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Downsides to working at a tech giant (garrytan.com)
700 points by razin on Dec 23, 2019 | hide | past | favorite | 559 comments

The pessimism in this thread really bothers me. I’ve read anecdotes on entrepreneurship being on the decline, but it pains me to read so many negative takes on startups. We’re actively training our young people to avoid taking risks, and it’s going to fuck us — especially if some of those young people have the ambition be early employees at, say, a startup that takes on climate change in a big way.

Look — the fact that Garry knew Peter Thiel when he was 23 is nuts. When I was 23 I was broke and living with my parents in the suburbs outside Toronto. I didn’t even personally know any other software engineers. I think many people here would relate more similarly to that position.

Just because he won the social lottery early, doesn’t mean his lessons are wrong. I got a junior engineering job in Toronto when I was 23, at a startup, making less than Garry. $57.5k CAD. I worked on my open source portfolio and next took a job in another startup in SF for $120k USD the next year.

That startup failed. I took a brief job at a biotech startup after being turned down by Google and Facebook (twice). After three months I quit that startup to run the company I’m still running today, four years later. Today, we’re very fortunate to work with some of the largest companies in SV.

Reflecting on this: I think a better story Garry could’ve told is not that he missed out on $200M, but that startups basically built his network so that — years later — he’d be a prominent VC working with Alexis Ohanian, funding the next round of exciting companies. $200M is an eye-catching clickbait headline, but not the real substance. The real substance is — how the fuck did he meet Peter Thiel at 23, and how can somebody recreate that?

In the story I just told about myself, I got really lucky as a function of working at startups. I didn’t really make any money doing it. But a whole bunch of interesting things happened:

- The first job in SF I worked at introduced me to a product manager who went to school with Aston Motes, employee #1 at Dropbox who would eventually be an investor in the company I run today.

- The founder of that first failed company introduced me to AngelPad, the accelerator that gave me my first $50k in financing. The fact I stuck it out as an engineering lead at a failing startup helped: I gave it my all. (Aside: YC turned me down. Twice.)

- The biotech company I worked at was founded by two early SpaceX employees, one who would also become an investor later on.

Don’t work at startups to make $200M. Work at startups because you’ll work with people who have risk profiles that are much more likely to generate outsized returns as a group. You’ll have the opportunity to join or create a community of high-performing folks that, in aggregate, outperform anything you can do on your own. Maybe you’ll be the CEO one day, maybe not, but no matter what you are very likely to come out ahead if you apply yourself.

And don’t let the comments here dissuade you. Startups are hard, but they kick ass. I’ve cried myself to sleep some nights — as both an employee and CEO — and still wouldn’t change the experience for anything. I’m a better person because of what I’ve been through.

The reason why is the math changed. The gap between startup and tech giant is much larger now than it was in 2010. Also, unless you have insider access and join a very risky angel stage company, the likelihood of getting a good package that makes sense is low, very low. Also public companies have shown to get +3x gains, which can make the math even worse.

Example from personal experience that is very lucky in startup land:

I'm an unwise jr, who gets a 25k (with 25k stock units) purchase price stock plan for a series A company valued @ 5m. 4 years later that same company has 200x in valuation to $1b and I get 5k more stock units as refereshers over 4 years 'since the value of the company has gone up so much'. The value of my stock is not 6 million, but 600k because of dilution. So even with this very positive case situation, I broke even +/- 100k or 200k compared to big tech co with promotions, but whats worse, I can't sell my stock. The company later dies and all of that stock is only sold for about $40k total in secondaries that happened before the last $1b valuation round.

Considering that is the good case, why would I work as an early employee at a startup? With capital being so abundant and being employee #1-5 at an angel startup, I might as well become a founder and start my own at that point, or join the obvious next big tech co, which was facebook back then.

We also only have so many years to go on startup expeditions, maybe 5 total before we are 50, or more if we are able to fail fast.

>The reason why is the math changed.

Very true. Making it even more unbalanced is that a startup exit may not be profitable to non-founders. I spent the first 17 years of my career at 3 different startups. Two were acquired and one is still chugging as a lifestyle business for the founder. The net value of my options (> 1% even after dilution in two of them) amounted to a $2000 capital loss due to there being no money left over after debt and liquidation preferences. I did get $350k payout for one of them since I was an executive.

I recently started at a FANG, where the new grads make cash and stock comparable with my startup exec compensation and it won't take long for them to eclipse it. I'll be making multiples of my previous compensation.

That said, I wouldn't change my path one bit. I learned so much in those startups that I wouldn't have learned anywhere else. I had a level of scope and responsibility that apply to nearly any tech job. It also lets me appreciate the benefits and stability of a large company. When I joined those companies, I was also not even thinking about making bank on an exit. I just wanted to work with nice people and build cool stuff.

I think this is a really good argument as why graduated corporate taxes really need to be increased in the US. I'd be curious how productive you felt at each position and if you think the FAANG job is more difficult and stressful.

I'd like to think that no matter which of these paths we chose - the more stressful and risky life or the more secure and corporate FAANG one - we'd all have a chance to live a decent life. I really enjoy working at a small company and we make a notable impact on society, but the money will never approach FAANG levels.

I really think the issue is that many startups don't offer alternative compensation and don't play to their strengths. You can be compensated in other ways, but often I've found much of the work at startups can be no more interesting than their Big N counterparts. Your career growth might also be similar. In theory, for startups, you sacrifice pay for other facets. The reality is quite different.

The work might be similar but you're paid 50-75% of your peers. That was my experience in startup land, at least. Few good challenges or career growth and half of what I felt like I was worth.

I think the benefit of working at startups is similar to the benefit of working for smaller companies in general. With a small team you'll get to touch more of the stack, and maybe even parts outside of your job domain altogether. In my first job I was the 2nd developer, the first was the CIO. In addition to writing most of the code for this project, I set up the entire production network including load balancers, database replication, firewalls, etc. I even picked out our hardware and physically installed it in the rack we rented at a local ATT data center. Now that's an extreme case obviously, but you will never get anything close to that broad of a base of experience working for a BigCo.

I’m intrigued by your idea of alternative compensation. Care to expand?

Are you thinking like bonuses for growth? Deferred bonuses?

Not OP but I've been thinking about this as cofounder of a "hard tech" company. If we live long enough that we're in a position to hire real talent we can't compete on total yearly comp. The business just won't be able to afford a 500k a year engineer for years.

However right now FAANG companies generally do not offer either the following:

- Reduced work weeks

- Remote work

I've talked to several staff and principle engineers who've told me that for the right company they'd take a massive paycut to work remotely 3-4 days a week. I've had the opportunity to work a 3 day week while making enough to support myself and I have to say, it's incredibly freeing. I don't think this is a sensible offering for anything below a Staff engineer, but it could be a promising path to get truly top talent.

I work at one of the FAANGMs and my group of about 700 engineers are all allowed to be 100% remote if they want to be. It’s actually promoted by our leadership.

I'm curious: which FAANGM? And where could I find the job openings for that group?

> I'd be curious how productive you felt at each position

I definitely felt "more productive" at startups since my work felt like it had a bigger impact to the company.

> and if you think the FAANG job is more difficult and stressful.

So far, it feels no more difficult and is stressful in a different way. With a startup, there's the stress of worrying about the company going under. At the FAANG, there's the stress of performing at a high enough level to justify the compensation.

I think you need to reform employee stock options - in the UK there are far less possibilities to screw employees over stock options.

Absolutely, stock options in the US are super strange, they can be performance tied and for non-qualified shares. The thing I'd actually like to see is a better default governance for companies - companies are wholly owned by founders and I think there is just something fundamentally wrong with treating all employees as contractors by default until it's decided to grant them options or actual ownership.

A bunch of people gather together and build a thing - why is the first person to the table the person who takes home all the profit? Sure employees are technically signing away their rights by agreeing to work without being compensated with a portion of their work, but it'd be really hard to actually pursue proportional ownership in the current labour market.

This. There is really no reason a founder deserves as much equity as they generally give themselves (I know the investors also have a say in what an acceptable cap table looks like so it’s not just on founders). If early stage startup founders split equity more evenly I think the numbers would start to make more sense. Maybe like 10% founder, 5% first 5, 2.5% next 5, and then 15% equity pool as you grow from 10 to 50. And that still leaves you with half your company left to raise capital with.

Then there’s advisors and execs. You can enter into an A stage startup as an exec or an advisor and generally expect ~1% equity post dilution. This easily eclipses all but the first few early employees who have been working their asses off with much less comp for a much longer time. Maybe really good execs and advisors are game changers but I haven’t seen it play out in practice. More often than not success of the early few hides failure of the new leadership to do anything remotely resembling what they’re paid so preciously to do.

So in the current market the only valuable part of working at a small gig becomes the alignment of risk profiles and consequential networking, and the do or die environment that accompanies an 18 month runway. I think these are good experiences for anybody to have at some point in their career. But since most people are rational they look at the numbers and it just doesn’t add up.

"deserve" doesn't really mean anything. As for why founders get the most equity, it comes down to the most risk. They have the most to lose and are usually are paid last compared to employees who get cash and benefits. It's easy to claim the profits and yet ignore all the risks and losses incurred by founders.

I've yet to see someone who thinks otherwise actually go out and start a company. Perhaps it's because the calculus changes when it's your business and livelihood on the line.

“Deserve“ absolutely means exactly what it means.

I’m talking about the equity distribution sub-10 here. What sub-10 employees are getting any more benefits than their founder(s)? Maybe marginally more cash but it’s all still below market so it doesn’t really matter. But most founders I’ve encountered are actually paying themselves more than their early employees because they have to in order to maintain their lifestyle in big city. But they also have remarkably disproportional slices of equity.

If a founder is investing large sums of their own cash it’s because they have that luxury. And I don’t think that’s actually very common. More often a founder drops some sweat and cash to incorporate and then maybe isn’t getting paid much while they pitch for seed capital but they’re doing so because they can’t afford to take no salary for very long. Even if you occasionally do see founders who’ve “killed” themselves for their cause, most of the founders I’ve encountered actually come out of cushy jobs where they essentially moonlit as a founder until they met someone willing to blow a few MM their way. In my opinion this type of story does not justify such disproportional equity distribution.

At this point I honestly think telling founders that they take on so much risk and should retain such a large portion of their company because they did all the hard work is a somewhat subversive tactic used by investors who want to retain control over their investments. It’s a lot easier to reason with a single founder than 5 large equity holders.

I think founders deserve a lot. I don’t think the typical founder deserves 10 times the equity of sub-10 employees. I think you’d see more people willing to join early stage companies if the attitude around equity shifted.

It doesn't mean anything because its a completely subjective moral judgement. There's no global arbiter of what people deserve.

And again, if you think founders should take less equity then you're free to start your own venture and show everyone how well it works. I've yet to see single example of this though. If it's so easy to start a company without risk and get rich then what's stopping anyone else?

Do you realize VC companies are less than 1% of all the small businesses out there? Most entrepreneurs are not well-connected wunderkind raising millions, they're just normal people busting their ass and risking everything they have to start and grow a business. Reality is much harsher than some wishful thinking.

