Big IPO, Tiny Payout for Many Startup Workers
bloomberg.com
bloomberg.com
It's time for the startup community to reevaluate the idea that your early employees (say pre 50) should get 0.05% of the company when they take the monetary risk of working for a startup. With such small ownership, it is starting to become a sucker bet.
So for those coming here, keep your eyes open and know that right now it's only founders, management and investors making out and if you are not looking to hit the lottery, you'll do much better working at a bigger company, maxing out that 401k and investing the rest. Or go for lottery but be a founder -- sure, get the experience of working at a startup but keep a careful eye on your personal burn rate (in regards to your potential earnings). And if you're not learning and you still want to learn more, make the move to the next startup. The options just aren't worth the wait.
How many users does your code serve?
Here lemme show you my AbstractFactoryOfFactoryInterfaceImpl class.
<duck and cover behind my TomEE server and continues to simplify the rest of the code.>
Java fixed the xml nightmare it had become, but the development world is about ten year behind in adoption
The thing I'm working on recently has cascading xml as configuration, the apoteosis of previous generation madness
As for people with wealth, yes, there are those that trade but there are also those that create wealth by adding value. All of those goods traded by others have to come from somewhere.
In the first season of the Apprentice the two teams had to renovate and flip an apartment. One team kept their apartment a three bedroom and the other team took out a wall and made theirs a two bedroom. The two bedroom apartment was a lot nicer but it was also worth less than the three bedroom and they ended up in the boardroom with someone getting fired. This is another example of something being higher quality but not necessarily higher value.
Sure, there are a lot of people who create wealth by adding value, but the whole point of OP's article on Bloomberg is that the people who are adding value are not getting the share of that wealth. While there are lots of people earning $127,000 a year and getting $350,000 a year or two after their startup's IPO, they are not making the type of wealth people with 10s and 100s of million dollars are. Do you think Larry Page and Sergey Brin are writing code right now? Probably not. Most likely they are looking for companies for sale that are under valued or added to the Alphabet family will increase the value. I was just pointing out that the state of mind of people making deals when they wake up in the morning isn't motivated by the money, they are motivated by making the the best deal and money is just a side effect. Fundamentally, they are allocating resources, they might not necessarily be creating value. They value is already present in the product or company, they just gain an edge at the game when they understand that product or company is, interestingly enough, under valued.
If people are not passionate about what they are doing, they are just wasting their time. And, my experience is people who are worth 10s and 100s of millions of dollars are passionate about making deals because that is all they do all day. People shouldn't write code because it will make them a millionaire. If people really want to be a millionaire they should make deals, even then they still have to be passionate about that game.
It's far more complicated than just startup or big company.
All in all, the Silicon Valley we-can-all-be-unicorns model is a pretty raw deal. So what if as an early employee you make $350,000 at the IPO? That's what, a down payment for a house in the Bay Area? Just don't let yourself get priced out by millionaires getting priced out by billionaires. And considering that any early employee is expected to pretty much always be working, that's basically overtime, with a tip.
People only put up with this pathetic excuse for an American Dream because they allow it.
Is that worth it?
From my curiosity as a late-20s guy not living in the US: For what reasons is a single man in the Valley not getting laid?
When I heard that, I knew Silicon Valley had nothing left for me, and I've never looked back.
EDIT: If you mean where I left for, then I went back home, Ithaca NY. Aside from it being much smaller and having the shittiest weather in the United States, it's an excellent place to live. Short commute, super friendly people, good local organic food, and it's not constantly in a drought. In fact, it is the safest place in the US from the effects of climate change and it's insulated from pretty much every natural disaster imaginable. It also has a minuscule cost of living compared to coastal cities and there's much, much more space than you'll ever get in a big city.
Just be prepared for cloud coverage so thick you could go weeks without seeing the sun.
I moved here single. I dated a lot. I'm now married. I'm by no means a player.
I live in a more popular area of SF where young people live and go out all nights of the week. Tech people are not at a disadvantage. Don't believe the (bad) hype and play into stereotypes.
