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Startup employees don't earn more (80000hours.org)
255 points by z0a on Sept 11, 2016 | hide | past | favorite | 153 comments



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.


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.


The reality is that going into startup for money is a big risk, it's a big gamble.

Isn't that exactly what the parent comment said?


> 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.


Yep. In a corporate environment, I've had far more freedom to explore new technologies and work on things outside of my specialism, than I ever did in startups.

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.


I've passed on opportunities to move to other places because there's a level of insulation in the corporation I work for, where we're able to experiment and fail with projects that, were I or my team to do in a lean startup environment, would very possibly mean the end of our venture.

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.


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


Not if you keep moving.


This reminds me of some documentary I watched about the Klondike Gold Rush. Someone (who obviously didn't make money at it) was interviewed by a reporter, and he said he would do it again any time just to be a part of the excitement and fun. It's cliche, but it really is about the journey not the destination.


You sound like an employee who thinks they're an employer.


Fun doesn't pay bills.


[flagged]


As yours is


Nobody wants to admit it but we are in a tech bubble.

On the contrary, people love to claim Silicon Valley is in a tech bubble and have been doing so continuously since 2011.


If it isn't a bubble the rest of the world is in an 'anti-bubble', which will hopefully anti-pop any time soon resulting in more money for tech workers :-)


Demand for good developers is extremely high in the US. Which is why salaries are so high.


How can one tell if they are a good developer or not? It's about one-for-one that whenever I read a statement that demand is high I recall a story (even some posted on HN) of someone struggling to find work and vice-versa. Is the demand at a historical high or presently higher than other industries, but still cannot keep up with the supply? Or are only a fraction of those job seekers good?


Combination of the two: Also folks aren't "good" or "bad" but rather able to add value in different circumstances. Some may be able to add more value in a more structured development environment where a mentor helps guide their every step. Others may strive in a green field situation where they can really build the "whole thing" themselves. Both of these modes have their costs in the near and long-term with the latter potentially harder to scale to other developers after the fact, but at the time appearing impressive. The former means continuity in the organization but some individuals will grow less in this model. And of course there are a million other models. Everyone thrives differently.


There have been loud screams of "Bubble!" since at least 2007: https://www.youtube.com/watch?v=SvmNDym6CvQ


I don't think a $1 million seed counts as "well-funded" and certainly isn't somewhere you expect large compensation. Startups pay below-market salary, especially at the seed stage. Maybe you have a big equity grant but that's not money in the bank.


Glassdoor says that a letter carrier earns around $50K/year.

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.

https://www.glassdoor.com/Salaries/city-letter-carrier-salar...


It seems like everyone forgot what happen after 2000. I hope you are saving your money.


Yeah, I remember that -- every industry had a downturn and there was no safe haven for employment, so I'd rather have a higher salary at a startup today with no guarantee of long term employment versus a lower paid job at an established company with no guarantee of long term employment. And I'm not going to work at the USPS and earn a fraction of my salary.


Implying someone with skills and a proactive attitude woulnd't be able to get a job or freelance?

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.


This doesn't work when 100k other people with the same attributes are laid off in your city.


Hah, I worked in government as an engineer before I moved to a startup doing something completely different. If you're ok with being a slave and fighting the very people you're working for to get the benefits you need to live a decent life then yeah government work is for you. That mindset that we're in a tech bubble is what I was worried about when I took on a city position but it's just fear. I thought it would happen for two years and nothing came. If you want to be scared, fine but how about you try and make an educated prediction and see if it will come true instead of just hand waving it.

On a broader note, I thought the fact that you make less at a startup was established. Big Co almost always pays more.

https://danluu.com/startup-tradeoffs/


Yeah but govt jobs pay a pension. Its the largest fraction of the federal budget. That doesn't happen in Silicon Valley.


My dad retired at 55, in the early 80s, with 25 years of service as a mail carrier. It was a secure and respected job, at least at the time. He's received a pension check every single month since then and has full medical coverage for life. I don't think that happens anywhere any more. Maybe the military, but there are certain downsides to that career.


This is hugely important. With rates as low as they are, a 2000$ pension per month, particularly if tied to inflation, can be worth $1m.


This is why you can save money not spend it all in rent to be in a cool part of town.


Who needs a secure retirement when there's a 0.002% chance that the startup you're working at won't fail, Google will buy it, and you'll end up a millionaire?


