Look at how little equity in startups engineers get. Don't settle for common stock, it's 95% of the time worthless. And if it isn't you should be a millionaire for your risk, definitely not less than RSU compensation at megacorp #3.
Unless you're a C-level employee, you're not going to have the choice. And even then you're probably still not going to have a choice except in very rare cases (e.g. Uber's new CEO might have some decent protections). If you're "just" an employee, you're going to get laughed at if you demand anything besides common stock.
If it's easy to find programmers who will work for below-market rates, but hard to find investors who will contribute millions of dollars, then you can expect programmers to have much less negotiating power.
Putting skin in the game is:
* paying from your own wallet when there's a cash shortage
* being mentally prepared to have guns pointed at you and your personal assets for violating an obscure regulation No. 389343A, or just attacked by employees, investors, partners for whatever reason they can come up with
* being a face of a commercial entity and putting your reputation at stake. Most people on this planet don't see a difference between a billion dollar corporation and a penniless startup, and assume all companies are powerful and have unlimited funds. Hence, their key people are to be hated and mistrusted.
* and, last but not least, being prepared to be woken up at any given minute to fix an issue of any nature
What's the difference between donating half your paycheck to the company, and only being given half your paychecks?
> being mentally prepared to have guns pointed at you and your personal assets for violating an obscure regulation No. 389343A, or just attacked by employees, investors, partners for whatever reason they can come up with
VCs don't need to deal with the former. You don't get attacked in the case of the latter, you just get fired.
> being a face of a commercial entity and putting your reputation at stake. Most people on this planet don't see a difference between a billion dollar corporation and a penniless startup, and assume all companies are powerful and have unlimited funds. Hence, their key people are to be hated and mistrusted.
VCs make bad investments and founders make bad decisions all the time. The valley does not hold it against them for long.
> and, last but not least, being prepared to be woken up at any given minute to fix an issue of any nature
Here's where you're wrong - in a startup, engineers are the ones who get woken up at any given minute to fix an issue of any nature. Investors sure aren't.
You really think there is a set percentage how much one needs to contribute?
Wait, you actually mean that "covering shortages" means "taking smaller salary", don't you?
>> being mentally prepared to have guns pointed at you and your personal assets for violating an obscure regulation No. 389343A, or just attacked by employees, investors, partners for whatever reason they can come up with
> VCs don't need to deal with the former. You don't get attacked in the case of the latter, you just get fired.
I was about to reply with "hahaha" but then thought you really don't understand.
1. Not all startups (in fact, only a small share) are VC-funded. In many cases, the funds come from personal savings. In case I need to break it down to you, loss of personal savings is not necessarily taken kindly. 2. There is exactly 3,493,231 ways things may go south, it is not at all guaranteed it will all be limited to firing. As a matter of fact, when things get serious, it usually isn't. I witnessed it more than once firsthand, from different angles.
>> being a face of a commercial entity and putting your reputation at stake... > VCs make bad investments and founders make bad decisions all the time. The valley does not hold it against them for long.
A couple of things: 1. America is not the entire world (shocking, I know). 2. Silicon Valley is not the entire America. 3. Bad reputation sticks for a very, VERY long time. Longer if you upset someone powerful.
>> and, last but not least, being prepared to be woken up at any given minute to fix an issue of any nature > Here's where you're wrong - in a startup, engineers are the ones who get woken up at any given minute to fix an issue of any nature. Investors sure aren't.
I assume you mean "founders", not "investors" (because why would investors be working?).
While startup engineers are overworked (depending on a startup - I personally think it's a bad idea, and never do it to my employees), there is a million unseen things going on outside of development which nobody bothers to tell you.
Do you think these funds arrive on their own without a fight after the invoice is issued? Do you think these investors just act rationally and it works as if you lodge your job application? Do you think the interaction with lawyers, accountants, authorities is limited to 5 minute emails, and they are picked randomly, or shopping around takes half an hour?
