Comment by keithwhor
6 years ago
The pessimism in this thread really bothers me. I’ve read anecdotes on entrepreneurship being on the decline, but it pains me to read so many negative takes on startups. We’re actively training our young people to avoid taking risks, and it’s going to fuck us — especially if some of those young people have the ambition be early employees at, say, a startup that takes on climate change in a big way.
Look — the fact that Garry knew Peter Thiel when he was 23 is nuts. When I was 23 I was broke and living with my parents in the suburbs outside Toronto. I didn’t even personally know any other software engineers. I think many people here would relate more similarly to that position.
Just because he won the social lottery early, doesn’t mean his lessons are wrong. I got a junior engineering job in Toronto when I was 23, at a startup, making less than Garry. $57.5k CAD. I worked on my open source portfolio and next took a job in another startup in SF for $120k USD the next year.
That startup failed. I took a brief job at a biotech startup after being turned down by Google and Facebook (twice). After three months I quit that startup to run the company I’m still running today, four years later. Today, we’re very fortunate to work with some of the largest companies in SV.
Reflecting on this: I think a better story Garry could’ve told is not that he missed out on $200M, but that startups basically built his network so that — years later — he’d be a prominent VC working with Alexis Ohanian, funding the next round of exciting companies. $200M is an eye-catching clickbait headline, but not the real substance. The real substance is — how the fuck did he meet Peter Thiel at 23, and how can somebody recreate that?
In the story I just told about myself, I got really lucky as a function of working at startups. I didn’t really make any money doing it. But a whole bunch of interesting things happened:
- The first job in SF I worked at introduced me to a product manager who went to school with Aston Motes, employee #1 at Dropbox who would eventually be an investor in the company I run today.
- The founder of that first failed company introduced me to AngelPad, the accelerator that gave me my first $50k in financing. The fact I stuck it out as an engineering lead at a failing startup helped: I gave it my all. (Aside: YC turned me down. Twice.)
- The biotech company I worked at was founded by two early SpaceX employees, one who would also become an investor later on.
Don’t work at startups to make $200M. Work at startups because you’ll work with people who have risk profiles that are much more likely to generate outsized returns as a group. You’ll have the opportunity to join or create a community of high-performing folks that, in aggregate, outperform anything you can do on your own. Maybe you’ll be the CEO one day, maybe not, but no matter what you are very likely to come out ahead if you apply yourself.
And don’t let the comments here dissuade you. Startups are hard, but they kick ass. I’ve cried myself to sleep some nights — as both an employee and CEO — and still wouldn’t change the experience for anything. I’m a better person because of what I’ve been through.
The reason why is the math changed. The gap between startup and tech giant is much larger now than it was in 2010. Also, unless you have insider access and join a very risky angel stage company, the likelihood of getting a good package that makes sense is low, very low. Also public companies have shown to get +3x gains, which can make the math even worse.
Example from personal experience that is very lucky in startup land:
I'm an unwise jr, who gets a 25k (with 25k stock units) purchase price stock plan for a series A company valued @ 5m. 4 years later that same company has 200x in valuation to $1b and I get 5k more stock units as refereshers over 4 years 'since the value of the company has gone up so much'. The value of my stock is not 6 million, but 600k because of dilution. So even with this very positive case situation, I broke even +/- 100k or 200k compared to big tech co with promotions, but whats worse, I can't sell my stock. The company later dies and all of that stock is only sold for about $40k total in secondaries that happened before the last $1b valuation round.
Considering that is the good case, why would I work as an early employee at a startup? With capital being so abundant and being employee #1-5 at an angel startup, I might as well become a founder and start my own at that point, or join the obvious next big tech co, which was facebook back then.
We also only have so many years to go on startup expeditions, maybe 5 total before we are 50, or more if we are able to fail fast.
>The reason why is the math changed.
Very true. Making it even more unbalanced is that a startup exit may not be profitable to non-founders. I spent the first 17 years of my career at 3 different startups. Two were acquired and one is still chugging as a lifestyle business for the founder. The net value of my options (> 1% even after dilution in two of them) amounted to a $2000 capital loss due to there being no money left over after debt and liquidation preferences. I did get $350k payout for one of them since I was an executive.
I recently started at a FANG, where the new grads make cash and stock comparable with my startup exec compensation and it won't take long for them to eclipse it. I'll be making multiples of my previous compensation.
That said, I wouldn't change my path one bit. I learned so much in those startups that I wouldn't have learned anywhere else. I had a level of scope and responsibility that apply to nearly any tech job. It also lets me appreciate the benefits and stability of a large company. When I joined those companies, I was also not even thinking about making bank on an exit. I just wanted to work with nice people and build cool stuff.
I think this is a really good argument as why graduated corporate taxes really need to be increased in the US. I'd be curious how productive you felt at each position and if you think the FAANG job is more difficult and stressful.
I'd like to think that no matter which of these paths we chose - the more stressful and risky life or the more secure and corporate FAANG one - we'd all have a chance to live a decent life. I really enjoy working at a small company and we make a notable impact on society, but the money will never approach FAANG levels.
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I'm interested in your transition, how did you go about the move from Startup Exec to working in a FANG?
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> The reason why is the math changed. The gap between startup and tech giant is much larger now than it was in 2010.
This is true but also kind of depressing. With the means of software production cheaply available to everybody is that stable job at a tech giant really the pinnacle of the software engineering career? I understand that everybody's got the bills to pay, kids to raise etc. and maybe I'm a bit naive but it just feels... wrong. And yes, working at BigCo can provide some interesting technical challenges, opportunities to impact millions of users and shield you from unpleasant interactions with the outside world. But it still feels like you are being paid premium to sit on the sidelines.
