Hacker News Reader

Comment by brk | Hacker News Reader

Then don't be employee #1. Ever.

I get your point, but if those things are true, then that would not be the proper job for you to take, no matter how risk prone or risk averse the founder is.

View on HN

Being employee #1 is the worst of both worlds. You get the risk of a startup and you most likely will get very little payout if the startup is successful.

Most of the people I know that were employee #1 got nothing.

That's reassuring.

(putting in my two weeks notice tomorrow to be employee #1)

Make sure that you'd be happy if you worked long and hard for the start-up and all you got was the salary they're paying you + the experience.

Even if the start-up is a huge success, the chances of you making substantial amounts of money are low, unless you have founder-level equity.

My husband was an early employee at a company that was acquired in a mid-nine-figure deal. The founders walked away with at least a hundred million each. Employee #1 got a low seven-figure payout, after about ten years of grueling overtime. Keep in mind this was actually a company that is IMO unusually fair and considerate toward employees.

You really need billions of dollars coming into a company before non-founders have a chance to make fuck-you money.

Not to worry, they've just read the article on why you should not be the first employee in a startup, and more specifically, what terms you should not necessarily agree too.

Being the first employee of a startup can be the best thing since sliced bread. You take little risk (compared to the actual owners), yet the reward is usually way better than employee number 100. Who do you think is more likely to get 1) a bumb in pay and 2) a better position first?

Most startups don't get anywhere near employee #100. If you're in a startup that does, you'll likely be happy to be either #1 or #100.

Being #1 means you work as hard as the owners but for much less -- often you will end up making less than you'd make elsewhere.

Being an early hire seems to be about trading salary & security for experience running a business. Friends who have joined a startup early have said it's the absolute best way to learn what to do -- and many times, what not to do -- when you're starting your own company.

Of course, YMMV. I've heard from plenty of early hires that don't end up near the business side, and don't get much out of it.

I know it's probably the furthest thing from your mind right now, but I think it'd be really interesting to hear how this works out, say a year or two from now

The learning is incredible - esp. if you've never been in a startup before and you don't have a business background.

Just go in with your eyes wide open, and don't expect to make any money off the stock options. Figure out what you need to do to get your startup off the ground better. Be flexible in doing whatever necessary as Employee #1.

Had huge learning in 6 years. So although I took a pay cut, and I made 0 on stock - I would recommend it to others.

Yes, employee #1 is almost always the worst-off person in the company. They get to work like a founder, without the financial benefits. I've been there twice; it isn't a lot of fun.

Either found or join a company that has funding.

There's another perspective that is equally true: Employee #1 is getting paid to see how a startup is created, struggles, pivots, pivots again, and eventually turns into a viable business. There is no better way to prepare yourself to be a founder than to be an early employee in a startup.

I definitely understand where you are coming from (and I didn't downvote you), but I have to disagree.

That employee (we'll call her Sarah) isn't being paid to see how a startup is created; she's paying to see how a startup is created.

She's paying heavily. She's losing money in the form of a lower salary compared to equivalent jobs, and she's losing money in the form of losing free-time compared to equivalent jobs.

Sometimes, that payment is very worth it. But it's a payment.

Not to mention that employee #1, if an engineer, is probably chained to the engine block (figuratively), toiling with keeping the machines running. He/she most likely remains in the dark when it comes to the business development and deal making that are all important for succeeding as a startup.

Exactly. This is my biggest problem with the "earning versus learning" philosophy. Both times I was employee #1 the founders had no interest in sharing any aspect of the business side of the company. I was there to build the product; anything else was a distraction.

Isn't it normally that employee number 1 get's some stock options?

Employees are less likely to make money from stock options than actors are to make a cut of net profit.

If you don't get the same type of stock as the VCs, and under all the same conditions, it's worth pennies on the dollar at best and likely simply zero.

Being employee #1 is fine, but you should be asking questions like 'how much money do you have?' and 'when will it run out?'

I've been employee #1 and in the position of having to find another gig due to the company running out of money. It sucked, but I was prepared for it since I knew what our runway was and what our situation with funding was.

You might be employee #20 - they can still lie to you and tell you everything's fine, then run out of money in a matter of weeks.

Was employee # 100000 or so at Dell. Still got laid off. No security anywhere, sorry, its all an illusion.

Hey, may as well be an entrepreneur!

You should still be honest with employees. They'll prove better in the long run if you are. Not a lot of stories where withholding the truth from your employees ends up being something that a boss feels great about...

Yeah, I see no problem if you tell the employee, "I can pay you for two months." At least he knows what he's getting into. Besides, even a "safe" job can abruptly end, often with much less than two months' notice.

It's a very fine line. I'm not disagreeing with you entirely, but every startup I have been at, bar one, has run out of money. Sometimes multiple times. You get bridge loans, venture debt, whatever. I also find that even most seasoned startup employees don't really understand the finer points of finances in a venture backed company and how quickly goings can turn.

It would generally be advisable to tell someone coming in "We have 2 months of finances, but expect (or need) to close this large deal to get some sustainability." But at what point do you not need to have that conversation? With 6 months of money? 12? 24?

Reply on news.ycombinator.com