Finally, who wakes up the engineers - do the founders do it in their sleep, in your opinion?
I am not claiming that the VCs are evil, or even a necessary evil. I don't think they are evil nor necessary. I think that they may be very inefficient when it comes to providing for a healthy economy that benefits everyone and not just themselves. Hate the game, not the player.
founders give up ((potential salary + RSU at a megacorp - salary at the startup) multiplied by number of years at the startup) while employees give up ((potential salary + RSU at a megacorp - salary at the startup) multiplied by number of years at the startup). Did you notice any significant difference? I mean there may be difference between megacoprs and numbers of years at the startup, yet does it warrant like 100x and larger (like div by 0) difference in the outcomes?
What? You're wrong.
you've missed the important point. It isn't for everybody. I specifically mentioned that it is already successful people with a lot of good connections. Thus such a startup is just the next step in the career progression. For a plain engineer, like me for example, who can't make even a CTO/VP of engineering of a small company or a Director/division Chief Architect/etc. at a BigCo creating a startup would be exactly or even worse than described by grand-grand-parent. There is a reason that early stage VCs, for example YC, invest in people, not ideas/business. One of the friends got invested with "just name the number" amount right on the spot the moment he mentioned that he got his own startup even without telling what his startup is intended to do (of course there were due diligence done by small people afterwards before things formalized on paper) Where is couple other friends, engineers more like me, who went through a very harsh interviews at those few VCs who agreed to listen to them and got, unsurprisingly, nothing, and still sitting as engineers.
>It sounds like you're complaining,
there is huge difference between recognizing reality and saying that the reality is unfair (which it just can't be by virtue of being the reality)
This is 2017, the year of Harvey Weinstein.
Starting a business isn't for everybody because it's a lot of stressful work. You have to wake up early and stay up late laying the foundation while your friends or spouse or kids or work are vying for your attention. You have to scrape together your savings or max out a couple credit cards to actually launch your product. Once you start hiring you are responsible for putting food on other people's tables. And even once you start making money, you have no idea what you're doing pretty much every step of the way.
If you actually do want to start a business, just fucking sit down and do it. There are a ton of profitable, bootstraped SaaS companies out there. Build a product, pay for the first couple months of hosting out of pocket, bill yearly, profit. (Notice "get funded" isn't a required step.) Complaining that VCs probably won't love you is just an excuse to take the path of least resistance and stay mediocre.
When you are the person worrying about making your number on a monthly basis, so you can pay your team ... whom aren't worried about this, because they get a salary ... and you sometimes/often can't pay yourself, so that you make sure that everyone else gets paid ...
... yeah.
When you do that, you are putting real skin, real risk into this game. Your reward should be commensurate with that risk if it pays out.
In my case, it didn't.
I got all the stress, pain, heartache, overdue bills, while dealing with skittish customers, people who demanded free things, etc.
All the while, growing a business from nothing to millions in revenue, with no VC involvement (not for lack of trying). To watch it shot in the head by the bank after sinking my entire worth into it.
I understand why founders/CEOs should expect excellent return upon a positive event. If they don't, then why, exactly, should the bust their behind as hard as they do?
I'd be interested to hear more of the story if you're willing
First, there are a lot more programmers than there are companies, and programmers are not unionized, so presenting a united front will be difficult if not impossible.
Besides, programmers want all sorts of different things. Plenty of us are happy to work for less pay at startups regardless of the equity situation, and the reasons vary: maybe it's a big step up from their last job, or the location is great, or they like small startup environments more than BigCo, or they didn't get the job at BigCo, or they're trying to build up a specific skillset, etc. It's not at all clear that common vs preferred shares is the hill that most of us would choose to die on.
What risk? The only risk I've ever had as an engineer at a startup was the risk of losing my job (which everyone has, they just ignore it). And let's be real, a good engineer can find a new job at the drop of a hat. The risk is nil.