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Comment by nostrademons | Hacker News Reader

They didn't have funding (other than YC, which at the time was $6k/founder, not nearly enough to support an employee) until right before they hired Aston.

Drew had approached me about being employee #2 for DropBox, and I had lunch with him, Arash, and Aston in Feb 2008. They'd only closed the Sequoia seed round about a month before. IIUC, Aston had been officially hired the day before. I (stupidly in hindsight, but for good reasons at the time) ended up declining. I actually reconsidered about two months later and asked if the position was still open, but they had long since filled it - I think they got some very good MIT grads literally later the afternoon after I had declined.

So they were hiring very aggressively, but they started recruiting before they were in a position to actually hire, to warm up potential employees.

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Interesting example. Genuine question, had it been the opposite, if you circle back in time, would you really take that job? (Trick question: Are you less happy than you think you would have been in other case?)

Complicated question. It certainly would've been better financially, though honestly, the difference is "set for life" vs. "set for a long time", so I'm not certain it would make a material difference in my life now. Besides, I think it's fairly likely that even if I were set for life, I'd be doing something fairly similar to what I'm doing now. I think that in terms of lifestyle & personal goals during the 4-5 years I would've been at DropBox, I actually did better (I ended up folding up the startup I was working on and working for Google, and I had a relatively stress-free, enjoyable, lucrative, and personally fulfilling time at Google where I grew a lot as a person).

I do think that my reasons for not taking the job have been invalidated by future experience. My top reason was "I'm not going to leave my cofounder", and then he ended up leaving me 2 months later. My second reason was "Well, you've got a startup, I've got a startup, it is unclear which of us is actually going to succeed," and of course my startup was dead in 6 months while DropBox is now a $10B company. (Interestingly, I had a gut feeling at the time that I was turning down something important - I could tell Drew/Arash/Aston were crazy smart, and I really liked their product concept video.) But Drew actually told me "Honestly, if I were in your position - and I have been in your position - I wouldn't take the job" and he was right. The bargain we make as entrepreneurs is getting to call the shots, and the consequence of this is that sometimes we make the wrong call, and in a way it's not wrong after all because the whole point was making the call in the first place.

There's also the issue of whether DropBox would be a billion-dollar company at all if they'd hired me. I think my skillset actually duplicated Aston's to a fairly large extent, and we would've argued over technology choices (I would've pushed for Django, JQuery, and git over Pylons, Prototype.js, and Hg - the fact that these won in the wider webdev world is immaterial, just arguing over them would've cost precious time that a startup can't afford). Instead they hired some very talented MIT grads instead, and my understanding is that these engineers were responsible for things like reverse-engineering the Finder and writing the syncing algorithm that were what really contributed to DropBox's success.

"It certainly would've been better financially, though honestly, the difference is "set for life" vs. "set for a long time", so I'm not certain it would make a material difference in my life now"

Let's not forget that DropBox hasn't exited yet, and in fact may be in a very tricky position. As much as it's fun to look at "I'd have had 0.75% of $10bn, that's $75m!", it's rather unlikely that you'd see that money. Maybe they can pull it off, but it's also possible that they are in a bit of a tight spot where they're over-valued, which can absolutely ruinous to employee options. They have to prove to the market that they're much more valuable than Box, which has a head start on them in that regard.

I'm not sure I'd view it as that clear-cut. If you walked away from your previous company with a life-changing amount of money, there's a very solid chance you were better off there than at DropBox, purely from a financial perspective. I'm not trying to be a jackass, I'm just trying to say that they haven't exited yet, and you can't really compare!

I assume there have been secondary stock sales. It's pretty common these days for relatively liquid secondary markets to spring up around tech unicorns. The fact that they aren't "public" doesn't mean that you can't sell; it just means you can't sell to ordinary people. Markets treat regulation as damage and route around it.

Hey Nostrademons,

I appreciate your thoughtful responses so I was wondering what your thoughts are on importance and corresponding compensation of the 1st employee at a company.

If the first employee is important enough that in your mind, it's possible that with depending on the first employee they may or may not be a billion dollar company, do you think the first employee compensation is commensurate with that? Aston also mentions specifically the commitment he has as a first employee, and how he feels "you're basically a founder" in terms of responsibility.

In my opinion, he made off about as well as any first employee could reasonably expect (even unreasonably I'd argue).

I don't have the perspective of either a startup founder or the first employee anywhere so I'm not trying to slight the Dropbox founders in any way.

I guess my question boils down to two parts 1. What do you think a reasonable level of compensation is for a first employee 2. Given the success rates of startups (low), why would someone want to be the first employee somewhere versus either their own startup, or a later stage company that could pay them a much higher salary then the typical startup compensation. My unstated assumption here, which you might disagree with, is that someone who could have the impact of Aston, could become a staff engineer at somewhere like facebook/google/microsoft/etc and pull total compensation of 300/400k with a significantly higher chance.

I think the key difference between founders vs. early employees is in risk tolerance. An early employee should be able to go to work reasonably confident that he will get paid for his time and his efforts will not be completely futile. The job description for "founder", however, involves finding a reason for the company to exist, and that inherently involves the risk that you could put in a lot of work and it'll still count for nothing.

Aston (presumably) made out with a lot more than the $300/400K a year that a Google/Facebook engineer tops out at. He also took on more risk, but the risk was largely technical risk: the possibility that him and his teammates couldn't deliver what 65,000 people said they wanted. That risk is largely under their control, while as a founder, the primary risk is that nobody wants your product or it can't be built economically.

I do think that the large amount of money in the funding ecosystem lately has distorted this bargain somewhat. In boom times, you get cases where the founders get funded on hope & pedigree and draw a salary immediately (meaning that their financial risk is more akin to an early employee's), and then they go and hire a bunch of naive employees at below-market rates before getting any validation that people want their product (meaning that the employee now takes on market risk that was previously reserved for the founder). This doesn't do either the company or the employee any good; these companies are significantly more likely to fail than ones who stay founder-only while they prove out the market, and they ruin more peoples' lives when they do. If you look at employee #1's who have actually made out well - eg. those at Google, DropBox, Thumbtack, AirBnB, SnapChat, etc. - all of those companies had validated demand, had raised funding, and in many cases were already in use by thousands of people when they hired their first employee.

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