You helped create the culture of founder empowerment. You have the power to evolve that narrative to those that sacrifice as early employees.

Tell the world that early employees deserve a lot more equity.

Tell the world that early employees contribute to the success of those companies and deserve to have that help their careers.

Because here's what I see are the pros/cons...

Pros:

* I was forced to learn with no one else to help me. Not sure I'd be as good of an engineer without that.

* I got exposure to a lot of things I wouldn't normally be able to control, which propelled my career going forward.

* I built the seed to make connections with people in the startup community which I still leverage today for my own consulting business.

Cons:

* I was paid terribly, and this was 8 years ago, so it was even worse than now.

* Even with the exit, I basically made enough money to recoup the money I should have been making at a bigger company, so it's net neutral.

* No one cares about that as a success for me. I'm surprised no one has brought this up. I was the 1st engineer for a company that had a successful exit for TechStars. Zero recruiters, companies, etc, have ever even asked about that company or my connection to it other than the fact they are reading it down on my resume (and when they do see it, they barely take note of it).

And for the record - I have no beef with the founders. But the culture around how to pay and credit early employees is institutional and was not their fault. They walked off with huge payouts and credit for their success, and I walked away with a catch-up check for missed EV and no one cares that I played an instrumental role in getting them where they are today.

But YC has the power to change that. I reiterate from above: you have the power to tell the greater startup community through your words and your actions that startups should provide better equity to early employees and make it so that the success of a company is shared far greater than that of just the founders.

That said, I sometimes feel that being a successful founder has less to do with skill and more with being at the right place at the right time.

Would be interested to see what others think.

Finding someone who thinks they have it all and will be the next big billionaire is easy. Finding a group of people who know what work needs to be done and can put their nose to the grindstone to match the "vision motivation and skill" is the hard part. Just look to google, the holy grail of tech visionaries. No one doubts that Page and Brin have vision/motivation/skill but they readily admit that their initial team of engineers is what carried them and they rewarded them like it.

What you're advocating probably feels good for the ego though... everyone loves imagining having demi-god-like status. For me it's always interesting to look at what people are fighting for. "The founder deserves 100 million, not 80 million, pay the engineers less!" At the end of the day it's just greed.

I do agree with your last point: engineers are often idealists and/or they have very strong preferences about what they want / don't want to work on. So they may often be willing to give up much better comp in order to satisfy such preferences. That's why startups get away with paying maybe half of what large corporations pay. Still that's not nearly enough to explain the gap between engineer and executive compensation.

If I had PG's recommended equity instead of what I had I would have gone from neutral EV to basically pay-off-my-house money. Like I said, it's things like these that make me never want to work for a startup again and only come in as a founder.

Essentially a start-up is a school, don't join if you don't intend to learn a lot while getting paid a little so that if one day you want to do a start-up of your own you will at least be a little bit prepared.

Its all about the founders. The VCs don't care, the acquirer doesn't care and largely, the industry doesn't care. I have been at 3 startups and they all feel more like "come change my world" instead of "come change the world".

Equity is so lop-sided that its almost laughable.

I earlier thought that a successful startup exit actually carries weight on one's resume but that's only on the founder's resume.

Nobody cares in SV if you were an EE at a non-unicorn startup with a reasonable exit. After an exit happens, founders still get to keep their badge of honor and propel their careers, not the EEs.

There is perhaps a warranted disdain for the behavior of founders on this thread, but I would also like to point out there are founders that genuinely care about the people on their team and would either ensure the equity was sufficient upfront or--if the total size and scale of the startup was miscalculated initially such as assuming the startup needed 100 employees when it really only needed 10--ensuring they receive ample compensation from the acquirer or not taking the deal. These types of founders do exist too, and I think there is an onus on an employee to figure out what kind of boss they have signed up to work for. If I had a few interactions with Steve Jobs, for example, I'm 100% sure I would have quit.

I ask because I've noticed with some high-dollar acquisitions a lot of times "engineer #50" makes his/her "F-You Money" on the acquisition, but having been "engineer #2" and "#4" and even "#1" (sadly, no big exits) I am skeptical that #50 took on much more risk or contributed more than, say, #200.

#50 is probably being hired for very specific skills and experience (to mitigate technical risk) that increases their opportunity cost considerably, and you aren't going to get an engineer with a track record of scaling operations like yours unless they get a decent salary and a shot at a significant upside.

For certain skillsets and track records, when a startup is having severe growing pains, it becomes a sellers' market.

The list is small, but there are some obvious choices, even now.

Tangentially, I _really_ lucked out. I had other options that were lead engineer, or engineer #2-4, but this was unequivocally the best choice. The work is more interesting here too.

None of these people are your friends, get as much as you can.

For me personally, I have a really bad perception of incubators, venture capitalists and big tech corporations. It's all a zero sum game to increase concentration of wealth in the hands of the few but there is little meritocracy behind it.

In a high traction startup, founders are often the dumbest people in the company but they get treated like they're genius visionaries. I've even heard really smart colleagues/engineers say stuff like "A good CEO needs to be enthusiastic and shouldn't be too smart" - For me this sentence means that we've accepted that the system is not a meritocracy but we've found a way to rationalize it.

Formula: (Fair total dollar compensation - agreed salary) / (dollars / share) * 4 yr vesting

A sliding scale for salary : equity is built in and you can compensate based on hire desirability or local market conditions by weighting dollars per share appropriately. This system is fair as long as both the employer and employee agree upon the share value (some information asymmetry there benefiting employers that decent companies will try to correct for).

Saying this as startup first engineer ;)

Citation please, because this sounds outlandish.

For a rough example, if the company gives 20% to early employees and 20% to investors, and want to raise $1MM A round at a $5MM valuation, they’d dilute down to 48% already. If they’d given 10% to early employees, they’d dilute down to 56%. That majority control could be significant. You can extrapolate lower numbers if a company needs significant cash and has to raise at a low valuation.

