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Comment by vinceguidry | Hacker News Reader

This comment reads as entitled to me. Startup founders have an insane number of things on their plate, and that list just keeps growing and growing. Startup employees work hard, but the founders still bear most of the risk and responsibility.

What really needs to happen is for new ways to organize startups to distribute the risks and responsibilities better, so that it's not up to the goodness of the founder's heart to ensure a good outcome for the employees.

Of course, this implies that the pie is being made bigger, the risks and responsibilities being spread out are actually building more value in the company so as to generate a bigger exit. So far though founder-level discipline and risk-taking is rare enough in one individual that this is the situation we have to deal with.

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> Startup employees work hard, but the founders still bear most of the risk and responsibility.

As much as I am a fan of startups and their founders, this statement seems excessive. In many cases, the financial risks are passed on to either angel investors or VCs (there are some startups funded by the founders' own savings or mortgages, which is a big risk, but there are still many that aren't). I don't see any significant negative consequences to the founders if a startup fails (they're not risking personal injury, bankruptcy, a lifetime of debt or anything else as severe).

Risk of employees is actually a lot higher than that of a founder. Founders have access to crucial financial information, employees do not. Thus higher risk. Founders have all the control, employees do not. Thus higher risk. Founders can make almost arbitrary hiring/firing decisions that can affect a future (!) career of an employee. Last, but not least, employees may need a reference from their former bosses, founders don't.

You forgot the obvious detail that the founder also stands to make far, far more money from an acquisition than most employees, but (if it's VC funded and not bootstrapped) is mostly insulated from any sort of real catastrophe if it fails.

Yes, and that's the reward part of the risk/reward equation.

I'm actually not concerned at all about the rewards, 'unfairness' or any other philosophical issues. What I don't like is that there's a myth "the founders bear most of the risk", while in fact, for VC-financed startups the opposite is probably true "the VCs and employees bear most of the risk."

How about bootstrapped startups?

In my experience, which may or may not be representative of the general case, bootstrapped and profitable startups with no funding often don't offer equity at all to employees.

Those are what I meant when I mentioned founders' savings, and I agree that they are risky:

> there are some startups funded by the founders' own savings or mortgages, which is a big risk

EDIT: Sorry, I now realize you meant startups that grow from their own income (or am I still misunderstanding?). Those don't seem very risky to me, since there's not much high gains/high losses potential to them.

I think it's far more entitled to think that because someone had a good idea and either connections, money, or a great pitch that they are entitled to 1000x more money than the people who actually turned the concept from a napkin into reality.

During the previous bubble I was employee #20 of a company that ended up having a $900M exit 5 years later.. I got less than 100k out of the deal. Do I think I was entitled to 50 million dollars? No way.. but I certainly think I added at LEAST 1 million dollars worth of that value.

What if the company was really worth $9 millions at its peak post-bubble, but its founder's good/lucky timing selling it near the peak of the bubble gave it a 100x multiplier?

Say your contribution to the company is worth 1% of the company's value, would you say you added $90k to the value of the company or $9 million?

It actually weathered the bubble collapse and was sold later, in 2003, after it was profitable.

I think it's hard to put a percentage on any single employee's contribution to a company's success, but I also think it's ludicrous to say that the combined value of every employee's contribution is worth less than a single founder's contribution. It's just dishonest.

Why is this post downvoted to grey? It is not offensive and states something with which many founders will agree. Just to chip in a personal anecdote, I tried giving away equity to employees twice as part of a package, and it didn't work out either time. I do not blame the other parties , but parent poster's comments on the risk-averse nature of most workers are not wrong. Most people want cash, and it is your responsibility as an employer to pay them regardless of whether you make money.

Anyone who believes the HN community is biased towards founders can see evidence here to the contrary.

And great employees can always go to {google, fb, twitter, microsoft, salesforce, etc} and get paid $250-$300 / year in cash or cash equivalents, instead of $125-$150 plus lottery tickets.

In fact, I remember reading that round A is the worse time for an employee to join a startup: the large grants are gone, but the business isn't derisked, so your lottery tickets still have shit ev.

Is the going rate $250-$300k these days?

Honestly, though - beyond just larger equity grants, I'd like to see companies have people get rewarded when the company does well... Through some kind of bonus (in equity or cash).

It seems like most companies either have bonuses that are pretty much an expected part of salary, or they have no bonus in any situation. I've only really been part of the latter, though.