If you're young, fabulous, doing well financially, but striking out with dates, don't blame it on your job or location. Dating is a contact sport. The more contacts you make, the better off you are.
My results have differed sharply from yours.
And now I need an anonymous posting button for HN. :)
That's why I signed up for this alt ;)
A lot of other replies have mentioned the ratio. Did you find this to be an issue?
No woman is going to sleep with an average dude making $150,000 when she can sleep with the better looking, smarter guy down the street sitting on $8 million in Dropbox stock.
So I can only conclude that not only do you and I exist in different social circles, but that your workplace must be significantly different from mine in order for us to reach such different conclusions.
It's very common for guys to feel judged on very shallow grounds. Nevermind the "eww, a techie" reaction.
My wife grew up in Silicon Valley but never worked in tech. On our first date, I casually mentioned that I worked on a couple of the Google Doodles. She was like "What are those?" On a later date, I mentioned that I'd found myself standing in front of Larry Page in the lunch line, and she was like "Who's Larry Page?"
Sigh. When casual name-dropping doesn't work, we're forced to rely on our personalities.
The interesting thing is that I can recall thinking that dating worked liked the grandparent post thinks it works only a few short years ago. Boy did I have a lot to learn. Most women don't actually care how much their partner makes beyond having some basic financial security. They care about feelings, and viewpoints, and hobbies, and values, and empathy, and all the things that make a person a person and not just an investment vehicle.
In most of the world (including in the US) a large proportion of 23-year-old men don't have basic financial security. So having basic financial security would be a key differentiator. In SV, it's not.
> They care about feelings, and viewpoints, and hobbies, and values, and empathy, and all the things that make a person a person and not just an investment vehicle.
Absolutely. But there's nothing about being rich that means you have bad feelings, negative viewpoints, or lack of hobbies, values and empathy. If anything, the richer you are the more interesting and diverse your stories and experiences will be and the more developed your hobbies and viewpoints.
It's also more difficult to be confident when you're surrounded by people richer and more successful than you day-in and day-out.
I'm referring to what you focus on, though. If you focus on being rich and are not, then by your own value system, you're a failure. If you focus on being kind - or well-rounded, or athletic, or outdoorsy, or eco-friendly - and are not rich, then who cares? By the standards that you've chosen to live your life, you're a success.
I think you might find that people have a surprising variation in values if you don't judge them - or yourself - by the same yardstick. Dating is all about finding the person whose values align with yours, not who is most successful on some arbitrary metric. Think in terms of direction, not magnitude.
In other parts of the world, you eventually get a return on that investment by standing out from the other 23-year-old men who might be more attractive or confident but are less skilled/intelligent, work menial low-paying jobs, and have no future. In SV, there are so many 23-year-old guys all around you who are more successful in their studies and careers than you are that you now have to find additional time on top of your 60h work weeks to differentiate yourself in some other way.
It's not impossible, of course, but it's very much playing the game on 'hard mode' compared to other cities I've lived and dated in.
Disclaimer: I am a techie with very artsy hobbies.
> Those long nights,
What nerd hasn't spent all night building something cool? I've /never/ been asked to stay at the office after hours and it's not an expectation that any of the big tech firms have.
> long commutes
No one gives a crap when you get in. I usually leave for work at like 10 AM and complete my 30 mile commute in about 40 minutes -- it's no big deal.
> (if you don't live a block away),
I used to have a shorter commute but I think SF is more fun and it's not that big of a deal...
> they can all wear you down.
I suppose if they were as you've stated them, but they're not.
> You're pressured into working more
You're really not. Also, we get like 21 full days of PTO, and I'm eligible for my sabbatical in another 6 months, which is just an additional month of free PTO.
> and you have less time to spend with friends and family
In addition to the fact that I get to hang out with friends pretty much whenever I want (no one cares about the 9-5 thing), I'm able to use my generous PTO to go visit family, which I probably do 3-4 times a year (honestly, love my family, but more would be too much)
> (work IS your friends and family! :')),
I get to work with a lot of smart people who I deeply respect and do consider to be exceptional friends. I also have friends who work at different tech companies and even outside of tech, and I get them the same was as anybody else, hanging out.
