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Working for a startup makes less sense, unless you are into the mission (jatins.gitlab.io)
408 points by jatins 7 months ago | hide | past | web | favorite | 257 comments

As someone who was a 1st engineer of a startup that successfully exited I had what would be considered a good payout. When looking over the course of my career, however, it simply made up for the reduced salary I took for the years I worked there. It was a net-neutral outcome to be the 1st engineer at a startup that actually exited for a substantial (8-figure deal) outcome which already puts me in the minority.

So no, its not worth it and hasn't been worth it for some time (I was there nearly a decade ago)...


However, what was worth it was the experience I gained. Being the 1st non-founder engineer means you own a whole stack or specialty and you have no one to lean on. You have to figure everything out. Doing so propelled my career immeasurably. Without that experience I'd still likely be a very mediocre engineer. As much as it wasn't a good financial decision it was a great decision in terms of upping my skills, becoming a harder worker, and building a network with VCs and the local engineering community.

I had already worked at the Big 4 prior to switching and I didn't thrive in that environment. The startup ecosystem provided me the opportunity to work hard, network, build skills, and give me the tools & learnings on how to start my own business.

Not everything is about money.

> I had what would be considered a good payout. When looking over the course of my career, however, it simply made up for the reduced salary I took for the years I worked there.

This is such an important point for people to know when they're joining startups. You're basically investing in the startup.

If you're going to be an investor it's good to know what your alternative investments are.

If you put $50k in the stock market every year for 5 years @ avg. 8% return, your have ~$400k. Over 10 years it's ~$900k.

At 1% equity (after dilution) you'll need a ~40-90M exit to reach those goals. Given that your taxable event will be bigger, it's probably more like a $60-120M exit to break even if you're considering a $50k/year pay cut in return for equity.

Both the market and startups have risks. But if the upside of investing in a startup won't reasonably beat the market then you're essentially taking a pay cut.

8% return on average is abnormally high.

But, on the other hand - the chance of retaining even 1% of a startup that exits for >50M is very small. By the time of an exit, almost no engineers will have anywhere near that equity.

After accounting for inflation and dividends, 7% is average (historically) for annual returns. So only a little high.

If the parent was not accounting for inflation, 8% is low.

I see the 7% return figure trotted out as average equity returns; but I think that number reflects a lot of “easy money” from the asymmetry of global industrialization in the post-WW2 era. Europe and America spent the 1920s through 1940s building fossil fuel powered heavy industry through a couple of particularly destructive wars. Then we spent the next 50 years spreading it around the globe, with American and European companies collecting a vast majority of the profits.

I’m not entirely sure it’s an assumption that will be correct for too much longer given the industrialization around the globe has increased competition significantly.

I think the true equity growth rate is closer to inflation / population growth rate; especially once we take the costs of climate change into account (think of it as a loan we have to pay back in either remediation of adverse climate effects or decreased future productivity).

Not sure I agree with your premise, but even if it was true, couldn't one simply balance their profile with more stocks from developing markets and be back to average?

Most of those nations didn’t really have viable / accessible public markets until the 90s. So there’s not a lot of reliable data from the first half of the century to go on.

And I’m not saying the US / Europe robbed any of those countries — just that there was a lot of easy growth in those countries in the 20th century, and western companies stepped in to facilitate and got paid a lot of money in the process. That growth is reflected in the stock prices of American and European companies.

My point is that those big, easy growth opportunities aren’t there anymore anywhere; and the growth opportunities in the future will be diminishingly small. We’re no longer bringing a country from the Iron Age mining with hand tools to the industrial era with mechanized mining and smelting; we’re largely just replacing one form of economic activity with another, slightly more efficient version.

401k’s haven been that spectacular for the last 15 years

My Vanguard account, which I've had since 2007, is showing 10.8% returns over the past 10 years.

I think the difference between 10 and 15 is pretty large since the recession started over 10 years ago, but under 15.

You are right, but even 15 year returns are still above 8% with VTSAX.

Exactly my point! We can’t grow at 7% in perpetuity; so at some point it’s going to have to slow down. It feels like that’s starting to happen.

Why can't we? From my point of view, we've just began. Maybe we will see a low decade now, but the decade after that will be incredible.

Also keep in mind we already had a "low" decade... the "lost decade" of 2000 through 2012-ish. That was a bad time for investing.

+1, doesn't it seem like ML can drive just as much GDP growth as the technology that spurred growth over the past decades? it's not clear the US will be at the forefront, but nobody is stopping investors from diversifying their portfolio globally.

Depends on what you're looking at for ETFs and mutual funds, but I think 8%, with a lot of work, CSVs, and tracking performance can be obtained. I know 12% is doable with a lot of work.

How's that? Over a decent period of time (5-10 years), 8% can be obtained with essentially no work just be investing in low cost index funds.

> But if the upside of investing in a startup won't reasonably beat the market then you're essentially taking a pay cut.

Like the OP said, if you look at it only from a financial point of view then joining a start-up is probably a worst financial decision compared to joining an established company.

The OP mentioned that going the start-up way has provided him/her with unique skills that then were of great help in his/her career. I can chime in with my own anecdote and say that joining a start-up/small-ish company has provided me with a greater will to do the actual work, a greater sense of purpose compared to me potentially having chosen to work for en established/bigger company.

I'm in this job (I'm a programmer) for the long run, I genuinely think that had I chosen to work at a big company my mental health would have been in shambles because I would have felt as an insignificant cog in the corporate machine no matter the compensation.

An exit would usually be considered long-term capital gains under the tax code, which luckily tops out at 20% (+ state income tax)

Only if you joined early enough that doing early exercise of stock options is financially viable.

In CA the max marginal rates are close to 40% for long term capital gains and 51% for short term / income tax.

If you exit by cashless exercise of options, it's (usually) then blasted by the full effect of wage/income tax.

This people do not understand the math of startup comp. If you get equity instead of cash, you could have taken that cash and just put it into as high a risk investment as you want. As such, startups are really offering access to an illiquid investment (but how sure are you it's better than other options), and forced risk-taking with some short-term tax benenfits (most people wouldn't put 10-20% of their income into one stock and you pay tax up front). You could go to google, put 30% of your income into crypto, and have some thing a lot like a startup risk/reward profile w/ a lot more liquidity. It's just that that feels riskier to people. Startup is only a great deal financial for the founders.

For early stage startups, consider an 83(b) election for better tax treatment on exit.

How'd you do your math? 50k every year @ 8% would result in 317k and 782k in 5 and 10 years respectively.

“If you put $50k in the stock market every year for 5 years @ avg. 8% return, your have ~$400k. Over 10 years it's ~$900k.”

That’s not always the case. Stock market returns are not guaranteed. If you start in the wrong decade you may be losing money.

startup returns are even less guaranteed. I think the main point is startup risk-adjusted returns are bad for non-founders.

There is still a financial aspect though: that rapid increase in responsibility and experience most probably translated to higher income at your next jobs. And there is a compounding effect each time you change jobs, so the earlier you were in your career when you worked at a startup, the more you gain from it financially over the course of your career.

I think we have selection bias on Hacker News because many of the prominent voices here tend to have high-paying jobs at prestigious tech companies, or at least know that they could get such a job at the snap of a finger. So from that perspective, joining a startup as an early employee is less attractive. For industry insiders who want to work at a startup, it often makes more sense to just raise money and start one yourself. They can do that relatively easily because their insider status vastly increases their chances of raising seed money.

For everyone else however... that cushy Google job is not at all guaranteed, and neither is the 500k angel investor check to be a co-founder. So, although being an early employee at a startup is definitely not for everyone... From an outsider’s perspective it can be pretty damn tempting.


I do hardware (sch/pcb) design in spain, I’m in a lead position in a small company.

When I look at what I’ve built, I have experience with technologies that most of my college mates are still mystified with (e.g. DDR4 or x64 architecture).

Most electronics in europe are industrial/power electronics, and most engineers spend their days doing what amounts to paperwork. In contrast I’ve had to ship new designs on a biweekly basis to keep things afloat, I’ve had to set up databases to keep track of our parts (something most hardware engineers don’t even understand), I’ve had to write reliable python scripts since our build process depended on it... the list goes on.

From my experience interacting with US engineers, you don’t even realize how little some “Engineers” in the old continent actually know.

Would love to hear more about your database system!

Chris Gammell of Contextual Electronic and Amp Hour fame? Boy I better not screw this up! :D

Bad news: I use Altium

Good news: I’m trying out kicad on my spare time (feel free to take the credit)

As to the question, Altium is quite flexible in regards to using a database as a library, but it is riddled with bugs, workarounds and generally weird stuff. I’ve tried from the extremely simple to the overly complex. In that order:

- Easy level: Excel files on a shared NAS.


* easy to set up.

* easy to convince management to try it out.


* Not really a database

* You need to close Altium to add parts (this is very frustrating during sch capture)

- Medium level: Acces database (mdb) on a shared NAS


* easy to set up (not as quite as excel but similar)

* you can add parts from inside Altium itself (with limited input interface)


* because of how buggy Altium is the database tends to get completely corrupted. Almost daily backups are mandatory.

* You need to set up a form for part management, directly editing the mdb files is a path to disaster even with as little as 2 people.

Insane level: SQL server on AWS. Conected to local LAN through VPN. A simple php CRUD on apache for management.


* Can handle heavish loads (a T2 micro can support about a dozen hardware engineers working in parallel)

* should be more scalable

* hides a lot of the complexity of the database for the junior engineers.

* small sized NAS won’t suffer while someone is generating a BOM.

* changes to database are more manageable if someone on the team knows sql.

* more reliable and resilient to altium bugs


* No internet connection means no one works.

* possibly the most expensive solution

PS: I’m on my phone, I’ll reformat stuff when I get my pc to make it more legible

This is very true. I come from a non-tech (humanities/academia) background and was entirely self-taught when I decided to switch careers. I had only done very specific and quite unmarketable hobby projects on outdated technologies (win32 Assembly, Pascal, Fortran and some PHP/MySQL) and there was no way I would have had a shot at getting a job at any tech corp, let alone a FAANG.

Startups, on the other hand, were hungry for talent. The pay I got at my first job wasn't great, even by startup standards. But it got me working on a more up-to-date stack (JS, Go, Python, Scala, NoSQL DBs...), taught me how to better handle the tradeoffs between clean, robust code and fast shipping and got me a great network.

A few years later, I got no equity, my salary is only decent (nothing FAANG-level, but better than friends at some larger corps) but I like what I do, got a fancy title, manage people and am considered indispensable enough that I can make my own hours.

I've met a large number of people from similarly non-traditional backgrounds as mine (former nurse, geology PhD, classical musician...) in the startup scene and my guess is they would never had a shot at working in tech if it were not for startups.

