Early employees have to work like crazy and get very little upside for the risk they take. It's literally the worst deal you can take, and in this economy it's just a bad idea - I imagine most of the candidates at WaaS right now are college grads who couldn't find a job.
I joined a YC company as a 1st employee (and also did YC as a founder).
I agree working at an early stage (especially < 10 person) startup is a terrible idea if you're looking for stability, consistency, high pay, etc.
But (depending on the company size and the founders) it can also be an amazing crash course in how to build a company if you aspire to build your own company one day.
Being part of a tiny startup gives you visibility into things that work (and more importantly, things that don't work) when you go on to start your own company one day.
If starting your own company is what you aspire to do, joining a very small startup is a free way to learn a lot of lessons about how (and how not to) run/build a company. For some people that can be priceless. For others, it's not.
I also think there's a good argument to be made for working in Big Tech for a few years (e.g. maximize salary potential) if you aspire to start a company, especially if you don't have savings to fall back on.
It really depends what you're optimizing for.
Edit: FWIW, I was definitely underpaid by the YC startup as a 1st employee and didn't make any money on stock options and worked crazy hours with barely any vacation time. But I learned so much during those 2 years. It was an amazing way to see first hand how companies thrive or fail - it's way better to learn the hard lessons as an employee via observation compared to as a founder making the mistakes first-hand. It was also exciting and fun. The one fear I have is that this experience may not be reproducible in a remote setting. Almost all of what I learned by being an early employee at a YC company were things I observed sitting in the same room as the founders 10 hours a day (as a developer). I don't think it would have been nearly as rewarding if I had been working remote the whole time.
Nope, the best way to learn to start your own thing is to start your own thing - I know several successful YC founders who would never join a random YC startup to be an early employee since the risk/return is so bad. A lot of YC founders are random 20 something who may not even have a network, or very often they are terrible mentors.
These same successful YC founders hired a bunch of people saying the same stuff you are saying even though they would never take that deal. It's stuff you say to the plebs (to hire them for cheap) but the social proof/networks are better at late stage startups and FAANG.
> A lot of YC founders are random 20 something who may not even have a network, or very often they are terrible mentors.
Or are just toxic people entirely. Or worse, they started out as good and they got a little taste of power, and instead of becoming humble from it, they become a tyrant. Or their bad personal habits from college (drugs, alcoholism, weird sex crap) are forced onto the employees in uncomfortable ways. Or handle failure badly -- by taking it out on others.
Founders become founders because of their assertiveness and confidence in front of VC's. But then some make this weird trend towards anger and aggro towards others -- particularly if they're not succeeding and drowning in their own failures.
Early employees often invest $ (cheap salary) but they don’t get preferential shares for their money - that’s a hell of an uneconomic trade.
Sure, early employees get to do “Startup University”, however the strictly better deal is to become a founder and do “Startup University on Steroids” (even though expected return is $0 for founders).
Ideally you can bootstrap a startup and retain 100% of ownership. A small pie you win, is better than a slice of big pie you failed to win. https://news.ycombinator.com/item?id=35472121
I think there's a good case to be made that being the first non-founder in a startup is one of the worst risk-reward profiles in the industry. The people who got there before you have far more upside (which is entirely fair, but still mathematically true) and the people who join later as the company grows and evolves have a lower risk profile.
I agree that you can learn a ton by being the first non-founder into a startup. You can learn even more and have more upside by being a founder.
This is one of those HN-isms that I think isn't right at all. Having worked at early stage companies, growth-stage companies, and in big tech:
1. What is the risk? From where I'm sitting, layoffs seem to be happening at all company sizes. At least early stage cos typically are pretty transparent internally so you know where the business stands.
2. Compensation is lower than $BigTechCo, no doubt about it, but it's competitive with other companies for folks early in their career.
3. Early stage companies are more fun! Ask your friends, you'll find that the $BigTechCo ones dislike their job but feel the weight of the golden handcuffs, and the $EarlyStageStartup ones love their jobs (but wish they could get $BigTechCo money for it!). Personally after the nth re-org, project cancellation, and executive temper tantrum I was ready to leave $BigTechCo.
4. You don't get founder equity, but the first 10 employees certainly get $LifeChanging outcomes on >B+ exits.
5. I worked the same number of hours at $ShittyBigCompany, $ExcitingEarlyStageStartup, $FamousBigTechCo, and current $GrowhtStageStartup (in fact, maybe a bit less now that I have kids). YMMV!
1. The risk is you've wasted your time being underpaid at a shitty organization run by people who you can't really learn anything from.
2. It's not close to competitive, YC backed companies are cash starved before they raise their first real round.
3. It's more fun if things go well (1/10 chance even after you are YC backed)
4. Odds of this are astronomically low and even lower outside the Fed's ZIRP.
I've worked at multiple size organizations too except for pre seed/seed companies because it seems awful - the Founders are just some random Berkeley kids without product market fit. All the people who I know who are in the same space would never take that deal. What percentage of VCs or Founders do you think take that deal?
Everyone has their own path and experience, so YMMV here.
1. Agree. I'm biased because I've gone from startups -> big techs -> startup. A massive number of friends at big tech have been laid off, but at my startup we're having record years in 2022, and 2023 is shaping up even better. Even if things go south, it'll be pretty obvious.
2. Perhaps early in careers, but not late. Outside of the CTO, I'm the highest compensated employee in tech, and that's still a 60% discount from my FAANG job, even when accounting for current stock prices.
