
Startup employees don't earn more - z0a
https://80000hours.org/2015/10/startup-salaries-and-equity-compensation/
======
bunkydoo
I'm gonna be straight with y'all, I earn more as a post office mail carrier
than I ever did as a programmer for a silicon valley startup with $1 million
dollars seed funding. I also surprisingly have more freedom even though I work
basically like a slave. Nobody wants to admit it but we are in a tech bubble.
Sure, if you are in the right startup things might be different. I had a great
valley experience - but it was all a façade, the next recession will really
highlight the failures of silicon valley startup culture. Wall Street got
pounded last time, and I'm sure I'll get downvoted night and day for saying
this here - but I'm sorry guys, you are the new problem. Silicon Valley is the
new Wall Street. There, I said it. Ironically I worked in both places before
joining the postal service. So I do have perspective. My claims aren't
baseless either, your startup that might even be funded at a million dollars
like my employer's was is just a tax write-off for your investor when it
fails. They are playing slots with your dreams, time, and skill - the only
person who truly loses is you.

~~~
segmondy
Wow, someone gives a company $1million and you claim that the person is
playing with dreams, time and skills?

Give us a break. No startup has to accept investor money. If you don't want
their million, don't take it. Bootstrap with your own cash.

The reality is that going into startup for money is a big risk, it's a big
gamble. Go in for the fun, go in to learn new things, play with new tech, go
in to avoid ( big company politics, enterprise style software development,
meetings, locked down environments).

Do it for the for the fun and if you make money great, if you don't, you come
out with new experience. Long before fullstack became a buzz word, I earned my
badges due to startup. I coded, I did design, I touched the DB, I setup the
servers, wired the network, setup the firewalls. It was hella fun, I made $0.
But my experiences from then still serves me till this very day.

Cheer up, the world is not such a terrible place.

~~~
Pyxl101
> Do it for the for the fun and if you make money great, if you don't, you
> come out with new experience. Long before fullstack became a buzz word, I
> earned my badges due to startup. I coded, I did design, I touched the DB, I
> setup the servers, wired the network, setup the firewalls. It was hella fun,
> I made $0. But my experiences from then still serves me till this very day.

You can have these experiences at a large tech company too, while also being
paid well and while collaborating with experienced people who can teach you a
lot.

~~~
tonyedgecombe
More likely you will be pidgin-holed into a very narrow area of responsibility
with no autonomy or opportunity to grow.

~~~
72deluxe
Not if you keep moving.

------
cj
If your #1 job criteria is compensation, do not work at a startup. You'll be
paid more at big companies.

If you don't mind being paid a little less, and want the opportunity to be a
part of building a company from the ground up, consider working at a startup.
There will be a lot more ups and downs than at a company like Google. But at
smaller companies, you'll have the chance to have a material impact on the
success of the organization instead of being just a cog in the wheel.

By no means am I saying you should accept a below market offer from a sketchy
startup that offers no benefits and expects 12 hour work days (those
unfortunately exist).

Disclaimer: I run a 6-person seed-stage company. To help keep our employees
happy (and to be competitive with bigger companies when recruiting), we try to
get as close as possible to big-company salaries, we don't expect anything
beyond 40 hrs / week, 100% paid health benefits, 401k, 25 paid days off per
year, snacks, food, full financial transparency, etc. (Not trying to self-
promote here, mainly trying to communicate that not all small companies are
bad just because they're small).

Also consider that the day-to-day work at startup is dramatically different
than the day-to-day work at a big company. For people who don't mind being
paid low $100k's instead of mid $100k's, the day-to-day work should be the
main deciding factor when considering startup vs. large co. In my opinion,
startups are more fun, you get to wear more hats since your role is likely
less specialized, (ideally) there's less politics, you can have a real impact
on the success of the business while (hopefully) watching it grow, and learn a
lot really fast along the way.

That said, the big company route definitely offers higher compensation and
more stability, and makes a lot of sense for people who are a little more
risk-averse.

Also +1 on viewing equity as a lottery ticket. When evaluating offers from a
startup, try to maximize your equity in negotiations (ie. more lottery
tickets), but the fact is the majority of startups will eventually shut down,
so don't use equity as a major factor when comparing offers between large and
small companies.

~~~
slykat
I'm going to have to disagree that you are "a paid a little less" at startups.
In my experience working for a startup is a 20-30% drop in compensation.

When startups say they are near market, they mean base salaries. They neglect
bonuses, stock grants, signing bonuses, stock refreshes, 401K matching. These
things add up real quickly. Even worse, I've found that startup salaries
usually don't grow as large companies (very few startups do equity refresh,
raises, COL increases, etc.)

Compound this 30% difference over a 4 year stint and things start to look bad,
esp. when you think of $1m+ home prices left in startup havens like San
Francisco & New York. If the majority of startups were in affordable cities,
I'd agree that the compensation difference isn't that much, but the bulk of
startups are located in places where that 30% drop means a significant change
in quality of life.

~~~
aetherson
My career has involved working at an e-healthcare startup (like 25 people),
then NetSuite pre and post IPO (probably no longer a startup), then a tiny
startup that folded after 6 months, then a 20 person startup, then a 60 person
startup.

