[koalaman]

I recently left a long career in FANG to roll the dice on an early startup. I was pretty surprised by the uneven terms between founders and early employees. From what I could tell the early employees takes more risk than the founders because they don't get that magic token dollar turning into their share of the founding equity event and have to pay the fictional valuation of the seed to convert their options. Depending on how hot your startup is that can be a lot of money.

Anyway that ended in tears, but I got what I was looking for from it. A look under the covers of the hot VC backed startup roller coaster. I may be getting old and cynical, but it looked considerably more exploitative than what I saw at Google. Obviously depends on the character of the founders and leaders, but the structure seems to be setup for toxicity.

[geepeeyoudata]

I worked at a Series A startup as an employee, and wont be doing that anymore. Early engineers have all the risk (lose job the second things go bad) but little upside. They would offer 500 options, or 1000 options, or 30,000 options -- but when you look at the prices, that was worth $100-$10,000. Why would anyone take all this risk, and lower base salaries for that lottery ticket?!

Secondly, they wont share the cap table, so you dont know what the denominator is. 30,000 shares of What!? No one would tell you. You should run.

Third, the VCs installed a buddy from SV as CEO who was creative with revenue. Great -- so they make their bonuses based on creative revenue, but the company gets saddled with VC rounds they have to dig out of w/o showing real revenue growth. Once you get SV insiders being placed into the company, often with their entourage of cousins and neighbors' kids as Director of HR or Director of Finance -- RUN FAST. The company is being strip-mined for cash, while Engineers slave away trying to code their way out of the wreckage left by locusts.

The C-Suite operated in a separate tier of the company with a heads-i-win-tails-you-lose setup. You could tell -- no way you are all driving Tesla Plaid on a "startup salary" -- the "startup salary" was for suckers, engineers, and those not in the VC-back-scratch loop.

My advice to everyone -- if you want risk, be a founder. Not Engineer #1 or #10. If you want balanced risk, go to a Series C or D company where you dont have the risk of fake accounting. If you want money, go to a public company with real accounting rules, visible revenue, visible liabilities, and more accountability.

[zenlikethat]

Even if you don’t see the cap table, any company you talk to should be clear and consistent in disclosure of facts like number of shares outstanding, including viewing it in tools like Carta. You are basically describing the abusive version of a startup and then saying all startups are bad.

I actually think going to a Series C or D is not the ideal play. It’s better to join an early company, with good leadership, reasonable if not mind blowing salary and cheap shares. Then, work hard, but not brutally hard. Somewhere that you enjoy the people, the work/product, and you can level up a lot. The options are cheap, and you can bail to FAANG at any time if you burn out. Realistically, that’s your shot at making 1% of $Xmm without completely hating your life. It will be a rare company so, yeah- be picky. I don’t know why all startups get lumped into one when there’s a lot out there for the discerning employee.

[randerson]

My experience was similar, right down to the $10,000 worth of options. Eventually the company went public and those options would have been worth $5M if I'd had the foresight (and cash) to exercise them (which I didn't). The co-founders did not have exercise costs or AMT of course. It is an unfair system indeed. I'd encourage those seeking to be early engineers to go work at a FAANG for a few years before joining a startup so that you have the cash reserves to take the risk.

[djbusby]

If you are early and they not sharing the cap-table it's a red-flag.

[pragma_x]

> but when you look at the prices, that was worth $100-$10,000. Why would anyone take all this risk, and lower base salaries for that lottery ticket?!

I was in a company when my options were "purchased" from me at the strike price, when the company itself was sold. We never made it to IPO. I've learned to not overvalue options and phantom stock, and just chalk it up to another bonus down the road. The real money is, or already has been, made elsewhere.

What really steams my biscuits is when I figured out how the payout was worth less than the unpaid overtime (never more than 50 hours a week), weekend support time, and travel time spent in my years there.

[bagels]

My early engineer story is a lot different than this. 0.7% sold shares for ~1M at the end of 4 years. There is a bit of luck, and a bit of picking the right one to join. Don't join the ones that don't tell you what your equity share is and what the last valuation was to start with.

[e40]

Spot on, and I say this as a founder of a company that didn’t fuck over the employees. 40 years and still going, and most people have been with us for more than 25 years.

I didn’t get rich because I wanted to sleep at night, but people in my orbit (probably me in theirs?) advised me very differently.

[carterklein13]

I did a similar thing to you. However, I do feel like cutting your teeth as a "founding engineer" at an early startup has 2 major benefits:

1. You get to see what it's like under the covers, as you said. It's not nearly as glamorous as it looks from the outside. And yes, as an early engineer, you share in a lot of the downside without nearly an equal share of the upside.

2. You get to leave. Unfortunately, the startup I joined entered a tailspin. But, my name wasn't attached to the company, and I didn't have a fiduciary obligation to our investors. I had a lot of "stake" myself after putting in years of 12-hour days, nights and weekends, but at a certain point I saw that my career was actively being harmed by staying. That "founding engineer" role on my resume got me the job I'm at now, at a level that skews higher than my YOE.

Do those two points mean you should get a fraction of the equity (or rather, a fraction of the options) as the founder? Honestly... maybe. I've now seen a few founders fail. It can really be a career-killer.

[palata]

> Do those two points mean you should get a fraction of the equity (or rather, a fraction of the options) as the founder? Honestly... maybe. I've now seen a few founders fail. It can really be a career-killer.

And I have seen a few founders fail and enter bigger companies at a pretty high position. Not sure I would relate that to how much money they should get in case their startup is one of the lucky ones.

