Getting 15% is only really possible as a cofounder or if you’re joining as the only engineer before they have money to pay anyone. I assume that’s why you said “sweat equity agreement”.
There can only be 100% total, so giving everyone from cofounders and the engineering team 15% would max out at 6 parties total, assuming no investors and the remainder goes to a pittance of an option pool for new hires. Unless you never plan to grow the company the math just doesn’t work.
If you joined pre-money and took pure equity as compensation while building the company from scratch then you’re more traditionally called a co-founder.
Google will pay a senior engineer 200k base and 250k in liquid stock a year for 450k TC. That stock is also incredibly low risk.
If a startup paying market means 450k cash, absolutely there’s no need for equity. But if it means matching the 200k base then obviously you’re screwed with no equity. And I’m theory it should be a lot of equity given the much higher risk premium.
You are getting equity either way, both are likely to appreciate, but one is likely to be more liquid. So you're trading liquidity for a higher return.
More than half of all startups fail within the first 10 years. They’re not just less liquid, they never experience a liquidity event at all. That equity is effectively $0.
The odds of any given big company going bust are dramatically lower than that. Their equity might depreciate but it’ll at least be worth something.
One can be very dedicated on a 9-to-5 schedule. Just because you value WLB doesn't mean you are in a 'clock-in-clock-out' mentality. People have lives outside of work, may be even hobbies. The idea that a startup owns your life needs to die, stat. That is an extremely toxic line of thinking.
Do you mean “fickle” rather than “feeble”?
From my experience, the group of people seeking FAANG jobs or prestigious roles at big companies doesn’t have all that much overlap with the group of people who like to build early stage startups.
Some people really liking going into a huge machine of a company, doing a lot of meetings and planning documents and consensus-building, playing the office politics game, and working with huge teams where everyone gets a narrowly defined slice of responsibility that they’ll be evaluated on 12 months from now in their performance review. These people usually struggle at startups and leave anyway.
Other people can’t stand anything resembling big company operations and won’t be working for FAANG or Series D behemoths for very long even if they’re making $400K or more.
This is why you’ll see companies like Oxide Semiconductor pay $200K, accept only the best candidates, and still have people lining up to apply.
If the only thing that matters to someone is cash, moving to a Tier 1 city and joining FAANG to play the game is just what you do. Just don’t be surprised when you find yourself surrounded by other people who care primarily about playing the game to maximize their comp, because they’re doing the same thing.
0.5% at an early stage with below market compensation, no refreshers with future rounds, negligible comp increase with future rounds, and below-market salary is indeed a scam. A lot of startups are happy to operate this way.
On the other hand, getting 0.5% equity in addition to market rate salary (or adjusted to market rate as soon as funding comes in) with refreshers on each raise to offset dilution and reasonable work life balance can be a very good deal.
I’ve worked for both types of startups. The first type quickly loses their best talent as they figure out they’re getting the short end of the stick. The second type can build a happy founding engineering team that grows with the company and wants to stay for the long term.
Fortunately, the internet has made it harder for companies to get away with the bad deal, below market rate, terrible WLB arrangement that was so common at startups a decade ago. Some people still get trapped by bad deals. Usually when you look at those companies giving bad deals it’s a small group of older founders managing a group of early 20s college grads who don’t yet know better.