I completely disagree. It's really not hard to find a company with great product market fit, say series B, get a bunch of equity, a decent salary, and wait a couple years for your equity to be valuable. Assuming the company is successful (of course there's risk there, but by series B a lot has been mitigated), your equity will likely be quite valuable. I actually think, risk adjusted, that's the easiest way to make a bunch of money.

I joined a startup long after product market fit, it was pretty obviously going to be moderately successful, and I was employee ~100. I never worked too terribly hard, and my equity was worth about 50% of my (not too low) salary each year.

If you're not joining at or before series A, a lot of the risk has been mitigated, and there are markets opening up to sell your equity into.

Even post-B, the odds aren't good. They're better than pre-A obviously but it could still be 4-5 years and there are a ton of ways to f* it all up before then.

I just wrote about this last week - https://medium.com/@CaseySoftware/tech-ipos-an-inside-out-vi... - after personally experiencing IPOs of both Twilio (joined post-B) and Okta (joined post-F).

Edit: Replaced the link to my site with the Medium post.

> my [startup] equity was worth about 50% of my salary each year.

The equity of many AmaGooFaceSoft employees is also worth at least 50% of their yearly salary.

Yes but that's if I were to sell it after ~1 year at a company you've likely never heard of. If I wait 3 more and there's a large exit it could easily be worth millions.

Do you have a convenient way to sell your startup equity after ~1 year? (i.e. before there's an exit)

There is a developed secondary market for venture-backed companies' stock. (Source: I do this.)

I thought private stock transactions were subject to board approval, or is that just Canada?

It depends on the company. Some companies are quite liberal with transfers. If you have a bona fide offer, they'll amend the cap table. For others, my having a relationship with the founder or Board is critical. A good starting point for American companies is is their Certificate of Incorporation. If you exercised options, the Restricted Stock Purchase Agreement should also contain terms, e.g. the company's transfer policy or right of first refusal.

I have never heard of a Canadian company looking to raise capital structuring itself under Canadian law. Commonly, you'd have a Canadian law subsidiary wholly owned by a Delaware corporation.

Disclaimer: I am not a lawyer. Hire a lawyer before selling private stock. Do not take investment or legal advice from my Internet comments; they are neither.

There's an EU startup that's trying to create a blockchain based market for shares of pre IPO startups: https://markets.funderbeam.com/market

Depends on the terms. In most startups board can only match the offer.

Lol.. good luck.

Not convenient, but definitely possible. Equidate is a fairly open market for that kind of thing.

That is an exit of sorts.

But there's also a much higher risk that your options will be dilluted to nothing.

> if your company isn't one of the top companies of the decade

GGP covered that option quite nicely. Those are companies that are clearly at the top companies of the decade, maybe even longer.

> Joining a series B startup and waiting a couple years is the easiest, risk adjusted way to make a bunch of money.

Sorry, what?

I'm glad I'm not the only one who did a double-take at that statement. The key qualifier is "risk adjusted", but that's not really meaningful from the employee's standpoint: You can only bet on one company at a time.

Imagine what kind of stock investments you'd make if you were only allowed to invest in one stock at a time.

Let's say 10% of start-ups succeed to the point where employee 100 makes "a bunch of money", which I think is very generous. You would need to join 10 of these start-ups throughout your career (and of course remain at each for the 3-5 years it takes to learn if the lottery ticket pays off) to have an expectation of one case where you end up that bunch of money.

So yea. Risk adjusted. While the EV might look good, the variance makes it a losing game.

I'm not sure what you mean by 'expectation of one case' here, but just to clarify: rolling a ten-sided dice, 10 times, gives a 65% chance of rolling at least one 10. So you still have a 35% chance of zero 'wins'.

I can't comment on the rest of your model, but its worth keeping in mind how the binomials shake out.

Ack, you're absolutely right. Don't know where I was going with the hypothetical example but my math was totally wrong.

Actually, your statement was entirely correct. "Let's say 10% of start-ups succeed ... You would need to join 10 of these start-ups ... to have an expectation of one case [of success]."