So 4 definitely honest-to-god startups, and one post-startup. The only one I
didn't get raises and equity refreshes at was the tiny startup that folded
after six months -- because it didn't exist long enough to have a compensation
cycle.

I don't think this was exceptional. I very much take exception to "very few"
startups doing equity refreshes, raises, etc. Some may not. Most do.

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danielrm26
This will surprise nobody on Hacker News.

The allure of startups isn't a guaranteed 20% more than a regular company's
salary; it's the possibility of 1000% more.

~~~
swampthinker
It's like the lottery, except you can influence your odds a bit more.

~~~
isoos
It would be interesting to see what the expected outcome's distribution is
with buying lottery tickets for $X/month vs. doing a startup (and potentially
earn less by $X/month than one could have had at a larger corporation).

~~~
elliotec
Interesting. If I spent 20% of my salary on lottery tickets, how good would my
chances be of winning vs cashing in my stock at a startup that goes public in
which I made 20% less salary? And what would the payout differences be?

~~~
vasilipupkin
The startup deal is a much better deal than lottery tickets. If you can get a
1% ownership stake and we assume a 10% chance of a 100 million dollar startup,
the expected value of that grant is 100k. The expected value of buying lottery
tickets with 20% of your salary is close to zero You should also consider the
fact that if you are an early employee in a startup, your future expected
payout is at least in part a function of your efforts

~~~
sidlls
Is 10% a reasonable value for that chance? Is 1% a reasonable value for the
ownership stake? What about dilution and payout rights?

A reasonable expected value of a lottery ticket is directly computable:
jackpot times probability of a winning set. I'm not so sure the same is true
for the value of startup employment.

~~~
dragonwriter
Lottery tickets' jackpot is usually determined in part by sales of tickets for
that drawing, and a winning combination wins a divided pot in the case of
multiple winners (the probability of which depends again on sales of tickets
for that drawing.)

So, no, you can't, at the time of buying a ticket, actually calculate more
than a guess of they parameters you cite for determining its expected value.

~~~
sidlls
The published jackpot is a very accurate value to use, and the probability of
being the sole winner is a very reasonable probability to use. The actual
expected value is not going to differ from that product by enough to matter
most of the time.

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philsnow
As others have posted, people don't go to small startups to earn more on
average.

They're not looking at the average or median, they're looking at the 99%ile
numbers, because they think the startup they picked has an angle or advantage,
giving it a shot at a 99%ile exit.

80000hours' audience is clever enough to understand cumulative distribution
functions or even just correlated sets of [25%ile, median, 75%ile, 90%ile,
99%ile] numbers.

~~~
devonkim
I've always thought that historically engineers cared more about working on
things they had more emotional investment in rather than working on things
they had no passion for that makes money as an established business like ad
tech or dog dating social networks.

~~~
tostitos1979
Your comment made me think of the episode of the show Silicon Valley (in the
current season), where the engineers want to build a scalable platform rather
than a box (appliance). The negotiate with mgmt to let them work on the
platform after they have worked on the box :)

As an aside, I thought this episode was very well done. The engineers believe
their algorithm will get better over time as it ingests more data (hence, a
scalable platform is the way to go). A box won't learn, and benefit from these
improvements. However, large companies want boxes (servers/appliances in their
data center) and aren't in a position to have their data leak out (for
statutory or competitive reasons in many cases).

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qwertyuiop924
This should surprise nobody.

If I had my copy of Cryptonomicon at hand, I'd quote the bit about everybody
being impressed Avi could let them sell out for roughly what they'd have made
at a regular job.

Yes, even in the '90s, this was pretty well known.

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djloche
It's easier to get hired at an early stage startup because there are fewer
hoops to jump through. You can then use that startup to build industry
connections and get your next job via inside track referral through someone
you know at a bigger / more established company.

~~~
saryant
That's what I did. I was fresh out of a college nobody's heard of, joined a
startup as their first employee and eventually networked my way into a big
tech company.

Nearly doubled my salary when I eventually jumped.

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parent5446
This is just a minor annoyance, but the header image of this article, which
has been used in other articles [0], is CC-BY 2.0 licensed [1], and yet is not
attributed to the original author at all.

(Perhaps even more interesting is that it looks like it's being used to depict
a startup company environment, even though it's actually a hostel in Amsterdam
during the Wikimedia Foundation's annual international hackathon.)