Hopefully the mechanics make sense and yes, there are companies that give too much away on paper and hurt the value of the equity long term because they didn’t have room to raise money or grant shares without giving up personal stakes.

You're missing the point of my original post. If a founder owns x100 the equity, why should an early employee be bound to the same salary restrictions?

If anything, since I have 1/100th the equity, that means I should be able to get a multiple of some raise when series A comes through.

Remember, equity is a lottery ticket (especially for an employee). If you're a founder, even if your startup fails, you can get a job as a highly-paid EIR or your founder reputation will allow you to join some other startup in a high level role (VP, Director, etc). This does not apply for engineer/employee #1.

Of course you can try to negotiate for more. Enough people want to work at a startup however that if you ask too much, you'll get passed on, and they'll just hire the next candidate who doesn't act so entitled to a meaningful piece of the founders' pie. It's exactly the same phenomenon that lets the big game studios chew up and spit out engineers: there's always someone else willing to take the job for less, or even just put up with the status quo.

That's a massive part of the problem, and telling people to negotiate better doesn't address it — or even acknowledge it.

But you’re right that (if there is only a very small number of co-founders) employee #1 should never be accepting 1/100 the total equity the founders have. Employee #1 screwed up in negotiating at least half way decent deal for themselves.

However, it is up to potential employees to refuse offers that are not in their best interest.

It’s lopsided against the founders too. They might walk away with big checks but the risk is too high.

This is the problem with the SV model. VCs take way too much off the table, founders and employees are not adequately compensated.

This is partly YCs fault because they basically groom startups and usher them into the maw of VCs while glorifying the exploitative VC model. But that model makes YC partners rich st startups expense.

Founders and employees in the SV model sell themselves way short. This is also why so many startups are BS non-innovative companies— they are chasing funding rather than the future.

Better model: - slicing pie with no bonus for money contributions- this rewards people fairly. - crowd funding, consultancy funding, boot strapping, angel money with no liquidation preferences, and no VC termsheet BS.

Having founded and worked for startups for 30 years, I won’t ever take a meeting with a VC again. I have not met any good ones (and people who say theirs is great are generally just kissing ass to keep money flowing.)

Worse- the number one cause of failures of startups in my experience is bad strategic decisions forced on them by VCs. The number two cause is conflict among the founders, and the number one cause of that conflict is VCs trying to force a bad decision in the company (and one of the founders realizing it.)

I believe this is a part of culture that VCs are creating. I've been interviewing lately and I've noticed certain personality traits among YC founders that I'll call "Business Sheldon." I saw it a bit 5 years ago when I went to Startup School, but it's pretty pervasive now, so much so that I see it as a red flag. If you've seen the latest season of Silicon Valley, the character that Dan Mintz played touches upon this: https://www.youtube.com/watch?v=fzbwLktN60c

Easier said than done. Lots of people leave school without the faintest clue what they want to do. Getting a job somewhere gives people training and experience and maybe even credibility before they strike it out on their own.

It's certainly not the best route for everyone, but definitely one worth considering.

I think being a founder is a great option right out of school--if you are working for yourself, responsible for your own mistakes, and not actively harming anyone else in your quest for personal achievement.

Bad managers (and most bad management - from death marches to protoduction - can be boiled down to "makes the people who report to them pay for the manager's mistakes") exist even in supposedly mature companies with good corporate cultures.

What's good for your personal growth was other people trying to make a living at a company being run by people who don't know what they are doing. Maybe it's fine, but that level of uncertainty is definitely a con.

Luckily we mostly had temporary interns as employees, and I can confidently say that they had a good experience, as we are still in touch.

The biggest problems of the inexperience were that we had to ramp up our skills on the job (for me programming), including the mistakes you make there, which killed a lot of the runway, and the lack of business knowledge which ultimately lead to us running out of money.

The rest of the startup game - building a product, pivoting correctly, building a team, overcoming oowerful rivals - is such a huge challenge, that gaining entry level experience before finishing school is perhaps the most straightforward piece of the puzzle.

  Anyone can start a business, and anyone should.  The things you mentioned - "pivoting" "overcoming powerful rivals" - goodness.  How about simply starting a business that earns more money then it spends. Do that and you will learn most any lesson you need to know about being a "founder."

It's possible to build "boutique" scale internet software businesses, but it's harder than ever, and you still need to be well-off enough to "risk" some time that you would otherwise be working on definitely-getting-a-paycheck type work.

In short "start a profitable business instead working for one" and "start a business that's profitable right away instead of taking VC funding" are both rather useless pieces of advice for somebody who doesn't have the means or background to do either.

There are of course more choices about what to do with your life. You should explore those too. Maybe you'd be happier as an auto mechanic or a nurse. That kind of work is available almost anywhere in the country so you won't have the "three body problem" of having to live away from your or your spouse's family, or both.

I'm not sure what you are defining as risk or difficulty. I can list a dozen day-one-profitable businesses right here that a person could start before tomorrow morning for less than $100 investment.

Too tough?

Spend $100 on a Beaver Builder license. YouTube to learn. You are now in the small business website building service.

Too tough?

Call a business and tell them you can help their local SEO for a price greater than $20/month. Once the check clears, get them an Advice local account. Pocket the difference.

Too tough?

Call a local business and tell them (true) that 92% of all visitors will seek out their business in a second source other than their home page. For $100 you will setup their Facebook page. For another 100 you will train them to post to it and reply to reviews.

Too tough?

Call a local company and tell them you can handle their social media strategy. If they have T, FB, LI, and IG then great. If not then charge 100 to build them. Signup for Hootsuite. Post to their accounts for the entire week on a Monday morning.

Too tough?

Call a small business and tell them that the number one way to generate repeat business is through a regular email newsletter to previous customers. Sell for $250/month. Signup for Outbound Engine agency program. Profit.

Too tough? Call a business and tell them that chat tech on the front of their site can increase lead flow by as much as 11x. Signup for Apex Chat account, charge $20 per less. (Apex charges you $10)

On and on. It's never been harder to start Facebook or Amazon or Google because we already have Facebook and Amazon and google. But divest yourself from needing approval and applause and you start to see one big truth: its really really easy to make a lot of money online.