I find a lot of joy in smaller, industry niche companies. Like 1-20 employees small. Not VC funded startups, but long running companies with proven value in an industry outside of the startup bubble.
There is a lot of them, and they can be very rewarding to work at. While they'll have less compensation, it's in real money and they're often located in smaller cities with lower cost of living. You get to work directly with clients/customers to provide value to them with your skillset. The pace is steady, and what you work on can have a lot of longevity which is nice. Software can feel somewhat ephemeral at times, written one month, thrown away the next. Working on a long term project means it feels worthwhile to go the extra mile.
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> This is true but also kind of depressing. With the means of software production cheaply available to everybody is that stable job at a tech giant really the pinnacle of the software engineering career?
Yes, because economies of scale greatly benefit big companies.
Just because software is free to scale, in the sense that a cp command doesn't cost you anything, doesn't mean that making money from software is free to scale.
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I don’t disagree with the spirit of your post. Large tech companies are paying ridiculous salaries and generally speaking we’re in a period of early-stage capital glut.
The point you’ve made — that it makes more sense to just start a company — is directionally correct, but for the most part is a logical fallacy. I hear this from competent, capable people all the time, “I might as well just start my own company rather than work at a startup as an employee.”
The reality is that 0 to 1 is an extremely, extremely difficult hump to overcome and most people intuitively know this. Which is why anybody who says, “I’m better off starting my own company than working at a startup,” especially without startup experience, is likely to never actually do that thing. I’ve never actually seen it, though I’ve seen a number of people go from working at to founding startups.
The real insight here is that it is actually more valuable to found — or be a really early employee at — a successful startup. And so the question becomes: how do you put yourself on track to get a $72k check from Peter Thiel at 23? Take risks, prove your competence and grow your network. That means work at startups.
Sure. I’m (currently) a lucky recipient of survivorship bias. There’s a long way to go and my current state is incomparable to most of the people we look up to and respect as a community. But the key word there is, “survivor.” If you look at the start of my startup career — middling ad tech company in Toronto, eng. lead at a failed Series A SF startup, short stint at a biotech company, turned down by BigCos — none of it looks like it could possibly have been leading anywhere. I just used those opportunities to meet really talented folks who believed in me and, one by one, would end up supporting me down the line. I’m lucky and very grateful for that. Some of the aspects of my journey to date are non-repeatable, and I’ll always give thanks for those moments — but a lot of the lessons I’ve learned can apply to any ambitious young technologist.
Keep at it. If startups aren’t for you, fine, but, again — survivorship bias requires you to survive in the face of insurmountable odds. And it does happen. Startups teach you how to survive. It’s OLN on steroids for careers.
TBH the best way to get a full spectrum startup experience is to go start a startup, like many other things in life.
Working at a startup, other than maybe a 1-2 year maximum stint to get a taste, isn't really useful because a lot is hidden from you even when you start the angel stage. And if you wanted to do the stint, I would probably do it as 1 year of PMing and 1 year of engineering max. If you really wanted the full spectrum experience just incase, then another year at a pre-ipo growth company, another year at a big tech co and another year at a VC to understand the full spectrum life cycle for 5 years.
As a founder, the demands of doing a startup induces you to learn a lot. It forces you to do that networking and making friends part and you will eventually get a mentor network via all your investment activities that will probably be way better than observing from a distance as an IC. Other founder friends you make and friends made at a co-working space doing similar things would give you a lot better experience and a better network.
I joined a smallish startup that grew big, as evidenced above. I mostly just churned on pushing out a lot of code and that's about it. I was part of helping create that 0 to 1 and all it gave me is a bit better work ethic since so much was hidden from me as a jr. The friend I made there that joined really early didn't gain much more insight than me and now works at big tech with me. I learned a bunch just through observation, but I think a founder mentor network would of taught me stuff a lot sooner, and a lot better.
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> The real insight here is that it is actually more valuable to found — or be a really early employee at — a successful startup.
Sure, and it's more valuable to be holding a winning lottery jackpot ticket than a year's worth of paychecks.
Problem is, most startups aren't successful, and you have to take the risk into account.
>Large tech companies are paying ridiculous salaries and generally speaking we’re in a period of early-stage capital glut.
The salaries are not ridiculous at all. It's the rate the market has decided those workers are worth. If a start up wants to compete they have to change something big because as it currently is I don't see it as rational at all. All the benefits you mention only happen if it works out for you. For nearly all people who try, it's not going to.
Most of the time, startup founders will have been successful elsewhere, or else they’d not have the ability to risk enough to do a startup. That’s why one avoids startups run by executives kids who are “creating” a track record.
> The reason why is the math changed. The gap between startup and tech giant is much larger now than it was in 2010. Also, unless you have insider access and join a very risky angel stage company, the likelihood of getting a good package that makes sense is low, very low. Also public companies have shown to get +3x gains, which can make the math even worse.
Unfortunately, nowadays, the only job titles at a startup that offer greater expected value than working at a tech giant are "Founder" and "Co-founder". The fraction-of-a-single-digit-percentage equity packages out there for Employee #1 adjusted for the risk of failure and the risk of getting diluted are often a very low number. And if you're Employee #10? Forget about it! I'd love take another crack at a startup but it only would possibly make risk-adjusted financial sense if I'm the founder.
I agree with all of the points raised, and share the same experiences. But this one:
> I might as well become a founder and start my own at that point
Great! So, how would you recruit your first 10 employees?
That is a big reason why I don't start my own company, because I couldn't really live with doing that.
My current armchair strategies:
* Compete in a way that big tech are not willing to do, which means distributed remote companies. A lot of people don't want to live in $3.5k/month rent SF or other tech centers for various reasons.
