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I agree. I worked for one startup which got bought. The founders made money. All of the employees lost money.

One of the founders reached out to me a few years later, asking me to join his new startup as employee #2. I said "yes", but only if I made 10% of what he made. The answer was "No". OK... maybe 1% of what he makes? "No".

Thanks, but no thanks. If you admit that you're not going to share the benefits, I have no reason to get involved.




>> I worked for one startup which got bought. The founders made money. All of the employees lost money.

I think this is far more common than you'd think. Take YC for example. I'd be really curious to compare SamA's outcome vs. employee #5's outcome (for example). Even when companies "fail", founders do just fine for themselves via acquihire, and it's generally not tied to their stock (acquirer values stock at $0, pays off investors, employees get retention bonuses of ~$50-100k over 4 years, founders get quite a bit more than that).


Yeah, most of the time, there is an expectation that employees will be employed at a market salary and remain content with that. There are not many ways around this. If you don't want to be a wage slave, it's hard to wage slave your way out of it. Just have to save until you can start something on your own, rinse and repeat until you strike it big.

The systems are always going to be biased to the people who have the most money. You may realize you're getting a terrible deal, and their deal is much better. That's not an accident, and asking them to fix it is just going to cause suspicion and anger, especially if you blow past their facially spurious justifications for this ("I'm taking a lot of risk here!!!"). The real answer is "I have more money than you, so I can set the terms to favor myself".

I'm not necessarily saying there's anything wrong with that per se. Consider the flip side. You've promised an employee that he will make 10% of what you make that year, even if it means you're tithing that to him directly. You make $10M. Your employee makes $1M. Is your employee going to stay employed, or is he going to leave immediately and use that $1M to start something that will make him $10M next year, or even just to buy a fancy house on the beach and invest from home without having to pull a 9-5 every day? Making your employees too prosperous can really hurt your company, because everyone will quit when there is no longer a financial imperative to work together.


Honestly, in my experience company loyalty in employees has less to do with outside financial incentives and much more to do with internal transparency and mutual respect at all levels of the company than compensation.

One of the main problems with the current startup culture is that everything is overly commoditized. For something to be considered a unicorn it has to fit a model, have a certain amount of growth, a certain amount of revenue, a certain number of employees. This hurts a lot of companies's success because it forces them to adhere to a model that's designed around a totally different organization, ironically the same thing that created "Startup Culture" in the first place.

I would and have much preferred working at companies where I liked my coworkers managers and reports rather than ones where I was simply paid more.


> Making your employees too prosperous can really hurt your company, because everyone will quit when there is no longer a financial imperative to work together.

This is not a problem for law firms, medical practices, consultancies, investment firms, or management in any public company. Your argument is just that employees who are in shitty, exploitative jobs will take the money and run, so try to exploit them harder by paying them less. Are you really "not necessarily saying there's anything wrong with that per se"?


Not every job that requires financial incentive to motivate work is automatically "shitty" and "exploitative". There are a lot of things that we really need to get done, that people wouldn't do if their paycheck didn't depend on it. I would say that probably 85% of the white-collar workforce feels that way about their job, and darn near 100% of the blue collar.

We're talking about getting paid something on the scale of millions of dollars here. I don't know about you, but most people I've met wouldn't keep working if they came into that kind of money, at least not the way that a regular worker works. They'd update to mimic the work-styles of the elite.

There's a reason that law firms, medical practices, hedge funds, etc. tend to be small. Each professional is essentially a free agent, hopping aboard on someone else's infrastructure for a limited time and more-or-less free to call their own shots, including going to another practice or starting their own if they're unhappy. There's a lot of lenience in scheduling, work hours, etc., and it's a very ad-hoc thing, because everyone knows that it's a free association based on goodwill and not based on mandate.

These high-level professionals decide to leave the office at 2pm, take every Thursday off for golf, and go on long vacations regularly. They just tell the people who are waiting on them that their needs are going to have to come later. They will also take long, self-financed sabbaticals.

Just think about the types of companies you listed and ask yourself if things would work out if every company afforded such luxuries to all of their workers. Normal people don't, and indeed can't, have access to those luxuries or nothing would work anymore (at least not until we get more stuff automated).

It's hard enough to get normal workers to collaborate when their paycheck depends on it. Take away that incentive, and suddenly everything looks like open-source; without the financial incentive and the threat of lost stability if a product has poor reception, people do the fun stuff, and leave the hard stuff for someone else to worry about somewhere down the road.

Like law firms and medical practices, teams of developers break apart and most projects can't sustain more than 3-5 like-minded major contributors (because there's little incentive to keep people around and get them to deal with necessary compromise; if people don't like what's happening, they just leave).

Also like law firms and medical practices, it suddenly becomes very difficult to get the help you need in either a cost or time efficient way.

The 9-5 is a different lifestyle. And we need people who work 9-5 more than we need people who close their practice down to go out to Tahoe for 1.5 weeks every time there's a bank holiday.

I'm saying there's not necessarily anything wrong with people who have more money being able to set the rules of the transactions they're involved in, necessarily. I do think they sometimes set rules that are bad, but my point was that the fact that such a group exists is not bad in and of itself.

Removing the general need to trade labor for financial stability is a disaster at a massive scale, and on many different layers. There is a path out of wage slavery, and anyone is free to choose that path and attempt to earn their way out. But a lot more people are content with the work-a-day grind than one might think (not content enough to do it willingly, but not discontent enough to put in the work necessary to escalate outside of it).

