Broadly speaking, engineers will work at a discount to market-clearing wages of maybe 20% if they really like the startup. This is not necessarily an issue if you are well-funded and require ordinary levels of skill from your engineering team, which is most startups. Some types of software startups can't be built without a team of engineers where the market-clearing wages are typically more like $500k-1M. Even at a 20% discount to market, the amount of capital involved just for headcount is far too large for early stage investors, and startups that try to fit within the capital they can raise by getting by with less qualified engineers always fail at technical execution. Consequently, startups that have this property are effectively un-investable because there is not enough capital available in the early stages to achieve technical viability even though they may be great investments in the abstract. This wasn't a serious issue a decade ago, but it is spreading to a larger set of startups as wages rapidly escalate.
Given a long-term glut of capital, this could be addressed in principle by designing a model that modifies the distribution of capital/equity over time to accommodate startups that have difficulty financing the initial wage gap. As the startups grow, one would expect the average wages to start reverting toward the mean, but these startups won't get out of the gate without that initial investment in capable and very expensive engineers.
I've had interesting and productive discussions around this, it is seen as a way to bring fresh blood into an early stage pipeline that is drying up. It is obvious to almost everyone that the classic model of how you finance and build a startup team is breaking down in the current market environment, with an adverse impact on expected returns.
Contrary to your points, I don't see any way this will change until some big technology revolution happens that puts power back into the hands of creators - though that might be a pipedream.
Note, that doesn't mean you can't start and be successful with a company. What I'm trying to point out is that the days of a scrappy upstart coming along to "unseat the leaders" doesn't seem anywhere near realistic.
The only counter to this might be worldwide competition - so for example I could see Tencent getting bigger than Facebook in total user numbers. I'm not sure if these are comparable because they are in segmented markets.
One unorthodox strategy, which I've discussed with investors, is funding early stage such that you can pay comp that BigCo can't easily compete with -- their scale works against them. In early stage, the absolute amount of capital is trivial (and there are trillions sloshing around these days), but the quality of the initial engineering team will have an enormous impact on the success probability of the investment. A few extra million in wages can have enormously high leverage in generating billions in returns. Imagine poaching literally the best engineers in FAANG and the kind of core team that would give you to attack markets no one has attacked before.
I'd like to see top engineers in tech compensated like top professional athletes. Investors pay the wages for athletes because the returns justify it, the scale of the wages is not material if you are chasing results. I believe that model applies in tech as well.
Meanwhile, if you apply the same math to the founders and their equity, in every single case they are paying themselves multiples of what they are offering me and significantly above their own market value, despite them not having done anything yet beyond getting seed funding.
What then happens is that startups like these end up getting what they pay for - they get the appropriate level of talent at market price. This maybe a market-optimal result but the cumulative effect of all these startups doing this is that most top people have sort of written off "working at a startup" as a reasonable career option, because of pay and what pay implies about the talent level of the people they would work with. This hurts all startups, even those that are willing to pay up to get the right talent. And if top engineers won't even consider your company, offering top-tier comp may backfire - you run the risk of overpaying for the same talent you could've gotten at a lower price. It's hard to break out of this cycle - consider how the same few schools are able to persistently attract the best students - and I suspect the entire startup ecosystem is trapped in it.
The behavior of startups is not intrinsic, it is the product of incentives. If I created a startup tomorrow, I am confident that I could pull world-class engineers out of FAANG. But to your point, I would not play games with compensation. I hire the people I would hire because they are clever, they aren't going to be fooled by bullshit nor would they respect me if I tried that. That is an essential quality of good startups that should not be lost in this mix.
This is easy. Offer relatively competitive TC with a real potential upside to the equity package and a work environment that's attractive. BigCorp is mired in politics and decision-making that's grounded in risk mitigation. Do something legitimately interesting and folks will come. Give them some agency and the ability to really get things done and they'll stay.
It's easy to deduce that those folks would be more interested in hard tech than any paint-by-numbers startup. I've worked at startups and well-established companies, and have found it surprising how easily really good engineers will turn down lucrative but uninteresting opportunities at well-established companies and how readily they'll take an "interesting" role for less or sometimes way less money.
As an aside, I’ve just re-read a Terry Pratchett novel and your description of the good engineers’ behavior made me think of Leonardo da Quirm :)
To my mind that's an engineer whose curiosity is uninvested in the outcome of the exploratory work.
I've known good engineers and great engineers and to some degree, they were all like Leonardo da Quirm, though not all quite as naive.
The past 2 years I was working part-time for a startup as I am running a business of my own which is almost on autopilot and allows me time to work on other things as well.
After 2 years I realized the positive and negative sides of working for a startup that is hard to find out before working for one.
First of all there were 3 main guys running the show. Only one of them was a tech guy, the other two came from a business background with no tech knowledge wanting to build up a tech startup. Joining that startup as an early employee didn't mean much apart from getting close to 1% in options (which is nothing considering my contribution to the cause was worth way more but obviously 1% is an industry standard).
The work became increasingly more demanding, although they knew I had other things to do and I was part-time, I was asked to work more than what was normal and almost reached working full-time helping them out (which was stupid of me, I was sacrificing time that I could be doing other things).
The paycut I took also from my previous part-time gig was about 40% which is almost half.
The cause of the startup also started changing increasingly and although at the start I was keen to have the paycut etc it felt like I didn't belong anymore (thats important for others wanting to work at a startup to know. The idea is not gonna remain the same as it is especially with business people driving research all the time).
The only positive was that I got some more experience on as a fullstack than before as I had to work a bit more on aws and backend systems and also was using "newish" tech.
My honest opinion and advice to anyone that is willing to try out working for a startup is:
Don't compromise your salary and well-being.
Startups will offer you options which is usually crap unless you are a co-creator. If you are taking a paycut but you support and like the cause of that startup then ask for a bigger %.
Realise that most likely the startup is not gonna vest or sell and generally think of your options as a gamble.
Its most likely that the chances of you making real money out of your options is the same as you winning the lottery.
If you are asked to work hard and stupid hours, then reconsider your well-being and ask yourself if its worth it.
Also look at the composition of that startup. For me personally it was stupid thinking that 2 business guys having the biggest % in the company would ever work for a tech startup. They contributed in writing long essays and doing research all the time, but at the end they couldn't attract more engineers by paying shit salaries and giving out 0.2-1% in options. The product failed because it couldn't be delivered on time due to having less people working on it than it initially required, and because those business people in order to justify their own % to the company were going on heavy research and constantly deciding shift changes on the product completely out of the blue just because they had nothing else to work on. (we were supposed to release within the 1st year which would be a year ahead of our competition. We released after 2 years which gave competition the lead of releasing before us and a much better product)
All in all - don't sacrifice your salary, thats how you feed yourself and your family and someone elses weird-ass dream is not gonna make you silly money out of the blue. And also remember that working should be taking some part of your day, but you also have one life and working your ass off for someone elses shitty dream aint worth it.
