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Ask HN: What is the dark side of working at a successful startup?
337 points by the_xenu_story 5 months ago | hide | past | web | favorite | 155 comments



People.

Success breeds some weird shit, especially if you were close to people, which happens a lot in startups with a high work ethic. Friends turn into strangers, friends turn into enemies. Some make more money than you — a lot more — and some make less than you — a lot less. Brews some weird undercurrent sometimes. Money changes things. Even if you don't make real money... the perception of success changes things, too.

The road to a "successful startup" can be paved with a lot of bullshit. Burnout, depression, stress, mistakes. Regret. Employees locked in their handcuffs, even though they hate their work and their lives. Taxes. Paying people to advise you on all of these things. Trying to do something bigger the next time. Trying to move up and forward, bigger and better. Recapturing the lightning in a bottle. Dealing with yourself, and your reactions to all of this. Feeling uncomfortable about those feelings.


Successful companies also attract gold diggers. When the company is small, unless everybody is going above and beyond the call of duty, it's likely going to fail. As the company gets bigger, there is more and more latitude for failure. At some point it is successful enough that it can survive having people whose only goal is to direct a large amount of money into their pockets. This can lead to really weird decisions being made as people try to kill off "competing" projects, or to sabotage other people who are interfering with the flow of money into pockets. If you happen to be the hapless person who is innocently trying to make the company successful and who is not paying attention to where the money "should" flow, it can be quite painful for you. Of course, you will always be comforted by they near-apology, "It's nothing personal. It's just business" as they drive you ruthlessly into the ground.


> If you happen to be the hapless person who is innocently trying to make the company successful and who is not paying attention to where the money "should" flow, it can be quite painful for you.

It can be a painful, frustrating, degrading, and ultimately extremely valuable lesson.

It's especially difficult if you're naive because everyone around you is talking about metrics and OKRs, you agree on OKRs with people, and everyone seems to be working toward their OKRs. Everything seems so objective! It takes quite a bit of experience to internalize that (a) metrics have a lot of momentum and lag, (b) shit changes too fast anyway, (c) managers will move teams/groups way before the goals materialize, and (d) by the time they've moved nobody will remember what happened two quarters ago.

So while everyone is talking about the OKRs, nobody who isn't hopelessly naive actually cares about them (beyond the top line stuff executives see). Your manager doesn't care at all if you meet your objectives. They just want to look good until they can move to bigger responsibilities. Sometimes that happens to align with meeting explicit objectives, but quite often there is no alignment at all.

The people who understand the covert goals will do well very well for themselves (at least until the future eventually catches up to them). The people who naively work on their OKRs usually will not.


please write a book on this, or post a link to the book that you have written :)


I'm unlikely to write a book, but here are a few more tidbits that come to mind.

Re the above -- I don't mean to imply that any of this is malicious or even conscious on anyone's behalf. I suspect it is for a few people, but I bet most people could pass a lie detector test that they care about their OKRs and the OKRs of their reports. They really, really believe it. But they don't act it. Our brains are really good at fooling us! I used to think that corporate politics is a consequence of malevolent actors. That might be true to some degree, but mostly politics just arises. People overtly profess whatever they need to overtly profess, and then go on to covertly follow emergent incentives. Lots of misunderstandings happen that way -- if you confront them about a violation of an agreement (say, during performance reviews), they'll be genuinely surprised and will invent really good reasons for everything (other than the obvious one, of course). It's basically watching Elephant In The Brain[1] play out right in front of your eyes.

Every manager wants to grow their team so they can split it into multiple teams so they can say they ran a group.

When there is a lot of money involved, people self-select into your company who view their jobs as basically to extract as much money as possible. This is especially true at the higher rungs. VP of marketing? Nope, professional money extractor. VP of engineering? Nope, professional money extractor too. You might think -- don't hire them. You can't! It doesn't matter how good the founders are, these people have spent their entire lifetimes perfecting their veneer. At that level they're the best in the world at it. Doesn't matter how good the founders are, they'll self select some of these people who will slip past their psychology. You might think -- fire them. Not so easy! They're good at embedding themselves into the org, they're good at slipping past the founders's radars, and they're high up so half their job is recruiting. They'll have dozens of cronies running around your company within a month or two.

From the founders's perspective the org is basically an overactive genie. It will do what you say, but not what you mean. Want to increase sales in two quarters? No problem, sales increased. Oh, and we also subtly destroyed our customers's trust. Once the steaks are high, founders basically have to treat their org as an adversarial agent. You might think -- but a good founder will notice! Doesn't matter how good you are -- you've selected world class politicians that are good at getting past your exact psychological makeup. Anthropic principle!

There's lots of stuff like this that you'd never think of in a million years, but is super-obvious once you've experienced it. And amazingly, in spite of all of this (or maybe because of it?) everything still works!

[1] https://www.amazon.com/Elephant-Brain-Hidden-Motives-Everyda...


    There's lots of stuff like this that you'd 
    never think of in a million years, but is 
    super-obvious once you've experienced it. 
    And amazingly, in spite of all of this (or 
    maybe because of it?) everything still works!
I think it's because like with many other issues, we are not really in such a resource-constrained environment as the free-market advocates will make you believe ("every company below peak efficiency will quickly and ruthlessly have their lunch eaten and go out of business").

According to the first link I could find (https://eh.net/encyclopedia/the-american-economy-during-worl...) in 1945, 37% of American GDP (and almost 90% of government spending) was spent on the war. And yet basically everyone was still housed and fed with 1945 tech on only the remainder.

There's a lot of fat for these inefficiencies to feed on before (and if) they kill the organism. That's also why there are so many bullshit jobs around that the world would actually be a better place without.


Thanks for the great insight, but I also have to admit it is incredibly disheartening and bleak. I truly think silicon valley is not a good place for the human psyche as a whole. Quite honestly it breeds negativity, envy, imposter syndrome, which all turn into depression.

It's cliche, but some of the happiest people are farmers, construction workers, or people who physically work on tangible things. Also, I feel people in the bay area compared to the south where I now live are perpetually unhappy and outraged. There is more to life than work. Simple and a slower life is not such a terrible thing.


