a huge weight in deciding
the benefits of each of their employees...they most likely listen to their
advisors/investors.

If you think a company should offer a higher salary and/or better benefits,
then best is to be frank and tell them. Especially since you are experienced
and you've been given offers, a simple email or call saying "Hey guys, I think
what you're doing is great but there are other companies at the same stage as
you giving much better salaries/benefits", I like to think they'd be open to
listening and looking to change. A illogical correlation + complaint on HN is
not exactly doing yourself or anyone any good.

------
joeframbach
Font size and contrast matter, or why I won't read your blog post

~~~
MBCook
I found it odd that the individual lines seem to be written your as opposed to
paragraphs.

I'm on my phone. In landscape it's readable, but in portrait the lines break
weird like an email program wrapped them wrong.

------
Aloha
I'm a contractor, I work for one of the largest telecom companies in the
world. Anyone who has worked for this company knows how well known it is for
endless bureaucracy, which is fine, because they pay me even if I cant
actually do any work.

I make around to slightly above market rates.

I have no benefits.

I pay for health insurance. I have no paid vacation. I don't get catered
lunches. I don't get a foosball table either.

Even though I'm a field service engineer, I don't even have a company vehicle.

I'm a mid-career telecom engineer, I've been doing telecom support and IT
Service for 10 years, I would love to find a permanent position, every perm
role I have made it into, I've been either downsized or outsourced out of. So
I contract. So when I see someone like this bemoaning their very good
situation, I can't help but roll my eyes a little.

------
sybhn
A side question on his net calculation, how did he end up with 63% tax rate?
anyone care to elaborate

~~~
oijaf888
Just using rough numbers: 33% federal income tax 6.2% on the first 113K for
Social Security 1.45% for Medicare 9.3% for CA state income tax Plus any local
taxes? Gets to about 50% there.

I know in NYC when the company I was with sold, my total tax rate was 52% on
it.

~~~
sybhn
right, i would expect 50% to go to the tax man, unless waiting long enough to
get into long term capital gain. His 63% threw me off there, sounds like
France!

------
lnanek2
He doesn't sound like he is interested in startups. He has a kid, a big time
draw, he says he is going to work 20 hours a week contracting on the side, a
big time draw, he wants expensive benefits, a big money draw from the company
hurting its runway and making the founders waste time fundraising more often,
he gets told he can take unlimited vacation yet decides he'll still hold them
to the 15 number, so the extra freedom you get at a smaller younger company
isn't even used by him, he says he is saving up for a house, a big distraction
from just paying for food and rent, etc..

Someone scrimping and saving every penny and working a side job is not going
to grab some hardware that helps them work, or take a cab when they need it to
get to an important meeting, or work overnight, etc. they are going to scrimp
and save and be less effective and clock out ASAP each day to do their
contracting or spend time with their kid.

It doesn't really surprise me that he then considers joining a C round company
the same as joining a freshly funded YC company and that he thinks both will
just sell to a talent acquisition. And that he doesn't think a smaller earlier
company gives him a lot more independence and control over what happens to the
company. You can find a lot of founders who definitely will not go for a
talent acquisition, which you would do if you are going for a big win. And
joining a later round at the same equity means much less upside for the big
win. You aren't going to be part of as many big valuation increases. But if
you aren't putting a lot into the startup and are spending time on kids,
contacting on the side, saving up for a house, I kind of doubt you are going
for a big win at your company anyway.

It's OK if you aren't going for a big win, but should you join a startup if
you aren't? Should you say joining a startup is a bad idea when you are
intentionally making all the choices that make it a bad idea? I don't think
he's really in a position to even understand the cost benefits of more
cash/benefits vs. more equity and more runway and better startup performance
since he doesn't care about the startup's performance, so of course he prefers
more cash/benefits.

------
twakefield
"That $375k would then be subject to 63% taxes, netting me $138,750, or a 20%
down-payment on my piece of the american dream. The other company does the
right thing, so I only see a 15% capital gains tax"

A bit of an aside but could someone elaborate on this? Is the OP referring to
an 83(b) election? If so, isn't that his responsibility (of course, the
company should advise him to do this). Or is this referring to something else?

At any rate, my impression is that there would be California taxes as well on
that income, bringing the taxes well above 15%.