Every person taking equity needs to justify their value now
This means that a setup with two "business people" founders need to justify their worth immediately. Not with promises of future sales. Not with vague research.
Worthy ways to prove their worth could be raising a giant amount of funding, or putting their own money into the startup as a sign of skin-in-the-game, or purchase orders standing ready to purchase the product once it is complete, or paid PoCs. Or serious track record of delivery/wins.
If you find a setup where engineers are taking all the initial risk while "business founders" stay on the sidelines waiting for a product to be built until they start to work -- run away. Think about it this way -- they have all the upside (they can choose later to work or to flee) while you have all the risk (you invested your pay-cut for vague promises of future work.)
Damn, this is exactly what I want to do. Computer vision too.
Do you have any advice other than "don't"?
Would basing the company on the East coast near a tier-1 research university help with talent?
Could you have strong software engineers support the research roles? Does that pattern work effectively?
Another thing I really want to do is offer a 4-day work week with the promise of sabbaticals and/or remote work. That might not be attractive to everyone, but it's something that would speak to me and that I would want in addition to equity and salary.
Are you still interested in computer vision? Want to chat sometime?
I think this would be a very strong advantage in the hiring market (assuming you can raise money from investors who're okay with it).
I'm not your target market (I'm just an in-demand software engineer who happens to be learning ML, not a top computer vision researcher), but this is something I'd be willing to accept substantially lower comp for.
Unfortunately most startups seem to require even higher work output than big tech.
The catch here is this will potentially enable you to hire those 10x people. Even at reduced productivity, 80% of 10x is more than double productivity for 100% of 3-4x people, and perhaps this work environment will foster other people to increase their productivity as well.
With the right people and product, I see this as the ultimate weapon against big tech, most of which will have shareholders that will act a lot more conservatively when it comes to risks compared to startups.
This is not something big tech will be able to accommodate in the current macro-economic environment, no board will approve basically a 20% salary bump to all employees and while risking a potential drop in productivity.
FAANG don't have offices here and don't offer remote positions, so no one is competing with them. As a result senior developers are getting like $130k or something, and seem to be happy with that.
Some people (myself included) don't want to move anywhere else even for $500k. So it seems like a nice little arbitrage.
I think the answer is, know exactly how you want to exit before you start and plan for that. Realize also that is 180 degrees polar opposite of how the major VC's want you to approach it - so if you wanted institutional money from Sequoia etc... they won't invest if they know that is the case. There are a lot of good reasons why they take that approach, power law and all.
The reality is, your best case scenario is most likely an acquisition. Which might be exactly what you want, and if so absolutely go for it, but you need to really understand how and why and when the companies you are targeting do their acquisitions. This is incredibly hard to do if you haven't gone through multiple acquisition Due Diligence processes before, but I know of people who have repeatedly done this, so it can be done.
As to the other points, there are too many variables to say whether those are good ideas or not, totally depends on what you're trying to do.
My advice is to find a technical co-founder who has built and scaled a CV system at a larger tech company, but who is looking for a new challenge. There are a lot of annoying problems that can be solved with CV as long as you create a way for users to help you get labeled data.
All of them are based on open source, and all of them are permissionless (I.e. the startup does not need permission from a big company, e.g. an app store owner).
They also erode the build-in advantages of big tech:
1) Kubernetes erode cloud lock-in on compute/storage.
2) AI is best serve on the edge.
I would say that everything today is up for grab.
Microservices are unix pipes but slower.
AI is linear algebra that costs x1000 because of the brand name.
There is no revolution in software. We are just building crud as high and as fast as we can because the quality of developers tends to zero as the number of developers increases.
Not if you're a 1,000+ engineer org with an SOA.
> Microservices are unix pipes but slower.
Humans are way more expensive than the machines running our code. You can always spend more on spinning up additional instances. In reality the overhead isn't that bad. The principles of immutable stateless deploys free up so much mental energy when it comes to thinking about how to get your code out and not break things that it more than pays for itself.
> AI is linear algebra that costs x1000 because of the brand name.
Tell that to my real time voice conversion system I just wrote. There's a lot of new magic happening right now.
> There is no revolution in software.
I'm on a fucking phone responding from hundreds of miles away. We're launching satellites that beam internet.
> We are just building crud
You can't speak for everyone here.
Are you in adtech or a social spyware company? Maybe don't work like that then.
Find meaningful work that speaks to you.
> quality of developers tends to zero as the number of developers increases.
I work with brilliant people.
That's the problem. With a sane simple architecture instead of 40 years of crap on top of crap you wouldn't need thousands of engineers to spin up instances.
>In reality the overhead isn't that bad.
Over 1e2 times if the solution is in software, over 1e5 times if it's an fpga. Around 1e8 if you do it in silicon. You make the savings from not hiring the 1000s of engineers to deploy your bloated horror.
>The principles of immutable stateless deploys
Has nothing to do with k8s. Nixos and Guix are two systems that are as close to functional as possible and they sure as hell aren't 'stateless', even though they come closer than any of the sexy trending tech.
>Tell that to my real time voice conversion system I just wrote.
Thank you project librevox for proving a near infinite training corpus, thank you nvidia for gpus to do linear algebra 1e5 more efficiently than you can on a cpu.
>I'm on a fucking phone responding from hundreds of miles away. We're launching satellites that beam internet.
Like everything else you listed there this is a hardware improvement. A Casio watch from the 90s had the same order of magnitude computational capability as the first generation IMPs. Good luck getting it connected to the internet using any software you could write for it.
It's all new.
> wouldn't need thousands of engineers to spin up instances
If thousands of engineers had to worry about deploys, that'd be a problem. The deploy team is small. K8S makes this dead simple.
> Over 1e2 times if the solution is in software
That's ridiculous. Where did you get those figures?
> 1e5 times if it's an fpga. Around 1e8 if you do it in silicon
If you're writing code for FGPAs or burning it to silicon, you're far removed from application server development. That would move at a glacial pace.
> bloated horror
Our containers are thin.
> Has nothing to do with k8s.
You're just hating on k8s at this point.
> Like everything else you listed there this is a hardware improvement.
Honestly there's been a metric ton of software improvements. Literally everywhere.
Git, modern kernels, Rust, Paxos (popularized in the 90s), LLVM, modern game engines, tmux, Wikis, bittorrent, blockchain, protobufs, gRPC, Bazel, Redis, modern PL idioms, futures, TOTP, U2F, Markdown, RSS/Atom, so many algorithms, seam carving...
> It's all new.
Now I’m tempted to reply, “No wonder that 1000+ engineers can pile up crap that fast” :)
> Not if you're a 1,000+ engineer org with an SOA.
The fact that most FAANGs (Amazon especially) developed their own systems that are not Kubernetes, and often much simpler, should make you think.
Many don't even use containers - by design.
(Source: direct experience)
These companies had deployment needs that weren't at the time met by off the shelf open source software.