Depends on the area but 300k is probably pushing it outside management and less than 15+ years of experience. Most fresh out of college offers at big companies these days I hear are slightly north of 100k, so 150-200k for senior folks isn't out of the ordinary.

For a highly experienced senior engineers capable of largely independent delivery of projects with roughly 8-10 years of experience on a platform, very deep understanding of at least one language with a bunch of experience in one or two more, etc etc seem to be getting about that much including grants at the big companies, particularly after being there perhaps 3 years and getting grants annually.

What is a grant? Familiar with the term in an academic setting, but not that much in a work setting.

http://fairmark.com/execcomp/grants.htm

In this context, it's a chunk of equity.

> $250-$300k Probably not the going rate, but to convince a top-notch dev to work in SF proper? Sure. Keep in mind that adjusted for cost of living, that's like $125k-$150k in most parts of the U.S., which isn't crazy for a top-notch systems engineer.

Right. Ultimately participating in a startup as an employee and as a founder are two totally different life choices with very different skill sets required and very different arcs. Founders have to juggle making sure the company is on track building value with courting investors, keeping track of the balance sheet, designing the product because they're the only ones with enough skin in the game to do them effectively.

It's a different level of hard work. And a different set of circumstances if the business fails.

Honestly as a society, we should be less focused on raising the mostly already-high ethical standards of busy founders and more on providing education and support to the next generation of startup founders and startup employees. Employees can bounce to any number of happy-to-have-them bigcos because those skills are almost as rare as those you need to be a founder.

If you're looking for a bottleneck, look in the mirror. There's always more that can be done to build the community. There's a huge hunger for tech skills, tech companies, tech products.

your comment is... well, less coolaid maybe, or less hero syndrome

Courting investors does not build value. Building a product builds value.

Plenty of people can and do design products.

In the case of an acquihire, founders, unlike employees, often clear a decent chunk of money (say $.5-$1.5mm) plus get an interesting job. (I personally know of several such cases).

There is plenty of unethical behavior by founders, but most of it isn't discussed in public or on HN, but rather privately between peers.

> instead of $125-$150 plus lottery tickets.

If you're working at a startup and getting $125-150k, you're lucky. Many people work at startups for half of that or less, plus those lottery tickets.

And, if you're working at a non-startup and getting $250-$300K, you are very, very lucky. That's far, far outside the realm of what I would consider believable, even in Silicon Valley. I may be a grossly underpaid sucker, but in my 15+ years of experience I've never seen even close to that. Jeez!

I have some first hand proof that google pays not-all-that-senior engineers that kind of money and more.

So if you're good then you may consider moving to one of the bigger players for a substantial increase in pay.

I can confirm this as well. I'm about 1 year out of college and just got a Google offer (salary + bonus + stock) that averages ~$240k per year.

Wow, Jesus. I think I'm going to delete the work history section from my resume and start looking around--I could double my salary.

Yep. I'll take my 10% ;)

Best of luck! And I really hope that works out for you.

How much of that was the base pay? I received a Google offer as well a couple of years ago, with a very concrete salary and a very handwavy "and there are bonuses and stock". Did your offer actually spell out how much the bonuses and stock were worth, or did you only find that out once you accepted the offer?

Haven't accepted yet (deciding between Google and a "hot" late-stage startup). The rough breakdown is $115k salary with 15% bonus if I "meet expectations" (presumably more if I "exceed expectations") + about ~$400k in stock over four years. Add in a sign-on bonus and we reach the $240k average.

What do you mean by founders bear most of the risk and responsibility? Most founders are not personally liable and haven't put significant amount of their own money in the company. At most they get some rough talk from the investors/customers, just like an under-performing employee would. They just stand to lose some of their time that could have been spent in more profitable employment.

> They just stand to lose some of their time that could have been spent in more profitable employment.

That's exactly what employees have to lose too. The way that I've always looked at it is that any employee, founder or not, should be entitled to current-valuation equity that's equal to the difference between their market rate and what they get paid by the startup.

Founders are frequently unpaid or poorly-paid at a time when the valuation is near zero, so they end up with a ton of equity. Early-stage employees should get considerable equity, since they're likely taking salaries well below market and the valuation is still tiny. Late-stage employees likely won't get much equity because they're not taking much below market and the equity is already worth a considerable amount.

> should be entitled to current-valuation equity that's equal to the difference between their market rate and what they get paid by the startup

Rrright. Only a founder can decide to dilute the stock while keeping that quiet, or do any number of other things. While an employee is on the receiving end.

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