* What a lot of startups do, but RDF (reality distortion field) over with 'we only hire the best'. Don't hire the best. Either because they couldn't hack the big tech co interview, have visa issues, are very jr or have personality problems that make them unhirable in big tech cos.
* Go bootstrap, so no VC style business timelines.
* Give offers that basically make them pseudo-founders and match the expected value of bigco with the risk premium of startups. A hard pill to swallow when investors give a lot of money offer similar or smaller dilution terms effectively.
I've never gone out to get investment, so I don't know how much of the above is also blocked by investors in general.
Also crypto style 'startups' (ICO or just a completely new coin) have shown to deliver compared to normal SV startups, but most crypto companies do not deliver actual lasting value and are more pure speculation plays. A big crucial difference is they give crypto coins instead of stock, and those coins are liquid immediately. They are also not restricted to start in the USA.
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One of the things that keeps me away from startups is how disadvantaged employee equity is. Options become golden handcuffs when they have to be exercised to leave. Execs and investors are not in the same boat as employees due to preferred shares, liquidation preference, and other terms. None of these are disclosed to employees.
I've heard too many stories of start ups being sold where the founders cashed a big check and the employees didn't get anything.
To be clear, I'm not an expert in this, but the startup ecosystem needs to regain trust if it wants to hire more competitively.
I don’t understand... why is the goal to convince a bunch of naive youngsters to work for you at 1/10 their value? You shouldn’t exist unless you can pay competitively for the same people, end of story. Until then, don’t hire
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Hope that they are not as interested in financial optimization as you? Or just take people who can’t get into top paying bigcos? Or be a good salesman? Same as everybody else who is recruiting for startups these days
Handpick them out of your network and give them not just equity but real control as well. That for the first 5 or so. The others should come from your network and be handpicked by your handpicked first 5 employees. And equity, but obviously less than the first 5.
In my case my first employee, as soon as enough comes in to pay someone, is already recruited. Equity will be around 20%, with another 25 or so for the next couple of employees. That's without outside funding, doesn't seem to be necessary so. If it will be necessary that obviously changes.
Why do you think you need employees?
Yes, I am a little longer on the tooth than some others, but I would love for developers today to dictate the path..
Instead of having this idea: 'We want to work for the next big thing' - Which can be super attactive.
- Instead say: Hey, Im a developer, so I like this product, can I stand behind it.. Can I stand behind my work in it.
Even if you need a job badly, and you're taken on as a developer or someone contributing, I still believe, you should always be able to stand behind your work. Even if the product is shit.
So If you want to work for a startup, you need to really know the company, product and for sure the direction, not all of them are looking for a payout. Some of them are genuinely enjoying changing and hacking things up. - Embrace these - eve if they're not startups!
The best companies I've worked for where well established, but gave the freedom to innovate, play around, make mistakes, and build.
New startups for me always seem to just throw money expecting something good.. I've come to the idea that its 'Startup business ideas people'. and not "Developer playground that turned into a startup"
This assumes all entrepreneurs would want to work for or even be hired by a tech giant.
FAANG pay has gone through the roof while startup pay has not. I am not a software engineer, but I still work in a field rife with startups. I don’t even work at a FAANG, but I do work for the industry leader in my field and I’m making a safe $250k annually after 5 years.
I have gotten a few startup offers just to test the waters and I’m generally being offered $175k + $50k-$100k in stock options. Sounds OK if you expect the stock to grow 100X, but the problem is that even Series A funding these days pushes valuations into 8 or 9 figures. In my field, the total market is 10 figures. The valuations are going up so steeply that anyone but founders or employee 1 will be better off on the FAANG hampster wheel
I think you've hit the nail on the head as to what's causing this.
1: FAANG companies have had a great decade in terms of stock prices which means employee options are enormous in terms of dollar value (even if salaries aren't huge on their own necessarily).
2: VCs are pumping much more money into the ecosystem, which destroys the equity play for employees. When companies are raising $100m Series C rounds, it changes the cap table in a brutal way. Cap tables ultimately add up to 100% which means someone has to be diluted.
> FAANG pay has gone through the roof while startup pay has not
That's because FAANGs have been profitable and startups haven't, in general.
There's no rule of the universe saying startups have to be unprofitable.
A profitable startup can, in fact, pay through the roof.
Once again, I assert that the valuations are rising too high, too quickly, and so even if you are optimistic about profitability, you won't see a return that's worth leaving your golden beanbag chair at a FAANG. Why would I join a startup after an 8-9 figure Series A valuation for a 10-figure market? And yet, that's what my options were in my industry.
> A profitable startup can, in fact, pay through the roof.
But most startups don't become profitable, most startups fail.
IMO, you should basically assume that any stock options a startup offers you are worth zero. Decide if you want the offer based on the base pay and how interesting/stimulating the work is.
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It's a bit sad how the rest of the world don't put such reward for dev jobs.Even here, in London,I'd need to be a quant to pull such a salary.
The rest of the US does not pull such salaries. That's pretty exclusive Silicon Valley / Seattle.
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London is an expensive town, so I'm sorry to hear that.
But for others -- dont be too jealous, because a lot of that high salary is just a rent premium and ends up with landowners. Great if you are a landowner, but otherwise, you're mostly breaking even after taxes and rent unless the markets riso to make your stock grant in the money. (and well, if all the math is on stock anyway, you can work anywhere and just buy some options on FAANG and be done with it, which is what I do.)
There are cases where you can do well (e.g., live with 2+ roommates in a tiny apt like some friends do.) -- but then, it isn't a sustainable thing.
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$250k is new grad salary these days.
It's also why I'm so sad all the time!
