Ask HN: Is it worth taking a 25% paycut to join a startup? | Hacker News Reader

Ask HN: Is it worth taking a 25% paycut to join a startup?

13 pointssreedhar30 comments

I am working in a pretty comfortable job working on a COBOL based software. The one thing that bothered me all these years is my lack of exposure to all the newer technologies.

I started interviewing and I have got an offer from a startup. But the offer is almost 25% less. They say they will add 20% of the salary in stock vesting over some time.

The advantage is that I will be get exposure to all the new technologies.

Is it worth it? Thanks!

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Do you have a family to support? Can you handle a cut in pay like this for a long time? What happens if the startup misses a paycheck or two?

Do you need solid healthcare and/or other benefits? Because you're probably not going to get that.

Do you enjoy wearing multiple hats - simultaneously?

The advantage is that I will be get exposure to all the new technologies.

That's the one plus. And that's about it. Unless it's something you can learn at home in your free time.

They say they will add 20% of the salary in stock vesting over some time.

Take some of the cash salary and buy lottery tickets. It's worth about the same "over time".

Thanks for the msg. Yes, I do have a family, home loan etc to pay for every month. So, it will be tough if they miss a salary. I will have to dig into my savings. They don't have any bonus or other benefits. And i need to travel more for this.

I think I can wear multiple hats. That should not be an issue.

hmm... i will have to think more on this.

The fact is I am not happy with my current job.

So, stay in your current job, set aside the 25% of your income you'd be losing by going to this startup, build up your savings, and find a company willing to hire you at or above your current salary.

Don't subsidize a startup by taking a pay cut, and especially don't do it by digging into your savings, unless you're going to be one of the founders and get a larger equity grant to begin with.

Don't take a paycut for any reason. And options are worthless.

Also, you said the startup won't provide benefits. Do you have other means of healthcare / health insurance? If not, then regardless of compensation, the lack of health benefits would be a very extreme risk to take on for yourself and your family.

If you want to pick up new technologies, inform your family that you will be parked at the kitchen table every Saturday for the next 4 months teaching yourself Python, web developemnt, containerization, whatever (what to learn is a separate discussion). Libraries, internet: learning is free! No need to take a paycut for that.

You could always become a cobol consultant. Otherwise if you are dead set on a startup then see if you can keep your current job on the side as a consultant.

No. Startups aren’t worth it if you’re not running it.

As far as newer techs go, well, how many have COBOL already outlived? It’ll outlive a lot of them yet.

HN is a great place for FOMO, but reality is often different. In my country 90% of everything is run on JAVA, C# or PHP. Front ends are typically something a little more modern like angular or react, but you won’t get a front end job if you can’t also do C#, JAVA or PHP.

If all these new techs really mattered, you wouldn’t still be working on COBOL after all. And you can always play around with them on your free time.

I mean WASM is a fun example, if it picks up, then everyone who’s spent the past decade ignoring JS won’t have missed out of anything, because they can just build their web app with WASM.

If you want to try something different, that’s another story, but don’t take a pay cut that you don’t have to because if FOMO.

I'd need the startup to pay me 25% MORE than the comfortable job to even consider it. Startups can be pretty demanding and stressful.

I'm 18 yrs experienced, tech role (C++, semi-conductors).

I landed a job in a reputed tier1 semi-vendor out of college. I worked there for about 8 years. Work was (technically) fantastic, pay was very good. But I had scratch the itch..

Left the company to join a startup (at that time, 2 yrs in operation). Took 50% paycut, but my wife stopped working at the same time, so effectively 75% paycut. My plan was to work for approx 3 yrs and see what I'd like to do next. Nearly 10 yrs down, I'm still here. My pay is still about 60% of what I'll get if I quit today and join elsewhere (I'm reasonably confident of that statement). My cumulative loss in monies over 10 years, taking into account growth due to investment as well, comes to nearly 7 times my annual salary.

So yes - not a financially wise decision. In retrospect (even though I didn't think of it that way earlier), it is a very selfish decision - missed family vacations, higher financial stress, budget stays, ... all to scratch the itch.

I have mentally written off the amount. I'll never get it back.

I'm still here due to few reasons: a. My salary even though much lower than what I can get, is still "sufficient" for most purposes b. I get to jump into very interesting problems - work on topics I wouldn't have been able to, had I been in a regular corporate environment. c. I have stocks - which potentially can give me back a good return if and when we exit. d. I still believe in the story we are selling. e. I add significant value to the company. My leaving the company will effectively devalue my own stocks. f. I have lots of work-life flexibility.

I'm not going to advice you - it is your decision. But, a. It is very likely that you will never recover that 25% of salary loss b. Your stocks may make it harder to jump ship later. And it is no better than monopoly currency - until the startup exits. Which may take forever - and may never happen (don't listen to what they say). c. You will likely face a much more challenging work environment - including activities that are not core development. Your time with Excel spreadsheets and Powerpoint may increase. I don't mean that as a bad thing!

Thank you very much for the detailed advice and sharing your personal experience. Really appreciate it.

