

Take a paycut to work at a startup - swombat
http://swombat.com/2010/12/23/take-a-pay-cut-to-work-at-a-startup

======
maxklein
The question I'd really like answered: Let's say there are 1000 startups -
there must be at least 5000 people who work at those startups. Of those 5000,
how many of them actually reaped the benefits of working at the startup? How
many made some large amount or went on to build their own startups?

In other words, these are the theoretical advantages of working at a startup -
but does this reflect the real situation on ground?

~~~
patio11
Not that privileged rich people invariably make good decisions, but one would
hope they generally have connections and decent advice. Do they tell their
kids "Screw investment banking, law, and medicine. That's for the middle
class. The smart money is in web 2.0!"?

~~~
krschultz
The parents push their kids to do that kind of stuff because it will make them
wealthy and they will have prestigious titles. That doesn't mean it is the
path to happiness. I think it is working out like shit for all the kids who
listened to their parents advice.

Background: I lived in NYC and am friends with far too many lawyers and wall
street bankers with no idea why they are a banker or a lawyer.

Almost without fail, I was happier than every single one of them, even though
they made twice or more of my salary every year.

They work more hours than us in the startup world. We boast about that phase
of living at the office and falling asleep at our desk, but at least that war
story is half made up and is supposed to end. _That's what they do forever_.

I have a friend. He is 32, a laywer at a corporate law firm. He is not a
partner at the firm. He works rediculous hours, often up till 2am on weekends.
He works those hours becuase if he doesn't, he will be fired. He doesn't like
his job, his boss, his company, or even being a lawyer. But he is working 60+
hours a week because without it he'll lose his $200k a year job. And most of
that money goes to paying for his great penthouse apartment. When I graduated
college he gave me the advice "whatever you do, save as much money as you can
so you can go and do whatever you want if you find out you don't like your
career" with the seriousness and tone of a kidnapping victim.

A lot of weekends, I come into the office and work. But I roll in at 1 and
leave at 8pm, after I had the morning off. My banker friends have conference
calls with their boss at 8am on a Sunday the night after we went out. It
sucks!

All of those guys (and girls) make double what I do. But at the end of the day
I'm not sure they put more money in the bank. Their echo chamber values things
that ours simply doesn't. We love people making it to be ramen profitable.
They think you are a loser if you don't have a BMW, a real rolex, go to bottle
clubs on the weekends to drop $300 at a bar, and have a $3000 a month
apartment somewhere in the city. I spent half of that, and do basically the
exact same things except with a Subaru, a regular bar, and a $1400 a month
apartment.

At least the doctors have rewarding work most of the time.

But I would tell my kids to be an engineer, or a freaking high school teacher,
or a circus juggler, long before I told them to try and work on wall street or
be a lawyer.

You can buy a lot of material goods with their inflated salaries, but I have
yet to find one that was actually happy with their job or their life. So they
strive to become partner at the firm or a big enough bonus that they could
leave and do something less stressful. But when they finally get there, then
they raise the bar yet again and sucked back in for a few more years. It looks
unbearable.

If I could tell my kids to do anything, it would to do what you are doing. Own
a business that you can run from anywhere and be your own boss. You probably
won't make as much money as working for Goldman, but if you want to surf you
can setup shop next to the beach in hawaii and start the day with 2 hours on
the beach and work the rest. If you like skiing, move to the mountains and do
the same. If you want to travel, pack your laptop and spend half of each day
working and half exploring. I imagine you are infinitely happier than people
making 5x as much doing the grind in those fields.

[Edited the horribly rambling mess into a rambling mess]

~~~
maxklein
You could also see it this way: imagine a guy who climbs mountains. Now
compare him to a guy who does not climb mountains. The guy who climbs is wet,
he's hungry, he's cold, and he's tired climbing that mountain. The guy not
climbing the mountain is warm and comfortable beside his fireplace reading a
book. Why is that one guy putting himself through miserable torture and
climbing a mountain? Even if he gets to the top, he's still going to have to
come down again? Is life not a whole lot more comfortable just sitting down
beside a fireplace and reading a book?

~~~
krschultz
I'm not exactly sure if you are saying the guys working as lawyers and bankers
are the mountain climbers or the ones sitting by the fireplace. I really don't
think they're either.

I climb mountains, and the going up part sucks. I do it for backcountry skiing
so it is always cold, usually windy, and very wet. But getting to the top
feels amazing, and going down on skis is even better.

The startup is like the mountain climb, there is a top (hypothetically).

