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> I had what would be considered a good payout. When looking over the course of my career, however, it simply made up for the reduced salary I took for the years I worked there.

This is such an important point for people to know when they're joining startups. You're basically investing in the startup.

If you're going to be an investor it's good to know what your alternative investments are.

If you put $50k in the stock market every year for 5 years @ avg. 8% return, your have ~$400k. Over 10 years it's ~$900k.

At 1% equity (after dilution) you'll need a ~40-90M exit to reach those goals. Given that your taxable event will be bigger, it's probably more like a $60-120M exit to break even if you're considering a $50k/year pay cut in return for equity.

Both the market and startups have risks. But if the upside of investing in a startup won't reasonably beat the market then you're essentially taking a pay cut.

8% return on average is abnormally high.

But, on the other hand - the chance of retaining even 1% of a startup that exits for >50M is very small. By the time of an exit, almost no engineers will have anywhere near that equity.

After accounting for inflation and dividends, 7% is average (historically) for annual returns. So only a little high.

If the parent was not accounting for inflation, 8% is low.

I see the 7% return figure trotted out as average equity returns; but I think that number reflects a lot of “easy money” from the asymmetry of global industrialization in the post-WW2 era. Europe and America spent the 1920s through 1940s building fossil fuel powered heavy industry through a couple of particularly destructive wars. Then we spent the next 50 years spreading it around the globe, with American and European companies collecting a vast majority of the profits.

I’m not entirely sure it’s an assumption that will be correct for too much longer given the industrialization around the globe has increased competition significantly.

I think the true equity growth rate is closer to inflation / population growth rate; especially once we take the costs of climate change into account (think of it as a loan we have to pay back in either remediation of adverse climate effects or decreased future productivity).

Not sure I agree with your premise, but even if it was true, couldn't one simply balance their profile with more stocks from developing markets and be back to average?

Most of those nations didn’t really have viable / accessible public markets until the 90s. So there’s not a lot of reliable data from the first half of the century to go on.

And I’m not saying the US / Europe robbed any of those countries — just that there was a lot of easy growth in those countries in the 20th century, and western companies stepped in to facilitate and got paid a lot of money in the process. That growth is reflected in the stock prices of American and European companies.

My point is that those big, easy growth opportunities aren’t there anymore anywhere; and the growth opportunities in the future will be diminishingly small. We’re no longer bringing a country from the Iron Age mining with hand tools to the industrial era with mechanized mining and smelting; we’re largely just replacing one form of economic activity with another, slightly more efficient version.

401k’s haven been that spectacular for the last 15 years

My Vanguard account, which I've had since 2007, is showing 10.8% returns over the past 10 years.

I think the difference between 10 and 15 is pretty large since the recession started over 10 years ago, but under 15.

You are right, but even 15 year returns are still above 8% with VTSAX.

Exactly my point! We can’t grow at 7% in perpetuity; so at some point it’s going to have to slow down. It feels like that’s starting to happen.

Why can't we? From my point of view, we've just began. Maybe we will see a low decade now, but the decade after that will be incredible.

Also keep in mind we already had a "low" decade... the "lost decade" of 2000 through 2012-ish. That was a bad time for investing.

+1, doesn't it seem like ML can drive just as much GDP growth as the technology that spurred growth over the past decades? it's not clear the US will be at the forefront, but nobody is stopping investors from diversifying their portfolio globally.

Depends on what you're looking at for ETFs and mutual funds, but I think 8%, with a lot of work, CSVs, and tracking performance can be obtained. I know 12% is doable with a lot of work.

How's that? Over a decent period of time (5-10 years), 8% can be obtained with essentially no work just be investing in low cost index funds.

> But if the upside of investing in a startup won't reasonably beat the market then you're essentially taking a pay cut.

Like the OP said, if you look at it only from a financial point of view then joining a start-up is probably a worst financial decision compared to joining an established company.

The OP mentioned that going the start-up way has provided him/her with unique skills that then were of great help in his/her career. I can chime in with my own anecdote and say that joining a start-up/small-ish company has provided me with a greater will to do the actual work, a greater sense of purpose compared to me potentially having chosen to work for en established/bigger company.

I'm in this job (I'm a programmer) for the long run, I genuinely think that had I chosen to work at a big company my mental health would have been in shambles because I would have felt as an insignificant cog in the corporate machine no matter the compensation.

An exit would usually be considered long-term capital gains under the tax code, which luckily tops out at 20% (+ state income tax)

Only if you joined early enough that doing early exercise of stock options is financially viable.

