Re:Startup Winter: Hacker News Lost Its Faith
by throwaway9191aa on Tuesday January 21, 2025 @07:38AM
(#42779431)
This is why I joined AWS 9 years ago, and left the startup world. I own (still?) 15% of a company as a founding engineer (with no voting rights). As part of a raise, the company sold its IP to another company for a 0.5% stake in that company. So now I own 15% of 0.5%....... I just didn't understand the business side of all this at the start. As I understand it, the raise wouldn't have happened and the original company would have folded if the deal wasn't done, so you can't really argue fraud.
Since then, I have seen similar things happen more than once to other friends. I can only imagine that as the number get larger, the problems become more complex.
Re:Startup Winter: Hacker News Lost Its Faith
by HWR_14 on Tuesday January 21, 2025 @09:16AM
(#42780291)
15% of 0.5% of a billion dollar company is just over $700,000. That's not FU money, but that's a down payment on a 3.5MM home.
Re:Startup Winter: Hacker News Lost Its Faith
by throwaway9191aa on Tuesday January 21, 2025 @09:33AM
(#42780501)
My other option was AWS though. That $700k is like 4 years of effort, and I get vacations. Actually realizing a sale on a billion dollar company after 4 years is just incomprehensibly low. TBH Amazon is also less work than running a startup. If you think AWS oncall is bad, think about having even less people on your team to handle the load, or to build the product durably in the first place :)
Also, I have no way of knowing if the same ownership thing is going to happen again. Giving me another 0.5% of the above calculation. Sure, lots of people make millions in a startup. Way more people make millions, although over a longer time span, in tech companies and index funds.
GP comment argues correctly that there's no guarantee that employee stock options will return a profit even in the case of successful exits. Valuation multiples, senior debt, clawback options (see Skype exit [0]), fractional stocks being rounded down to zero after stock splits have all been implemented successfully by startups and VCs. I wouldn't invest my time, which is very precious compared to my capital, into any company that is managed by someone I don't know personally. I would rather earn surplus money to invest into high risk high return options. Treat startup equity as a lottery ticket and don't pay too much for one.
[0] Skype options turn out to be worthless. https://news.ycombinator.com/item?id=2692985