It is a true statement that the expected number of successes after 10 tries would be 1. It is also a true statement that your chance of zero successes after 10 tries is 34.8%. (The balance comes from the outcomes that include multiple successes.) It may be that the latter is the more relevant and interesting statement to make, but your math was totally right.

;-)

What about staying for 1-2 years per company? Then, you can diversify twice as much as if you stay 3-4 years per.

Where "a bunch" = 2-3m

Yes. However, you are basically making the argument that your options are worth ~50% salary. The problem with that argument (at least in the valley) is that you are making the calculation off the initial starting salary. Salary/RSU growth at companies like Google, FB, etc is surprisingly rapid in the first ~24 months, to the point where I would argue that if you haven't doubled it in that timeframe you need to work on your extrovert/self promotion skills

I only stayed 1 yr

This is just an anecdotal account of your single experience, it isn't making a strong case for your general point.

> but by series B a lot has been mitigated

Or, the fact that a series B is needed is indicative that there was more risk than anticipated. Series B is not always good news (in general it is though, but there is still plenty of risk at that stage). So always verify what the reason for a funding round was and make sure that it was an 'up' round rather than a 'down' round.

> It's really not hard to find a company with great product market fit, say series B, get a bunch of equity, a decent salary, and wait a couple years for your equity to be valuable.

Still so many phony companies out there even at Series B.

> I actually think, risk adjusted, that's the easiest way to make a bunch of money.

It's really not. Risk-adjusted go work at Google for 10 years and you'll probably make more.

If this is easy for you, you should quit engineering and run a growth equity fund.

> If this is easy

If what is easy? Making a few million in a few years is never easy, but I don't know of a better way to do that on a risk-adjusted than joining startups after product/market fit.

And for what it's worth I don't build very much anymore, unfortunately

> and wait a couple years for your equity to be valuable

Product-market fit does not imply appreciation. Growth is priced in. Unless you think you know more than the market (the VCs), you shouldn't expect a return.

Product market fit and further growth are generally pretty correlated, though

Yes, but growth and appreciation are (theoretically) not. Growth is priced in. You're saying product-market fit -> growth -> appreciation. The first part of that is true. The second isn't. Assuming market efficiency, the VCs know just as well as I do that the company is going to grow, so they'll pay a higher rate, which means my options will be priced higher (or I'll get fewer RSUs, accordingly). Growth does not imply appreciation.

Assuming market efficiency at series B is quite a leap, IMO. That said, let's roll with that assumption; you need to find a company that continues to grow, or in some other way derisks itself.

This is like saying "To make money in the stock market, you have to find stocks that will go up." It's tautological.

I'd love to see stats on total comp for engineers at "normal" established companies. Sure, everyone knows that you can make a lot more at Google / Apple / Facebook, but it's also significantly harder to get those jobs and not everyone can.

If you're a SWE at Oracle, are you really going to make much more than you'd make at a 50 person startup? According to Glassdoor, not really.

https://www.glassdoor.com/Salaries/san-francisco-senior-soft...

Just look at the Oracle SWE salaries: https://www.glassdoor.com/Salary/Oracle-Senior-Software-Engi...

Even including total comp, that's barely more than I made the the first <20 person startup I joined.

Is Oracle a good example? I think they are known for abusing H1Bs.

Look at another mid size company as a developer.

"Yep, IMO unless you are a founder, if your company isn't one of the top companies of the decade your 4-6 years of pay-cut toil as an early employee will likely just not be worth it, at all."

Not worth it financially, considering opportunity cost of not working somewhere that pays more.

Just pointing out that there could be other non-financial benefits from working at a startup, that might make it worth it. Everything from you enjoying your time more, to the work helping you gain skills faster and make you able to get a higher salary down the line.

I'm at a startup now. When I was looking for a job last year, I had 3 offers and this startup was the lowest in terms of compensation and while the other two offers were higher they were with large corporations.