That's not what I wrote.
I wrote that the systems they came up with are much, much less bloated and provide very comparable features - if not better.
I disagree. Maybe it's because we haven't gone "full Kubernetes" where every cronjob is now a Kubernetes cronjob, or what have you, but for all the complexity we've had to overcome, we've seen substantial benefits.
For example, autoscaling instances of my data pipeline apps based on Kafka lag.
Was it complex? Yes. We had to expose Kafka topic lag as a metric to Prometheus, then configure the k8s metrics server that HPAs (Horizontal Pod Autoscalers) use to scale to pull that in from Prometheus using k8s-prometheus-adapter as a custom metric, then set reasonable scaling limits in the data pipeline apps HPAs.
Was it worth it? Fuck yes. We no longer have to worry about data arriving out of time at our data warehouse, because the scaling we've configured (in YAML, god rest its dirty soul) ensures that our data will always arrive at the data warehouse within 5 minutes, which is ideal for a near real time reporting product that greatly enables our end users.
Is Kubernetes worth it? For us, definitely. For anyone else? Really depends on your use case, don't cargo cult this shit.
Where do you work? I'd like to pitch my radical idea of edge consolidated cloud computing.
Yep, we could handle it easily on one machine, if we gave it unfettered access to all the resource, but our throughput varies during the time of day, so dedicating a machine to it to handle the peak throughput wouldn't make financial sense at 3am at night. So it's far simpler to scale pods with known resource usage as needed.
It also helps prevent issues when throughput suddenly doubles because of a business decision that you're left out of the loop on.
So autoscaling pods is ideal for our use case.
Is your aws bill really under $500 a month?
Will see if history repeats itself and we will see be imperative systems.
I was doing "microservices" on QNX using MsgSend/MsgReceive for hard real time over 15 years ago. It doesn't have to suck; the mainstream is just using the wrong tools for doing it fast. The QNX people managed to shoot themselves in the foot by going closed-source -> open source -> closed source -> open source -> closed source, after which their developer community was fed up.
Machine learning is not linear algebra. It's nonlinear. That's what makes it useful.
Not that you're wrong per say, but personally, I think you should take a look at the HN guidelines. Like don't be snarky, and don't post shallow dismissals.
Just categorizing the arguably most popular way of building software as "crap" doesn't seem like thoughtful or curious conversation.
I completely get the hate for modern web, but in this case I think it's unrelated. The whole Kubernetes/microservice world exists basically to serve JSON and similar protocols. Maybe rarely some static HTML.
For HTML->CSS->JS->Webasm stuff it is more fashionable to compile at build time and service as static assets. That's the polar opposite of Kubernetes/microservices.
This doesn’t even make sense because it can be said about anything involving numerical work on a computer and it’s still roughly true. Also because all of the libraries are free anyway.
Sure, but we've learnt to apply linear algebra to achieving things we could only dream of 10 (or even 5) years ago.
There are a lot of things that are impossible to raise money for, that are possible to bootstrap. If you're willing to work on something for 5 or 6 years without getting paid, there are lots of opportunities that open up that have high barrier to entry because they essentially can't be copied by venture backed companies.
Some startups may be amenable to slow bootstrap, but the ones that have this very high wage cost tend not to be those types startups. I love these kinds of hardcore tech startups and believe they are extraordinarily valuable, it is the kind of company I would start, but I am also very realistic about the economics of building a team that can execute within those constraints.
Short version: you can either generate project revenue or product revenue. You build a fundamentally different company to do either, so if you spend a significant portion of your time in project mode, the time you spend in product mode is usually moot. Consulting companies are project companies, through and through. The widely regarded truism that project companies cannot be transformed into product companies exists for a reason.
I'd love for this to not be the case but I've lived it so many times that I thoroughly understand the reality of it.
A lot of the best SaaS companies have actually come from consulting businesses that were productized. C.f.: https://startupsocials.wistia.com/medias/e6ttk04b9e?fbclid=I...
I think this strategy has a bad reputation because it usually fails, but what people forget is that startups usually fail anyway.
What types of software startups have these constraints?
And, as suggested in sibling comments, could building a highly technical founding team (e.g. bootstrapping) be a viable alternative to hiring with high wages? There ought to be a sizable subset of highly skilled engineers who have achieved financial independence and would enjoy tackling a challenging problem in a startup.
The flip side of this equation is that those same engineers can tackle pretty much any challenging problem they choose, while continuing to take home those massive paycheques from a big tech firm.
Big tech operates in almost every part of industry simultaneously - want to work on Blockchain? AI? VR? Shipping and logistics? Silicon design? Drones? A valued engineer at a FAANG can switch between all of those at will without ever even interviewing.
but usually not in the way they see it. There's enormous value in having freedom to do things the way you want, without being restricted by corporate culture and/or engineering conventions of a Big Co.
Is it that easy to switch departments/focus? I thought internal transfers, while easier than interviews, were not trivial.
For someone at a senior level (Amazon SDE III/Facebook IC5), an internal transfer is at most a perfunctory whiteboard session, and often just a conversation - you already have passed an interview loop to get into the company, after all, and have an easily-verifiable track record thereafter.
I generally agree with this, except I would change "impossible" to "exceptionally hard." You're right that a lot of startups innovating on deep tech need to hire people who would earn $500k+ elsewhere, and that a typical startup can't afford that.
However, very exceptional founders can often raise unusually large rounds early on. I.e. some founders can raise a $10m or $20m "seed" round at inception, which allows them to afford to pay $500k salaries. It's the top 1% or 0.1% founders within their fields, but it is possible.
(Source: I'm a VC)
Startups are not a place for an MBA to get engineers for free but a place for engineers to make bank if their egghead managers in their corporations don't get going with an interesting business idea of which they know that it is a missed opportunity.
If you are failing to attract these high-end engineers to a low paying job, perhaps it is because they dont see what unique skills the "business person" is bringing to the table to balance the risk.
As an extreme example, I'd guarantee if the "business person" was Elon Musk, people would flock this startup. What high-end Engineers do not want is to give away a lions share of equity in exchange for a pay cut with no real upside, that would make no sense.
The typical procedural founder with "business skills" may have solid business skills, but those can be hired anyway, the business founder needs to demonstrate equal 500k-1M level of skills/background/trackrecord/etc.
what are those startups? asking for a friend
A "founder" is not just another name for a very early employee. It is a wildly different experience. I've been both, multiple times.
If they're this vital to the success of the startup, they should receive equity accordingly.
There is an implicit startup social contract and the OP points out that maybe startups can't outbid the FAANGs for talent now. That may be but I think startups (and the VCs+lawyers who are guiding them) are absolutely pathetic at managing this social contract.
