As I was reading "Downsides to working at a tech giant" it occurred to me that the alternative to working for a tech giant is not necessarily a start-up: I would probably work for myself — freelance.
So, in fact the two articles can both be right. ;-)
I like being freelance but getting the motivation in those first couple of weeks was pretty hard. I also found it tougher to sell my services because I never really had to do it before. Probably some other stuff I can't think of off the top of my head? I don't think any type of work is perfect although I'd go for freelance any day of the week.
Actually for most of the piece he was pretty straightforward about making sure you get equity if you want to get paid upon company success.
What has changed is that genuine equity in startups isn't being offered as readily as it was ~15 years ago (and it is notable that the missed opportunity he describes is that far in the past).
I later worked for Y Combinator as a partner helping founders make products and services. The best ones made something that touches millions of people now.
While there is a lot of zero sum thinking in startupland and finance/capitalism in general, you have to remember that this is probably the most GROWTH mindset industry in the world. Where else can you, with just your hands and a laptop on the Internet, create something a billion people use?
I'm not saying that is the norm. But when it works, it's still remarkable.
And it can start with you, and everyone reading this.
Keep in mind that if you look back on the things that made you excited to go into startups into 2006 or whenever, probably none of them are true anymore. E.g. the main reason people were excited back then is that there was a huge arbitrage opportunity to take every business that already existed as either brick-and-mortar or web 1.0, and reimagine it using AJAX and web 2.0 design language. In retrospect there were a bunch of other favorable macro trends coalescing at the same time also, but regardless none of these arbitrage opportunities exist any longer.
Serious question: how many software companies have something that a billion people have used?
It's a pretty special industry, for sure. But the odds of it happening are basically zero. I see how selling the dream makes for a good story for young and hungry startup founders to passionately change the world and (cynically) end up as a failed bet in someone else's portfolio.
But it's a bit disingenuous to make it sound like it's commonplace.
At the large tech companies, with a lot less risk and higher salaries.
At companies that already have a billion users?
Touch 20 lives as a teacher and enrich those individuals, or 20 million lives by helping them order groceries over the internet.
It's always simpler, safer and more wise to incorporate.
Totally agree with this. Unfortunately I think there might be about 5 startups left if this idea were widely implemented.
You should feel lucky if confusing is the problem. I think the bigger problem usually is -- you often cant see the cap table. If you cant see the cap table and the preferred overhang, there is no way to realistically understand where you stand in the scheme of things. Confusing can be overcome with some search, but "opaque" cannot be.
I can say as someone older than they were at the time that there was an element of wishful thinking about many of the founders I worked with, and even more so for some that I met in passing.
Charismatic people who are deluding themselves just bring others along for the ride. They may not even know they’re being dishonest. People who have a way with words can be sucked in by their own words just as much as others can.
a larger question is : why can't startups make money
I think some old school thinking of more organic growth of a good idea with immediate revenue will see a resurgence.
There are certainly situations where that makes sense but if the founders are adding extreme value compared to the first few employees perhaps they should only end up with twice as much stock. That would free up a lot of equity for early employees.
Why would this be the case? If they’re adding relatively extreme value, why should they only get 2x the equity?
a) The market is now incredibly saturated, and being an early equity owner in a start up that will be worth billions is very rare now. Gone are the days of a unicorn every month or two.
b) People have noticed the trend of FAANG companies buying up start ups, and that this is the goal of many (most?) start ups today. Reach critical mass, get a good valuation and customer reviews, get bought out by tech giant. If you want to work on the most viable new products, just join a tech giant and work on one of the projects they've acquired. (Or wait till the company is bought and join them if they are still independantly run at which point they're not really a start up anymore)
My friend, I've been building software professionally for big companies and small since 2001.
There were never days where there was a unicorn every month or two.
Employees should get preferred stock in the amount of their pay cut.
A. Why are we comparing an employee situation at a FAANG company with what should be a co-founder situation? If someone is an engineer that can make something happen at a startup, they should probably be a co-founder rather than an employee.
B. Why are tech center startups trying to hire coders of a certain skill level that will be incredibly expensive due to local competition? If a startup is looking for skilled coders to implement the vision of the co-founding engineers that can make things happen, then there are plenty of remote coders in non-tech-center areas that will do a bang up job for a reasonable price. Note that many of these remote coders don’t want to or cannot come to a tech center. I assume that this is an issue because many/most startups are not good at hiring, on-boarding, managing people, managing remote workers, etc.