There are two points that I think are very important but usually don't get the time of day in these discussions:
1. Your success is intricately tied to your network. Have you ever met someone who was ready to cut you a $72k check as a recruiting bonus to join a startup? (Referring to Garry Tan's story.) I will bet that the vast majority of people in the world never even came close to that kind of situation. My point isn't that any given individual has no hope of getting there, but rather that if you want to manufacture that situation for yourself, you do it by networking, not really risk taking.
2. Not everyone's priority is their careers. I wholly agree with encouraging young people to take risks, but for a lot of people that's not the right choice. Most people want to build their careers, but not everyone wants to make it personal the way you have to as a founder.
I worked on startups for my entire early career. I met a lot of interesting people, learned more than the equivalent big company career could have taught me, and I regret none of it. However, it also made me realize that the vast majority of startup people are also just grinding away, not necessarily "taking risks." My experiences with startups made me much more wary about working for a startup.
If you want an interesting life that might lead to money/power (but will definitely lead to interesting people and good stories), find an idea you love and start something. If you want a reliable path to lots of money, join a growth stage company or tech giant and grind your ass off.
Its not pessimism. People should just get to hear both sides, and know that VCs typically offer this advise because, first and foremost, it benefits the VCs.
The VC typically has enough money to be set for life, several times over. They bet on many companies simultaneously to diversify their own risk. Most companies will fail, and the employees will go down with the ship, but the VC only needs a handful of bets to pay out. None of this is the case for the employee, who bets all in on one company.
I started in 2006, here, just like you, reading Hacker News. I spent most of my day writing code. I learned on this site how to build things for other people, ship and release them, and yes, eventually build a company. I learned I wasn't meant to have a boss.
The only reason I became a VC is that I want to be here to help people who really should be start companies actually figure out that they can! People helped me a lot, more than I deserved.
The world is full of capital, and it's not going to the right people who can solve problems. I would like that to get better, and trying to do that with my own hands.
I’ve been active on HN almost as long as you. It’s not 2006 anymore. I would still follow the same career path based on what the world, HN and Silicon Valley were like in 2006. I wouldn’t based on 2020 world, HN and Silicon Valley. Would you?
Rents are astronomical. Startup math has worsened. FANG math has improved. In fact only the G in FANG even resembled the FANG of today. FANG has done a great job figuring out the innovator’s dilemma, making disruption in all their verticals much more challenging. The low-hanging fruit problems are gone so there aren’t really any two engineers in a garage problems that someone well capitalized can’t quickly copy. You now need generalist engineers, designers, AL/ML/DS engineers, hardware people, etc. on a founding team, meaning that you need to take on sizeable VC money before building IP equity and getting product market fit.
Startup risk is way way worse these days.
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> The world is full of capital, and it's not going to the right people who can solve problems.
Hmmmm, isn't being a VC kind of exacerbating this problem? The business model of being a VC is entirely based around moonshots, which means that you are pigeonholed into only making bets on certain types of founders that either (a) already have extremely high risk tolerance or (b) can be pushed by VCs to take risks beyond their personal risk tolerance.
Which makes your "right people" statement come off slightly disingenuous, since the VC strategy seems to disproportionately attract more Mark Zuckerbergs than Matt Mullenwegs (for category (a)) and often exploits founder naivety for the benefit of the VC (for category (b)). I'd argue that many if not most of the "right people" who can solve problems are in general not a good fit for seeking VC investment.
Do you have suggestions for other investments strategies that may be more compatible for potential founders that don't fall within these two categories? Have you thought about branching into those investment circles?
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Parent does not dispute this. You want what you want, i.e., selecting the people who are most capable to put the capital into good use.
But note that this game is not as much costly for you as the founder. Founder takes bigger risks in terms of their time and opportunity costs than you as a VC. You will probably find your successful pick in the other founder you fund and designate that other guy “the most capable”.
> The world is full of capital
This is one of the most entitled statements I've heard.
> The real substance is — how the fuck did he meet Peter Thiel at 23, and how can somebody recreate that?
I think things like this seem impossible when you’re thousands of miles away, but I believe the answer is to move to SF. It really works! Move here and rub shoulders with startup people and eventually you’ll be 1 degree of separation from Mark Zuckerberg.
I think I met Peter Thiel when I was around 21? And I sometimes play PUBG with the founder of del.icio.us, and Alexis Ohanian is a frequent customer of my business. I started out as a mediocre college drop out in Michigan. But to be honest while this is what a lot of people who move here chase for, they’re not really needed to make a business successful.
> Don’t work at startups to make $200M. Work at startups because you’ll work with people who have risk profiles that are much more likely to generate outsized returns as a group.
What's the point of that if those "group returns" are allocated almost entirely to the founders and the investors?
If you think it's not about the money, it's worth checking to see if you're being suckered by someone who realizes that it is about the money.
I generally recommend people think about it as two things: Learning or Earning.
If you are learning, you are getting something out of the situation even if it's not well paid. Don't stay there forever, or stay until you stop learning.
Then when it's time to earn: go work at a tech giant if you must, but also consider starting one yourself. Or if you can tell a startup is a rocket ship and have a chance to join, don't ask about whether you have a window seat, just do it, because those are often the best risk-adjusted returns you can get. Post-product-market-fit is an amazing time. (The trick is it is hard to tell if it's a rocket ship, of course.)
In the learn phase, I don't think it has to be about the money (though of course people have their individual needs). But in the earn phase, it is definitely about capturing the value you create.
Work at startups because you’ll work with people who have risk profiles that are much more likely to generate outsized returns as a group.
This is statistically not true. S&P 500 Index funds have outperformed VC's as a group for any reasonable time period.