Why be a postal carrier with your skills when the average salary seems to be so much less (40-50k) than you could make?

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.


Because some people enjoy being postal carriers?


Ask any postal carrier if they would take a job that paid $20K more. I guarantee they will say yes. Stop thinking everyone is happy with their job because they have "a good life." Money still rules this world. Why else do people spend 8-10 hours a day trying to make money?


Stop thinking that making more money is the only thing that would make people happy, or that making enough to live on and be comfortable isn't enough for anyone.


> Money still rules this world

Probably says more about you than it does the people you're talking about.


Depends what your perspectives are. Money is a means to an end, and accumulating assets and material belongings doesn't lead to true happiness (just more stuff to maintain). I have a friend who has hardly anything and he is free to move around the world and do menial work in different locations, but importantly he is able to move freely and live in different parts of the world for as long as he wants, even if he has little materially.


Don't discount the value of a pension. If they make $50k/yr + 2% inflation adjustments for 20 years, they would retire making $75k/yr. Their pension would pay them roughly half that, plus the value of their TSP (401k).

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.


Do you honestly not know anyone who is "overqualified" for their job but happy? I know quite a few.

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.


Is there any chance of a systemic failure that would affect the entire economy caused by Silicon Valley? I am not talking about some shares losing value but with the Credit Crunch, we had thousands of average Joes in above their head in debt which couldn't be refinanced while the value of their home crashed.


Silicon Valley is not like Wall Street in that way. If quantum computing breaks public key encryption the world is in deep doo-doo though.

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.


I don't know that they've made anything that important. I'm up for feedback from anyone on something irreplaceable and necessary for consumers or businesses everywhere. Those that did are really old, established firms that actually sell product for a profit. Different model. ;)


Yes. The NASDAQ meltdown in the dotcom crash affected everything. Arguably the economy never recovered, and just papered over it with a housing bubble instead.


No not really it would just make the bay area housing bubble burst won't really affect the country


I'm not even convinced it would do that. I'd love to get my hands on employment numbers of VC funded startups that aren't profitable vs those of big established tech giants like Google, FB, Apple, Adobe etc. with strong revenue streams and billions in the bank to weather whatever comes.

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.


$1 million is practically nothing as far as startup funding goes. Especially in the Bay Area. That's basically a year to find product market fit and raise another round.

No offense but you don't sound like you have enough experience to be commenting on our industry as a whole.


Why did this get voted down? A $1M funded startup is very early stage, and statistically not likely to succeed.


Seed rounds have certainly exploded over last few years.


In USA and in the rest of the world, $1 million dollars is a shit ton of money. Full stop. Please, let's go back to reality.


It's a shit ton of money for one person. For a business, especially a business without revenue, it seems like far less.


Not to any business that has to pay the salaries of 10+ people.


Not when you need to pay people 100k/year. They aren't staffing a 7-11.


In the part of the world OP was probably referring to, development companies are like staffing 7-11


$1 million dollars used to be enough to buy the American Dream and have enough left over to send little Timmy to college. How 'bout them apples?


That's a terrible comparison. The impact of $1 million dollars on a family and the impact of $1 million dollars on a seed-stage startup are totally different. Did you really work in the tech industry? It doesn't sound like you know what you're talking about.


Circuithub YC Winter'12 batch baby. I make more money at the post office duder.


How'd you get started at the USPS? I always wonder about being a postal worker, sounds like you enjoy parts of it, whats it like?


Comparing what happened on Wall Street in 2008 to what is happening in Silicon Valley is just not even in the same realm. The scale, for one, is not even close. And do you have any evidence to backup what you're saying other than your own anecdote which is surprisingly lacking in details? You just sound generally disgruntled about a startup experience.

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.


Here is somebody who agrees with you. The presentation (boo author) is not earth-shattering but still interesting enough (watch at 1.5 times speed). You don't need to accept everything, just take it as an interesting personal report based on his unique experiences. I think I even found this video here on HN just a few days ago.

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"

https://www.youtube.com/watch?v=oO836hHCmZA


I saw that talk and thought his points were interesting. His take on the Wall Street thing is that the kind of people who would have gone to Wall Street to try to make it big trading bonds are now heading to SV to try to get rich.


There are bubbles, for sure; tech is probably bubbly more frequently than other areas.