In a utopia, everyone would help everyone out and contribute their skills, knowledge, and resources free of charge, just because they saw a need for them. If literally everyone agreed to do this literally all of the time, we'd be in fine shape. But we don't live in such a place, so the need for financially-motivated human labor will continue to exist until we can teach robots how to replace 100% of it.


> We're talking about getting paid something on the scale of millions of dollars here. I don't know about you, but most people I've met wouldn't keep working if they came into that kind of money, at least not the way that a regular worker works. They'd update to mimic the work-styles of the elite.

The context is early-stage startup employees, not white-collar accountants and blue-collar janitors who you are presumably outsourcing to other companies because they perform functions that are not essential to your business. The profits shared by people working for these outsourcing firms are not great because the profits of these outsourcing firms are not great. Your argument is that the profits shared by early-stage startup employees should not be great even when the profits of the firm they were instrumental in building turn out great. How is that fair and why should anyone agree to work with you on those terms?

> These high-level professionals decide to leave the office at 2pm, take every Thursday off for golf, and go on long vacations regularly. They just tell the people who are waiting on them that their needs are going to have to come later. They will also take long, self-financed sabbaticals.

You should really make friends with people who are lawyers, doctors, and in finance. I have friends in all these fields and your idea of these peoples' working hours is a deluded fantasy. They usually work around 50-60 hours a week and rarely take vacations.

I don't want to address the rest of your rant except to say that you should think about why you go so far out of your way to rationalize what to most people is obviously unfair behavior.


>Your argument is that the profits shared by early-stage startup employees should not be great even when the profits of the firm they were instrumental in building turn out great.

Firms that resell blue-collar labor are often very profitable. I'm not sure why you think they're not.

>How is that fair and why should anyone agree to work with you on those terms?

It's a marketplace, supply and demand is going to dictate these types of arrangements. There are many more adequate employees who want to work at an early-stage startup than there are early-stage startups hiring employees.

I'm not saying anyone should agree to work under these conditions, but as long as they do, others have to remain competitive.

I don't personally think it's fair. I think early-stage employees should get a much larger slice of the pie than they typically do. But I'm also not going to indulge the fantasy that being a non-founder and/or non-investor can lead to riches; it may have happened once or twice, but it's very unlikely to happen to you. In almost all successful startups, already an infinitesimally small quantity, the founders and investors get the proceeds from the exit and the employees are lucky to see a bonus check for $5k.

>You should really make friends with people who are lawyers, doctors, and in finance. I have friends in all these fields and your idea of these peoples' working hours is a deluded fantasy. They usually work around 50-60 hours a week and rarely take vacations.

They certainly want you to think that's the case. I'm not going to say that everyone in these professions works a certain way or another, but there are many who have a lax working schedule (admittedly, I don't know any who close their practice for 1.5 wks every time there's a bank holiday, that's called "hyperbole"). I know this because I have friends who are doctors, lawyers, and in finance.

>I don't want to address the rest of your [essay] except to say that you should think about why you go so far out of your way to rationalize what to most people is obviously unfair behavior.

I went out of my way to discuss because you seemed like you wanted to do that. This is a discussion forum, after all.


I couldn't agree more. After I first realized this asymmetry back in the dot-com 1.0 days, I stopped wanting to be an employee and started founding companies. I did take a couple senior VP jobs where I fully understood the equity I was getting and was OK with it.

If you want the large exit, you're either a founder or an investor. It's been that way for as long as I can remember.


For a startup I think market-rate salary for early employees is more than fair, assuming it's coupled with an appropriate options package.

But if we're talking about "Well you make market rate if you value your options like XYZ..." then yeah, that's BS.


Exactly. Equity should balance out the risk and opportunity cost of joining a start-up vs. an established company, NOT compensate for a below-market salary.


Just to play devil's advocate - as a founder, I've both made money and lost money. Some of my ventures were self-funded to failure and I had to write off hundreds of thousands of dollars. I repeatedly remind my family that my worst case is not a year of unemployment with zero income but rather a year of business failure with a painful amount of red ink. One or two experiences like that and you become very aware of the line between people willing to risk their time and money vs. people only willing to risk their time. If you really want to make the leap from employee to co-founder, you can probably do it - but need to bring money to the table or at least offer to work for much less than market (or even zero) in salary, which good founders will typically respect and overvalue since it reflects extreme personal commitment to them and/or the business.


> line between people willing to risk their time and money vs. people only willing to risk their time

But when people take equity instead of compensation at BigCo, they are quite literally risking money + time.


If I'm not being paid market rate, I am being given equity, and I'm expected to work the typical startup bullshit hours, then there is absolutely no way you can say I'm not risking both money and time.


Exactly that. Your additional time is money invested in the company.


Interestingly, one person's time can be worth more than another person's money. For founders, this is sometimes factored in, but usually not for employees, even when they take a reduced salary. At best, if you are taking a 100k job for 50k, you are, in the eyes of most founders, only investing 50k in the company. But if you are putting in beyond 2k hours that year, anything beyond that is an investment and can be worth far more than the extra time put in by founders themselves. Such invested time is usually completely unrewarded, it's assumed to be "factored in".


> But if you are putting in beyond 2k hours that year, anything beyond that is an investment and can be worth far more than the extra time put in by founders themselves

It's not just the time, but the experience and skill of one person can be immensely more valuable than someone else's experience and skill.


> Such invested time is usually completely unrewarded, it's assumed to be "factored in".

i.e. "completely ignored".




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