Can you expand a bit on the "harder than ever" point? I've observed a couple of phase changes since the 90s, but I don't think I've seen that particular needle move very much in the past ten years.

Good luck man.

Build Uber for X and rightly it'll fail without VC money.

The equity side is pretty rough. Founders are very sensitive about disclosing important information about company performance. They are sensitive about disclosing the cap table. Some will share info with investors that they don't share with employees. And they are sometimes trying to pitch optimistically and leaving out items that don't fit the narrative. So you end up with a very vague sense of where the company actually is when you are interviewing. A much better stance is "awesome opportunity, and these are our problems, come help us fix them". Standardization on more disclosure would push hiring toward a higher local maximum.

Something like Geoff's https://blog.ycombinator.com/transparency-in-startup-investi... for hiring companies. For workatastartup.com, you could say "if we make an offer, we'll show you this critical info". It's probably a bit much to expect companies to disclose this in public job postings.

Sam's thoughts on equity at https://blog.samaltman.com/employee-equity are spot on. Especially the 10 year exercise period.

Scenario one. You leave a company after 5 years. You think they will be successful but best case is 5 years before liquidity and 10 years is very possible. It will take most of your savings to buy the stock and pay taxes. You helped with the $20 million to $800 million valuation growth. Now you have no savings, and the money is still at risk because $800 million dollar startups die all the time. You get to bet all your savings that a die rolls 1-2 for 10 times your savings. Roll 3-6 and you lose it all. The expected value is great, but it's a pretty hard bet to take.

Scenario two. Your coworkers realize this and hang on at the company long after they want to move on. Now 20% of your team is just showing up and the company culture is dying. Everyone worries about retention, we should worry about over retention too. It's better for the golden handcuffs be "if I stay, I'll vest these options" rather than "I must stay to preserve the options I vested 4 years ago".

These and 10 other bad scenarios like them are definitely on the con side.

And so easily fixed!

As for equity amounts - if I have to assume your startup will grow at least 10X, without any further dilution, in order to break even on comp with a public corp, it's not a very compelling offer.

If not, then what you're really doing is offering something you hope doesn't cost you anything and is therefore worth nothing. Good luck to you.

If so, then do everything you can to help them do it. Holding an employee hostage because in order to leave they have to write a check for a significant part of their life savings won't be productive. They're taking up a salary from someone who will actually be engaged and motivated.

In my experience, this definitely plays into individuals' job offer decisionmaking. At least the most sophisticated ones, which are usually the ones you're most interested in recruiting.

is this the case? i actually don't know that it is.

Jawbone $2.7 billion valuation -> 0

Beepi $560 million -> 0

Better Place $2.5 billion -> 0

Quixey $600 million -> 0

YikYak $400 million -> $3 million

Fab.com $1.5 billion -> $15 million

Rdio $500 million -> $75 million

Here's 133 of them, most pretty big: https://www.cbinsights.com/research/biggest-startup-failures...

Also got some details from: http://www.businessinsider.com/startups-that-raised-148-bill...

I worked at a unicorn startup five years ago in the bay which no longer exists. Anyone who bought the options -- and the company was very cagey on providing cap table info -- was left with nothing.

Even if the company is sold at a high value chances are the payout will not be worth the risk. Unless your shares come with a board seat never buy the options in a private company because the shares are worth literally zero unless a secondary market exists.

:)

But if I had to do it all over again, I still might do the startup route. It's just more fun. There's more to life than money.

Intense can be great if you're looking for that, and the startup is doing well.

Intense can be terrible if the startup isn't doing well and/or the atmosphere has gone acrid. It is now intensely bad.

It's like a polite disagreement with a casual acquaintance versus bitter fight with a close friend.

When startups derail, they really do go far off the rails.

When I was younger I didn't have chances. It's incredibly privileged to be able to take a position somewhere you might not have a job in 2 months because you have enough stashed away or enough family wealth that if you fail, you can pick yourself back up easily.

Easy to say because you have gotten the money. :-D

As someone just starting out, the hidden cost of exercising and the tax bill that follows was staggering. It would have eaten up most of my fledgeling liquidity and dug into my rainy day fund.

My advice to my former self would be to take more cash over equity and invest that cash in the public markets. Diversify your investments to reduce the risk of the giant startup bet you're about to make. Compounding is a hell of a thing, even over four years, and people tend to forget to account for investment returns when they value their cash.

I'm of the opinion that the generalist skill set you typically get from a startup is far more valuable than the specialist (and typically exclusive to the corp) skill set you get from the corp, and I'll even argue that the entry level skill set of the corp is pretty damn useless, but that's only from anecdotal evidence.

What doesn't kill you makes you stronger, startups dance at the edge of survival.

Some of the skills learned in big mature organisations tend to be very narrow and specific to the tools that the big organisation uses.

Some ... but not all.

The man-management and general engineering skills are still pretty transferable.

Here's a crazy idea from the IT contracting industry: Maybe YC and the like should hire employees and contract them out to startups. I work for a company which contracts me out to another: Even if my position is eliminated with the client, I don't lose my job, I just get reassigned. Perhaps as part of this, YC (or other funding group) gets the investment options an employee would otherwise have had, for example.

- For the startup, they'd be getting employees who weren't worried if they'd have a paycheck in the next six months, and they'd know their VC folks are confident in that employee's ability. For all the other risks startups take, hiring a good developer/designer/business manager would be less of one.

- For the employees, they'd have a stable income they could base real estate and financial decisions on.

- For the fund, they'd have possibly gained more investment, and ideally, having known employees that they've seen the work of before should add confidence to the success of a given business they've funded.

Disclaimer: I have literally no experience or expertise in claiming this would work out financially or otherwise for the startup industry.

I should point out too that many investors want to see a team of employees, because they are investing in the strength of the personnel. So they didn't like this idea of a startup built using contract / outside talents.

