Now I work at a large tech company in SV and wont be involved in another startup unless I'm a founder.
Surely this must reduce the quality of the talent pool available to new startups, as the experienced developers conclude that other options are a better use of their time.
Second, regarding the talent pool available to employers, two factors confound the analysis: the first and by far the strongest is stated preference vs. revealed preference --- to wit, good developers will make large concessions on comp in exchange for working at companies that seem more fun; the second is that software developers are as a demographic cohort terrible at negotiating.
Yep. It's no real surprise that coders are mostly men with poor social skills, while HR is mostly women with good ones, most of whom those men find attractive. Classic Valley symbiosis.
I am sure there are companies that, by outward appearance, do have candidates negotiating with HR people after the interview is over. Step 1 in handling negotiation with those companies: realize that you are not negotiating with HR.
The other was a big one in San Francisco, and their HR was insanely powerful... for some reason. It was quite a shock to me but to a lot of others used to Bay Area startups they made it seem like the norm.
So I guess my point is that not all HR is alike and there is probably some truth to this HR negotiating business.
Most of the software developers I've worked with in my career have had very good social skills, those that didn't, were poor developers as well... So are they bad negotiators because of they lack negotiating ability, or actual ability?
Is there data on the social skills of IT, HR, Gender breakdown etc... Perhaps what you are refering to is a U.S (?) phenomenon?
The fact that people with good social skills convinced you that they were good developers proves the comment made by the parent poster.
To clarify for those that are a bit slow(er):
Their development skills convinced me they were good developers, their social skills just correlated.
I've met quite a few HR folks with rather poor social skills. It's often the place where the worst business majors get "parked"
In other words, you're telling me both people and organisations are imperfect?! Shocking.
Sarcasm aside: really, it is shocking how SW engineers could come to think that any of the inexact, data-free, human-judgement-driven sides of business are optimal--simply from the theoretical argument that a market is involved. A little economics is a dangerous thing.
I suggest starting from the assumption that everything can be improved, unless proven otherwise.
The failing is not that the employee equity math rarely works out, it's that the "industry" is so focused on equity. It often falls short as a recruiting tool (a significant number of prospective employees are clued in to the fact that it's likely to be worthless) and it's usually a poor retention tool as well (just look at startup turnover and the number of employees who don't stay with one company long enough to fully vest).
The startup value proposition today is actually quite compelling in some cases. Employees, many of them young and without significant real-world experience, can earn six-figure salaries working at companies that, without outside investment, could not sustain themselves.
Too much capital chasing too few opportunities has given many startup founders the ability to raise capital on terms that are insane. I mean, you have entrepreneurs raising million-plus convertible note seed rounds with caps that make absolutely no sense. Where does all that cheap money go? For many if not most startups, one word: salaries.
If you're being paid $120,000/year plus benefits to work on a CRUD Rails app at a startup that probably won't be around in five years, you should forget about equity. You have already won the lottery.
Working in tech may be unjustifiably glamorized, but you have to be incredibly out of touch with reality not to realize that earning six-figures plus benefits working 8-10 hours a day in air-conditioned buildings for employers, many of whom will feed and transport you, is something that millions of Americans would give everything for the opportunity to do.
Getting that first job on your resume can be quite a trick.
Just before he emphasizes, with italics, that this is only "compelling in some cases".
Because of the circumstances in which I got dumped into the job market, I started out with a sysadmin job with some programming, which I turned into more programming, but it was not a great start, and it was only through unique coincidence (about the only person in the community with serious Lisp Machine and UNIX(TM) experience) and connections that I got my first really good job.
They were working with Western Digital, which like everyone else at the time was designing a 68000 based workstation, and conveniently enough, it was based on MIT's Nubus NuMachine: https://en.wikipedia.org/wiki/NuMachine
So they were doing all the normal infrastructure for a high end workstation, and LMI was designing a 4 board Lisp Machine CPU with a Nubus interface that would work in one of their machines, with or without the 68000 processor board running UNIX(TM).
People with a serious UNIX(TM) background were actually harder to find in the community at that time....
Oh well, lucky you for having been exposed to Lisp machines.
