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.