I can imagine this to be true but do you have a source for that information?
https://www.vox.com/2014/9/14/6137473/venture-capital-return...
And related.
https://www.investopedia.com/articles/investing/030916/buffe...
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You’re making this (single startup) v. (single S&P company). That’s not how it works. Prove yourself at being an adept generalist and you’ll, over time, create access to the most ambitious people and companies.
I’m doing just the opposite. I’m comparing VC funds in the aggregate to stocks in the aggregate using VC funds returns as a proxy for startup returns.
I think that’s fair. By definition you can’t invest in bootstrapped “lifestyle companies” and they rarely have “outsized returns”.
There are a lot of “ambitious people” who have failed that you never hear about.
Stories like this are really a dime a dozen. Marc Andreesen and the founders of Tivoli both worked in the same IBM dept. I met Michael Dell when he was building systems in his dorm. So did a thousand other people. Anyone who got in early at Dell got ground into the pulp years before there was a huge payoff. Even those who survived had to wait 10 years. The trick is finding new tech where people are taking risks. Anybody who went to a NeXTWorld Expo could have partied with John Parry Barlow, Tevanian, Kawasaki, Draper, etc.
There are probably a thousand classmates of Larry, Sergey and Mark who are just "getting by" at $200K/year. Get out there, mingle, take risks, fail and look for the edges. That's where you'll find the famous people of 2025 or 2030.
This is a great reminder. I was impressed by the recent documentary "General Magic" by how much smart people seem to congregate around new ideas. The old Mac team was the same one trying to create the smartphone 10 years before it was possible, and it was that core of folks who ended up doing it at Apple and Android later anyway.
I saw the documentary and enjoyed it. But finding that company in 2019 seems harder. That said, I perhaps I'm not seeing it -- how do you find that company of today?
There are thousands of start-ups in their A round right now. A bit less in their B round. Which is going to be Apple of 2040? Which will be the Google of 2030? Which will be the Stripe of 2025?
It is like one of those quotes "if you purchased gold in 2002 and sold in 2009, you'd have a 400% return" -- works well when you know in hindsight that 2002 was a long-time low and 2009 a long-time high.
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I really want to believe you, because that means I could also end up rubbing shoulders with Thiel, Andreesen, and their crew at will.
But what you are saying seems to be cherry-picked examples, how does one do this without knowledge of the future?
We dont know who the future Andreesen will be, we dont know which one of thousands of groups/departments/companies they will work at, so where do you go work (assuming it were that easy to just choose a company+department+group at will.)
The population of innovation is a sliver of subset of the engineering/CS/AI community. UI-Urbana (Andreesen), Stanford (Page/Brin), Harvard (Zuck), etc, etc. That gets you down to a couple of 1000 people or so. The size of an American High School.
You don't have to see the future, you just have to know where those working on it are and meet enough of them. They're in places like a Supercompute booth or MIT poster session trying to tell you. They may not have The Big Idea yet, but talent tends to stand out.
Andreesen didn't randomly pick an IBM group. He picked one doing Unix distributed system management and virtualization 25 years ago. I didn't have foresight to make the same choice, it just seemed obviously interesting and there were only three major players in that space.
it pains me to read so many negative takes on startups. We’re actively training our young people to avoid taking risks
The maths has changed, substantially. As late as the 90’s if a startup was a success then all the early employees would make life-changing sums of money. Even the secretaries at Microsoft and Apple got equity. Nowadays all the value is captured by founders and VC’s - by spinning the myths from the 90’s and ruthlessly exploiting any workers young and naive enough to fall for it.
I think many people are just burnt out by false early stage startup promises and all of the grifting that takes place in this industry. I wouldn’t think this sort of reception would have happened in 2012.
When I was 24 I was a broke college kid who couldn't get a real job and just had his first child. Then the invasion of Iraq happened and I was deployed to Kuwait. About 50 of us came over together and they basically separated the smart people from the rest of us. The smart people were given engineering or analytics positions. I was put on operations which was considered a dumb person's job.
Some context is in order. This unit was/is the 2-star command that runs communications for CENTCOM. We were supporting a network of around 270,000 users at that time due to the surge into Iraq in 2004 and the stand up of the transitional government. That is about the size of Bank of America, the entire company with all its branch locations and total employees. I was the night tech lead of operations of communications over all of it. That was my first time in management as a young staff sergeant. This was an incredible eye-opener for me, but its not a mark of success. I didn't get paid more because of the severity of my decisions or the size of the organization.
Now I'm just some software developer at a big corporate company assigned to a team that struggles to get copy/paste right. When I want to work on software that's vaguely interesting I contribute to open source.
My reflection from all of this is that people often evaluate themselves, and their perspectives of success, using faulty metrics. If you were a fresh 2 week hire on Instagram before they were gobbled up by Facebook are you suddenly a successful software genius due to a magical windfall? In my world as a front-end developer people often consider themselves experts and pat themselves on the back for stringing a few statements together like magic glue over a monster framework that they don't really need but does all the work for them. I don't really consider that a mark of success either and am often a social pariah as a result. If you really, I mean this seriously, really wanted to be rich and financially super successful then why are you spending your time writing software?
For me, personally, I measure success in the problems I solve that other people find value in, which is a large motivation for my contributions to open source. It isn't a number that comes with bragging rights or some form of vanity. Instead, its just something to do or take pride in.
It was insane that I got to meet Peter Thiel at that point in his career. One of the subtle things is that he wasn't the demigod he is today. He was a very well respected founder who had a great exit. You're right to point out it's a social lottery. Dumb luck is a big part of success.
I will definitely make more content about building your network the right way. I think if you consistently try to spend time with people who make things you think are awesome, the score seems to take care of itself.