Even in professions like law and investment banking, where employees do have to work grueling hours on a regular basis, the "80 hour work week" is largely a myth. I think medical residents are one of the few groups that really puts in these types of hours consistently.
so I was probably exaggerating a bit, but I stand by my original comment that many of these overworked, underpaid startup employees lead absolutely miserable lives and work harder than 95% of people on the planet.
For reference, the US in general works more hours per week than any other industrial nation. Hunter gatherers worked only 15 hours/week. Most impoverished nations work very few hours per week. The only people who beat them out are sweat shops in Southeast asia
This allows us to:
1) Justly reward our employees to the upside (with cash, delivered semi-anually) if things go according to plan
2) Automatically controls costs if we don't perform as a team
3) Achieve upside fairness across early vs late employees since we can adjust the bonus % as we hire each new person
4) Eliminates oddities due to variations in company valuations where swaths of employees end up underwater due to bad luck of timing
1) the tax treatment of bonuses as income rather than capital gains is nominally worse; but given the complications with options, it probably works out better for all but HUGE equity gains
2) this plan might not work well for a company that will be pre-revenue for many years, but that should be a pretty far outlier case.
All-in-all this allows us to offer the opportunity for employees to earn above-market comp without having hope they get lucky with company growth, market timing, and their timing of joining the company.
It's been 3 years now and so far, so good!
I worked at a very successful company that used a similar model: flat 50% of profits paid to employees as bonus. This worked fantastically well in the short term. Now, 10 years later, the company is still very successful but the upside has all shifted to the owners due to departures, renegotiations, and new hires not getting the same terms. So at 3 years it looked very pro-employee but at 10 years it looks very pro-owner.
Would have been really "interesting" if there had been a liquidity event...
However, I'd make the argument that paying above market for top talent is about the best thing a startup can do to increase its likelihood for continued success.
So why did we choose revenue growth instead of profits as the basis for the bonus plan? Profits are easily gamed and frankly rare in startups and would not make for an appropriate metric to base bonuses on for an early-stage company.
I am not sure I follow your points about metrics, transparency, valuations, etc. Those seem like concerns unrelated to the structure for giving employees exposure to our financial upside.
Our #1 metric is revenue growth. That's what we want our team focused on. Not vanity metrics, not profits even. That's a management concern. Our bonus plans cover multi-year terms, and they motivate one to do the right thing in the long-term vs short term. There are no issues with gaming the bonus program; moving $1 of revenue forward/backwards by a few months has no effect. Making an extra $1 now at the expense of $2 next year is not rewarded. "Top management" still has to approve overall direction and operational processes, so it's not like anyone even has the opportunity to game revenue numbers at the expense of operating margin. Besides that, we hire good people and if you can't trust
I will say that for some types of models (eg Twitter) this wouldn't work as it's a free-as-in-beer product until they can start doing advertising. But models like that are quite rare. Though even in those cases there is probably a single vanity metric that is theoretically the main driver of future revenue growth which could be used.
Of course, that's still talking about equity, which gets back to the fact that it really is best to treat your equity as little better than a lottery ticket -- something with the possibility of turning into a modest bonus and the remote chance of making you wealthy.
> experienced developers conclude that other options are a better use of their time.
Which I suppose is part of the reason the startup labor pool skews young. Occasionally, though, experienced developers get bored and need new opportunities too.
Also because if they are worth something, it's a motivation for the company to fire you before you can cash out. E.g. while the discrimination case against Google was settled out of court for undisclosed terms, whatever the motivation, the timing of the firing of Brian Reid 9 days before the company's IPO was clearly not an accident. (119,000 options, $10 million on the day of the IPO, lots more later: https://en.wikipedia.org/wiki/Brian_Reid_(computer_scientist... )
Given that we're living in a mostly post-IPO world, you could well be better off never getting options....
Even well-funded startups give me pause. I'm not interested in putting in founder-like work for entry-level employee-like compensation plus a lottery ticket. Unless the equity is meaningful and imbues the recipient with an actual, real voice in the direction of the company it's just a way to sidestep offering real compensation.
In the first case, it's unreasonable to put in more than a couple of hours of overtime here and there for even market rate wages at any company, whether it's a startup or not. "Uncompensated (comp time doesn't count) overtime" is a euphemism for "exploitation."
