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.
Isn't that exactly what the parent comment said?
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.
When I was in startups, anything other than working in a tried-and-tested fashion using known technologies to solve the business problem was seen as forging more nails for the company's coffin.
In a big organisation, I've had the freedom to fail in pursuit of innovation, without worrying about losing my job and the jobs of all my colleagues.
There are some really, really cool things happening at a lot of startups, and some of the shining stars are making waves at the moment (e.g. High-quality all-electric cars for the common family, affordable full-home automation, autonomous for-hire fleets at the tap of a screen).
But I also think there's a reason a lot of the real innovation and advancements in information technology have come out of the research laboratories at big corporations, and that's because they have the liquidity to absorb experimentation that goes nowhere without the risk of bankruptcy, and it's certainly an attractive place to go invent some awesome stuff.
On the contrary, people love to claim Silicon Valley is in a tech bubble and have been doing so continuously since 2011.
Interns still in college can earn that much in Silicon Valley startup, a decent (not stellar) engineer can easily be in the $120K-$180K range.
I don't see how I'm losing no matter what happens to my employer -- I'm getting paid a much higher salary than when I earned working for a more established, non-startup before I was laid off during a large reorganization and I'm doing much more interesting work than I was at the larger company.
The world is moving every day towards tech based solutions. If you can find a process to automate/improve and can sell yourself, you shouldn't have a problem.
On a broader note, I thought the fact that you make less at a startup was established. Big Co almost always pays more.
Forget SV you could work remote from any inexpensive place in the country, or just park a camper near a national park and live the dream.
Probably says more about you than it does the people you're talking about.
If you're a 45 year old programmer and feel like you're nearing the end of your valuable career, it might make sense to take the pay cut and make the transition. The pension alone is the equivalent of adding another $1MM to your retirement portfolio (assuming 4% safe withdraw rate).
As a person who is scared by the prospect of programming into my 50s, I could see making this move. A 50% reduction in pay until retirement sounds more appealing to me than a sudden 100% reduction in pay at some indeterminate point in the future.
Have a friend who went to school for business. Realized once he started working in business he absolutely hated it. Took a huge pay cut to work for a non profit. Much happier.
Another person I know spent many years trying several different careers. Got a bachelor's degree, did work studies, job shadowed, got licences. Didn't like any of them. She is happy in food service where she works now.
It is like Wall Street back in the 00s in that it attracts greedy people as well as people in it for the love of it. I predict the greedy people will ruin this iteration of Silicon Valley, if they haven't already.
It also has a savior complex that is convinced Silicon Valley is "doing God's work". In other words drinking the Kool-Aid. "Do well by doing good" is a bit self-serving to me. It's a big warning sign when an industry constructs a mythology around itself. First, it's used as a psychological reward for employees that allows employers to suppress wages. Second, like any moral framework it makes ends-justifies-the-means rationalization easier.
It's just commerce! Get over it.
My hypothesis is that the former group are a small enough number where they might shake up confidence in the housing market temporarily, but would ultimately not sufficiently dent demand.
Big companies might go on a hiring spree for cheap talent and the housing market continues as it has been.
China money drying up could also be a catalyst or a natural disaster like a major earthquake could be another.
No offense but you don't sound like you have enough experience to be commenting on our industry as a whole.
I am really not concerned for all of the startup employees that are making six figure salaries, putting them easily in the top 5% of earners in the world. These people have the freedom to do so much more than what most workers do. They are not victims.
Now, if we want to talk about how the work that Silicon Valley is doing will displace non-tech workers, then yes, that is a discussion that is worth talking about.
I think the video is especially valuable to young people getting started in SV, those older and/or with experience may still find it interesting but gain usable insights.
"Inside the Tech Start-up Bubble | Dan Lyons | RSA Replay"
But IMO the salaries and benefits of government and many other non-industry workers form one of the biggest bubbles right now (an average public school teacher with seniority paid 120-200k if our local paper is to be believed and that is not in the most expensive area on the East Coast).
This bubble may overstretch public finances and pop or slowly deflate via retirements, but given the choice of two bubble areas I will choose tech over mail delivery as even after a pop the skills (I think) are easier to apply elsewhere.
While teacher pay definitely varies by district in public schools, that range seems absurdly high. I'm unclear precisely what you mean by "with seniority" but often the max comp for teachers is defined as being at the highest salary level with "Master's Plus 30".
The NEA lists average teacher starting pay at $35k, and it doesn't exactly rise dramatically after that. A teacher making six figures in the midwest is almost unheard of. A common max in Ohio is $65–75k.
My guess there were periods in the past when new teachers started with decent salaries and given guaranteed yearly raises, seniority moved them beyond this.
Im interested now myself (did I make a mistake?) and will look for an online copy or save next version
> have more freedom even though I work basically like a slave
I really envy her ability to leave work at 5 PM (or whatever her shift's 5 PM is) and not have to think about work until 9 AM the next day. I'm always 'on', always thinking about the next problem or outage or project, and frankly it's exhausting. If she calls in sick, they call in someone else to cover for her. There's no wondering 'will this get done' or 'what if...'. She never books a day off and then ends up having to work that day anyway.
Add to that that she's working a union job and getting a pension. She's got four weeks of vacation now, five or six years in, and it's only going to go up (her mother had months every year by the end). She's guaranteed raises based on how long she works there, and if she's qualified for another position and she's the most senior person then she'll get it (rather than having to kiss the boss's ass, or 'sorry we can't do without you in your current position'). Her pension is based on her 'best five years', so if, down the road, she does five years in operations, in a stressful, difficult, and frustrating job, she can then hop back out and do something simple until she retires.