BEGIN THEORY

Startups hire in-house devs because, basically, management does not know exactly:

A. what to build

B. what's possible to build

C. how the real world will react to the initial product/service offering and how the company will need to adjust

So, they bring devs in close, as high availability, high dedication employees, people who are in the center of the decision making. These intimately involved, trustworthy, motivated devs will then be more likely to come up with features and products that workaround management's deficits. And the company will benefit from that quickly and the company will own those features and products.

END THEORY

But, if this were contracted out to an outside stable of roaming rockstar developers, all highly talented but still less motivated and more in need of detailed direction from management -- how much insanely great startup flash-magic would really happen?

Also, consider that not only could someone be contracted to you in a high availability/all hours arrangement, but that this would potentially also allow YC companies to benefit from roles they couldn't afford to full-time.

For example (here in the UK) Founders Factory and Forward Partners both maintain large stables of designers, developers and other specialist executors that they assign to their portfolio companies.

I was paid when I was "on the beach"(bench), but I was expected to train and get tech certifications

I find time-clocking incredibly irritating, as I may be inspired to a solution or want to fix something outside of hours, which is pretty common for me. And similarly, I don't want to feel bad about if I am doing something wrong or not the most efficiently, but still charging full price for that time. Possibly the most irritating thing for me in times I was on hourly was arriving at work a few minutes too early to clock in and having to twiddle my thumbs, or having to determine whether or not something I wanted to remote in and do met the official terms for being paid in after hours time.

My personal feeling leans towards paying for "a job well done", and leaving it on the idea that if you're doing your job well, I'd like to believe nobody will question how you spent the hours you were doing it.

Being paid while on the bench makes a lot of sense if they feel you're valuable enough to retain, and time to actually spend training is pretty nice when you can fit it in, and obviously works to their benefit.

Then there is no problem with just billing the spent hours without any fudging one way or the other.

- A lot of people at the company would feel guilty and put in free hours to the client. (They would usually also get rewarded with excellent customer feedback.)

If the business works, I'm thinking the transition from the fund swat team to "real" employees might be difficult as well, probably at a time when you need to be firing on all cylinders.

The idea here would not be for YC to have a constantly growing outsourcing team, but to ensure they didn't lose the good employees because a startup failed. In a given failed startup, there are likely some rockstar employees that definitely weren't why it failed, and it's in YC's best interest, presumably, to hang onto those great employees and get them placed with other investments of theirs, should the opportunity arise.

Regular comp does that if the company can afford it. Startup equity is there so companies that can't, can offer early hires the "maybe money". Pay 200k and you'll get fully committed employees.

This is also similar to how a lot of small software development firms work; they develop web sites and mobile apps for companies on contract.

That obviously creates a risk of perverse incentives, but from the PE folks' perspective it seems to work.

IIRC that's also how Berkshire Hathaway does it: builds managers for Berkshire Hathaway companies, and whether they're managing at GEICO[0] or Fruit of the Loom[1] depends on where they're needed and not whom they work for.

I don't know anything about how technical employees benefit (or not) from that setup but I suspect there is some amount of informal sharing of tech talent across portfolios.

It'd be really great to see something like that for tech people. Maybe YC can start and everyone else will follow. :-)

[0]: https://www.geico.com/about/corporate/at-a-glance/

[1]: https://en.wikipedia.org/wiki/Fruit_of_the_Loom

So I don't think stability is much of an issue in the current economy, developers are not afraid to lose their job because they know they'll have dozen of opportunities just by activating their network.

Whereas a outsourcing company would benefit by providing as many staff members as possible, if YC or the like were to do it, they'd likely want to zero out the "profit" on supplying employees: To keep it affordable for a startup, and to not break the incentive for YC: To push companies to success via whatever resources they can offer.

Particularly if YC's "cut" was solely in the form of share of the business, they'd have no benefit to over-pushing poor quality labor on their own companies: It'd just doom them.

One of the interesting things that struck me was how much advisement/mentor/training/etc investment went into the founders/C-team, and how little went into all the rest of us.

(Totally reasonable that this was a situational thing, but I don't think it is).

There's fame and reputation that comes from being a founder, and there's not much of that that goes into the EEs. For example, at my current startup, one of my founders wanted to sub me in for them at a panel they had a conflict with, but the guy running the panel "didn't want individual contributors".

Being a founder is celebrated; being an EE isn't: https://strongfemaleprotagonist.com/issue-5/page-63-2/ https://strongfemaleprotagonist.com/issue-5/page-63-3/

Note: I'm not talking about how employment is celebrated within any given startup - that's important, but it's going to be situational - I'm talking about the community as a whole celebrates the EEs.

That may be a reasonable requirement, depending on the panel topic.

But note: Plenty of EEs aren't individual contributors! An EE can be a "team lead" for example. Basically if you have any responsibility for directing or managing other people, you are already not an IC.

Hmm. I really don't see how. That's a bit like saying that because you work in Java, you can't talk about Ruby, or AWS, or Scrum, or skydiving. This really seems like the sort of thing that you "opt in" rather than "opt out" - you're qualified to talk on a panel if you are X, rather than being disqualified if you are Y.

Can you think of any topics where that WOULD be a reasonable requirement? I cannot, but I'm biased.

Seems like the problem is trying to have a category (as in folder, as in old school email) rather than a label.

"Technically capable", "contributor", and "technical contributor" all sound like ways to positively express "not looking for non-technical managers".

The problem comes back around to "do not restrict people to the categories you assign to them".

(Which is also a way to phrase many social justice issues and IMO where "being a cog in a machine" comes from).

In short, I completely disagree both by opinion and experience that any of those topics have "not being an IC" as a reasonable requirement.

Can you give a sense of how much that might be?

You invest money in successful ventures, and they snowball; people invest themselves in other successful people, and you also snowball.

PS - Also just getting invited to meet other interesting people. It's suprising-not-suprising how much of an effect that has on yourself.