> less time for dating
We've got plenty of time for dating. My friends are going on dates all the time actually. Dinner, Drinks, Hiking... they're all totally possible thing to do.
> (and let's be honest: if you're a single man in the Valley, you're not getting laid).
Not going to dignify this with a response.
> It just sucks.
You are incorrect
> Is that worth it?
Beyond the shadow of a doubt :)
That's assuming that you somehow find time amidst 100-hour weeks to get a mate.
On the other hand if you want to work at a startup because of the lifestyle or mission then don’t expect to make any (well not much) money if the company succeeds. The sooner everyone wakes up to this reality the better.
Most people are not rich, even software developers. Only the rich can be angel investors, because it's illegal to issue securities to non-accredited investors. Being an accredited investor requires a net worth of $1M excluding your house, or a steady job with $200K/year pay ($300K if married), and 2 years at that pay level before you can start investing. There's no net worth or income requirement to work at a startup and get equity that way.
Joining a second rate start up is even a worse idea than working for an established company - you will end up with less pay and worthless options.
Edit. Wow this comment hit a nerve with some people here.
I was more making the point that it is not wise to turn down a good salary with an established company for the tiny level of equity that you will end up with at a startup and if the startup is not perceived by the investor community as being the next unicorn then this equity will be worthless.
Devs in the 20-40 employee number were probably making out with $4-5Million
Of course things were less institutionalized and procedural than they are now.
Now I think the balance has swayed in favor of the founders/investors much more than it used to be but thats just anecdotal
The same ought to be true of start-ups. Sure, you can make more expected money working at Facebook redesigning their like button, or whatever. But, at a start-up, you can have a huge hand in building something much bigger than yourself from scratch. You get to be a jack-of-all-trades, learning a bit of everything, making something hundreds of thousands of people will use go 0 to 1. You get to be incredibly important to the company and have a say in just about every decision if you want it. That role is still romantic to me, and that's why I've worked and continue to work at start-ups. I know I can make more money somewhere else. I don't care. And I want to work with other people who don't care either. If your motivation is just money, there are plenty of big faceless companies doing fun stuff like ad-tech that will be happy to pay you, and you'll be doing your start-up coworkers a favor by leaving.
It sounds like Box dude from the story had a very cool experience building a company from 50 people to 1,000. I'm sorry all he thinks he got out of it are his stock options.
But what are you going to do with that experience you have gained. To go back to the romance option, if you can't get someone else into the bed, romance can become very sour.
I too see that the Box guy got more value than just the earnings on the options. But that more value is largely theoretical unless he can turn around and put what he learned into practice (and get compensated for it).
An interesting example is Kingston, a memory company. In 1996, after the bulk of the company was bought by SoftBank, Kingston's founders gave $100m in bonuses to the 550 employees. It's a shame that doesn't happen more.
But what possible argument can be made that if/when the company DOES mint billionaires and multimillionaires, it should only be the two or three founders and the investors that keep up to 95% of the haul?
Your point would be appropriate if the problem was people not joining companies at all because no one would make money off them. Not the case. A few people will make money and lots of it. It's time now for employees to demand much higher equity.
Now I know better as a software engineer to avoid immature companies like the plague unless they're willing to pay very close to market value. That stock is worth zilch with the way the VC investment game is typically played currently, and founders are fully willing to abuse the naive assumption by those in the trenches that employees will come to riches by working hard and overcoming bad executive/management decisions to save the day.
Founders need to be more honest about employee compensation and more willing to compensate more in line with the market if they want true talent. A $160k-180k offer (or typically less at many cheap startups - a YC company tried to go low with a $120k offer in SF within the past year) with uncertain value of stock doesn't really compare favorably to $250k base + performance bonuses + stock options at a Google or Facebook (or $375k cash/immediately vested stock from Netflix, or in one case I turned down, $170k base + various bonuses for typically $350k-400k compensation). The terms are very unfavorable to employees currently, especially the highly skilled ones, who are also more likely to be savvy.
