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Comment by abalone | Hacker News Reader

It seems highly improbable that cash-based Wall Street compensation packages could be offered by Silicon Valley startups. Maybe established companies could, but it would massively increase the fundraising requirements for early stage companies, with probably bad effects on the SV ecosystem.

Perhaps you can argue that startup equity grants should be higher. Would hiring issues be resolved if the average equity grant tripled? Would more talented people in the U.S. pursue Silicon Valley careers if they got 3% instead of 1% to be an early employee?

I can't prove it, but I'd conjecture it would only have a modest effect. The notion of "expected value" of equity is problematic. It's not like it's simply a 3X stronger offer. The bigger issue is whether the company will be worth anything at all.

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"That totally blows out my business model!" may be true [+], but is not an objection which should escape the lips of someone who has the word "capitalist" literally in their job title.

[+] I'm agnostic on this. Pinterest just raised, what, $450 million dollars? That's presumably not intended to buy the world's biggest vat of chocolate pudding.

Out of curiosity, what are programmer salaries like in Japan, and how is immigration there?

Read and discover:

http://www.kalzumeus.com/2014/11/07/doing-business-in-japan/

(I could pull an answer to your question out of this -- hint, search the page for a dollar sign -- but if you're reading "out of curiosity" you should just get some coffee or something and read the whole glorious thing, because the number is useless without the context, and the context is very different from the USA.)

I'd forgotten about that. On the whole, it looks like, despite lower levels of immigration, Japanese engineers do not earn more than their US counterparts, which makes sense: the economy is complex, with a lot of different things factoring into how much people make.

Pinterest is waaay beyond the early stages of startups that Paul Graham focuses on.

It used to be that it did in fact take millions of VC just to get startups off the ground (70s, 80s, 90s). We could go back there. Would it be better for the ecosystem? Would employees have a net gain, or would there be fewer early stage companies & jobs? I don't know, but these are the macroeconomic questions to consider.

The impact would be reasonably small, depending on which sub-slice of the startup ecosystem you are looking at. Paul Graham doesn't advocate jacking up headcount before you have decently functional business fundamentals. The YC model seems to be that (before the product is proven out) development is done by founders, which costs the same no matter what the prevailing wages are. After that, it's either (1) paid by revenues or (2) paid by VC money -- in the latter case the VCs will adjust expectations and/or the amounts they invest, and in the former, they'll just need to get 2x more productive employees, which is well within the band of talent hired by the marketplace today.

I don't think pg says it's founders-only until you prove product-market fit. Usually it takes some hires and seed funding to run some experiments and show proof. Product-market fit is more of a Series A requirement.

If the cash cost of running experiments goes way up, that may very well mean going back to the old way of doing things, where you essentially had to jump straight to VC money just to get off the ground.

> It seems highly improbable that cash-based Wall Street compensation packages could be offered by Silicon Valley startups.

Maybe this would force VC companies to be more selective in who they fund, vs "fund 100 and hope for 1 to be the next google".

A first approximation would suggest doubling programming salaries would only change their strategies from "fund 100 and hope for 1 to be good" to "fund 50 and hope for 1 to be good". More selective, sure, but not game-changingly so.

Not sure that would be an improvement. If funding gets tighter and more selective, their selection criteria might become pedigree and connections instead of who has the better idea and team.

The very reason they fund 100 and hope for 1 is that all the analysis and data in the world have not helped narrow likely success criteria beyond 'fund the team.' What's stopping you from starting a VC fund that's REALLY CAREFUL with investments?

> Would more talented people in the U.S. pursue Silicon Valley careers if they got 3% instead of 1% to be an early employee?

IMO, no. The difference between founder and employee #1 is still too large, even though the risk is not significantly higher.

Assume there are two founders, splitting 50/50, then there's a 10% employee option pool, so the founders have 45% each. Moving from 1 -> 3% is not enough incentive, but moving from 1->10% might be.

While I'm willing to be convinced that things like HFT have some value to society ( https://www.chrisstucchio.com/blog/2012/hft_apology.html ) and while there are certainly some lame things that come out of Silicon Valley, on the average, I think I'd rather see more resources flow to the latter than the former.

> Maybe established companies could, but it would massively increase the fundraising requirements for early stage companies, with probably bad effects on the SV ecosystem.

Welcome to running a business. You aren't guaranteed anything. If you can't survive, you die. Tough. That's life.

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