>some of the happiest people are farmers

Farmers and soldiers have notoriously high suicide rates. One explanation is that it's caused by a lack of control. From that perspective, it's certainly frustrating to watch your company succumb to inefficiencies (e.g. politics), but as a white collar worker, it's much easier to solve than for farmers. White collar worker can move laterally to a new job or upward, but farmers are looking at selling the family farm (social/career implosion) or controling the weather (impossible).

>Simple and a slower life is not such a terrible thing.

Agreed.


For some reason, your post reminded me of this bookmark I go back to:

https://www.brainpickings.org/2013/05/09/daniel-pink-drive-r...

"In Drive, Pink goes on to illustrate why the traditional carrots-and-sticks paradigm of extrinsic reward and punishment doesn’t work, pointing instead to his trifecta of intrinsic motivators: Autonomy, or the desire to be self-directed; Mastery, or the itch to keep improving at something that’s important to us; and Purpose, the sense that what we do produces something transcendent or serves something meaningful beyond than ourselves."


Wow, that is so depressing on so many levels but thanks for calling it out and educating us clueless ones.


It's more helpful to look at it as a social scientist. This is what can be empirically observed about the behavior of a large group of humans under these very specific conditions. It's not good or bad in the same sense that chemistry isn't good or bad. It just is, and can actually be quite fascinating if you look at it from that light!

It's also magical that given all this, everything still works! The products get shipped, the people get paid, the world benefits! Think of it this way -- human behavior is much weirded than one would naively expect, and we manage to self-organize to accomplish all this crazy stuff! Isn't that pretty cool?


I'd say that it's also a big part of the reason so much of what get shipped is incredibly mediocre, though, and why small teams of dedicated people that manage to ship generally seem to ship the highest quality products.


I've first hand experienced teams of 4 people achieve higher output (both in quality and velocity) than teams of a dozen+.


> professional money extractor

It's strange how SV geeks as a class will generally skew libertarian and wheel out lots of free market arguments, but haven't read Coase nor thought about how this applies within an organisation. Of course they're money extractors, that's what you've selected and that's what your culture prizes - you were just hoping they'd turn the money-extraction skill only against people outside the organisation. It's not even necessarily a bad thing, every successful startup needs a bit of this to get money from investors and make their first sales of a not-really-existing product.


I think this is very true, but it's worth pointing out to people. A lot of people don't think it through. You get technical people who are really passionate about their work. Additionally, they want to get rich. They think SV is the perfect marriage -- do amazing technical work and get rewarded with riches. The reality is that the money attracts a lot of people who are completely uninterested in anything but money. It's obvious if you think about it, but many people don't think about it.


>> People overtly profess whatever they need to overtly profess, and then go on to covertly follow emergent incentives.

This is a universal truth, and it is probably the main reason why a company needs a well defined mission, vision, and core values. They provide a way for individuals' emergent incentives to align toward a common goal.


nailed it


I believe this one should be relevant to your interests. Best non-fiction book I've ever read.

https://leanpub.com/developerhegemony


I was about to link to the Opportunist / Idealist / Pragmatic blog post but this is even better.


The Dictator's Handbook, by de Mesquita & Smith:

https://www.amazon.de/Dictators-Handbook-Behavior-Almost-Pol...


The Ropes to Skip and the Ropes to Know


Is the book worth reading in your opinion? Which edition would you recommend (earlier editions are sometimes less pc than the latter ones, and therefore contain more/better information)?


Your post reminds me of this excellent post on metagames.

https://www.epsilontheory.com/too-clever-by-half/

The naive employee you mention who strives towards OKR completion wins the game, but loses the metagame of corporate ladder climbing.


This sounds true for startups and "established" organisation alike.


Slightly different take: I remember back in the dotcom boom, a company of which I was a part started to go downhill (in a bumpy fashion, with VC money).

In retrospect, one of the early employees observed that this happened when the company "was big enough that people could hide".

That seemed to happen around 60ish people.


>>That seemed to happen around 60ish people.

The moment your boss has a boss, its just plain easy to hide.

The most important thing to understand about big people structures is every thing is a 'cost center'. The expenses aggregate at your boss, its irrelevant who is consuming how much in a team. For example Boaty McBoatyFace could have negotiated a big bonus from his boss Scrooge McDuck. Scrooge could have 10 people reporting to him, but Boaty's bonus is largely an expense divided by 10 across Scrooge's team, and largely appears as expense per person to the Scrooge's boss.

More precisely its like

    SELECT SUM(person_expense)
    FROM expense_table
    GROUP BY manager_name;
Sure some one could fire a query and see it was not 9 people who ballooned Scrooge's expenses, but only one employee called Boaty. But almost always no one does that(Because people who deal with expenses interact through Dashboards, not SQL queries).

I learned this first hand from my ex-manager. Also most organizations are likely to fire queries along the lines.

    SELECT SUM(expense)
    FROM expense_table
    GROUP BY expense_category;
expense_category being things like lunch, project outing, education etc. Then companies decide to cut down on budgets related to that category. But that's on the common category alone.

Say an expense category was 'bonus', or 'stock grant'. Its very common in most orgs, that in a team, for 2 - 3 people to eat the whole team's budget, and yet be totally invisible. And better, make it look like the whole team finished the budget.


Same thing in the hedge fund space. When you start seeing people walking around who are basically like Creed from The Office and you start to wonder 'what does that guy actually do all day'. It's normally a good indicator that PnL is going to get rough.

But it also helps that the relationship between money in and money out is more explicit in finance. The feedback loop is more immediate.


Then office politics really pick up, and it’s no longer about being a team, but playing affiliations instead. People will totally throw each other under the bus when a promotion is up for grabs and there’s real money at stake. Power shifts between factions and people must make decisions about not only how to present themselves in the situation, but how to align themselves. People will gladly take credit for the successes while blaming others for the failures. If you think politics in real life can be a shit show, there’s times where the workplace may not be that far off, since it’s still real people afterall.

