
The Problem With Founders - zvanness
http://techcrunch.com/2014/07/20/the-problem-with-founders
======
TheBiv
I have to commend TC for writing an article like this, as they are largely the
biggest vehicle for turning founders into Hollywood-esque stars and boasting
founders as being disruptive (heck, their own conference is called Disrupt).

The central principle of realizing that there are more people behind a startup
and we should cherish them as well, is an absolutely awesome thought!!

I just hope that the vision for how we recognize them is not how the author
describes in: "We need to find a way to build up the profile of that quiet
army of people who are developing products behind the scenes, the engineers
and product managers who took risks to build their founders’ dreams." Because
that just sounds like what they currently do to founders!

Idea: maybe TC could take the charge and list the founding employees profiles
with every company article they write?

~~~
ChuckMcM
I like your idea. I expect if they implemented it they would see that the
article gets it wrong on a number of levels.

Take any successful company, Google, Intel, Apple, Facebook, LinkedIn, Yahoo!,
Microsoft, Boeing, any of them. Now compile a list of the first 10 - 100
employees. Now take the net worth for those individuals and compare it to the
rest of the world. You'll find it lands north of the 99th percentile.

You can pull out exceptions of course, the sales guy at Sun who was worth
several million and lost it all through a series of really poor choices, the
Googler who left 6 months in rather than vest that first tranche of stock, the
Apple employee who gave up their shares to live a simpler life. But for the
most part all of those people have a net worth north of $1M. Ask Charlie
Ayers, the original chef at Google if he is mad/bitter/whatever because Larry
and Sergey are billionaires and he is just a multimillionaire.

The narrative that founders win and everyone else loses is wrong. You've heard
about the abominable failure rate of startups 9 in 10 fail. An employee can
get a piece of 10 different startups in 10 years if they move from place to
place, vest their 25% of their option and exercise it. A founder is lucky if
they get 3 shots at the prize in 10 years. Do the employees who are driving
around matching Ferrari's in the Facebook parking lot feel bad that Zuckerberg
is worth a lot more than they are? Most of them no, they don't care, they are
"rich".

Do founders get the 'fame' ? Sure, is that a good thing or a bad thing?
Sometimes it makes you a target. I was amazed at how much Eric Schmidt paid
for personal security (its in the 10Q) he can afford it of course but really?
You have to hire ex-special forces types because you're too tempting a
kidnapping target? I personally would much rather be anonymously wealthy than
'target on your back' wealthy.

One summer I worked at IBM and lost my housing just before my internship was
up. I stayed at one of my co-workers places for the last three weeks. He had a
computer which he used to monitor the stock market, I helped him enter data
into it (which at the time there was no Internet). One evening having just
gone through a list of number/value pairs (qty and price) I multiplied them
all out in my head and summed them, the result was over $2M. I asked him if
that was his savings and he said "yup". I couldn't believe this guy who lived
in the same tract house he had been living in for years was a millionaire.
Where was the fancy car? the lavish furnishings? None of that. I asked him
what it was like, he said, "I worry less about the future than I did before."

My point is that the ecosystem that is Silicon valley creates a lot of those
kinds of people. People who don't get caught up in the razmatazz and just save
money when they can, diversify when their stock value goes up, and accumulate
over time. They are usually "employee" types and not "founder" types though.

~~~
michaelochurch
The Valley has changed. If you started in the 1990s, you got real equity and
housing costs were low. You could get into the low millions just by working
hard and living frugally. It was a different time-- more egalitarian and far
more engineer-driven.

The question is: if you're 22-25 now and move into the Bay, do you have a good
chance of ending up a made man (or woman)? The answer is "no". It's been
overrun by MBA culture and has severe founder quality problems and I don't
think it's salvageable.

~~~
ChuckMcM
The valley constantly changes.

Your question is identical to the one posed in 1999 during the first 'bubble'
people saying "Oh but now it has gotten so inflated and ridiculous, someone
moving here now doesn't stand a chance" and yet here we are in 2014 with a
bunch of new LinkedIn, Google, Facebook, and other millionaires. In '84 when I
moved here it was the 'great semiconductor dying' where places like Intel
argued they were a good company because they were losing money less quickly
than any other semiconductor company. Or had you been here in the 70's when
cutbacks on defense work was the 'death knell' for the valley. What the
observations miss is that the value is in the _change_ not in the _status
quo_.

If you move here as a 22 - 25 year old I think you continue to have a better
chance of becoming financially independent than you would elsewhere. But its
not a 'done deal', there is always luck, choices, and opportunities. Every
time something fundamental changes, it creates a shift. In the last part of
the 20th century it was the arrival of cheap computation, in the early 21st
century the arrival of the Internet. Both created big shifts and opened up big
opportunities to create value and wealth. They appear and vanish. I find it
amusing that much of the money that went into my house came from Sun stock
which, when I sold the last bit was worth very little, but during that time
when it was valuable it became a part of my house. I see three candidates
leading the next wave, adding autonomy to normally non-autonomous products
(cars, trucks, lawn mowers), ubiquitous sensing to achieve better efficiencies
in raw material usage (farming, manufacturing, housing, etc) and information
economics (changing the way information is priced, bought, and sold). These
are all emerging even as we're exploiting the tail end of social and Internet
everywhere.

But here is the thing, if your 22, thing about being 'made' when you are 52,
not when you are 25. And if you are suddenly "rich" at 25 think about how to
make sure you are still rich enough when you're done working for others.

------
sparkzilla
So much nonsense in one article. If you think the "bar is so much lower" to
becoming a founder then stop whining about being one of the forgotten early
employees and get off your ass and start a company for the right reasons:
finding a market opportunity and making money from it. If you can't or won't,
then you can't expect the rewards.

Early employees are important, and should be given credit and fair payment for
their work, but their risk profile is far, far less than the founders and
investors. Investors stand to lose their investment (which is an accumulation
of work) and the founders can lose money, reputation, and time. In my last
business I lost hundreds of thousands of dollars of my own money and five
year's 24/7 sweat. Every employee walked away.