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.


> an average public school teacher with seniority paid 120-200k

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.

http://www.nea.org/home/20620.htm


I live in a pretty well off, but not the wealthiest East Coast suburb and out local newspaper occasionally prints a list of folks who have to report their salaries and make over 100k.

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


One thing that can happen with really senior teachers is "double dipping": they retire, start drawing from their retirement fund, then get rehired by the same district at a lower salary (like a starting teacher). That combination might be enough to push into six figures but only for teachers that are at retirement age.


How is it beneficial tax-wise to lose $1 million?


And what happens when the postal service gets opened up to competition /privatized as happened to the Royal mail


I'm interested to know more about this part:

> have more freedom even though I work basically like a slave


When you're responsible for everything, the weight of the world is on your shoulders at all times. When you're a cog in an accepted system, you aren't singled our for your inefficiencies . Perhaps less gratitude for being a baller, but a lot more comfort in knowing you aren't going to be wrongfully terminated because the CEO has a personality disorder.


My wife spent years working for our local transit company, starting in the call centre (at a startlingly high wage for a call centre) and moving to other departments (scheduling, etc.)

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.


Could be - hopefully OP will elaborate.


Thank you for sharing! (Not sarcasm)


Just sour grapes.

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.


Our country is just shy of $20 trillion in debt because investors spend their cash on startups like mine and expect the government to write it off on their taxes when it fails.


> because

While it's reasonable to bring up issues of moral hazard, blaming the national debt on startups has no relationship with reality.


I don't think you understand how tax write offs work. A $1 million loss in investments does not equal a tax bill $1 million less. At most it only means only paying $150k less in taxes (based on 15% capital gains tax). This only off sets other capital gain taxes.


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.


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.


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.


Your not paid a little less, your paid a lot less, especially as the years go by. For example:

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:

https://friendlyoptions.org/#%7B%22numOptions%22%3A250000%2C...


> 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.

These sound reasonable.

Quick question - has anyone you tried to recruit walk away because you mentioned the 40hr/week expectation?


> 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?


In the book Chaos Monkey [1], Antonio Garcia Martinez writes:

  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.
  
[1]: https://www.amazon.com/Chaos-Monkeys-Obscene-Fortune-Failure...


This mode of thinking is apparently common, and yet so alien to me... When you're 80 looking back, are you really going to wish you'd put in more hours making Dorsey or Brin & Page or whoever more money? At the expense of your own life beyond a company which doesn't and never will care about you except as a replaceable factor of production?

[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!]


I have interviewed someone who was getting really tired of his coworkers putting in minimum acceptable effort while he was working very hard; so yes, this person exists.


It looks like there is a font rendering issue in this image: https://global.localizecdn.com/uploads/1463786278815.png

The last item on the right column should look like this: 中文(简体)


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.


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


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).


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?


More interesting would be to take the delta between a startup salary and a Google salary and invest it in SV real estate. I'd easily bet real estate would net higher returns.


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


You don't get to say that the EV is close to zero in one case, but not in the other. 20k/year (dollars spent) * 1/100mm (odds of winning) * 100mm (jackpot) = 20k/year

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.


Even given the generous 10% success rate, and 1% equity comp, you need to factor in dilution, time till maturity, whether the company even goes public, and below market salary/benefits.

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


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.


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.


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.


and accelerate your learning/career path a bit. Big companies with big company politics tend not to reward talented 20y/rs like they should with promotion, raises, and bonuses. But being promoted or growing in a startup has a return when you job hop, at least when you're starting your career.


Not my experience at all!


And you're (hopefully) working on something more interesting and more self-directed than you might at a typical job.


How many engineers get 1000% more? I thought it was the founders and investors that got more.


Yep, you're right. There's a belligerent, Randian dream behind that 1000% nonsense that always seems to be accompanied by some far-fetched narrative of climbing the ladder.


"not 20% more but possibly 1000% more" -- you are implying that the median startup employee makes less but it is worth it because of the big payoff for the lucky ones. That is, you imply that the median might be lower, but the average pay is higher. But that is not what the article is saying. The article is saying that average payoff is lower. In other words, being a startup employee is irrational the same way the lottery is irrational -- total payouts are lower overall.


This entirely depends on what utility you assign to a given amount of money.

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.


Both the lottery and working at a startup are rational bets if you believe the value of money is non linear.