You want equity? Fine. Here's some equity in the form of an RSU (fuck you, Bill Gates) which won't qualify for either 83b or QSBS tax protection. Sure, it may crush the employee with AMT taxes. Yeah, the startup gets a minor tax benefit from this but then expects its employees to bleed for them. This is beyond stupid. This is beyond stupid by the founders, the employee (who knows nothing) and the VC+lawyers (aka the institutional memory of the Valley) who do know something.
It should be part of the startup social contract and best practices to inform and help manage the employees tax situation. Don't use RSUs. Put a gun their head and make them sign and file the 83b. Etc.
The challenges that open source faces are closely related to this subject. Many vibrant parts of the software world -- open source, startups, et al -- are essentially dependent on engineers willing to write code for the compensation (direct or indirect) offered. When it no longer makes sense for good engineers to write that code, everyone will suffer from their lack of contributions.
Well, this is the class system in action. Investors would rather sit on capital and moan about how they’re unable to spend it, than spend it in a way that would benefit engineers. They will endlessly try to keep that money circulating amongst their own class.
Note: I am not a Corbynista by any means, but there’s no other way to explain all this money with nowhere to go yet wages stagnating.
To be frank, it was a total shitshow. Especially on the startup side.
Here’s some of the bullshit I faced interviewing at early stage companies before accepting an offer literally 2.5x as high as the (multiple) offers that startups made.
1. Shitty equity: one startup wanted me to be engineer #7 and completely own the mobile app and strategy, which is the single point of interaction for their customers. They offered me 0.1% and spun some story about how much it would be worth when they were worth $800mm. Their last valuation was about $35mm. Even if their numbers were real, I’d still make more at a big tech company in equity alone. They also made it clear they wouldn’t budge.
2. Bad work/life balance: the big tech company where I accepted apparently has no issue with people taking off whatever time they need (avg is about 25 days per year), working normal 40 hour weeks, and working from home if needed. By contrast, the startups felt way more restrictive here.
3. Terrible interview process: almost all these startups had pretty disorganized process. Worse: they did the standard whiteboard algorithms interviews, whereas multiple bigger tech companies had more iOS-specific interview loops. Even worse, the startups tended to have a higher bar for hiring than the bigger tech companies. This one is subjective and could be random or misperception on my part too.
4. Most infuriating of all, all of these startups (except coinbase) had a 60-90 day option exercise window for employees who left before a liquidity window. Let me be clear: fuck you if you think this is fair. IPO might be 7-10 years out and if I stay and add value for anything short of that, you’re going to ask me to take a huge risk to exercise my options (and pay the taxes) on your probably worthless stock, otherwise you’ll just keep it? Fuck you.
The entire thing left a bad taste in my mouth. It’s pretty clear that these founders and investors don’t give much of a fuck about their talent, and watching them get squeezed by big tech companies offering sky high comp fills me with glee.
Be a founder, investor, or big co employee. Fuck being an employee for a startup so they can bleed you dry.
Could not agree more, and this is my stance which I will happily share with anyone who cares to listen. I was first employee (and only engineer) at a startup which dangled 'equity' in front of me but didn't deliver. Contract was so full of gotchas that the path to me seeing some sort of actual payoff was astronomically unlikely.
90 day exercise windows upon leaving or even getting sick and being forced to leave. Liquiditation preferences for VC shareholdings. No way to sell your options on a secondary market. Permission of the board required to actually exercise them. Half a dozen clauses that allowed the board to revoke your options at any point in time. Basically, they want you to give your fucking life to them for 5-10 years with only a contract not worth the paper it's written on as an incentive.
Between the shitty equity terms and the fact I was building a damn tech company to make someone other than myself rich, I told them to go fuck themselves and took a job at Google for over 3x times the pay. I have no regrets. Being an early employee at a startup is a complete waste of time and I still beat myself up for being so naive. Sharing this so other people don't make the same mistake.
If I decide the next day, “Nah, it’s not going to work; let’s close the company and distribute the assets to the shareholders,” it would be manifestly unfair for the 80% shareholders to take $1.6MM of the $2MM in the bank and give the VCs back the $400K that represents their 20% stake in the bank account.
Liquidation preferences ensure that the first $2MM that comes out goes to them.
Of course, everyone is disappointed. But it's still unfair for that engineer who gave up half a million dollars or more to work at the startup to get nothing. You might say that the engineer should be aware that they agreed to a way of structuring equity that means it's likely they'll get screwed. Fair enough! But all of this discussion is meant to make readers aware that, yes, the industry standard practice is to screw over the people who have the most skin in the game.
By all means understand it; I’ll never argue against that, but I find liquidation preferences quite reasonable.
I don't have statistics, but I believe the more common scenario is that the company gets acquired, and the return on investment is not the 10x or 1000x or 1000000x the VCs hoped for, so they recoup their original investment. Leaving the engineers with options worth nothing.
I view liquidation preferences as VCs offloading risk to employees because they can.
Just like the “declare strategic bankruptcy a few months before graduation” doesn’t happen much because student loans aren’t discharged in bankruptcy.
Both moves would “break the game” in a very similar way and so are blocked.
This is absolutely correct and it SPEAKS VOLUMES about the reality of the startup world, even apart from this discussion on liquidation preferences. I'd recommend anyone looking at working for a startup to consider the above and then consider the fact that as an employee they'd be in an even worse position than those founders before turning down that far more lucrative offer from BigTechCo.
The rich technically have less personal risk -- that's because, well, they're rich. GP arguably took more personal risk, took less pay, and created the machinery that made the company profitable.
If you want to say that the original $2M is paid out before anyone else is, that's fine, especially in a sinking ship.
If you mean to say that on a %1000 increase of company valuation, GP should not get his share because, well, he didn't fund $2M dollars -- that's _utter_ bullshit. And arguing that VC's should get preferential treatment so they can directly screw over the people who directly provided the growth is the stupidest argument I've heard for this clause.
It seems to me that you built and eviscerated a strawman right in front of us.
The liquidity preferences could certainly be structured in a fairer fashion. Just because it’s currently structured this way doesn’t mean that it needs to be always or that it’s a great model ( it’s not unless you’re a VC, which is basically the point).
Would you think this is a legitimate claim?
It's silly to automatically assume that "investor" or "capitalist" is someone rich. Chances are, the VC get their money from banks and pension funds who, in the end, invest money of people who earn much less than an average startup employee.
Come up with a different mechanism if you ever want anyone competent to work at your startup.
Of course, if the difference is 2.5x then it's a no brainer.. I wouldn't take more than a 20-30% cut to work at a startup.
One thing I absolutely agree with you on is the option exercise window. I think it's pretty common in the startup world, but I can't really understand WHY. I mean your options at a startup are already worth less than stocks at a public company, and they still do this shit ? With all the extra risk you'd imagine they'd have to get rid of the liquidity window just so they can compete a bit better with the big guys.
1. Shitty bosses (this and the following can be found in any kind of company)
2. Being promised one thing and then being screwed over later. How many companies have screwed over their employees of stock options or those holding existing stock?