~~~
nostrademons
I think the article is complaining precisely because many people are doing
that; they refuse to be one of the forgotten early employees and start their
own company. As a result, you get a glut of startups, a massive shortage of
engineers (particularly in the startup ecosystem), and a series-A crunch as
many of these startups fail to gain traction.

The market may fix everything in the long run, but usually it does so through
failure. The article seems like it's trying to get ahead of the curve and
glorify being an early employee before it's popular.

(Side note: I'm currently trying my own thing, but I wonder how well
economically I would do by offering to be an early employee for high [>10%]
equity stakes. My guess is I would get - reluctantly - laughed out of the
office, but that's okay, because I've got my own thing and am probably more
well-funded with better tech skills than they are.)

------
mikeleeorg
I'd like to add that while I totally admire Gideon Lewis-Kraus and Nikki
Durkin for the struggles they went through, their stories aren't the average
experience of a founder in today’s Bay Area ecosystem.

For every founder that has gotten seed funding, there are several times that
number that haven't gotten anything. I made it to a startup accelerator, so I
know that already puts me above the average experience. But for the others...

Maybe they tried it for a year and burned through their life savings. Maybe
they worked on nights and weekends and are still struggling. Maybe they quit
their jobs, talked to every investor they could, and are still trying. That's
the average experience.

And don't forget about the world beyond the Bay Area...

------
jlees
_We also need to shift our culture and empower our employees to build their
own careers, networks, and ultimately, dreams. Companies should take the
opportunity to encourage their engineers to give technical talks, release
open-source code libraries, and receive external credit for the work that they
are doing._

I get the sense from this article that every startup can be reduced to a lot
of engineers chained to benches with a founder (or cofounders) standing
gloriously in the limelight, cracking the whip between press interviews and
investor meetings at the Battery.

One thought is that the founding team at a startup is likely to be
entrepreneurial and initiative-taking enough to seek out these opportunities
for themselves, should they want them; though I appreciate the nod to startups
who remain in 'stealth' mode indefinitely, leaving a puzzling blur on
someone's resume.