No, many people believe the value of money in non-linear but most of those people believe that the marginal utility of each additional dollars diminishes as your wealth increases, rather than increasing. I.e. even if you might earn more money on average at a startup (which the article claims isn’t the case), it still wouldn’t be worth it because it’s better to earn a decent salary from a big company with high probability. Who seriously believes that the marginal value of money increases as you have more?


Interesting that while I agree that the marginal value decreases I also feel (literally feel) that somehow having say an order of magnitude more would somehow be qualitatively different (and better). Funny to see my own biases play tricks (?) on me!


Paradoxically, I think that you feel that way _because_ of the decreasing marginal value of money. Superfluous income is disposable income, and spending money in a way entirely of your choosing is pleasurable.

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.


> Superfluous income is disposable income

Only if you don't rent a nicer/closer apartment. (OTOH, lower commute times are associated with happiness).


Of course, this is a good interpretation! Cheers.


I think one could define a metric in which average result is higher for startup employees than for BigCo employees.

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).


You'll only make $100M of you're a founder of one of the very few really large, successful companies. It's a 1 in 10,000 chance or worse, not 1 in 10. (And mean value of $100M at 0.01% right now is only $10k)


Unless you think that marginal value decreases at quite an exponential rate, an order of magnitude more would probably be noticeably better. That's a huge difference (e.g. the difference between minimum wage and well-to-do, between well-to-do and rich).

Until maybe ~$100M net worth, for me personally, I think an order of magnitude difference would indeed be qualitatively different / better.


Who seriously believes that the marginal value of money increases as you have more?

There are plausible arguments that money can often have increasing marginal utility for poor people. Google "bee sting theory of poverty".


That's not really the relevant range for this discussion.


With $1M net worth (expect $40k/year annuity,) you'd have to live frugally to be truly independent, especially of you have a family. With $5M net worth, you could live well, independently.

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.


Caveat lector: author is talking about USA.


I also believe that the marginal utility of additional dollars decreases, but I prefer the startup value prop for me. My personal calculation is something like this, where "value" is some personal average of marginal utility:

Big co: $50k extra from $100k -> $150k = $50k * 1 value / dollar * 100% = 50k value

Startup: $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.


The entire point of the article in question is that startup employees make less on average, so forgive me if I'm a bit skeptical of your claim that the startup job will pay on average a full order of magnitude more.


That depends on whether you believe it is sub-linear or super-linear. Many people treat the value of money as sub-linear (e.g. better to go from $0 to $50k, than to go from $100k to $150k). If that's the case, then the riskier, lottery style model would not be rational if money is the only value in working for a startup.

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.


The idea is once your making ~80k extra money does not make a big difference assuming your single. Until you hit an extra ~2,000k which let's you stop working.

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.


> is ~19% of your time.

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.

Work sucks.


Hah but what is the flip side? You can give no hours to work and be stuck in a park bench. You get more prime hours, but is your quality of life better?


A good used sail boat is about $60k. You can live very well on it for about $15k/year. That's not a park bench; that's freedom, which is priceless.


Not sure my dogs would like that.


Liveaboards have dogs onboard without much issue, unless they're frequently transiting other countries and having to clear customs (ie your pet needs to be quarantined for 30 days).


Or if you're looking for variance rather than mean. You can't beat the beta of a lottery ticket!


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.


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.


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).


In recent years I think that too might make big companies more attractive. Companies like Google are solving a lot of interesting technical challenges, and produce interesting software (even some open-source) like Kubernetes and deep-learning frameworks. And there are many jobs you can have there there are purely about solving those tech challenges (the business side is someone else's job). While a lot of startups are less about tech and more about specific business plays, "AirBnB for x" or "Uber for x". Which, yes, to be an AirBnB-for-X you do need some tech, like a website and payment processing system, but the real innovation at these startups (in cases where there is any) is around business models, not technology, while the technology is relatively pedestrian.


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.


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.


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.


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/ [1] https://commons.wikimedia.org/wiki/File:Wikimedia_Hackathon_...

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


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


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.


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.


Obviously has been referenced a lot but still relevant: https://danluu.com/startup-tradeoffs/


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.


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.)


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.


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.


And you should give out of income not capital - you donate capital in your will.


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.


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.


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


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.


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.


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.


Are they happier ?


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


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


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.


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.




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