The simple truth is that working for the equity of an unproven start-up is a gamble, and statistically unlikely to pay off. And sadly more and more start-ups are undermining access to equity in shady ways. Not that one should never work for a start up on the hopes it breaks big, but we should also never forget that the successes are outliers, by a massive margin.
Just understand the trade-offs of your decision and the probabilities involved with your decision.
I mean this is really not talked about more frequently. At this point, with all the shady tactics that most startups now pull, it would appear that only an idiot would really want to be swindled this way. Furthermore, this is not something that will go away since with less IPOs actually being successful and a mature tech market, hoarding the most value you can from your company seems to be in vogue these days.
> Furthermore, this is not something that will go away since with less IPOs actually being successful and a mature tech market
You’re implying that less successful IPOs mean less liquidity options for private company employees. That increasingly isn’t the case as private markets opens up to sales of startup equity. Success is no longer the same as an IPO and the number of companies that are becoming successful and the cumulative value in those companies are both increasing
While this is a good general approach to life IMHO as well — if you mean "be rational, not just emotional" and "work on your cognitive biases, seek objectivity" — it might also prove terribly counterproductive in this context.
It would take a book or five but briefly:
- you just can't use statistics when they say "95% fail", otherwise you just don't do startups, ever. With that mindset, joining an established company is more likely to "succeed" for you and maximize serenity.
- another stat for you: most entrepreneurs fail "about twice" before making it, i.e. you'll probably fail 1-3 times for sure before entering the 5% of those who create a profitable business. Trick #1, thus: you can roll the dice several times (consider 2-5 years per "real try").
- most valuable ideas were either not identified (rarely) or not well executed (often) before someone eventually nails a product. You thus iterate quickly on the market (MVP, feedback, lean cycles, etc) to find your best fit curve, to hone in on the product that works. Chances are you'll find a local minimum, not "the best", you'll pivot, you'll reconsider, you'll maybe focus entirely on a subsystem, a 'feature' become 'product' — think how Docker, the company, appeared after the same name product.
The reality is that a "fast scaling startup" a la California is rare and a moonshot most often — unicorns and all that — but a diligently conducted, ground, sustained effort to make a business growing organically to reach sustainability for you and a few others in 2-5 years is a realistic goal (but all things considered, e.g. probably not on your first try, likely 10 years after you began for the first time).
I don't want to claim that it's easy to create a business, it's by far harder than working the jobs in most cases; but SMBs make up anywhere from 80 to 90% of our economies, they're the real bread and butter of our collective wealth, and these 'small' entrepreneurs are our true heroes. Not many of them make it big, and that's the 'gamble' you speak of, but it's not the only way, nor is it at all required to go down that path.
You just can't use statistics when they say "95% fail", otherwise you just don't do startups, ever. With that mindset, joining an established company is more likely to "succeed" for you and maximize serenity.
Actually, you certainly can do that. Most people do. And depending on what you're optimizing for, it seems pretty rational to me.
Another stat for you: most entrepreneurs fail "about twice" before making it, i.e. you'll probably fail 1-3 times for sure before entering the 5% of those who create a profitable business. Trick #1, thus: you can roll the dice several times (consider 2-5 years per "real try").
Yes, but that's for founders, not employees. If "success" here is defined as "made more in risk-adjusted income as early-stage startup employee than I would have made as big tech company employee", I doubt any early stage employees are "successful". Every failed startup you participate in (2-5 years of your life gone) adds to the opportunity cost "debt" you have to make up once one succeeds.
As I see it, if it comes down to such criteria to decide which path you'll take — i.e. you're in tech for the money — then it makes no sense to dabble in startups. Statistics clearly don't lie in this regard.
What I meant however was a bit meta: those who are deeply cut for entrepreneurship and startups are not motivated by money first or even at all; they thus don't and shouldn't care about statistics aiming at maximizing personal benefit... to a founder, "personal benefit" is more about getting things done, creating the dream. They'd rather optimize for long-term success (the kind that's much harder to take away from you, that creates real value).
Wealth, personal or collective, is but a consequence of a successful economic endeavor. As an employee, you'd choose to work for a startup because there's something in it that corporations money can't buy for you. There's no bet if you already believe in the work, you will get what you want every single day on the job. Different values, different goals, different rewards for different people I guess.
- another stat for you: most entrepreneurs fail "about twice" before making it, i.e. you'll probably fail 1-3 times for sure before entering the 5% of those who create a profitable business. Trick #1, thus: you can roll the dice several times (consider 2-5 years per "real try").
I've never heard of this stat. Seems like a case of survivorship bias more than anything else.
For every entrepreneur that "made it" on their third try, there are millions who had to declare bankruptcy and set their career back years because their ventures didn't work out.
So the exact statistic is indeed about "entrepreneurs who make it", those who eventually create a successful business, how many time did they have to try?
Average is ~3 times, and your typical successful business (across sectors) takes ~2 years in "survival mode" (most don't make it past that mark), then 3 more (~5Y total) before things may feel "sustainable", cruising.
So indeed, we are not all considering those who don't make it in this picture. Creating a business is hard, very hard.
Small business does not equate to a startup. It's not nearly as huge of a gamble starting a small business as most aren't pursing new ideas in unproven markets, and trying to find product market fit/scale rapidly.
You're right that "startups" are harder statistically I'd suppose, more moonshots.
Still these numbers are general, not tech specific.
The mindset in entrepreneur circles:
- failing is ok. Happens to most. Those who eventually succeed try again, and again.
- you have about 2 years of surviving hell to overcome first
- going alone (by design) lowers your chances of success; hiring gets you in the right growth mindset, strategy (eg most people don't charge enough in the beginning)
Honestly, it's almost masochistic when you've failed twice yet keep trying. Obsessive. You could but just won't fold, get a regular job. This is what it takes.