[zenlikethat]

Getting to leave is so underrated. Nothing keeps your head above the doom and gloom like knowing you aren’t shackled to the thing, and the world’s your oyster if you need to move on. We live in a weird world if people don’t think a gig with $160K salary, 2% of the company, where you can work hard but not 24/7, and _leave any time you want_ is a bad gig. That 0.25-0.5% after one year that you get is PERMANENTLY gone for them even if you just fuck off after a year. Years later it could be worth millions.

But anyway, as founding engineer you get to set the systems, culture, language etc. maybe some people don’t want the responsibility but for others it’s an opportunity to build things out in our own image and learn a lot.

[hliyan]

There was an oft-repeated response back in the day (but gladly rarer now) when you dig too deep into employee benefits at startups: "If you're offered a seat on a rocket ship, don't ask what seat!"

To this, I usually reply "Unless the seat happens to be in a stage that gets jettisoned before reaching orbit".

[palata]

I have been working in multiple startups, I've come to think that it's a Ponzi scheme for the founders.

Generally underpaid and quickly toxic. It is an experience, but it's important to know it.

[RhodesianHunter]

It's a Ponzi scheme for VC and other investors.

Founders just get greased palms along the way if they're successful.

[sackfield]

As an engineer you really have a finite amount of good working years, and accepting startup salary vs big tech compensation is a bigger risk than founders are willing to generally admit.

[wnolens]

I almost left for an ultra early startup, still running on seed money. They offered a typical SDE2-Senior salary + 1%. I was kind of offended. I'd be inventing their core technology (which didn't exist yet and which their CTO wasn't fit to do) and probably interviewing every engineer and growing them.

Even IF they achieved a 100-300M exit, after dilution I would be compensated at best par with a FANG Senior over about 5-7y.

I was pretty excited about joining and would have been all-in. So I asked for 2-3% and was denied. Looking back, I'm glad because even 3% isn't worth it. Not when the founders are taking 10x.

[kelnos]

Oof. The CTO not having the chops to build the core technology would have been a huge red flag for me. At a 75-person startup the CTO should transition to be more of a manager and strategy person than a builder, but at time of founding they should be doing 100% of the building. Hiring the first engineer should be a way to increase the pace of tech work, not start it.

If none of the founders are technical enough to build the MVP, none of them should take the CTO title.

[indymike]

> . I'd be inventing their core technology (which didn't exist yet and which their CTO wasn't fit to do) and probably interviewing every engineer and growing them.

I see this a lot in failing startups:

The CTO is a pure manager who can't do any actual engineering. The result is that the shares and salary that could have been traded for getting product to market faster & better ends up being burnt on an empty chair.

[o283j5o8j]

I did early employee several times because I didn't know any better, didn't have anyone around to tell me not to. I won't do that again. All the risk, none of the reward. 1% of $10-20M after 4+ years of 80hrs/wk is less than the difference between a startup salary and a good salary over that same time.

[jejeyyy77]

most i know who work as eng #1 (non founder), are new grads who couldn't get into FANG. So mainly just looking for experience/inflated job title to boost their resume.

So not like these startups are getting top senior talent who obv will want to get PAID.

[tmpz22]

I went this route and now have a resume of inflated titles. I learned a lot and believe I can do some things in the top 10 percentile, just not the things many companies are currently hiring for (top 10 percentile in a narrow development skillset such as ML, or a specific language, or algorithms).

Im cynical and ultimately an rebuilding my dev career around a platform that will give me opportunities for entrepreneurship AND individual contributor work as an employee (Apple Ecosystem - iOS client development + product dev/mgn).

If I were to do it over again I 100% would've avoided startups early in my career when I could lean on junior positions to grow in a more mainstream manner. I'd have more money in my pocket, less stress, and less cynicism.

--

The problem is there is objectively zero way for fresh grads to learn these lessons. Even with prominent threads like these being available to some, the bearish attitude in every other thread will be more appealing to a fresh grad.

[kelnos]

I've worked at seed, series A, and series B startups, and I think... it just depends. Only one time (a series A) did I feel exploited. That wasn't because I was an early employee at a startup; it was because the founders were sketchy and lied to us about what was going on with the company's fundamentals.

I frankly don't mind the idea that a founder is going to see orders of magnitudes more cash from a successful exit than I will, though I do think it would be great if that gap were closed a bunch.

Ultimately I worked at startups because I thought the work would be interesting, challenging, and educational (it was), because I wanted autonomy, influence, and impact (I got those), and because didn't want to deal with bureaucracy and many layers of management (I mostly didn't have to). In contrast, working at a FAANG sounds not particularly enjoyable to me. But I've never done that, so maybe it would be more ok than I think. Then again, I did join a 50-person startup and stay until it became a 10,000-person public company, and was pretty unhappy there for the last few years of my tenure, so I think it's pretty reasonable to expect I wouldn't be happy at a FAANG.

I say this to point out that not everyone is looking for the same things out of their employment experience, and that's totally fine.

[oblio]

You have the current unicorns, basically anything from about the time YC started, and then you have the old school unicorns.

For comparison, Microsoft IPOed in 1986:

> The company's 1986 initial public offering (IPO) and subsequent rise in its share price created three billionaires and an estimated 12,000 millionaires among Microsoft employees.

https://en.wikipedia.org/wiki/Microsoft

I would really, really want to know if anything more recent has gotten to that level of widespread distribution of the riches.

I kind of doubt it, such an event would probably be considered Communist by modern standards :-)

[kaiokendev]

Facebook, although it didn't have nearly as many employees upon its IPO

[dilyevsky]

Google and Facebook of the more recent ones, though it was nowhere near 12000 i think

[ilamont]

an estimated 12,000 millionaires

One of them is my neighbor, an early Microsoft employee. She basically retired in her 30s.

[bagels]

I completely disagree on the risk. What was the opportunity cost for you in founding? Are you taking a salary comparable to your FANG comp? Usually the early employees are getting paid a lot closer to their market rate than the founders are.