For bankers and lawyers, there is no top. There is never a point when you say
"that is enough". It is a treadmill, not a mountain climb. You just stay on it
slogging for more cash and more cash. First you have an apartment, then you
want to have kids so you need to move out to Westchester and buy a 2 million
dollar house, then you need nice cars to drive to the train station (which
soon will have to be replaced when the lease runs out), and boats, and then a
porsche, and then private school for your kids, and then a vacation house in
the mountains, and then private college for your kids, then money for
retirement, and if you have a lot of money you give your kid the seed money
for his hedge fund. It never stops.

------
nobody_nowhere
Protip: Not all startups are created equal.

Bonus tip: You're probably not as good at evaluating the difference between
startups as you think you are.

Look really, really hard at the size of the market you're entering, and the
track record of the founders.

For employees, a company that's going to peak at a few million dollars in
sales probably won't make you much money based on your equity. Working for
people with no track record of success lessens your odds.

You're going to learn a lot, no matter what, but it might not be the lessons
you're looking for.

~~~
netcan
_You're probably not as good at evaluating the difference between startups as
you think you are._

I've never worked at a startup, so I'm speaking from ignorance. That said,
what always struck me as a problem with the work for equity is just that.
Investors are professionals (or competent amateurs) at evaluating startups and
understanding the deal. They have access to more information and have more
leverage in demanding it.

They also do a lot more choosing too. I think this is the one that get lost in
an analysis like this. Most startup investors invest in a small portion of the
deals that are a signature away and evaluate many more. Employees are much
more limited.

Sweat is a lot less liquid than money. The problem of receiving risky stock in
exchange for labour is like the problem of trying to trade without money in
general. A graphic designer is limited to accountants that need designing and
want you. An employee is limited to investing in companies that want to hire
them.

------
axiom
Considering that this is a startup community, it's really surprising to see
the amount of negativity in the comments here and on other "work for a
startup" posts.

Is it just that a lot of people here have been burned by enough startups that
they're cynical?

~~~
timr
I think it's a reaction to the over-the-top rhetoric that gets tossed around
on HN, especially the _"startups are a great learning experience!"_ sentiment
that seems to prevail. That kind of thinking is a recipe for exploitation,
especially of less business-savvy people.

I like startups, but you definitely have to go in with your eyes open, and
most new grads don't know anything about business or negotiation. There are a
ton of douchebags in this world who are only too happy to exploit cheap labor
to line their own pockets. If you've got the means, starting a company is
nearly always a better risk/reward trade-off than _working for someone_ who is
starting a company.

~~~
mscarborough
> I like startups, but you definitely have to go in with your eyes open, and
> most new grads don't know anything about business or negotiation. There are
> a ton of douchebags in this world who are only too happy to exploit cheap
> labor to line their own pockets. If you've got the means, starting a company
> is nearly always a better risk/reward trade-off than working for someone who
> is starting a company.

Well yes, of course. But there is a sweet spot for this for people that want
to learn a lot, and do not have the means or motivation for running their own
business. So many great technical people are of this persuasion at some point
in their lives.

Working at a startup that you care about is a great way to fill in the gaps:
figuring out what you do not know yet but would like to understand.

Working at a large company has its advantages too. You learn how those orgs
work, and how to navigate different situations than what you see at startups.

Other folks on HN have said it before and better than I, but ultimately if you
want to go into business for yourself, until you understand both, you may not
understand the full potential of your business.

------
tim_iles
Two of these factors have been particularly relevant to my situation:
lifestyle, and passion. I'm still young enough (28 in London, no major life
commitments) to take risks where the pay-offs include loving my job, loving
going to work everyday, and finding further personal career development
possible and exciting.

If this is the worst case scenario and the company fails, I'll have zero
regrets.

~~~
revorad
Do you work at a startup?

~~~
shrikant
Looks like he does: <http://www.gigjunkie.net/>

~~~
tim_iles
that's the one :) we were finalists in TechCrunch's Europas this year,
currently all going to plan...

------
sdizdar
As far I understands and I was told by some successful entrepreneurs that
startups must not assume that it can build a great team by paying them less.

Actually, when growing the team, startups must assume that they will pay more
than competitors.

Paycut is ok if it is augmented with generous equity (really generous): which
basically means first couple of employees. And startups should treat these
early employees (which took paycut) as important investors and co-founders.

------
parbo
Who cares if it's a startup or not? I'll take a paycut to work on something
challenging and fun.

------
jrockway
OK, maybe I will. I want to work somewhere where there is a comfy couch and
coffee, the languages in use are among Perl, Haskell, and C, and I can open-
source everything except the actual product. Where should I work?

~~~
swombat
Considering your good reputation in this community, I'm sure if you contacted
a few prominent people they would be aware of opportunities which might suit
you.

------
xutopia
Sure... but only if the driving factor for you is the experience you'll get
out of it.

Taking a pay cut on the idea that a high valuation of your stock options will
make up for it is both naive and silly.

------
Wilduck
As a soon to be grad, I'd love to work for a startup when I get out of school.
However, I would need enough money to live, and to make payments on my student
loans. Can these be reconciled? Will I need to find a startup that already has
some VC?