People become invested for themselves (in some ways that always true with work, but there’s levels of obviousness). It’s like that with every trending “gold rush”. Opportunity arises, FOMO strikes, and hell breaks loose. A worplace that suffers 0 damage would be incredibly rare, but having the presence of mind to accept it, plan for it, and confront it in a positive way makes a huge difference is the ultimate success or failure of a place.


At some point it is successful enough that it can survive having people whose only goal is to direct a large amount of money into their pockets.

Seen this a few times, “executives” joining late in the day (weeks before IPO) with 10-100x the stock(options) of early engineers.


Seen this too. What I can't understand is what makes people hire these clowns ?

The first thing you learn about business is that you don't know how it works.

The second thing is that no matter how experienced the competition looks, they don't know either.

Hiring cannot solve a lack of business knowledge ... and yet everyone keeps thinking, again and again and again, that it does.

So what makes people hire these idiots ?


It seems like a group thing where they buy credibility with industry insiders. IPO's are all about lending credibility (that's why investment banks take a huge chunk), and the do-nothing hires are apparently related to that.


Yes, signaling plays a big part. At some point you’re basically buying a gold-plated LinkedIn profile for the VCs and the press releases and the keynotes in industry summits, and that feeds on itself - each new prestigious VP position is another layer of gilt on the CV.

In other words, they are hired to look good - any productive outcome is a mere coincidence.


The IPO process is very tricky too; they want large holders to keep their stock as long as possible either to avoid tanking it or to keep the float small so it will bid up quickly. Naturally all these people can get out before the employee lockup ends though.


If you see such behavior, I encourage you to look for personal relationships. Many of those situations that I have observed the grifting new hires were friends of the investors or founders, etc.


My memory is hazy but the first time I saw this, they were all followers of the same guru as the founders. Not actually Scientology but a similar sort of thing. They lost it all in the dotcom crash anyway!


>>At some point it is successful enough that it can survive having people whose only goal is to direct a large amount of money into their pockets.

This is true about any large people structure operation. In fact I would say this is true in any case where your boss has a boss.

>>If you happen to be the hapless person who is innocently trying to make the company successful

You are either going to be a Jeff Dean. Very likely you won't be.

In the other case this is the equivalent of painting a huge X and walking into an arena full of political snipers. The first thing they will do is eliminate you at all costs, to prevent competition from emerging.

I've been purposefully losing 'Hackday' and 'Innovation Challenges' at work. Those have little to do with innovation and mostly exercises to prepare purge lists.


Unless you founded a non-profit isn't your end goal to "extract money". Your employees should be in it for love though?

I think what you're really talking about is short vs long term gains.

Unless you give your employees the option to achieve long term gains that out weigh the short term gains, they'd be kinda dumb not to focus on short term gains right?

Of course, you'll still get people who focus on short term gains even if long term gains are better, because they might think it's more likely they can find better success moving on to their own version of long term gains, or they think they'll get screwed over if they put all their eggs in your basket.


Reading this comment and thread was painful because I immediately agreed and can tell that it was written from the wisdom you gain only by having experienced it first hand.

I was so naive when I started out in tech as a starry-eyed fresh grad, only to have my soul slowly crushed somewhere between the transition from slash and burn start-ups and boring behemoth big Corp bureaucracy. How do you guys stay sane in tech and do you see yourself do thing forever?


> How do you guys stay sane in tech?

Recognize that the work life is not the ends, but the means. You're selling your time in exchange for money which then allows you to pursue your personal goals.

Also, enter a state of mind where you watch office politics from the sidelines without getting personally invested in it. Maintain a metaphorical "strategic popcorn reserve".


I love the "strategic popcorn reserve". The trick is to a) not use it up and b) not become someone elses popcorn reserve


> Maintain a metaphorical "strategic popcorn reserve".

Did you just come up with that? It's absolute gold.


There is prior art. I learned the term from German tech blogger Fefe: http://blog.fefe.de/?q=Popcorn-Reserve


I read about work politics so I can get good at self-defense for my economical interest, but avoid going offensive so I can sleep sound at night and keep a bit of my naive child heart.


I also agree that "people" is the dark side (as well as the bright side). Mixing friendship with business is complicated, especially in a co-founder relationship. I've seen many instances where not only the business fails, but lifelong friendships are lost. To me, this is definitely the dark side.


Do most people leave when they make a lot of money? Or do they stay and continue working?


I worked at a small company in Silicon Valley that was very successful and became a very large company.

A lot of people did leave when they had the chance.

It surprised me how many people stayed. As another poster here noted, a lot of very senior people stayed who were at or near the VP level stayed. Some of them wouldn't know what to do with themselves if they left. And I think some like the status and power that comes with managing a huge org.

But I was also surprised how many individual contributors who became rich stayed, and just continued to write software or Verilog or whatever. They were bright people, and nobody messed with them because they were well-known and were just allowed to do their own thing.

Watching what people did when they came into a lot of money was an interesting life experience. Hell, watching what I myself did when I came into a lot of money was also an interesting life experience.

When I first came to Silicon Valley I was so excited to be surrounded by so much great technology. I got to play with so much very expensive test equipment: it was like being a kid again. As time went on, it wore me down, and it wasn't so interesting. I encountered a lot of bad actors: the other anecdotes in this HN post sound very familiar. When I had FY money, I left. At that time, I hated my job. I have no interest in writing code or using fancy oscilloscopes and logic analyzers. I don't want to look at another C function as long as I live. And I will never go back to Silicon Valley.


At least you have beenn lucky enough to get FY money, this is quite hard to come by outside SV I assume. Otherwise I could imagine it would be a rather bleak spot to be in.


I’ve worked for a company that IPO’d and those people who made a ton of money tried to stay on for a while to maintain a normal life but most people just rested and vested.

IPO day had a bunch of people walking around in a daze because they became millionaires on paper during the day. Nice people too. That was a good day :)


From my expierence most people leave soon after they can cash out.

It’s the top tier (VPs or people with a clear path to becoming one) people who usually stay


Agree. If there's a successful IPO, almost everyone with ISOs leave as soon as they hit their cliff. Any reups are simply competitive with recruiting offers.


I always wondered if success at any startup naturally sort of canalizes whatever was there previously, relationships, culture, etc.


