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Comment by hash872 | Hacker News Reader

Not in any way defending day trading, but I think it's interesting that it's become such accepted wisdom about how bad it is- here on a website dedicated to startups. 90% of day traders lose money, what are the odds for startup founders? Probably more than 90% fail, yeah?

Imagine if, within the next 20 years, it becomes normal & accepted wisdom that joining a startup and taking their basically worthless 'equity' is more likely to lose you money than day trading. Just kind of an interesting juxtaposition- Hacker News, Website Devoted To Risky Startups, Decries Risky Day Trading

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Not really a fair comparison.

Stock Market: you have access to the cap table, debt, overhang, etc.

Startup Equity: Unknown denominator. Unknown multipliers.

Stock Market: you can sell almost any time (unless you're trading penny stocks, etc.)

Startup Equity: you wait for a liquidity event, or hope your company is large enough to have an active secondary market.

Stock Market: you can buy/sell at any time

Startup Equity: you have the privilege of exercising an option into IL-liquid holding that you pay for now (sometimes forced to if you leave the company) but have little idea of the future value of.

To be fair, i'm working at a startup, I left a public company to do so. I'm here because I have huge impact on my product, I'm learning more, have more impact at the company level, low BS, low regulatory strangle, dynamic team, etc. I think it is rare to have positive expected value on startup equity unless 1. You are the founder or 2. It is a pre-IPO company. Your odds are probably better buying out-of-money NASDAQ Compsite options.

You don't work at a startup to make more money, you work at a startup for non-monetary benefits and if you're extremely lucky you might get rich quick. Average case is you make less, good case is you make even if your company is highly successful.

Without pointing any specific fingers, people were pushing 'you should spend your 20s working 60-80 hours a week at a startup so you can get rich' really hard for a while there. It's only relatively recently that this is understood to be a bit of a con

>> It's only relatively recently that this is understood to be a bit of a con

This go-around, there is a lot of private capital, so companies stay private for a decade or longer and lock employees out of liquidity events (meanwhile, founders can negotiate to take some cash off the table during a financing round.) The incentives are skewed. In the 90s bubble, companies with a $50M valuations could go IPO -- you could hopefully sell after your lockout. (Oh, and houses cost a tenth of what they do now.)

This go-around, there is HN, Quora, Blind, and so it is harder for people to get suckered into starry visions.

That said, it is still worth considering working at startups for the high-learning, low-BS environments you can find as compared to big companies.

> that joining a startup and taking their basically worthless 'equity' is more likely to lose you money than day trading.

How is that not obvious already?

I agree, I just think capital feels more tangible and riskier to lose than opportunity cost. Also easier to put a specific number to so easier to quantify the risk.

Only a small number of people are really good at any given thing, funny how people just forget this when a specific industry is being scrutinized.

Your making me glad I've been day trading instead of founding a new startup.

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