I don’t understand the “if it’s so easy then go do it” argument. Personally I’m interested in founding something at some point in my life. And I’d much rather do it with a group of people who I’ve shared more equity with. But that’s not the point at all.

In this thread we’re talking about what stops people from leaving their cushy jobs at big corp to join a small gig where apparently the talent is sorely needed. My response to that is, “if it’s so needed then speak with equity and more favorable comp strategies that are more likely to pry those smart people out of FAANG’s grip”. If the world needs a few principle engineers for some incredible new idea then surely the world can find the capital to fund the equivalent of a few 500k salaries for a few years—whether it’s with more cash or more generous equity or both.

It’s a two way street. Every time I hear someone lament about the dying startup scene my response is generally that humans are acting rationally and the industry has realized that the ~0.2-1% equity offered for positions 4-10 at a small gig is not really worth the sacrifice required unless some other stars align (mega exciting domain, super unique opportunity, write off as professional development).

So either the startup industry is dying and all the good talent is locked up in FAANG. Or maybe startups don’t need principle engineers and 0.1% talent in the first place. It’s probably some of both.

And I’m certainly not sitting in a pile of my own self entitlement at FAANG thinking, “if you want me pay me more because I’m hax0r”. I’ve made my own sacrifices to be a part of growing a small company. We’re in a specialized domain where finding the right talent is especially difficult. I’m unable to fault anyone for rationally biasing towards more comp and stability and less stress. So when the topic comes up I like to remind people that the status quo equity/comp strategies that you see at most places are a little dated and despite it being (as it seems) somewhat presumptuous of me, suggest that founders might be biased towards overvaluing their own contribution to the cause. If the cap tables were a little looser I think you’d see the scene perk up again...

My replies are regarding your statement that founders "deserve" less, especially the rather extreme quote of 10%. That's nowhere near viable considering the effort and risk involved, and why I suggested you try it and show us.

And if most startups fail, why is equity worth so much to employees? Who wants to be paid in worthless options? This is the other common fallacy I see. Startups can compete by offering cash and better benefits like work flexibility. Equity rarely moves the needle and doesn't suddenly make people better workers either, regardless of all the hype leadership blog posts about ownership.

Some people respond to the increased responsibility and will always work at startups. Some people always want the big corporate gig. Neither will change much based on equity. What startups are competing over are the mostly average workers in the middle that could be swayed with the right offer, but there's not really a global shortage, just with hype FAANG workers (who are no longer 0.01% quality or anywhere close). You can get great people anywhere and plenty of startups have figured that out.

> And again, if you think founders should take less equity then you're free to start your own venture and show everyone how well it works. I've yet to see single example of this though.

This topic was covered in Episode 3 of Gimlet Media's "Startup" podcast[1]. He ended up do a 50/50 equity split. They seem to have done well for themselves[2].



(And why this reply is not properly indented is beyond me.)

They're both founders and equity is split evenly between them, which is extremely common with any startup.

That's not the same as founders giving up majority to their employees.

I'll have to go back and re-listen but IIRC the other guy wasn't a co-founder, he was employee #1.

You are free to found your own company and do this.

Of course I am! But I don’t want to found a company just to found a company. We’re talking about attracting talent to small companies. I’m offering my perspective on why joining a small company doesn’t make tons of sense with the status quo equity packages and sub-market salaries offered. There’s some good discussion on another post about this exact problem and it seems, at least, that VCs are starting to come around as well and there is productive discussion about alternative early stage plans/strategy for capitalizing in a way that can attract top talent from big companies. I’m not founder bashing please don’t take my comment the wrong way.

Employees get cash, that's the compensation like any other worker.

Why should equity be a default option? Most startups fail so that's like saying workers should get something that has a high probability of being worthless while suffering all the tax implications. If anything equity should be decreased. Startups are better off competing on cash and other benefits like work flexibility and increased responsibility.

That would imply that they make revenue, which is somewhat unfashionable.

You need cash to run a business, wherever it comes from. Otherwise you don't have a business in the first place.

You need engineering talent to run a tech business. Otherwise you don’t have a tech business in the first place.

Money comes from anywhere, tech talent is fixed in supply.

A business needs cash to operate. It doesn't matter what talent you have if you can't pay them. Startups die when they run out of cash, not because they couldn't hire anyone.

Startups offering more cash has no implication that they must generate revenue (although that's obvious to building a good business). The point is that operational costs exist - and so a business must already have cash to exist - and increasing costs for better salaries and benefits is a better trade-off than increasing equity which is mostly worthless anyway.

Also global tech talent has more supply than demand once you get past the SV/HN bubble. No serious startup has failed because they didn't get the perfect engineer.

That’s an interesting point of view. Do you think engineers are much more “interchangeable parts” than most HN folks seem to believe?

Customers care about solutions to their problems, not the engineering behind it. Many VC funded startups with the latest AI tech have failed because they never actually served the customers. Meanwhile there are millions of profitable small businesses running with simple boring tech that works enough to provide value to their clients.

Engineering talent is in oversupply across the US and definitely across the globe. You can easily hire PhD level talent from Brazil or India. Also FAANG companies have long ago exhausted the best talent available. Most of their hires at this scale are no better than engineers elsewhere, it's more about the interview process, benefits, location and internal politics than raw quality now.

Are you confusing "contractors" with "employees"

No it’s a good argument for eliminating corporate tax- no matter what the level it hits entrepreneurs the hardest.

This. In my experience, the burden of taxes and regulations are most felt by new entrepreneurs and smaller organizations.

I'm interested in your transition, how did you go about the move from Startup Exec to working in a FANG?

The startup I was an exec at was acquired by a large (>$100B market cap) company. Going through that process and adjusting to life as a much smaller cog in a much bigger wheel was definitely educational. I was no longer "the boss" and had to work very closely with people that I had no authority over, possibly had different goals than me, and who were thousands of miles away. The startup skills of being lean, problem solving, leading people, etc. still applied, but building the skills to work in a bigger company environment was very important. Going through that experience definitely helps with my life here at a FAANG.

> The reason why is the math changed. The gap between startup and tech giant is much larger now than it was in 2010.

This is true but also kind of depressing. With the means of software production cheaply available to everybody is that stable job at a tech giant really the pinnacle of the software engineering career? I understand that everybody's got the bills to pay, kids to raise etc. and maybe I'm a bit naive but it just feels... wrong. And yes, working at BigCo can provide some interesting technical challenges, opportunities to impact millions of users and shield you from unpleasant interactions with the outside world. But it still feels like you are being paid premium to sit on the sidelines.

I find a lot of joy in smaller, industry niche companies. Like 1-20 employees small. Not VC funded startups, but long running companies with proven value in an industry outside of the startup bubble.

There is a lot of them, and they can be very rewarding to work at. While they'll have less compensation, it's in real money and they're often located in smaller cities with lower cost of living. You get to work directly with clients/customers to provide value to them with your skillset. The pace is steady, and what you work on can have a lot of longevity which is nice. Software can feel somewhat ephemeral at times, written one month, thrown away the next. Working on a long term project means it feels worthwhile to go the extra mile.

Just curious can you give examples of this?

A few examples of ones I have worked at or friends have:

A company that created a novel commercial solar estimation algorithm, and ran a B2B SaaS with it.

A small platform specific agency, 10-20 people specializing in a specific eCommerce platform.

A company that had been producing IoT software and devices for farmers.

A slightly bigger company that produced backbone software for bank management, I think they had closer to 100 employees eventually but the dev team was still relatively small. Bank software takes a lot of extra curricular activity it turns out!

> This is true but also kind of depressing. With the means of software production cheaply available to everybody is that stable job at a tech giant really the pinnacle of the software engineering career?

Yes, because economies of scale greatly benefit big companies.

Just because software is free to scale, in the sense that a cp command doesn't cost you anything, doesn't mean that making money from software is free to scale.

> Yes, because economies of scale greatly benefit big companies.

I don't think software engineering in itself benefits greatly from the economies of scale. Yes, tech giants have developed some nice internal tooling, but the cost of implementing a feature for a google engineer is probably in the same ballpark as for a startup engineer. User acquisition OTOH seems substantially cheaper for the big companies. So, economies of scale in marketing and distribution?

If they don't then why does anybody use AWS?

Start-ups use AWS because with $20k-$100k in credits you can do a lot for free in the first year, and after that the cost difference usually doesn't matter. It also looks great on everyone's CV.

Big companies ofc have other reasons like flexibility, needing less coordination in the company etc.

If there were no economies of scale it certainly would seem strange that it could possibly be cheaper to rent computers from Amazon than to run your own data center.

Renting servers from Hetzner is a lot cheaper than using AWS. If you get your uplink figured out then running your own servers is also cheaper.

Sure, if you discount the administrative work to keep them up it might be.

Operating AWS and the datacenters involves massive economies of scale. Writing the software that powers AWS - not so much.

Yes, but since most of us (I think, anyways) are working on Web-hosted software that stuff all matters. It also matters that an Amazon or Facebook has whole teams dedicated to developer tools, operations management, and so on.

I don’t disagree with the spirit of your post. Large tech companies are paying ridiculous salaries and generally speaking we’re in a period of early-stage capital glut.

The point you’ve made — that it makes more sense to just start a company — is directionally correct, but for the most part is a logical fallacy. I hear this from competent, capable people all the time, “I might as well just start my own company rather than work at a startup as an employee.”

The reality is that 0 to 1 is an extremely, extremely difficult hump to overcome and most people intuitively know this. Which is why anybody who says, “I’m better off starting my own company than working at a startup,” especially without startup experience, is likely to never actually do that thing. I’ve never actually seen it, though I’ve seen a number of people go from working at to founding startups.

The real insight here is that it is actually more valuable to found — or be a really early employee at — a successful startup. And so the question becomes: how do you put yourself on track to get a $72k check from Peter Thiel at 23? Take risks, prove your competence and grow your network. That means work at startups.

Sure. I’m (currently) a lucky recipient of survivorship bias. There’s a long way to go and my current state is incomparable to most of the people we look up to and respect as a community. But the key word there is, “survivor.” If you look at the start of my startup career — middling ad tech company in Toronto, eng. lead at a failed Series A SF startup, short stint at a biotech company, turned down by BigCos — none of it looks like it could possibly have been leading anywhere. I just used those opportunities to meet really talented folks who believed in me and, one by one, would end up supporting me down the line. I’m lucky and very grateful for that. Some of the aspects of my journey to date are non-repeatable, and I’ll always give thanks for those moments — but a lot of the lessons I’ve learned can apply to any ambitious young technologist.

Keep at it. If startups aren’t for you, fine, but, again — survivorship bias requires you to survive in the face of insurmountable odds. And it does happen. Startups teach you how to survive. It’s OLN on steroids for careers.

TBH the best way to get a full spectrum startup experience is to go start a startup, like many other things in life.

Working at a startup, other than maybe a 1-2 year maximum stint to get a taste, isn't really useful because a lot is hidden from you even when you start the angel stage. And if you wanted to do the stint, I would probably do it as 1 year of PMing and 1 year of engineering max. If you really wanted the full spectrum experience just incase, then another year at a pre-ipo growth company, another year at a big tech co and another year at a VC to understand the full spectrum life cycle for 5 years.