I am in my late 30s. So, I think it is probably not worth it considering all the uncertainties.

A recruiter friend who normally works with startups have always advised me to treat stock options as a bonus and never a true consideration.

As an entrepreneur who's looking to build a team, I completely understand that they will try to sell you on their vision and all the benefits and wonderful things you get for being part of a startup. But you'll have to ask yourself if you feel that the vision is something you believe in as well? What stage is the startup at the moment? What's the founders' exit strategy? What is their philosophy on engineering/corporate culture?

The startup is around for more than 7 years. Less than 15 people in the team. They got some funding recently and another partnership. Hence they are trying to grow their team.

The domain has some overlap with what I do. So, they will definitely gain from that from me. I think the Founders' exit strategy is to get acquired by some other big player.

They have been growing their product slowly as and when they get feature requests from their clients.

7 years and still a “startup”? They just want cheap labor from you.

I would be slightly wary about the leadership if they have been around for 7 years with less than 15 people and thinking of being acquired.

Acquisitions usually happen because of tech, customers, or talent. Are there any assets within the company that you feel would be worth acquiring? If this event doesn’t happen, your stock options are virtually worthless. Equally important is checking the price they are offering to you for the options - my strike price was set so high at a previous company that the options were just worthless because we were never going to sell for that high.

Sounds like more established tech companies might be a better fit for you at this time.

- They can afford the time while you ramp up on new technologies, frameworks etc. A typical startup would expect you to be productive in month 1 (if not Day/Week 1)

- Their interview process would look for fundamental data structures, algorithms, problem solving etc. Very little emphasis on specific programming languages and such. This would play to your advantage.

- Better pay (in terms of cash) & more job stability. I read somewhere that you have family, home loan etc so this could be important.

After a few years at a established tech company setup, you might be in a better position to 1) negotiate a better salary at a startup of your choice and 2) be able to contribute to the startup more quickly.

Thank you very much for the solid advice.

A big issue with startups today is that it takes longer and longer to get any kind of liquidity (5 years is very quick these days).

So, in the small chance your startup works out, you only get that equity pay day after half a decade at best.

Is the experience worth the risk and opportunity cost? Depends on your situation

If your goal is to use new technologies, sure. Personally, I would probably never take a new job with a paycut. Also, are you aware that the COBOL market is so hot right now that companies are paying alot of money to bring devs out of retirement? Perhaps you should be looking at those opportunities. Save enough money and you can work on whatever technology you like at your leisure.

https://thenextweb.com/finance/2017/04/10/ancient-programmin...

Take that 25% invest it in the market, you will probably get a better return.

If you can handle the cut, then yes. It's awesome to work in a startup. You can learn so many things, more than just your work area. The colleagues are more like a family and you will do more things together. You have also times where you need to work more but you can be more creative and you are able to offer more ideas which can help the startup flourish.

A few years ago I made a similar choice to work for a startup. It didn't work out; I learned that it's probably not worth it unless for me unless I know and am comfortable with the founders, as well as believe in the mission. Less than that brings a lot of uncertainty, compared to a stable high salary I might otherwise earn.

Well, I would compare the market-rate first. I.e. if you are one of those legendary cobol-cowboys, used to several thousands dollars a man-day, it is likely that the market-rate for i.e. backend dev in most other technology stacks will be lower. At least look at glassdoor?

If the pay seems under the market-rate, negotiate or let it be.

No. There is a 99.999% chance the startup will fail => your stock will be worth nothing. And they probably expect you to work 80+ hours => your actual hour rate will be even less than what you are making now (assuming you are currently working standard 40 hours).

I think you are taking a big risk with little chance for reward.

That being said, you could use the startup to really learn some new skills then transfer back to a comfortable job where those skills are needed.

Only if you want to gain experience wearing many hats. (source: I took 40% paycut to work at startup for a year)

Is it 25% less because they are a startup, or 25% less because you're no longer using your expertise in COBOL?

It is 25% less because i will no longer use my COBOL experience but will start working on node js, python etc. I will contribute with my domain knowledge. so it is a win-win.

May be they have a budget!

No.

Let's say you make 100000 today. They're offering you 75000 plus 15000 (20% of 75000) in equity which is likely vested over four years with a one year cliff.

So, you stay four years. You've earned 300000 and now have 15000 in equity. Yes, they may well offer you more equity over time, but you don't know that today. You've foregone 100000 in income (or more), and the 15000 in equity is, in the best case scenario, worth much more on secondary markets, but only if there is a buyer. In the worst case scenario, the company shuts down some time over the next four years and you are now unemployed, out the equity they granted, and the income you've lost.

There are better ways to learn new technologies than subsidizing a company with your talents.

I'm kind of puzzled by this offer. Are they offering him $15,000 in shares based on the valuation that day? That year? When?

And wouldn't it all just get diluted to hell in the years after that?

The whole thing reeks of bullshit.

I’m guessing 100% here that it’s the number of options or RSUs roughly equal to 15% of the salary. Even if it was 20% of the current salary it isn’t a good deal.

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