Comment by sdrinf
6 years ago
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?
6 years ago
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.
Founders should be willing to give a lot more equity to the first employees. I don’t get the logic of not doing this. You want your engineers to feel as if they have ownership in the equity that you’re building. It’s such an easy way to keep engineers engaged and productive that it baffles my mind that it’s not done more widely.
I hate working for BigTech. Startups expect too much and compensate very little. The sweet spot for me has been medium sized public companies that offer great compensation but need solid engineering to grow their market share.
We usually encourage folks to give at least 10% of the equity to the first 10 employees. That's what Stripe did and it worked well.
That number is going up over time, so I can report at least a little bit of improvement, though certainly not fast enough.
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It's the math again. Go do a spreadsheet and simulate a company as it grows and you see treating your first 10 employees in line with big tech expected value outcomes is a really, really big hit.
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> Go bootstrap, so no VC style business timelines.
This is easier to do when you have some money on hand. Which is why working at a well-compensated job if you are not from a wealthy background is quite important in your early career. Also its not that bad a strategy. I mean Qualtrics pulled it off quite well.
We'll be taking some of this approach at our new co, bootstrapped, with very generous share grants for the first employees. We're doing partially remote, but I think full remote might make it too hard to get the core team as tight knit as it needs to be. I don't think it's a good substitute for a few people sitting in a room yet, but I could certainly be wrong about that.
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
The fact is that there are a bunch of younger programmers willing to work for a startup regardless of the comp. Founders naturally try to exploit this.
They could be taught ethics in college or find that their peers actually called them out for it? Heh.
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?