At your next jobs where? Other startups? If increased responsibility means managing people, I don't think that's a positive - the management experience is going to be discounted by the relative lack of hands on technical experience.

Even if more responsibility means more hands on responsibility, it's a mixed bag because your experience tends to be broad but not deep. Still valuable, but not really worth the comp tradeoff IMO.

Assuming he is from India, there might not be a translation to a high income job. Salaries in India frequently follow a %age increase in the last role, regardless of the position they are hiring for. There are some exceptions, like the global cos which would pay according to job, and some startups which would have salary bands, but mostly, its about how much can we increase from the last role.

> Assuming he is from India,

That's kind of a weird assumption to make.

Based on this.

> However, to me, it’s dubious how many startup successes, especially in India, have been great for, say, 20th to 50th engineer at those companies. Swiggys, Olas and Paytms of the country are infamous for not giving good (or any, these days) equity to engineers.

I wasnt sure, hence stated the assumption. Did not want it to come across as a prejudice. Apologies if it did.

The article talks specifically about Indian startups, so I think it's a fair assumption

But most startups fail before they achieve any sort of name recognition. In those cases, how much does being the CTO of a company no one has heard of and no longer exist boost one's resume?

In that case IMO it's not about the title but about the responsibilities and achievements. Don't just write "CTO of Waggletech (2018-2019)" and call it a day, but instead spell it out.

Example: "Defined the technical architecture of the MVP and implemented large portions of it. [Platform-specific stuff here]. Lead the recruiting effort to bring the company from 2 to 10, interviewing over 100 applicants. Participated in raising seed-stage funding from X VC and N seed-stage investors." IMO the thing the Bay Area does better than everywhere else is in the face of failure, the immediate follow-up question is "so what did you learn?"

Not everything is about money.

+100 to this sentiment. It has never made sense to work at a startup to "get rich" it has always made sense (and will continue to make sense) to work at a startup in order to expand your personal skill set and to take on different challenges.

In the Bay Area, and I recognize that this may be completely different elsewhere, when you work at a startup it is often difficult to "hide" if you are under performing, and it is easier to "shine" when you put in the extra effort. It is also generally a place where engineers can try on more marketing roles and vice versa. Moving from "management" to "individual contributor" is often more fluid, and the variety of technologies you are exposed too can be quite diverse. Start ups are generally less 'snobbish' about which college you graduated from or even if you graduated from college, concerned more with results and less with appearance. Turn over (people coming and going) is generally higher so you end up knowing people at more companies which builds a "network" when you decide you want to work somewhere else.

For new engineers I typically advise them to find 'mid-stride' startups, generally something that as locked down a Series A or Series B round so there is "real money" and they can generally make a near market rate base salary. And I advise them to go in with the attitude that they are using the startup to expand their skill set and increase their exposure to various roles.

Generally its a great way to launch into your second (or third) job.

FWIW: I kind of feel the opposite. Or at least I think the experience is a real trade-off. The skills I gained as a first employee at a startup were more along the lines of business and marketing. The engineering skills required were pretty trivial: manage a small Heroku setup, write early backend and frontend app boilerplate, spin up an initial db schema, integrate CSS from a contract designer, work on email templates, set up analytics, etc. Most startups never get big enough to start hitting the really tough challenges. On the other side of the coin, when I joined a big four company, I was immediately dropped onto a team with the challenges that come with huge scale and have grown more from that experience. I may have a skewed perspective because I already learned most of the skills I exercised as a first employee by being an early member of a team at an established small company, but I think even so the point stands; I was able to grow similarly with a bit more pay and a lot more stability without being at a startup. You're right about meeting investors though, but I'd argue that having a network of investors is not (or at least should not be) a requirement to be a software professional.

The more interesting skills someone learns when implementing Heroku is when they learn it doesn't scale and the challenges in migrating off of it.

haha! sadly true. I really wish they had the equivalent of aurora serverless.

Even if they did whichever startups that end up using it would have to get a few more funding rounds :)

You mean heroku because of the excessive cost of over-provisioning their db plans to support traffic spikes with new products?

Yes indeed. Have worked with several clients and chatted with several startups that ultimately decide to migrate off due to extremely high cost as they grow relative to other platforms.

I'm curious what language and data stack they're using? Asking because I've seen real scale (billions of devices running our software) and the real leverage is in how you architect your application (software and how the data is stored, retrieved, moves around) and things like choice of language. Not where it's hosted.

Languages like Python and Ruby are just grossly inefficient. Single-threaded, huge memory profiles, and fully synchronous I/O. Whereas in C#, Tasks and async/await probably provide no shit 10-100x the performance in both compute and concurrency. It would probably be the same deal with Go or Java.

The point is, we tend to hand-wave these kind of choices away on HN. "Just ship it, language doesn't matter". But increasingly, I think it does. You want to make a product with an aggressive free tier, where only like 1% of the user base pays, or some data-heavy analytics thing, these kinds of decisions can be make or break for a business.

This isn't just one startup, these are multiple startups I have talked to that all end up deciding to move off the platform due to cost. Solid containers orchestration platforms like Kubernetes are slowly reducing the need to have one specific cloud platform, but cost control is still extremely relevant with architecture design choices.

As far as language is concerned, Ruby and Ruby on Rails is the usual choice with Heroku and is marketed specifically towards RoR devs (https://www.heroku.com/ruby) and Postgres as db. Most startups who decide to go the RoR route are not going to decide to go with C# as far as the Microsoft ecosystem is concerned, which would be a different set of architecture design choices. If you wanted to market a more performant alternative Go would 100 percent be the way to do it.

I would still somewhat disagree with your conclusion that language choice is imperative though, so much as how well you architect your application and infrastructure. A simple RoR app that pulls in a bunch of static assets from an S3 bucket is going to scale at whatever load compared to an ETL tool like Airflow that might need to process terabytes of data on a daily basis and has to have more planning from the start.

I feel you both have fantastic insights in this. Thanks for the discussion.

My take is it’s great to use ec2 pricing, likely with beanstalk, and aurora or perhaps aurora serverless for sql. There’s room for moving fast with rails. Then as things grow, splitting off a microservice with the same url via your proxy server which uses go and redis. This way you are not over optimizing one data model before you know exactly what its schema is.

Yep, this is largely consistent with my experience.

But you could arguably get the same result working for a larger company, getting paid market rate for a 9-to-5, and putting in a few more hours at home working on open source or managing a solo side project from scratch.

You might even end up with a side project that earns you passive income in the end if you're lucky, but you had to be lucky to get a "break-even" payout from startup-life anyways as you have said.

I don't agree that an open source project an stand in for the specific type of experience you can get working at a startup.

Source: while taking a stint in engineering project/product management, I was a core developer on a popular open source project for 5 years.

Re: Not everything is about money.

Blasphemy! :-)

experience earned IS a financial investment because it increases your future earning power.

whether the increase in the expected present value of your future earnings justifies the present-day lower salary is a question of magnitudes and probabilities

I totally agree. The money was bad really really bad and so was dealing with the some of the owners.

But what I learnt in full stack development even though it was just C# and SQL help a lot!

What's the Big 4 in this context? Generally that term applies to accounting firms (PWC, E&Y etc.)

Google, Amazon, Facebook, or Apple.


ibm, microsoft, dell, hp

That used to be The Big 8 and people knew of them as The Big 8, even me. I think that The Big 4 is used now with a tinge of irony.

  Arthur Andersen.
  Coopers and Lybrand.
  Deloitte Haskins and Sells.
  Ernst and Whinney.
  Peat Marwick Mitchell.
  Price Waterhouse.
  Touche Ross.
  Arthur Young.

Apple, Amazon, Facebook, Google.

Usually FAANG pre-Netflix

faag ?

Could you please stop posting unsubstantive comments to Hacker News? We're trying for something better than that here.


And what about life-work balance?

Because not everything is about work.

One thing that gets glossed over a lot with startups is that often times the technical skill level is really low. If you are a young engineer and you are hoping to learn technical skills, be very very careful about which startup you join because you might end up at one where nobody actually has any idea what they are doing. And if you yourself are in the learning phase of your career, you might not have the experience to figure out if the startup's technical situation is great or terrible.

At least one very important benefit of joining a big, reputable company is that the technical skill level will be good, the career coaching will be good and they probably will even have some sort of education pipeline set up for younger engineers to learn.

I always shudder when thinking about all of the new-grads who are seduced to join startups and then spend years learning terrible habits and churning out crap and get spit out no better than they began. At minimum if you spent a couple years at a larger, reputable company you'll always have a benchmark to compare with other opportunities.

I absolutely second this perspective. I started out working at a very large semiconductor company and put in my time there for about 3 years before testing the waters at ever-smaller shops. We even called it the 'systems engineering bootcamp'.

I feel the major advantages of working in a large corporate environment are that you will develop an inclination towards professionalism (e.g. how to write excellent emails and communicate with others) as well as a solid foundation in traditional tools and practices (e.g. SQL, manual release planning & execution, coordination of large-scale efforts, etc). By having these 'traditional' perspectives, I feel you can much more accurately and definitively identify & mitigate hazardous work efforts, as well as see certain types of risks in new technologies that others might not be aware of.

I strongly feel that if I had started in a much smaller company and stayed there for too long, I would be much worse off than I am today. The big companies sound un-cool (and they may be in some cases), but they almost seem essential for rounding-out your perspective as a developer/engineer/manager/etc.

Also, I occasionally miss the feeling of being part of a huge team, so I am entirely open to the idea of returning to a large corporation at some point in the future.

> At least one very important benefit of joining a big, reputable company is that the technical skill level will be good

I don't believe this is a universal truth, especially since your experience at a large company is largely dictated by the specific team you work on. I've definitely worked for small startups that were far more talented than some of the technical teams I've worked on at big companies.

Well nothing is a universal truth, but I think my point is generally accurate.

IMO a bad team at a good company is way way better than a "good" team at a bad startup where nobody knows what they are doing. At the very least the company will have lots of resources outside of your team to learn from (company-wide infrastructure and processes, tech talks, etc).

I also am not saying all startups are bad, and in fact I know that many startups are full of very talented people who are certainly more talented than the average person at a big company. And it is possible, and maybe even likely, that a good team at a good startup is better learning environment than a good team at a big company.

But I think the median team at a big company has a pretty good technical level, and the median team at a small startup (for example one that is just graduating from YC) is fairly bad. If you are young engineer who doesn't know any better, you are much much safer taking a job at a big company if learning about good engineering is your chief priority.

I agree with you with most things, but bad team is bad team everywhere, and it can ruin your life and career.

It's important to recognize it and switch teams inside the company after 1-2 years if it's needed.