As a founder, the demands of doing a startup induces you to learn a lot. It forces you to do that networking and making friends part and you will eventually get a mentor network via all your investment activities that will probably be way better than observing from a distance as an IC. Other founder friends you make and friends made at a co-working space doing similar things would give you a lot better experience and a better network.

I joined a smallish startup that grew big, as evidenced above. I mostly just churned on pushing out a lot of code and that's about it. I was part of helping create that 0 to 1 and all it gave me is a bit better work ethic since so much was hidden from me as a jr. The friend I made there that joined really early didn't gain much more insight than me and now works at big tech with me. I learned a bunch just through observation, but I think a founder mentor network would of taught me stuff a lot sooner, and a lot better.

Yes — some execution is hidden, for sure. I, personally, try to be ultra transparent with the team: here’s our bank account, here are deals in-flight, here are the VCs and founders we’re talking to.

The value I aim to provide anybody that works with us is all the things I felt I was missing when I was a startup employee. I wanted to understand how deals happen, what personalities are like, how things work. As we grow I can’t share entirely as much — a piece of minor bad news can hit me pretty hard emotionally and it’s not fair to subject the team to me being upset or a hothead over something that will blow over — but I do try to encourage folks to learn as much as they can.

Even if somebody were to be entirely disinterested in founder-level execution, early employees have a super easy, instant warm introduction to any investor on that company’s cap table downstream. You might not be using that aspect of your startup career yet, but it certainly can help you if you wanted to use it.

You are a much better founder than my founder was, and I'm glad you are. My founder was a good business man, kind of slimy, but effective. And definitely not transparent and gave a pretty employee unfriendly options contract. Again, I was an unwise jr and that experience was years ago now. I was also employee ~50, so I don't know if that was early enough to get real warm intros for investments with people I didn't interact with that much.

TBH the pre-ipo company I went on to next has given me a much better network than the startup I went to as a jr. One coworker direct has started a company that I think will do pretty well, along with a bunch of others who have gone on to VC firms, their own startups and so on.

I appreciate the kind words, but trust me, I still have a lot to learn. The most important contributor to our early success so far has been the team, who have supported me in my growth as a founder as much, if not moreso, than I’ve supported them.

Yes — being employee 50 changes the scales a little. You’re a little too far removed from the executive team to have the same level of comfort. We’re still significantly smaller than that, but at my first job I was in the same # range as an employee.

While I didn’t get to build a relationship with the executive team, my boss at the time kept in touch and ended up introducing me to my best friend / confidant in the Toronto ecosystem as a result. So I would still say the network was valuable. :)

> The real insight here is that it is actually more valuable to found — or be a really early employee at — a successful startup.

Sure, and it's more valuable to be holding a winning lottery jackpot ticket than a year's worth of paychecks.

Problem is, most startups aren't successful, and you have to take the risk into account.

>Large tech companies are paying ridiculous salaries and generally speaking we’re in a period of early-stage capital glut.

The salaries are not ridiculous at all. It's the rate the market has decided those workers are worth. If a start up wants to compete they have to change something big because as it currently is I don't see it as rational at all. All the benefits you mention only happen if it works out for you. For nearly all people who try, it's not going to.

Most of the time, startup founders will have been successful elsewhere, or else they’d not have the ability to risk enough to do a startup. That’s why one avoids startups run by executives kids who are “creating” a track record.

> The reason why is the math changed. The gap between startup and tech giant is much larger now than it was in 2010. Also, unless you have insider access and join a very risky angel stage company, the likelihood of getting a good package that makes sense is low, very low. Also public companies have shown to get +3x gains, which can make the math even worse.

Unfortunately, nowadays, the only job titles at a startup that offer greater expected value than working at a tech giant are "Founder" and "Co-founder". The fraction-of-a-single-digit-percentage equity packages out there for Employee #1 adjusted for the risk of failure and the risk of getting diluted are often a very low number. And if you're Employee #10? Forget about it! I'd love take another crack at a startup but it only would possibly make risk-adjusted financial sense if I'm the founder.

I agree with all of the points raised, and share the same experiences. But this one:

> I might as well become a founder and start my own at that point

Great! So, how would you recruit your first 10 employees?

That is a big reason why I don't start my own company, because I couldn't really live with doing that.

My current armchair strategies:

* Compete in a way that big tech are not willing to do, which means distributed remote companies. A lot of people don't want to live in $3.5k/month rent SF or other tech centers for various reasons.

* What a lot of startups do, but RDF (reality distortion field) over with 'we only hire the best'. Don't hire the best. Either because they couldn't hack the big tech co interview, have visa issues, are very jr or have personality problems that make them unhirable in big tech cos.

* Go bootstrap, so no VC style business timelines.

* Give offers that basically make them pseudo-founders and match the expected value of bigco with the risk premium of startups. A hard pill to swallow when investors give a lot of money offer similar or smaller dilution terms effectively.

I've never gone out to get investment, so I don't know how much of the above is also blocked by investors in general.

Also crypto style 'startups' (ICO or just a completely new coin) have shown to deliver compared to normal SV startups, but most crypto companies do not deliver actual lasting value and are more pure speculation plays. A big crucial difference is they give crypto coins instead of stock, and those coins are liquid immediately. They are also not restricted to start in the USA.

Founders should be willing to give a lot more equity to the first employees. I don’t get the logic of not doing this. You want your engineers to feel as if they have ownership in the equity that you’re building. It’s such an easy way to keep engineers engaged and productive that it baffles my mind that it’s not done more widely.

I hate working for BigTech. Startups expect too much and compensate very little. The sweet spot for me has been medium sized public companies that offer great compensation but need solid engineering to grow their market share.

We usually encourage folks to give at least 10% of the equity to the first 10 employees. That's what Stripe did and it worked well.

That number is going up over time, so I can report at least a little bit of improvement, though certainly not fast enough.

Equity or options? If options, what happens if they leave pre-liquidity? If it's, "they have 90 days to exercise", see this comment on the counterpoint thread: https://news.ycombinator.com/item?id=21868797. To summarize: screw that. If it's actually straight equity you recommend, how do you recommend the dilution work? Is it tied to the founders' own dilution? If not, what incentives do the founders have to not throw their early employees under the bus in future rounds? Even if all of this is done right: 10% seems likely to be too low for the risk.

Honestly I think 10% should be a floor for this, and considered completely separately from the usual 10%+ option pool (for the ones that come after the first approx 10).

For that matter heading out of a seed round with very roughly 1/3 founders 1/3 employees 1/3 angels/whatever seems pretty sane to me, although a bunch of that first 2/3 should not have vested yet. Your second tranche their would hold a largish option pool for growth, and a bunch of "founding employee" equity. You are all going to get diluted to hell, but however it eventually shakes out I think that collectively those starting key employees should see roughly the same outcome as individually a founder does....

It's the math again. Go do a spreadsheet and simulate a company as it grows and you see treating your first 10 employees in line with big tech expected value outcomes is a really, really big hit.

I know this is totally super optimistic, but can we change the perspective from

> is a really, really big hit.


> really amazing payoff for the early engineers/employees

My very limited understanding of the growth of the SV tech community is that its a generous cycle of people creating wealth, and then using that wealth to fund the next generation of tech. So it seems completely logical for SV founders to want to do more of this.

Especially when you consider the diminishing returns on wealth. And presumably you should be able to attract higher quality employees who are more incentivized to work hard. Resulting in faster and more efficient growth. So you may never even take a “hit” to wealth. Unfortunately most founders and VCs have resorted to exploiting the social dynamics of the engineer class instead.

Whether it's a big hit or an amazing payoff are actually irrelevant, there is a going rate for engineers who are willing to accept startup risk (in a job market where anyone can get hired right after it fails this is not a lot of risk), and that's the price that will be paid.

When I was young and naive, they paid employees the "risk bonus" in stock shares, not cash. I asked for more cash, and they said, "nobody takes cash, stock shares are the thing". They were the dud thing.

Which will be attrited away over funding rounds

> Go bootstrap, so no VC style business timelines.

This is easier to do when you have some money on hand. Which is why working at a well-compensated job if you are not from a wealthy background is quite important in your early career. Also its not that bad a strategy. I mean Qualtrics pulled it off quite well.

We'll be taking some of this approach at our new co, bootstrapped, with very generous share grants for the first employees. We're doing partially remote, but I think full remote might make it too hard to get the core team as tight knit as it needs to be. I don't think it's a good substitute for a few people sitting in a room yet, but I could certainly be wrong about that.

One of the things that keeps me away from startups is how disadvantaged employee equity is. Options become golden handcuffs when they have to be exercised to leave. Execs and investors are not in the same boat as employees due to preferred shares, liquidation preference, and other terms. None of these are disclosed to employees.

I've heard too many stories of start ups being sold where the founders cashed a big check and the employees didn't get anything.

To be clear, I'm not an expert in this, but the startup ecosystem needs to regain trust if it wants to hire more competitively.

I don’t understand... why is the goal to convince a bunch of naive youngsters to work for you at 1/10 their value? You shouldn’t exist unless you can pay competitively for the same people, end of story. Until then, don’t hire

The fact is that there are a bunch of younger programmers willing to work for a startup regardless of the comp. Founders naturally try to exploit this.

They could be taught ethics in college or find that their peers actually called them out for it? Heh.

Hope that they are not as interested in financial optimization as you? Or just take people who can’t get into top paying bigcos? Or be a good salesman? Same as everybody else who is recruiting for startups these days

Handpick them out of your network and give them not just equity but real control as well. That for the first 5 or so. The others should come from your network and be handpicked by your handpicked first 5 employees. And equity, but obviously less than the first 5.

In my case my first employee, as soon as enough comes in to pay someone, is already recruited. Equity will be around 20%, with another 25 or so for the next couple of employees. That's without outside funding, doesn't seem to be necessary so. If it will be necessary that obviously changes.

Why do you think you need employees?

Yes, I am a little longer on the tooth than some others, but I would love for developers today to dictate the path..

Instead of having this idea: 'We want to work for the next big thing' - Which can be super attactive.

- Instead say: Hey, Im a developer, so I like this product, can I stand behind it.. Can I stand behind my work in it.

Even if you need a job badly, and you're taken on as a developer or someone contributing, I still believe, you should always be able to stand behind your work. Even if the product is shit.

So If you want to work for a startup, you need to really know the company, product and for sure the direction, not all of them are looking for a payout. Some of them are genuinely enjoying changing and hacking things up. - Embrace these - eve if they're not startups!

The best companies I've worked for where well established, but gave the freedom to innovate, play around, make mistakes, and build.

New startups for me always seem to just throw money expecting something good.. I've come to the idea that its 'Startup business ideas people'. and not "Developer playground that turned into a startup"

This assumes all entrepreneurs would want to work for or even be hired by a tech giant.

FAANG pay has gone through the roof while startup pay has not. I am not a software engineer, but I still work in a field rife with startups. I don’t even work at a FAANG, but I do work for the industry leader in my field and I’m making a safe $250k annually after 5 years.

I have gotten a few startup offers just to test the waters and I’m generally being offered $175k + $50k-$100k in stock options. Sounds OK if you expect the stock to grow 100X, but the problem is that even Series A funding these days pushes valuations into 8 or 9 figures. In my field, the total market is 10 figures. The valuations are going up so steeply that anyone but founders or employee 1 will be better off on the FAANG hampster wheel

I think you've hit the nail on the head as to what's causing this.

