You need to know what you are betting on
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I don’t have data on this, but I’d guess the top tier VCs attract and have deal access to top tier startups, which are more likely to perform well. Then, when those perform well, the next top tier startups will come to them again.
Perhaps someone else would be able to confirm my assumption on this positive reinforcement loop.
Also, these days you can get a reasonably good comp and still be at a startup. Sure, it will not be as much as FAANG, but it’s still good, and you get to work on an environment that’s more stimulating and allows you to try things out.
Yes. Startups these days, at least as an engineer, are a great vehicle for barbell investing. The salary caps your downside (make sure it’s enough to support savings) and the equity offers balls-to-the-wall exposure to potential upside.
Non-startup corporate (BigTech is a part of this) instead offers the vibe of “Thank you for creating the next billion dollar product, here is a 20k bonus and a pizza party”
Yes and a lot of those total comp numbers are hiding pretty reasonable base salaries behind a huge “BigTech stocks soaring hiigh”. It is still pretty rare for an Individual Contributor to make more than $250k base. Even in BigTech.
> pay a mortgage in a HCOL area out of base salary without dependency on stock
This is completely doable in startups these days. Perhaps our definition of “startup” is different? I’m using it to mean any company with VC funding that hasn’t IPO’d or been acquired by a post-IPO company.
If you have over 1000 employees, you haven't IPO'd, and you keep telling your employees to work 60 hours a week because "we're a startup" then you're some combination of delusional and exploitative.
1. A substantial fraction of successful exits are now acquisitions. If you have ever been a part of an acquisition you know that unless the acquired company is a unicorn it is unlikely that you will see anything unless you are a key member of personnel. I've seen this happen to friends at >100 companies.
2. Long timelines to public complicate things. Options, even on a 10 year timeline, may expire before you can reasonably exercise them. The lack of cash can hinder life plans (children, house) and incentivise you to bet big. Each round requires the org to once again execute. If I build play a key role in making a business worth 100 million, and we raise at a value of 2 billion and fail to get there, my stock might now be worth very little.
The E(V) at larger companies is awesome by comparison.
>The E(V) at larger companies is awesome by comparison.
It's not just comp that's variable, but experience too. Fast-growing startups offer career opportunities that you'd rarely see at FANG. Even if your goal is to simply minimize risk and maximize upside, the optimal path is probably something like bouncing back and forth between FANG for the cash comp and fast-growing startups for the career acceleration.
Not to mention the type of people who thrive at early stage startups typically can't stand FANG environments, and vice versa.
It doesn't make for the flashy 100x unicorn returns but it's been a consistent source of 5-10x returns especially for seed and Series A/B investments where the VCs are likely to get liquidation preference up to 100% of the acquisition.
Pictures shows three dice. Two dice have five spots on all visible faces; the other has six adjacent to five in an abnormal pattern.
Take another look, there's actually six pips on both sides.