Cost of living must be completely astronomical, or people have really expensive tastes. That kind of salary would be enough, after taxes, for me to work five years, buy a home, cash on the barrelhead, invest the rest, and retire to live off the dividends the rest of my life.
I could live like a king on $150k per year. I don't know what I would spend that kind of money on.
5x$4-$15 for commuting during the week 2x$15 per weekend for transportation on the weekend ---- $200 for communting per month
$3000 rent per month $150 cell phone bill per month $150 cable/internet bill per month $50 electric/gas bill per month ---- $3350+ per month in housing/utilities
=
$4750 per month in living expenses...not including entertainment, car/insurance, and a host of other things. If you're young you probably split the housing costs, so it comes down a little, but you're probably spending at least $3k a month just to live and get to work around SF.
I ended up taking an offer less than half as much as the top end, but mostly for non-monetary reasons. I came to the conclusion that money wasn't vitally important to me beyond a healthy amount to live comfortably & pay off my debts, and I wanted the flexibility to leave work early, not live in constant pressure to have stories done yesterday, and in general live a more normal life with actual vacation I could take without guilt. It also gave me more freedom to explore software development at my own desire, as there is always more to learn and improve on.
I may start a company in the future, or enter the grind again, but for now I'm happier spending time with friends and enjoying the fruits of my labor. I'm a bit wary of immature startups now though, since many of them are their own brand of mental torture due to large oversights in managing people capital.
You argue for the value of passion, but you're also inadvertently siding with people who have done nothing to contribute to the product aside from spreading risk by investing in it.
After the founder who went a year getting paid negative money, the investor putting $1m in their dream and valuing it at $5m-$10m is taking the next highest amount of risk, and I have no problem with the reward they get in exchange.
> and you'll be doing your start-up coworkers a favor by leaving
So people fighting for what they are worth is detrimental to coworkers now? Maybe you and your coworkers need a reality check if you feel resentment towards one of your coworkers fighting for fair compensation.
And this was as a RN at a hospital with a strong union presence. Hospitals today do everything they can to hire as few RNs as possible, because they draw a higher salary than LPNs and medical assistants. And the better nursing programs out there are extremely expensive, resulting in the same kind of debt load that other professional careers have started having recently.
Teachers certainly don't do their work for money, but then again if their school has a couple of really good years their school superintendent doesn't walk away with half a billion dollars while the teacher still gets shitty pay and maybe a $500 Christmas bonus.
If you really want to change the world for the better volunteer, do charity work, if you want a big say in direction of a project then work with friends on side projects or contribute to important open source projects.
But working for people who stand to get (even more) wealthy from your well-below-market-rate work while you're unlikely to recoup basic opportunity costs is just being a sucker. There's nothing noble in that.
He had said - "Yes!"
See: https://news.ycombinator.com/item?id=10361451
I hope that any under-the-market-salary investments from employees would start getting the same treatment as any other investors money (e.g. dilution cap, not vesting cliff).
Interesting when I first started my business I paid well over the industry norms. I later tried moving to a model where employees (voluntarily) were able to trade in this high salary for a normal salary and a significant equity share (between 2% and 5% without vesting or a cliff). None of my employees wanted the trade. In the long run it worked out well for me, but I was surprised at the time.
If I'm the board of directors, I care about profit. I care about dividends on equity.
If I'm an employee working for cash, I care about cash.
Yes you can argue that smart employees will realize that revenue and ultimately profit leads to more available cash which leads to continued employment and salary, but that's an indirect effect.
Of course you can also say that most employees don't understand equity or why they should care about it, so granting equity alone doesn't align incentives.
Arguments can be made in both directions. I think it's an interesting debate actually.
I've come down on the side of granting equity and encouraging employees to understand their grants so that (hopefully) incentives are more aligned than at the average company.