The observations don't need a startup to propagate.


Success can hide a lot of problems. Companies with wildly successful products have a strong bias toward "we must be doing everything right," when in fact the truth is only "we did some things right at some point".

That bias can make it hard to change things, even clearly broken things. It can make it hard to introduce new products, since anything new will be tiny compared to the old successful product. It can make it hard to get rid of bad managers, since their bottom line looks great.

For a view from inside this phenomenon, read http://www.paulgraham.com/yahoo.html


This exactly, and sometimes it can be more than just a broken process or two. It could be that the rumors you hear are true, that there's some dirty secret that will eventually surface and endanger the entire business, and that there’s no bond of trust with executive leadership to confront it before it’s too late.

I worked at a unicorn that seemed unstoppable until allegations of fraud surfaced in a major publication, its customers started pulling out, and investors filed a lawsuit. The company shrank dramatically over a period of months, pulled out of a flagship office move, and today is a fraction of its size before the turmoil.


Is this Outcome Health? http://www.chicagotribune.com/business/columnists/ct-biz-out... seems to line up with some of the details provided.


Theranos?


Zenefits?


Were any of the allegations true?


Amazon.com?


> "we did some things right at some point"

or got lucky, but attributed the success to ability/execution instead of learning the right lessons. Then, because of over-confidence, make poor decisions and cause problems down the line leading to failure (as "luck" runs out).


I experienced this first hand. I was at a founder’s second company, after the first one had a successful exit. The second company was in a similar space.

There were a lot of things that we got ridiculous pushback on, justified as “at company X-1 we only needed 2 salespeople. We don’t need more than that at company X”. There seemed to be a lot of things where it seemed like he thought he’d figured out “the formula” when it was really just a lucky break. I didn’t stay long. 10 years later, they did have an exit, but it was on a dramatically longer timeframe than the first company had, and I suspect a lot of that had to do with bad choices that had worked out at the previous company.


i've heard this phrased as something along the lines of "winning solves all problems", which is a double-edged sword.

"winning" doesn't really solve all the problems, your problems just become secondary or tertiary concerns, and the fact that they haven't been solved doesn't immediately matter...


This is so true, and I have unfortunately observed this personally too many times.


The dark side is probably joining a cool small tech company with interesting problems and work and cool people. As a result of your (& others work) it becomes successful and one day you look around and realize you no longer fit in -- it's become the big tech company you left and vowed to never work at again. Your peers don't care about tech in the same way and don't have the same passion as you, but are still there regardless and viewed as your equal. You feel as if they don't deserve their place, and many actually discredit your work with the benefit of hindsight and all of their 6 months of experience. Increasingly, your tenure is seen as a liability rather than an asset and you feel the distinct sense of an "old crew" vs. "new crew" forming as the people you know and loved are slowly replaced with new comers who are attracted to the success of the company, like a moth to a flame, but who you know would never have joined in the early days. You watch as design by committee takes firmly hold, insignificant straw man wins are the subject of great excitement, and processes replace unstructured trust.

Finally, after the company hires a "Director of UX" you realize it's simply not your thing anymore. You must make the hard decision to leave and never look back.


Now imagine that you didn't get any equity also.


Haha I didn't get any equity in the end.


This gave me chills. You have to wonder though, how these nightmarish, big companies continue to achieve success and grow. Maybe software engineering, however shoddy, is just not that hard to make good enough.


Wow. This is so well written and succinct. I love HN for these comments.


Getting acquired and watching everything you built get rendered obsolete overnight.

It's a good reminder that almost everything you build is fleeting. Especially in a startup where you often pour your heart and soul into a product. Ecclesiastes:

> For a person may labor with wisdom, knowledge and skill, and then they must leave all they own to another who has not toiled for it. This too is meaningless and a great misfortune. What do people get for all the toil and anxious striving with which they labor under the sun? All their days their work is grief and pain; even at night their minds do not rest. This too is meaningless.


Thanks for the Ecclesiastes quote, Ecclesiastes is one of my favorite wisdom books, and a classic for any startup founder.

Just to add to your comment, I think the key to understanding the "meaningless" motif, and how the book works, is that the "meaningless" motif is used by the author to shut off every dead-end path, things that perhaps might be good things but good things which can't bear the weight of worship, things which can't in themselves give meaning or purpose to your life.

It's like a rat maze, with the author helpfully shutting all the paths, except the one path that matters, "the conclusion of the matter", the path of the "firmly embedded nails" on which you can stake your life, the path which is the duty of man, the path which is truly good and which will ultimately be rewarded.


Ecclesiastes is so underrated.


+1 on the Ecclesiastes quote.

A lot of people seem to find it depressing. But for me, who was already plagued by existential dread before reading Ecclesiastes, it was the first time I felt someone really speaking to where I was at.


Make that shit Free Software as fast as possible.


That becomes the decision of the acquiring company. Why would they do that?


You could say because the acquiring company might be motivated by a desire for staff OR customers. If that's the case then sometimes the software developed might still be of use in the public domain. It's very dependant on what is being created. Is it a tool, a product, or a community?


I'd say there are a couple problems you're likely to have at a successful startup:

1) You (the early engineer) get promoted and are leading the charge, but have no mentors or role models to help you develop your career.

2) You raise a huge Series A / B, and everyone says "spend it in 18 months" so you hire a ton of people quickly, which significantly changes the company culture. Your first attempts at introducing structure / management to the team are rough, and early engineers get frustrated the growth and seek out smaller teams.

3) You (and everyone else) think the startup is "successful" as valuations increase and build your internal narrative around this success. Later reality sets in - you need a bridge round! Since you and your co-workers placed so much of your self worth in the company's success it totally destroys morale.


This fits my experience. Also important to remember that success is cyclical. One year you think "wow I never thought it could take off like this" and the next year is "where did all the growth go, how did these idiots ever think this product would succeed".


I advise a startup in the bay area and sat in on a meeting with an early investor last week. A plan for raising a series A was laid out and he said "why do you want to raise money outside of being in SV? Nothing you have told me indicates you need funding."


