OP here: Couldn't see the post because I have noproc set, but wow - front page and many awesome comments.
I wanted to clarify a couple of (perhaps erroneous) assumptions in my original question:
- I see many comments comparing these salaries to recent grads hired by i.e. Google, but I didn't intend to use the words "skilled" and "talented" interchangeably. Recent grads aren't usually as effective as people with experience, and salaries tend to reflect that. I can see many reasons why a founder might be interested in hiring someone with little to no experience, but the job postings didn't specifically say "junior" in them.
- I see many comments referencing the realities of what is affordable. Yet some of these startups are advertising more than one job opening. Therefore, it would appear they are considering hiring three people instead of one person for 3x the salary. My question is informed by real world experience and written material: advice, essays and quotes including obvious and much repeated ones by Paul Graham, Peter Thiel, and Bill Gates which emphasize the concept that great employees are magnitudes more effective than good ones. Every knowledge-industry employer I've talked to agrees. Much startup advice emphasizes how bad it is to grow your team too quickly, and how a low performing employee hurts far more than a high performing employee helps. Given some of the companies are hiring for multiple positions, this could imply the salaries are considered competitive, and paying more wouldn't get a better employee.
The reality with your second point is that it is very hard to know for sure which engineer will be 10x better due to your interview process. Great people aren't just great technically, they also are great humans too (who can mentor, collaborate, be humble, and see the forest from the trees). Often you don't find out later until 3-6 months into a working relationship. I think you're placing a lot of weight on the initial offer because many smart companies will issue huge stock grants and salary bumps for their best employees to retain them. And I would argue that I know this to be the case because I chase a lot these continuously, long employed people each day that have incredible golden hand-cuffs.
This is totally understandable, because in many ways programming is a "market for lemons": good programmers disappear off the market, there is a high chance you'll hire a bad one, and there is severe information asymmetry because it's so hard to tell how someone will perform.
But if it's true that good employees wind up in golden handcuffs, companies should advertise that! It's been several years since I've seen a salary that is competitive with freelancing, but if a company had a published plan about performance-based raises and could point to some happy employees who could verify that theory aligns with practice, I'd be more willing to consider their offer. Conventional wisdom is the opposite: the only way to get a decent raise is to leave. One obstacle to using high raises to attract talent is that a company would have to be more transparent about what salaries everyone is earning.
I think you have to judge if you've been a top 10% team member in the past and are capable of being one in the future. If you're not, this is unlikely to happen to you. The reality is, most companies do this. And as a company gets larger, they get this down to a science. The calculus here is pretty simple because the company (whether you're a startup or Google) is very incentivized to retain it's top-tier talent who can go and work anywhere they want.
No company will promise you millions of dollars in long-term incentivized compensation (whether that's a stock option or a RSU) because it's highly dependent on the output of the individual and circumstance. I do think you can safely assume this is happening all around you (like I said: I meet many people who we cannot get) but they may not be publicizing it on forums like HackerNews (I am not sure many people find it kosher to boast that they made a lot of money as opposed to people who have been burned).
To be constructive though, I think prospective employees could ask the following set of questions to figure this out:
- Are there people in your company that are making above $X dollars a year in total compensation (options + salary)? I'd like to know what's possible if I worked hard and made a huge contribution.
- If I worked very hard and killed it, what kind of total compensation could I expect down the road? How is it split between long-term incentives like options and salary?
- What's an example of a project that someone did an amazing job on that changed the trajectory of the company? Was this rewarded? (Does the company have projects that they valued and has acknowledged that it made a difference?)
- How long has the most tenured Engineer in the company been at the company? What about the 2nd most tenured? 3rd? (This can tell you if the company has talent at the company they believe is top-tier and if they value them presumably because they are incentivized to stay)
I am sure there are other questions you could ask but these were just the ones at the top of my head that I feel would be pretty convincing.
I wanted to clarify a couple of (perhaps erroneous) assumptions in my original question:
- I see many comments comparing these salaries to recent grads hired by i.e. Google, but I didn't intend to use the words "skilled" and "talented" interchangeably. Recent grads aren't usually as effective as people with experience, and salaries tend to reflect that. I can see many reasons why a founder might be interested in hiring someone with little to no experience, but the job postings didn't specifically say "junior" in them.
- I see many comments referencing the realities of what is affordable. Yet some of these startups are advertising more than one job opening. Therefore, it would appear they are considering hiring three people instead of one person for 3x the salary. My question is informed by real world experience and written material: advice, essays and quotes including obvious and much repeated ones by Paul Graham, Peter Thiel, and Bill Gates which emphasize the concept that great employees are magnitudes more effective than good ones. Every knowledge-industry employer I've talked to agrees. Much startup advice emphasizes how bad it is to grow your team too quickly, and how a low performing employee hurts far more than a high performing employee helps. Given some of the companies are hiring for multiple positions, this could imply the salaries are considered competitive, and paying more wouldn't get a better employee.