C. Related to issue B, why play the micro-equity game with coders at all when they should either be co-founders or they (as remote workers) can be paid a satisfactory wage without equity bait?
D. Why is this conversation comparing a job with (relatively speaking) a lot of hierarchy and politics at a FAANG with a job that should have a flat structure and a great deal of autonomy? These jobs cater to two different groups of people — the ones who like the former probably won’t like the latter, and the opposite is true as well. There are subtle sides to this (e.g., do your time at a FAANG to develop a network), but many people who succeed at startups are not folks you want working at a large company — they will go nuts, and they will drive the people around them crazy.
This whole conversation is bizarre to me. I think there are three relatively simple choices:
1. Take a company job if you’re a company person — that is, someone who likes structure and hierarchy. It might not be trendy to admit it, but many/most elite school grads fall into this category.
2. If you prefer things like autonomy, being close to the customer, and being a generalist, then go to a startup. Plan on leaving once it hits a certain size.
3. If you have a plan for an alternate path that includes both, then go for it — specialist work at FAANG, FAANG then startup founder, startup employee then startup founder, etc. Just know what you’re getting into, because it can be awfully tough to walk away from $300k annual comp as a 25 yo.
Most people I’ve known clearly fall into one of these categories barring some sort of life-changing event.
They are, given the exorbitant salaries, financially set enough to afford the startup risk, and there's a good chance they'd like to see some more agility again.
But 1) you'll need to stop lowballing equity for hires, and 2) you need to get used to the idea that it's not going to be an extension of university life - these people have all better things in their spare time than playing beer pong.
Bonus points: Offer an office instead of cubicle mania.
Bonus bonus points: Make sure you hire a diverse workforce from the get-go.
Startups are a wild ride, and a thrill to join, you'll learn a lot, and have a great chance of coming out learning more than you'd learn as a entry level at a big company. Don't for a second think you have the winning lottery ticket, because if your number doesn't come up you'll left with memories and the paper it wasn't written on.
PS I'd argue if you have a group / team, build your own vision. Go big, we have enough insta-wecha-snapple sauce out there. Build something that will have real impact. And if you don't have the Team / Vision / Risk tolerance go somewhere they'll pay you what you are worth. Maybe you'll be even meet some of those you want to build a team for whats next.
Problem is that all the capital is in NYC and SF, and they still prefer to invest locally. At this point VCs should just skip the middle man and cut checks directly to landlords and property speculators.
It would add a lot more risk, but given the outsized rewards, it would still be profitable for some VC’s.
Otherwise, there will be lots of ideas left un-persued because many experienced engineers will not want themselves or their employees to live (in relative terms) an ascetic lifestyle while perusing their dream.
Since starting, I've seen engineers who can't hack it leave or get fired. I've been the one engineer who has been productive and seen our projects to completion. Our team has gotten stronger over the past 2 years however and I feel that we are in a good position. In this way, I feel that I am valuable, but I have nothing to compare myself to.
Working at a startup I've also learned an extremely broad area of knowledge, much of this completely on my own. I'm often worried that that may hurt me if I apply at a larger company and that hiring managers would question my fit.
I’m sure the points exposed apply there but there are many other places in the USA and the rest of the world where this doesn’t apply and you can find good talent without needing to offer an exorbitant paycheck.
I got lucky that the public techs both had the largest stock growth in their history while I worked there.
All the money I ever made was at the public companies. I also learned a lot of cool, very specialized skills and got to do a lot of “ohhh so cool” type stuff.
Almost all of the knowledge I learned that allowed me to be successful at the big companies I learned at the startups, and most of the friends I made at work that I still talk to were at startups.
Both environments offer something unique.
I usually tell young people to start at a big company with a well known mentorship program and then quickly move to a startup to learn a bunch of practical skills.
I did the math and I figured that it might work out for me. 2 years later it turned out that they have been talking about a possible acquisition for the last 3 years, but nothing happened. I also checked the company's public information and it turned out that they weren't that transparent about the shares. I was told that I get 0.5% worth of shares (they refused to tell me the total amount of shares) and what I saw is that it was true: I had 0.5% of the outstanding shares. But in case of an acquisition, they are free to dilute them 5-fold because the authorized shares are 5 times as much as the outstanding ones.