In the second, the employee is effectively creating at least one of the revenue generating engines of the business. He deserves to reap the rewards of his labor. That means more than below-market wages plus "startup bucks"/lottery tickets.
The entire issue, as I see it, can be distilled to this: founders want employees who are taking significant risk, who will work for and treat the business like the founders themselves would, but who considers below-market wages plus "startup bucks" as great compensation, even when it is historically not.
* The medical sort, and here in Holland the Pharmacists require the same education as a medical doctor but specializing in pharmaceuticals not diagnosis.
I'm actually sitting on a huge pile of vested options at a company I left a few years ago, but I'm unlikely to ever exercise them during a sale because the strike price is almost guaranteed to be higher than they're worth.
I also know quite a few folks working a big startup sitting on lots of options, except the startup is on something like a G round of financing so they're likely diluted to worthless. Most of them started working there right out of college and don't understand how it works, and the company salary caps employees...it's a cool place to work but they're likely to get screwed if they're ever acquired/IPO.
One thing I've learned after working at quite a few startups as a non-founder is this, ignore the options and try and get the best possible salary you can. If you get some options, that's cool, but don't count on them for anything.
The competing job offer is Google or another megacorp. What's their turnover for engineers in a year? 10%? 15%? The definitionally average startup has a higher turnover even if we restrict it to turnover caused by business failure, to say nothing of voluntarily or involuntarily losing one's job.
If you exit a position with Google/etc, you have a network full of people who also spent the last couple of years at Google. You can easily lateral into jobs of comparable quality. If you exit a position with a failed startup, your lateral transfer is likely into another job which pays below market. Your immediate professional peers are also people trying to avoid the failure stigma. They may also be slightly busy looking for a job to help you with your own job search.
If you work for Google for 2 years and then separate from them, your 401k increased by $30k in the interim and you probably have six figures sitting in the bank account. If your startup is shot out from under you, you may end up counting the number of ramen boxes in the pantry while hoping that the startup can make good on its final payroll check.
If you work for a megacorp and are let go, it is highly likely that you were let go for firm- or individual-specific reasons rather than industry-wide calamity. This is very much not guaranteed in startups, where e.g. ebbs and flows of the capital market can cause a daisy cutter to hit the hiring pipelines at dozens of firms at once. You could lose your job at the same time that everyone else stops hiring. Ask the wizened veterans of the dot com bust who are, what, in their late 30s?
Startups are meaningfully less secure than working at bigco. Anyone who says differently either doesn't understand them or is trying to sell you something.
You're certainly correct about the opportunity cost of forgoing higher guaranteed comp at a BigCorp in return for a potentially higher reward, but I don't think that directly relates to the question of job security.
Now, maybe we are in a bubble and maybe we are not, but the tech sector has a history of very sharp ups and downs, and in the downs? my experience is that a lot of pretty good people end up un[der]employed.
The other interesting thing is that from what I've seen? Layoffs at big companies (and if the sector takes a dump, there will be layoffs) are generally more "fair" than interviews at the same places. By that, I mean that those people who are shy but good are often the last to get laid off, but beyond a certain level, when interviewing, the "shy" part hurts you more than the "good" part helps you.
I had to move to Ann Arbor to find my next job.
The thing about the daisy cutter that Patrick said is not a myth. If you're one of the people here that believes we're in a bubble, you should take it seriously. They didn't call 2002 "Nuclear Winter" for nothing.
I moved to NYC to get a semi-functional job market.
These days the possibility of highly correlated failure is a major component in my career decisions.
If I'm paid $100k pa at Regular Corp and I get laid off after 1 year, then I keep the 100k I've already been paid.
If I'm paid $50k pa and 5,000 options at Startup Inc and I get laid off then I'll probably end up forfeiting the options which leaves me 50% worse off than if I'd worked for Regular corp.
Both are off my list because I'm not lucky enough to join the next Facebook and I'm not capable of founding a company myself at the moment.
Getting sweet $170k salary with some bonus, massage, free food and shuttle is good enough for me.
As a general rule of thumb, if a company is willing to do the extremely expensive action of acquihiring, they are willing to part a pretty high amount of equity of employees. Not acquihire-high of course, but a pretty good amount.