An alternative way to get a similar result is to give a bonus based on company performance I think.
My expected return after 4 years should be in the ballpark of working for Google for 4 years, with an acceptable variance due to risk.
That means $180k for new grads and $220k+ for an experienced engineer. That should be the benchmark.
According to Glassdoor, the median combined salary at Google is $166k/year further making the $180k/year for new grads claim ridiculous.
That's a yearly bonus. Worth around 15k/yr.
105 + 15 + 55 is $175.
Signing bonus is around 20k. Divide by 4 and you get $180.
You also need to consider what equivalent returns would be at competing companies. Someone who joined Google or Apple in 2011 with a decade of experience could easily have made $350K in stock compensation alone, but with a higher base salary and even less risk.
Shareholders + Founders + Upper Management.
---
Peons & serfs.
Much like it's always been. Peons and serfs get enough to get buy, and a little more to see them through the hard times. To make sure they keep working until they are of old age. Don't want to be adding too many to the upper middle class. They don't deserve it because they don't take the risk, you know of costing billionaires a few million... who would probably not be billionaires if not for other serfs and peons.
My point is not that founders don't deserve a pay out. My point is that if you get a huge payout, employees that made that happen deserve a good part of it. It's good for everyone involved and the economy at large. And the startup ecosystem. It keeps wealth from concentrating in a few hands who can then affect the masses adversely and the economy as well. More people with money is better than fewer people with money. Competition is what makes Capitalism work. And part of that competition comes from the fact that many people have wealth. Not just a few.
I disagree strongly about your characterization of risk. Long run losing of $10k for 10 years is nothing like losing salary completely for a year. Unless you've been very good with money, taking a year with no salary in the Bay Area means Ramen. That year is also the start-up's most risky and the one with the least support. Most of the time when I hear these arguments it's from employees who have never tried founding. People who've tried both and know how difficult it is to keep yourself going for a year making nothing and trying to convince someone to pay for what you made don't think the equity split is unfair anymore-- even when they go back to being employees.
Joining a company after C round is likely to be a solid financial decision, but not significantly life-changing. Joining a unicorn who got to that valuation by taking a few late-stage financing rounds is almost a losing bet from math standpoint - that entity has so many ratchet conditions, side letters, and so much dilution you might just as well start distributing those shares on soft paper in 24-packs.
I have worked with him for all his 4 years there. He is a good, competent, typical startup guy who fits better at an early stage. But I think that the way he is (and many others in the valley are) measuring payout is flawed. I hope this audience doesn't generalize and extrapolate Jeff's observations. Especially in the context of Box.
For those who have never worked at Box, it's very hard to describe how special that place is. The culture is (or at least was) hands down one of the best I've experienced. The bar to entry is high, both culturally and technically. Everyone has a drive to do the right thing for the customer, and has had a meaningful opportunity to contribute. All of us there have built amazing relationships and grown (tremendously) professionally over the years. Many of us have even gone on to build successful businesses, on the strength of those relationships (e.g. http://interviewkickstart.com).
THAT is the payout.
The fact that Sutton can now hop from one good startup to another in the valley is the payout.
The fact that companies look at his resume and trust him to help their IT infra grow from 40 to 1000, is the payout.
The fact that he can proudly recount to his friends, that he worked at Box early, is the payout.
The fact that he can call upon any relationship from those years and they pickup his phone, is the payout.
The fact that he is not worried about his next startup job in the valley anymore, is the payout (that wouldn't have happened had he stayed at IBM).
The fact that he can put down payment to a house and raise a family in a decent part of Bay Area, is the payout.
And btw, the fact that his IT management helped 1000 of us serve a million+ customers to organize and secure their data, is also the payout.
In a startup, you value people and an opportunity to do meaningful things, above everything else. You want to be a part of that small group, that moves the needle in this massively morbid and unpredictable world. Anything else, is bonus.
And a down payment so you can raise a family is the pay-off? That's a little thin, in most other locations the downpayment on a house would not cost you several years of your life, for that kind of money you could buy the house free of debt. It becomes a pretty hollow proof when you look at it like that.