So I decided to join a big company which is paying almost 2 times more right off the bat and I also get additional shares each year. I made a calculation and even if the old company gets acquired I get less money (it is just a rough estimation) than I get at the new company. And that's still a big if. I think that I still started from a much better situation than most of the other folks working for startups. This company produces profit, they have a business model I believe in and there is no VC to please. Most of the startups are in a much worse situation.
I will never work for a startup again.
This definitely isn't one size fits all and there are a lot of people that will happily try to sell you on their version of the story because 'it worked for them'.
Or it might indicate a lower probability of creating another company that produces FAANGM levels of cash flow.
Do you believe in it ?
Are they paying you a nice amount of money ?
If you can only answer 1/3 please continue to the purgatory state.
Personally I work for startups, but only because they let me work remotely, something I wouldn't be able to do at any FAANG. I would only go back to an office job to work at a FAANG, since compared to a startup the money, "exit ops", work life balance, and job security are probably going to be way better.
If startups want to be more competitive and have access to more talent, then they'd be wise to open to hiring remote workers. Otherwise they're going to struggle to compete with FAANG type companies. Remote is the one perk that FAANG companies don't offer, and unfortunately probably won't for the foreseeable future short of some serious cultural change.
The whole premise of venture capitalism is that money is an appropriate common denominator for what is valuable in the world, that the best way to change the world is through establishing a legal entity whose goal is to make money, that once you have lots of money the best thing you can do is to put that money to further use instead of directly engaging your own technical skills.
Why do we tell potential employees at startups "money isn't everything" but potential founders "you'll make more money this way" and potential funders "please, sir, some money"?
The startup ecosystem is a way for venture capitalists to get richer, and to incentivize the people who can directly help them get richer. Evidently it's not enough - so maybe they should incentivize the people who help them indirectly get richer. If money isn't everything, don't join a startup or a big company, go to grad school, where you can actually work on whatever you want. Or go work for a big company for several years and retire, or find a half-time consulting gig, or something.
If money is what you're after then joining a big company is by far the most rational choice. Eventually, big tech companies will realize this and start significantly lowering wages until new engineers are paid the same as blue collar workers.
The reality is that new startups do not disrupt corporations; they feed them.
The only way I can see to end corporate dominance is with blockchain tech because it can disrupt the incentive structures that feed corporarions. The new generation of developers can build a new financial system using cryptocurrency as the decentralized foundation in which to store value.
I can see you just started writing on this blog so I don't want to discourage you, but I was struck by the formatting of your notes page and this post being so similar to Dan's along with the topic and content of this post. Keep writing but I would maybe suggest something with more of an original spin.
Not to mention that his post format isn't remotely like DanLuu's. It reminds me more of old Philip Greenspun.
Not that "basic text" is some sort of copyright or something.
As a counter example, I found this is far more true at big companies, where you can switch teams until you find one that fits your interest, then at a startup where you are expected to work on basic infra that the company doesn't handle.
For the data/ML related jobs that I was looking for and the industry is moving towards, big companies have tons of valuable data that startups could only dream of acquiring.
At small companies, you have more control. That's in the high-growth handbook. :)
I don’t understand this at all. Big companies have lots of individual projects, where engineers get direct access to customers. At my big co, we all watch every App Store review come in, conduct thousands of interviews with customers and have a direct say on what gets built.
working evenings and weekends,
a life outside of code,
having children or families,
master in a specific field vs jack of all trades (master of none),
money is more important than free snacks,
working your butt off to watch all the credit go to the founders (as well as the money),
long term stability,
benefits and retirement is much less risky than hoping for an equity payout
I feel the startup founders should enjoy reaping what they have sown.
that being said, if a person wants to work at a startup, i'd say they already accept that the wage will be much lower than at some big corporate or company who is making good income already. it seems a bit if not a lot silly to me that someone would join a startup in the early phases but then demand a corporate salary. startups are kind of a popular term, but think about it... people used to actually build stuff and then get funded / success, instead of wanting funding upfront without any actual effort put in (thats exaggerating i know). A lot of startups these days though really ask for ALOT of money from investors without having even an MVP or viable product yet. I can't see why someone would pay for just an idea ... it seems a lazy way to make a startup. Building something, prove it works, and investors will have no issue to invest?