3. Terrible tech stack / less personal satisfaction -- especially if the startup hires lousy people and value code production over smarts.
4. Management defined engineering -- when managers make important technical decisions instead of engineers. ("We've signed up for service X, please integrate with them regardless of your thoughts on the matter").
1) Safety and predictability in compensation
2) Ownership over your company’s strategy (e.g. mobile) only if you’re paid highly for doing it (not a bad thing, but many other people exist who would willingly take a pay cut for the ability to have an actual impact on company strategy)
3) A highly organized and logical hiring process and qualification evaluation
4) Custom negotiated options contract outside of industry norms OR BigCo stock that has value today
5) 5 weeks of paid vacation
It definitely sounds like you made the correct decision by choosing BigCo over startup.
Equity is basically always monopoly, you generally can't even evaluate its value because no one will show you the cap table. Highly profitable startups still regularly manage to deliver a pittance to early employees on exit. Even if the exit does deliver oftentimes the yearly compensations disparity is so large that if they'd just stayed at BigCo and invested the bulk of their earnings they would have earned as much or more. This is all while working significantly more hours per year.
The list of upsides is really small relative to the risk. If startups want talent the industry norms are going to have to change.
Not showing the relevant details of the cap table is ridiculous, companies that do this are banking on a pool of candidates that are either morons or don't care what they're paid.
Imagine the following situation: You're in a foreign market, and a vendor tries to sell you a fancy-looking machine. You know he's legally bound not to lie, so you ask what the machine is worth. He says "it's worth 2 billion Magic Moneys!!" but refuses to give you any information that would help you suss out whether that's 20 cents or 20 million dollars.
1) Fair compensation, yes.
2) It's unfair to ask someone to have the responsibility for the success of a huge part of your business without making sure they have significant upside if they succeed.
3) Yes, I want a logical hiring process. The horror.
4) Fair. Not "custom negotiated", just fair. The fact that the industry norm is to fuck over your employees should fill you with shame, not be an excuse you hide behind to do the same thing.
5) I doubt I'll take that much, but I like that the company understands that they'll get the best work from employees who are taking care of themselves and their families.
If you're representative of a typical NYC founder, then yes, I'm glad I didn't join a startup.
The norm is changing. Good startups today generally offer 5-10y exercise windows.  This is something Triplebyte started, and they have a guide for how to implement it. 
I think you mean the GP wants options within industry norms, which are outside of a failing startup's shoestring budget. On a separate note, what are your thoughts on the glassdoor ratings of Localize?
If you're reading this, please know that not all startups will "bleed you dry". And on the other hand, many big tech co's will!
To be fair, I was specifically not interested in a remote job. Would rather work in an office.
I'm working on something to make the interview process and the offer piece a lot more transparent. I've been part of terrible interview/offer loops too, and the problem aggravates me to no end.
I'd love to speak with you.
Enjoy your new life as a corporate drone!
Note to the salty drones in the comments below: I started a business that was passively profitable for years and now pretty much just work on what interests me
I think startups are great for junior employees because you learn so much so quickly. Eventually if you want to be successful in startups you need to start your own startup. The payout on 25% ownership at $10M or $20M is not bad and lots more companies can buy that sized company than a billion dollar one.
There absolutely is. I'm not sure why so many here seem to think that the only options are: BA startup, FAANG, Fortune 500 megacorp.
Comp and work/life balance smoothes over a lot of negatives inherent in corporate life.
But money isn't everything. Startup #2 was the place where I learned the most. I was senior enough to be single-handedly responsible for large projects like a distributed search engine and a logging and analytics service. Sure, my search engine was a POS compared to Google's, but at Google I would've worked on a part of a feature of a component of the search engine whereas at a startup I got to build the whole thing from scratch. I'm almost 40 now, and that search engine is still by far the most fun and educational engineering project I've ever worked on.
Aside from learning potential and financial comp, there are other factors like team camaraderie, independence, etc. I keep in touch with way more people from the two small startups than I do with Google colleagues. Google had a good culture, but the startups were much tighter knit.
Finally, I think articles advocating for startups vs. big companies are a little like trying to convert someone to atheism or Christianity with a blog post. It doesn't really work that way. Some people are wired for startups: they love them and spend their careers at small companies and don't understand why big companies are attractive. Other people are more drawn to big companies where the company itself has a huge impact, the teams are well-staffed and have lots of resources, and the employees get higher salaries and lots of other benefits. When these people try working at a startup, they often hate it and quickly go back to another large company.
Neither big nor small companies are objectively the best, but if you factor in personal happiness then often one type of company is the best for you.
But then I switched teams and stuck around for 5 more years before leaving out of boredom. I joined a startup, and learned far more in that first year than the last five years in Big Tech. In the span of two years I went from not really knowing how SSL worked to being the architect and primary coder for a couple kubernetes deployments with a few dozen services.
The thing about big tech is that you become super specialized. Sometimes that’s fine, like if you’re a kernel hacker earning $$$, but if you join the wrong team then your world just shrinks.
I don’t ever want to go back to working on a tiny piece of something, even if that something has millions of users. Even if nobody exists on purpose, nobody belongs anywhere, and everybody’s gonna die, I still like the feeling that the work I do somehow matters to the people using the product.
So a dev team of less than 10 is probably the sweet spot for me.
It’s pretty rare for this to actually happen in my experience. Generally an early engineer will grow and be ready to take up the role of VP Engineering or even CTO and instead the VC’s will parachute in one of their cronies once the hard work has already been done.
One very salient explanation of this that has stuck with me goes something like this:
A fast growing early stage startup is great for learning because you'll often end up with tasks that you're not qualified to do, which forces you to go out of your comfort zone and learn from the inevitable mistakes you'll make along the way, whereas in a large company they usually have plenty of more senior people to take care of the more challenging tasks outside of your current pay grade.
That's a very good point. Money isn't everything. Pretending that money is the ultimate goal of life can be off-putting in the startup world and in the American lifestyle in general.
Obsession with money is an easy way to envy, burnout, depression, and loneliness.
I'm going to be honest, I don't think this is the norm. I worked at a start up for years and never experienced that level of ownership or challenge. We basically built a glorified CRUD with VC money. Good for you! But I don't think this is the case for many? Or maybe it was just me.
- worked at a startup out of college for 85k max plus significant equity (never amounted to anything). Stayed too long.
- worked at a later-stage startup starting at 120k, peaking at 130k. Got some stock options there (haven't amounted to anything yet)
- took a job at FAANG starting at 400k, plus some stock options. Currently at this job for > 600k base. Plus stock options.
While at FAANG, I created a tool that we open-sourced. I've had several VCs contact me to see if I want to try turning that into a company, but by my math it would be a lot of work for no gain over what my salary already is. I already get paid to work on this OSS thing, but I also get to work on other things - and on the OSS thing it's pretty clear cut what I need to prioritize, since my priority user base works with me at FAANG.