On the down payment don't really have an argument there as SF and Europe differ a lot on pay and housing costs.
Hm. I'm not sure how to take that. I'm ok with you starting companies without having experience but to hire yourself out as a contractor without experience is a bad thing in my opinion. It does explain why I get to clean up the occasional mess of contractors that over-reach their abilities but that doesn't mean that you are doing anybody a favor with that. Maybe it is indeed luck that you succeeded and it really shouldn't depend on luck, it should depend on your expertise.
According to the article he made about $750k over four years at Box ($95k/yr salary + $350k in options total), but would have made nearly 60% more, or $1.2M, working for a more firmly established post-IPO tech company during the same time (say $160k/yr base salary + $40k/yr bonuses + $100k/yr in restricted stock).
Still wouldn't have been able to buy a Bay Area house (not sure why you suggest it could), but he would have had all of the other payouts you listed, with basically no downside risk at all.
Seems like pre-IPO companies like Box are increasingly a bad deal for the employees. I'm genuinely sorry you guys ended up getting the short end of that stick.
Appreciate your disagreement, but why anon? :-)
> According to the article he made about $750k over four years at Box ($95k/yr salary + $350k in options total), but would have made nearly 60% more, or $1.2M, working for a more firmly established post-IPO tech company during the same time (say $160k/yr base salary + $40k/yr bonuses + $100k/yr in restricted stock).
This was in 2009, when salaries at established companies were not that high. I came from eBay, where neither of the three components were anywhere near what they are today. Also realize that he was in IT, where salaries have never been that good.
> Still wouldn't have been able to buy a Bay Area house (not sure why you suggest it could),
I didn't say 'buy'. Just down payment.
> but he would have had all of the other payouts you listed, with basically no downside risk at all.
I prefer to define "downside" with not just money, but with the whole experience. Defining upside/downside with money builds mercenaries; not missionaries. And in a startup, whatever level one gets in, one should be the latter. If you can't be one, then IBM is a better place to be and to stay at.
If you are primarily focused on monetary payout, you won't be able to do the best work of your life, which is an opportunity a fast-growing organization provides, which nobody else can. And when a 1000 people do the best work of their life, everyone invariably gets rewarded.
At that point, 350K or 500K doesn't matter. What matters, is that you've spent 4 years of your life with incredible people doing incredible work. That will always open far more doors than it'll close.
> Seems like pre-IPO companies like Box are increasingly a bad deal for the employees. I'm genuinely sorry you guys ended up getting the short end of that stick.
That's the point. We didn't get the short end :-) Even Sutton says, that overall he is fine. Because he too, understands that it's about the whole experience and the future credibility. He is just ranting about one piece - viz. mismatched monetary expectations and doesn't want us to generalize.
Remember that everyone who joined early was taking a gamble on a high risk, high reward company. You see an OK payout for him, but you don't see the 0 payouts for the people who bet on the wrong horse. So if joining a startup as an early employee is changing from high-risk high-reward gamble to instead high-risk OK-reward, that's a problem.
Founders and investors make MOST of the money. It has and always will be that way. If you want to change this dynamic, become a founder or a VC. It's pretty straightforward.
This nonsense about "getting screwed" as a startup employee is delusional ignorance.
If you work for someone else at a startup, of course you're not going to make as much as someone at a more established company.
I only know this because I have relatives who work for a public company that IPO'd that everyone uses to search for restaurants so this surprises me not one iota.
Last comment on employees who make millions from IPO's - how often does that occur? As often as Uber, Google, Facebook and the like are created. Which I'd say is once every 6-8 years. The odds are terribly stacked against you if you think you'll pick the right company in the beginning.
I mean I remember when Dropbox was super popular and then Uber just absolutely blew it out of the water. Who would've thought a taxi dispatch company would be the next Google/Facebook?
It's certainly not impossible to make money, but temper your expectations and don't believe everything your founders & investors tell you until you see the real numbers. The devil is in the details.