1: FAANG companies have had a great decade in terms of stock prices which means employee options are enormous in terms of dollar value (even if salaries aren't huge on their own necessarily).

2: VCs are pumping much more money into the ecosystem, which destroys the equity play for employees. When companies are raising $100m Series C rounds, it changes the cap table in a brutal way. Cap tables ultimately add up to 100% which means someone has to be diluted.

> FAANG pay has gone through the roof while startup pay has not

That's because FAANGs have been profitable and startups haven't, in general.

There's no rule of the universe saying startups have to be unprofitable.

A profitable startup can, in fact, pay through the roof.

Once again, I assert that the valuations are rising too high, too quickly, and so even if you are optimistic about profitability, you won't see a return that's worth leaving your golden beanbag chair at a FAANG. Why would I join a startup after an 8-9 figure Series A valuation for a 10-figure market? And yet, that's what my options were in my industry.

> A profitable startup can, in fact, pay through the roof.

But most startups don't become profitable, most startups fail.

IMO, you should basically assume that any stock options a startup offers you are worth zero. Decide if you want the offer based on the base pay and how interesting/stimulating the work is.

Sure. Upon re-reading my comment I wasn't very clear. What I meant was along the lines of: the past decade VCs have convinced startups that they don't need to be profitable for many years. That's a pretty recent aberration. It took Google less than 3 years to become profitable, for instance.

I think the argument is less between "startups" and "tech giants" and more between "profitable companies" and "unprofitable companies". Profitable companies can also grow quickly, after all.

It's a bit sad how the rest of the world don't put such reward for dev jobs.Even here, in London,I'd need to be a quant to pull such a salary.

The rest of the US does not pull such salaries. That's pretty exclusive Silicon Valley / Seattle.

And NYC. Finance IT management jobs at the senior levels pay a solid 3-500, senior devs 200+, with some sort of bonus structure being common. Then there are increasingly tech companies (something that used be pretty rare even 10 years ago), and for the tired, there are university and hospital IT jobs.

However, rent is through the roof, on par with San Francisco. And a city with its own set of challenges.

From what I hear and read, Seattle seems like one of the best bangs for the buck. As for myself, the lack of sunlight would make me want to live in London (at least I can fly two hours and see the Sun).

You can easily make $100-$120k in Houston and that’s still much higher than London salaries. I had offers for $135k in Connecticut, offers for $90k in Kansas City.. still vastly better than London and the rent is a hell of a lot cheaper.

£90k is around benchmark senior dev pay in London (band I'd say is £80k to £95k). I make a bunch more than that.

London is a global city though and you'll always feel somewhat poor in this town unless you can compete with various foreign kleptocrats using it as a land bank, and that takes 8+ digits wealth.

Dude, $135k base in Montreal. Pay is localized but not that localized.

London is an expensive town, so I'm sorry to hear that.

But for others -- dont be too jealous, because a lot of that high salary is just a rent premium and ends up with landowners. Great if you are a landowner, but otherwise, you're mostly breaking even after taxes and rent unless the markets riso to make your stock grant in the money. (and well, if all the math is on stock anyway, you can work anywhere and just buy some options on FAANG and be done with it, which is what I do.)

There are cases where you can do well (e.g., live with 2+ roommates in a tiny apt like some friends do.) -- but then, it isn't a sustainable thing.

> because a lot of that high salary is just a rent premium and ends up with landowners.

And London has cheaper rent?

Right that point broke down pretty quickly. Rent in London is more expensive than most of the United States.

I found pay-salary ratio worked best in Toronto provided you don't expect to own a home in the city.

That is why the post started off with "London is an expensive town, so I'm sorry to hear that. But for others --"

Some cities are not rational. The best game to play when you have irrational rules is to not play. That is why the post was directed "To others: "

London and NYC are not rational cities. To some extent, also Vancouver. Some of these cities are places where foreign cash comes to be parked in, often empty, apartments. They raise prices for everyone and ruin market dynamics. SF/Bay Area is irrational in a sense because you are competing on a time spectrum -- a rational job for someone who purchased a house in 2004 is an irrational job for someone who needs to rent at 2019 rates.

Yup, Vancouver can be more expensive than LA, with way lower average salaries.

$250k is new grad salary these days.

It's also why I'm so sad all the time!

There are two points that I think are very important but usually don't get the time of day in these discussions:

1. Your success is intricately tied to your network. Have you ever met someone who was ready to cut you a $72k check as a recruiting bonus to join a startup? (Referring to Garry Tan's story.) I will bet that the vast majority of people in the world never even came close to that kind of situation. My point isn't that any given individual has no hope of getting there, but rather that if you want to manufacture that situation for yourself, you do it by networking, not really risk taking.

2. Not everyone's priority is their careers. I wholly agree with encouraging young people to take risks, but for a lot of people that's not the right choice. Most people want to build their careers, but not everyone wants to make it personal the way you have to as a founder.

I worked on startups for my entire early career. I met a lot of interesting people, learned more than the equivalent big company career could have taught me, and I regret none of it. However, it also made me realize that the vast majority of startup people are also just grinding away, not necessarily "taking risks." My experiences with startups made me much more wary about working for a startup.

If you want an interesting life that might lead to money/power (but will definitely lead to interesting people and good stories), find an idea you love and start something. If you want a reliable path to lots of money, join a growth stage company or tech giant and grind your ass off.

Its not pessimism. People should just get to hear both sides, and know that VCs typically offer this advise because, first and foremost, it benefits the VCs.

The VC typically has enough money to be set for life, several times over. They bet on many companies simultaneously to diversify their own risk. Most companies will fail, and the employees will go down with the ship, but the VC only needs a handful of bets to pay out. None of this is the case for the employee, who bets all in on one company.

I started in 2006, here, just like you, reading Hacker News. I spent most of my day writing code. I learned on this site how to build things for other people, ship and release them, and yes, eventually build a company. I learned I wasn't meant to have a boss.

The only reason I became a VC is that I want to be here to help people who really should be start companies actually figure out that they can! People helped me a lot, more than I deserved.

The world is full of capital, and it's not going to the right people who can solve problems. I would like that to get better, and trying to do that with my own hands.

I’ve been active on HN almost as long as you. It’s not 2006 anymore. I would still follow the same career path based on what the world, HN and Silicon Valley were like in 2006. I wouldn’t based on 2020 world, HN and Silicon Valley. Would you?

Rents are astronomical. Startup math has worsened. FANG math has improved. In fact only the G in FANG even resembled the FANG of today. FANG has done a great job figuring out the innovator’s dilemma, making disruption in all their verticals much more challenging. The low-hanging fruit problems are gone so there aren’t really any two engineers in a garage problems that someone well capitalized can’t quickly copy. You now need generalist engineers, designers, AL/ML/DS engineers, hardware people, etc. on a founding team, meaning that you need to take on sizeable VC money before building IP equity and getting product market fit.

Startup risk is way way worse these days.

I’m not so sure that FANG companies have solved the innovators dilemma. Do you really see new and ground breaking tech come from them these days? I do agree that innovating is more expensive than the 2006 days of “we made a website”

> The world is full of capital, and it's not going to the right people who can solve problems.

Hmmmm, isn't being a VC kind of exacerbating this problem? The business model of being a VC is entirely based around moonshots, which means that you are pigeonholed into only making bets on certain types of founders that either (a) already have extremely high risk tolerance or (b) can be pushed by VCs to take risks beyond their personal risk tolerance.

Which makes your "right people" statement come off slightly disingenuous, since the VC strategy seems to disproportionately attract more Mark Zuckerbergs than Matt Mullenwegs (for category (a)) and often exploits founder naivety for the benefit of the VC (for category (b)). I'd argue that many if not most of the "right people" who can solve problems are in general not a good fit for seeking VC investment.

Do you have suggestions for other investments strategies that may be more compatible for potential founders that don't fall within these two categories? Have you thought about branching into those investment circles?

If you look at our portfolio we do try to find people who are not necessarily that classic "moonshot" type. Things that turn out to be moonshots often look like niche businesses.

We try to put what you say to practice, but it's an inexact art, far from a science.

I still look for two things: a/ great engineers/designers/product folks with deep empathy for problems people have, and b/ a real problem to solve.

From my experience as a YC partner it seemed clear to me most of VC-dom uses the wrong criteria: buzzwords (like Realtime or AI), and resumes (ex-Google ex-Facebook Stanford Stanford Stanford etc). Better to use first principles and try to find that which is signified, than just use of credentials that are just dumb signifiers.

But in order to do that, you kind of have to be an engineer/designer/product/marketer yourself, and that's why I think our approach can work. Ask me in another 10 years.

You're absolutely right that VC makes this problem worse. I'm sorry for the industry, but we are trying to do better.

> I still look for two things: a/ great engineers/designers/product folks with deep empathy for problems people have, and b/ a real problem to solve.

That... sounds like just regular investing. Rather than trying to save the VC brand (which is already pretty tainted in entrepreneur circles), why not come up with another name and scale that?

Parent does not dispute this. You want what you want, i.e., selecting the people who are most capable to put the capital into good use.

But note that this game is not as much costly for you as the founder. Founder takes bigger risks in terms of their time and opportunity costs than you as a VC. You will probably find your successful pick in the other founder you fund and designate that other guy “the most capable”.

> The world is full of capital

This is one of the most entitled statements I've heard.

> The real substance is — how the fuck did he meet Peter Thiel at 23, and how can somebody recreate that?

I think things like this seem impossible when you’re thousands of miles away, but I believe the answer is to move to SF. It really works! Move here and rub shoulders with startup people and eventually you’ll be 1 degree of separation from Mark Zuckerberg.

I think I met Peter Thiel when I was around 21? And I sometimes play PUBG with the founder of del.icio.us, and Alexis Ohanian is a frequent customer of my business. I started out as a mediocre college drop out in Michigan. But to be honest while this is what a lot of people who move here chase for, they’re not really needed to make a business successful.

> Don’t work at startups to make $200M. Work at startups because you’ll work with people who have risk profiles that are much more likely to generate outsized returns as a group.

What's the point of that if those "group returns" are allocated almost entirely to the founders and the investors?

If you think it's not about the money, it's worth checking to see if you're being suckered by someone who realizes that it is about the money.

I generally recommend people think about it as two things: Learning or Earning.

If you are learning, you are getting something out of the situation even if it's not well paid. Don't stay there forever, or stay until you stop learning.

Then when it's time to earn: go work at a tech giant if you must, but also consider starting one yourself. Or if you can tell a startup is a rocket ship and have a chance to join, don't ask about whether you have a window seat, just do it, because those are often the best risk-adjusted returns you can get. Post-product-market-fit is an amazing time. (The trick is it is hard to tell if it's a rocket ship, of course.)

In the learn phase, I don't think it has to be about the money (though of course people have their individual needs). But in the earn phase, it is definitely about capturing the value you create.

Work at startups because you’ll work with people who have risk profiles that are much more likely to generate outsized returns as a group.

This is statistically not true. S&P 500 Index funds have outperformed VC's as a group for any reasonable time period.

I can imagine this to be true but do you have a source for that information?