Pro: I've seen and learned things I wouldn't have in a big tech company. The rapid growth and constant fight for survival means I've picked up skills my big company peers didn't even have access to, especially leadership skills.

Con: In hindsight, the equity was a joke for the pay cut I took. If I had fully appreciated all of the gotchas of startup stock options, I would not have taken the pay cut relative to what I could have gotten from the big company offers that I had. Chief recommendation there: no 90-day exercise window, and employees should have ongoing access to details like liquidation preferences, revenue, burn rate, etc. I appreciate the need for confidentiality for strategic reasons, but I no longer believe that this need outweighs the principle that employees should know what they're signing up for.

The big issue is that there is not remotely enough institutional/cultural wisdom around what it means to be an early employee, so it feels like startups are often exploiting early employee naivete.

Cons: As others have said, the pay is always going to be lower. The stock options are, in most cases, always going to be worth $0.

Both startups I worked for never had serious traction and both shut down as failed. We worked so hard to create really cool products, but there just was not the demand for what we made. Cool software with no users.

Now, I work for a huge company. My work gets deployed to tens of thousands of servers, and I know that people use and need what we make (because they pay us a lot of money). I can tell people who I work for and they know who it is, and I can point to things they do in their daily lives that my work touches.

I feel like I have a much bigger real-world impact at my current big company than the startups.

I think this is the big difference. When you're working for a startup that literally can't keep up with demand (such as the one I work for now), it's an entirely different animal.

Although, given that both of our stories are just anecdotes, the advice might come down to "Work for a good company that does valuable things that make a difference to people"...

Working at a BigCorp(tm) right now, this is somewhat of a false statement imo, at least for us. Being in such a standardised place, it is very hard a lot of times to find new inspiration for technologies to adopt and things like conferences or meetups are the perfect opportunity to network and hear about how people make use of new things. Usually, we don't really get much time to explore new technologies as capacity is always planned for our current workloads. That's why I love being able to go to a conference every few months (this year it'll be 4 for me) to be able to bring some things back into my team that might be interesting to us.

We get the time approved for conferences, but not to explore things "while at work".

This obviously differs from company to company but that's my experience at my current one so far.

My point was more about the token conference goer.

I have an acquaintance that has given the same talk at 13 different conferences over the last 12 months. I don't know how that benefits him or the company. He's also on twitter literally all day. I just don't get it (as I hypocritically type this out on HN).

From my perspective it seems that there's tremendous benefit in becoming known by thousands as an expert in a particular topic and in having the skill to present that material to others.

See, I'm the opposite. I couldn't care less about the importance of my work. I work for one reason and one reason only: to fund my life. I just want to put in my eight hours a day, draw a paycheck, and then go home and have fun.

And I honestly like the idea of being anonymous. I just want to blend into the background and not be noticed, and I couldn't care less about climbing the ladder because my career is the least important thing in my life.

> Most of my friends that work at larger public tech companies — it just feels like they're constantly doing unimportant things, going to conferences just for the sake of it, getting into work late and leaving early.

Honestly, that sounds like paradise to me. I'm pretty satisfied with my current job, but if I wasn't I'd definitely be asking you for the names of some of those companies.

Obviously that is not universally true: All the things that do see the light of day, some small, some big, are done by actual employees of a big corporation. Maybe you will not be working on them all the time, but chances are good that you will at least get the opportunity to have a public, meaningful impact.

Just as an anecdote, when I interned at Google long ago, I got to work on a public feature in Google Maps. It was a great feeling to directly work on something that anyone could potentially use, and see even just a few public reactions.

That experience probably set my path on favoring working at big corporations, because I knew I could do meaningful things there if I position myself correctly, whereas startups seemed much more like a big gamble (which by itself is probably an exaggeration also).

Just yesterday I spoke to someone at another big corporation who proudly proclaimed that people clapped at the mentioning of their own feature, when it was unveiled as part of a bigger announcement. YMMV.

I'm currently at a big co (though not really a "tech" one, so can't speak to FAANG) and can relate to many of these. I can def see the attraction in taking less money in order to have a better shot at achieving excellence.

uuuh, do you have any links I can follow to apply for a job like that?

A small company, say 20-50 people or thereabouts, that has a profitable niche and does not require much in the way of investments. Here's why:

* Small is more fun for me - I like knowing everyone I work with, and the chance to see what other people are working on, and maybe move around some in what I'm doing, rather than 'the same thing day in and day out at BigCo'. Your work also feels more valuable and meaningful. Startups are a lot of fun that way, however...

* Investments and not living off what you sell are inherently unstable and stressful. That's ok to take a chance on when you're younger, but as someone with 20 years of experience in the industry, a family, hobbies, an interest in local politics and so on, it's not so much fun any more.

* I have a bias for cash, not equity. It's fine to roll the dice a bit on that when you're younger, and even now for the right thing... you never know, but ceteris paribus, I'd rather just have the money.

Of course actually finding a place like that is easier said than done. You need to avoid things like winner take all markets.

I'm like you. I'd rather take cash and dump it into my 401k or an index fund for retirement.

Another thing that might work is looking at industries with a lot of software needs that are not traditionally considered "tech companies."

A long time ago I worked in Biotech. There's tons of money there, and an awful lot of software made both in-house and by consultancies. (And I bet it's a hotbed of machine learning right now.)

I'm sure there are lots of other industries where their core business makes a lot of money but there's no way for startups to just "disrupt" them out of existence; however if you can move the needle 0.01% that's more than enough to support a very profitable smallish company.

i love this idea.

yet, it seems like the whole point of startups nowadays is to become the winner in the winner-take-all market. and VCs seem to be looking for that kind of play mainly. and markets become winner-take-all with alarming frequency.

so, it's like, how do we get to the kind of market with room for multiple long-term, profitable players?

One of the interesting things is how companies like CB Insights seem to have built quite successful mid-sized startups with very little funding (CB Insights are at $11.7m in funding), or Atlassian who didn't raise until they were pretty close to IPO. Compared to Uber at the opposite end - how much capital has been squandered on making very marginal gains in the name of growing market share?