There are no highs or lows in bus driver scheduling like when a server goes down and you're losing thousands of dollars an hour, but honestly, when a server goes down and we're losing thousands of dollars an hour, that sounds pretty good to me sometimes.
You don't have any magical insight into the industry. You're just drawing conclusions from one data point.
Here are two more data points for you: I've worked at two startups and so far both startups are solid successes.
While it's reasonable to bring up issues of moral hazard, blaming the national debt on startups has no relationship with reality.
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.
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.
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.
Enter a startup as a sr.eng employee, and you get the same salary that you got working at google. Instead of google equity & bonuses you get startup stock options.
Google gives you $150k/year salary & $100k/year in equity & bonuses for a total of $250k/year.
By entering the startup you have a good chance of losing that $100k/year you gave up because it fails. Over 4 years you have given up +$400k in equity compensation which is about $240k of after tax income. That is almost a quarter million dollars!
If that startup is successful later on, the IPO will likely be about 7+ years out. If the startup is sold in a few years, liquidity is 1-3 years out. That means the investment returns you would of gotten from those savings is also lost.
You should compare your equity grant to possible outcomes with something like this calculator:
These sound reasonable.
Quick question - has anyone you tried to recruit walk away because you mentioned the 40hr/week expectation?
Why would they? Are you imagining somebody who only wants to be part of a team that's overworked?
I recall very little from the interviews, except a comment from
one of the DabbleDB engineers. After getting through the stress
questions, I asked him, "So what do you like most about Twitter?"
By this point, we'd build a decent rapport, so with a nod and a
wink, he said, "Well, you know, in companies like Facebook and
Google, they serve you breakfast, lunch and dinner. Here at Twitter,
they one serve you breakfast and lunch."
I cringed inwardly. So the big selling point was that nobody worked
late into the night, so we could have that chimerical work-life
balance? I smiled to keep the warm vibe going. But that comment more
than anything else sealed my decision. I was not going to blow the
biggest career wad of my life on a company that hesitated to work
past six p.m. daily.
[Dear any future employers who've bothered to de-anonymize me off Hacker News: Just kidding! I'm all about long hours and have no interests or loved ones outside of working for you!]
The last item on the right column should look like this: 中文(简体)
The allure of startups isn't a guaranteed 20% more than a regular company's salary; it's the possibility of 1000% more.
If you get a 1% ownership stake for a 20% salary reduction (per year) and you have to stay there for say, 4-5 years in order to get that 100k payout then you're looking at numbers on very similar terms.
I understand why people need to be convinced that their odds are much better in startups than in the lottery. But wanting to believe something to be true and it being true aren't the same thing.
After that, I'll bet that in the vast majority of cases your maximum upside is significantly less than what you'd have with the standard bigco package.
Edit: not to day there isn't legitimate reason for joining a startup: it's just if the work isn't super interesting, you're getting tricked
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.
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.
For many people who are well-enough off to consider having a good risk floor, the utility of a non-life-changing amount of extra money is nearly zero. It is only once you get into the high jackpots that it gets interesting.
Depending on your situation it can be completely rational to play the lottery or be a startup employee.
Especially if you're already making enough to get by, the value of the money you're already making is "priced in" to your subconscious analysis. Thus, the next order of magnitude of income really is qualitatively different.
Only if you don't rent a nicer/closer apartment. (OTOH, lower commute times are associated with happiness).
Someone with $100M has access to politics/investments/etc that most people earning $250k/yr don't. So while the average monetary payout is smaller (1% chance at $100M is equal to a 50% chance at 2M), average social currency is much higher. (1% chance at the social power that comes with $100M vs 0% chance in the BigCo job).
Until maybe ~$100M net worth, for me personally, I think an order of magnitude difference would indeed be qualitatively different / better.
There are plausible arguments that money can often have increasing marginal utility for poor people. Google "bee sting theory of poverty".
A 9-5 is unlikely to let you save $1M, much less $5M, unless you're high level in a big company. If you're very early in a big success, you can get there.
However, in many ways, employee 15 and up is the worst of both worlds. Small stock grant, sub market salary and benefits.
$50k extra from $100k -> $150k = $50k * 1 value / dollar * 100% = 50k value
$10M extra from $100k -> $10M = $10M * 0.25 value / dollar = 2.5M value * 5% chance of success = 125k value
There's also the intangible value of having hope for big success.
However, most startup employees I know make the choice for more than just the direct monetary rewards. There's the culture, the potential influence and impact, and several other potential reasons.
I take the opposite approach where a low stress 40 hour a week job can be pleasant. I have a minimal commute and spend less than 1/3 of my waking life at work or getting there. Further I mostly enjoy my time there. I did the high pay high stress job and it's just not worth it, but taking a year off showed that's not so interesting either.
Live to be 70 and a 40 hour week to a normal retirement is ~19% of your time. As long as it's not bad there are just other thing to focus on.
Let's not count the 8 hours you sleep. That gives us 8 hours out of 16 spent working. Also your employer isn't paying you for your commute let's count that at 1 hour per day this comes out to 9 hours /16 @ 5 days per week
45 hours out of 112 waking hours in a week spent working (and commuting). That's if you're lucky enough to work at a place that allows you to leave after "only" 8 hours worked without raising eyebrows.
That's 40% of your premium waking hours devoted to earning those precious clams.
Let's not kid ourselves. Your employer gets the best hours of the day and the best years of your life.
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.
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).
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.
Nearly doubled my salary when I eventually jumped.
(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.)
EDIT: I misread the license. It's CC-BY 2.0, not CC-BY-SA 2.0.
You don't need to expend wads of cash. But you don't need to be destitute as a software engineer to give effectively.
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.
"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.
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.
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.