Was Choe's comp worth near $500M? Hell no. Is he laughing to the bank? Of course. Is life fair? Hell no. Were other early employees screwed by the Choe's comp? Probably but they made out more than OK. I don't hear Taner complaining. Roll the dice. Make your decisions. Live with them.
In 2004 I turned down a job offer from Google. On paper, I'd be worth lotsa millions. In reality, I would have gained zero. Why? Because the team I interviewed with was full of jerks, and I would have quit before my 1 year cliff had I accepted the offer. Instead, I stayed and worked at my then current job. I made a lot of good professional contacts and have never looked back.
Would my life have been different if I accepted the Google offer and hit the IPO payday lottery? Possibly. I'm not sure. I don't think about it at all. I moved on over a decade ago. I'm quite happy with my life. There's more to life than being a "early XYZ employee" or "pre-IPO employee". Notorious BIG had it wrong. You don't have to slang rock or have a good jump shot. You can live nicely and happily making assists.
I could also write a long comment about how often I get into negotiations that take the form of "We'd like to offer you less salary, but more stock options". Ha ha ha, if I was that dumb, why would you want to hire me?
The problem is, there are too many things that can go wrong with stock options. The biggest, of course, is that most startups fail, and therefore most stock options have zero value. Or as Paul Graham once said, the median long-term value for any startup in any startup investment fund is $0 -- and that implies the median value of any startup stock option is $0.
The article lists many other things that can go wrong with stock options -- dilutions, side deals, etc.
I can think of some incentives that would actually motivate me. They would be expensive, but that is the point -- they would put real money in play, which would make them worse from the point of view of the company, but would make them real to me. They could then work as an actual incentive.
One such incentive would be for the company to agree to commit a percentage of gross revenue to the workers. Say, 2%, or 4%. Then lets say, for every dollar we are paid from our salary, we get 1 royalty point, and the gross revenue fund is divided up on the basis of how many royalty points we all have. As much as I laugh at the line "We'd like to offer you less salary, but more stock options", if I seriously believed that a startup was going to do well, then hell yes I would take a salary cut now in exchange for a percent of a pot that is guaranteed to get a committed amount of gross revenue.
I'll point out that Hollywood has been a trailblazer in this regard. It used to be an industry joke that actors were promised a percent of the "profits", but then with creative accounting, even very successful films could be shown to lack any profits, and therefore nothing needed to be paid to the actors. Because of the unfairness of those deals, Hollywood has moved toward royalty payments that are increasingly based on something like gross revenue.
still the comment about the smallest violin hits this on the head. what could have been with different decisions is fine, but if you made $350k you did not get screwed over. plenty of companies like this fail outright and never even float.
It's not unreasonable that employees didn't do well during those IPOs.
Some of the things startups are good for:
1) Higher potential earnings. EV might be higher or lower depending on the startup. At Google, you get a $175k salary and a $300k stock grant over 4 years. The stock might double or triple but won't 10x or 30x. If you joined a company like Pinterest or Uber 3-4 years ago, you might've gotten $100k salary and a S300k stock grant over 4 years, but that stock has gone up 10x or 30x and is now worth $3m or $10m (at least on paper).
2) Better shot of quickly shooting up the career ladder, having a lot of responsibility, and so on.
3) Great opportunity to learn things outside of your current comfort zone.
Startups are not good for: maximizing steady salary + predictable equity, blending into the crowd and having more free time outside of work, going really deep on one area instead of working on a lot of different areas, and so on.
Finally, I think using Box in the article is potentially misleading. By the end of 2011, according to https://equityzen.com/blog/box-path-to-ipo/, Box was already valued at $600m. The current valuation is only 3x that, despite the company having 20x more employees. There are other startups with a similar trajectory, like Etsy. However, there are also companies like LendingClub or Lyft or Uber, where joining 4 years ago would've provided a 10x or even 50x for an employee. 10x or 50x on a $200k or $300k initial grant is huge.