
My experience as the first employee of a Y Combinator startup - budu
http://nathanmarz.com/blog/my-experience-as-the-first-employee-of-a-y-combinator-startu.html
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jrockway
My experience as being employee 8 million at a Large Corporation is nearly
identical. I can choose my own tools, work from home when I want to, take
breaks, etc.

We've already taken care of the cash flow thing, so it ends up being much more
relaxing than working for a small company. We aren't going to go out of
business if our software isn't released tomorrow, so we have lots of time to
write quality solutions. We can build stuff that's really nice to work on,
instead of stuff that will give us one more checkbox in a TechCrunch
comparison article.

(I worked at a small company for a long time. It was less flexible, and every
year, we "don't have enough money" for a raise. Eventually it was very
stressful, my input didn't matter at all, and I got paid nothing. All for what
most people consider "the ideal job". "Going corporate" was the best thing I
ever did!)

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StavrosK
It's better if you actually own the small company, though...

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jrockway
So that I can spend 99% of my time doing something I'm bad at, and 1% of my
time doing something I'm good at? No thanks.

As an employee, I spend at least 80% of my time doing my best work -- no
billing, no taxes, no finding new clients. I wake up, do some programming,
chat with coworkers, eat lunch, do some more programming, then go home. And oh
yeah, I get paid even if the company has a slow month or year.

Don't get me wrong; in many ways, I would love to have my own company. But I
am pretty sure I will make more money, be less stressed, and have more free
time not doing that.

(Anyone want to pay me to implement whatever random useless ideas interest me?
Exactly.)

~~~
staunch
Will you still be happy with this kind of job in 20 or 30 years?

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rdl
I personally think the first one to five employees in a minimally funded
startup with small m&a exit as the likely exit are getting a bad deal, vs. the
founders or employees who join after financing.

An early employee will get about a percent tops as an individual
contributor...maybe up to five percent tops if he is more of a vp engineering.
In exchange, a seriously below market salary, equally high if not higher risk
of losing one's job vs. founders, and vastly less respect when he later goes
to try to do his own startup.

Assuming the same caliber of individual, it makes a lot more sense to either
found your own startup, or join after real financing (where you get a market
salary, and have a lot less risk, plus a lot of startups with problems have
been shaken out.).

Obviously being am early employee at a great startup like google or Facebook
makes sense, but for companies more likely going for 10 to 50m base hits, I
don't think early employee is a financially rational decision. (note to future
people I want to hire: I only do high risk potentially high value exit
startups, so your initial equity actually is worth it!)

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pg
If by "real" financing you mean a series A round, then you're probably
mistaken. People who join a startup with just angel funding might get roughly
4-5x as much stock as they'd get post series A. It's only a worse deal if a
series A round makes a company 4-5x less risky.

There's a market price for all the different options, from founder to early
hire to later hire. It would not make sense for there to be points on the
continuum that would suddenly be a much worse (or better) deal, and in my
experience there aren't.

You're also mistaken in saying that an early hire will get 1 percent tops.
This number varies by 30-40x, depending on where the company is and how early
the hire is. 1 percent would be typical for a very good hacker fairly soon
after a series A. You can get much more pre series A.

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vaksel
"You're also mistaken in saying that an early hire will get 1 percent tops.
This number varies by 30-40x, "

so the #1 and #2 employees are going to get 60% equity combined?

Or was that x supposed to be a % sign?

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mrshoe
One company might choose to give an early hire 20%, possibly even making them
a cofounder. Another company might give an early hire 0.5%. Hence the 40x
variability in the amount of equity given to early hires.

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dustingetz
all equity isn't created equally -- .5% of google is worth vastly more than
20% of a brand new startup.

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jacquesm
If it takes you weeks to recover from a burn-out you haven't burned out - yet.

Burn out is a serious issue and some people never fully recover from it. If
you're working hard and you need a break after a few months of hard labour
that's normal, but it's not the same as being burned out.

Otherwise a great piece and nice to get some insight in to what goes on behind
the scenes of backtype.

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SMrF
Years ago I suffered what I would now call "burn out" although at the time I
didn't know what was happening. I found this essay to be an accurate
description of my experience, but I think a doctor would be a better source of
information on this topic: <http://www.stressdoc.com/four_stages_burnbout.htm>

At the worst point I was experiencing anxiety, paranoia and depression. My
only strategy for coping with stress and difficult situations at the time was
to put my head down and work through it. I thought if I was having problems
getting the job done, I would just put in more hours. This turned out to be a
terrible idea. I worked 80 hour weeks for months at a time in highly stressful
situations. Initially this work ethic bought me promotions and raises, but you
can't work these kinds of hours under a huge load of stress for years and not
suffer consequences. In two years I gained 40 pounds and became a pack a day
smoker. When you never put a limit on how much you work you eventually break
down.

I nearly ended up quitting and going to seminary. Instead I just got a new job
with less hours and responsibility on the other side of the country. After a
few years I'm finally getting to the point where I can handle stress like I
used to: until now any moderate level of stress has caused me to spiral into
anxiety and paranoia again. I was worried I was permanently damaged, but
thankfully I'm getting better.

EDIT: I haven't smoked for two years. I've lost over 40 pounds and I'm running
my first 5K on Thursday. I got better but I had to drastically change my life.