Another, that I definitely see folks out and about from startups who are not
the founding team, but then I go to technical events and read technical
publications, neither of which tend to fawn over the CEO to the exclusion of
all else. Should we glorify the Rails developer who built a CRUD app over the
CEO who found the money to pay the team, test the app in the market, and
ultimately grow the business? No, we should reward ingenuity regardless of the
title of the person behind it. But HN does a pretty good job of that, and at
its core I think this article is just an argument against shallow tech
journalists who prefer a tidy story about college roommates over a messy bunch
of talented folks who did great work.

~~~
brandnewlow
_I get the sense from this article that every startup can be reduced to a lot
of engineers chained to benches with a founder (or cofounders) standing
gloriously in the limelight, cracking the whip between press interviews and
investor meetings at the Battery._

Yes, that's the image the author wants you to take away. It doesn't make much
sense though.

For starters, what on earth chains these engineers to their benches?

Startup engineers get weekly emails from recruiters and hiring managers at
competitors (and often partners, which really stinks). The pay, perks, and
work environments available to them are tremendous and only getting better. If
they don't like where they're at, they can be in another job in a fortnight.
And if that's no good, they can jump onto the next opportunity until they find
a good fit.

For this reason as a founder that went through YC and took a startup from 0 to
acquisition in 3 years, I never once felt like I had anything resembling
leverage over the engineers in our company. Just the opposite, I spent a lot
of time thinking about how to give them the best possible work experience
because I knew if I didn't, someone else would.

------
7Figures2Commas
There's so much that's wrong with this post it's hard to know where to begin.

> The secret of Silicon Valley is that the benefits of working at a startup
> accrues almost entirely to the founders, and that’s why people repeat the
> advice to just go start a business.

This is simply not true in today's environment. Most startups fail so at a
typical startup, there is no upside for employees _or_ founders. Funding,
however, is plentiful and most of that funding is directed to employee
salaries. So who is benefiting the most at the average startup? The engineers
paid well into the six-figures to work on modest CRUD apps regardless of said
app's ability to drive sufficient revenue to sustain a real business.

In other parts of the post the author suggests that engineers (and other non-
founders) aren't compensated appropriately, but his argument isn't convincing.
Lots of early stage startups (perhaps the majority) don't generate enough cash
to fund operations and many won't any time soon if ever. Just how much should
folks be paid at a company that, without investment dollars, wouldn't be able
to make payroll?

> There is a reason it is hard to hire in Silicon Valley today, and it isn’t
> just that there are a lot of startups. It’s because engineers and other
> creators are realizing that the cards are stacked against them unless they
> are the ones in charge.

There are _a lot_ of reasons companies find it hard to hire in Silicon Valley
today. They're too picky and/or focused on "culture." They can't pay market
salary. Lots of companies are uninspiring and thus unattractive. Many startups
fail at retention. Not everyone wants to work at a startup or live in an area
with a high cost of living. And so on and so forth.

Absent hard numbers to back up the claim, the author fails to present evidence
is there that there isn't enough talent primarily because individuals are
leaving the labor force to start their own companies.

> Founders are not normal people in any of the ways that matter of course. For
> them, the benefits of building a business are many-fold. They can connect
> with journalists, advisors, mentors, new business partners, and most
> importantly, investors...

Note how the author left out "customers." Interestingly, the word doesn't
appear anywhere in this article, nor do the words "sales", "revenue",
"cashflow" or "profit." For a post that does an awful lot of complaining about
how the fruits of startup success are divvied up, I think it's telling that
the author completely ignored the things that make a company successful.

------
ykumar6
I agree mostly with the article, but early stage employees are also investing
in themselves.

Young product managers at Google or Microsoft don't get the opportunity to
work on big problems. The few young people I've met tend to lack the macro
thinking on what makes a product successful. Why talking to users is so
important. Why defining a problem is so important. Why retention is more
important than growth. Why cohorts are so important and why analytics can be
misleading.

With young engineers, they tend to lack the understanding on why striving for
simplicity is important. Why thinking in iterations is important. Why writing
tests are important. Why the best engineering in the world can't save a
product that doesn't solve real problems.

Big companies do teach you these things, but not at the pace of a real
startup.

~~~
nostrademons
My experience - having worked at both Google and in the startup scene - is
that young PMs at Google/Microsoft actually get to work on much bigger
problems and have a much better understanding of the macro scene than startup
founders. At Google, it's not uncommon to hear "Can't we just buy [famous
startup X]?" or "Figure out the benefit for users, and if it turns out to be
useful for a large number of people, we'll see if the lawyers and lobbyists
can get the law changed" or "We'll just throw 65,000 machines at the problem."
As a result, there's a presumption that problems are _solvable_ if we just
think really hard and identify the incentives of everybody in the system. Few
startups have this privilege.

Where Google really falls down compared to a startup is in _micro_ -level
thinking. A PM at Google may understand how a hundred million users behave in
the aggregate, but fail to understand how to change _one_ user's behavior.
When your sole work experience is at a powerful corporation, you start
assuming that people will take your phone calls, and you don't develop the
skills of how to cold-call an ambivalent prospect, or how to empathize with a
minority user who is really frustrated, or how to focus and prioritize on only
the tasks that you can make a real impact on.

For engineers, I'd say Google (and presumably Microsoft) engineers understand
far better than a startup why simplicity is important. The codebase, after
all, is orders of magnitude bigger and harder to understand. And iterations
and tests are common practice as well. What a Google engineer does not know is
how to stare at a blank editor window and, in the next 3-4 hours, get
something cool up on the screen. They don't know how to duct-tape open source
components together into a working, if imperfect, system.

------
thu
Articles like these always repeat it is hard to hire in the SV. I got a few
interviews to do remote working for such startups and some of them said it was
not possible to work with me only four days per week (I'd like a part time
job). If talent is so rare, why is it better to go with zero hours instead of
four days ? (Or maybe I just suck at something they don't want to say and
telling me about the part-time requirement is easier.)

------
gomesnayagam
it is like, if you have standup comedian talent , people around you will
notice invariably and force you to enter into the arena, similarly if you
possess entrepreneurship skill obviously including your family can support
you... there you take the first step...otherwise enjoy the world of piece...

------
sida
Off topic: Clothing brand "banana republics" just released a summer line
called the startup guy. Even a clothing line is catching up to the phenomenon
of "Just start a company"

[http://venturebeat.com/2014/07/20/startup-guy-fashion-is-
lit...](http://venturebeat.com/2014/07/20/startup-guy-fashion-is-literally-a-
style-in-banana-republics-summer-line/)