Thanks for the links! I am aware of the Buffet's bets but I did have a feeling that some VCs can be quite profitable especially the ones which invest in future government contractors and/or future surveillance facilitators.

The VCs are always profitable - for themselves. They get 20% returns no matter what. Their investors on the hand....

You’re making this (single startup) v. (single S&P company). That’s not how it works. Prove yourself at being an adept generalist and you’ll, over time, create access to the most ambitious people and companies.

I’m doing just the opposite. I’m comparing VC funds in the aggregate to stocks in the aggregate using VC funds returns as a proxy for startup returns.

I think that’s fair. By definition you can’t invest in bootstrapped “lifestyle companies” and they rarely have “outsized returns”.

There are a lot of “ambitious people” who have failed that you never hear about.

Stories like this are really a dime a dozen. Marc Andreesen and the founders of Tivoli both worked in the same IBM dept. I met Michael Dell when he was building systems in his dorm. So did a thousand other people. Anyone who got in early at Dell got ground into the pulp years before there was a huge payoff. Even those who survived had to wait 10 years. The trick is finding new tech where people are taking risks. Anybody who went to a NeXTWorld Expo could have partied with John Parry Barlow, Tevanian, Kawasaki, Draper, etc.

There are probably a thousand classmates of Larry, Sergey and Mark who are just "getting by" at $200K/year. Get out there, mingle, take risks, fail and look for the edges. That's where you'll find the famous people of 2025 or 2030.

This is a great reminder. I was impressed by the recent documentary "General Magic" by how much smart people seem to congregate around new ideas. The old Mac team was the same one trying to create the smartphone 10 years before it was possible, and it was that core of folks who ended up doing it at Apple and Android later anyway.

I saw the documentary and enjoyed it. But finding that company in 2019 seems harder. That said, I perhaps I'm not seeing it -- how do you find that company of today?

There are thousands of start-ups in their A round right now. A bit less in their B round. Which is going to be Apple of 2040? Which will be the Google of 2030? Which will be the Stripe of 2025?

It is like one of those quotes "if you purchased gold in 2002 and sold in 2009, you'd have a 400% return" -- works well when you know in hindsight that 2002 was a long-time low and 2009 a long-time high.

This is less difficult than you're implying. It's true that selecting the Stripe of 2025 is difficult; you need to pick between companies that are only 3 years old. Similarly, if you want to select the Google of 2040, you would need to pick between a bunch of companies working out of their friends' garages, and that would not be easy. But to select the Google of 2030, you need to look at companies which:

1. Are about 10 years old.

2. Are close to IPO (Google was already 4 years post-IPO when it was 10 years old, but IPO timing has changed since then).

3. Have market fit with multiple products (Google had Gmail, Maps, and Chrome already when it was 10 years old).

4. Are still founder-led.

To select the Apple of 2040, you need to look at companies which:

1. Are about 20 years old.

2. Are about 10 years past IPO (again, Apple IPO'd 4 years after its founding, but the same company today would probably IPO a bit later)

3. Are still actively innovating, and launching successful new products.

4. Are still founder-led.

These companies exist, and they have been substantially de-risked relative to the 3 year-old startups. Engineers that join them today will have similar financial outcomes to those that joined Google in 2008, or Apple in 1996.

I really want to believe you, because that means I could also end up rubbing shoulders with Thiel, Andreesen, and their crew at will.

But what you are saying seems to be cherry-picked examples, how does one do this without knowledge of the future?

We dont know who the future Andreesen will be, we dont know which one of thousands of groups/departments/companies they will work at, so where do you go work (assuming it were that easy to just choose a company+department+group at will.)

The population of innovation is a sliver of subset of the engineering/CS/AI community. UI-Urbana (Andreesen), Stanford (Page/Brin), Harvard (Zuck), etc, etc. That gets you down to a couple of 1000 people or so. The size of an American High School.

You don't have to see the future, you just have to know where those working on it are and meet enough of them. They're in places like a Supercompute booth or MIT poster session trying to tell you. They may not have The Big Idea yet, but talent tends to stand out.

Andreesen didn't randomly pick an IBM group. He picked one doing Unix distributed system management and virtualization 25 years ago. I didn't have foresight to make the same choice, it just seemed obviously interesting and there were only three major players in that space.

it pains me to read so many negative takes on startups. We’re actively training our young people to avoid taking risks

The maths has changed, substantially. As late as the 90’s if a startup was a success then all the early employees would make life-changing sums of money. Even the secretaries at Microsoft and Apple got equity. Nowadays all the value is captured by founders and VC’s - by spinning the myths from the 90’s and ruthlessly exploiting any workers young and naive enough to fall for it.

I think many people are just burnt out by false early stage startup promises and all of the grifting that takes place in this industry. I wouldn’t think this sort of reception would have happened in 2012.

When I was 24 I was a broke college kid who couldn't get a real job and just had his first child. Then the invasion of Iraq happened and I was deployed to Kuwait. About 50 of us came over together and they basically separated the smart people from the rest of us. The smart people were given engineering or analytics positions. I was put on operations which was considered a dumb person's job.

Some context is in order. This unit was/is the 2-star command that runs communications for CENTCOM. We were supporting a network of around 270,000 users at that time due to the surge into Iraq in 2004 and the stand up of the transitional government. That is about the size of Bank of America, the entire company with all its branch locations and total employees. I was the night tech lead of operations of communications over all of it. That was my first time in management as a young staff sergeant. This was an incredible eye-opener for me, but its not a mark of success. I didn't get paid more because of the severity of my decisions or the size of the organization.

Now I'm just some software developer at a big corporate company assigned to a team that struggles to get copy/paste right. When I want to work on software that's vaguely interesting I contribute to open source.

My reflection from all of this is that people often evaluate themselves, and their perspectives of success, using faulty metrics. If you were a fresh 2 week hire on Instagram before they were gobbled up by Facebook are you suddenly a successful software genius due to a magical windfall? In my world as a front-end developer people often consider themselves experts and pat themselves on the back for stringing a few statements together like magic glue over a monster framework that they don't really need but does all the work for them. I don't really consider that a mark of success either and am often a social pariah as a result. If you really, I mean this seriously, really wanted to be rich and financially super successful then why are you spending your time writing software?

For me, personally, I measure success in the problems I solve that other people find value in, which is a large motivation for my contributions to open source. It isn't a number that comes with bragging rights or some form of vanity. Instead, its just something to do or take pride in.

It was insane that I got to meet Peter Thiel at that point in his career. One of the subtle things is that he wasn't the demigod he is today. He was a very well respected founder who had a great exit. You're right to point out it's a social lottery. Dumb luck is a big part of success.

I will definitely make more content about building your network the right way. I think if you consistently try to spend time with people who make things you think are awesome, the score seems to take care of itself.

Totally agree you shouldn't work at a startup if money is the only consideration.

> The real substance is — how the fuck did he meet Peter Thiel at 23, and how can somebody recreate that?

He kinda answers that fairly early on:

"I'd just graduated in 2003, and my friends were starting a company with Peter Thiel. They flew me down to have dinner with Peter."

So to get rich, all you need to do is come from enough privilege that you graduate well connected with rich friends...

Sounds like your story supports that too - if you didn't connect with rich people in school, meeting (and becoming friends with them) at startups is a reasonable second alternative.

Where did he say that his friends were rich?

> The pessimism in this thread really bothers me.

I don’t recommend startups because of personal experiences. I’ve personally lost more working for startups (in terms of unpaid salaries, lower salaries and impact on health) than I did running my own startups. Startups rarely have good development practices, are often always in crunch mode and often have bad work-life balance.

Some people thrive in that environment, sure. Personally I don’t hate the environment but I can’t stick it too long either so I’ve job hopped a bit. But when you add that high-stress-low-discipline (discipline in terms of development practices) environment together with low salaries, false promises based on worthless stock, high founder ego and a high rate of startup failure, I don’t think it’s a good deal for most people, who would be better off in a stable balanced low (comparatively) stress well paying big company instead.

I hate to say it since I’ve started startups myself and it makes finding employees hard, but I think the people who really thrive in that environment are relatively few.

Sure it can be rewarding, you can make great connections and learn a lot but I’ve found big companies can be all of the same things, although the learning is usually deep in big companies and wide in startups, but a medium sized (ie established startup) company might be a good middle ground. Maybe everyone should experience it once though and then move on. I also will likely make another attempt at a startup myself too, but I do feel that there’s a difference when you own the thing.

This is all very inconsistent. OP says in big corps you need politics to get (new) shit done. But building your people network is politics, regardless where you work. It is certainly easier if you are employee number five or ten, but it still distracts you from your actual work.

I can't say it another way but the very american person cult is worrying. Thiel any many other tech icons are just icons because they are billionaires and maybe populists. Having a network of those is surely a way to get funding. But that again beings politics on the table and more importantly implies that you can only be successful if you have connections to the billionaires club. It lacks a great deal of imagination that only startups can survive with the direct support of the big guys.

I can’t stand startups. Low pay, long hours, loys of aggravation and often socially toxic environments.

The social toxicity is a big one for me. I have always struggled in this area and it makes things SO much harder outside of work.

In what sense? Also, would insisting on a 35 hours work week fly badly at startups?

Maybe startups would be more desirable alternatives if they gave RSUs instead of stock options, or at the very least have an exercise period of 7+ years instead of 3 months, or not be forced to pay the cash equivalent of taxes just for exercising...

As it stands now, startups are just places that offer half the salary compared to public companies. Working for half what you could be making is a large ask of almost anyone.

A startup won't solve climate change and contributes to another global problem - inequality.

If we want these problem to be solved we should rather encourage people to be active politically and figure out how to tax carbon emissions worldwide and make sure the tide actually raises all boats.

This is very insightful. Thank you.

One insight you may not be considering is that the profile of a CS graduate has changed significantly. A tech job is now full of prestige and social status. Even more so if that tech job is at a big brand name.

A much larger portion of young people are going into tech purely for the income and the prestige. And the preferences in this thread at the end of 2019 reflects that shift. Your average person going into tech in 2019 is very different than your average person going into tech in 2005 or even 2010.

The people who think like you still exist. Just that a much larger group has poured in and made them less obvious.

As tech becomes infused into everybody's daily experience, a certain amount of conservatism is not only to be expected, but probably wise. The "move fast and break things" startup approach isn't necessarily optimal in all facets of life, and a lot of the low-hanging fruit of "possible significant improvement if we succeed, low societal consequences if we screw up" is plucked.

I absolutely love love love this..

I'm not sure how many more people I will send this on to, you haven't said something for the first time, but you laid it out in a way as if i was speaking to someone.

Thanks, I appreciate it. I've been somewhat there and I get that not everyone understands, but you really speak what I believe a lot of normal developers/designers/engineers are thinking.. Much love.

Just based on your rebuttal, background knowledge and common sense alone, please write up an article, even if you only flesh out the points you made. I agree with as much as I can relate to, but the rest begs for more story!