It'd be an interesting research project to compare outcomes against funding raised, over say a 10-15 year period.

I would look to start-ups to be leading the effort to improve industry practices for software development ergonomy and human-centric working spaces (i.e. focus on privacy, quiet and individual customizability).

But instead, start-ups often try to conflate “collaborative spirit” with some shallow and false idea that collaboration is equal to being continuously embedded in a real-time stream of preemptible audio and chatter.

Headphones, jabberboxes, telephone rooms, limited freedom to be remote — none of these are useful and none address the underlying privacy and human centric ergonomy points.

Practically the only thing left that can convince me to take the risk of a startup, with its lowered compensation, poor insurance, and the poor risk characteristics of equity, is giving me my own private office, and making sure everyone on the team who wants one also has one, from the summer intern on up to executives.

If a start-up cannot offer a private office, then the start-up has to offer me the same market rate salary, bonuses, insurance and work-life balance that any other company would have to offer me.

    8. Do programmers have quiet working conditions?
    9. Do you use the best tools money can buy?

"... programmers are easily bribed by giving them the coolest, latest stuff. This is a far cheaper way to get them to work for you than actually paying competitive salaries!"

Salaries are such a hot topic, startups unable to match need to differentiate from what the big players are doing in a better way across many dimensions at once, not solely the nebulous "more control of the product direction".

https://www.joelonsoftware.com/2000/08/09/the-joel-test-12-s...

The unequivocal importance of private offices is mentioned in both (in the latter, it’s focused on how meetings swiss-cheesify the day, but the point is obviously the same as that of private offices vs. open plan interruptions.)

So it remains a mystery why Y Combinator and YC-backed companies, so informed by many of Graham’s viewpoints, aren’t more proactive about this.

Past time (20 years ago) programmers yes. Today's programmers? No.

The Math is very simple: if a company throws a lot of money, I can buy the latest coolest stuff for the next 10 years.

I doubt programmer is that gullible (otherwise they're probably a "Yes" man).

The economics of hardware are very different now. In the 90s you might have a SPARCstation or an SGI on your desk at work, amazing gear you could never have afforded for yourself. Now you can easily buy a home PC that’s better than any corporate model.

I’m sure it’s still true in some industries, 3D printing maybe, but not in software anymore.

The risk that start-ups won't follow through on ambiguous work promises is super high, yet people keep falling for it year after year.

i agree that they should do that. OTOH space isn't cheap. i recall a scrappy startup where 20 people were packed inside a live-work loft. the CEO's office was the master bathroom.

When young start-ups are spending millions on the company’s third wave coffee station and opulent roof deck for obligatory alcohol drenched happy hours, you know it’s not cost keeping them from prioritizing ergonomy-focused private & quiet work space.

Small companies end up in post War art deco buildings with flimsy elevators that open up to a mess of open plan tables, cables over the floor and pillars in strange places. Some of them have the audacity of handing out laptops and making a group sit in a conference room around a table all day (and days are long in startups).

That's what I've observed in Manhattan at least.

The problem is exacerbated by rapid hiring growth and the inelasticity of physical office building plans.

One was a defense research lab, one was a boutique company that makes computational fluid dynamics software, and one was an education technology company.

The ed tech company went through a huge remodeling effort to rebrand as more of a straight up tech company, spending bonkers amounts of money to tear down offices in favor of open plan designs, despite outrage, protests and resignations from longterm staff, especially in some of the offices where there was no planned headcount increase and no engineering presence (like the Columbus, Ohio, office).

I ended up leaving the final place to take a more lucrative job in finance in a company with high-walled cubicles, and couldn’t believe how distracting and frustrating the ambient noise and discomfort from headphones was. These days I would give my left arm to have even just high-walled cubicles.

Since then I took jobs in two places with fully open-plan shared desk areas and I flat out will never do it again. It’s just too unhealthy and too counterproductive to even bother with it at all.

Whatever my next job is, it has to give private offices, end of story.

Given how incredibly rare private offices seem to be these days I can't imagine what kind of leverage you must have to be able to stick to such a requirement.

Especially since unlike salary and other benefits it's not something that any company can decide to give you.

Either they have private office culture or not. If they are an open office company like most of them are you just have to exclude them, severely limiting the type and number of companies you can work for.

Obviously, if you are desperate for a job due to other factors, you may be literally unable to turn down a suboptimal offer. It’s unfortunate that companies bank on this, and sometimes even angle their search criteria to specifically find classes of candidates they can exploit with low offers, inadequate workspace, etc. But it’s a fact of life.

When you’re not in that situation and you are free to turn a place down, then you just have to decide what matters to you and ruthlessly stick to it.

To your other points, I think they are not actually big deals. Relative to other costs, building private space on an existing floor is not that bad. Of course, companies are mostly not worried about the cost but are worried about the anger and reaction from existing staff who hate the open plan space they are stuck in.

If a company has a top-down “no office” culture, like “not even our CEO has an office!” then just walk away. Those people are so far gone it’s not worth it. You know from day one that insincere corporate evangelism matters more to them than your actual work. You are more office furniture and less engineer at that point.

It doesn’t matter if this is ~70% of all IT jobs. They are bad jobs. Ok to take them if you’re in a pinch, but why would anyone choose them? They’ll never be forced to reform their habits to recruit adequate staff that way.

Another big option is to ask the company to rent a dedicated office for you from a co-working space. So you’ll be “remote” except working from a single office that they lease for you (or you could lease it yourself and be reimbursed or grossed up for it). This is exceedingly cheap for well-capitalized companies and if they are serious about your productivity and ability to actually collaborate, they’ll do it (as opposed to only being concerned if it superficially looks like people are collaborating because of the open plan layout).

There are plenty of solutions for a motivated company. Existing office build out is not a serious barrier, only cultural unwillingness to be adaptable to people whose jobs require private space to work.

Most companies will say "no thanks" and move on to the next candidate in their list.