Totally agree you shouldn't work at a startup if money is the only consideration.
> The real substance is — how the fuck did he meet Peter Thiel at 23, and how can somebody recreate that?
He kinda answers that fairly early on:
"I'd just graduated in 2003, and my friends were starting a company with Peter Thiel. They flew me down to have dinner with Peter."
So to get rich, all you need to do is come from enough privilege that you graduate well connected with rich friends...
Sounds like your story supports that too - if you didn't connect with rich people in school, meeting (and becoming friends with them) at startups is a reasonable second alternative.
Where did he say that his friends were rich?
> The pessimism in this thread really bothers me.
I don’t recommend startups because of personal experiences. I’ve personally lost more working for startups (in terms of unpaid salaries, lower salaries and impact on health) than I did running my own startups. Startups rarely have good development practices, are often always in crunch mode and often have bad work-life balance.
Some people thrive in that environment, sure. Personally I don’t hate the environment but I can’t stick it too long either so I’ve job hopped a bit. But when you add that high-stress-low-discipline (discipline in terms of development practices) environment together with low salaries, false promises based on worthless stock, high founder ego and a high rate of startup failure, I don’t think it’s a good deal for most people, who would be better off in a stable balanced low (comparatively) stress well paying big company instead.
I hate to say it since I’ve started startups myself and it makes finding employees hard, but I think the people who really thrive in that environment are relatively few.
Sure it can be rewarding, you can make great connections and learn a lot but I’ve found big companies can be all of the same things, although the learning is usually deep in big companies and wide in startups, but a medium sized (ie established startup) company might be a good middle ground. Maybe everyone should experience it once though and then move on. I also will likely make another attempt at a startup myself too, but I do feel that there’s a difference when you own the thing.
This is all very inconsistent. OP says in big corps you need politics to get (new) shit done. But building your people network is politics, regardless where you work. It is certainly easier if you are employee number five or ten, but it still distracts you from your actual work.
I can't say it another way but the very american person cult is worrying. Thiel any many other tech icons are just icons because they are billionaires and maybe populists. Having a network of those is surely a way to get funding. But that again beings politics on the table and more importantly implies that you can only be successful if you have connections to the billionaires club. It lacks a great deal of imagination that only startups can survive with the direct support of the big guys.
I can’t stand startups. Low pay, long hours, loys of aggravation and often socially toxic environments.
The social toxicity is a big one for me. I have always struggled in this area and it makes things SO much harder outside of work.
In what sense? Also, would insisting on a 35 hours work week fly badly at startups?
Maybe startups would be more desirable alternatives if they gave RSUs instead of stock options, or at the very least have an exercise period of 7+ years instead of 3 months, or not be forced to pay the cash equivalent of taxes just for exercising...
As it stands now, startups are just places that offer half the salary compared to public companies. Working for half what you could be making is a large ask of almost anyone.
A startup won't solve climate change and contributes to another global problem - inequality.
If we want these problem to be solved we should rather encourage people to be active politically and figure out how to tax carbon emissions worldwide and make sure the tide actually raises all boats.
This is very insightful. Thank you.
One insight you may not be considering is that the profile of a CS graduate has changed significantly. A tech job is now full of prestige and social status. Even more so if that tech job is at a big brand name.
A much larger portion of young people are going into tech purely for the income and the prestige. And the preferences in this thread at the end of 2019 reflects that shift. Your average person going into tech in 2019 is very different than your average person going into tech in 2005 or even 2010.
The people who think like you still exist. Just that a much larger group has poured in and made them less obvious.
As tech becomes infused into everybody's daily experience, a certain amount of conservatism is not only to be expected, but probably wise. The "move fast and break things" startup approach isn't necessarily optimal in all facets of life, and a lot of the low-hanging fruit of "possible significant improvement if we succeed, low societal consequences if we screw up" is plucked.
I absolutely love love love this..
I'm not sure how many more people I will send this on to, you haven't said something for the first time, but you laid it out in a way as if i was speaking to someone.
Thanks, I appreciate it. I've been somewhat there and I get that not everyone understands, but you really speak what I believe a lot of normal developers/designers/engineers are thinking.. Much love.
Just based on your rebuttal, background knowledge and common sense alone, please write up an article, even if you only flesh out the points you made. I agree with as much as I can relate to, but the rest begs for more story!
Thanks for the feedback. This thread has me thinking about a blog post. I don’t write as much as I’d like to because I feel as though I’m still testing my worldview / hypotheses, and I don’t like delivering half-assed products. :)
Thanks! There are ways to work on ideas without sacrificing one's own life. And this can involve working in a small group that people will call a startup. There is no reason to enter into abusive relationships or sacrifice being paid, IMO. I also think though some tech salaries are really high and an ok salary from a startup that keeps you alive + lets you work on your own product vs. being told what to do is really nice. I mean if more people did that we may even have less of an income disparity between tech and all other jobs in any given geographical region.
> The pessimism in this thread really bothers me.
I wouldn't worry about it. Every venture I've started, successful and failures, came with everyone telling me I had no chance.
I honestly find it highly unlikely that a startup is going to address climate change in any meaningful way.
If the pessimism in this thread bothers you, imagine how much your woefully out of touch survivorship bias and bothers everyone else in this thread?
One of the top comments that responds to your post tells you that the math changed. This is true. The fact that neither you nor Garry talk about the concrete specifics of this means that you're either unaware of it, or worse, intentionally sweeping over it.
