Comment by ryandrake | Hacker News Reader

Comment by ryandrake | Hacker News Reader

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I once interviewed for a software position at a risky looking small company, and I asked the CEO/owner if the books were available for me to verify their 1-5 year outlook before I moved my family across the country for the job. He looked totally shocked and gave a weirdly cagey “no”. I learned long after the fact that at first he was mortified and then later had a “wow who does he think he is” chuckle with the HR lady about me.

They ended up making a barely acceptable offer because despite my horrible faux pas, I was a domain expert and they couldn’t keep staff for more than a year. And I accepted because I was 1 month away from being bankrupt and homeless. Lasted a year and a half. The business turned out to be solid but I left for greener pastures.

I have no idea why owners are so cagey about the health of their businesses and funding sources, to potential employees. Especially when things are basically fine! He was bootstrapped and evidently had fine cash flow. Why is this a faux pas to ask? HN is full of entrepreneurs: why are you so offended when a candidate asks about cash flow or to see the cap table?

These are intelligent people and the actions don't make sense when you look at the details, like your example of being in a fine position. That only leaves unaccounted for variables at play, and the best I've been able to tell is that its a cultural gap between the execs and the plebs that plays out even at small startups.

You see the same behavior in non tech companies when VPs find out what their senior software engineers are paid, and start getting upset at the similar salary level, even though that's the market price. Or in things like rules that only Execs get to fly first class. I had a an executive have HR look into me "breaking the rules" when he saw me in first class with him on the way to a company event after I paid to upgrade my own seat.

Hard to take the lizard brain out of the human.

Pretty much.

Life is about observing the lizard brain rules.

Never be the bearer of bad news for example, because even if people are polite about it, the lizard brain says stab the bearer of bad news.

- Founders/management get defensive because they don't think they are so small that they cannot be trusted to pay you on time and when you ask for data it implies you don't trust their word that can taken as insulting/lack-of-confidence in them.

- The other common reason is those numbers are confidential not just from employees, a competitor or investor who is evaluating a competitor could use it against you, so founders worry about that stuff, you may not take the offer and mention it to next company you talk to etc.

- Few tech employees have the financial know-how to read financials, especially of startups . Most early stage investors rarely go through the actual books in any detail.

- Measures like churn, CAC, ARR, MRR are the go-to metrics . The actual book numbers basis cash flow can be very bad although company is in decent health, this is why banks will not loan early-stage startups money unlike small businesses as startup numbers are not simply good enough by traditional metrics.

- In small enough companies exposing the books to new employee will give rough idea of who is earning how much including the founders, and what else company is spending money on, keeping the information asymmetry can be seen as beneficial by founders.

The flipside is that most startups fail. 90% of startups have terrible numbers on the metrics like churn, CAC,ARR, MRR. Because most startups fail.

So as a startup founder, unless you are ONLY looking for financially illiterate employees who are willing to get snowed, you need to show and tell.

Often I think the employer doesn't realise that me, the software engineer, might not have the financial know how.

But my buddy from college with a masters in finance, THEY do. I'm running the numbers past them.

The upside to employees is very limited , that is the point of the post.

the upside will be low unless you join very early stage and get decent amount of equity or join as a founding engineer or the company you join becomes valued at 10s of billions which is of course rare otherwise there is very little upside.

Almost always FANNG level companies will pay you close or better what you would make best case in most startups with much less risk and far better work life balance.

The reasons I have found people are most happy with are non financial, like can’t join big tech/ great dev but poor leet coder, learning opportunities, much more senior role , switch skills, less red tape to get things done, stepping stone to starting your own etc. You can’t quantify that , for some it is worth the risk and the paycuts , for others it isn’t.

Most startup recruiters or founders probably won’t pitch that picture to prospective employees, independent of their ability to pay you economics is going to be favorable in big tech any day compared to most startups .

> the upside will be low unless you join very early stage and get decent amount of equity or join as a founding engineer or the company you join becomes valued at 10s of billions which is of course rare otherwise there is very little upside.

Startups often have very, very mission critical technical problems.

The first 20 engineers will be solving some really important technical problems. And they'll need high speed & high quality, since what they do will probably directly manifest in the ole bank account.

Even outside of engineering.

A rule of thumb running a startup is you should overpay for your first 30 employees. Get smart people who are future leadership candidates.

If/when you expand to a 500 person company. Out of those 30, chances are quite a few will manage upwards of 30 people as their reports and child reports.

I'm sure there's a million different variations on this story. By no means is it universal.

But the "early employees are solving life or death business problems, and will transition to being leaders and force multipliers of large numbers of new hires" definitely happens.

> The first 20 engineers will be solving some really important technical problems. And they'll need high speed & high quality, since what they do will probably directly manifest in the ole bank account.

I don’t know, many startups are solving business problems, tech is sometimes just fancy versions of CRUD apps.

I guess this brings up another idea.

The nature of the business is, employer's rarely ever have to hire an employee who knows how to negotiate, knows when to walk away from a deal, and knows their market price.

Most employees you've ever worked with are not quite that clever.

Most employers vastly prefer employing this slightly dim type of employee, because they cost a lot less money and ask for a much simpler quid pro quo.

I find capitalism extremely exploitative like that. At least with unions you have a hustling union boss advocating for the union employee so employees don't get ripped off too much.

Now it seems like the vast majority of people I work with are tired parents in their 30s and 40s, who are working a job they don't love for not all that much money.

Because they don't have the resources, socioeconomic and otherwise, to bargain and argue their corner.

All good reasons. But an engineer/employee considering moving from a stable publicly traded company to a startup is justified in asking for the data.

I am evaluating options now and one of the reasons I am not so keen on offers from startups (even ones with multiple series of funding) is that they expect me to take the risk without sharing adequate information.

Employees have valid reasons to ask, just explaining why it is not common to get a good clear answer from founders . Not saying it is justified .

Having said that, if risk is a major concern most startups are not the perhapsright place to work. They are designed to fail quickly than become unsuccessful or low growth businesses, employees or founders do get short end of the stick frequently.

Yes I am aware most startups fail.

Risk appetite for each person is different. For anyone considering a start up an assessment of the degree of risk and rewards is essential. So if a startup does not offer me enough information to make that decision I will pass on the offer.

Isn't it normal to have some doubts about what a total stranger tells you?

I once interviewed with a startup and the equity part of the offer was only x number of options. So I was like, OK what is current/expected evaluation and how many shares outstanding, like what is the percentage I get. That was apparently "big company thinking" and they rescinded the offer just for asking this question (through the experienced recruiter).

evaluation -> valuation?

Yes :-)

Probably the same reason most people are reluctant to admit their salary in public.

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