Of course, it could be argued that they aren't "startups" by that point, but "growth companies."
There is also a major information asymmetry. They know the ins-and-outs of the stock types and likely acquisition scenarios. It is not likely you are going to go over the company financials and corporate documents during the interview process. You just have to hope they treat you fairly.
(If my current company doesn't work out, this is how I'll do it next time around)
If I were to guess why: The more relationships you have on the founding team, the more likely you are to have ONE of them blow up or have someone lose their nerve/interest. Early startups are fragile things.
Seems like you could go with a hybrid approach (start with 2-3 founders, raise a small amount or self fund to hire 1-3 stars for small salary/high equity comp who couldn't go without a paycheck).
They usually are, but the median is not the message. If it's a group of college friends coming together to start a company for the first time, 2-3 people is way better than 4-5. But if you've worked with a few people before, know them well, and know how to set up expectations on day one, you can successfully have a larger group of cofounders without worrying about conflict. (This is something I've discovered for myself, it doesn't mean it would work for everyone)
- A "negotiator". The kind of personality that is always mending the cracks that inevitably appear in the group.
- A visionary. The kind of personality that is incredibly optimist and always has the destination and the path in view.
Smaller groups can forfeit these needs and function, and are thus easier to assemble.
I've never seen groups larger than five succeed, and I've seen quite a few fail.
He could try this: http://michaelochurch.wordpress.com/2013/03/26/gervais-macle...
I'll just take the higher salary and use it to fund my own ideas which I control 100%. Equity without say into decision making is practically worthless.
You're making the right call. I'm probably older than you and I've done two startups. My career hasn't recovered from the lost time. Total waste.
Most startups (by startup, I mean "company focused on such rapid growth that VC investment is mandatory") are pure shit. They fuck up your finances, drain your emotional reserve, and (unless you're a founder) often spit you into junior roles that you won't be able to stand after a taste of real autonomy.
If you don't learn much, then you've wasted time. If you do learn a lot (which you can, with a good run as de facto CTO) then you still end up in a junior role, due to your lack of credibility on-paper, for which you're massively overqualified. That's the worst outcome, because you're better off actually being junior if you're in a junior role; overperformance is far more dangerous (in large companies) than underperformance.
I have no delusions that my option grants will turn me into a millionaire, but my salary is good/great, and I'm able to live well below my means (in San Francisco, even).
I tend to think startups messing up your career is more of a function of your selection of company and attitude than anything else. It's just a job. It'll only break you if you let it.
It's even bleaker for non-technical roles IMO: get hired as an "office manager," try to do everything asked to a high standard, and end up as a janitor, concierge, personal assistant, accountant, and collections manager for accounts receivable, all while getting paid as a receptionist.
I report to 'architects' who haven't done or know 1% of me. By the fact that they've hopped 10 mega corps and with some neat interview skills always ensures they take home big salaries and bonuses.
While technical skills are good. Soft skills, social skills, a strong network is ultimately what really matter in the real world. Focus on that with a occasional focus on tech trends. Once you do that you can relax in positions of authority to make junior devs slog for you.
I thought it was very intriguing, if perhaps hard to get off the ground. Definitely would be a good antidote to the kind of SV craziness you describe, but of course not really in line with the status quo. I'd like to see some more discussion on this, and maybe get involved (though my business knowledge is near nil).
Also, I think "startups" generally suck. By startups, I mean companies built to become billion-dollar concerns (and willing to throw culture and people under the bus to get there). I'm starting to think of that as raving narcissism. People should want to do great work without that instant gratification and entitlement of Big Exitzzzzlol!!!!111
A better idea is this: http://michaelochurch.wordpress.com/2013/05/07/fixing-employ... . The idea is that people sell call options on their time, as a consultant. Let's say my fair market value is $200/hour now. I might sell a call option, struck at $150/hour, exercisable within 5 years. That's probably worth $100-150 because I'll be more skilled in the future. It lets people finance their career needs early, but it also makes the consulting market astronomically more efficient because the option-holders (who would tend to buy underpriced options) have an economic incentive to find work for talented people.
I really like that idea - there's not currently a marketplace for this, is there?
Why? Can you explain.