Startup promised options in employment contracts. Three years later, employees find out they were never granted. Very stressful and depressing. What to do? Can you recommend a good attorney in the Bay Area?


I don't think there's one universal "dark side" to working at any successful startup, not anymore than there's one "dark side" to working at any other very broad category of projects.

At best, you're going to get a laundry list of various issues people encountered at (what they consider to be) successful startups.

I'd answer the question a bit differently: the downside of working at a successful startup versus a successful mature company.

At a mature company, success is more of a uniformly good thing. There will typically be growth, people will be promoted, there will be a strong inclination to keep the current team ("don't change a winning horse") so often anyone in influential position will see increased bonuses and other benefits. Very often you can expect promotion, especially if it's a mid-sized growing outfit rather than a huge one.

In startups, "success" often means your shares are worth more on paper, but not necessarily more profit. For example, "success" at a startup may mean your userbase is exploding, but you're not making profit on each user, and perhaps even losing a bit. Like every other process, success can lead to less stable and predictable results in startups versus mature companies.

Often it will increase stress, as more successful startups are under even more pressure to keep performing, since you are now a potential unicorn. There will be a lot more investor interest, but that comes with increased scrutiny and pressure to succeed.

It's quite likely there will be changes, including personnel changes. Many startups are a wild bet at first, so they start with a "B team", a group of people whose opportunity cost is typically low, which means they're not at the top of their field and often don't have a solid track record, so they're willing to take the risk on an unproven business model. As the startup shows signs of success, investors will be willing to pay more, and the bet starts to look more promising, so "A players" will start showing more interest. Very often there will be pressure to bring such A players in to replace anyone important all the way up to the executives. This is especially true when VCs are involved, and they will often have an "A team" in mind to replace the old "B team".

So I'd summarize that success at a startup will tend to bring more pressure and a lot more risk of bad outcomes for you as an employee. For many employees, that may be a net negative. There's also a positive though: if you're considered an essential, well-performing employee, and willing to work very hard and withstand the increasing pressures, you may end up as part of the new "A team", which may get you a fat package of shares that are now more likely to be worth something. But I've also seen startups where any one who worked there so far was looked down upon as a stereotypical "B player", with even great performance disregarded and ignored. So there's potential reward, but a lot more risk.

There are also many horror stories about how getting dismissed as a "B player" at this stage also involves the owners trying to suck back every piece of equity you may have hoped to retain. Now that the equity is worth something, you'll find the majority owners typically a lot less willing to share it. You'll obviously lose any options that haven't vested. Sometimes "B players" with a lot of yet-unvested options will be dismissed for that reason alone...


"Successful" has a different meaning depending on your title. I work for a successful startup and all the c-levels are happy, but as developer #1 I am very unhappy. The goal was acquisition. We developers did our job: we iterated on several products until one of them struck gold and is minting money. We are ready to move on. The founders are enjoying the success and have put less priority on acquisition. As a "stay-up" we are now in the growth phase: more middle-tier, more process, more meetings, more politics, more hiring, more distractions, etc. Due to our success, I can no longer afford the taxes on exercising my options. I'm completely locked up with golden handcuffs. I want to leave, but if I do and they sell in the next couple of years I don't think I could handle it. I feel stuck and it's starting to affect my mental health.


Anyone considering a “developer #1” position at a (presumably pre-money, low valuation) company is well-advised to insist on pre-exercising their options to avoid exactly this conundrum. You should even be able to get the cost covered with a signing bonus, since the company will get the cash right back. Then you can quit any time and keep all your vested shares, with no tax consequences. Worked out swell for me. Consult a real tax attorney, of course.


Have the founders considered a profit-sharing solution in the interim? No matter how profitable the current circumstances are, every startup ive been a part of would badly want to solve for the response you wrote about. Particularly in an early engineer who (i assume) knows basically everyone about the codebase and surrounding tech.


Why not talk to the ESO fund to see if they’ll pay your tax bill?


I'll take a wager and say it's overwork. If you're a startup, and a successful one, you're probably very busy. Busy doing a lot of things, wearing a lot of different hats. Many startups can be victims of their own success, and don't necessarily scale up well, or at least well at first. There can be some real ups and downs. If you get traction but then are in a hiring frenzy, that can be hard, since you have your normal workload, plus the additional workload of interviewing.


I have had two startups promise me the moon and the stars only to fire me shortly after the product was developed and viable.

One found a way to screw me out of all the equity as well, which would have made me a ten something millionaire.

Once people start smelling money things shift quickly.


I actually have almost the same story. Spent long nights and weekends building a company for a number of years, from the ground up, and I was naive enough to go off a handshake and a verbal promise that my boat would float when all the rest of them did.

When it started to look like the company would be sold, I politely asked if we could finalize an agreement in advance of knowing the sale amount, so that all would be clear. And I wasn’t expecting the moon, just fair compensation if the company was sold. We never even got that far.

2 weeks before the owners sold the company, and I was left out of the org chart handed to potential investors, I was “asked to leave”. I could have sued but I was young and didn’t have the money or energy to do it, so ultimately I left and moved on with my life. Not before going through a period of burnout and depression.

It still stings sometimes. The owners got off with all the money, and I never saw a dime.

A very expensive lesson learned.

That said, I have come to learn, I don’t think I would have been where I am if it had gone any differently - a place where I can sleep at night.


This is pretty typical behavior for a lot of startups. I once witnessed a situation where management (knowing that most people's options were way underwater) got a 'top slice' agreement where X% of an acquisition would go straight to key personnel.

Amusingly, this identical vague mechanism was given 2 different names: "Management top slice" when talking to investors/managers, and "Engineering top slice" when talking to the engineering staff.

This ridiculous mechanism was never defined (and ultimately no acquisition occurred in that time-frame), arguments over it ultimately may have helped a few engineers get out so that was about all the impact it had.

The lesson is not to count on verbal agreements. If they don't put anything on paper it's because they don't want to and don't value you enough to care, not because "the time isn't right" or similar nonsense.


Seconded, don’t count on verbal agreements, and vet ANY agreement very carefully and with legal and/or tax advice wherever possible.