While I'm a little disappointed in my pay, I get a ridiculously flexible schedule, work from home whenever I feel like it, I put in some extra work last weekend so my boss just told me to take tomorrow off (which is a common occurrence), the work I'm doing is 5x as interesting and I get to try my hand at a breadth of tasks. I also ended up getting a fantastic title after 6ish months as I was hired in under a pseudo title and they had the mentality of "show us what you can do." There's always new/more difficult tasks I can jump in on when I'm ready.

My other two offers did not have flexible schedules, one had no work from home and the other allowed it sometimes. They were both clearly defined roles, despite my interviewers telling me about all the cool projects I "might" get to do l've learned to never consider any "mights."

I think I'm another year or two my pay will be higher and I will have a more interesting career than if I had chosen one of the ther offers.

I don't expect to get anything from this startup other than experience and a paycheck. And the experience definitely makes up for the lower pay.

One thing to be aware of is that titles given by small and medium-sized companies are viewed differently than titles at large and well-respected, well-known companies.

For example, someone who is a VP at a startup might equate to a typical Manager at a larger company. Someone who is a CTO or Chief Architect at a startup might be a Senior Engineer at a larger company.

Large companies have an approximate scale in mind for their titles, where a Manager, Director, VP, etc. are responsible for (on average) a certain number of people reporting to them, and a certain amount of budget. "Director" level at a large company may entail responsibility for hundreds of employees and significant budget. That director has far more actual responsibility and scope than a startup "VP of Engineering" with a 10-person team.

To put it in different terms:

Anyone can pay $50 to incorporate online and they'll be a CEO. The actual prestige of the person and their CEO title significantly depends on the prestige and scope of the company. From a career perspective, what others will care about and evaluate are a person's actual scope, responsibilities, and accomplishments.

So be careful about viewing a title as a reward; a better reward is an actual increase in scope, responsibilities, and compensation.

Absolutely agree. It's funny, first time my boss brought up upping my title my response was "it really doesn't make a difference, but sure that's fine."

Because of my lackadaisical response it never got changed. Couple months later my boss's boss brought it up because they needed it for some form and she asked if I wanted an even higher title than what I was offered initially. I said "sure."

I don't expect much from it, but every stupid signal helps next time I'm job searching.

That's true, but even with size-adjusted titles you can get faster promotions in a startup. It's pretty common to go from being an individual contributor to running a small team to running a larger team, all within a year or two at a startup. That sort of career growth is unheard of at more established companies.

I've had a similar experience. I've loved the team I work for, the projects I've built, and the opportunity to have impact. I would not be as happy somewhere else.

I would add to that that if your startup pays enough for you to live your lifestyle in the area you choose, then it's okay to leave money on the table so to speak.

You can always go retire at a big company later. The younger you are, the easier it is to take these sorts of risks.

But also think like an investor. Don't put your $x00,000 investment in a startup just because it's cool. Do it because you believe you'll make a positive ROI.

> If you're optimizing your career, either make the most you can at an established company, or start a startup.

I feel I'm optimising my career, working as a sysadmin at a small startup. It's not optimising for money, but I get to touch a lot of tech and design a lot of infrastructure. Make a few mistakes and learn from them. I'm not implementing someone else's design here.

But who are you learning from? Is there a senior sysadmin at the startup? Mentorship matters.

Yes FYI last years basic employee (5 year) scheme at BT returned over $200,000 if you maxed out the contribution, Bear in mind this was avaible any employee even a junior engineer (lineman in US speak).

Oh and you had zero chance of losing any money and you can take share save money tax free

Always good to work for a monopoly..

lol not for a long time has BT had a monopoly unlike the US which left local monopolys intact

Sure..

http://www.telegraph.co.uk/business/2016/11/02/telecoms-riva...

really and you don't think the fabulously wealthy tax dodgers who own the DT don't have their own agenda or are making nice with Murdoch in a you scratch my back ill scratch yours :-)

Al those competitors want to do is cherry pick profitable customers and the USO can go hang.

Or just keep hopping until you find something that you like and pays what you're worth

Did you just delete your comment or was it somebody else?