For me, startups have a 0/2 track record of delivering value. Being able to net more than I make as an IC seems pretty unlikely, and trying would be a whole lot of pain and sacrifice. The "faster growth as a founder" idea seems to be conditioned on the assumption that you'll succeed enough to pay yourself more than you make now, and/or be able to exit at an amount that will make up for the opportunity cost of getting paid well in the meantime while having a sane work/life balance. YMMV.
I posit its even more than that. It's a meme / propaganda by the survivors with their bias and those who hope to follow in their footsteps.
Also what's also interesting is you posted your comment to a throwaway while the others parroting that talking point were happy to reveal themselves at least pseudonomusly.
I'm pretty sure why. You don't want to burn your shot if you want to have another go at the startup thing and have people be able to read you saying you wouldn't be fully committed.
I fully respect that.
The only reason I point it out is to show how Silicon Valley the larger VC ecosystem is an echo chamber around this ethos.
My guess as to why is how would they recruit the next generation without that?
I worked at a large tech company for 3 years before joining a startup, and learned more in the first month at the startup than the full 3 years at the large tech company. I was able to design and implement a service in a matter of days, whereas at the large tech company those 3 days would easily spent convincing people that the service is needed in the first place. Direct exposure to customers also is really interesting and changes you as an engineer.
It's definitely a no guardrail environment, in the early days we had a bug that directly cost us a large customer pilot. No better teacher than experience, we did not make that mistake twice.
I think the biggest difference is money. A well funded startup might be a boon but a struggling one will be a bane.
I think systemically one thing we need to do is help people make better decisions about where they spend their time. Especially for people who are good builders, they happen to also be the best people who can decide for themselves whether something is actually going to work.
Boeing won't care if you save the project $5k by spending a week of your time coming up with a clever workaround. The week was more important than the $5k. Same for a high level role generally. But not getting work done for a week because your boss won't approve a $500 purchase... that would be frustrating and get old fast.
I'm confused what you're getting at here. $5k/week is $260k/y (or a bit less counting vacations and holidays) and the fully-loaded cost of an engineer at a startup is typically more than that. Then consider how high opportunity costs typically are at startups, and I expect most startups would view your spending a week to avoid a one-time $5k expense to be a bad tradeoff.
I agree, most startups would view spending a week to avoid a one time $5k expense to be worth it for several years at least. That's why I'm saying the experiences are different.
If you're reading a judgment into my comment, there is none, I think doing super constrained engineering is super fun and an awesome skill to have. But I have also worked places that have the attitude of time being vastly more valuable than cash, and respect that both approaches are reasonable. Just different. But worst is when you're cash constrained to the point where even your clever workaround isn't possible to implement, even though it costs 10x less and is mission critical.
Sorry, what I'm saying above is that I don't agree with that.
I am also thinking more "angel+bootstrap+grant" funded startups rather than people already past a Series A; if there's 10 employees with a decent runway the calculation changes a lot versus 3 people getting something off the ground. I think the latter is more typical of a startup for the first several years.
Which can be a hell of a lot more than you expect. Like, don't bother spending two weeks to cut the CPU use of a service in half, if the service only uses 1k CPUs to begin with.
Saving $$ per unit and saving $$ total are so different. If all you're doing is saving $500 total, I wouldn't even care in most cases... but if you managed to use clever techniques to save $0.30 off the manufacturing cost for a toy that gets sold in the millions...
I most strongly agree with the ethical part of the article, in any event. I'm sick of companies trying to take advantage of their employees, it's just sad and gross to see it done by startups that could be better than big companies in at least this one way. But instead they take it even further somehow because their finances are far more opaque. I don't think it should be up to noblesse oblige to determine whether distribution of profits and salaries are fair, it should be assumed to be the rule even if there may be exceptions.
It's a sad day when you look at employment agreements from Intel and a shiny startup and find that Intel is more up front and transparent about how things will work and what you'll get paid.
I think the course of events in the USA in the decades since the 50s has essentially answered the question of what happens if you leave it up to the most fortunate to decide how to treat the least fortunate.
Anyone stuck in this situation?
Can you explain more about this? The mantra is generally ship early and iterate fast.
How come the tech team was spending 80% in a bugs rat race?
The earlier statement of "80% of the time was wasted supporting clients" seems perfect? i.e. what else should you be doing other than supporting clients who are willing to pay with features and bug fixes?
Feel like I'm missing something.
Nobody wants to pay for bug fixes.
Do more QA and avoid making your customers part of the QA team.
So now you have a team with about 2.5 collaboration projects per engineer, who are at the same time the tech support and SREs. With several new products in a pipeline. All of it wrapped in a bow of medical certification.
One think that startups should have in my opinion is focus. If you have enough funding to go for a moonshot drop everything else and go for it. Don't spend too much time hedging because you will never get to the goal. If it doesn't work out, too bad, but at least do everything you can to get there. Especially when cash strapped.
There are a lot of valuable lessons to be learnt here about product planning and dev process, but if you didn't make any attempts to fix the issues you mentioned, you probably didn't learn very much.
Firstly, startups have been an absolute delight. I very carefully chose the company and hence my boss and my co-workers and love working with every engineer on the team. It is a pleasure coming into work each day and I often cant leave because I'm excited about my work.
I have a lot of authority over what I build a much of it is "close to the metal" rather than some side system. I get to see the whole slice of cake from conception all the way to sales and client implementations and participate in all of it. At small companies, as an Engineer, I learned how to build a successful product and learned all the steps from inception to sales and production.
At every big company I was at, there was more specialization and lots of process. Process was necessary at that size. There was also a great deal of inter-departmental politics and incentives were usually not aligned at big companies, sometimes incentives across departments were even orthogonal. I spent 30% of my time on process and communication at big companies and it went to 80%+ once I was a senior executive. I made a lot of money there, but I think it was to compensate for having to deal with the inner workings of a big company (and being able to be effective at it.)
At big companies, I learned how to turn the gears of organizations and learn how to make globe-spanning change effectively.
To be fair, I took a big pay-cut to come to a startup as an Engineer. I'm happy with the choice. I dont think there is any silver bullet out there, but it is important to understand what you get with each choice. It is also important to make that choice with full intent and not be fooled or brow-beaten by anyone.
I have hobbies, I have a family, I invest in culture, I enjoy free time, that is actual growth.
This just makes me think that either you are exaggerating a lot, or you were highly unproductive at the big company than most people.
In either cases, I end up not being able to take your comment seriously.
At a big company you are given a slice and you really have to push to get anything more. I've had the experience where no work is assigned because approving anything takes time and once the work comes it is extremely easy to finish immediately because you have sat through weeks of meetings reexplaining everything to different groups get approval to change a form.
At one startup by the end of the day I was already learning four different languages/tools.
Now I imagine places like fangs would be amazing places to learn. If you ever work in healthcare most of your day will be explaining why this is a small change / very safe and you learn very little.