Instead of startups I want to attract people to a project to change the world just like the OP is saying. But where to find the first few developers who would do it not for the money?
I can't find the link but a while ago hacker news how to link to an article about useless jobs at large companies. Reminds me a lot of this.
So, if you're a founder, how do you tip the equation to make working at your startup attractive to talent who presumably also read HN?
What would make you interested in joining a startup as an employee?
I work with startups, and while this may have been true 10-20 years ago I can't imagine how you would think it's true now. As the sibling comment says, I'd love to see your work, i.e. a remotely plausible example case with numbers illustrating how startup EV would approach bigco EV.
In the meantime of what? I didn't suggest any action but merely suggested that sometimes money could clarify whether you do something because you love it or/and because you have to make money.
Except they did. Countless people have done the calculus and decided that their creativity wasn't going to put food on the table.
I'm not sure the startup angle jives with the artist's.
Most great artists, musicians, writers, theorists, scientists, teachers, and inventors would not need to struggle as much if they would have some money to cover their basic needs. They would just avoid bullshit gigs and do they stuff with a greater focus. And if having $1M in their bank account would stop them doing what they love, then it is quite possible that they didn't love it in the first place.
That is what poor people are told to justify their struggle.
$1M is about 20 years of coast on a modest bay area mortgage + family healthcare.
To me, FU money is passive investments which yield a couple hundred thousand a year from businesses that can keep up with inflation.
If someone doesn't feel comfortable leaving a job to bet on a startup project with 20 years of mortgage payments in the bank, it is unlikely they ever will.
It should be possible to live in the Bay Area on that, given that the place still has cashiers, cleaning personnel and maintenance workers. It won't be a middle-class lifestyle, but you'd have to make _some_ sacrifices in order to indefinitely work at whatever you want in the most expensive place in the world.
So I'll just give you some simple answers.
If you don't already own a house, it's not a functioning area for families, or those wanting to own a house, aka "priced out forever."
Commuting farther is an option in other parts of the USA, but not the Bay Area, since it's constrained by hills and the Bay.
The non-owners living here need a gaffe of some kind:
* shared accommodation
* fly into a city airport with a private plane
* know a Prop 13 owner (ultra-low property tax) who wants to rent to a friend
* find an in-law unit coming onto the rental market
* navigate the Sunset area flop houses
* connections to ethnic communities with below-market asks
* get employer to chip in
* homestead a sketchy area of Oakland
* be a multi-unit superintendent (those used to offer a free apt. on-site, but recently I heard of almost market rent being charged)
There’s no reason pay for cashiers, cleaning personnel, and maintenance workers can’t rise, or to meet the demand of labor with a little bit of automation also. Making $40k per year as a cashier means $80k as a couple or roommates.
Assuming this is investment income of course, and not just spending down the principal, which obviously wouldn't work.
So probably under 2k, and it's not fun money, it's everything but housing starting with food and transportation.
Doable? I guess. Fun? Eye of the beholder, I'd say. And that's assuming kids don't enter the picture, say goodbye to every part of this plan if they do.
>I feel like it is hard for people to say what they truly love before they have at least $1M in their bank account. If you have FU money, your view on working at a FAANG vs building a startup can change. You will find it easier to know what you truly LOVE
The question wasn't if you can retire, or live of the investment income, but one of perceived finical security.
If someone is too afraid to try working at a startup with $1M cash in the bank, it is unlikely they ever will.
Even if someone has kids and family, $1M provides a huge buffer to find a new job if the startup doesn't work out. Maybe 20 years is a stretch, but I am utterly baffled that other posters think this would only cover 2 years of spending...
Not in the Bay Area.
Looking at an excel for a million-dollar+ home is truly frightening. So many zeroes!
I'd consider $5M closer to FU money.
In US this might correlate more strongly to the numbers of zeros in the bank account or the salary difference to similar workers at FAANG. But feeling of safety is subjective and depend a lot on the environment you're in so I don't think that's universally the case.
[edited to protect your feelings]
Are you saying that simple introspection is hard? I completely disagree, because separating extrinsic motivation (I do this for money) from intrinsic motivation (I do this for fun) really isn't that hard.
>Or am I giving the average person too much credit?
Another consideration is that this is an irrelevant question for your average person, or even 99.9% of the population.