The friction for finding a new job in a big company is often lower then quitting your startup. If you're not growing the way you want to, transfer internally.

You don't lose your unvested equity, you don't have to spend 6 months re-onboarding (3 would be sufficient), you can have a much better idea of what the working environment in your new team is going to be, then going across the street to a competitor.

Maybe a different way to think about it is not that the skill level of the team is low (because people aren't talented), but that at start-ups, you tend to have smaller teams or a lot more work is distributed across a fewer number of people. So if you are a young engineer, you might not have access to a good mentor at a small start-up. More onus will be on you to develop skills and learn things by researching and ingesting material outside.

At larger companies, they can attract skilled talent with bigger salaries and they will most likely employ more people on teams. While you might not necessarily work directly with someone who can mentor you, there is more likely to be someone in adjacent teams or in other departments who you could reach out to and learn from.

> So if you are a young engineer, you might not have access to a good mentor at a small start-up. More onus will be on you to develop skills and learn things by researching and ingesting material outside.

Necessity is the mother of invention. For the right kind of person, the quickest way to learn might just be because something that needs to be done yesterday requires a specific skill or a piece of knowledge. There’s nothing quite as motivating as “the business is on fire and you can personally fix it, but you need to learn how right now”.

I agree, but anecdotally I believe there is a correlation between salaries and talent level. Larger companies have the budget to buy talent, startups need to entice them with equity and interesting work. But overall, I've noticed it's hard for startups to compete with the money the FANGs throw around.

This views education as something you get from your peers and/or from your employer. It's true, but incomplete. You also get education from challenges you face. In a startup, you'll be often challenged out of your comfort zone. This will force you to learn. If not from your peers, of which there may be none able to teach you, then from other sources. On the other side, in a big company, you'll be much more limited in your scope of action. You'll get very very good at tightening that specific model of screw.

It is a balance between models of learning, the best position is, as ever, in the middle.

> And if you yourself are in the learning phase of your career

Also bit of unsolicited advice, never think you are out of the learning phase of your career. There are few things more frustrating than an engineer who has been working for 5 years, think they no longer have to learn, and refuse the entire team's attempts to move them from a bad idea.

> At least one very important benefit of joining a big, reputable company is that the technical skill level will be good, the career coaching will be good and they probably will even have some sort of education pipeline set up for younger engineers to learn.

This hasn't been my experience, at all. The worst code I have work on has been at the biggest, most prestigious tech company that has employed me.

And the best learning environment was at a startup that could only afford bootcamp grads.

One other issue is that even at a startup that did this right, you're still in danger of learning from a smaller set of individuals. It can lend itself to group-think / inbreeding.

I'm not sure that startup vs. big company is useful anymore, if it ever has been. You can be in a team in a big company that is an awful place for learning, for example.

Agreed. And from the other perspective, as a senior engineer at a formerly-small startup, I never had the time to properly mentor any of the new grads we hired, and I feel bad that their initial career development probably suffered because of that.

> learning phase of your career

That should be your entire career. The statement also strikes me as quite self-aggrandising.

Why so? Earlier on in your career, you are learning more than you're contributing and later on, you're teaching/mentoring/leading/managing more and learning less.

Honest question: Why does every blog post that talks about working with a startup, always pick Facebook and Google for the comparison?

Both these companies are extreme outliers (probably in the history of business!). Their outsized pay comes from their outsized profits, which comes from selling your data. I find it very ironic, that these very same people who diss startups love dissing Google and FB as being evil, but somehow when it comes salary packages they're viewed as holy institutions.

Google and FB hire very selectively, and even if you're truly qualified they may not actually have a position open for you. And most critically 99+% of engineers (including the ones in HN) probably won't make the cut for whatever reason.

Why not compare with traditional megacorps (of which there are literally (fortune) 500s of them (every company is a tech company now ;) ) like IBM, Oracle, SAP, etc? This group is far more representative of where most engineers would actually end up and hence a better comparison against startups.

Then you'd realize that startup packages don't seem that bad - or rather you're making a tradeoff between not having to deal with corporate bullshit or an extra 30K in stock grants.

Also on another note - startups are a wide spectrum (more so than megacorps). You have 3-5 person starting up startups to series D unicorn startups. Broad sweeping blanket statements comparing startups as if they're a single entity don't help too much.

Those places (IBM, Oracle, etc.) also tend to pay much better than startups, have better equity packages, and more room to learn things. Just look at angel.co. It's common to see everything from "no salary" to "$90k", plus equity, in the listings for Bay Area startups. It's much more rare to see salaries above about $150k. These days working for a startup doesn't make any sense at all, for any reason, unless you're literally a founder (with double-digit equity).

^Thanks for the comments. As I said there is a spectrum of startups. You have to make your own judgement - especially if you're joining 3-5 person startups without any funding. But that said the median Valley-based Series A/B/C startup would probably offer a competitive package or atleast they'll be upfront about it and not waste your time. On a side note - any tom, dick and harry can create a angel.co profile. I would discount 90% of them there. Basic due diligence - crunchable, SEC filings (on funding), any press articles, digging into founders' linkedin profiles should help you separate the wheat from the chaff.

Even "B tier" tech companies such as finance firms, travel firms (booking.com, expedia) pay significantly better. Their stock is also worth something and will continue to be worth something.

Facebook and Google are so big they pretty much set the standard for what people talk about. You might prefer to say, I dunno, AirBnB, but that detracts from the point people are trying to make, which is that a bigger de-risked company is better on financial terms.

Isn't Airbnb still technically considered a startup (albeit a profitable one as of 2016)?

I've worked everywhere from small startups, to big FAANG companies and big enterprise companies. I am in the very same opinion as op.

1. Financially the exits weren't worth it. The amount you actually learn is incredibly questionable.

2. Working at bigger companies I learned a hell of a lot more, from the mere fact that there are a bigger pool of resources with a lot of experience to go get help from. This is just not technology, but even from improving management and soft skills. You'll learn a hell of a lot more on your career path moving up to Director and VP level from a big company than the equivalent title at a startup.

3. Everything else is really dependent on you as an individual. I personally thrived at a big company. As the writer suggested at a startup its all about shipping and things are pretty much laid out for you. At a big company, it really gives you time to take advantage of resources and people .. you just have to be very aggressive and pro active in your pursuits.

Just adding to your point: in all of the start-ups I worked for, the main selling points were (a) more responsibility sooner and (b) chance to drive decision-making about tech stack and/or work with the best tools (new or old) without red tape.

I’ve never seen (or heard of) any start-up actually fulfill these selling points any better than medium-to-large companies.

More responsibility sooner typically just translates into the usual crap about “wearing many hats” — which is to say your “responsibility” means doing whatever whimsical thing that other people say you have to do, with no regard for your career goals.

In start-ups, I’ve only ever witnessed people getting less autonomy and much less freedom to learn. At the same time, the earliest engineers might have made very poor commitments to certain extreme philosophies about programming and engineers who come later have to clean up these messes while experiencing a lot of dogma from the early stage people.

I’ve personally seen this happen several times with ex-Google employees who join as the earliest engineers and insist on setting up copies of what they recall from Google, mostly insisting on a monorepo regardless of any use case details, insisting on using Bazel or a similar homebrewed build file system, insisting on the same style of canary deployments.

You have to be really careful to avoid these places unless you’re perfectly happy to be a cog implementing these patterns based on someone else’s authority-from-big-company-X. You might even have a super senior job title, yet still just be shuffling code according to someone else’s dogma, while being told the company doesn’t want “dogmatic” engineers.

All this is just to say: be careful. Taking a start-up job because you think you’ll get more responsibility or be given autonomy or discretion in project architecture or tooling decisions is often a big mistake.

By this point, I believe candidates simply need to reject start-up jobs categorically.

Unless the job is paying full market total compensation (excluding non-liquid equity), top of the line benefits, and provides full transparency, just say no. Investors looking to back start-ups simply have to accept that the up-front costs from day one include ensuring employees earn fair market compensation exclusive of the risks associated with start-up equity. That’s just table stakes of hiring a team, period. It does not matter what optimistic outcomes you’d like for candidates to believe about you in exchange for dramatically less compensation.

> Just adding to your point: in all of the start-ups I worked for, the main selling points were (a) more responsibility sooner and (b) chance to drive decision-making about tech stack and/or work with the best tools (new or old) without red tape.

> I’ve never seen (or heard of) any start-up actually fulfill these selling points any better than medium-to-large companies.

I've had that work out for me. But that was also specifically what I was hired for. Definitely, you have to look before you leap.

> I’ve personally seen this happen several times with ex-Google employees who join as the earliest engineers and insist on setting up copies of what they recall from Google, mostly insisting on a monorepo regardless of any use case details, insisting on using Bazel or a similar homebrewed build file system, insisting on the same style of canary deployments.

I'd be interested to hear more details of what winds up going wrong with these practices in a startup environment?

Many things go wrong. Monorepos + bazel is an approach that’s well-suited for some use cases but poorly suited for other use cases. The problems usually happen when some early engineer “knows it all” because they saw these tools in action in a different use case (such as inside Google) and incorrectly assert they will be good solutions in some other use case (e.g. a start-up with very different reality than Google).

If the company is healthy, there will be a give and take, people will acknowledge that e.g. monorepos are not universally always a good or workable choice, and compromises or trade-offs will be analyzed in earnest.

If the company is not healthy, which happens often in start-ups that are forced to adopt a monoculture or extreme philosophy of the founder or early engineers (and enforcing dogma may even be a main reason why those people left other jobs to be early employees in a start-up), then usually by some argument from authority or poorly conducted confirmation bias blog post competition, the dogmatic choices about monorepos or bazel tooling (just as common examples I’ve seem turn out poorly) will just be mandated and all intellectual integrity about it will be shut down.

That was an incredible response. Thank you so much for sharing your advice!

This is knitpicky, because OP's point may still stand, but as a founder, this is what comes to mind after reading this: When I hear "work for a startup", I don't assume that means "be the 10th engineer at a company". You might make some money at that point, but you're not going to get financial independence unless there's a billion dollar IPO.

By BigCo standards, 10 engineers is a tiny startup. By venture/founder standards, I think 10 engineers is when you've already made it past the riskiest parts. You probably already have significant revenue traction, or you're past a Series A. You should be able to pay market, and equity is about alignment not risk compensation.

I think you can still get rich at a startup, but you need to take actual risk to be compensated for it. Join a 5 person company. Be the second or third engineer, and be able to become the CTO if the two technical people ahead of you leave.

Okay, and as someone who has hitherto largely worked at startups (2/3rd of my career), let me tell you the counterpoint.

There is not a lot of risk from your perspective, but there is a large amount of risk for us.

