Re:How to Earn a Billion Dollars
by Grombobulous on Sunday June 14, 2026 @04:15PM
(#48532145)
Remember, you said "YC also provides founders with the funds to pay themselves while they start their company."
That doesn't sound very risky. Why are these founders getting outsized rewards again?
The risk that founders undertake when starting a business, that risk is primarily associated with small businesses, which are a very different concept from VC-funded startup companies. If I take a small business loan and start my cupcake truck, that's me taking a huge personal risk.
My read is, the way the system works is as follows:
- VC firms have lots of money but no ideas to grow that money further than the overall market growth rate
- Startup incubators find ideas and nurture them
- VC firms don't incur any level of unpredictable risk, as they have spread their risk across dozens of funded firms and the risk/reward is rather predictable - 9/10 of the companies are expected to fail and leave the majority of their employees with nothing more than a resume bullet point
- Successful founders of VC-funded companies are rewarded disproportionately from early employees and all employees in the company in general.
This seems totally fine on the surface and certainly it's worked well, but I still detect an undertone of exploitation here. The only thing the structure of these businesses value and significantly reward with equity are the founders with ideas, and of course the VC funds themselves who provide the capital for the funding rounds.
At the bottom are the employees who actually built the product. Without their work none of these ideas would have any value at all. But they don't have to be paid like they are highly valued since they're just interchangeable market rate implementers. In fact, they'll take below-market rates to work for a startup because of the excitement and the lottery effect. If I see the YC brand on a company and I think if I work there I could be the next Airbnb millionaire (and of course the founders of Airbnb are billionaires while the early employees are taking home 1/1000th of that wealth despite doing a much larger share of the labor than 1/1000).
Here's an example: Glimpse is hiring a Security and Compliance Lead in New York City and is only paying $150K - $225K.
Meta is paying a Security Engineer (not a lead) $271,000/year to $347,000/year + bonus + equity + benefits across the following locations: Bellevue, WA, Menlo Park, CA, Washington, DC, New York, NY
That doesn't sound very risky. Why are these founders getting outsized rewards again?
The risk that founders undertake when starting a business, that risk is primarily associated with small businesses, which are a very different concept from VC-funded startup companies. If I take a small business loan and start my cupcake truck, that's me taking a huge personal risk.
My read is, the way the system works is as follows:
- VC firms have lots of money but no ideas to grow that money further than the overall market growth rate
- Startup incubators find ideas and nurture them
- VC firms don't incur any level of unpredictable risk, as they have spread their risk across dozens of funded firms and the risk/reward is rather predictable - 9/10 of the companies are expected to fail and leave the majority of their employees with nothing more than a resume bullet point
- Successful founders of VC-funded companies are rewarded disproportionately from early employees and all employees in the company in general.
This seems totally fine on the surface and certainly it's worked well, but I still detect an undertone of exploitation here. The only thing the structure of these businesses value and significantly reward with equity are the founders with ideas, and of course the VC funds themselves who provide the capital for the funding rounds.
At the bottom are the employees who actually built the product. Without their work none of these ideas would have any value at all. But they don't have to be paid like they are highly valued since they're just interchangeable market rate implementers. In fact, they'll take below-market rates to work for a startup because of the excitement and the lottery effect. If I see the YC brand on a company and I think if I work there I could be the next Airbnb millionaire (and of course the founders of Airbnb are billionaires while the early employees are taking home 1/1000th of that wealth despite doing a much larger share of the labor than 1/1000).
Here's an example: Glimpse is hiring a Security and Compliance Lead in New York City and is only paying $150K - $225K.
Meta is paying a Security Engineer (not a lead) $271,000/year to $347,000/year + bonus + equity + benefits across the following locations: Bellevue, WA, Menlo Park, CA, Washington, DC, New York, NY