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This comment will sound a little confrontational, but here it goes.

Why would anyone competent enough to work at one of these companies choose that path instead of being a founder?




That's actually a good question. There are several answers. One is that being a founder is not merely a matter of competence. It's also financially risky, and very stressful. So someone who was just as competent as the founders but wanted less risk or stress might prefer to be an early employee.

You can titrate the amount of startupness you get in your job by the size of the company you join. If you're the first person hired by a startup with one or two founders, you'll probably be a de facto cofounder. Whereas if you get hired by a startup with 30 people you'll have a lot less risk and stress, but it will probably still be more interesting than going to work for a big company.

Another reason is that luck (usually in the form of timing) is a big component of startup outcomes, so in some cases it can be a better bet, measured both financially and by how much effect you can have on the world, to join a startup that is obviously taking off than to start your own. All the first several hundred employees at Google, to take an extreme example, probably made more money and had more effect on the world than they would have on average by starting their own companies.

Plus you need more than ability to start a startup. You also need an idea and probably a cofounder. Joining an existing startup can be the easiest way to get both.


It doesn't seem to me that a lack of interest in starting a company is simply indicative of a lack of tolerance for stress or financial risk, nor the absence of an adventurous spirit or anything like that.

Business is a very particular discipline in its own right. While the technocrats and bureaucrats of corporate America's professional management and executive corps have certainly done enough to exaggerate its exclusivity and idiosyncratic character, the fact remains that it's a rather distinct kind of thing. The qualities that make one a good programmer, a good technologist, a good innovator, etc. aren't necessarily the same qualities that make one a competent or happy business owner, especially when, as a matter of practical necessity, much of the everyday workflow is tedious administrativia or other things banal to engineers.

I'm all for the idea that intelligent, confident and well-rounded people are better off doing something more interesting than fighting mediocre fights in the cubicle trenches, but that doesn't mean they're all--or even a majority of them--are entrepreneurially disposed per se.

Plus, as has been pointed out elsewhere in this post, joining early often brings equity with it, which, from a certain point of view, is quite an entrepreneurial proposition.

If nothing else, it's simply not mathematically possible for everyone to be the chief in the driver's seat; many technical endeavours seriously require people to build out and scale.


Yes, that's a good point. Another reason not to be a founder is that you don't want to waste your time working on all the random crap that founders inevitably have to. Though actually the first several employees usually have to do a lot of random crap too. I'm not sure how big a company has to get before there start to be people who don't have to. I'd guess at least 10 people.


True, but I think my point is that there are many personality types that do not want to be Random Crap Central, nor marketing central, nor leadership central, nor cashflow central, but that doesn't mean the only reason for that is that they're fragile, coddled or "don't have what it takes." They just aren't interested in business, and prefer to leave it to the business guys.


You can titrate the amount of startupness

I think this is my favorite metaphor ever. (I'm titrating it all the way down to homeopathic levels myself...)


Okay, what's the appeal of "changing the world" for its own sake? I often hear things like "entrepreneurs endure the stress because they want to change the world."


People who want to change the world think their change will be an improvement, they aren't doing it "for it's own sake".


Yeah they're improving it to be more in line with some set of values (which will vary depending on their ethics). When they don't say which values are important and just say "changing the world" I am not inspired.


I just want to code. I'm okay with the risk and glory going to someone else.


Is that attitude common, or are you one in a million? (Serious question)


That's my attitude as well: I love coding, I don't enjoy doing the business operations aspects (I do like being able to set the direction of a project/product, something typically done by program/project/product managers in big companies but by developers in start-ups). Entrepreneurship to me is a means to an ends, my ends being "working on interesting technology" -- if I can get a job doing that in a place with relatively low amount of bullshit and high amount of autonomy, I'll take it.

The latter requirements (interesting project, high amount of autonomy, non-capricious requirement) does, however, exclude the typical "I'm an alpha-male with an MBA who can't code, I need a beta-male coder to implement my vision" situations. I have a very strict requirement when joining other companies: I can't absolutely be the smartest or most technical person in the company.