3. I've definitely had way more fun at early stage companies. I've enjoyed the learnings as well.
4. FWIW, I'm 3-3 on startups w/exits (all acquisitions). Net value of my equity was $0, though I did get a 6-figure bonus once as an executive of the company. A $1B exit at my current company would mean some real $$$, such as low 7 figures! Now, to put that in perspective, that bonus was worth less than RSUs from a single year at FAANG (even before stock appreciation). The low seven figures from a startup $1B exit would be about the same as 3-4 years of comp at the FAANG. All of that is to say that I didn't go back to startups for the money.
5. Early in my life at "exciting" startup, I worked wayy wayy wayy more hours than I did at a big company or my current startup. I think hours worked correlates better to my age than to where I'm working. ;)
Agree that the risk is overblown. Apart from the sometimes frantic pace, startups also have more flexibility for different personalities. In a small company things aren't standardized and there's room for uniqueness.
#4 to me is uncertain. I view startup equity as slightly better than a lottery ticket, but unlikely to beat RSUs in a public company unless you get super lucky.
Yes but if everyone listened to your advice, there will never be successful companies that once were a startup. Yes working at an early stage startup is mostly a gamble and the financial outcome is close to zero but people have other motives too. You can learn the most by working close to founders in a small startup. It will take years to learn the same (if even possible) in larger orgs where you are told what to do and cannot do things outside of your "job duties". Some people hate to work in boring corporate hell where their soul is being sucked away from them. I was one of those so I know the feeling.
"most of the candidates at WaaS right now are college grads who couldn't find a job"
I disagree. Few may be. Most? I wouldn't think so. Trust me, there are people who want to work for startups because they really want to work for them, not because they have no choice.
In an age of 10 million dollar seed rounds there's more ability than ever for startups to pay competitive salaries to non-founders.
I did the early-employee-recently-out-of-college thing a while back, they weren't able to raise nearly as much; my boss would've LOVED to have the money to retain me when I got a closer-to-market offer from another company.
I feel your pain but unless your startup has a decent revenue inflow any changes to permanent costs, which should read salaries, are difficult to justify.
You obviously need a strong and motivated team to build something great. But - in the current conditions - if you are unsure as a founder when the new round may come any increase to salaries may not be taking you to product market fit and a stable revenue stream.
The other option, of course, is to give employees more upside. I've had a few founders offer me founding engineer at a salary equivalent to theirs with 1% of the upside in an IPO scenario despite very similar risk profiles (not to mention
what would happen in acquisition).
Actually it's probably worth mentioning acquisitions as one of the things that's severely reduced the appeal of working for a startup. After failure the most common exit for a startup is acquisition. As an employee this almost always means you get zeroed out and founders regularly walk with 7 figure pay days (or higher). I know they exist but I've yet to meet an employee who made any money in an acquisition for under a billion.
No one will offer you any sort of protection for this scenario, why bother?
No. These startups still pay a salary, right? And I don’t think they that much less than your opportunity cost (at least my opportunity cost is not $500k at Google)
At the moment it's slim pickings out there, so even if you have to grind out a few years, it's better than nothing. Some people also enjoy the hectic environment. There're definitely ways to do startups that don't involve crazy hours and / or burnout, but it takes discipline and acceptance that you can only do so much in a day.
> Early employees have to work like crazy and get very little upside for the risk they take
For some people that is more interesting than a boring corporate job. There are lots of interesting aspects to being in a small company building something. Not everyone is trying to maximize monetary return on effort.
Biggest challenge with startups for experienced people in my experience is inexperienced founders who haven't sorted out the difference between coordinating work and telling people how to do something. But that gets better with time, and isn't a reason to abandon startups altogether.
This is actually a spot on comment recalling the true startup/software mindset.
I miss the old days of building software just for the pure joy of hacking things together to create value, first for myself.
The physics of software/SaaS market became severely disturbed in the last decade by free marketing money pushing the most shiny products as wide as possible without making the technical side work first (Looking at you, Clickup).
We strongly need hackers to become motivated and concentrated again to build great new things. Far from FAANGs and far from GPT-is-the-answer theme.
Just two-three hackers working together late nights over shared pizzas on something smart.
Building is the answer. And even likely so in the current reality of failing corporate promises which will take us into 2024 or even 2025 easily. The new, adjusted financial forecasts for public companies are just being published (these won’t be nice) and we are still to reach the bottom in demand for software developers.
Let’s not waste this time and build something great.
> We strongly need hackers to become motivated and concentrated again to build great new things.
This guy on twitter is a *checks notes* virtual mailbox provider. A product that's existed for ages and already had software startups take a run at disrupting them a number of years ago. I remember one spectacular failure, don't remember how well the others fared, and get the impression from a friend that uses one of the legacy providers that they're happy with the software offering of existing service providers.
Not exactly the kind of tech R&D conjured up by the phrase "build great new things."
Makes me expect that the kind of people "Work at a Startup" could place at innovative companies are going into the same meat grinder that got us to where we are today.
I have a hard time drawing a line where my own lost innocence ends and the widespread cynicism and malaise that has crept into "tech" starts. But the culture has unmistakably been a casualty of recent history.
This corporate-all-hands-meeting flavor inspirational writing ain't gonna fix it.
I would love to do something like that, but I wouldn’t do it for a 70% paycut like I’d get as a founding engineer, unless I had founder-level equity.
I’m actually considering bootstrapping but in this day and age, it’s a hard prospect. You’re getting out advertised by everybody and many domains (AI, SAAS) have high inherent costs. It only works if you put in a lot of your own money, and are OK with a slow ramp to ramen profitability (within a domain where such a domain exists; forget about ML or nontrivial SAAS).
The whole “get some pizzas and hack” I am pretty sure is still how many profitable startups are getting created up to the MVP stage, just not necessarily the “three randoms and an accepted YC application” startups.
