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Comment by zyang | Hacker News Reader

VCs and startup founders are shooting themselves in the foot. It makes very little financial sense to work at a startup vs FAANG these days.

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Classic tragedy of the commons scenario. ISOs were originally a great idea for how an early group of employees could take a big salary cut in exchange for a shot at getting wealthy. Founders and employees both had common stock and would sink or swim together.

Then over the decades information asymmetry started to chip away at this with investors realizing they really only needed to keep the founder happy, and they could steadily chip away at the outcomes for the rank and file given those young engineers would keep coming in based on the mythology of getting rich from the previous generation.

It took awhile, but now that trust has been fully eroded, and simultaneously FAANG have recognized the value of top engineering talent, paying salaries to ICs that would have been unthinkable in the 20th century.

It's going to be very difficult for investors to win back trust because now the information asymmetry works the other way, with young talent just assuming ISOs are worth nothing. Even if founders make an effort to do right by early employees, it's very difficult to demonstrate this to someone who is suspicious but not seasoned enough to know what questions to ask.

This information asymmetry is also solvable at the company level and IMO, good founders have a obligation to fight to educate engineers who are thinking of joining a startup.

I'm not saying you're wrong at all -- most typical startup ISO offerings suck and are not good situations for employees. That said, as a founder who custom designed our stock plan to be as employee-friendly as we could, there is a better way when actually done right and not just "following the standards".

Stock plan improvements like super long post-termination exercise, offering RSAs instead of just stock options, and most importantly in my opinion, adequately educating your employees on the risks and return possibilities of their equity!

While many employees' eyes will glaze over a bit if you start citing tax code, helping them get the basics and fully internalize the risk/reward tradeoff is both doable and necessary!

Yeah exactly. Early in my career, I loved working at startups, and aside from compensation would prefer to do so again, but the opportunity cost now is way too high. The one advantage I see at a startup is that if you pick one with a decent engineering culture, you can learn a lot more than most FAANG roles (although you'll probably learn more at the best FAANG roles than at good startup roles? Unclear.)

I think startups are a bit of a crapshoot even in this regard. You'll learn a lot at a good one, but could potentially learn a lot of bad habits at a bad one.

> I think startups are a bit of a crapshoot even in this regard. You'll learn a lot at a good one, but could potentially learn a lot of bad habits at a bad one.

I've seen far more shit habits from habitual startup employees than those who come from Big N. The people who come from big public companies are almost always better at best practices and writing code than startup employees. I don't believe working at startups really gives you good sense for architecture, scalability, readability, or a variety of aspects of programming. It's almost all about getting that short term dollar to get to the next stage of funding. So, raw first time implementation speed gets prioritized over all other aspects. I don't find many startups have very strong technical voices either. CTOs frequently being product people in disguise, etc. That's my experience...

That is all true but you’ll get one thing working at a startup that you don’t get at a big company. A sense of legitimate urgency. I’ve worked at both and at a big company things are glacially slow and engineers love to build big “enterprise” solutions to tiny problems that don’t need it.

At a functioning startup if you overbuild you die. Everybody working at one knows this so people are much more pragmatic.

At a large company, your over engineered crap is lost in the noise.

> That is all true but you’ll get one thing working at a startup that you don’t get at a big company. A sense of legitimate urgency. I’ve worked at both and at a big company things are glacially slow and engineers love to build big “enterprise” solutions to tiny problems that don’t need it.

The "sense of legitimate urgency" is a bunch of bullshit. It's just as made up as it is at any other company. I've worked at startups from seed stage to unicorn and a lot of the real urgent things aren't things that engineering needs to do - it's other shit and usually has to do with partnering with someone. And that usually isn't an engineering problem. Engineering is rarely the blocker for things being rolled out. It's usually that product can't determine what the right product is - business can't get the partners they need - etc.

At a small company - your overengineered crap becomes the institutional bullshit that holds the rest of engineering back for years because no one can replace it because there's no time for refactoring. At least at a big company you can throw away those solutions that don't work for people. At a small company - it becomes the shit that holds you back from doing things efficiently for years.

Because startup employees are typically doing tasks where they don't have much prior experience, your chances of learning from your peers is lower in an average startup than in a large company.

"VCs and startup founders are shooting themselves in the foot. It makes very little financial sense to work at a startup vs FAANG these days."

Consider that it makes no sense to do almost any job if you can work as a dev at a FAANG.

Not everyone can work at a FAANG, moreover, this is not just a VC/Founder vs staff problem, it's an existential startup problem vis-a-vis FAANG and the rest of the world. You see the issue in housing affordability etc..

Indeed. Real upside is the only thing that lets them at all compete for employees. Investors facilitating deals that screw early employees are poisoning the well for all their future investments.

> Investors facilitating deals that screw early employees are poisoning the well for all their future investments.

That horse has bolted the barn long ago.

Also these days a motivated eng will get exposed to many projects / processes at FAANG at usually a higher quality than at a random startup. You used to need to go the startup route for generalist experience but there's so much you can pick up at the big co's nowadays.

Early stage, yes. Top late stage (unicorns) tend to win (depending on your risk aversion).

Ok cool, Il tired of seeing these startups popping up. Great thing that they are now thing of a past as they wont be able to hire anyone. /s

A few startups are realizing it is a rigged, unfair game and are trying to balance things a bit. They are offering stock purchase and exercise windows valid for several years, instead of just months or even days. Unfortunately it is still not a widespread practice. I have yet to see a company equalizing stock priorities of employees vs VCs.

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