Comment by senordevnyc
6 years ago
This is such a weird post. Big fan of Garry, but I don't agree with most of this.
1. Just because it turned out that you would have made $200mm doesn't make it a mistake. If anything, that outsized return proves just how rare this kind of outcome is. If you look at the YC startups graduating every year, maybe 1 will ever generate $20mm for an early employee, let alone $200mm. Joining a new startup for that kind of outcome is stupid, even (especially?) if the founder is a big personality.
2. What is the bizarre pie chart in the middle of this post supposed to show? I'm very skeptical that it's actually based on data of any kind.
3. What is the line about it being hard to believe that any company other than Google is going to make money? Apple and Microsoft both earn more than Google, don't they?
Bottom line, if you care about comp, you should know that no early stage startup of any kind offers an expected outcome remotely close to the big tech companies. Yeah, you might make a few million after working your ass off for many years. But realistically, you won't. But you would make close to that (or more) if you worked for the big tech companies for those same number of years, at a much lower risk.
If you want to do the startup thing, do it as a founder, not an employee. Start with 30-100% of the equity, not 1% or 2%.
Again, I'm a fan of Garry's, but I'm very skeptical of these posts by VCs trying to convince you it's a good idea to work at an early stage startup. Startups are great for them since they have a whole portfolio of companies to spread their risk across, but it's a shit deal for employees if you care much about comp. I don't envy the hassle of trying to hire at a startup when big tech companies literally pay 2-3x as more, but that's where we are.
EDIT: apparently the graph I referenced in #2 is showing that the top 5 companies in the S&P500 (as of sometime back in 2018) are equal in market cap to the bottom 282: https://www.newworldadvisors.com/post/the-role-of-private-ma...
Interesting, I guess, but pretty useless stat for the topic of this post. It also ignores about 200 companies in the middle that have huge market caps as well. Like Visa or Walmart or Disney. More here: https://disfold.com/top-us-companies-sp500/
> If you look at the YC startups graduating every year, maybe 1 will ever generate $20mm for an early employee
YCombinator -- like all other VCs -- has the data trivially available to show actual compensation of early employees across entire classes of startups and not just cherry-picked best cases. After all, they have the cap tables and the exit dollar figures and how long it took to reach those exits and how many never exited. They probably show that stuff under NDAs to their LPs.
Just not to engineers.
Since YC, like every other VC, has never bothered to publish that kind of data I have to assume it doesn't support their boosterism case for working for a startup.
> They probably show that stuff under NDAs to their LPs.
Probably not. I can’t imagine why LPs would care. it’s not their problem.
Very interesting point.
Thanks for the note! I appreciate the feedback.
These things are crazy rare. I didn't do a good job of explaining then how weird this experience was. In the moment it felt like any other startup. Peter was great and well known but not outrageously famous the way he is today.
I also didn't do a good job of doing an intro on this idea that tech startups are taking over all of the economy. There are some things that I just take for granted— I guess in abstraction now there are trillions of dollars of market cap in just tech firms, and this fits with my overall view that software is eating every part of GDP. We see this every day, but it's not well explained in my video/post.
I was making a joke about Google eating all of the world's revenue, but it didn't land. Sorry about that.
Really appreciate the feedback here. You're totally right that it's more directly lucrative and lower risk to work at a big tech co. I just still think people should consider making things for themselves though.
> I just still think people should consider making things for themselves though.
I've worked for startups and big companies. In both cases you're making something for someone else. Even then, at least at a "Big Company" you can sometimes choose to work on a product that you personally use.
Yeah, I hope none of the criticism was too harsh. I'm a big fan, we've actually met in person, and I almost got into YC while you were a partner. Oh well :)
Agreed on most of your points here, especially about software eating the world. There's a good post here, just not sure this is it yet!
Just trying to get better. Not too harsh at all. Thanks again.
> I was making a joke about Google eating all of the world's revenue, but it didn't land. Sorry about that.
Honestly, I found it slightly offensive.
Sorry about that. Lots of other companies are going to make money, and that's a good thing.
It's certainly a bad thing for large tech firms to take out increasingly large portions of global profits. It also might be a secular trend without end.
Yeah, the moral of the story, as far as I can tell, is: 1) make sure to know the kind of person who can write you a $72,000 check as if he was leaving a tip at Starbucks, 2) impress him enough that he’s willing to offer you $200 million when you’re 23.
I see now where I went wrong in my youth.