At a startup, you push all you can towards steering the ship in the right technical direction. For example, unlike at a BigCo, you are likely to be that person who will write the technical debt that later-joining younger engineers will call you stupid for, but you did it while producting your startup to scale.

But you only get the pay-out if you actually manage to last until the exit. If you leave before then, because of politics or some failed product push or what-have-you, then you will have to exercise your options, which puts you in a bind in terms of financial risk. If you do exercise, you will be subject to dilution. If you'd stayed at the company, it's often the case that they continue to grant options to employees they want to keep.

So to "make it," you effectively have to grow into a BigCo employee anyway. At that point, what is really the point to working at a startup? Especially since your pay will be like half that of a BigCo? Especially since it's A LOT more stressful? Especially since you actually need your critical thinking skills to compensate for your founding team's shortcomings?

Now at a BigCo, you drink the kool-aid, you jump through the hoops (working at BigCo is more about jumping through hoops because that's how they "scale" things), but if you do all that, you're more or less set. You may have to "work" hard, but your life is on autopilot.

I've had this conversation with lots of folks who've been there, and I myself have helped build one company from the pre-10 engineers phase (more like 3 engineers phase) to something that had a real shot. To be quite frank, the financial incentives are certainly not there, and for most companies I see, I'm no longer sure about the growth/learning incentives either. It's just a bad deal, and you should care because by and large, the smart engineers who can make your boat float aren't going to work for a startup.

> But you only get the pay-out if you actually manage to last until the exit. If you leave before then, because of politics or some failed product push or what-have-you, then you will have to exercise your options, which puts you in a bind in terms of financial risk.

Employee #1 of a startup that sold for 9 figures chiming in. I loved the people I worked with (until we got to around 70+ and bureaucracy/meetings grew), the company had an amazing life/work balance (it was one of their core principles and it was real), I learned a bunch of things (a lot of dead knowledge now though), and it seemed like my best shot for $$ because I knew the product was good. It took a decade to sell. Around year 7 the company started changing and I grew to like working there less, but the possibility of the payout was still my best bet for a pile of cash. It was then that I really felt the golden handcuffs and grew anxious. I couldn't leave and keep my options because of the exercise tax. We finally sold and the amount I got was so embarrassing that they offered me a second pot of cash that was more reasonable, but still a far cry from what the founders got.

I probably could have made the amount over 10 years working for one of the bigs. I will never put on golden handcuffs again.

Not sure how to reconcile the fact that a) you had golden handcuffs because of the exercise tax and b) the amount u got was embarrassingly low. Was your strike price too large or something? Obviously you made a lot of money if you couldn't afford the taxes up front.

Typically exercising options gets taxed as regular income on the difference between option strike price & fair market value.

If OP had something like $300k of options, that'd be about a $100k tax bill assuming the strike price was appropriately low. Not a very big payout on a 9-figure exit, but also not pocket change for the taxes.

Well, if the "9 figure" was 100M, then 300k seems fair, since after 10 years of fundraisings and even minor dilutions, it's very easy and expected to go from 1% to 0.3%.

On the other hand, if the amount was 500M, 300k seems very low, hinting to a final ownership of ~0.06%. If that was true, even after considering all dilutions, that makes me think that OP didn't negotiate a fair equity package to begin with, since as employee #1 you should definitely have at least 1%.

I would love to understand how employee #1 got an "embarrassingly" low amount from a 9 figure sale, especially when you say that the exercise tax would have been high. What was the issue? I can think of:

1) Massive dilution or liquidation preferences?

2) Failure to negotiate significant equity at the beginning of the company?

3) Something else?

> So to "make it," you effectively have to grow into a BigCo employee anyway.

Currently at a startup that is angling for IPO and it got very corporate in a hurry. I'm finding it fascinating to experience, but it has more in common with a BigCo now without as much of the upside.

I think that's the other thing that happens, the transitioning to normal corporate practices ends up being a culture shift that ends up breaking a lot of people's interest in an organization. There is a reason why some of the bureaucracy exists at BigCo and people have to experience that in a culture that may be hostile to it. It also in those early stages doesn't have the years or decades of practical application of BigCo processes that have been figured out and tailored specifically to a company in question and there's just teething problems all over that make the whole effort more frustrating as these new business processes get figured out.

So I wrote a longer post about founder risk, but I realized maybe I misunderstood what you meant by this:

>There is not a lot of risk from your perspective

You mean, from my perspective, it sounds like I don't think early employees take on a lot of risk? I wanna be clear: Options are risky. Working at a startup for options is much riskier than taking cash. I hope it doesn't sound like i'm denying that.

If you're making market salary, and you're getting equity on top, then maybe its not so risky. But if you're taking a pay cut for equity in any form, you are absolutely taking a financial risk.

> So to "make it," you effectively have to grow into a BigCo employee anyway.

This is an excellent point. I know quite a few people who joined my company before I did (~50 people when I joined), stayed for a couple years, but didn't have the temperament to grow into the process, politics, and red tape that inevitably started accumulating, and left. Some of them didn't have the resources (or foresight) at the time to exercise their options, and got nothing, even though they put in a couple years when it was very risky to work there. I did stick around for the long haul, and it's paid out very well, but it still makes me a little sad to think of some of the earlier contributors who laid the foundation, but IMO weren't compensated enough for it.

Agreed. I'd also add that there is frankly risk to your resume by working on a failed product that no one has heard of. (Or perhaps it's even worse if it's a failure that people HAVE heard of!) Working at a BigCo at least gives some weight to your resume.

"You may have to "work" hard, but your life is on autopilot."

Mmm... I get what you're saying, and I don't think you're necessarily advising auto-pilot, but I want to put a word out against career autopilot, even in BigCo.

You want to put some thought into your career. I've always got my metaphorical finger in the wind to figure out whether or not I'm working in a part of the company that is rising or falling and taking appropriate steps. Sometimes it's figuring out how to make something falling become something rising by improving alignment, sometimes it's working toward shifting assignments, sometimes it's by shifting companies. Depends on a crap ton of things. Honestly it's just been maybe three or four explicitly-made choices I've made over the past 10-15 years, but it's made a lot of difference with where I am now vs. where I'd be if I just went on autopilot too much. (I know some similar people who did just kinda go on autopilot, and can compare with their results.)

My meta-advice is just to look around and think about where you are and where you are going, though. Even when a company genuinely cares and works with you to develop your career, there's still an irreducible element that is your responsibility.

The problem with this thinking is that you’re assuming that the founders are taking all the risk. They’re not.

Series As implode all the time, as do Bs. In the end the equity is worth nothing. If you’re lucky, you might walk away with it being almost a wash compared to taking a job at an established public company.

I think of the startup I was recently pitched. Two non-technical founders said they raised some money, and now needed to hire people to actually do the actual thing they promised they could do. These founders, brought nothing to the table beyond an idea, and not even an original idea, since I actually know three different startups already in that exact space that have an actual product and customers.

I laughed at him. Why should anyone join him? I’m taking as much risk as him, providing more value, and then get a tiny fraction of the equity? It’s basically a scam, because they’re not providing anything of value, and yet they’re the only ones that are going to walk away with anything after the inevitable aquihire.

> “equity is about alignment, not risk compensation”

This seems like moving the goalposts to me, I have always heard the opposite: that the tradeoff of working at a startup for a reduced salary is supposed to be that you get equity to compensate. If the equity share is tiny by the time you get to engineer #10, fine, but engineer #10 should get near-market salary to compensate. Otherwise there’s no reason not to go work for BigCorp if you don’t buy the starry-eyed promises about innovation and unique experience.

> "You should be able to pay market, and equity is about alignment not risk compensation."

I think the parent didn't see those as connected in my post. To clarify, in my OP, I meant it how you read it: After a Series A, you should be pretty close to market salary, and as a result, equity is about alignment not risk.

> I think you can still get rich at a startup, but you need to take actual risk to be compensated for it.

Joining any startup is risky. Most startups fail for reasons beyond the employees control. If employee #10's compensation is less than an established company, and requires an exit event that is unlikely to happen, then it's just not worth it.

You just can't say "real risk" to gloss over the fact that startup compensation doesn't justify the risk.

> knitpicky

this one writes itself

Whooops, thanks!


I was employee 40, and approximately 15th engineer of a YC startup where the founders made roughly $50M each, and I made just under $80,000. During this time, had I gone to work at a FANG, I would have probably made a few million dollars just from being a senior software engineer.

I have another friend who has been at 3 startups during this time and deeply regrets leaving his FANG job because he also missed out on millions.

I think the way things are structured, you have to negotiate hard with startups otherwise it's better to stay in FANG. It didn't used to pay this well to be at a big company but the industry has changed. Not sure if things will work its way back, but having a TC of 400k+ as a senior engineer at a tech company is easily achievable these days, so the startups need to give bigger comp packages.

This is 100% accurate and not how things were even 10 years ago. The market today is basically bi-modal. When I first started out in startups (2008) that didn't seem to be the case. The result is obviously worse for you financially if you join the startup, but it has also weakened the teams at startups. Many top engineers are just staying at the big public tech companies. Meanwhile large startups that would have IPOed years ago stay private in the current funding environment, dragging out the lockdown period for engineers. It just doesn't make sense to work at a startup like it used to.

I truly don't think most people that argue to work for a startup have internalized the compensation at the big tech companies. $400k+ really is total comp for senior engineers. Not $200k + some lottery tickets for later, it's $400k on your W2 each year, with some of that fluctuating based on stock price and delivered in quarterly increments.

> I truly don't think most people that argue to work for a startup have internalized the compensation at the big tech companies.

Completely agree. For instance I don't think anyone who throws around the term "market rate salary" has updated their definition of it to include these dramatically higher numbers.

Not to mention, housing costs in the bay area have followed (or been driven by, depending on your perspective) these rising big co salaries. Meaning that startup salaries not only haven't kept up, they may have even gone down in terms of how much money you take home after paying for housing.


This is approximately less than my annual stock grant will be this year at Google, just as a point of comparison. I'm not yet a "Senior" Engineer, just a mid level one.

I was employee 40, and approximately 15th engineer of a YC startup where the founders made roughly $50M each, and I made just under $80,000.

Wow. Employee 40 is still an early employee, but apparently not when it comes to equity.

After the first 10 employees or so, you're looking at nickle and dime stock option allocations (0.05%, 0.10%...) Factor in dilution, liquidation preferences, etc. and you're looking at a nice down payment at a house... if you're lucky enough to have a successful exit. That's a very big if.

I thought Sam Altman said that he thought that startups should be giving more equity to employees.

Working for a startup absolutely makes sense.

The unstated assumption here is that you have a pile of offers from Amazon, Google, Microsoft, etc along with some from startups and you have to make a decision about which to go with.