In CA the max marginal rates are close to 40% for long term capital gains and 51% for short term / income tax.

If you exit by cashless exercise of options, it's (usually) then blasted by the full effect of wage/income tax.

This people do not understand the math of startup comp. If you get equity instead of cash, you could have taken that cash and just put it into as high a risk investment as you want. As such, startups are really offering access to an illiquid investment (but how sure are you it's better than other options), and forced risk-taking with some short-term tax benenfits (most people wouldn't put 10-20% of their income into one stock and you pay tax up front). You could go to google, put 30% of your income into crypto, and have some thing a lot like a startup risk/reward profile w/ a lot more liquidity. It's just that that feels riskier to people. Startup is only a great deal financial for the founders.

For early stage startups, consider an 83(b) election for better tax treatment on exit.

How'd you do your math? 50k every year @ 8% would result in 317k and 782k in 5 and 10 years respectively.

“If you put $50k in the stock market every year for 5 years @ avg. 8% return, your have ~$400k. Over 10 years it's ~$900k.”

That’s not always the case. Stock market returns are not guaranteed. If you start in the wrong decade you may be losing money.

startup returns are even less guaranteed. I think the main point is startup risk-adjusted returns are bad for non-founders.

There is still a financial aspect though: that rapid increase in responsibility and experience most probably translated to higher income at your next jobs. And there is a compounding effect each time you change jobs, so the earlier you were in your career when you worked at a startup, the more you gain from it financially over the course of your career.

I think we have selection bias on Hacker News because many of the prominent voices here tend to have high-paying jobs at prestigious tech companies, or at least know that they could get such a job at the snap of a finger. So from that perspective, joining a startup as an early employee is less attractive. For industry insiders who want to work at a startup, it often makes more sense to just raise money and start one yourself. They can do that relatively easily because their insider status vastly increases their chances of raising seed money.

For everyone else however... that cushy Google job is not at all guaranteed, and neither is the 500k angel investor check to be a co-founder. So, although being an early employee at a startup is definitely not for everyone... From an outsider’s perspective it can be pretty damn tempting.

This.

I do hardware (sch/pcb) design in spain, I’m in a lead position in a small company.

When I look at what I’ve built, I have experience with technologies that most of my college mates are still mystified with (e.g. DDR4 or x64 architecture).

Most electronics in europe are industrial/power electronics, and most engineers spend their days doing what amounts to paperwork. In contrast I’ve had to ship new designs on a biweekly basis to keep things afloat, I’ve had to set up databases to keep track of our parts (something most hardware engineers don’t even understand), I’ve had to write reliable python scripts since our build process depended on it... the list goes on.

From my experience interacting with US engineers, you don’t even realize how little some “Engineers” in the old continent actually know.

Would love to hear more about your database system!

Chris Gammell of Contextual Electronic and Amp Hour fame? Boy I better not screw this up! :D

Bad news: I use Altium

Good news: I’m trying out kicad on my spare time (feel free to take the credit)

As to the question, Altium is quite flexible in regards to using a database as a library, but it is riddled with bugs, workarounds and generally weird stuff. I’ve tried from the extremely simple to the overly complex. In that order:

- Easy level: Excel files on a shared NAS.

Pros:

* easy to set up.

* easy to convince management to try it out.

Cons:

* Not really a database

* You need to close Altium to add parts (this is very frustrating during sch capture)

- Medium level: Acces database (mdb) on a shared NAS

Pros:

* easy to set up (not as quite as excel but similar)

* you can add parts from inside Altium itself (with limited input interface)

Cons:

* because of how buggy Altium is the database tends to get completely corrupted. Almost daily backups are mandatory.

* You need to set up a form for part management, directly editing the mdb files is a path to disaster even with as little as 2 people.

Insane level: SQL server on AWS. Conected to local LAN through VPN. A simple php CRUD on apache for management.

Pros:

* Can handle heavish loads (a T2 micro can support about a dozen hardware engineers working in parallel)

* should be more scalable

* hides a lot of the complexity of the database for the junior engineers.

* small sized NAS won’t suffer while someone is generating a BOM.

* changes to database are more manageable if someone on the team knows sql.

* more reliable and resilient to altium bugs

Cons:

* No internet connection means no one works.

* possibly the most expensive solution

PS: I’m on my phone, I’ll reformat stuff when I get my pc to make it more legible

This is very true. I come from a non-tech (humanities/academia) background and was entirely self-taught when I decided to switch careers. I had only done very specific and quite unmarketable hobby projects on outdated technologies (win32 Assembly, Pascal, Fortran and some PHP/MySQL) and there was no way I would have had a shot at getting a job at any tech corp, let alone a FAANG.