Thanks for the feedback. This thread has me thinking about a blog post. I don’t write as much as I’d like to because I feel as though I’m still testing my worldview / hypotheses, and I don’t like delivering half-assed products. :)

Thanks! There are ways to work on ideas without sacrificing one's own life. And this can involve working in a small group that people will call a startup. There is no reason to enter into abusive relationships or sacrifice being paid, IMO. I also think though some tech salaries are really high and an ok salary from a startup that keeps you alive + lets you work on your own product vs. being told what to do is really nice. I mean if more people did that we may even have less of an income disparity between tech and all other jobs in any given geographical region.

> The pessimism in this thread really bothers me.

I wouldn't worry about it. Every venture I've started, successful and failures, came with everyone telling me I had no chance.

I honestly find it highly unlikely that a startup is going to address climate change in any meaningful way.

If the pessimism in this thread bothers you, imagine how much your woefully out of touch survivorship bias and bothers everyone else in this thread?

One of the top comments that responds to your post tells you that the math changed. This is true. The fact that neither you nor Garry talk about the concrete specifics of this means that you're either unaware of it, or worse, intentionally sweeping over it.

You really think that what is "actively training our young people to avoid taking risks" is all the "negative takes" on startups? What about the changed exit environment where companies are staying private longer and equity shares are no longer outcompeting public company compensation? Poor or inexistant options for liquidating large holdings of early company equity? Liquidation preferences, dilutions, and founder enrichment allowing grey-hat founders to self-enrich at the expense of their employees? How about the increased ability of large companies to compete with startups and turn their products into mere features? Ballooning student loan debt, rampant social inequality, a collapsing middle class labor market and automation?

You know what I think is actually happening, based on the interviews I've given working at various startups where we lose great candidates to more established companies? I think candidates are getting smarter. If they're smart enough to make outsized impacts at startups, they're smart enough to make outsized impacts at large corporations and make sure they get commensurate compensation. They know that they have better access to a tried and true organizational structure around the software development and revenue line development lifecycle.

A lot of this completely changes if you're the founder. That's probably the one perspective where the ownership structure is so radically different and more advantageous that it's very much worth it over being a mid level manager or executive doing the same thing at a larger company, if you can pull it off. But if you're not a founder at a company any earlier than late series B or C, you're generally taking a proportional risk for a much less proportional reward if you join as an employee -- not just financially, but organizationally and directionally (in career trajectory).

And, if there's one thing I can't stand more than anything, it's when founders wear rose-colored goggles and can't admit this truth. Not implying you're doing this, but I'd advise anyone in danger of this to never drink the kool-aid you sell to the point where your reality-distortion field obscures your inability to see the very real reasons why people make (and remain happy with) these decisions, just because it threatens your life choices and identity.

I appreciate this, and am trying to take this to heart.

But it is also possible to survive. And if you do that, you don't merely survive, you thrive— that's what product market fit looks like. I've been lucky to see it dozen of times first hand, and it's nothing short of magical.

When founders and teams pursue something without product market fit, it's a high cost to pay and a terrible outcome for most everyone. This is also absolutely true.

Startups are not for everyone! I appreciate your feedback and it resonates with me.

>> But it is also possible to survive.

I think there is a big gap in how different people see this. You are right, it is possible to survive. It is also possible to fail. For some people, that is fine -- they can call up an uncle, or a friend (Thiel) and land another job quickly that pays good medical benefits.

For others, an 20/80, or even 50/50 or 80/20 survive/fail just does not cut it. Perhaps they have crushing student loans. Perhaps they have no parents to fall back upon if things go south. Perhaps they have visa issues. Perhaps they have a sick parent to take care of (my case.)

I admire your ambition (and envy it.) I hope people who have social safety nets realize it though. Because not everyone does.

It reminds me of a fellow undergraduate Senior who looked down upon me for going to work on Wall Street while he did the more pure thing of going for the Peace Corps. I asked -- so how do you land a job when you're done with the 2yrs commitment? He said his uncle was going to hook him up at a hedge fund. Nice, if you can swing that. Me? I have no uncles at hedge funds, so the on-campus recruiting super-day was my one and only shot. I dont think that makes my choice less pure, it is just one of relative necessity.

Yeah, I know. I had this problem too. I had $40K in credit card debt and $40K in student loans, when I got that offer. I probably should have mentioned that too. Having debt is a huge crushing weight and definitely prevents you from taking the risks needed to capitalize on opportunity given you.

It really did, for me, as well.

Thanks for that detail. I believe every decision needs to be made in the context of what I know at that time -- and what I decide is the best way to go forward at that time. If I gain new information later, and I can adjust great.

But if it works poorly later on, I dont look at it negatively, because short of having a time-machine it does not help me be a better person. Constantly improving the judgement framework is a good thing, but there is no point regretting a mistake you could not have seen differently.

> When founders and teams pursue something without product market fit

How do you know if you have product market fit until you pursue something though? The standard advice on this is completely contradictory:

E.g. on the one hand, you have the advice that adding more features will never result in product market fit, because most of the features will be too far down the funnel to move the needle and they won't ever solve whatever the core problem that's making the thing not successful in the first place.

On the other hand, you have the advice that you shouldn't pursue growth until you have good retention, which basically implies that you should keep working on the product almost indefinitely even without product market fit.

On a per employee basis, the overall likelihood adjusted expected value and liquidity of most startup shares generally underperforms the market, almost to zero if biased towards liquid earnings like it should be. If you end up the former employee of one of those startups (which is pretty common), you end up in a place where even if the company is booming 5, 10 years later, no liquidity event has happened nor is in sight for employees. If you ask if you could give someone $9-19M liquid evenly split over the next two decades or several tranches of $1-100M potentially forever illiquid stock and $2M liquid, which one do you think they would pick and should pick? Even if the max payout is lower, the mean payout is orders of magnitudes higher and creates access to bootstrapping. I'm not going to say you made the wrong one for obvious reasons, but do you think it's smart to attach your lifetime net worth to such illiquid assets?

Garry, you entitled your blog post "Working for Microsoft cost me $200 million" but you neglected to mention that you had debt you were paying off. For many other people, that blog post could easily have been called "Why working at startups instead of Microsoft cost me $20M and left me in the debt I started in". That debt neatly encapsulates one of the societal problems with student loan debt. It creates a caste system. The less generational wealth you are born into, the more your stepwise freedom in any direction is piece by piece restricted. You can't make choices that people born just a bit wealthier than you could make because they're cost step functions.

It would indeed have been a poor decision of you to take that Palantir job out of college with your financial situation. That smart decision would have been to keep pursuing the traditional big company engineering promotional path. Any action you take that deviates from that path towards a sustained lower liquid compensation on a year over year basis is one where you're taking a hit to liquidity by paying opportunity cost to make a default-illiquid investment (or multiple of them over time). If you combine all the post-tax income you've lost with the compounding interest it could have made, it's substantial on a career-long basis.

I would advise folks to work at startups for the same reason I'd advise them to work at a fashion magazine or work at a record label intern. It still has some cachet as culturally creative labor, and you can certainly make a living in the industry, but it's not a great place to stay long-term unless you're independently wealthy, are running the show, or you found a firm cleanly in hypergrowth and manage to grow with it. The antics and financial shenanigans take a toll on you. You can't rely on it as a sane vehicle to consistently build wealth, because it's structured like a swap heavily in favor of the company's investors, and you're footing the bill with your labor in exchange for an IOU that the company will IPO.

Tens or hundreds of millions of extra income and RSUs from their big company paycheck could be going straight into their nest egg and compounding over time, making it viable for them to make a major life decision without hardship. It's reckless and irresponsible to recommend others to engage in without a significant buffer of pre-existing wealth, and with the expectation that (like many other kinds of investing) all of participation is at risk of full loss.

The reason I haven’t responded to the math changing is because it’s Christmastime and I’m spending time with family. Some of the responses to my post require a much more thoughtful answer than I can muster while at the gym between meeting family members.

Be patient. I’ll respond to the other post if you wait.

Please do. I honestly want to hear. I am debating whether to join a startup again for my next job or just crank Leetcode and go FAANG and stay for the rest of my life there.

Unless you’re 80, you’re not going to spend the rest of your life at Facebook or Google. Imagine someone in 2004 saying they’re going to work the rest of their life at MySpace or Yahoo.

There are 100% people who have spent their entire career at Microsoft who are financially extremely well connected and financially set for it. Folks who have been there from 1995-2015 and beyond. Don't underestimate the possibility of doing something similar, whether for MSFT or somewhere else.

Fair point.

It sounds a little bit like perhaps your original post required a more thoughtful answer than you could muster while at the gym. Perhaps it could have used a bit more patience as well?

Sure. Feel free to respond. I think everyone would benefit from you contributing more to the discussion, especially if your original post didn't fully clarify your position.

This is a terrible comment. "Be patient" is a non-response. You made a comment, and got a very good response as to why your comment is missing nuances that might be the real reason for a change that you're attributing to something else.

Especially in a forum like this one with no notifications, Be Patient is basically saying STFU.

"Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith."


In a heated discussion thread we forget that web forums and bulletin boards are not the best place for realtime conversations.

On HN people often do not reply on replies to their comments and it does not mean that they do agree.

It seems like a rather nice thing which helps to avoid many ego-battles.

Not to start an argument, but that could also be because HN doesn't automatically notify you of replies. I'm subscribed to the email notifier, but that was created by a third party and I doubt if a majority of the users know about it.

It contributes as well.

The poster I replied to here created a straw man argument based on my lack of response to another comment. I didn’t think that was fair considering my bandwidth limitations, so I decided it would be best to set expectations. My response to the “math changing” comment has now been added above.

Do not assume that the lack of response of somebody else implies anything aside from the fact that they didn’t respond. They could agree, disagree, or maybe they haven’t even read or thought about it yet — and maybe they never will because something else distracts them.

I think discussions tend to be the most productive if we assume everybody has the best intentions. :)

Leaving the passive-aggressive smiley aside for a second, you'd do well to more fully understand my position before brushing it off as a straw man. While I don't agree with how GP phrased it, they are correct that "be patient" is a non-answer. I've been sold enough kool-aid to where my default presumption is that the founder suffers from a "reality-distortion field obscures your inability to see the very real reasons why people make (and remain happy with) these decisions, just because it threatens your life choices and identity." That's why I suggested it when I saw elements of that distortion field in your reply.

We do not agree on how folks should approach their careers. Not one bit. That's not a straw man just because you don't agree. It clearly resonated and struck a chord with others who have been on the other side of the pitch, and who have made the same conclusions I have.

It's just the reversion-to-the-mean effect described elsewhere[0]. It seems bothersome that on a startup news website run by an incubator, the view is that startups aren't a good idea. However, that's only because HN is now what /r/programming+technology+apple+google was, not what HN was. It's not really a startup news website. So I wouldn't worry too much. The people in startups are probably in real-world groups, and the networks are tighter.

I suppose the real problem is that some genuine startup-oriented personality may be dissuaded from working on one, but perhaps the cultural force against them is in the range where it should dissuade someone who isn't more wholly convinced that they know a truth that others do not believe in.

I think it may be counter-productive to attempt to convince people who prefer aiming for the safe money. I think that while attempting to draw a line hits the Sorites paradox really fast, there is quite clearly a difference between someone with your world-view and someone who runs the math on total compensation alone. I think the person with the latter view will not recreate the OP experience because all the choices are very non-independent. The same person who'll take the low-variance high-expected-value out of school will do the same the next time they're faced with a choice and again and again and again ad inf. They provide the selective pressure of optimizing for 'exploit' (in the explore/exploit sense) while the startup-type folks provide the selective pressure of predation.