I suppose my experience might be unusual, but I don't think that's typical. You've got an offer on the table, and your choice is to go with it, or reject it and hope you're given an offer by some other company.

I've seen it go both ways. Maybe the next week you do see the better offer. Or maybe 3 months later and a few dozen rejections later you've got nothing to show for it.

So you take what you're given.

Likewise, there's nothing preventing you from taking an offer at a startup, continuing to interview and taking a job at a big company whenever, even if it's only 2 or 3 months later.

I mean, try not to make a habit of it, and give the first place a chance to fully match the salary/RSU's.

But I've seen it happen before, and while the first startup won't be happy with you, it's not going to have any long-term consequences. Just don't bother even putting them on your resume.

I've also seen companies do the same -- hire someone in the spring of their senior year to start in the fall, and then rescind the offer late summer because some internal financial projection didn't pan out. (And even have the guts to ask for a signing bonus back. "Sorry, already spent it.")

Good advice. Always Be Interviewing. The business is going to be constantly interviewing new talent, you do a disservice to yourself to not be doing the same of other companies.

Completely missing are stable mid-size companies. They can be great! Lots of flexibility to do your own thing, with less corporate politics.

Unfortunately, market forces seem to be driving them out of the economy. Companies have to grow insanely big to justify their investments. And consumers increasingly don't want to shop at a 3rd or 4th player in a market.

I look at it another way - there are plenty of startups (series A, B) that pay fair industry wages along with equity. If the exit is worth nothing - no huge loss, I made what I should have. If there is a good/great exit - awesome, I pocket 1-10 years worth of salary on top of a fair salary.

Could I make more with salary+rsu at a FAANG? possibly, maybe even probably - but then I would have to work at a FAANG

I would never work at a FAANG, but there are plenty of post-IPO tech companies out there that pay near-comparable levels when you look at salary and equity comp combined. And in many cases the mix will be more like 30-40% salary, 60-70% RSUs, which reliably show up ready to sell every quarter.

At a startup, even if you're making a market-rate salary, you're giving up the equity, or, at best, hoping that the equity will be liquid and worth something in 5-10 years. If it's not, you're looking at a huge pay cut (over 50%, often), and even if it is, equity payouts post-IPO or post-acquisition are often less than what you'd get at a non-startup, when you average it out over the years you had to wait to sell it.

Effectively, you're saying you'll take a 50% paycut (including RSUs) to avoid working at a FAANG? Most people wouldn't do that.

But it isn't a paycut - at best I am declining to look for a pay increase. And that is ok. I think plenty of people would do it - at a certain point we make more than enough to fund our interests and lifestyle.

I am always happy to make more, but I don't _need_ to, so my decision matrix on where to work extends beyond the question of dollars into consideration of people, mission, industry, possibility of making an individual impact, openess to remote work (I will not be going back to an office, at least while my kids are young) etc.

Fair industry wages INCLUDE the RSU's / Bonuses at larger companies... and is often more then your base salary. You can't say that it is a fair salary PLUS equity unless the fair salary is comparable to BigCo Total Comp.

> In my experience, the deadline-driven culture crushes any scope for creativity and experimentation.

This is true anywhere. It's amplified in a startup because you can't switch teams or move around to get on an innovation driven team, it will also have a much bigger affect. If you only focus on deadlines, developers (by necessity) start taking short cuts and laying code that pushes boundaries less. If they get punished for taking a risk, then they won't take a risk.

Taking smart risks are the bread and butter of innovation. I've seen what it means to be punished for taking risks and it changes the entire atmosphere and dampens innovation.

I think it is in the nature of risk that you get punished if you end up on the losing side of it, no?

That's a cultural thing. Losing a risk doesn't require punishment, unless you consider not getting the reward a punishment. You can just reward winners and otherwise not punish the others.

The comp packages at big tech companies are becoming insane.

In Seattle it's not unreasonable for a senior software engineer with some good connections to be making 200-250k.

With that comes life insurance, health insurance for your whole family, disability insurance, etc.

That's more in cash AND benefits than a doctor.

A senior engineer at a BigCo in Seattle with good connections should be making 300-500k (mix of cash and RSUs).

The companies themselves print money.

The owners of these companies are the wealthiest people in the world.

I think the question needs to be asked: will this last for the next 25-30 years? I really hope so, but unlike being a doctor, it's a lot more uncertain than we'd like it to be.

Unless there are extreme breakthroughs in making software engineering approachable for currently not quite as qualified people, I don't see it changing. Breaking the social stigma of "nah that is extremely complicated, I can't learn that" would also be a big one.


There are a lot of new software engineers popping up all the time, but very few ever reach a "senior" change, and a lot of them end up producing unmaintainable systems at companies, that sooner or later crumble. All at the same time, demand for good software engineers is growing and growing.

There are also an interesting effect I'm starting to see more often (in Berlin), that due to combination of high salaries and moderate living costs, which make saving up money possible, qualified engineers are (partially) leaving the workforce quite early, either by dropping to part-time or retiring early. This then further lowers the available supply, making salaries even higher, and it even easier to save up money. More of a hunch than a big observable effect right now, but I'm very interested in seeing how that plays out over the coming years.

> There are a lot of new software engineers popping up all the time, but very few ever reach a "senior" change

And yet many of them still get the 'senior' title and role, and still end up producing unmaintainable systems. I've had to clean up after quite a few.

Yep. I think this might even be a symptom of the shortage of engineers. A "senior" title might often be the only way for the CTO (or equivalent) to justify what is perceived by the rest of the company as high salaries.

Does it need to? If you're making $250k a year (which honestly I think is lowballing; source: personal experience) and still have compensation growth, you shouldn't need to work another 25-30 years before retiring, as long as you don't feel the need to live a lavish lifestyle and are fine retiring in an area that doesn't have a high cost of living.

If you're in your mid 30s now, and are already making $300k+ (very doable if you're skilled and work for an established company), I don't see why you couldn't retire by the time you're 50 with $2M+ in the bank. Even if you choose not to retire fully, even taking jobs that drastically cut your income to under $100k a year should net you a very comfortable retirement with a nice buffer. Just don't buy a house in San Francisco.

Git while the gittins good.

So long as there are things that can be done with software that are more profitable then what it costs to hire an engineer there will continue to be upward pressure on engineer salaries. Anecdotally, there are SO MANY things that could be done better with software and the potential upside on those things is SO HIGH, I don't think we are anywhere near that breaking point.

Thanks for some reasonable(?) numbers. I too often see people here and other places positing that mid-level developers easily net $500k a few years out of college. I've no doubt that some at FAANG companies make that, but those seem very much at the high end.

"Total comp" vs "total cost" are different numbers as well - stock, 401k, etc all can add to the final numbers too, but $200-$250k seems a lot more in line with the top end numbers I'm familiar with.

I've been told I'm pretty close to top of market in Austin at ~225

That's a great negotiation strategy for a company that doesn't want to pay more. That isn't top of market in Austin.

Okay, but to be fair I said "close to" and the person that told me that was not offering me a job.

it's also going to depend on how you define "market". At some point at high salaries you're looking at pretty narrow/specialized skills, and 'the market' may only be a handful of qualified people in a given geography.

>That's more in cash AND benefits than a doctor.

Does the company make wildly more money than a doctor's practice?

For my dad, a psychiatrist, running a private practice netted him around $400,000 yearly.

Psychiatry scales "poorly", being "merely" linear in input. I scare quote those words because they're only poor by software standards.

That's why software companies make the big bucks; they're just about the only businesses around that can reliably scale superlinearly in inputs. People who can help you scale superlinearly in inputs are pretty darned valuable.

Don't doctors in the US have massive malpractice insurance to pay? I heard it was 6 figures. Got family who are docs there.

> Don't doctors in the US have massive malpractice insurance to pay?

Depends a lot on specialty, but apparently within some specialties there's almost a 10× range of annual costs.

> I heard it was 6 figures.

For the highest cost specialty (OB/GYN), near or into the six figures range is right by the first source I find, and surgery specialities seem potentially to be in that range. Others much lower, down as low as four figures.


Doctors make significantly more than that. Double that at minimum for a successful doctor.

Physician income varies widely based on specialty. Family medicine can be paying in the $200K's while a skilled surgeon with their own practice can be $1M+.

Certainly a fair point.

> That's more in cash AND benefits than a doctor.

No it isn't. You're comparing top-of-the-line tech comp to Joe Random Doctor. Surgeons make thousands of dollars per surgery. Busy surgeons do 5+ each day. That's 50-75K/week in a good week.

The thing you have to realize is you don't get to senior by coasting. You have to have a great education and then work at least 5-10 years. Doctor pay is higher because they have to go to medical school. So really I think the more relevant comparison is doctor vs. mid-career dev. It's still way lower, though.

I keep hearing they can get to close to double that, too.

The blog post desperately needs "...for some people" appended.

We are all solving for different things.

Some want a shot at changing the world, some want to get rich, some want a job that (mostly) "doesn't come home with them", and many want to trade off between stress+anxiety and income+convenience. Others want to be always learning. Some have families and non-work commitments, others don't.

For example:

>>In my experience, it’s harder to have any visible growth in a

>>startup because well first, what do you grow to? There is no

>>clear hierarchy, no promotion paths.

In startups, there's often a better chance to learn general skills outside of (say) just development (dealing with users, writing content, devops, QA, teamwork, etc.) for those that have initiative.

Larger companies can be more structured but may have a chance for a more defined impact, with an existing customer base and market.

Which makes more/less sense? Depends entirely on what YOU care about.

> there's often a better chance to learn general skills outside of (say) just development (dealing with users, writing content, devops, QA, teamwork, etc.)

I think this point of "multiple hats" is true only on paper. I can imagine a founder wearing multiple hats. First few engineers - still likely. But if you are like 30th engineer at a startup, you really are not wearing many hats.

"dealing with users" there are dedicated people in most companies who deal with users/customers. They are either PMs or Customer Success Engineers. Occasionally, you do interact with customers but I wouldn't say it's monumental.

"writing content" Again, there are dedicated technical writers who do that.

same for other roles.

If the company already has specialist people for all the roles, then it has already moved on from the traditional early stage startup where the rewards are higher and learning exponential.

The 'actual conversations' section bugs me, he wrote about having his request to use Kotlin rejected, and even though I'm a coder that loves trying new tech, I think it is usually both a very bad decision and investment to either mix languages just for cool points or rewrite your codebase because there's a new hype language.

The queue problem sounds more sensible, but it could also be a case of over engineering.

Overall I get the impression that the author was thinking on a purely technical level, and that's not something you can afford to do in a startup where budget and time are limited.