> 2) impress him enough that he’s willing to offer you $200 million when you’re 23
I think the answer to that is "Go to Stanford". For literally 99.999% of people that is never possible.
I think you're not giving the meritocracy at MIT enough credit. I went to a state university.
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Surprisingly, these sorts of people are both not that rare and relatively straightforward to connect with.
A year of low level engineer’s salary is, relatively speaking, not a lot of money in our industry/society, regardless of what that figure ultimately works out to as an integer.
There are 607 billionaires in the US out of 320 million people. You need to meet over half a million people to average one person with Peter Thiel's level of wealth.
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Agreed. On the surface Im like, oh ok yeah that is good advice. But as I pondered the situation and remembered what I was doing at that age. If someone waved my annual salary in my face to join a startup there is no doubt I would take it. But how many of us hob knob with hundred millionaires or billionaires and get approached to leave their job? maybe .01% of the folks who frequent HN. It feels a bit humble braggy.
I guess what I wanted to say was that if you are capable of building great software, you should join the .01%, because that was my experience.
I started as a reader of Hacker News just out of college, and it taught me a lot. Many of the founders we back came through Y Combinator and learned about startups here.
I have a hard time not reading this as a "pull yourself up by your bootstraps".
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I hope that eventually as more and more people realize how much more they could make at big tech (IME a lot of people just straight up don't know, esp. when a lot of the comp comes as equity grants), startups will have to start paying more/offering bigger slices of equity. But seems we're not there yet.
I also wonder how much of this is driven by software engineers who couldn't (or, probably more realistically, don't think they could) get a job at Big Tech?
Oh I agree— big tech is fantastically lucrative! I wouldn't dissuade people from spending some time there.
Separately I also agree that there's a big problem of credentialism in software engineering. We meet lots of amazing software engineers who didn't go to the right schools— that's a big reason why I funded Triplebyte.
The other big thing messing up startup comp right now are super-high valuations for mid stage companies. When you’re getting options based off an inflated evaluation your upside is low, and the probability your options become worth $0 even if the startup does moderately well (eg if it raises a round at $4b right before you start and goes public for $3b). Doesn’t matter how many options you got, they were pegged to an inflated evaluation
Agreed. People are madly in love with working at companies like Stripe and Airbnb right now, but I'm not convinced the risk is worth it. They're giving out equity as if it's liquid, but it's not. So if I can get $200k per year in equity from Stripe or $200k per year in equity from Google, why exactly would I choose Stripe or Airbnb? Just in the hopes that the $200k will end up worth $400k or $800k? I mean, maybe it will, but that feels pretty speculative. Put another way, if you already worked at Google and had the opportunity to invest cash into those companies, would you put all your equity comp in Stripe or Airbnb?
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RSUs are the solution to this problem. With a double trigger a pre-public company can offer them without employees suffering a tax liability on illiquid equity.
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I understand the general skepticism, but if Peter Thiel writes you a check for your current annual salary as a signing bonus and asks you to join his new company - you’d be stupid to turn that down now.
Worst case you can just go back to Microsoft on failure without too much lost.
Today the salaries are higher, but they’re often pretty high at VC funded startups too.
Could you recommend good reading from this guy? That article doesn’t reflect well on his judgment- the story, the decision to post this story- the idea that Peter Thiel literally told him to quit his job (after he answered the question of his current salary?!?)- none of it makes any sense to me.
It's pretty bewildering to me too. The point is I said no, and it was the wrong decision. I ended up starting a company and later becoming a VC.
What I got out of the post is that the value you bring to a company, doesn't at all align with what you're actually paid, which is typical of our society.
I think the truth is more complicated than that. The synergistic existence of the company itself is what allows each person to be able to create millions of dollars in value. And there was a risky bet made with capital to create that company in the first place, and those investors / owners / etc. making a solid risk-adjusted return on their investment hardly seems like a travesty to me.
I wish we did have more employee-owned cooperatives though. I think that's a better way to fix the inherent tension of owners vs employees.
Yup. It's almost axiomatic that you are being paid less than you are worth to your company. This is a foundational piece of the capitalist mode of production.
I wish there were more software cooperatives, or worker owned businesses out there.
A cynical reading is this: he missed out by not buying a $200M lottery ticket, so the next generation of engineers and designers should buy lottery tickets.
Conveniently, the author is now in the business of selling lottery tickets.
(Then again, if he’d stayed at Microsoft he probably wouldn’t be in a position to sell lottery tickets).