~~~
coloris
Recent grad who worked for a startup (the past 6 months) here.

You have to be extremely lucky to find a startup that:

1) actually has the funding they say they currently/will have

2) actually will pay you what they told you they would pay you

Your best bet as a new grad is finding some impressive startup people who have
great track records. Do some cool stuff for them, and tutor/wait tables for
real cash on the side.

Part-time jobs will reduce your risk of running out of money. Working for the
right startup founders will improve the chances that your startup succeeds. I
can't find the source on this, but people who have previously failed to start
companies are much more likely than not to fail again; people who have been
successful in the past are more likely to succeed in the future at starting a
company.

It's way easier said than done to find the right people. The amount of
deception out there for new grads is sickening. People know that new grads
don't know jack. You're up against a lot, even if you are smart and you
regularly browse HN. Be careful out there.

I wish you the best of luck.

------
angdis
I had a stint at a startup. It never got more than a bit of "angel" funding.
Pay was at market rate-- perhaps a bit less. But so what?

As everyone knows, most startups eventually "fail". They use up their
"runway", and everyone scatters to do other stuff. There's nothing wrong with
this. That's just the way it is. What you come away with is a bunch of
connections, the opportunity to do cutting edge work with minimal red-tape,
and a chance to work with really driven people who are following their dreams.

If you're working at a start-up strictly for the promise of riches, you'll be
disappointed. There are many good reasons to work at a start-up, but pay IS
NOT one of them.

------
lkrubner
Any business will have its share of disappointments, and some industries are
notorious for the projects that get canceled. The gaming industry is a lot
like that too. I know of someone (a very good programmer) who spent 9 years
working for major gaming companies, and every single one of the games that he
worked on was canceled before launch. He was very well paid, but he eventually
became burned out and disillusioned, simply because he was never part of a
successful product. Mind you, he did not face long hours or poor pay, he
simply faced 9 years of working on products that never saw the light of day.
And that depressed him.

------
bpm140
People who join startups hoping to make a pile of money with their shares are
fooling themselves. For every Google or Facebook, there are ten thousand
startups nobody remembers.

I'm always direct with my startup hires:

"You are unlikely to get rich with these shares. You are unlikely to even make
up the difference between what you would earn working at a large company.

If you want to be able to make a difference and learn a lot, have a lot of
responsibility early on an potentially learn how to run your own startup, then
this job (and corresponding lower salary) will be worth it."

~~~
mmt
_You are unlikely to even make up the difference between what you would earn
working at a large company_

Do you find that this filters out a certain kind of candidate, perhaps the
more generally experienced, or even, specifically, experienced with startups?

How is that working out for you? (Only a hint of snarkiness intended. I'm
actually curious what the results of the filter have been)

------
toxicflavor
I would say the only startup worth working on is your own.

Working at someone else's startup is a recipe for getting exploited -
overworked and underpaid. And the worst thing about it is that it's all
couched in an atmosphere of guilt trips and taking-it-for-the-team.

Perhaps there are exceptions. I just haven't seen any.

I'd rather work for The Man in my day job in a cold corporate environment
where everything is explicit from the get-go, get well paid for it and crank
out code for my own startup in my free time.

~~~
gjenkin
If your startup does eventually take off, you will have to hire people. But
I'm afraid that no one (no one of significant worth anyway) will want to work
for you if your attitude is that "working at someone else's startup is a
recipe for getting exploited". How will you, as a founder, do things
differently?

~~~
rick888
"How will you, as a founder, do things differently?"

Pay developers what they are worth. If you can't afford it, then you are doing
something wrong.

~~~
mmt
Exactly. TFA's theme is having employees invest cash by taking below market
salaries.

Smart, experienced[1], disciplined employees will expect this to be a choice.
Some may take the equity. Others will insist on the cash.

I agree that if one can't afford the latter, one is doing something wrong.

[1] In the ways of startups and the tech industry in general

------
seivan
I am actually working for free now. Not even a contract signed.

And to answer, of course, especially if you're young and inexperienced, who
knows maybe it'll work out, and if not, it's another app in your resumé.

~~~
pmjordan
To be honest, that sounds like an accident waiting to happen, for both
parties. Who owns the work you produce? Verbal agreements on this are great
until push comes to shove. If the company exits, you'll almost certainly get
nothing, regardless of what the founders have verbally promised. (not that the
company should pass due diligence if the copyright status of their code is
murky, but who knows)