Several times I've worked on side-projects/ideas that could bloom into something and I am not opposed to starting a company to pursue that, along with another technical founder. Being a founder also means the ability to completely set the technical direction, something you can't quite get when joining as an employee (corollary: if you can't set the technical direction of a company, you're not a founder).

Success in a start-up requires drive, solving fascinating technical problems drives me. I've absolute zero interest in being involved in media or enterprise-y start-ups (either as a founder or an employee), no matter how much money is dangled in front of me.


I wouldn't say it's common but it certainly isn't uncommon. I have basically the same view.

I like to code and I'm not big on risk but I hate bureaucracy and bullshit even more. So startups are a great fit. They're generally places where people get things done.


I suppose one in ten. This is a wise attitude. I am inclined to work with people like that.


Common? I'd have to say that among the average population it's the most common attitude. Most people just want to work, get paid, and go home. Sure, they may want the glory (but generally it's sufficient recognition they really want), but they definitely don't want the risk.

Common in a group of entrepreneurs? No! Common in the workforce of the average company? Definitely.


Most people just want to work, get paid, and go home.

That implies a certain apathy that I didn't (intend to) convey. Strlen's comment is a good expansion of what I said: http://news.ycombinator.com/item?id=1346626


Everyone's risk tolerance is different. Sometimes, you need to get paid. This will get you in the door at an already funded startup where you'll get a salary and still have the potential payoff of a big exit.


This will get you in the door at an already funded startup where you'll get a salary and still have the potential payoff of a big exit.

Simply out of curiosity, what range equity stake would a programmer get? More specifically, if there is a $10mm exit, what would a programmer stand to make? How about $100mm? I know it varies by company, vesting, additional funding rounds, and a bajillion other factors. I'm just curious as to rough order of magnitude.

While I think it's a great idea to work for a startup because they're exciting environments which offer a lot of learning experiences that big companies do not, "big exits" for non-founding programmers are exceptionally rare and are too easily oversold.


This is the kind of thing I'm going to talk about at the event. But here are some rough calculations. If you were the first person hired by a YC startup you'd probably get between 3% and 30% of the company. I know that's a wide range, but that's the range I've seen. Suppose to make the math easy you got 10%. Suppose you get diluted 20% by funding rounds before a $10m exit. That yields $800k.

In a $100m exit you'd probably have been diluted more, because the company would probably have taken VC funding to get that much. So suppose your 10% was diluted by 2/3. Then you'd get $3.3 million.

This is assuming you're the first person hired by the startup, of course. The amount of equity you get decreases by time to a power. Someone who joins the company after 6 months would get way less than half as much as someone who joins after 3 months. It's rare for a series A funded startup to give more than 1% to a programmer.


What's a typical salary for the same person?

(Obviously this affects the risk/reward trade-off)


Someone that early would probably get the same deal as the founders, which would vary depending on how much funding the company had. If the company only had a small amount of angel funding, they'd be paying themselves no more than living expenses. If they had more substantial funding they might get 50-70% of market rate.


Programmers < 10 typically get between .25 and 1.5%, pre series A.

It's best to look at this as a theoretical upper bound, not a likely outcome. Usually the investors, founders and board members fuck around with the corporate structure, option splits and preferred vs. Common stock so that the employee options are worthless, anyway.


Usually the investors, founders and board members fuck around with the corporate structure, option splits and preferred vs. Common stock so that the employee options are worthless, anyway.

That's not common in successful startups. No successful startup would want to alienate their employees this way. It wouldn't be worth it, just to recapture a few percent of stock.

Common stock only gets massively diluted when a company is in trouble. And usually startups in trouble end up dying, or getting bought in a fire sale, so in those cases the equity isn't worth much anyway.


Most startups are not successful. This way the executives the VCs installed when the company started to fail can walk away with something when they fold the company into another company in their portfolio and disguise it as an acquisition.

Edit: I think you edited your post as I made mine and made my point for me.