Startups, on the other hand, were hungry for talent. The pay I got at my first job wasn't great, even by startup standards. But it got me working on a more up-to-date stack (JS, Go, Python, Scala, NoSQL DBs...), taught me how to better handle the tradeoffs between clean, robust code and fast shipping and got me a great network.

A few years later, I got no equity, my salary is only decent (nothing FAANG-level, but better than friends at some larger corps) but I like what I do, got a fancy title, manage people and am considered indispensable enough that I can make my own hours.

I've met a large number of people from similarly non-traditional backgrounds as mine (former nurse, geology PhD, classical musician...) in the startup scene and my guess is they would never had a shot at working in tech if it were not for startups.

At your next jobs where? Other startups? If increased responsibility means managing people, I don't think that's a positive - the management experience is going to be discounted by the relative lack of hands on technical experience.

Even if more responsibility means more hands on responsibility, it's a mixed bag because your experience tends to be broad but not deep. Still valuable, but not really worth the comp tradeoff IMO.

Assuming he is from India, there might not be a translation to a high income job. Salaries in India frequently follow a %age increase in the last role, regardless of the position they are hiring for. There are some exceptions, like the global cos which would pay according to job, and some startups which would have salary bands, but mostly, its about how much can we increase from the last role.

> Assuming he is from India,

That's kind of a weird assumption to make.

Based on this.

> However, to me, it’s dubious how many startup successes, especially in India, have been great for, say, 20th to 50th engineer at those companies. Swiggys, Olas and Paytms of the country are infamous for not giving good (or any, these days) equity to engineers.

I wasnt sure, hence stated the assumption. Did not want it to come across as a prejudice. Apologies if it did.

The article talks specifically about Indian startups, so I think it's a fair assumption

But most startups fail before they achieve any sort of name recognition. In those cases, how much does being the CTO of a company no one has heard of and no longer exist boost one's resume?

In that case IMO it's not about the title but about the responsibilities and achievements. Don't just write "CTO of Waggletech (2018-2019)" and call it a day, but instead spell it out.

Example: "Defined the technical architecture of the MVP and implemented large portions of it. [Platform-specific stuff here]. Lead the recruiting effort to bring the company from 2 to 10, interviewing over 100 applicants. Participated in raising seed-stage funding from X VC and N seed-stage investors." IMO the thing the Bay Area does better than everywhere else is in the face of failure, the immediate follow-up question is "so what did you learn?"

Not everything is about money.

+100 to this sentiment. It has never made sense to work at a startup to "get rich" it has always made sense (and will continue to make sense) to work at a startup in order to expand your personal skill set and to take on different challenges.

In the Bay Area, and I recognize that this may be completely different elsewhere, when you work at a startup it is often difficult to "hide" if you are under performing, and it is easier to "shine" when you put in the extra effort. It is also generally a place where engineers can try on more marketing roles and vice versa. Moving from "management" to "individual contributor" is often more fluid, and the variety of technologies you are exposed too can be quite diverse. Start ups are generally less 'snobbish' about which college you graduated from or even if you graduated from college, concerned more with results and less with appearance. Turn over (people coming and going) is generally higher so you end up knowing people at more companies which builds a "network" when you decide you want to work somewhere else.

For new engineers I typically advise them to find 'mid-stride' startups, generally something that as locked down a Series A or Series B round so there is "real money" and they can generally make a near market rate base salary. And I advise them to go in with the attitude that they are using the startup to expand their skill set and increase their exposure to various roles.

Generally its a great way to launch into your second (or third) job.

FWIW: I kind of feel the opposite. Or at least I think the experience is a real trade-off. The skills I gained as a first employee at a startup were more along the lines of business and marketing. The engineering skills required were pretty trivial: manage a small Heroku setup, write early backend and frontend app boilerplate, spin up an initial db schema, integrate CSS from a contract designer, work on email templates, set up analytics, etc. Most startups never get big enough to start hitting the really tough challenges. On the other side of the coin, when I joined a big four company, I was immediately dropped onto a team with the challenges that come with huge scale and have grown more from that experience. I may have a skewed perspective because I already learned most of the skills I exercised as a first employee by being an early member of a team at an established small company, but I think even so the point stands; I was able to grow similarly with a bit more pay and a lot more stability without being at a startup. You're right about meeting investors though, but I'd argue that having a network of investors is not (or at least should not be) a requirement to be a software professional.