0: For instance in the geeks/mops/sociopaths view https://meaningness.com/geeks-mops-sociopaths

It may also be that the big pile of folks here with experience in startups have done the math and can argue that working a startup isn't the best way to maximize the outcome of your time.

HN doesn't just have to be a "startups are the best" echo chamber.

I would be surprised if your hypothetical situation more closely models reality than mine. It's possible. I just don't think it's likely.

I would revise my position if more successful founders argue that it isn't worth it and I'd mildly revise it if more failed founders argue that it isn't worth it anymore.

The discussion isn't against startups. It's for giving employees more incentives to join startups, as opposed to repeating the same hoary cliches. The tech industry and cost of living have simply changed from a decade ago. Incentives must increase accordingly.

thank you, this was the comment I was looking for

>We’re actively training our young people to avoid taking risks, and it’s going to fuck us

I think the kind of people with the balls (or stupidity) to join/found a startup tend to be the kind of people who don't listen to what everyone else is doing anyway. This might have a sort of positive selection bias: you need a minimum amount of risk tolerance to succeed in a venture.

>Work at startups because you’ll work with people who have risk profiles that are much more likely to generate outsized returns as a group. You’ll have the opportunity to join or create a community of high-performing folks that, in aggregate, outperforms anything you can do on your own. Maybe you’ll be the CEO one day, maybe not, but no matter what you are very likely to come out ahead if you apply yourself.

After failing with a personal venture, I recently joined a small startup and I can offer an similar perspective: working here is amazing for a generalist because once your coworkers trust you, you have more freedom than you could ever ask for, and your personal decisions have compounding effects on the direction of the product that you're building. There is zero bureaucracy. This is a dangerous place which requires a knack for hiring the right kind of independent thinkers and doers who do not need hand holding and tend to have good understanding of large systems - but when the org is small and the team is well selected, if you're building something truly new and useful to society (read: not adtech or social networking) the feeling is magical and being enthusiastic about your job does wonders for life satisfaction.

I know this is a temporary state that will disappear if we fail or grow into a midsize company, so I'm trying to savor it while it lasts. Also helps to have no family so that you can crunch when necessary without hesitation.

> right kind of independent thinkers and doers who do not need hand holding and tend to have good understanding of large systems

lucky you. i’m in a startup where the very large majority of the eng team is here with their first job out of school. and they have the same latitude you are describing. i’ve found that to be typical these days.

> The pessimism in this thread really bothers me.

It's the demographics. The HN population skews extremely old and older people are generally more pessimistic, cynical and risk averse. Also, there is a large amount of traditional media workers on HN and they, for obvious reasons, are not fans of the tech industry since the tech industry is eating their lunch.

Don't let the thread get you down. It's a skewed and biased representation that isn't based on the real world.

"Extremely old" compared to the general population? Are you saying HN mostly consists of retired Cobol programmers?

I'm going to be cynical and say, maybe >32 was the cut-off point in the OP's message.

"OK, Boomer."

There's something to be said about assuming a that very large volume of mostly-anonymous messages on the Internet can be deteremined by the OP to be old. That sounds like ... something a young person might say.

Is there some kind of demographic data for HN or is this based on your impression from comments? I wouldn't expect a large amount of traditional media workers.

you say pessimism I say the experience and better insight how life really works YMMW

For all the startup founders and VCs in this conversation, you are cheap motherf*ckers. When I read that engineers and employees prefer FAANG companies because they pay better, I want to remind you that it wasn't always like this. 10-15 years ago startups paid way better than big tech. Big Tech rewarded you by getting to specialize on problems and working at scale. The reason FB and Google pay well is because when they were startups, they were paying WELL!

Let me ask you all this, if you could make the same (or more) money working at a startup that you make working at a big tech company for 4 years, would you pick the startup? The answer should be based on what kind of working style and project you prefer, not finances.

Google and FB were paying less when they were founded than most startups I see today, adjusted for inflation.

The difference is that now Google and FB pay way more. More than startups could ever dream of competing with. Everyone I know at FB or Google is making $225k+, with the average/median being around $300k/yr. Absolutely no way new startups can play ball with those salaries, and FB/GOOG certainly weren’t paying that as they got off the ground.

> The difference is that now Google and FB pay way more. More than startups could ever dream of competing with.

Logically speaking, the only way that a company can pay more and still be profitable is if they produce value more efficiently. On a general, macro level.

So, if startup founders cannot even dream of providing either cash or equity (adjusted to risk) comparable to the big-techs, does this mean that startups are no longer the best way for society to become more productive?

I only see if two ways (again at the macro level)

a) Startups are better than BigTech for society economically: so make sure you hire the best-of-the-best, and give them high equity, and later compensation when you have more cash.

b) BigTech is better than startups for society economically: here, the proof is in the pudding, better hires leads to more profits, so hire the best of the best, and just give them mountains of cash.

I feel like we're seeing b) for the last 5 - 6 years.

I don’t think it’s crazy to say that a line of code written at Google will, risk adjusted and averaged across all lines of code written at Google, create more value for society than the risk adjusted and averaged line of code at a random startup.

But in startups averages don’t matter as much - it has power-law style returns, so if you happen to work at an insanely valuable startup those lines of code might be 1,000x as valuable as the average line of code written at Google.

Ergo, if you can/want to play the odds with those kind of risks you go to a startup, even knowing the risk adjusted value is lower (loving your work also matters, and some prefer startups - myself included). If you want a sure thing you go to Google.

Could it be because BigTech, collectively, have created an oligopoly? Perhaps making it easier for startups to compete is another reason for antitrust.

BigTech is insanely big right now. Basically advertising and cloud are humongous cash cows. It’s a good time to work for BigTech and build some safety net.

But then again it’s only Google and FB that pay above the line. Microsoft and Amazon salaries, last I checked were pretty subpar.

Apple is not known for paying great, either. So one wonders if it really is just Google and Facebook pumping the market up.

A lot of Amazon engineers have done amazingly well over the past 5 years what with the huge run-up in stock prices. This may not continue going forward, but don't underestimate how much bank they've made recently.

I think that's true but a good number of my coworkers at Apple got offers from Google as well and Apple outbid them

My theory (I could be wrong) is that both Google and Facebook and startups trying to emulate them are trying to exclusively hire from the same dozen elite universities. That would explain the salaries.

SRE has a lot of people without degrees. I don't know if SWE is still an ivory tower but just SRE salaries at G and FB can debunk this theory.

Or alternatively (and in my mind, more likely), the massive gains coming directly from computer technology has reached its peak. There will never be another new purely "technology" (i.e. where the business is primarily built-on computer software, internet, and/or hardware) company that's as profitable and powerful as Google or FaceBook

There will always be scope for solid good new businesses with big and small margins, but maybe the next FB / Google will be in some other field? Maybe biology or nutrition, maybe quantum physics, who knows. I wish I had some ideas though.

> Logically speaking, the only way that a company can pay more and still be profitable is if they produce value more efficiently. On a general, macro level.

sed 's/produce more value/extract more wealth from dominant positions and regulation then control/'

C) The largest tech companies are receiving windfall profits after a decade of successfully engaging in predatory anti-competitive behavior and regulatory capture.

>> Google and FB were paying less when they were founded than most startups I see today, adjusted for inflation.

You'd have to adjust quite a bit for inflation. The average rent has skyrocketed 300% since the time Google was a pre-IPO company. I would not mind a "low" Google 2004 salary if I could somehow also lock down a Mountain View 2004 mortgage. Also, tuition and student loans have risen. So while im at it, i'd love to lock down a 2004 student loan burden.

> average rent has skyrocketed 300%

The world is bigger than SF. Seattle enjoys the same payscale with half the housing costs.

Pretty sure house prices in Mountain View would've been way higher in 2004 if everyone knew where they'd be in 15 years.

> Absolutely no way new startups can play ball with those salaries

Are their ideas just not that promising, or are they just not raising enough money, or what?

Google has an ATM printing money in the basement. Startups do not.

> Google has an ATM printing money in the basement. Startups do not.

Venture capital is supposed to be (and certainly was a few years ago, though it may have gotten more conservative) the transfer pipeline between the money printing enterprises and the high-risk, high-reward startups that provides the unlimited cash the latter don't otherwise have while unlocking the return potential the former lack.

I mean my company raised $14 million from Google Ventures, so it’s working to some degree

They may have been paying less, but they were granting actual meaningful equity, and it paid out. Startup equity offers are absolute jokes now, and on top of that you run the risk of a recap zeroing out everything you've worked for.

Most startups can't match G/FB on cash, but they can do much better than they are on equity amounts, equity terms, work-life balance, etc.

For example, what is the option exercise window if you leave Lambda?

They can do better on equity, but they absolutely no longer do. My last startup was acquired for $1.1B. The founder walked away with $400M, and the average engineer (there were 60 of us) received less than $100k each for 4 year grants.

> startup can do much better on work-life balance?

really? i never heard anyone said that

Absolutely this.

A lot of startups these days skimp by hiring sub-FAANG SWEs with less than 5 yoe, and it shows in their products. Lack of product maturity, bad engineering (worst horror story I’ve heard recently is Wayfair), resume driven development / over-engineering / cargo culting, huge teams to work on simple features. All so they can hire two middle-skill 22 year olds instead of a skilled 35 year old.

If you’re able to work at FAANG it is just bad financial sense to work at most startups unless you want to play the lottery. If a place offered 40-50hr/week, $250k salary, 15% target bonus AND generous RSUs/options it would be able to compete with FAANG. But not a lot of places do that, and those that do are often the very bubbly ones with uncertain futures

Who/what is a “sub-FAANG SWE”? Are you suggesting software engineers who don’t work at one of the FAANG’s are subpar? Apologies if I’m misunderstanding.

I think it's more referring to compensation. If you're only offering half the pay of some of the alternatives, you're simply not going to get a shot at most of the highest-skilled job seekers. They will, sensibly, tend to go work for the highest-paying employers. Free market for labor and all that.

What about all the skilled software engineers that DON'T want to live in SF.

From what I've seen most startups DO expect you to move to SF, though. They just don't want to pay a competitive salary.

I guess I can see that (to a certain extent), thanks for offering your explanation.

I assume they’re saying there’s a certain bar for FAANG SWEs. That doesn’t also imply all (or even the average) SWEs outside of FAANG are below it.

I thought FAANG weren't hiring 35-year-olds?

Definitely not true. It seems to me that, if anything, Google has been prioritizing experienced industry hires recently, many of whom are in that age range.

That's interesting. Does "recently" mean it was not always so? My untested and rumour-based thoughts had been that they skewed towards younger (no family/ties/more energy/less negotiation skills) employees, and you were dead after 30.

There are tons of 35 year olds at FAANG and they do hire a lot of people who are currently 35 too.

Correct. The hard threshold is 40.

Sub-FANNG SWEs? 250k+ or gtfo? I sincerely hope Google and it’s Ilk don’t represent the best of the best because that would mean the best of our indistry would be found severely wanting.