If they intend for you to reap the reward, they won’t care if you do everything above board and legally. They might even respect you for it.


Why do you think the founders did that? If they made serious money, why not throw at least a bone at you to compensate for the work? Do you think it was all pure greed, or something went wrong in the relationship between you and them before that?

If they made 100, why not give you 0.1 and keep the 99.9 for themselves? In my home country, doing something like that would probably cause the founders to be worried about their physical safety (eastern europe).

Clearly you did wrong in not having it in writing, but if you were dealing with such vipers, who knows if having it in writing would have been enough anyway? Very shady


I think they had been burned by someone else before, and were not very trustworthy people. I learned later just how shady they were, things I hadn’t seen because I was too busy trying to actually build something that worked.

I think after that it was pure greed. It was a “family-run” business and the wealth stayed with “family”.... and I was just an employee.

The reason I said I can sleep at night is because later in life I realized, I was better off without their money. I would have not felt as good if I’d had gotten it given what I learned about their character and business practices which I had not known about.


It’s truly horrible. I’ve been at a startup for 4 years now, all my options are vested and partially exercised (including some painful amt tax ugh), but I’m paranoid that at the last minute, if it even arrives to that point, everything will be pulled away from me with some magic trick.

That’s one of the reasons why I am not moving on to other opportunities even if my grant is almost all mature, I don’t want them to “forget my face” when the time comes, it might help them screwing me.

And I’m not talking about dilution, liquidation preferences, ... that stuff is business risk, I’m talking about dealing with greed of people.


I didn’t stick through it in my case since I was “asked to leave” and had nothing in writing, one of the weirdest experiences of my life but a clear sign that something was not right.

But if you can stick through it I hope that on the other side of it you come out in a good way.

Depending on your agreement and country, one can only hope that what you have protects your interests well and can be enforced.

In my case, I could have gone after them because verbal agreements are actually still valid and enforceable, although complex and legally expensive to pursue. But I couldn’t get myself to do it and by now it is years past the statute of limitations.

I don’t know but somehow greed and survival and the human condition are all inextricably linked. All I can say is I wish you sincerely the best.

I still came out with something at the end - a cautionary tale, a lot more experience, and my honor. Depending on how you measure things, that counts for a lot to me, although it doesn’t necessarily put food on the table, or a roof over your head.


I never wanted (and still never want) to work at a startup. Without my knowledge or consent, my business partners acquired a small percentage of one, thereby bringing some measure of that toxic atmosphere into my work environment where I thought I was safe. Now there's at least 3 levels of secrecy and collusion as everyone maneuvers in expectation of a truly enormous payday that I truly do not believe will come. The tragedy is that when the startup in question fizzles, I'm still never going to break bread with these "partners" again, ever. If we had just stuck together and kept our heads down, we could have made plenty of cash, but the scent of blood changed them directly into people I can barely share a respectful meeting with, and they're starting to figure that out.


I would be very interested in knowing the specific details of how you got your equity stolen in a legal way, if you have some time to reply.

Thanks


Basically they pretended to go out of business and reorganized the company slightly to purge all equity holders they didn't actually want to have equity.

I lawyered up but I can only afford a five figure lawyer, at that point they were willing to bring in a seven figure lawyer so that was that.


Oh wow. Yes, that's definitely called getting screwed. What a shady world :(


I am guessing no agreement regarding dilution and/or liquidity preference?


What you’re mentioning sounds more like a case where the company was not a big success and things like heavy dilution came into play? In that case, I’d hardly call it “getting screwed”, that’s just a risk of doing business with a startup that failed to execute properly, or lost against opposing market forces.

In other words, when the company goes bad and it’s forced to take heavy dilution or aggressive liquidation preferences it’s obvious that common holders are going to get wiped out. But, and that’s the part interesting to me, what greedy behavior from a company can make the common holders get screwed even when the company sale is a big success?

An example of getting screwed was the clawback clause that the Skype employees had, which gave the company the right of buying back the exercised shares from common holders at the original exercise price rather than the market value at sale time (or something like that). That’s called “being screwed”, not seeing your shares getting wiped out because your founders had to dilute the common holders (which many times includes themselves) 50% during a difficult fundraise.


Why don't you explicitly name that startup that took out all your equity?


What would you do differently now?

How would you protect yourself from getting screwed over?


I also was majorly, majorly deceived about my equity stake, even though I was one of the two all-in founders and built both of our products. I suggest you insist on helping with the initial legal. Have your own lawyer review the documents. Insist on seeing the cap table if you are mostly taking equity. I highly recommend calling references if you don't know your business partner well. Finally, I suggest playing a visible role in representing the company to the outside world. This way, your cofounder will have a difficult time hiding you from future investors.


For me personally, get it in writing and pay my own legal and tax advisor to review any agreement, if it was serious enough.


For me there was a lot... Being pushed around by members of the founder's entourage who are untouchable, especially incompetent people who would never be hired at the same level elsewhere. As a new grad coming in fresh out of school, realizing your equity is probably worth 1/10 what you thought when all is said and done. Dealing with the middle management takeover and dodging accompanying political bullets as the new VPs and Directors try to clean house and eliminate threats to their authority / careers. Dealing with underdeveloped HR that mishandles issues like sexual assault and harassment. Seeing some early coworkers who play their cards right get fast tracked in their career and go into management shortly after graduation, and feeling like a loser for remaining an IC / little person. The worst one is realizing you worked somewhere for the equity, only to discover that you are X years behind in your professional development because you spent most of your time hustling and rushing your work.


> Seeing some early coworkers who play their cards right get fast tracked in their career and go into management shortly after graduation, and feeling like a loser for remaining an IC / little person. The worst one is realizing you worked somewhere for the equity, only to discover that you are X years behind in your professional development because you spent most of your time hustling and rushing your work.

You must take it as a lesson and don't do same mistakes twice.


Having worked at a company that went from < $50 million to > $1 billion in less than 10 years I think the biggest dark side is when it's all over.

Either the company will get bought, leadership will leave and company priorities will change -- or you'll just end up leaving.

When you decide to move on, you'll notice that all other companies seem less smart and a LOT less intense.

