The difference is that now Google and FB pay way more. More than startups could ever dream of competing with. Everyone I know at FB or Google is making $225k+, with the average/median being around $300k/yr. Absolutely no way new startups can play ball with those salaries, and FB/GOOG certainly weren’t paying that as they got off the ground.

Logically speaking, the only way that a company can pay more and still be profitable is if they produce value more efficiently. On a general, macro level.

So, if startup founders cannot even dream of providing either cash or equity (adjusted to risk) comparable to the big-techs, does this mean that startups are no longer the best way for society to become more productive?

I only see if two ways (again at the macro level)

a) Startups are better than BigTech for society economically: so make sure you hire the best-of-the-best, and give them high equity, and later compensation when you have more cash.

b) BigTech is better than startups for society economically: here, the proof is in the pudding, better hires leads to more profits, so hire the best of the best, and just give them mountains of cash.

I feel like we're seeing b) for the last 5 - 6 years.

But in startups averages don’t matter as much - it has power-law style returns, so if you happen to work at an insanely valuable startup those lines of code might be 1,000x as valuable as the average line of code written at Google.

Ergo, if you can/want to play the odds with those kind of risks you go to a startup, even knowing the risk adjusted value is lower (loving your work also matters, and some prefer startups - myself included). If you want a sure thing you go to Google.

But then again it’s only Google and FB that pay above the line. Microsoft and Amazon salaries, last I checked were pretty subpar.

There will always be scope for solid good new businesses with big and small margins, but maybe the next FB / Google will be in some other field? Maybe biology or nutrition, maybe quantum physics, who knows. I wish I had some ideas though.

sed 's/produce more value/extract more wealth from dominant positions and regulation then control/'

You'd have to adjust quite a bit for inflation. The average rent has skyrocketed 300% since the time Google was a pre-IPO company. I would not mind a "low" Google 2004 salary if I could somehow also lock down a Mountain View 2004 mortgage. Also, tuition and student loans have risen. So while im at it, i'd love to lock down a 2004 student loan burden.

The world is bigger than SF. Seattle enjoys the same payscale with half the housing costs.

Are their ideas just not that promising, or are they just not raising enough money, or what?

Venture capital is supposed to be (and certainly was a few years ago, though it may have gotten more conservative) the transfer pipeline between the money printing enterprises and the high-risk, high-reward startups that provides the unlimited cash the latter don't otherwise have while unlocking the return potential the former lack.

For example, what is the option exercise window if you leave Lambda?

really? i never heard anyone said that

A lot of startups these days skimp by hiring sub-FAANG SWEs with less than 5 yoe, and it shows in their products. Lack of product maturity, bad engineering (worst horror story I’ve heard recently is Wayfair), resume driven development / over-engineering / cargo culting, huge teams to work on simple features. All so they can hire two middle-skill 22 year olds instead of a skilled 35 year old.

If you’re able to work at FAANG it is just bad financial sense to work at most startups unless you want to play the lottery. If a place offered 40-50hr/week, $250k salary, 15% target bonus AND generous RSUs/options it would be able to compete with FAANG. But not a lot of places do that, and those that do are often the very bubbly ones with uncertain futures

If a startup wants to pay you enough to compensate, the options need to be worth > 100k present value (even if this means 1% of the company). Otherwise you'd be better off working for google and buying equity in the startup rather than breaking your back working there.

Yeah, just go to Walmart and find the startup equity behind the underwear to your left.

100% this. Most people didn't work at Google or Facebook back in the day in the hopes of winning the lottery. Those companies paid really well, had the best benefits, culture, and mostly they were working on a ton of challenging problems unlike most of the "giant tech companies" of the time.

Now I contract out days for an agency. I estimate predefined tasks and then execute them. I talk nicely and calmly to clients who don't do me the same courtesy. I work only with the technology I have the most experience with and don't have opportunity to try new tech. But I have to pay my rent and I have to start putting money away to eventually get on the property ladder so working at a startup isn't really an option for me any more.

they most decidedly were not. everyone there was taking $25k if not $50k pay cuts to be part of it.

Do not ever work for a startup where the founder(s) have this sort of mentality.

The giants can pay high salaries because they're hugely profitable and don't need to worry about being hyper efficient to make the most of VC money.

Startups on the other hand, are still weak on the profitability part, but have massive room for growth when it comes to valuation. Therefore, the equity they can offer has way more potential value than stock in a large company that's averaging 5% growth or something.

I don't see how a founder of a startup would benefit much from cheaping out on salaries for employees. The vast majority of the payout for founders is company value increasing, not how much of the VC money they keep.

Once a company is large, it's hard to have that level of impact until you're a director/vp/etc.

You'd be wrong.