One of my points, though, is that you are effectively investing $100k in the company by taking a crap deal to work there (e.g., via a $25k pay cut over 4 years of work). For that $100k, you're getting much less than you would get by simply straight-up investing $100k.
- age - Bay area/NYC or somewhere else? - how do u deal with taxes, 401K contributions and still have 100K leftover?
I am possibly overcontributing 401K (maxing the 18K allowed by the IRS) and certainly overpaying rent (bay area :[). How the heck does one manage to save/invest 100K even at that salary? As a soon to be father, I need to get my act together asap.
After taxes, $250k becomes $150k. After rent, food, staying alive, some travel, etc., I'm left with about $100k disposable per year. Like most of you, I don't really have nice things, fancy clothes, etc.
I would continue to max out contributions to retirement accounts, though! You can invest in startups via IRAs and Roth-IRAs (I have done it).
> a sum FAR more than almost anyone reading the comment will ever see in their own bank accounts
You're joking right? Engineers make six figures and can easily save $100k if they try. Your retirement account should have seven figures by the time you retire.
To the extent that is true, neither is taking a salary hit on that order in exchange for equity from your employer.
The contention GP makes is that even ignoring the opportunity for diversified investing, from a financial standpoint, getting a job with an established company is strictly better than a startup in most cases, since you can exceed the pay and equity (and equity in the startup) of the startup job with the bigco job.
That the bigco job also gives you the option of diversifying your equity investments to manage risk, while the startup job does not, reinforces, rather than counters, that argument.
That doesn't seem like much in today's hot market, but ask anybody who went through a crash how much a stable job is worth.
If you're not comfortable investing ~100K in a startup, you probably shouldn't join one.
Assuming that the majority of HN readers are software developers, I actually don't think that's true.
While I agree that investing $100k into a company is a big gamble, it's important to realize that's precisely what you're doing if you give up a BigCo job for a startup one with a $25k pay gap and vesting over 4 years.