This attitude comes through in other posts, too, e.g. [1] where he says "AMAZON DOES NOT EXPERIMENT ... Facebook contributed React; Google gave us TensorFlow, Kubernetes, and lot more ... But Amazon doesn't give a fuck". But at the PRODUCT level, Amazon seems extremely experimental. E.g. they kind of invented the "cloud computing" space.

[1]: https://jatins.gitlab.io/me/amazon-internal-tools/

Looking at any individual employee's outcome from a startup's exit is wildly unproductive because there is so much variance in startup outcomes.

What you really want to know, as an employee, is what the expected value of your shares/options are. As a general rule of thumb, I'd recommend taking the valuation of the company's last financing round and halve it. Then, multiple this valuation by your projected ownership percentage after vesting (and subtract any impact from exercise price).

The biggest reasons you want to discount the company's last private valuation are liquid preference and risk intolerance.

Then, treat it as a high variance investment, which it is. I.e. don't count on the money.

High variance investments are typically supposed to be a minority of your portfolio. Startups force you into investing an outsized amount into them.

That's not even touching on how the actual value and variance is unknown, and how startups prey on what amount to unsophisticated investors (the workers taking equity).

I agree with all your points, especially that many startups 'prey' on employees who don't really understand how startup economics work.

This is why I think it's important to distill general rules of thumb like the one I suggested. This will give employees a realistic perspective when evaluating startup offers.

For example, let's say your typical pre-series A 1st engineer hire gets $150K + 1% vested over 4 years. Instead of thinking about what your shares would be worth in the case of an IPO, just take the last company's valuation, halve it and multiply it by your ownership. So, if your startup's last raise was at $10M, your 1% stake is worth $50K.

If people start thinking in these terms, the level of disappointment will go way down because you start realizing that the expected value of employee equity is almost never that much to begin with.

Halving it for dilution is not actually enough. Remember that the valuation that an investor is paying is what the investment is worth _to them_. Any investment is worth more as part of a well diversified portfolio. As an employee, you lack that diversification. Even worse, the investors get significant protections built into their investment... preferred shares, board seats, dilution protections.

I would be surprised if the true value (if that were possible to calculate) weren't closer to 1/10th the valuation that investors bought in at.

15k at a $200M outcome (ignoring liquidation preferences) means he had 0.0075% assuming 70% dilution from the time he joined to exit. He joined at 0.025%. assuming everyone before him got on average got 5x what he got that's still 1.5% to all the first 15 employees combined. Which is beyond attrocious.

My guess as to what happened here is op got bored with job at big co. Startup offered 10% higher or same salary. Told him he is getting some stock, he didn't bother to find out how much.

What you should get as employee 15 at a startup if your 2+ years of experience (according to ops resume on his website) is at least 0.1% which would have translated to $70k (assuming 70% dilution). In India a big co employee at 2+ years probably makes $40-50k at best including stock. That's close to 1.5 years salary at least at exit having worked for 2 years at the company. Assuming 25% of salary was in stock at big co he lost 20k in stock over 2 years. 70/20 is 3.5x and gives an annual rate of return of 80% which is roughly similar growth to big co. in it's best years.

Moral of story count your stock when joining a startup.

In my career, I've made all my money from working for public companies, and I've gained a lot of experience from both. The experience I got at the big co's was more around how to manage, how to manage up, how to drive big technical project to completion, and also some very niche, specific technologies. At the startups I got very broad technical knowledge, got to build full app stacks on my own, and also got to create and run a hiring process.

Overall I'd say the startup experience was more fun and more valuable, but the experience at the big co's was still worthwhile and more than made up for by the compensation.

However, I wouldn't have given either one up. Having both made me a well rounded engineering and employee.

> That startup sold for 200 million dollars and, as the 10th engineer, I made ... 15000 dollars from that exit.

Why so low?

I worked at a company for roughly five years, that sold for 250M. When I was hired I was like 4th engineer, but by the time I left I had 2nd most seniority in engineering. Exercised my mostly vested options when I left.

I got mid-5 figures. In the year following my departure to BigCo, the difference in my salary was more than what my options ended up being worth.

One of the C-level guys who was there for 8 months when the company sold made 100x what I got. He wasn't a founder. He came on late in the game and basically had nothing invested.

That's why working for a startup hoping to get rich is a sucker's bet. The game is rigged against you unless you're a company officer.

What was your equity grant by %?

They were ISO's, I only knew how many shares I was granted, but by the time of the exit, following several rounds of funding, it ended up being around 0.02%.

This is the context everyone needs to share when telling their story of startup compensation.

It very much looks like you got screwed on equity even before dilution.

An early and somewhat senior employee should be getting anywhere from 0.5% to 1%. If the company is high quality, raised funding on standard terms and is actually successful, you'll still get diluted but not down to 0.02%.

Your comp sounds off by an order of magnitude based on what I can infer.

The fact that you didn't know how many total shares were outstanding at the time you were granted your ISO options is more proof that you likely got screwed.

Not all startups are like this.

It depends on how much cash salary you received. If they pay cash a lot, the equity part is not worth that much.

Yeah, that's 0.0075%.

Versus a ballpark of a 10th engineer getting, say, 0.5%.

Even a few rounds of dilution can't explain a drop of two orders of magnitude.

I'm thinking the author either didn't pay attention or care or trusted too much in the initial offer, didn't stay long enough to vest most of it, didn't buy most of their options in the end, or all of the above?

This number makes complete sense. I was a 'key employee' once upon a time - in a startup that had just raised f&f, and I received a FULL 2% (unheard of for Canada).

Fast forward through the (usual) reality of 6 rounds of dilution, and my 2% was worth less than 0.02%. If the startup went from a $2M valuation to $200M (as it did) then my take would have been $40K.

Do with that what you will.

It sounds like your startup was unfortunately an outlier with respect to the level of dilution experienced. 99% dilution over 6 rounds is far from 'usual reality'. More common is 20% dilution per round.

It was also an outlier, in the sense that it had a valuable exit.

You've only got one lifetime to pull the equity slot machine, hoping that the reels come up all sixes.

6 rounds of 20% dilution will get you to 74% total dilution from the initial grant.

Which in this case nets you >$1M [0] vs the 80k quoted above. This also assumes no retention grants over 6 rounds.

  [0]: 0.02*0.8^6*$200,000,000 = $1,048,576

Something I am always curious about is, was your company / CEO open and honest with you about how your shares were doing? If you worked somewhere for 5 years, it could be easy to think you're safe but meanwhile the CEO is diluting your equity to fractions of what it originally was? Don't they have to report that to employees?

In my experience both as that employee, and sometimes the executive - they're not. There are frequently legal, secrecy, or other corporate reasons for the lack of disclosure. It kinda sucks - but it's understandable.

To be fair, I'm someone who has never chosen shares over base salary. The equity slot machine is fine, but I (firmly) believe that over the long haul, the only thing that matters is index investing. Benjamin Graham is always right.

I appreciate shares - I work either way. They're just not my motivation. If that works for others - great.

Every round of financing, the shares got diluted but the total value of shares should increase. Otherwise, the company is not doing well and taking a down turn.

If the Lyft founders are entering the IPO with about 3.5% each, then I don't think it's crazy for 10th engineers these days to have less than a basis point.

That doesn't tell the whole story. There's a dual class share structure and even with the 7.5%, they retain majority control of the company.

When you're talking about valuing their shares, yes, it does tell the whole story. They cannot transfer their extra voting rights, so if they're ever interested in monetizing their investment, they have to convert to limited voting shares to sell. And all we're talking about here is the monetary payout of working at a startup.

> And all we're talking about here is the monetary payout of working at a startup

Fair, I concede my point based on this premise.

That’s (substantially) more than I have as #5 at a startup. Truth be told I didn’t pay attention to this when joining because at the time they hadn’t yet set up their EMIs and I was told that negotiating for share options is pointless since their expected value is close to zero. So, if I had insisted I could probably have gotten more. But it’s neither unheard-of, nor even particularly rare from what I’ve heard (in the UK).

Dilution isn't all that matters. There's also investor liquidation preferences that can drastically change the outcome.

Liquidation pref for investors with preferred shares.

I am the OP.

I think it was because I was an overseas employee and the founders just didn't shell out equity to people who were not based out of US. I saw the equity distribution sheet that was disclosed after the acquisition as part of legal requirements and that was indeed true.

IMO, equity represents ownership in the company and should not depend on purchase parity.

I think you should've mentioned this in your blog post, especially if you're comparing the money you've made from equity to new college grad salary at Facebook

>I think it was because I was an overseas employee and the founders just didn't shell out equity to people who were not based out of US.

Isn't that illegal ?

Why would it be illegal?

Insanely low. Strangest part of the article.

Potentially it wasn't a successful exit? Dirty term sheet or multiple down rounds and $200m wasn't a successful exit?

He's from India, they probably thought 15k would set him up for life.

I'm guessing a bad options grant.

I worked for a bootstrapped company that had some minimal investment and equity. Company sold for ~$12Mil and I pocketed 80K, on top of a market salary

He's from India, I think it's not as common to get a big equity package as some startups in the US.

I was confused too

Example dialogs in this article are without context. However, the responses that engineer got from founders or other teammates do not sound terrible to me in most contexts.

Most of the time, you shouldn't spend time on new shiny tech, like a new programming language. And you should really try hard to not urge adding more stuff to your stack, like a job queue server.

>> Founder's goals and your goals, as an engineer, will not be aligned most of the times.

This happens a lot and to be honest, I believe most engineers don't get it. Your goals should be aligned with the founders. If this is not the case, you shouldn't be in that startup. You don't do any good to yourself or to your team. Find another job.

The problem is there is very, very little equity given to early employees. I went to one of YC's "work at a startup" events and Sam Altman himself got on stage and called out basically every company there for this very issue (assuming I interpreted him correctly).

I looked into joining several startups as employee #1, both at this event, on AngelList, and by talking to random people who cold emailed me -- and it seems like an offer of 1% equity would be considered generous. I thought that seemed totally crazy and when I asked founders why they didn't offer more, they always said the same thing: "We have one slice for the founders, one slice for the investors, and one slice for every employee we are going to hire going forward, so we can't offer more than 1%."

If you're friends with the founders and they know you have the skills, and they trust you to work hard, you could get something like 5-10% as employee #1. That's really the only sort of deal you should consider. But if you're just some random dude with a decent resume, you're way better off taking a more traditional job at an established company where your compensation is relatively predictable.

Heh. I have had a similar experience with AngelList except the offer was 0.5% and no salary — "it's standard".

That didn't last long.

If the OP liked startups so much I think they should have just tried to be a founder. It doesn't take a lot of math to realize non-founders usually get a pretty bad deal. Unless someone is particularly enamored with startups or can't get a job at a well-paying bigco (which there's no shame in, but let's call a spade a spade) it's pretty clear your 10% chance at realizing <1% of a company's valuation will pay out less money than the guaranteed increase you would make at bigco.