You really think that what is "actively training our young people to avoid taking risks" is all the "negative takes" on startups? What about the changed exit environment where companies are staying private longer and equity shares are no longer outcompeting public company compensation? Poor or inexistant options for liquidating large holdings of early company equity? Liquidation preferences, dilutions, and founder enrichment allowing grey-hat founders to self-enrich at the expense of their employees? How about the increased ability of large companies to compete with startups and turn their products into mere features? Ballooning student loan debt, rampant social inequality, a collapsing middle class labor market and automation?
You know what I think is actually happening, based on the interviews I've given working at various startups where we lose great candidates to more established companies? I think candidates are getting smarter. If they're smart enough to make outsized impacts at startups, they're smart enough to make outsized impacts at large corporations and make sure they get commensurate compensation. They know that they have better access to a tried and true organizational structure around the software development and revenue line development lifecycle.
A lot of this completely changes if you're the founder. That's probably the one perspective where the ownership structure is so radically different and more advantageous that it's very much worth it over being a mid level manager or executive doing the same thing at a larger company, if you can pull it off. But if you're not a founder at a company any earlier than late series B or C, you're generally taking a proportional risk for a much less proportional reward if you join as an employee -- not just financially, but organizationally and directionally (in career trajectory).
And, if there's one thing I can't stand more than anything, it's when founders wear rose-colored goggles and can't admit this truth. Not implying you're doing this, but I'd advise anyone in danger of this to never drink the kool-aid you sell to the point where your reality-distortion field obscures your inability to see the very real reasons why people make (and remain happy with) these decisions, just because it threatens your life choices and identity.
I appreciate this, and am trying to take this to heart.
But it is also possible to survive. And if you do that, you don't merely survive, you thrive— that's what product market fit looks like. I've been lucky to see it dozen of times first hand, and it's nothing short of magical.
When founders and teams pursue something without product market fit, it's a high cost to pay and a terrible outcome for most everyone. This is also absolutely true.
Startups are not for everyone! I appreciate your feedback and it resonates with me.
>> But it is also possible to survive.
I think there is a big gap in how different people see this. You are right, it is possible to survive. It is also possible to fail. For some people, that is fine -- they can call up an uncle, or a friend (Thiel) and land another job quickly that pays good medical benefits.
For others, an 20/80, or even 50/50 or 80/20 survive/fail just does not cut it. Perhaps they have crushing student loans. Perhaps they have no parents to fall back upon if things go south. Perhaps they have visa issues. Perhaps they have a sick parent to take care of (my case.)
I admire your ambition (and envy it.) I hope people who have social safety nets realize it though. Because not everyone does.
It reminds me of a fellow undergraduate Senior who looked down upon me for going to work on Wall Street while he did the more pure thing of going for the Peace Corps. I asked -- so how do you land a job when you're done with the 2yrs commitment? He said his uncle was going to hook him up at a hedge fund. Nice, if you can swing that. Me? I have no uncles at hedge funds, so the on-campus recruiting super-day was my one and only shot. I dont think that makes my choice less pure, it is just one of relative necessity.
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> When founders and teams pursue something without product market fit
How do you know if you have product market fit until you pursue something though? The standard advice on this is completely contradictory:
E.g. on the one hand, you have the advice that adding more features will never result in product market fit, because most of the features will be too far down the funnel to move the needle and they won't ever solve whatever the core problem that's making the thing not successful in the first place.
On the other hand, you have the advice that you shouldn't pursue growth until you have good retention, which basically implies that you should keep working on the product almost indefinitely even without product market fit.
On a per employee basis, the overall likelihood adjusted expected value and liquidity of most startup shares generally underperforms the market, almost to zero if biased towards liquid earnings like it should be. If you end up the former employee of one of those startups (which is pretty common), you end up in a place where even if the company is booming 5, 10 years later, no liquidity event has happened nor is in sight for employees. If you ask if you could give someone $9-19M liquid evenly split over the next two decades or several tranches of $1-100M potentially forever illiquid stock and $2M liquid, which one do you think they would pick and should pick? Even if the max payout is lower, the mean payout is orders of magnitudes higher and creates access to bootstrapping. I'm not going to say you made the wrong one for obvious reasons, but do you think it's smart to attach your lifetime net worth to such illiquid assets?
Garry, you entitled your blog post "Working for Microsoft cost me $200 million" but you neglected to mention that you had debt you were paying off. For many other people, that blog post could easily have been called "Why working at startups instead of Microsoft cost me $20M and left me in the debt I started in". That debt neatly encapsulates one of the societal problems with student loan debt. It creates a caste system. The less generational wealth you are born into, the more your stepwise freedom in any direction is piece by piece restricted. You can't make choices that people born just a bit wealthier than you could make because they're cost step functions.
It would indeed have been a poor decision of you to take that Palantir job out of college with your financial situation. That smart decision would have been to keep pursuing the traditional big company engineering promotional path. Any action you take that deviates from that path towards a sustained lower liquid compensation on a year over year basis is one where you're taking a hit to liquidity by paying opportunity cost to make a default-illiquid investment (or multiple of them over time). If you combine all the post-tax income you've lost with the compounding interest it could have made, it's substantial on a career-long basis.
I would advise folks to work at startups for the same reason I'd advise them to work at a fashion magazine or work at a record label intern. It still has some cachet as culturally creative labor, and you can certainly make a living in the industry, but it's not a great place to stay long-term unless you're independently wealthy, are running the show, or you found a firm cleanly in hypergrowth and manage to grow with it. The antics and financial shenanigans take a toll on you. You can't rely on it as a sane vehicle to consistently build wealth, because it's structured like a swap heavily in favor of the company's investors, and you're footing the bill with your labor in exchange for an IOU that the company will IPO.