[0] [http://silicon.nyc/code-academies-new-york-
coding/](http://silicon.nyc/code-academies-new-york-coding/) [1]
[https://commons.wikimedia.org/wiki/File:Wikimedia_Hackathon_...](https://commons.wikimedia.org/wiki/File:Wikimedia_Hackathon_2013,_Amsterdam_-
_Flickr_-_Sebastiaan_ter_Burg_\(28\).jpg)

EDIT: I misread the license. It's CC-BY 2.0, not CC-BY-SA 2.0.

~~~
parent5446
Follow-up: I contacted them, and they added the attribution, so all is well!

------
manuelflara
To be honest, I don't think startup employees (and by startups I don't mean
Dropbox, I mean companies who have to count the cash they spend) are low paid.
Obviously a startup can't pay like a company with tons of cash can. In tech
and everywhere else. I like working at small companies because you get to do
more things, because of the atmosphere, small team, agility, lack of
bureaucracy, etc. Where I do think startup employees are getting absolutely
screwed, specially in the US, is in the working hours. As an employee, you
don't have founder shares. You should just be able to work your 9-5 hours and
call it a day. If the founders think there's more work to be done, they can
either prioritize better, hire more people, do it themselves, or just accept
that not everything they want to do can be done with the resources they have.
Period.

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markbnj
I'm working at my third startup, and money has never been close to the top of
the list when deciding. First, I'm old enough and experienced enough to be
skeptical about the pot of gold at the end of whatever. Second, my time is far
more valuable than money, and how I spend it, who I spend it with, and what I
am doing are much, much more relevant to me.

------
forgotpwtomain
Obviously has been referenced a lot but still relevant:
[https://danluu.com/startup-tradeoffs/](https://danluu.com/startup-tradeoffs/)

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adamzerner
This talks about aggregate earning rather than earning per unit of time. I
think the latter is what people are/should be interested in, and from what I
understand, startup employees put in a lot more hours.

~~~
telotortium
Well, it depends on what you're trying to achieve. There are legitimate
reasons to try to achieve the highest possible pay per year, no matter how
many hours in the year you have to work in order to get it. In the case of
80000 hours, the goal is to donate as much money to charity as possible, and,
if I may put it somewhat crudely, they would prefer you work as much as
possible, only stopping work in order to eat and sleep, if that's the way to
achieve the highest salary, since the noblest calling in their view is to dump
as much money as possible into (the most optimal) third world charities, and
80000 hours has already taken the time to determine which charities maximize
third world utility. (Technically, you need to deduct the negative utility to
you from working increased hours, but your utility should be the same as a
poor person in the third world, so that negative effect is minimal.)

~~~
HaseebQ
Completely disagree. Even if you're maximizing for donations, any reasonable
analysis would still have to privilege your own well-being as a giver.
Lowering your burnout/regression rate from 25% to 5% by giving yourself a
higher quality of life seems like one of the best investments you can make.

You don't need to expend wads of cash. But you don't need to be destitute as a
software engineer to give effectively.

~~~
telotortium
I actually agree with you. I was being a bit facetious - 80000 hours is
somewhat infamous for a rigidly utilitarian view of effective charity and for
optimizing for monetary means of increasing the effectiveness of said
charities. But even they recognize the risk of burnout.

------
dangero
The thing I wish someone spelled out to me when I started my startup
employment journey over ten years ago is that you need to pick the right
company. Most startup equity ends up being worthless, so you need to think of
yourself as a venture capitalist. Will this company really be the next big
thing? Do I believe in them or am I just excited that they want to hire me?

Looking back I wasted far too much time working for companies that I knew deep
down were never going to make me money on options and working on projects that
I knew were going to fail. I wasted my time and I let these failure companies
give me valueless options in place of pay that I would have received working
for an established company. Job interviews are bi-directional and everyone
tells you that, but it took me wasting many years to understand what that
meant.

~~~
nathan_f77
I think you've nailed it. If you're an employee at a startup, you should be
doing the same amount of research as a VC, if not much more. A VC is only
investing a bunch of cash that they can afford to lose, and probably only a
little bit of their own money. As an employee, you're investing maybe 5 years
of your life that you can never get back.

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avindroth
80k is my favorite EA organization. I love reading their articles!

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collyw
I was looking for a job last year, and had a number of startups contact me as
my 14 years of experience were interesting for them.

"We can't afford to pay much because we are a startup" came up on a number of
occasions. Sorry, but I already get paid poorly relative to other engineers
because I am in Spain, and I am not a charity.

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ikeboy
Uh, taking the average equity granted and multiplying by the average value of
equity is flawed on so many levels.

If there's any correlation between equity granted and value, that analysis
fails. Also, the average company value needs to be weighted by number of
employees. Chances are if you take that average you'll get a higher number.

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repomies691
This varies greatly from company to company. I would say in startups the pay
related issues can have much greater variance than in established companies.
The startups that have lots of cash flowing in but have urgent customers often
pay well. The startups that haven't yet found a business model probably don't.

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lamby
Are they _happier_ ?

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ryanSrich
In other news the sun rose this morning. How do these stories get upvote?

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hackaflocka
On average? Of course not. It's a power-law! Averages mean nothing in power-
law situations.

~~~
aab0
It's not a true power-law (assuming it's not a lognormal). It's truncated by
the fact that anyone considering a startup would never have earned more than
the world GDP, or more specifically, the peak tech market cap to date (Apple's
$775b). Once it's truncated at a finite value, the moments become meaningful.

~~~
AstralStorm
It is probably something similar to a negative binomial distribution. (Polya
distribution)

You play until your VC decides not to fund you or you actually win. This can
be done over either money or time.

This only works on startups as a group, for any specific one you would use a
more complex method as trials are not independent. Discrete please - type
distribution, derived by a Markov chain.