~~~
johnnygoods
I think he is referring to the company letting him purchase his options as
they vest, so that the eventual sale of the stock will be of a long-term
capital asset, rather than short term and subject to his marginal tax rate.

------
meerita
The panorama in Spain for many startups:

\- 30k/year (minus all the taxes) ~21/23k/y \- 28 days for holidays. \- No
health insurances (free health insurance on the country) \- No conferences \-
No pluses.

Profitable companies: a bit more of money, but not that much: 35K/year.

About shares, as usual: the promise. some of them makes you sign something but
to opt those you need to stay around 5 years, wait to be IPO or you can sell
the opt to the company for a really stupid price.

With taxes you pay the pension, etc.

~~~
herdrick
How much does a house cost where those startups are?

~~~
meerita
by house you mean housing for companies or families? A house in Barcelona
costs around 200k-500k.

------
miah_
As a transgender women working in the Bay I can say that no 'startup' has ever
proven to me that they cared when it comes to benefits. I still have yet to
land a job anywhere that doesn't have explicit exclusions for transgendered
people in their insurance policies. Yay. I get paid well. Its a good thing too
because paying out of pocket for health care is shit even when you make six
figures.

------
DividesByZero
" All start-ups today are about supporting advertising in one way or another."
Ouch. It must suck to be in an ecosystem where that's true.

------
rdl
I don't think benefits are the main reason to work anywhere -- doing
meaningful work and working with great people far exceeds financial benefit,
and salary/bonus/equity should dominate fringe benefits. However, why do
benefits packages need to be uniform?

I personally hate having "benefits" in my compensation which come out of my
salary which I don't really want. Sometimes companies get tax savings (i.e.
they can deduct, I can't), but VERY RARELY do they get actual dollar savings
(health insurance is one weird case, due to some people being more expensive
to insure than they could ever pay, and that risk being spread across a
group).

My personal ideal benefits package is: 0) Private office, 24x7 hvac, a door,
decent security, locking storage, parking on-site ideally with a guard or
gate. Essentially non-negotiable (or, wfh). EV parking would be nice too soon.

1) Max 401k match and maybe even profit sharing (in California, I'd happily
take $1 of salary and put it into employer 401k match) -- I think you can get
up to 46k/yr max, so 15k personal contribution, 5% salary match, and the rest
as profit share up to 46k.

2) FSA, Transportation accounts (fully deductible for employer, and non-
taxed). I ended up buying a bunch of air filters and condoms when I had an
FSA, and I guess I could find a use for a TSA.

3) As much hardware as I realistically can use ($10-20k/yr -- not just
computers, but I'd love to have a budget for a hw lab). Someone recently
questioned whether a $4k per developer laptop budget was legitimate, and I
seriously question why someone would deny a $1-2k marginal expense on a worker
generating >$500k/yr in returns.

4) Conference/books/etc. (time is the big cost for the company there, not the
cost) -- and "if you're speaking at a conference related to work, we cover
nice travel)

5) Free food/etc. (i.e. RG's "unlimited Seamless"). Bad food is of negative
value, since I'll feel obligated to eat it.

6) Decent travel when travel is required. Not first class, but helping you
make it less painful -- either letting you do your own bookings (I'm better
than any corp travel agent I've used), or doing it for you. Optimize for ff
status. I pretty much need a $65/day car vs. a $30/day car (and tend to pay
for the upgrade out of pocket when it's not covered), but would in exchange
prefer a more complex $300 routed ticket vs. a $500 direct flight, and would
stay on starwood points sometimes vs. paying cash.

7) I prefer to keep my health insurance _separate_ from the company, for
practical and philosophical reasons. (I pay $118/mo for better coverage than
~any company I've seen). Give me $5k/yr into my HSA instead, and pay any other
marginal insurance benefit to me as extra salary or more RAM or something.

