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.
Most of the people I know that were employee #1 got nothing.
Either found or join a company that has funding.
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.
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.
(putting in my two weeks notice tomorrow to be employee #1)
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.
You really need billions of dollars coming into a company before non-founders have a chance to make fuck-you money.
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?
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.
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.