Tens or hundreds of millions of extra income and RSUs from their big company paycheck could be going straight into their nest egg and compounding over time, making it viable for them to make a major life decision without hardship. It's reckless and irresponsible to recommend others to engage in without a significant buffer of pre-existing wealth, and with the expectation that (like many other kinds of investing) all of participation is at risk of full loss.
The reason I haven’t responded to the math changing is because it’s Christmastime and I’m spending time with family. Some of the responses to my post require a much more thoughtful answer than I can muster while at the gym between meeting family members.
Be patient. I’ll respond to the other post if you wait.
Please do. I honestly want to hear. I am debating whether to join a startup again for my next job or just crank Leetcode and go FAANG and stay for the rest of my life there.
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It sounds a little bit like perhaps your original post required a more thoughtful answer than you could muster while at the gym. Perhaps it could have used a bit more patience as well?
Sure. Feel free to respond. I think everyone would benefit from you contributing more to the discussion, especially if your original post didn't fully clarify your position.
This is a terrible comment. "Be patient" is a non-response. You made a comment, and got a very good response as to why your comment is missing nuances that might be the real reason for a change that you're attributing to something else.
Especially in a forum like this one with no notifications, Be Patient is basically saying STFU.
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It's just the reversion-to-the-mean effect described elsewhere[0]. It seems bothersome that on a startup news website run by an incubator, the view is that startups aren't a good idea. However, that's only because HN is now what /r/programming+technology+apple+google was, not what HN was. It's not really a startup news website. So I wouldn't worry too much. The people in startups are probably in real-world groups, and the networks are tighter.
I suppose the real problem is that some genuine startup-oriented personality may be dissuaded from working on one, but perhaps the cultural force against them is in the range where it should dissuade someone who isn't more wholly convinced that they know a truth that others do not believe in.
I think it may be counter-productive to attempt to convince people who prefer aiming for the safe money. I think that while attempting to draw a line hits the Sorites paradox really fast, there is quite clearly a difference between someone with your world-view and someone who runs the math on total compensation alone. I think the person with the latter view will not recreate the OP experience because all the choices are very non-independent. The same person who'll take the low-variance high-expected-value out of school will do the same the next time they're faced with a choice and again and again and again ad inf. They provide the selective pressure of optimizing for 'exploit' (in the explore/exploit sense) while the startup-type folks provide the selective pressure of predation.
0: For instance in the geeks/mops/sociopaths view https://meaningness.com/geeks-mops-sociopaths
It may also be that the big pile of folks here with experience in startups have done the math and can argue that working a startup isn't the best way to maximize the outcome of your time.
HN doesn't just have to be a "startups are the best" echo chamber.
I would be surprised if your hypothetical situation more closely models reality than mine. It's possible. I just don't think it's likely.
I would revise my position if more successful founders argue that it isn't worth it and I'd mildly revise it if more failed founders argue that it isn't worth it anymore.
The discussion isn't against startups. It's for giving employees more incentives to join startups, as opposed to repeating the same hoary cliches. The tech industry and cost of living have simply changed from a decade ago. Incentives must increase accordingly.
thank you, this was the comment I was looking for
>We’re actively training our young people to avoid taking risks, and it’s going to fuck us
I think the kind of people with the balls (or stupidity) to join/found a startup tend to be the kind of people who don't listen to what everyone else is doing anyway. This might have a sort of positive selection bias: you need a minimum amount of risk tolerance to succeed in a venture.
>Work at startups because you’ll work with people who have risk profiles that are much more likely to generate outsized returns as a group. You’ll have the opportunity to join or create a community of high-performing folks that, in aggregate, outperforms anything you can do on your own. Maybe you’ll be the CEO one day, maybe not, but no matter what you are very likely to come out ahead if you apply yourself.
After failing with a personal venture, I recently joined a small startup and I can offer an similar perspective: working here is amazing for a generalist because once your coworkers trust you, you have more freedom than you could ever ask for, and your personal decisions have compounding effects on the direction of the product that you're building. There is zero bureaucracy. This is a dangerous place which requires a knack for hiring the right kind of independent thinkers and doers who do not need hand holding and tend to have good understanding of large systems - but when the org is small and the team is well selected, if you're building something truly new and useful to society (read: not adtech or social networking) the feeling is magical and being enthusiastic about your job does wonders for life satisfaction.
I know this is a temporary state that will disappear if we fail or grow into a midsize company, so I'm trying to savor it while it lasts. Also helps to have no family so that you can crunch when necessary without hesitation.
> right kind of independent thinkers and doers who do not need hand holding and tend to have good understanding of large systems
lucky you. i’m in a startup where the very large majority of the eng team is here with their first job out of school. and they have the same latitude you are describing. i’ve found that to be typical these days.
its amazing how every piece of this comment is either referencing money, social connections or status. it reads like you've forgotten that whats significant about a job is the work itself, and what it does. well, for me anyways.
> The pessimism in this thread really bothers me.
It's the demographics. The HN population skews extremely old and older people are generally more pessimistic, cynical and risk averse. Also, there is a large amount of traditional media workers on HN and they, for obvious reasons, are not fans of the tech industry since the tech industry is eating their lunch.
Don't let the thread get you down. It's a skewed and biased representation that isn't based on the real world.
"Extremely old" compared to the general population? Are you saying HN mostly consists of retired Cobol programmers?
I'm going to be cynical and say, maybe >32 was the cut-off point in the OP's message.
"OK, Boomer."
There's something to be said about assuming a that very large volume of mostly-anonymous messages on the Internet can be deteremined by the OP to be old. That sounds like ... something a young person might say.
Is there some kind of demographic data for HN or is this based on your impression from comments? I wouldn't expect a large amount of traditional media workers.
you say pessimism I say the experience and better insight how life really works YMMW