You might find yourself attempting to unsuccessfully chase that high that you had before when working for a successful startup or attempting to 'go back to the way it was' ... but the odds are stacked against you. There's no going back. And there's no recreating what you had. Just treasure it.

Very few devs get the opportunity to work for a startup. Even fewer get the opportunity to work for a successful startup.


The nature of a startup is long hours and a lot of work, chaos, unpredictability and some reward (a lot more of all these than in other places). A successful startup is not immune to these.

So one dark side is looking back years later and realizing that all those long hours and reward (money) were probably not worth as much as lost relationships and time outside of work.

I don’t like the term “work life balance”, but the lack of it can immensely cause long term issues...many irreversible because there’s no time machine.

Basically, if your work is taking your attention or keeping you away for more than 8 hours a day and also adding continuous stress for a long enough time, then some other things in life have to give...those things usually cannot be replaced effectively at a later time.


I increasingly see "long hours and a lot of work" as a cargo-cult of startups. Almost everyone talks how this should be this way if you want to be successful, but where is the data? Alas, the only counterexample I know is Basecamp built with DHH spending 10hr/week on it.


Agreed. Most startup founders I've seen "complain" about having to work 12 hour days, 6 days a week but in reality they are wasting a lot of time doing nothing and could get the same amount of work done in a 40 hour week. They then go on to complain about it but in reality they think it shows how tough they are for being able to do this.


You're right. The larger question is how many productive hours people are putting in (which is not easy to measure) and what they're actively doing about reducing the number of hours by improving productivity, efficiency, automation, etc.

Constant firefighting is not what any workplace should be about for a long period of time.


The dark side is probably the equity - how to actually cash out on that. For example, employees at Gilt were expecting an IPO and then eventually it got acquired by another company and devalued their stock, yet they paid taxes on the earlier value of it, and ended up losing money.


Assuming you get any? There are plenty of 'startups' that offer none.


Why wasn't that a capital loss?


You're still on the hook for the taxes upfront when you exercise, and you're going to deduct $3k/year of that investment loss off your taxes until you die.

https://github.com/jlevy/og-equity-compensation#taxes-on-sto...


Capital losses offset capital gains, not earned income (except very slowly). They protect investors, not equity-compensated employees.


So if you get a million dollars of equity, and it devalues to $10 before you cash it out, you have to pay taxes on the million? That's insane.


I've worked at a few startups in the relatively early days. My impression is that aside from money, early employees want to be appreciated for the success they helped build. People who were there when under 100 employees are less accepting of employee 500. Not always, but often enough. And those same employees can get preferential treatment from management. Again, not always but often enough.

Additionally it is important to remember that a successful startup isnt really a startup anymore. It's a business. When I was at WP Engine in the earlyish days I remember telling my boss "if we are successful then we are going to build a company we dont really want to work for anymore."


Managing hypergrowth. Especially if it is investment-driven rather than customer-driven. But either way, it's hard to watch your fun and quirky little company become just another profit-motivated machine.


Early employees get fucked over by later hires in terms of both salary and equity.


no clear personal growth and career growth path

company wide meetings about arbitrary things that don't matter (ie. 2 people reply to the company account on twitter and suddenly EVERYONE has to get involved)

pretending someone's use (or lack thereof) of their unlimited vacation matters, because it won't after the exit or buyout or shutdown


It depends on how you define "successful". There are an awful lot of startups that are successful solely and completely on their ability to raise money.

Every year there are double-digit startups who sell and the employees get nothing, because they raised too much money and couldn't sell the company for a number higher than the preference stack.


The cost on myself, my life and my family.

Nothing is free. Ever. You can implement one thing and there are a number of other things you did not implement. In my case that meant always always focusing on product and finishing above all else.

Shitty engineering and bad choices litter the code. Even worse bad design is everywhere. All in the name of "getting shit done."

As that stacks up it costs more and more. More late night calls. More time spent trying to fix things that should not be broken to begin with.

Just one more day in the week to do something operational for once. Another night spent trying to keep things running.

Those all add up over time. And they cost.


If you're acquired, there's a significant risk of a cultural clash between the people from your company and the current employees. "I didn't want this job" syndrome is real.


Doesn't happen at all startups but work vs reward. I feel like in startups especially at successful ones, the founders gain so much at the expense of the workers (usually in the form of time).


I think it's important to recognize every startup is different, some may have dark sides others will be wonderful place to work. Furthermore, people are different, and what might be a dark side to some would be attractive to others.

If you're asking HN, does that mean you feel something bad in your gut? If so, just talk to people who hired you or reach out to existing employees and try to get your questions answered. They'll help a lot more than people on HN who aren't familiar with your exact situation.


I would guess that some people achieve financial success and suddenly think their opinion in every realm is the correct one, and think every choice they make is most moral.


The unfairness of it all. Years ago I was employee #1 at a small company, which grew quite large in terms of user base and profit. VC was attracted. More profit was made. New C-level executives were attracted. The founders and C-levels made very profitable deals for themselves. The engineers got nothing. No bonus, no stock options, nada. I left the company a lot more cynical than I joined it.


Did you have any equity in the company? If you didn't, why do you feel entitled to share in profits and success?


I didn't have any equity. The only thing I invested was several years of my life and a fair amount of blood,sweat&tears. The other early days engineers and myself worked our asses of, going beyond the call of duty as they say. I don't think I (or my former coworkers) felt entitled as such. We certainly did feel like we were underappreciated when piles of cash were being handed out to everyone but us.


The harsh truth is that your expectations were wrong. I could be a lot nicer about this but it's the simple fact. You thought you deserved more because you busted your ass and took a risk, but the reality is that it's just sort of silly to work at startups and bust your ass without some legally binding agreement to potentially get a reward for your above-and-beyond work.


Ugh, sorry, I was in a bad mood. Sorry for my comment. Your feelings are valid, I was just being a dick.


You will enjoy journey for sure if you are aware about running progress of company and where else you can contribute to make it a successful company. I have been part of two start-up for 6year. Spent 4.8+ year in first one, we start with 7 and reached to 70. I have to take a break of 15 days because of some reason and this is where company took steps to start with new in-house project. Everything was so speedy that I could not be able to understand core and just started to work wherever I can add some value but that was the worst decision I made. By the time I could not be able to summarise my folio and ended with some low value communication with founder.