Work at a Startup is a brilliant move and I'm looking forward to learning from it.

I don't agree that "usually startups in trouble end up dying, or getting bought in a fire sale." I don't know if anyone has a big enough data set to give us the "correct" answer.

But if you talk to thoughtful, experienced VCs and entrepreneurs who have seen many companies through their whole lifecycle (birth to IPO and beyond), I think they'll tell you that a lot of the successful startups get in significant trouble along the way. And if that trouble coincides with the need to raise a round, common stockholders get diluted.

Preferred stockholders have anti-dilution, pro rata rights, protective provisions, and cash reserves to protect them.


They don't die, they become zombies. The last startup I left 3 years ago is going to limp along forever because the investors won't kill it. At this point I believe the entire corporate entity has been restructured so that none of the original employees nor even the founder will make money in the unlikely case of a liquidity event. This isn't the only "startup" I know of in this situation. Im not really sure what the point of this is other than to give members of the SV subclass of professional startup executives and EIRs something to do...


Don't you think that most startups that get into such trouble that they have to wipe out the common shareholders end up dying? I realize there are cases where the company bounces back, but it seems like not bouncing back is more common.


Based upon some completely unscientific asking around, it seems like a person who has an employee number under 10 is likely to make 1/50th to 1/400th of the total exit after taxes. So $100mm for the company = $500K plus or minus. Not total crap, but also probably not worth it based upon the money alone.

The reason to work for a startup as an early employee is the fun (if you like working 12-14 hour days on cool stuff) and the experience. I'm guessing having a successful startup under your belt makes it a LOT easier to get your own company funded down the line. Also, people can end up much higher in a large organization earlier than they could have without some serious corporate climbing.


Is the 12-14 hour thing necessarily true? I know some people at startups and they don't work that much. It seems that a lot of startups say they value life/work separation. There has also been research to suggest that working that much is anti-productive. Of course, I understand crunch time, but as a rule 12-14 hours a day!? That seems a little outrageous.


> It seems that a lot of startups say they value life/work separation.

Of course they say so. Deloitte says so too, and Wachtell, and Cravath, and every other high pressure professional outfit. Doesn't make it true.

> There has also been research to suggest that working that much is anti-productive.

Yeah but most of those are in different circumstances. It all depends on where the motivation comes from. If you take a wage slave and whip him into working 80 hours, while paying for 40, and not dangling any form of carrot in front of him/her (making partner), of course productivity will go down. If you've got a product you believe in, a vision to make it come true, an innate drive to succeed no matter what, and no personal life, you can work 80 or 100 hours a week for months on end and get the work of 5 or 10 people done in that time.


It's also probably good practice for founding a startup. You get to learn about the issues that come up in running a startup without having to make all the big decisions yourself. Think of it as similar to auditing a college course.


I've been asked that during a hiring presentation before, and the answer I gave was that starting a startup was the most fulfilling thing I've ever done and you should definitely do your own if you have the inclination.

However, if you want to get a bit of experience working at somewhere where you can work on many systems at massive scale, want to jump a few levels ahead on the risk curve, or are interested in first seeing what a startup is like from the inside, then Justin.tv, Airbnb, Weebly, Scribd, Dropbox or any of the others are some pretty good places to do that.


If everyone thought like that, the salaries for competent employees would skyrocket due to minuscule supply, and startups would start failing for inability to find anyone to hire. These two factors would push less people to be founders, and it'd sort itself out.


As Mark Suster says, "there is a time to learn, and a time to earn."


This is contained in the other responses, but to make it explicit: another reason is to learn from somebody better or more experienced than you.

I'm currently a founder of a company that is likely to have a pretty good outcome in the next not-too-long. I've learned so much about what I don't know, that I've determined my next gig will be working for somebody who can mentor me and help me climb to the next level of competence.


I think you also need to be connected to roll out a successful start-up.


I have a good friend who has asked me to look for opportunities to work at a startup, preferably in China.

He wants to be a founder deeper in the future, but wants to work under a serial entrepreneur first, for the experience.




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