8) Use of company resources for personal projects (e.g. hosting a tech user's
group, or helping friends launch their own startups by letting them use
conference rooms when meeting with people, etc. etc.

I'm curious if people are "picky" like me, or would just prefer a bunch of
benefits as a package. There are HR reasons to give everyone the same thing,
but IMO one of the advantages of being a small startup is being able to
customize packages for people. If I hired someone with sick kids, I'd
obviously make sure there were a group health insurance plan for him or her.
If I hired someone who was on an H1B or otherwise needed citizenship
sponsorship, I'd call in favors with undersecretaries to write letters on his
behalf. etc. There's no need for a small company to act like a megacorp.

~~~
r00fus
FSA got gimped in the past year or so - you can't use it to expense non-
prescription items.

Where are you getting your better coverage than at a company? I heard group
coverage was insanely difficult to get outside the umbrella of a large risk
pool (ie, corporate)...

Most of the times benefits offered are optional - I've never been forced into
any benefit at my company. Also the cost for benefits are usually better for
larger pools than smaller so some of the not-as-popular options you state
would cost the company an inordinate amount if you were the only subscriber.

~~~
rdl
I'm pretty healthy and single, so when I priced my personal $3500 deductible
HSA (+$3500/yr into the HSA, which is like a Roth) vs. any group plans I've
found, I ended up with much better coverage and pricing. I think the issue is
we have people in multiple states, so it was hard to get good group coverage.

I forgot about FSA reductions (which were already pretty bad when you have
both an HSA and FSA). I probably don't have anything useful to spend FSA money
on.

------
jacoblyles
It's true that Bay Area startups spread their equity shamefully thin. Doubling
the equity stakes for employees wouldn't dilute the founders much for most
startups and it would feel a lot more fair when everybody is working late at
night.

~~~
throwawayhooray
It's really funny when Founders are stodgy about giving more than a single
percentage of equity per employee when those early employees will probably
work just as many hours.

------
jpdoctor
20 years of experience and he's only now figuring out that you don't join a
startup for the money and benefits? :sheesh:

------
joeblau
Just based on reading the Author's concerns, it seems like there would be too
much risk for him to join any start-up. People aren't starting companies at YC
so they can have a "good benefits" package. In their eyes, they are trying to
disrupt industry and change the world. Joining a start-up for a good benefits
package with hopes and dreams of making enough money to buy a house is a
pretty big bet to make.

------
trustfundbaby
can someone explain this to me please?

> The YCombinator company probably didn't care enough to have their lawyer
> draw up the paperwork so that their employees can execute on their stock
> options from the first day to avoid AMT.

what does "executing" on stock options mean? how does it work with vesting?

------
tlrobinson
_"Most of them are children fresh out of college"_

Who's the child here?

~~~
rocky1138
I was thinking the same. It's very dangerous to a career to come right out and
say such a thing. What happens if he ends up working for another YC company?
His employers will know how he feels about them and it could hurt relations.

------
pclark
I don't understand what this has to do with Y Combinator.

------
codyZ
angryasian speaks the truth. Different priorities for different people. If you
want their talent, cater to their priorities.

------
thom
You forgot the #humblebrag hashtag.

------
suyash
Great Post: Fuck You, Pay me!!

------
michaelochurch
The prestige asset generated by YC is interesting, because I bet it's going to
have an unintended consequence of increasing the social difference between
founders and employees.

If you're a YC founder, you're in the club. You were picked. It's great if you
succeed; if you fail, you have a network. If you're a YC employee, you're just
an employee of a small startup. YC founders seem, at least from this, to be
blind to the fact that their employees aren't able to cash in on the prestige
of being YC and will therefore expect hard currency.