In your next family gathering people will ask you to fix their computer. You say 'Sorry I'm not IT, I'm a programmer'. Suddenly they dislike you. Do they dislike your cousin who waits tables for not fixing their computer? No, just you.
Similar themes play out in a business setting. If you're competent everyone will want you to do everything important. Which will result in:
1. You get stretched too thin and start making mistakes -> fired.
2. You refuse to take more than your share of work. This is seen as a slight to whomever you refuse. Similar to the above anecdote.
No one gets upset with the person who can't help them. They get upset when the person who can help them doesn't. Additionally people tend to focus on what you haven't done yet, not what you've already accomplished. The more that you are able to do, the larger the unfulfilled expectations become. Suddenly a large portion of the projects are complaining that they would be further 'if only we could get Redmaverick to help'. Now you're seen as the bottleneck for not helping, rather than the asset because your skills apply in so many areas.
If you are a skilled person who can execute tasks, it is vital that you always frame yourself by your accomplishments. By default your capabilities will be used to create a long string of perceived obligations.
It can be worse than that. In a small startup, you can be the least-worst informed and capable about several critical areas, where you pitch in and do a better job than anyone else could have, and make mistakes.
(In one particularly galling example in my work history where I was employee #1, I recommended an ISP, which was good, but without talking to me the co-founder who set that up also bought their bundled email service, back in 1997 when this was seldom well done. This turned out to be a mistake visible at the top of the company....
Or take firewalls: while I now know a lot more about them, and can set one up with raw iptables or Shorewall, back then all I knew was what I'd read in Cheswick and Bellovin's seminal book https://en.wikipedia.org/wiki/Firewalls_and_Internet_Securit... and said, "Gauntlet has a good reputation". Yeah, but its company, Trusted Information Systems, had just been bought by Network Associates, which apparently following a common Computer Associates business model of firing almost all of the technical staff and milking the reputation....)
I'm (mildly) bipolar. The highs hurt me more at work than the lows. The lows I can push through and compensate for. I have a strong enough work ethic that except in an absolute mind-breaking depression (which I haven't had since my early 20s) I can handle it. In the highs, I either overperform or raise expectations. I always do a very good job of something, but that something might piss someone off.
Reliable median performers, on the other hand, don't piss anyone off or surprise anyone.
Which, if you're one of these "overachievers", increases the chance the start up that hires you, at least early enough that stock options might even vaguely maybe be worth something someday, will fail. This has happened at several that I've worked for, they died hard after I was purged.
The #1 thing you can do to at least not help drive yourself deeper into depression is to learn cognitive therapy, which nowadays has a "behavioral" aspect added to it that I'm not familiar with (this is the CBT Michael refers to in his message composed at the same time as mine). Buy this book; I keep extra copies to give to people: http://www.amazon.com/Feeling-Good-The-Mood-Therapy/dp/03808...
If you're truly bipolar, there's no substitute for a doctor's care as well, you'll probably need a mood stabilizer, of which there are many varieties from the "gold standard" of lithium to modern atypical anti-psychotics.
My genetic pattern seems to show more debilitation in the 20s. Unfortunately, some people don't recover from the damage (to health and career) done in that phase. I seem to have made it through the worst, though.
It was in my late 20s that I learned to live with an unstable mood. Sometimes I'll have a panic attack (10 minutes of extreme adrenal excitement for no reason) or a depression attack (an intense 2-4 hour bout of depression that, while leaving me exhausted, seems to leave no lasting mark) but I take a zen approach. Yes, this is actually happening, and it's just emotion. Easier said than done, for sure, but it's an ongoing practice.
Panic attacks I think of as a stern, somewhat obnoxious teacher whose motivations I haven't figured out yet. What makes panic scary is that it can imitate pretty much any physical disease. Phantom smells, visual flashing, chest pain, balance problems, paresthesia, vertigo, vomiting, blurry vision. I've had pretty much all of that shit. Over time, you learn that it's not dangerous. Then it becomes an annoyance (like a traffic jam) rather than a source of terror.
I don't think of myself as disabled by it. Most creative people are on the bipolar spectrum (although two thirds are probably sub-clinical). I don't lose work time to it, and my "never flake" rule keeps it from being too disruptive. I think of myself as traveling the same road as everyone else, but in winter rather than summer. And there are things you can see more clearly when the trees are bare and the air is crisp.