~~~
grinich
I've found exercise to be one of the best ways to help prevent burnout.
Especially exercises that put one into a meditative state. (Running, rowing,
swimming, yoga, etc.)

Good luck on the 5K. :-)

~~~
rdl
I definitely agree re exercise.

A good relationship, kids, and general family life also seems to help people
survive high stress, but high stress often leads to a bad home life which can
make it worse yet.

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mattrepl
Employee compensation from startups depends on many factors including how much
they value employees, but it's really important for prospective startup
employees to understand that you'll probably work longer hours, have more
responsibility, and earn less than if you keep your day job.

Someone with experience in a great "normal" job may be surprised that the
compensation, including equity, of a first employee is usually significantly
less than what they're already earning. A first employee is taking a risk in
opportunity cost by accepting a lower salary, but the risk should have an
associated reward, namely equity. However, if a company has to do well just
for the employee to break even with the opportunity cost, joining a startup
doesn't seem like a sound choice. And not just in terms of money, but also
general wealth and quality of life.

Further, the hours conserved by remaining at the day job can be used to build
your own product. When the risk-level is acceptable, leave the day job for
your own startup where you can maintain control and keep a meaningful equity
percentage.

There are benefits to being a startup employee, such as the exposure to
growing a company and the opportunity to join a support network and work with
good people. Those things have value, but not always enough to offset the
opportunity cost of either keeping the day job or founding your own startup.

Personally, I'd still consider joining a startup as an employee if it was a
great match.

As a side note, RethinkDB has done a great job with posting a mapping of
position/experience to compensation. They set compensation expectations before
a prospective employee has even applied.

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dpritchett
Interesting read but the details are a bit scary from my comfy chair here in
enterprise software land:

\- Six years at Stanford, two CS degrees

\- Works up to 90 hours a week from home, has burned out multiple times in
only six months with the company

\- Founders work even more

\- All three appear to be single white 20something males

\- Job and tech (Clojure!) sound cool.

 _Edit: All that said he seems like a nice guy and I hope he gets rich off of
Backtype. I love the service. I just can't quite project myself into the
profile above._

~~~
nathanmarz
I've had some weeks where I've pulled 90+ hours, but my normal week is more
like 70 hours.

~~~
dnaquin
this is similarly ridiculously high.

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nathanmarz
Well, I really enjoy what I do, and I'm passionate about seeing this company
succeed.

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levesque
What salary can one expect while working for a YC startup? Is it comparable
with the industry's average?

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abstractbill
I took an almost 50% salary cut when I first started working at justin.tv. I
don't think you can generally expect the industry average in an early-stage
startup. My salary is nearly back up to what it used to be now though.

~~~
jacquesm
> My salary is nearly back up to what it used to be now though.

How much do you figure is your overall loss because of joining (in $) ? Does
your equity make up for that ?

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abstractbill
If you assume the company's most-recent valuation accurately reflects its
worth, then yeah, my equity more-than makes up for my loss. Until there's an
exit though of course, the equity is essentially worthless (I find I stay more
sane if I just act like it has no more value than a random lottery ticket
has).

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dpritchett
I love the layout on <http://www.backtype.com/about>

Seeing the two open positions in line with the current team really drives home
the point that you'll be taking on key people and not just filling out an org
chart.

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iuguy
Wow, having read that I'm genuinely horrified. You work 6 days a week. Why?
You're an employee. Seriously even if you weren't theres more important things
in life. I can understand where you're coming from but believe me, it's not
that the founders are abusing you, it's that you're abusing yourself.

Seriously, go out, enjoy yourself. Live.

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karl11
Just wanted to comment that this is a great post and I enjoyed reading it.

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wfjackson3
Nice post. I think I would have a hard time pulling the trigger so quickly
after meeting someone, but it sounds like serendipity.