But since bigcos have so greatly outstripped startups in terms of the compensation packages they can offer, that's why I think all but the most technically challenging startups should GTFO of the bay area. Your compensation package probably won't be able to compete so you probably won't end up with very good talent, on average. So just go somewhere in the interior of the country and pay above-market there for engineers who maybe could have got hired by bigcos but wanted to stay in their area.

OP had two years of experience before joining the startup. I'll give them the benefit of the doubt of not knowing things like "doing the math". When you are a relatively new grad working an entry level job at a big Co and what you hear are mostly stories of all your friends of friends who became millionaires being an early employee of Uber/Snap/Twitter/whatever, it's tempting to make the jump.

This is something I'm pondering a lot these days. I am the co-founder of a startup that I'm in the process of winding down. We had some success but ultimately never gained sustainable market traction in a very hard to penetrate market.

Having bootstrapped the company to revenue and kept things very lean and with costs and employee salaries funded initially through personal savings and a little bit of debt, I didn't take a dime of salary for myself in over 3 years.

I always told myself the experience would be incredibly valuable regardless of what ultimately happened, knowing the chances of success were slim but opting to go for it anyway, because how else was real change effected? Yes, I've definitely learned a lot, would do things very differently a second time round and have gotten some experiences (good and bad) that I wouldn't otherwise have had, but I'm finding it hard to see much upside in the past 3 years right now. I see my colleagues doing well in their careers and seemingly every other startup founder I've met, crushing it, although I have also seen a few failures over time.

I've tried to sell what's left of the company but have had little interest. I've applied to jobs in the Bay Area but it's clear hiring managers don't know quite what box to put me in and would rather go with the brand name and "safer" candidates. Yes I'm being a little selective in where I want to work, but it's hard not to stick to your ideals after standing by them for the past 3 years.

Hopefully it'll all be part of a glorious master plan that becomes apparent in decades to come but at this point who knows! It's definitely given me a better appreciation for the risks that entrepreneurs (including early employees) take and a greater respect for those who do go out and grow something that truly makes the world a better place.

Having been one yourself very recently, you must be aware that every founder is "crushing it" right up until the put up that blog post about how it didn't work out, right?

As a former startup and FANG employee, I absolutely agree that working at a startup AS AN EMPLOYEE is not financially beneficial. The only ways to really make money as a non-founder employee at a startup is by being lucky enough to be at a Google/FB/Uber type exit for billions (not millions), or coming in as senior leadership (VP/CxO type role) AFTER the startup has gone through its growing pains, determined product market fit, and is seeing good traction. This is honestly as it should be - as an employee you are taking far less risk than founders (and to be fair, than most investors as well), so you shouldn't expect a massive windfall. As some people have commented, reason the cost benefit is out of whack is mainly due to recently inflated salaries (over the last few years) that came about as the result of FB/Google poaching wars, so this is a relatively recent development, and who knows how long it may last.

Did it ever make sense financially?

The idea that you'd get rich was always a gamble / not likely. I knew some folks who went to startups telling me how great it would be if the company took off, but none of them I felt were capable of predicting how likely that was.

Outside of enjoying a start up like environment and the environment you get from an early stage company / like the people .... I don't see any obvious advantages that were ever true enough to count on.

There's definitely a model for selling MVPs for fifty to a hundred million dollars, especially in AI right now. If you can stay small and take away 5 to 25% of that you win. The best way to approach this is to work at a bigco and then leave to build something they need but for which they lack the will to build themselves.

But the minute you're talking less than 1% equity, unless it's the next Facebook, you belong at the bigco of your choice.

All IMO of course...

Early stage hires at startups have the worst of both worlds: they face the downsides (lower wages, tons of risk, expectation to work long hours) but have muted upsides (small equity grant relative to founders, not even guaranteed to be hired in an acquihire situation). It is arguably even riskier than being a founder.

> It is arguably even riskier than being a founder.

Depends what the founder put in. Founder put in 100k? Or founder put in 12 months of unpaid work to build a MVP? He has a fair bit to lose on a splat.

Engineer #7? I suspect most developers can find a new job in 1-2 weeks, so the only thing "lost" is potential equity.

Why do you suspect that about developers? I've yet to have a hiring process be faster than a month, and that was unusual. The last time I went looking the turnaround time from recruiter pre-screen to an offer was six weeks. My job hunt lasted three months and I ended up not taking any of the middling offers I got. These were mostly series A and B "startups." I've shifted my focus to bigger, FAANG-like companies.

I totally agree with this. I've been in two early stage startups like the OP, both high reputation. The first gained me ~US$12,000 on IPO (I put it towards a Nissan 300ZX Twin Turbo :) and the second, US$0 (ironically having that car was part of why they hired me :). Definitely a loss if one counts emotional wear. I still have dreams about being back at the 1st place and they're not good ones.

I've worked for ten startups. Financially, not a great idea. Like the lottery, a few win big and the vast majority lose. I had one decent exit, which is about par for the course, and really it just brought me up to parity with my BigCo colleagues. I'll make more in four years at a FAANG company than I did in four years even at that one successful startup.

As far as learning, it's also a mixed bag. Sure, you get to learn a lot of different things, but a lot of it is the digital equivalent of cleaning toilets. You might have some influence over which technologies get used, but only a small number will get used company-wide vs. the wide variety that might exist at a larger company. I was still probably able to learn more about storage and networking and HPC and other general areas at some of those startups than now, but it's not clear it was any better for my market value. Even though much of what I'm learning now is totally specific to this employer and should barely even count in any future job search, there's a lot of cargo-culting in this industry so it's likely to make more than impression than even the most innovative startup nobody ever heard of.

There are a lot of reasons to choose working at a startup, but they're mostly about personal preference and fulfillment rather than doing your career or finances any good. In some ways, startups would be a better choice late in someone's career, not early.

I'm not sure I understand what the real dilemma is here of working for a startup. Being employee #15 is not the same as being in the first 5 hired. You don't take the same risks (or even do the same type of work), so there is obviously less reward when it's time to exit.

If you want to get rich, the best way to do it is to start a company yourself - but it sounds like the author didn't want to go that route after trying it. That's OK though, it's not for everyone. But I think the author needs to understand the risk-reward thing here a little better - you need to take more risks to earn more reward, and being the 15th hire at a company that has most likely already raised money is significantly less risk then being like employee #3. A lot of companies compensate their first handful of employees in equity a lot more than others because they took risks (and pay cuts) plus made contributions to the growth of the company that that employees #10 and after most likely didn't.

It still makes perfect sense to work at, or start, a startup - you just have to have the right appetite for risk and the right mindset for the varying types of work you'll be doing (compared to latter employees who can specialize more). You simply won't get "rich" without taking the risk and accepting that you have to broaden your capabilities beyond core technical skills to grow at a startup and earn your way to a nice exit package.

Everything you said makes sense. Now pick up the phone and talk to a recruiter who is trying to hire employee #15 - the tales and projections you will get will be off the charts. My take is that there are people out there who will thrive for every risk/reward ratio. The misgivings usually arrive when employers misrepresent the risk/reward ratio during the hiring process.

One of my favorite questions to ask startups during interviewing is - "In a semi plausible best case scenario how much money do you want me to make?". Answers are usually all over the place.

I think the author understands exactly what they're talking about, and they're not talking about being employee #1-3.

Most people, when they hear "work at a startup", they're talking about being employee #10-30. Not 1-3. There are, clearly, 1/10th as many of the latter, and they're almost all looking for much more skilled people than employees #10-30. I figure this advice is for people who are newer in their careers. People with 10+ years experience probably already know what the article says, and they're likely the only ones who might get hired as employee #1-3.

Then why does he says it's not worth it? You don't get rich being a later employee - I thought that was common knowledge. He's not getting rich, so he thinks working at startups aren't worth it. That's what I get out of this. He didn't take the same risks, so, yeah, he wouldn't get rich - that's my point.

Trying Kotlin just for kicks or introducing a half-baked but hyped queue server is not a good idea for BigCo too, unless that BigCo is a developer of tech in question. What is a better idea is to spin up a pet project, particpate in hackathon or contribute to FOSS with this tech under the hood.

Justin Kan has a great post that is equally critical of startup compensation and management. He also makes positive points in favor of startups: as opportunities for non-FAANG candidates, for learning faster and (to some people) as a gateway to starting your own company.


In line with Justin's post, learning has been a key motivating factor throughout my career. In particular, working at startups has given me better insight to the business that drives the company. I've sat on calls with sales people to understand customer asks vs. needs, and I've developed strategy alongside BD teams for driving adoption of technical platforms. For engineers who are interested in learning more about other functions/roles at a company (product, business development, sales), startups are sometimes flatter and can offer more exposure.

(That said, you can also get non-eng exposure/experience in larger companies. You may have to take a non-traditional eng role, such as sales engineering, partner engineering or developer advocacy. There are some perceived downsides of that path -- sometimes around compensation or building your core "engineering skill set" -- but it's a viable option.)

I feel the need to defend the startup life... so here goes:

I have spent 12 years in the startup space, with an origin in software engineering... so far I have learned:

- how to be an amazing engineer

- how to be a above average IT/Ops/Devops Engineer

- how to build/manage/run QA teams

- how to be a successful project manager

- how to me a successful product manager

- how to manage and work with designers

- how to deal with managing culture within a company

- how to lead and grow product and engineering department from the ground up

- you can get paid VERY well if your skilled

- once your prove yourself you can effect the direction and culture of the entire company (i pull 250+k in cash on top of equity)

My latest position is a CTO of a startup that went from seed to series A in less then a year and triple their valuation, while turning down other CTO offer's from billion dollar valuation startups, and other "head of engineering" like roles from well knows startups... plus manager/director level roles at some of the FAANG companies.

I would of never have learn what I have learned or have grown as quickly as I did if I took a job at a standard "stay in your lane" corporation.

I also get to work on a social mission I truly believe in, and help define, build, and grow the next generation of startup engineers.

Start ups are a lottery. A few hit it big while most don't. Even then, the owners make the real gains while employees are typically rounding errors.

The best advice I have for startups is to try it early in your career to see if it's for you. The number of older folks I've seen who jumped to a startup and lived to regret it is almost 100%

I joined a startup 7.5 years ago and, from a money perspective, it's vastly exceeded expectations. But I wouldn't join another startup for the money; it's just not reliable, and I recognize that I was very lucky to have accidentally picked a winner.

Yes, you can do interesting work at a BigCo. Sometimes you even get to work on greenfield projects, which is often even better than working on a greenfield project at a startup, because usually the BigCo has a lot of infra and resources that you can lean on that allow you to make fewer compromises.