At a startup you might get core technologies going in a month, while at a big tech company the timescale might be closer to years.
I worked at a startup and the focus was on the work. I got to make decisions on what to work with, what technologies to adopt, and then I had to get them running. I worked on core technologies.
At a large company you rarely get to do this. You usually have large systems in production, have very large teams, and get to work on an established code base adding a feature or fixing something.
An interesting exercise at a large company might be to look at the version control checkins from the beginnging. The features at the beginning of the log probably went in a lot faster from fewer contributors.
Here follows my translation of the advice above:
> Yes you will probably make more at an established company, but your rate of growth can be much higher at a startup.
You'd personally benefit more from working at an established company, but if you work for a startup you'll be trained on the cheap and then an established company can reap more profits from you.
> I worked at a large tech company for 3 years before joining a startup, and learned more in the first month at the startup than the full 3 years at the large tech company.
The comfort of a large tech company is nothing compared to the stress filled life of working at a startup, having to constantly innovate on your toes and learn your own ways will push you to develop faster - but if you hit a wall you're truly hooped.
> I was able to design and implement a service in a matter of days, whereas at the large tech company those 3 days would easily spent convincing people that the service is needed in the first place.
I saw a need and dedicated some days of labour to filling that need, because it was a valid need I was praised, if it hadn't sold I'd be chewed out for wasting time - and there is no guidance on which needs might be helpful or not... Within a startup you'll be expected to do user surveys and then market your new product even though no time is formally afforded for either.
> Direct exposure to customers also is really interesting and changes you as an engineer.
I assume when you decided to become a software dev you really meant UX designer? If your perfect world is being given a task to do and doing it accurately to a high level of perfection then have fun trying to quickly adapt your highly designed system to literally contradictory client requests coming from the same customer.
> It's definitely a no guardrail environment, in the early days we had a bug that directly cost us a large customer pilot. No better teacher than experience, we did not make that mistake twice.
Losing your shirt trying to make your day job not collapse and then being excluded from any of the benefits when your company goes public is character building.
Yeah, there’s no formal time laid out to do step X in the course of development. There’s the chance that you won’t make payroll someday.
It’s definitely not for everyone, but when you get a good team together on a good project, it’s fantastically energizing.
I have really enjoyed working at small companies as well - not two person startups working on hopes and dreams, but companies under a year old that are struggling to stablize their offering of a product that they know there is a market for. Startups can be lots of fun, they can also be a grind trying to keep up with shifting customer requests - especially if you find yourself with a single dominant customer that knows they can push you around. Start ups can buy you an island or you could make 60k a year for three years and then be let go immediately prior to an IPO. There is an immense amount of risk there and I'd like to see some shifts in startup culture to provide a bit more assurances since the experience can vary wildly.
Maybe employees at small companies need to be guaranteed (i.e. by the government) a portion of that company for their work, maybe work days need to have a hard limit on them - maybe there just needs to be more VC funding sloshing around and given away in small doses - 200k to twenty companies will produce a lot more success than 4m to a single company.
I see a lot of people very much willingly freely entering into contracts that are beneficial overall for society. That many startups fail and few result in king’s ransom payouts for employees who put up no money to form the company seems ok and preferable to an environment where government has a heavy role in picking startups, regulating work, or otherwise mucking things up.
If a couple of my buddies and I want to work together and want to work as hard as humanly possible at it, why ought that be disallowed?
I think it should be obvious if that is what you desire start-ups are not for you. Whoever hired you failed at their job.
I've worked in a large corp IT department and for start ups.
I'd say the most value in working for a start up comes from being in the core group of founders and first employees. After that point, my perception is that it's more of a toss up - if you're going to be a rank and file junior developer on the periphery of the decisions that shape the company, an established company could in many cases be a better choice.
I have seen no limit to what an individual engineer can accomplish at my big company as long as they have the desire and ambition.
There's a thin line between growth through mistakes and learning bad habits (because of lack of training and no colleagues with experience).
If founders and VCs gave a third to half of their companies to employees, instead of crushingly small option pools, this math would almost certainly shift. And the returns wouldn't be much worse for founders or VCs.
The problem for a startup here is money and customers. There is some local money, but in practice, you will be raising from firms in SF or Boston. To do that well, you will be sending a founder on trips a high percentage of their time: Our CEO was out 50 percent of the time this year. It’s OK with three founders or a small team already, but the seed stage is very rough, especially for a solo founder.
There is also the matter of customers. If you are doing B2B for startups, or straight sales to developers, the market isn’t here. Consumer? Any physical bits are not going to grow the fastest here. Do you want to start selling to large masses of people with little time and loss of disposable income? Not the best test market. So you better be doing something that is better done from here. An agriculture startup, with farms across the river, for instance. Still, it will be rare for this to be your ideal location there.
Still, I wish for more startups here, but the negatives are very visible, and we have very few success stories that tell people it’s worth trying.
That $140k number might be a reasonable 50th percentile for what a junior engineer would make at a startup in the Bay Area, but compensation can increase quite a bit after several years in the industry, especially for engineers who move to large companies which give stock compensation. They will far outpace the earnings growth of engineers elsewhere.
It's much easier to achieve that kind of career trajectory in places with high concentrations of tech companies, e.g. the Bay Area and Seattle.
Now I'm sure the BA people average better but somebody in the top 5% from St Louis is going to be pretty good.
Note: I'm from Auckland, New Zealand and $US 100k would be a very good salary.
Even if I concede to your assertion that a vast majority of the top 10-20% of developers from these cities leave for the big tech centers- most startups are not doing the kind of work that requires their tech team to be made up of "rockstar" top 10-20% developers.
Although maybe it would work if some of the second tier cities agreed to pay off the debt and contribute to the savings of people that agree to work there.
Now, if you really want to make it more enticing, some things that would move the needle for me other than comparable salaries (although more cash is #1):
- Larger equity that automatically ups if it will be diluted, and the moment any shares vest I can sell them in the private market.
- Transparent cap table.
- If the founders take cash off the table, I can as well, and no preference for founders.
- 10 years after leaving to exercise my shares. I don’t want to have a 3 month trigger that handcuffs me to prevent a giant cap gains bill on “paper money” when the fair market value is way higher.
- Reasonable working hours.
- Flexible work from home policy.
But overall, go raise more and start offering more cash, because I assume 95% of startups are total failures.
So with that in mind, if the equity and bonuses in BigTechCo are a sure deal, then it may be worth negotiating for more when you join a startup.
Don't sell yourself short.
In the mid 90s, Microsoft was buying up talent left and right, in whatever area they wanted to go into. My field is databases, and I developed expertise in the integration of query languages with programming languages. I got an obscenely lucrative offer from Microsoft, and decided to turn it down. It was a dumb decision, financially, but actually worked out fine on that front. However, I'm sure that Microsoft enticed many promising software developers to work for them instead of startups. (A few names do come to mind.)