There are much smaller things that companies treat as deal breakers, let alone asking for a private office. The dynamics of it just doesn't work if there is a open office plan with 20 people working in it, then there's one lone snowflake demanding their own office. Even if they agreed to that you wouldn't want that nightmare.

Your practical options would be limiting your choice to companies that have private offices baked into their culture or remote jobs.

Most people can't realistically afford to exclude that many job opportunities from their pool.

I don't see why this makes any part of it idealistic or how it is connected.

I view it as pragmatic.

Consider an employer who feels so entitled to workers that just take whatever unproductive office space they give that they would just say, "no thanks" to a qualified candidate and move on. Never mind the fact that in many domains, it's extremely hard to find good engineers, and 'just moving on to the next candidate' is not really a thing. Beyond that, this employer would be telling me how entitled they believe they are, and inflexible about a top-down mandated open floor plan design.

It's not idealism to want to avoid that sort of employer, it's just pragmatism. Like I mentioned, unless you're in dire straits and you have to compromise to take a job right away, then just say no. In other situations, you can by definition afford to just search longer and longer until an employer meets these standards.

I agree it would require patience for a very long job search, but I don't agree that it is optimistic or idealistic. Rather, it's pragmatic and being patient to reject all the bad employers who won't care about your ergonomic health is important and worthwhile, even at the cost of a slow job search where you turn people down for failing to provide private offices.

Some-role at FANG sounds more impressive than same-role at a no-name startup.

Even the startups themselves like to brag that they were started by alumni of brand name employers, rather than alumni of other startups.

So, in what concrete way can you shift this?

There is no easy solution, but you can try and follow the same route you did for startups.

No-name (YC 18) is a better brand then just-no-name.

Allow/encourage employees and encourage/require your startups to brand people as “YC Startup Engineer” rather than “no-name Engineer”.

It may sound a little strange at first but there is a probability bigger than zero that if you promote this correctly, as you did for startups, you may end up at top of the prestige pile.

Just 2 cents from a guy with none ;)

Brand perception is a real issue - and it doesn't get covered up by your title or role.

    STARTUP X!
  [powered by YC]

The money is better at big companies.

There are exceptions, but you almost certainly won't work for one of them. You will make more money at Google or Facebook or Netflix than you will at all but the luckiest choice of startup. Note I didn't say "best" choice or "most successful" choice. Gotta get in small, and exit big, which, no matter what anybody tells you, is more luck than skill.

That said, why do I work at a startup? Because the feeling of being able to meaningfully affect its trajectory (both technically and in terms of product) just matters to me. You can't get that at a big company, and for me that more than makes up for the ~50-75 k$/yr I gave up for it.

But I'm in the extremely fortunate position of having very frugal tastes, a significant fallback fund (I could afford to not work and maintain my current lifestyle for several years), and no dependents. Beyond the raw dollar amount, this also means that I'm basically indifferent to the prospect of losing my job, which as the other comments point out, is the other significant drawback of startups.

It's unclear to me that the combination of intangibles and tangibles works out positively for many other people, and I kind of feel that to a first approximation, recommending against being an employee at a start up is the right advice.

Or what if you were actually giving up $200k a year?

Yes, money isn't everything, but that's no reason to let someone take advantage of your excitement.

I am seeing a lot of people doing the devils work here, depressing engineering wages with arguments against higher pay. The VCs dont need your help, why are you helping them?

Are you saying you think startups are better for people with dependents? That's surprising to me, could you elaborate?

I kind of feel that to a first approximation, recommending against being an employee at a start up is the right advice.

Absolutely.

But in my opinion, the answer is more pay, not more equity.

Employees should get market comp, period. Doesn't matter how early-stage the startup is. If a founder can't afford employees at market rate, they shouldn't be hiring yet. They could perhaps offer to take people on as co-founders -- with an appropriately equal share.

People looking to join early-stage startups as employees should be extremely skeptical of equity. Obviously, you want to take some. But if a small chance of getting super-rich is your goal, you should start your own startup. If you are going to make bets, bet on yourself, not on someone else, because you know yourself much better than you know anyone else, and wise bets are all about having information no one else has. Yes, non-founding early-stage employees can have a big impact on a company, but they are still beholden to the founders -- if something goes wrong, they can fire you but you can't fire them. Making a big bet while letting someone else hold the cards is just too risky.

Instead, demand market comp. Do not join a startup that won't offer you market comp. It's not worth it.

"Market comp" for a good engineer with several years of experience in the Bay Area is something like 250k - 350k at a Google or Facebook (with some variation in both directions here). It's not realistic, nor consistent with the market, for an early-stage startup to pay people this much in cash.

Early-stage companies should offer sufficient equity such that their employees should in expectation earn at least the same as they would at a public company. If their expected earnings are less than this, then more equity is absolutely a good solution.

That's the joke! Nobody comes remotely close to offering enough equity that their total comp is equivalent!

Imagine a company that just raised a $1M seed round on convertibles at a $6M valuation cap. Now say they offer an "extremely generous" 2% equity package to their first employee. What is that 2% worth?

Well, the investors think that preferred shares in that quantity would be worth $120k. Of course, equity vests over four years. So your equity comp is... $30k/year. If it were preferred shares. But it's not, it's common shares. So it's worth even less.

You'd need to offer more like 10% to claim you are matching the RSUs people are getting at Google or Facebook. But at that point, you might as well call the person a co-founder. And maybe that's in fact the answer: add co-founders, not employees.

But this isn't what people are doing today. Instead they're convincing employees to take sub-market pay and sub-market equity to take a stressful job with almost no benefits.

There's one nuance that I've been thinking about lately that I haven't seen anyone ever point out before, which is that high volatility will make options worth more than they are on paper.

Here's a thought experiment: imagine that there are two employers on the market. One will always pay 200k/yr guaranteed and you can choose to work for them at any time for this wage. The other pays 100k/yr plus one Coconut per year, and Coconuts are currently worth 100k each. So far these are equivalent monetarily. But now let's add the stipulation that after one year, the price of coconuts has a 50% chance of going to 0 and a 50% chance of going to 200k each. Which would you choose?

