In my opinion a 40% pay cut and being one of the first 5 engineers warrants co-founder status.
But a 40% pay cut is within the the norms for that sort of transition. It can be a good move for some people.
It is rude to lie to people about the value of their options to hire them. ("Your options are 0.866% of the company"). But to try to defend that practice in public is just hilarious.
Heh, at least now we know what it does take to be a cofounder :)
> It is rude to lie to people about the value of their options to hire them. ("Your options are 0.866% of the company"). But to try to defend that practice in public is just hilarious.
I never once stated that one should lie to employees about the value of their options. Those conversations are always highly specific to the situation, the negotiated contract with the person, and how fluid the actual current "valuation" is. It's very difficult to pin-point a true value for a set of options in a private company - sometimes you can come close, particularly once major funding events and milestones have been hit, but it is still difficult. I usually do my best to have a candid conversation with prospectives or currents about that value. A lot of founders do.
If all you care about is the financial upside in joining a startup, then I will always say that you should not join one. The risk is very high and it takes an enormous amount of cooperative collaboration from numerous people that are willing to be "in it together" - it also takes many years before you have something valuable enough to make those early options worth it. If you get in before the Series A and you really give it your all and it's a good product that people want and you're surrounded by peers who are the top of their game and you've got excellent leadership: Hang on because it will be a rocket ride. If not, then it might not be worth it.
The other reasons to join a small startup are numerous. In the early stages it's mostly intangible and the later stages are usually very tangible. The "option" for a financial upside is there and should factor into how much risk you're taking as an early employee, but unless that is all you care about then it should not be the only factor in your censure of an organization.
Figure out what's important to you and act accordingly.
> Heh, at least now we know what it does take to be a cofounder :)
Become one. You'll find out. I've been unable to accurately convey it to people it seems; most think it's glamorous. It is not. Most think they're entitled to it. They most likely are not. Most think founders have the upper-hand. Very few ever do (hint: the board and the investors control the strings more than most think).
Upper hand, n: having better knowledge, information, or otherwise situation than the rest. Compared to the employees founders most definitely do. Eg: how many startups will give you the answers to the listed questions easily? Founders have them.
I am not saying founders are above all, but they definitely have the upper hand when compared to those pesky employees who want to know the value of monopoly money they are claimed to be paid with.
It's also on you to be clear about what you want and to vet orgs and people. If an org will not share sensitive information with you in order to make a sound decision, then I certainly would not join it. If the leadership won't go to bat for their own people or honor their word, I will not work for them.
It is. If i wanted to change the world, I'd join the red cross. Attempting to make someone feel bad for only caring about pay, as a way to get them to work for worthless options only works on some people. :)
If you wish to be a co-founder, you typically have to be willing to take more than 40% pay cut for much longer. You must be willing to defer your paycheck so that your other employees (who are usually on a paycut too) can get paid if funds get tight - this is even expected of most CO employees in the company but the first ones to go are always the founder's. You are usually involved in most fundraising activity in addition to your other duties, whatever they may be* and customer support early on.
The list is quite long, I was once a highly entitled "engineer" until I built a few of my own companies. The dynamics are so much more complicated and tailored to each individual situation that it's disingenuous to lay out blanket statements the way most people in these comment threads have been doing.
Being a founder is brutal.
I'm not saying key engineers aren't entitled to good or fair treatment or that it is impossible to become a co-founder if you're #3 or #4 or #5, but I do not believe you're entitled to founder status just because you're an early hire. Sometimes it can happen that way if you choose to take on those responsibilities and risk and negotiate that dynamic with the other founders - setting up achievement milestones and what-not.
Similarly: Just because you're a founder doesn't mean you're actually entitled to the role of C*O (though you may hold that position early on as it needs to be "filled" it can quickly out-grow you). Some can become those roles and some simply aren't capable of scaling with the needs of the company.
just wow
...
Also, what risk? There has never in history of history been easier access to money than now, and never better terms. Hell, tell a stranger in palo alto you're an MIT dropout, and have a Stanford dropout friend, and they will practically write you a blank check.
Many roles in the company are invaluable. Not just the engineer.
It sounds like you've had a bad experience and I'm sorry if you have, but not all companies are "pointy haired bosses that take advantage of the underlings".
> Also, what risk?
You clearly have no idea.
> There has never in history of history been easier access to money than now, and never better terms.
You still have no idea. I'm not even going to try.
> Hell, tell a stranger in palo alto you're an MIT dropout, and have a Stanford dropout friend, and they will practically write you a blank check.
This is a pretty offensive statement and you've lost me entirely, your perspective is so far detached from reality that it makes a lot of sense why you're so upset, sarcastic, and frustrated. Instead of a self-righteous attitude, go build your own startup if it really is that easy and low risk.
If you have built your own startup and received a blank check and performed the feat [of building a startup] with no risk to yourself or your peers then I call bullshit or you're just internet trolling.
That's not what I said at all.
Early employees that are paid a fair market salary are absolutely not entitled to founder status, and in some cases not even substantial equity.
As someone who has been the first employee at two different startups, it doesn't warrant co-founder status.
Yes, it's going to be a lot of work. But you never go without salary and never have the same stress level or expectations as founders. At the end of the day, you're still an employee—a key one, who should be compensated with single digit equity, but an employee nonetheless.