This problem was completely solvable then, and the same technique would work now. The problem is that VCs don't want to solve it. They want software developers cheap. They give miniscule amounts of equity, and bias the terms so that those tiny stock option grants almost never pay off very well, (e.g. liquidation preferences). Except, perhaps, for the chief architect, and one or two very senior developers, we are viewed as disposable, interchangeable cogs.
There are great reasons to work for a startup, other than equity. I am very happy with my 25 years doing just that. But equity is definitely a factor. Contrary to what they would have you believe, VCs are extremely risk-averse, certainly compared to the developers who are sacrificing the best years of their lives for their companies and the chance of a financial win.
The VCs have naturally gotten better at what they do, which is bring returns to their LPs. The consequence is that they get more value from exits than they used to which comes at the expense of the employees and founders.
2) A new grad at a startup gets, what, $100k in salary and some equity? If we're talking a three year stint at a startup, you're effectively asking a worker to invest ~$500k in exchange for that hypothetical equity. In the broadest strokes (obviously everything depends on the deal), what kind of equity does an angel get for half a million dollars, and how does it compare to the amount of equity the new grad gets? And it bears pointing out that that new grad equity is subject to all kinds of games and deception. Of course, the usual response is "you just have to be smart enough not to be scammed!" Perhaps, but I know tons of people (including myself) who are apparently just too dumb not to be scammed but are still smart enough to be gainfully employed at a safe job.
I don't think that had a large effect on my compensation, if any: I joined at L3, which is what most new grads are hired at, and my salary before Google was low enough that I don't think it pushed up my offer at all. I also didn't get offers from multiple places, which is the sort of thing that (a) results in higher offers and (b) is the sort of thing new grads usually do.
But ideally someone hired right out of school would be up for sharing their comp?
edit: Oh, I see you were in Boston -- that's a great deal then. I still wouldn't want to work for Google for idealogical reasons, but I can see why the money would attract others. You also had ~9 YEARS of full time experience at that point, which makes it a lot less impressive.
Taxes would be higher but we donate 50% of our income (https://www.jefftk.com/donations) so I'm not sure how you'd count that?
Also, I didn't have ~9 years of full time work when I started at Google, I had 3.5. My first full time programming job started fall 2008, and this was Spring 2012.
Also, donations are discretionary, so you wouldn't count them at all -- you would just count your salary minus your tax rate (not counting deductions, so that the average Joe can get some context).
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. Completely personal anecdote, but I felt I was sold some half truth, where I was promised career growth, interesting problems and flexibility, but got nothing that I couldn't have found at many Big N companies.
Even if the original founders have the best intentions, large equity up front is unlikely to give you a big payday.
Since, in the traditional VC model the drive is to move toward bigger rounds (A, B, C, etc) and investors get paid back first.
So even if you do start with 10%, you'll probably only end up with a low % percent after 3-4 rounds.
The important thing to note is that this whole thing bamboozles our brains because of unicorn survivor bias. We feel like unicorns and $100m dollar companies are the norm but nothing could be further from the truth.
The chance of being part of unicorn is about 0.006% last I checked. The chance of being part of a $100m+ company is in low single digits (of all startups).
If it ends up just making a few million revenue investors will drop it (because not 10x enough) and you're 2-3% will be worth very little.
If ends up stagnating at $5m for a few years investors will drop it (because not 10x enough).
The overwhelmingly most likely outcome of you getting a large chunk like 10% up front is, when all is said and done, after 5-7 years you'll walk away with a few hundred thousand (before tax) if you are lucky.
In my case I was on founding team. Started out with 10% equity. Co. is now 7 years old. After a merger (diluted by 40%), $10m investment (diluted more), $4m strategic investment (diluted more), then investors taking money off the table first for an exit event - I stand to make $100k if we sell at $20m and $600k if we sell at $40m (currently valued at $20mish and has been for 2 years). That's pre tax.
Ok I have seen this written every now and then.
What does this person look like and how do I become one given a willing to sacrifice everything else?
I can not find a good answer to this question. Everybody seems to have their own opinion.
Second, attend a top tier "name" university like MIT, Stanford or Carnegie Mellon and major in a related discipline.
Third, do some side work in your chosen field that can be shown off to prospective employers.
Fourth, learn how to present yourself well (for interviews and such).
That's generally speaking, of course. Exceptions exist.
I think every engineer should at least do some mock interviews on data structures, algos, and system design (there are TONS) of free study resources and then do a round of interviews. You only need one yes.
Sounds like this is not possible without years of exposure to events that force you to this situation. How else would you learn to act like that?
Regarding being "smart": How do you define this? For example, I got a CS degree from a second tier Engineering school. But I was a B-/C+ student. Do I meet the criteria for being "smart" or just lazy?
>Second, attend a top tier "name" university like MIT, Stanford or Carnegie Mellon and major in a related discipline.
Is this a hard requirement? What do these schools do that others don't? Is the exposure to other top tier people a necessary requirement from a skills perspective?
>Third, do some side work in your chosen field that can be shown off to prospective employers.
How do you choose a field that leads to the original goal: "the very good engineers, the ones who could truly help build a tech company from the ground up from day 1, were getting offers so exorbitant they could not possibly fathom to turn them down."
Tech is such a diverse field. There are so many paths to take, none of which guarantee I will reach this outcome. I could become a rock star developer having developed tons of apps, but is that the right path? Or will it lead me to a cubicle job?
>Fourth, learn how to present yourself well (for interviews and such).
This seems like just a lot of practice. Maybe even requiring growing up in a very socially active lifestyle. The opposite for people who sacrifice everything to become great at something eg. programming.
Its looking as if you need to be in a narrowly defined path that needs to either be decided when you are born or you adopt very quickly at a young age in order to accomplish all your steps.
- Solid results too show
- Fantastic references
I know a lot of younger guys have these pipe dreams of sacrificing their youth, going to the best university, studying years for interviews, and looking / being the "perfect" candidate come interview time, without actually having built anything of substance.
Sure - you will probably land some sweet positions, but there's no way in hell you'll get hired as a CTO without anything real to show - unless it's a 3-piece student startup.
Yes, there are exceptions. There are young people that land very nice positions, but they're almost always both smart and experienced.
I think the roadmap look pretty boring, but it's what it is. Read, build, analyze, and understand. Have vision, and get good. If someones gonna hire you to design / build / develop their product, then you need to be able to lead and deliver. Hard work, experience, and good networking skills.
This is probably the clearest answer that I have gotten so far so thanks.
However I was hoping for something more exact. I guess there is no perfect path that someone can take.
I think I also asked my question incorrectly seeing the other answers I got.
What I was really looking for was how can I as a 29 year old graduate of a CS program who is currently working as a developer(Doing nothing exciting at a enterprise company) get to that goal(the one mentioned in the original comment). Like what steps should be taken going forward.
They're then able to easily debug/optimize the system and know how to implement features in the best/simplest/most scalable way almost immediately.