I think that crappy benefits send a pretty awful signal: we're not committed
enough to making your life not suck. A 25-year-old founder is going to think
of that stuff as an afterthought, while the 40-year-old is thinking, "kid, if
I wanted to take on that kind of risk and insanity, I'd have your job". Health
insurance is a goddamn mess and a company can't expect to get it right in an
afternoon, but it is important.

~~~
FD3SA
As you've noted here, it seems like most startups support the traditional
executive/employee status divide, but with better marketing. Using startup
culture as a substitute for benefits, compensation and autonomy within a
company is now standard practice. Unfortunately, it just a variation of the
old Sociopath/Clueless/Loser paradigm (I am a frequent patron of your blog).

I recently discovered a blog with some interesting proposals on how to run a
company, and an economy, in a radically different non-sociopathic manner. I
submitted the link to HN , but didn't receive any traction. Perhaps you may
find it interesting:

<https://news.ycombinator.com/item?id=5402277>

~~~
euroclydon
Is there anything going on on that blog these days? The analysis of _The
Office_ was captivating, but I can't even find those posts by Googling for
them...

What's the URL?

~~~
wr1472
[http://www.ribbonfarm.com/2009/10/07/the-gervais-
principle-o...](http://www.ribbonfarm.com/2009/10/07/the-gervais-principle-or-
the-office-according-to-the-office/)

~~~
euroclydon
Thanks. So why did I (and 'FD3SA) think Ribbon Farm was Michael O Church, when
it's Venkat?

~~~
malandrew
Because both Venkat's and Michael O's blogs are incredibly insightful and
thorough on similar topics.

~~~
euroclydon
What's Michael's blog URL please?

~~~
malandrew
<http://michaelochurch.wordpress.com>

------
adnam
The entitlement culture in the tech industry is mind boggling. One day we may
look back and wonder how we ever had it so good. Perhaps we'll even envy the
person paid $1 per day to suck the gold off our old circuit boards.

~~~
vhiremath4
People in tech don't realize just how lucky they are. I'm 20 with no wife or
kids, and I'm making more per year than certainly almost all of my friends
will be making after they choose to actually finish college and get a salaried
job. However, I'm told by people that myself and my colleagues are getting
underpaid (we work at a startup). Ridiculous.

~~~
nthj
> However, I'm told by people that myself and my colleagues are getting
> underpaid (we work at a startup).

That's how “market rate“ works. A profession's salary has nothing to do with
what you deserve and everything to do with how your specific combination of
skills are valued by the free market.

~~~
vhiremath4
I agree. I didn't phrase my comment correctly. I suppose what I'm really
amazed by is the fact that those people don't seem to understand why I'm not
angry about my situation. I don't know. Maybe it's because I've been lucky
enough to have parents who have exposed me to extreme poverty at a young age
(several trips to India). There are just too many wrongs in the world for
someone like me to be complaining about not being able to save up for shiny
new product X, Y days earlier because my employer isn't paying me 10s of
thousands of dollars more on top of the 10s of thousands of dollars I'm
already making.

~~~
nthj
> There are just too many wrongs in the world for someone like me to be
> complaining about not being able to save up for shiny new product X, Y days
> earlier

I don't complain when a startup can't afford me, it's just business.

But I also don't work for them.

------
philco
I don't think he gets it. The choice is clear, do you want to earn, or do you
want to learn? Going to an early stage startup as a non-founder is
learning...you don't have the upside of a founder, but you're exposed to a lot
of really cool shit.

You want to earn? Then go earn where people will pay you what you want?

The post had nothing to do with benefits, it had everything to do with money.
IF you want to make money, and you don't care about the problems you're
solving, and you don't care about learning, then go work for Oracle.

Stop bitching.

~~~
lazyjones
> Going to an early stage startup as a non-founder is learning

Really? So startups do not need any experienced developers and architects?
It's the other way round, the founders usually need to do the learning (fast!)
and they'd better hire experienced people who can teach them something.

~~~
whynotbalu
Your argument about experience probably holds a ton of water in other domains,
but I question that it applies to every technology startup. A lot of
technology startups are better off not hiring any any experienced folks
(developers, business people, whatever) for a long long time. Young people
learn and adapt faster and are less blinded by past knowledge and heuristics
by how the world operates, so there are tons of technology startups that can
probably go a long time without bringing on experienced folks.

This is a specific argument, cannot be generalized for all startups.

Full Disclosure: I'm a "young person".