The more interesting skills someone learns when implementing Heroku is when they learn it doesn't scale and the challenges in migrating off of it.

haha! sadly true. I really wish they had the equivalent of aurora serverless.

Even if they did whichever startups that end up using it would have to get a few more funding rounds :)

You mean heroku because of the excessive cost of over-provisioning their db plans to support traffic spikes with new products?

Yes indeed. Have worked with several clients and chatted with several startups that ultimately decide to migrate off due to extremely high cost as they grow relative to other platforms.

I'm curious what language and data stack they're using? Asking because I've seen real scale (billions of devices running our software) and the real leverage is in how you architect your application (software and how the data is stored, retrieved, moves around) and things like choice of language. Not where it's hosted.

Languages like Python and Ruby are just grossly inefficient. Single-threaded, huge memory profiles, and fully synchronous I/O. Whereas in C#, Tasks and async/await probably provide no shit 10-100x the performance in both compute and concurrency. It would probably be the same deal with Go or Java.

The point is, we tend to hand-wave these kind of choices away on HN. "Just ship it, language doesn't matter". But increasingly, I think it does. You want to make a product with an aggressive free tier, where only like 1% of the user base pays, or some data-heavy analytics thing, these kinds of decisions can be make or break for a business.

This isn't just one startup, these are multiple startups I have talked to that all end up deciding to move off the platform due to cost. Solid containers orchestration platforms like Kubernetes are slowly reducing the need to have one specific cloud platform, but cost control is still extremely relevant with architecture design choices.

As far as language is concerned, Ruby and Ruby on Rails is the usual choice with Heroku and is marketed specifically towards RoR devs (https://www.heroku.com/ruby) and Postgres as db. Most startups who decide to go the RoR route are not going to decide to go with C# as far as the Microsoft ecosystem is concerned, which would be a different set of architecture design choices. If you wanted to market a more performant alternative Go would 100 percent be the way to do it.

I would still somewhat disagree with your conclusion that language choice is imperative though, so much as how well you architect your application and infrastructure. A simple RoR app that pulls in a bunch of static assets from an S3 bucket is going to scale at whatever load compared to an ETL tool like Airflow that might need to process terabytes of data on a daily basis and has to have more planning from the start.

I feel you both have fantastic insights in this. Thanks for the discussion.

My take is it’s great to use ec2 pricing, likely with beanstalk, and aurora or perhaps aurora serverless for sql. There’s room for moving fast with rails. Then as things grow, splitting off a microservice with the same url via your proxy server which uses go and redis. This way you are not over optimizing one data model before you know exactly what its schema is.

Yep, this is largely consistent with my experience.

But you could arguably get the same result working for a larger company, getting paid market rate for a 9-to-5, and putting in a few more hours at home working on open source or managing a solo side project from scratch.

You might even end up with a side project that earns you passive income in the end if you're lucky, but you had to be lucky to get a "break-even" payout from startup-life anyways as you have said.

I don't agree that an open source project an stand in for the specific type of experience you can get working at a startup.

Source: while taking a stint in engineering project/product management, I was a core developer on a popular open source project for 5 years.

Rate-of-learning: the most valuable startup compensation: https://kyletibbitts.com/rate-of-learning-the-most-valuable-... https://news.ycombinator.com/item?id=13575706

Re: Not everything is about money.

Blasphemy! :-)

experience earned IS a financial investment because it increases your future earning power.

whether the increase in the expected present value of your future earnings justifies the present-day lower salary is a question of magnitudes and probabilities

I totally agree. The money was bad really really bad and so was dealing with the some of the owners.

But what I learnt in full stack development even though it was just C# and SQL help a lot!

What's the Big 4 in this context? Generally that term applies to accounting firms (PWC, E&Y etc.)

Google, Amazon, Facebook, or Apple.

https://en.wikipedia.org/wiki/Big_Four_tech_companies

ibm, microsoft, dell, hp

That used to be The Big 8 and people knew of them as The Big 8, even me. I think that The Big 4 is used now with a tinge of irony.

  Arthur Andersen.
  Coopers and Lybrand.
  Deloitte Haskins and Sells.
  Ernst and Whinney.
  Peat Marwick Mitchell.
  Price Waterhouse.
  Touche Ross.
  Arthur Young.

Apple, Amazon, Facebook, Google.

Usually FAANG pre-Netflix

faag ?

Could you please stop posting unsubstantive comments to Hacker News? We're trying for something better than that here.

https://news.ycombinator.com/newsguidelines.html

And what about life-work balance?

Because not everything is about work.