The expected value of each of these job offers is still equivalent (after 4 years of working at each, you'll have 800k in expectation). But you should definitely take the second one. Why? Because after one year, if coconuts drop to 0, you can just quit and join the first company. Then you have a 50% chance of 100 + 200 + 200 + 200 (coconuts to 0) and a 50% chance of 300 + 300 + 300 + 300 (coconuts to 200) which comes out to 950k, which is better than sticking with either company alone.

This thought experiment fascinates me because it clearly shows the extra value that up-front stock grants have. The point is that you have some protection from downsides in the form of switching jobs, but no similar cap on the upsides, and the higher the volatility of the stock the more value this provides.

I'm not sure what the numbers look like when you view them through this lens, but it does mean that an equity grant of 2% of a 6M company should trade off for more than 30k/yr.

The 90-day exercise clause and options instead of shares effectively forces you to buy the coconut, meaning that instead of a 50/50 chance of 0/200, if you plan on leaving before the event that resolves 0/200, then if your strike price on a coconut is $50, it's more like 50/50 chance of -50/250 because you expect to have to exercise when you leave. You can play with the exercise cost, but it does change your math quite a bit regardless. Now if startups gave actual stock instead of options or if they don't place a 90-day time limit on exercising vested options, this wouldn't be an issue. But almost all startups do it this way.

The second point is that the company often doesn't look dead until much later. You're just not going to be able to tell one year in, or two years in, or three years in. So you won't be in a good position to capitalize on volatility like you would on the public markets.

Then you have things like liquidation preferences that will skew your EV calculation, except they might happen after you join, but you may or may not ever find out that those gotchas are there.

As it stands, all of this just creates an incredibly inefficient market that requires employees to take badly informed, high risk bets, where they often don't have deep enough pockets to absorb the risk.

The limited information is also a good point. Some level of saviness and understanding of your company and market can help with some parts of this but certainly not all.

If anything this may be a good argument for working at late stage private or smaller more volatile public companies. Then if you get lucky and get, say, Square from two years ago, whose stock has gone up 7x, you capture this upside (and if they do poorly, roll the dice again after a year, perhaps). This is quite mercenary and might not be the route that makes one happiest, though.

Funnily enough, the fact that equity grants are "options" to purchase stock at a strike price less than the real share price is much less valuable than the optionality you describe of continuing working to earn the rest of a stock grant after more information is known.

Unfortunately I think it's very hard to pin a value on the optionality to continue working, and I haven't seen anyone mention it when considering joining a startup over a larger company.

Perhaps more reasonable is 1-2% per for the first 5-10 hires, then 0.5-1% for the next batch, etc.

Also I really think these should be RSUs, not options. Employees are already invested in the startup by paying a premium in the form of reduced salary and opportunity cost.

You can give them a signing bonus to cover the tax, but at this point it's easier and actually better for the employee to give them the cash separately and say "you can use it to exercise if you like".

Really the difference between options and Restricted Stock is measurable in dollars, so might as well just give people the dollars.

(Note that Restricted Stock is not quite the same thing as Restricted Stock Units (RSUs)... RSUs are for later stage companies. But the principles are similar.)

Maybe YC could lobby for a sane way to grant equity to early employees without penalizing the employee?

They basically have to give out generous equity to compete, but they and the VCs would rather be greedy and dole out fractions of percents under the cynical misleading pitch that these scraps will be worth millions when the startup exits for billions.

To their credit, This scam did work for a while, shortly after a whole lot of early employees really did make millions on generous equity grants at early startups like Google.

Being an "early employee" means nothing now. You get the token 0.01% bottom-preference shares that will net you 0 in almost every imaginable scenario, and somehow this is supposed to cover the 200-300k/yr difference you'd get at a profitable established company.

http://www.h1bdata.info/index.php?em=&job=Senior+Software+En...

Try:

http://www.h1bdata.info/index.php?em=Google&job=Staff+Softwa...

And keep in mind that base salary (what's reported on that page) is usually about half of total compensation. (Bonus and stock being the other half.)

Also this appears to be the H1B database. I'm not sure how H1B salaries compare to the overall average.

H1B salaries are typically lower than average. Why do you think companies spend millions lobbying for more H1Bs? To pay them more than average? :-)

Also, keep in mind Google only has to disclose base salaries for these H1Bs. For a staff engineer, most of the total comp would be in bonus pay and especially RSUs. They can easily be making $400k or more through those means.

As I understand it, H1Bs aren't too bad (transferability is a thing here), but other forms of visas are brutal in this regard.

No, to get a bigger talent pool.

This would still be underpaying people for a few reasons: expectations are not risk-adjusted, it also doesn't take into account the timeline you get paid on, i.e. the ROI you would get investing your Google salary in an index fund and taxes make getting paid a regular amount over time more valuable than getting a large startup check.

Maybe you were taking these factors into account, but most startup equity offers are massive low balls.

No, it should be multiples. Otherwise why is the employee taking on that risk?

That's a little bit too strict, and as such is not a position founders are likely to accept. Sometimes they need employees before they can pay market rate, and market rate is pretty steep for a senior engineer in the Bay, for example, and most other areas startups are heavily recruiting.

It's reasonable to offer generous equity for early employees willing to take the risk. What does need to stop is the toxic culture of giving out 0.01% even to earliest employees (engineer number less than 10, often less the 5) with the cynical fake-stardust pitch that "this will be worth tens of millions since we're definitely exiting at $1bn+".

As you mentioned, this culture of deceit has become commonplace and it's poisoning the well of future employees. You can witness its corrosive effect throughout this comment thread.

Give out substantial equity to those early engineers who take risk. Give them a realistic estimate of the risk they're taking, and the value they can get. If they take it, it's their prerogative.

They should be rewarded proportionate to the growth they create and catalyze.