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"while the typical startup may fail, such that 1 in 10 or even 1 in 15 have successful outcomes, it is "easy" as an employee to work in 5 or 6 of them for the first few years of your career."

I've been here for nearly a decade now. I know a fair number of people who have become genuinely rich (i.e. have fuck-you money in the bank), and people who are theoretically rich on paper.

With only a few exceptions, the genuinely rich people were either founders, long-time insiders at public companies (i.e. Google, Facebook, etc.), or (very rarely) early employees at smaller companies that had an exit (as in, employee numbers lower than 5).

Of the people I know who are currently theoretically rich, most are tied to "unicorns", because they can't sell their insider shares. Maybe these people will end up actually rich, maybe they won't.

But most of the people I know who match the profile you describe (i.e. worked at a few startups as a not-super-early employee, of which some succeeded), are doing okay, but are nowhere near retirement, and certainly nowhere near fuck-you levels of wealth. The expected value of the lottery seems to be something like a few years of market-rate salary at a big company.

What you're seeing in the bay area is the legacy of decades of this kind of wealth accumulation. Millions of people, taking 50+ years worth of chances, over a series of successive economic bubbles. Said another way: you're underestimating the denominator on the probability.

I don't know if I'm under estimating it, I've been researching different ways to quantify it a bit more though.

But I think more importantly we need to differentiate a bit between rich and wealthy. If you want to pick some number and say "that is rich" (which is often the case with 'fuck you' money type statements, that is fine. However I define it a bit differently. Do you own your home outright? Are your kids undergraduate college funds funded so they don't need to take loans to get a degree? Do you have enough money in the bank to pay for food and utilities for the rest of your natural life time? I think of that as "wealthy", you have lots of choices. That number though is a lot lower than the number that typically people use.

For me, when having these discussions it helps to understand the 'expectations'. The number of people who own their own jets, multiple vacation houses, and have paid staff to manage their affairs? Yeah, that is a pretty high level of extreme wealth that you're extremely unlikely to achieve, however I would estimate that every one of the first 2500 employees at Google, NetApp, Sun, Oracle, HP, CA Associates, Electronic Arts, Ebay, Netscape, Amazon, Zappos, hell even pets.com had an option at one point to buy their own mortgage. So were they "rich" by your definition?

And its fair to say "gee Chuck but yeah looking back its easy to see companies that did well, what about these days?" and the answer is really that you only know by looking backward, if you could predict the winners the world wouldn't work quite the way it does.

This the following statement however, deserves special attention.

   > But most of the people I know who match the profile 
   > you describe (i.e. worked at a few startups as a
   > not-super-early employee, of which some succeeded),
   > are doing okay, but are nowhere near retirement, 
   > and certainly nowhere near fuck-you levels of 
   > wealth. The expected value of the lottery seems to 
   > be something like a few years of market-rate 
   > salary at a big company.

This hints at what I think of as the unreal expectation, that you will come out of college, join a startup, make enough money in equity to pay all your current and future bills, and then go on to a life of partying or something.

No one should expect that any more than they should believe that buying one lottery ticket will solve all their financial problems.

However what many have been able to do, is work in technology for 15 - 20 years and get enough money to cover a comfortable existence, save for their kids college, and buy some property. The result of which means that the last third of their life will likely be as comfortable as the middle third.

Certainly some of the current unicorns will likely become non-unicorns at some point by going public or by merging with a public company. At which point some of the illiquid wealth of some of your acquaintances will unlock.

   >  What you're seeing in the bay area is the legacy of
   > decades of this kind of wealth accumulation.

Yes, and while it might not be what folks are hoping for, if you aren't at this level of wealth right now, this process is going to take decades (like two of them, maybe three) and when you come out the other end of those two or three decades, if you have been working in tech, politics, or banking, your last couple of decades will not be filled with worry about how you're going to pay the rent or pay for groceries or heating in the winter. Your kids will be doing better because they didn't have to pay for their own college educations and so started after school debt free.

Oddly enough, for many people that is the definition of "winning" in life. Not a big bank balance.

"However what many have been able to do, is work in technology for 15 - 20 years and get enough money to cover a comfortable existence, save for their kids college, and buy some property. "

If you're frugal, and invest wisely, you can do the same thing with a plain corporate job. And while it may not be as "cool," at least they don't ask you to work excruciatingly long hours like a startup (well, some do).

Well said.

> Next lets talk about lying, which is making a statement you know to be false. Now buy a PowerBall lottery ticket, hand it to your special friend and tell them "This Lottery ticket is a winner." are you lying?

Yes. You can say 'I believe/think this lottery ticket is a winner' or 'This lottery ticket could be a winner' and those are not lies. However the statement you discuss is a statement of a fact that you know is extremely unlikely to be true and is thus a lie.

You can make statements of fact about things that you are reasonably certain are true and will generally not be called a liar. However you will be being more honest if you qualify that statement of fact by as to the amount of certainty you have.

The point of this article is that deliberately expressing a level of certainty that you know doesn't match the actual certainty is lying. There are ways to express confidence without expressing certainty.

> Nobody accuses the quarterback of lying when he tells the wide receiver he is going to through the pass to him, only to be sacked behind his own line of scrimmage.

Due to the context people know that "I will throw the pass to you" is intended to mean "I will try to throw the pass to you.". The same thing does not generally apply to interpreting "This lottery ticket is a winner" (a lie) to mean "This lottery ticket could be a winner" (not a lie).

Fair enough, although I think you are trying to have your cake and eat it too. And as an engineer I share your desire to have people make precise statements. But they don't.