But nevertheless it helped me to improve lot as professional. You must be aware about work you are doing, it just should not be labour work for long time. If you thinking to have 9-6pm job then that's the only Dark-side I would say; else everything is fine.


There have been a lot of great comments hear. I call the problem, "The True Believer Problem". True believers are those who are bought in to the product and vision, and ultimately are personally invested in the company's success, regardless of compensation. However, they are hard to distinguish from the opportunist, who can spot true believers, and their success, and then latch on. They often reflect back to key executive / founders, the values / language / signs of being a true believer, but their investment in the company's success is directly tied to their financial upside. Oftentimes these folks work very hard to market themselves, and their company, but mostly themselves. It can also cause cultural rifts because non-executive true believers spot this behavior and have very little recourse. The culture starts to suffer, little by little.

Startup boards can be highly problematic. Some board members are great, but many can't differentiate the best interest of the company from their own best interest. They can be highly-biased and interested in a getting a good return / new investments opportunities / using the company to leverage their professional network. This often comes into play when your board is only a combination of founders & investors. Who's bringing the industry experience w/o pressures of an exit? Who's sitting on the board because they care?

Many very important things don't matter early. There's a mindset that Compliance / Security / Legal / HR are things that big companies worry about. That they just slow down agile startups. The reality is that the reason that the perception is that those things will slow companies down is two-fold. One, most founders that never worked in leadership roles at legacy or non-startups don't know anything about them. Secondly, boards don't really care about this stuff until they need to be in place for an IPO. They don't even really matter if your plan is to be acquired. This leads to some very toxic environments.


The best reason to work at a startup is if you are a founder and have significant equity. The other reasons to join are if you are enamored with a technology that they specifically use or want to get experience quickly wearing a lot of hats.

There are no other reasons to work at a startup. You will work much harder, for less money, and poor benefits relative to larger companies. You work in uncertainty. Unless you are a founder, you will not make a lot of money in an exit unless the company hits the lottery and becomes google.


There is one other reason: you just can't deal with megacorp politics.

I don't mean to suggest that startups don't have politics. They certainly do. But startup politics is different from megacorp politics, in ways that I can't really explain. All I know is that I feel much better at startups, even when there's a lot of politics flying around, than I do at megacorps, having worked at both.


This is the kind of advice that is probably right, but when wrong is very wrong.

For example, I’d guess the risk-adjusted return is better at a Series B company with product market fit, however you still have to be able to pick well.

But knowing a dozen people who made enough money to retire from joining early-ish at a company that had done a lot of the hard stuff I’ve gotta say it’s certainly not always true.


A large, 200+ employee private company is what 20 years ago would have been a public company before all the internet bubble shenanigans stopped that. If it has revenues and a proven business model, it’s definitely less risky than a small startup.

I’m specifically talking about seed stage startups, where the risk vs. reward for normal employees is not favorable. Best to join these companies for experience over dreams of money.


Advice like this helps people from wasting the best years of their life.


I have worked at several startups. So far my payout from stock options has been a $7,000 loss, but maybe some of these shares will be worth something... someday!

My career was accelerated because of all the experience I had, and in terms of title and skills I got ahead faster.

But in terms of total compensation and the number of hairs remaining on my head, I would have much more wealth and many more hairs had I played it safe at a megacorp.


Having been on both sides of the fence, mega corps have politics so bad that you want to rip out your hair in addition to it falling out. I can’t honestly say one is better or worse than the other - I think what matters most is are you bringing enough in to survive reasonably comfortable, and do you have a reasonable enough amount of time/energy for your family or personal pursuits on the nights/weekends?


Do you literally meant that you have lost some hairs. This is the only thing that is holding me back from joining startups


We had our photo taken during an acquisition, and of the engineering staff, 3/4 of us (me included) were all going magnificently bald by the time of the acquisition. It's probably safe to say we would have lost most of our hair anyhow, but it was amusing to see us in photos circa 2006 vs 2013. I would say the due diligence probably cost me a few percent of my hair...


Looking at my uncles and brother, I would have lost this hair either way. But I have certainly been in a lot of stressful situations. One time I took a paycut to minimum wage that lasted 6 months! Not fun.

But in tech, any halfway talented engineer can get a job in 5 seconds, so the risk isn’t that bad.

It’s just the hours, the stress, the uncertainty, the low pay relative to megacorps, and the founders who make 1000x payout if they manage to sell it.


You can surely find a new job at the worst in a few months and no well-paid engineer should be living without a few months' liquid savings anyway (emergency fund). So, every time people say startups are dangerous because they can go bankrupt, they're full of bullshit. Unless you live in rural US, or very inexperienced, there is no way in hell you'll burn all your emergency fund before finding a new job. Especially in tech heavens like SF, Boston, Seattle etc, it should be pretty easy to find a job even the day you're laid off. This is, unless tech industry collapses. Which I suppose is quite possible, but currently there is no evidence this is happening.


At times redefining moral and ethics to better fit a business plan


Suddenly realising that you have to do things in a way you don't want to because of investors demanding growth! Restructuring, moving the office, laying certain people off, bringing certain new people on, making profit everything and only pretending that everything else is still important.


A lot of people equate success with happiness. Especially if you're company is making headlines. One does not always accompany the other and it will be difficult for many people in your life to accept that.


hard to leave when bonus + $$ is so high. So you can get yelled at, things can be unfair, and in any normal circumstances you'd leave. But what if you can make millions.. would you stay another year..?


Work life balance sucks.


The fear of failing and long working hours.


maybe analyzing the character of your boss and coworkers and then being a pleasant figure are the key. Sometimes you have to really change your character when you enter the office and really become someone else

source : http://www.aseangol.online


Values.


1. work life balance (especially in the early days) 2. defining new features and backing decisions with data 3. selling your stocks too early and moving on


Its always risky to switch to your job with a startup. There isn't any security for your job as well as for salary.


This is a great question. Thank you!




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