The average at these companies may not be very good given the inherent noise in hiring and promo processes, but most very good engineers end up at one of these companies since it's a much better deal than going to a startup.

I think the problem is that startups don't offer enough equity. Google offers a couple hundred thousand PLUS options worth > 100k present value.

If a startup wants to pay you enough to compensate, the options need to be worth > 100k present value (even if this means 1% of the company). Otherwise you'd be better off working for google and buying equity in the startup rather than breaking your back working there.

> and buying equity in the startup

Yeah, just go to Walmart and find the startup equity behind the underwear to your left.

> The reason FB and Google pay well is because when they were startups, they were paying WELL

100% this. Most people didn't work at Google or Facebook back in the day in the hopes of winning the lottery. Those companies paid really well, had the best benefits, culture, and mostly they were working on a ton of challenging problems unlike most of the "giant tech companies" of the time.

This hits home. I worked at 3 different small startups in my career. The first two failed and I left the last one for finances. I started contracting because it pays better but it's sapping my soul. I loved each one of those startups. I loved the people, the creative freedom and even just the vibe of trust and determination in the office. I loved the parts closer to the end even more because of the thrill of being on the edge. I didn't mind liquidation because I have a good recruiter and I was always ready to get back on the horse.

Now I contract out days for an agency. I estimate predefined tasks and then execute them. I talk nicely and calmly to clients who don't do me the same courtesy. I work only with the technology I have the most experience with and don't have opportunity to try new tech. But I have to pay my rent and I have to start putting money away to eventually get on the property ladder so working at a startup isn't really an option for me any more.

> The reason FB and Google pay well is because when they were startups, they were paying WELL!

they most decidedly were not. everyone there was taking $25k if not $50k pay cuts to be part of it.

Exactly. There get so many startup positions advertised, even here on HN, where the job description summarizes as “build our product from the ground up” and the offere salary is below par and the offered equity is an insultingly low number like 0.2%.

It's because the founders think too highly of themselves, and have the thought that since it's their "idea", they deserve the lion's share of equity.

Do not ever work for a startup where the founder(s) have this sort of mentality.

Startups paying better than tech giants seems counter intuitive to me.

The giants can pay high salaries because they're hugely profitable and don't need to worry about being hyper efficient to make the most of VC money.

Startups on the other hand, are still weak on the profitability part, but have massive room for growth when it comes to valuation. Therefore, the equity they can offer has way more potential value than stock in a large company that's averaging 5% growth or something.

I don't see how a founder of a startup would benefit much from cheaping out on salaries for employees. The vast majority of the payout for founders is company value increasing, not how much of the VC money they keep.

Founders are not even giving enough equity for employees to match the income they lose not working for big tech. Its common to still make less on equity + salary after a successful exit compared to the yearly total compensation at big tech.

Fair point. However another selling point of working at a startup vs a big company is the impact you get to have on a product. Being able to say you were one of 5 people that built out a core feature of Uber in its early days is immensely valuable for career trajectory.

Once a company is large, it's hard to have that level of impact until you're a director/vp/etc.

Google makes so much money that it makes sense to overpay? I mean that keeps people from leaving and starting their own thing that might be competition to Google. Plus give them the resources inside Google and they might build something there.

The average turnover is a little over 2 years at BigTechCo so half of the people never see that 4year total compensation.

That _position_ pays that much over the 4 years, irrespective of how many different people filled those positions in those years.

I doubt this very much.

VCs feel the need to constantly remind us that working at a startup is worth our time as a means to fuel the startup workforce. I understand that he was simply sharing an anecdote, but I found the conclusions and headline misleading even verging on dishonest. I've worked at an early stage bay area startup -- hiring progressively got harder and harder because candidates were becoming more aware of the career risks involved and the perks they'd be missing out on at big companies. In almost every case, you're working far more for less with very little structure -- if that's your cup of tea and have an obsession for the product, then go for it. If you're hoping to make $200 million, don't bother.

> If you're hoping to make $200 million, don't bother

... And unless you’re IC number 1, you’re not going to make more than a million bucks even in the best case as well, which makes the risk/rewards ratio higher.

Yeah, at the end of the post I tried to reference this: You probably shouldn't work at a startup for the money per se. The real value is short cycles with users and being able to make decisions and ship.

This is also cautionary for startups. You have to be an actually rewarding place to work, otherwise there is literally no reason to work there.

To me it comes off as a bit contradictory to say "you shouldn't work at a startup for the money" when the title of your post and video prominently feature the "$200 million" figure.

Spot on! Clearly author’s intentions were to convince people that being an employee at a startup pays monetarily. Which is now denied by him? I am confused.

I agree -- ideally, it shouldn't be about the money. But, everything comes at a cost, and the cost to short cycles with users and more control over your product is quite literally thousands of dollars, endless perks, and a cushion not affordable by most startups. That's the classic early-stage startup dilemma I've experienced -- when left to the decision of good potential hires, I've noticed a disproportionate number not willing to forgo all of that. Big companies are only getting larger and the requirement for startups to outcompete them on everything besides money and perks is higher than ever. At the very least, I think startups should be fully transparent about this instead of waving equity in front of you as though it will be worth anything.

Garry, where do you get that figure of $1.6 million per employee per year in profit for Google, please?

In Q2 2019 Alphabet (GOOGL), Google's parent, made $9.81 billion in profit[1].

At the end of the previous quarter, they reportedly had 103,549 employees[2].

Doing the division yields $88,654 profit per employee in Q2 2019.

Doing the naive thing of multiplying that by 4, which I know will be somewhat off, gives $354,615 profit per employee per year.

That's a tidy sum, but only a quarter of what you claimed so, again, can you tell us where you got that figure, please?

[1] https://www.theguardian.com/technology/2019/jul/25/google-al...

[2] https://edition.cnn.com/2019/04/29/tech/alphabet-q1-earnings...

He probably confused profits and revenue.

Could be: Google's annual revenue for 2018 was $136.22 billion[1], which yields $1,315,512 revenue per employee.

Controlling for employee growth from 2018 to 2019 (they only had 85,050 employees at the end of Q1 2018[2]) and assuming linear growth and revenue earn through the year, that gives an average number of employees of 94,300 over the year (I realise this is an oversimplification), and revenue per employee of $1,444,546.

That's still lower than Garry's quoted figure of $1.6M, although it's close, and possibly close enough.

The reason I queried it is that he goes out of his way to make the point about profit: "Google's pure profit per employee is actually $1.6 million per year, after all costs." (Emphasis mine.)

[1] https://www.statista.com/statistics/266206/googles-annual-gl...

[2] https://edition.cnn.com/2019/04/29/tech/alphabet-q1-earnings...

You're absolutely right — I annualized net revenue which I interpreted as "net" but certainly is not profit. I've corrected this and will put a note about it.

I'm sorry for the mistake. I'll do better next time.

Even after this correction, the article still doesn't make sense to me:

> net revenue per employee is actually $1.6 million per year, after all costs.

What does "net revenue after all costs" mean? Isn't that operating income or net income rather than revenue (which aren't that high)?

You really should get these things straight before giving people advice.

No stress: thanks for posting the correction.

This vlog is more of a cheap advertisement for the "oh work for a startup it's great" nonsense school. I don't really understand why I would work in an environment where the pay is shit and the issued stocks can be re-classified or diluted or just taken away by lay-offs. Makes no sense.

I started here on Hacker News as a software engineer. I learned that I could build software for others, ship it and release it. I did end up taking the venture path, and now help others on that path.

The key here is that magic can be created by people, and I'm not that different than a lot of people on this site. I also got very lucky, and I'm thankful for that.

Startups are hard, and most fail, and most startup stock is worthless. But if you read my post, I'm trying to point people to the fact that the deeper lesson is to be able to learn to ship to real customers quickly.

Anyway, I appreciate the feedback. It's shockingly hard to get something that is both nuanced and clickable in video format, but I will keep trying to get better.

> But if you read my post, I'm trying to point people to the fact that the deeper lesson is to be able to learn to ship to real customers quickly.

The video title is "My $200M mistake" and you spend 90% of it talking about the money. In what way is the point of this learning to ship to real customers quickly?

I threw it in at the end but honestly your point is valid. I should have expanded that part and will do so in the future.

The first time we met, you had just announced Initialized and had hired two people to work for you. I asked one question about it hoping to see if you guys were hiring more and send a resume, and you said something along the lines of: “Yes, one of the perks of raising money is you get to hire your friends”.

Just want to say that I appreciate the post. I am considering whether to go to a smaller startup for my next job, or just go to a big company.

I doubt many people have a passion for shipping to customers quickly.

I am saddened by this, since the “shipping to customers quickly (and iterating on the product based on feedback)” is the foundation of a successful growth economy.

There are so many gross inefficiencies in my market (US) that could be successfully addressed if more people has this type of orientation.

You're right, they don't. It's my hope that more people do, though.

There is a medium-high probability of what you mentioned. But for many, it's about having a (tiny) shot at changing the world. It can be a thrill.

You are also a bigger fish in a small pond - more responsibility, no bureaucracy. And usually the pay is enough to live modestly on.

> But for many, it's about having a (tiny) shot at changing the world. It can be a thrill.

Honestly this seems like Silicon Valley bait for getting people for work in an abusive mismanaged environment. And I hope most people stopped drinking the Kool Aid.

> You are also a bigger fish in a small pond - more responsibility, no bureaucracy

This I can understand, I mean if you are talented enough that you don't want to jump through corporate hoops, then it makes sense. But I would only do it for a company that has competitors. Atleast that way if you do well and get mistreated (because some founder assumes that employees are sheep), then you can always take your talent to a competitor. Better if you have the ability to take others with you.

There are a lot of envs that are not abusive. Having your workplace generalized and called abusive on the internet when it's not in real life, definitely feels abusive, however.

I've seen people join abusive personal relationships with worse pay than startups, it happens with friendships and marriages everywhere. I've also seen very bad relationships between founders and teams that have caused lots of pain...

The only way this is worthwhile is if you really believe in some product + are working with non-abusive people you trust and have known for a while + actually get paid enough to live a comfortable life. You can't join a startup thinking that the world owes you and will make you rich and the startup is how it will do that. But I just hope people reading your comment don't think that any small group of friends working on something is abusive to new folks that join.

The main question is to ask what can you make out of it as an employee assuming the worst. I know full well that there are several great people working in tech as founders. I also believe that ambitious people who really think they are fantastic at delivering products can and should try the testy waters of startups knowing full well what the true market value is of the skillset that they are building. I would never ever join a startup where your market value keeps degrading. Yet many people join startups as employees with mostly worthless stock and continue to do meaningless work that doesn't help increase their market value because they are sold the Kool Aid of "belief in product" and "changing the world" or whatever so hard. As an employee, it is important to stay mindful of your market value and where it is headed.

Yeah this definitely makes sense. I think the startup work you do should build your personal portfolio. Open source (like with an actual open source license like MIT and no weird edge cases) work helps a ton too. I think also being paid in actual cash is actually pretty good and you don't have to make weird money bets.

> But for many, it's about having a (tiny) shot at changing the world. It can be a thrill.

Yes he had a shot at changing the world, at Palantir.

I'm sure that it's a thrill, but it's not necessarily a benefit to the world.

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