But you're just never going to have an outsized influence on the trajectory or success of the company as a whole. You're never going to have the authority or ownership to make big decisions for more than your (relatively small) area of the BigCo. If you want that, the best way to get that is to join a smaller startup.

If you are going to look a startup as an investment, then you have to evaluate a startup as would a VC. If you are going to look at a startup as a place to learn skills and develop a network, that's another matter. Rarely will these two views coincide.

I still have friends from my first startup. I had lunch with a couple of them last week. I took that job on slightly more than a whim. I learned a ton and got to know some good people. I did some interesting work. In fact, at the time, I didn't even know how to evaluate a startup as VC might. So add that to the skills you might learn from a first startup.

As for the article, I disagree. I think there are a lot of crap startups, lifestyle startups, that you should avoid. However, I personally still believe but you have to be brutal in your selection, as a VC would be.

Work for a good startup. Having job hopped a half dozen times in the Bay Area (to play the salary game) my experience has been that most startups are not doing anything new, have no sense of innovation, care more about quickly shitting out a crappy product than ever following up on the “iterate to something good” part, and are for the most part run by either clueless business types, or by programmers who think programming is just a tool, it’s impossible to be 10x better than average, etc. Craftsmanship and excellence are rare.

Go work for a company that’s actually going to be worth lots of money someday. I like the quote about how burnout comes not from working too hard but from losing too much over and over.

Nowdays a seed round is $1.5M. That could buy a startup 3 engineers at $200k/y in SF/LA/NY/Seattle for 16 months + $300k on distribution and misc. or 3 engineers at $150k/y in Switzerland and $600k in distribution and misc.

as a founder I don't subscribe to giving 30-40% less than the top firms pay plus some basis points of equity worth something in the instance the company becomes a $10B company. and it makes little sense.

Any great engineer can work at FAANG for $230k and still work on interesting problems even tho its riddled with politics. Paying 30%-40% less means you're not hiring the best, but mediocre people who have been rejected at FAANG or drank the startup kool aid.

a lot of things have to align for your startup experience, as an engineer, to be worthwhile

This definitely resonated. We talk here about the Swiss cheese model of failure, but I think it's important to apply it to success as well.

> Get rich quick in case of success.

This is just betting. The probability of success is extremely low. Would be as wise as betting part of your salary each week in the lottery.

It's not quite the same. It might be closer to investing part of your salary in the same penny stock each week.

I’m confident one could do better with short duration out of the money options on SPX while working a comfy BigCo job than anyone here could with their ISO options. And you’re not wasting years of your life grinding to do it.

No startups unless you’re the founder and you can iterate as a side project while collecting a check from someone else.

"I’m confident one could do better with short duration out of the money options on SPX while working a comfy BigCo job than anyone here could with their options."

Yeah... if you bound your losses by giving up at a certain point, that's true. And if you take your BigCo salary and subtract the startup salary, the result is a pretty big stake to put into the short-term options gambling game.

I'm not endorsing this plan... I'm observing that if this is a more financially sensible thing to do than work at a startup (in 2019), working at a startup must be a terrible idea...(!)

One point OP may have missed is learning opportunity. The opportunity to learn in a big company, any big company is simply not the same as that in a startup. You are always one of 50 people working on a feature that has already been spec'd out in great detail by some one else. Early in your career investing in learning and becoming a better engineer makes a lot of sense.

That is definitely not "always" the case, and in fact I highly doubt that "50 people working on the feature, spec'd by someone else entirely" is often true at all.

Even as an intern at Google many many years ago, I was one of just a handful of engineers working on a feature, and even though my internship lasted only a few months, I not only had a considerable part in the feature's implementation, I was also given plenty of opportunity to give my own input.

Now, many years later at a different large company, that has not changed. The total amount of people working on a significant feature may be large, but that's mostly when the feature is very cross-functional, and well, just generally large. Most teams we interact with still have the size of a handful of people, and they very much have the authority and responsibility over their components.

Obviously there are a lot of factors in play, and I don't at all doubt that jobs like you describe exist (though 50 people with no spec input still seems like a vast exaggeration to me), but I highly resist the claim that working in a big corp means that you're bound to be a small cog in engineering. Quite the opposite: It can be a large lever giving you the opportunity to work on things of amazing scale and effect, that a startup simply does not have the resources for.

I agree that there is some learning experience, but I am not sure how valuable that is. My experience working at a startup has been a learning experience on how not to do things (tech) and how wrong management feels - but I actually find that a universal experience within all companies - only in a startup it's more amplified. Theoretically, it might be valuable to know how not to do things, but that's only a small slice in an infinity of options. For the how to actually do things, I think anyone involved in trying to figure that out too - and feel like luck plays a big part.

My thought on this is, life-style business rather funded startup might be better in coming close to big company pay and independence - although myself, I haven't tried that.

From 2002 to 2008 I was the technical co-founder of a startup, and I had amazing fun. I worked 70 hours a week for 6 years, mostly because we were having so much fun.

In 2015 I was the lead engineer at a small startup that had a self-destructive and abusive top leadership. The technology was very exciting but the context was not.

What I learned from the two experiences is that startups can be intense fun if you are one of the owners, but if you are not an owner, startups can be absolutely miserable. More details are available in the book that I wrote:


Over the past few years, I've talked to numerous early-stage startups of various kinds and all of them were making offers where the valuation would have to be 10-20 times their seed round valuation - which is already inflated, due to liquidity preference if you're merely taking RSU/options - for me to break even. And rarely was there significant sweat equity, nor were the founders' background substantially better than mine in any of those cases. If the potential for those startups was so great as to make their offers for early employees fair, they were essentially paying themselves millions a year, assuming most of the founders' equity was also being vested. And looking back, none of them found any kind of success where I would've come even close to breaking even.

I'm at a point where doing my own startup is beginning to look attractive and this is a concern - would my investors force me to make these types of offers to early employees? What kind of employees would I be able to attract with that? Is this just entirely about attracting anti-big company people, delusional true believers or those who have no shot at getting a decent offer elsewhere?

Btw, I've worked at startups, small companies and big companies and I don't buy that the rate of learning is higher at a small startup. At a big tech company, junior engineers already work on very large, complex problems and have tons of great people to learn from. As an engineer, there's no shortage of opportunities to learn. What can be potentially higher at a smaller company is the rate of career growth - if you're at a company that is growing at a crazy rate, you can become a somebody and have large managerial responsibilities quicker because being an early employee and having those relationships and foundational knowledge give you an advantage even over outsiders who would otherwise be more qualified. But even this is probably overstated at this point if you're not a founder, since tech culture is much more fungible than they used to be and nowadays everyone feels much more comfortable hiring experienced external managers over promoting internally those that aren't quite ready.

I'd say working for an employer is making less sense in general, especially if you're a developer. It's becoming way easier to make money through other means, and you can devote your time to pursuits that are actually meaningful to you.

I think the idea of "getting rich" is your first mistake. That seems like a terrible reason to do anything.

When I left Citi, I went to a startup so I could work at a small company and get away from politics. Ya the paycheck was ok, and stock was fine, but that company went under and I moved onto the next. The idea of "getting rich" was never in my head.

Also, when you start a company, if your goal is to "get rich" than you have already once again failed. You should have a completely separate sub set of goals that are pushing you forward. I.e. lifestyle, financial independence, changing an industry, doing what you love, etc.

Two additional pieces of information would be necessary to know if the author got a good deal:

1) How long was he there before he cashed out? (The amount of equity isn't just about the grant, it's about whether you stay for the vesting...) 2) What stage was the startup at when he joined? Yes, I know he was engineer no. 10 and employee no. 15. Many startups in the Bay Area are post-Series A by the time they have 15 employees. A lot of the risk is already gone by then, so the equity grants are less.

Aside from enthusiasm for the mission, or the chance to strike it rich, there is another important consideration: self-actualization. That is, how much do you need it?

In a way, self-actualization is like having your own personal mission. If things like impact, influence, autonomy, innovation, speed, and big challenges are important to you, than you'll probably be miserable at a well-established company, regardless of the compensation, WLB, T-shirts, pep rallies, etc.

This is what does it for me. Working for large companies kills me. Being totally alienated and disconnected makes going to work feel like torture. But working on my own projects is a delight. Working somewhere where you're one of 2 or 3 engineers is fun. It's exciting. You can do things.

Working for a startup is a rare opportunity that can be exhilarating and educational from a business and personal perspective. However, be aware you are taking a gamble with your career and time. If you have a family to support, taking that gamble can be a sticky decision. Discuss it with family first.

Working overseas is kind of the same thing: it diversifies your outlook on life and people. But, does carry more career and family-time risk.

If you are single and unattached, go for it!

It seems like a lot of the OP's experience is clouded by bitterness over having such a lousy payout in what looks like a good acquisition.

I think this mostly goes to illustrate how important it is to understand the ownership structure of the company (common vs. preferred stock) and understanding what your grant actually means. Most people just accept whatever they're given without really understanding it. It can be a costly mistake.

dotcom era startups were fun... these days they ain't no different from corporations - greedy, boring, technocratic, stressful, delusional, etc...

Agreed. If my company ever exits and thats a big if. I doubt I get much. 100k would be amazing, but I am likely sacrificing 20k per year to work here at this point. The reason I stick around here is I can work full remote and have been able to travel the world much more. But after four years, I'd trade that in for a really nice pension or matching 401k in a heart beat.

>In my experience, it’s harder to have any visible growth in a startup because well first, what do you grow to? There is no clear hierarchy, no promotion paths. The “no titles” thing is great in theory but unless you have a naturally dominating personality, it likely won't work for you.

That's because you're basing growth on titles instead of actual capability.

Speaking from experience, it's not worth it even if you are on a mission.

We're in a world where the incumbents have more resources and the talent to execute on big ideas. There's no reason why you need to choose between mission-driven and 1/3 the salary anymore. You can probably achieve bigger things at a big company these days.

Has it ever? I’ve worked for a bunch of unsuccessful startups and it never “made sense” to work for them. I loved it and learned a lot and still was able to meet Maslow’s hierarchy.

But it seems like an odd message since working for startups is pretty much never the sensible thing to do.

What if we are actually interested in starting up something on our own in the future? Does the startup experience help? Or is it still beneficial to work at Big4 (or) Fast paced big firms like Uber, Slack, etc?

Little late to the party. I am going second the sentiment that is presented here. Startup makes sense for founding members with double digit equity. For everything else go join a BigCo, any BigMediumCo.

Also, you got paid out $15,000 on a $200mm exit. Sounds like you didnt do a good job negotiating your worth from the start. I would chalk that up to YOUR failure, not the startups failure.

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