When I tell you that the lottery ticket I'm giving you is a winner, you probably understand that it is only a winner if the numbers are drawn at the correct time. You might ask, has the draw already occurred? (knowing that to be the critical feature) and I would either say "Yes" and you would know that I was literally accurate in my statement, and if I said "No" you would know that I was probabilistically accurate in my statement. You would then act in your own self interest based on your understanding.

So if I'm a founder and tell you that the company I'm trying to hire you to come work for is going to be a huge success. You might ask "What are your current success metrics?" or "How much revenue do you have?" And based on those answers you could tell if I were speaking literally or probabilistically.

The "interesting" (from the philosophy point of view) is the statement "This lottery ticket is a loser" is just as much as accurate as "This lottery ticket is a winner" because the operation is binary.

For every startup (or company) I've ever been in, or recruited people to come work for, I've been very clear about what is the upside and what is the downside. And generally people understand that. And I have heard people (and people have pitched me) with outrageous "sure bet" sort of things. Which I have politely, and respectfully, picked apart at the places where I have concerns. The most recent was last week when I listened to a pitch for a new product idea to connect people and jobs. I idea is really clever, if you have a critical mass of people who are looking for jobs and people with jobs participating. But there is a huge gap between the world of today, and the world where all those people are participating. If that person wanted me to believe that there was any chance it was going to be a huge success, I would have to believe they could get a critical number of people on board. They don't yet have a way to do that, so I don't yet believe they will be successful. They are completely honest and forthright about the potential success, once they have critical mass, so I don't consider them to be lying to me when they say it will be a huge success. I just know that they don't yet know how they are going to get there.

The original article was a sort of 'wake up sheeple' sort of call to action but I felt that was completely unwarranted. Sure there are some new folks who, in their first job, might feel like the possibility to suddenly be a billionaire is just around the corner. Just at one point they may have believed that all college courses are trivial. But experience teaches us to think, and when we think about startups we have to think critically about the likelyhood of various scenarios coming true or not.

But we're not talking about founders lying about their start-ups chances (the lottery ticket is a winner). We're talking about founders lying about the present situation of their start-ups (not being transparent about financial health of the company). If, like you say, both parties involved understand the risk, why can't founders disclose more?

   > why can't founders disclose more?

I expect it revolves around how people treat information.

Have you heard the paradox about if you found out that in the future you would be able to time travel, and so in the present you slack off on an exam knowing you can come back and fix it later, but slacking off results in you not discovering time travel?

There is a similar one in leadership where if you, as a leader, express doubts about the future your team will have doubts about the future and then they won't be operate at the level they need to in order to succeed. In some cases folks will believe that if they share all the information it will spook their team and make the negative outcome even more likely. Of course you can't know that until you actually try it, and once you try it you can't reverse it. Not surprisingly, one of my personal stress 'nightmares' (dreams I get when I'm under a lot of stress) is that I've just done the one thing that, having done it, it is now clear it is going to make for a worse outcome.

I don't doubt there are times when extra transparency would be a positive, and where it would be a negative. And I understand why people, unable to predict if it would help or hurt, choose not to be more transparent.

Yeah, but did those people with a 1mm+ net worth get it startup-ing, by going to oracle/google/fb and banking a bunch of their comp, or by getting lucky in the valley real estate lottery?

Also, I feel like the article directly addressed your, imo, somewhat dated impressions. In the new unicorn world

(1) startups take much longer to go public: there was a recent discussion here about how exits have now become 7-10+ years on average

(2) companies aren't shy about preventing employees from selling: viz examples in the article, or the cto of another startup (I originally wrote slack but my memory was incorrect) on here describing how they effectively prevent even fully vested employees from leaving (while often the cto/ceo/c* are allowed to sell a million or two, if they aren't already wealthy)

(3) unicorns taking huge rounds often give the next round's growth to the current employees and create giant preference overhangs; this is the flip side of raising a huge round if you can

Does the above mean nobody makes $1-2mm? Certainly not, but it does shift the probability distribution.

So be careful

In (1) the challenge is that internal valuations means that folks who cannot get stock cannot participate in the growth of value, however as an employee with a stock option you do get to participate in value growth. If you join and your option's strike price is $1 and when that company goes publiic its worth several billion, your stock value will reflect the growth during your stay in the company.

In (2) there are things you can do, and things you can't which will be controlled by the company bylaws. That said, if the company has a lot of "sweetheart" deals just for the executives then you already know its a screwed up place and you might want to seek out a different place to accumulate value. Some companies are run by people who are ill suited to be in that position, recognize that and leave, it isn't like there is a scarcity of positions around. Further, if you've been in this situation you can (and probably should) ask when you're interviewing if there are any provisions for employees to see their stock as part of a fund raising round.

Here too, one needs to understand stock and value. Typically a privately held company will have two classes of stock, one called "preferred" and one called "common". Preferred stock is usually sold to investors, and sometimes given to the founders. Common stock is usually given to employees.

Preferred stock carries special "powers" in the privately held company, it may have preferential liquidation rights, it may get to vote on board decisions, it may have resale rights. Common stock typically has no special rights.

But none of that is important when the company goes public, because all shares turn into common shares (although there may be different voting classes like there are for Google shares). It is also true if the acquisition price exceeeds the liquidation preference for the preferred stock. Some money, and/or stock from the acquiring company will filter down to people with common shares.

I completely agree with you on (3). The preference overhangs are bad for employees, and I think they are bad for founders too. So if you are a company that can't go public and you don't have enough revenue to continue operations, that may be your only choice. Or you can just admit you're dead and exit. But back to my original point the founders are going to have to believe that with this next round of funding they can get to a viable selfsustaining business. You don't have to buy into that as an employee, you can say, "I'm just not seeing it." and move on. The founders don't get that choice.