Comment by yowlingcat
6 years ago
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.
Yeah, I know. I had this problem too. I had $40K in credit card debt and $40K in student loans, when I got that offer. I probably should have mentioned that too. Having debt is a huge crushing weight and definitely prevents you from taking the risks needed to capitalize on opportunity given you.
It really did, for me, as well.
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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.
Unless you’re 80, you’re not going to spend the rest of your life at Facebook or Google. Imagine someone in 2004 saying they’re going to work the rest of their life at MySpace or Yahoo.
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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.
"Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith."
https://news.ycombinator.com/newsguidelines.html
In a heated discussion thread we forget that web forums and bulletin boards are not the best place for realtime conversations.
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The poster I replied to here created a straw man argument based on my lack of response to another comment. I didn’t think that was fair considering my bandwidth limitations, so I decided it would be best to set expectations. My response to the “math changing” comment has now been added above.
Do not assume that the lack of response of somebody else implies anything aside from the fact that they didn’t respond. They could agree, disagree, or maybe they haven’t even read or thought about it yet — and maybe they never will because something else distracts them.
I think discussions tend to be the most productive if we assume everybody has the best intentions. :)
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