That is my take and my experience from that statement.
The best thing to do after having been tainted by startup education is to go into consulting.
Bingo. You fucking nailed it.
How easy is that? I'm considering that avenue for myself, largely because I'm sick of office politics, re-orgs, and other time-wasting bullshit. With a consulting arrangement, there's no expectation (on either side) of a long-term deal and I think that's better, because most companies renege on their side of the social contract (e.g. investing in their people's careers.)
How do consultants find good ($100+ per hour) work? If I could get the same take-home pay as a consultant, I'd do it in a heartbeat. I'm honest enough to know that I'm not a team player (unless I assemble the team) but I do great work and I'd rather be in a place where that's respected.
The Gervais Principle is a fascinating series of articles that explain why this is the case and also give a lot of insight into corporate America. It's a great read.
"Unless you very quickly demonstrate that you know your own value by successfully negotiating more money and/or power, you are marked out as an exploitable clueless Loser."
If you are working long hours and aren't rapidly negotiating your way up and into serious equity then you are marking yourself as a sucker. Don't be surprised if they continue to exploit you.
Overperformers, on the other hand, draw attention and animosity. People may say they like change, innovation and creativity. Abstractly, they do. At work, when they're trying to hold position within an organization that would throw them under the bus without hesitation, they hate change (except change that they control) and anything that smells remotely like it might be a challenge to their authority, reputation, or power, no matter how remote that challenge may be.
I'm seriously considering going into consulting, specifically because it's the one employment structure where overperformance isn't catastrophic. The worst result of overperformance is that you automate yourself out of a job, but that usually leads to another, better, one.
If you're an underperformer, you might get laid off in a year or two. You'll typically have a severance or warning because people will still generally like you as long as you're not an asshole.
If you're an overperformer, then unless you have someone powerful who goes out of his way to protect you, you're going to be fired (on a bogus "performance" case where you're set up to fail) in 3 months. You're also probably the type of person who, when served with a PIP despite being one the biggest assets to the company, will go nuclear, create morale-killing spectacles, and be talked about for years afterward. (Not that I know anyone like that...)
Underperformers can move along. With 2-3 years on their resumes, no one asks any questions. Overperformers often blow up spectacularly and develop reputation problems because, even if they're abstractly admirable, they didn't know the rules.
I think Googler's and Xooglers on HN have by now learned to restrain themselves but I've had enough of this troll. I don't know what the actual psychiatric terminology would be but I know what the symptoms are: Toxic levels of cynicism combined with massive delusions of grandeur ("... despite being one the biggest assets to the company..." Hah.).
Please note that the company he's talking about is Google where he spent a few months (or perhaps a year or so) in 2010/2011 timeframe. His equally delusional rants on internal mailing lists were stuff of (hilarious) legend. It was clear to any engineer with half a brain who read one of his rants that you don't want this guy anywhere near your team.
I do sympathize if he's suffering from genuine psychiatric issues and needs medical help. Someone close to him needs to help him get the care he needs.
But please, please young hackers, don't pay any heed to his alleged words of wisdom. The world, and especially silicon valley, may not be all cookies and cream... but it's also not the satanic hellscape that you're reading about in these sickening threads. Lots of young people enter this world every year, do their work, get compensated handsomely and treated royally (way better than almost any other profession that a young graduate could find work in today) and live happy, fulfilled lives. I wish a few more voices here would spread a bit of positive news (and down-vote the ever cynical trolls on a regular basis).
I wasn't even on a PIP at Google.
You launched a personal attack on me for no reason. The conclusion I'm left with is that you're probably an asshole.
If you're an overperformer, then unless you have someone
powerful who goes out of his way to protect you, you're
going to be fired in 3 months.
I was thinking I would put them to work writing good software, delivering business value and generally making my team look good. In the fullness of time, and if they're interested, I would support them for promotion. While I would lose them as programmers, blocking their promotion would not be productive (assuming they're smart enough to notice, which you'd hope high performers would be), and as managers they would add to my political allies in other teams.
How would I benefit from firing them instead?