That's why I said the money is far from the first goal of those who succeed. At best that kind of money is 10 years later when you first try. You'll suffer so much and statistically would probably do better at a regular job. You'll be broke often. Stressed and uncertain. Unable to make promises in your personal life to a certain extent. So why?.. Doesn't make sense from a utility standpoint. You do it because that's what you do, like artists or athletes. This is the general profile of entrepreneurs who make it, and age of success is 45-55 on average.
This is a lot like saying not buying a winning lottery ticket "Cost you" the jackpot.
Opportunity cost is a very real thing, the vast majority of startups fail, or do not deliver any meaningful amount of equity to their employees (compared to the huge pay cut they take).
This is a blog by a VC so its pretty obvious where his interests are aligned on this.
There's a LOT of survivorship bias in this article. I personally worked in small companies (30 - 200 employees total) and startups (4 employees, including myself) before ending up at a big tech company, and I would have preferred to do this journey in the opposite direction - that is, work a few years at a BigCorp, and then work for a startup.
Getting to see what works and what doesn't work in the context of a bigcorp is really valuable, and I think this post discounts that. A lot of technical mistakes I've made could have been remedied by simply seeing industry best practices, and there was no way I would have learned these things in school.
I just cringed at the thought of some BigCo software company project management tracking obsessive approach being pigeonholed onto a startup. Or the various other ‘processes’ that built up continually over the years at BigCo to minimize any sort of risk at the expense of speed and flexibility.
The bigger benefit is working with really smart people. I think you’re over valuing the utility of a lot of the stuff that goes on at bigger firms, mostly out of necessity but also many times due to managers trying to justify their own existence in the company so they create ‘processes’. But also just merely the scale of the operation where highly automated fancy systems would be a complete waste of time for a startup with a small team and a short run way.
Sorry I just think I wanted to go on a rant at all the big software co "project managers" that got hired into startups I worked at and ruined everything.
Yeah, I could have been more clear - the BigCo I'm at is still pretty light on process, and teams are free to use whatever project management approach they want. As seattle_spring conjectured, I was thinking more about technical best practices. I've learned many patterns from the software I work with now, and I've been able to grow from working with really smart engineers that have enough experience to be pragmatic without compromising on quality.
An (admittedly controversial) example is repos-per-service vs a monorepo: now that I've worked at a bigco with a monorepo, I would have used a monorepo at my previous company.
Personally having also worked at monorepoCo, I would only recommend it to another company with a good enough system to support it. I’ve heard of places trying to implement it with git sub folders and hellacious branching, to great lack of success
I worked for Microsoft this year. Had an amazing experience, learned a ton, built a great network, had benefits and was well compensated. I did this all while taking almost 0 risk. The idea that working for a tech giant is "maintaining the status quo," but working for a startup is "making something new," is perhaps not accurate.
Working at a startup can be great. Working at a tech giant can be great. Just don't make your decision based on one guy who turned down a personal offer from Peter Thiel (and was later employee #10).
When you work for a giant corporation of any sort, you are inherently breaking capitalism as it is.
There's no foreseeable way around this , it's irresponsible, and all the suffering you're seeing it the world is the cost of many many millions of people giving themselves a pass on this.
I strongly urge you to recognize that any of the life benefits you get from working at one of these places are reaped from the lives of others. (https://www.youtube.com/watch?v=oQEO2P9j_vU)
So all the suffering in the world is the fault of giant corporations? How giant do they have to be to go from being the building blocks of capitalism to breaking it?
Obviously not all. You know how english is with these words.
There's a gradient. The point at which there's no point in going up against them is definitely too far. Competition is important to a healthy capitalist economy.
I think... I think if it's not obvious to people why supporting companies that undermine competition is bad.. I think maybe I should stop commenting here entirely. I'm going to log out, and not log back in. I'll be happier, you guys can enjoy yourselves too.
Sorry to hear that someone disagreeing with you is worth disappearing entirely. Crony capitalism is indeed a problem, but I think you're going far overboard by suggesting that all large corporations are evil and that anyone who works for them is just causing all the suffering in the world by ignoring it.
And yet I'm unclear on where any of the big tech companies have a lock on their market such that there's no point in competing with them. Google has huge market share in search, but Bing and DDG and others are still competing.
Well this is why it's important to work on something that you believe in. I think there is a fatalism to think all small companies are going to fail. Individual employees should use their own judgment when thinking about whether a startup will work— they are often more right than not since startups tend to be self-fulfilling prophecy. If lots of smart people like you want to join too, then it actually becomes a lot more likely.
That being said by the numbers most startups fail, and there is no guarantee a startup role will get you a positive outcome vs other alternatives.
It’s not about the company “failing”. Very few tech startups are bootstrapped. At some point they take investor funding. At that point it doesn’t matter what the “smart people” want or the founders. The only thing that matters is what the investors want - they want “an exit”. Statistically:
- the chances of a company not just closing their doors are low.
- out of those, the chances of a company becoming a “lifestyle business”, a profitable ongoing private business are close to zero once you take investor money. Investors aren’t looking for profitable private companies hoping to get a minor dividend. They are looking for their investment to get acquired or go public.
- speaking of which very few companies exit with going public instead of being acquired by big tech. Look no further than YC. Only two YC companies have ever gone public.
- Out of those that do go public, even fewer don’t end up getting acquired by big tech and/or are profitable. Again look at YC. Two public companies and Dropbox has admitted that it has no idea whether it will ever be profitable.
As far as “smart people”. All startups think they have “smart people.”
I don't disagree with you in theory, but when an article is suggesting that you should instead make $200M in equity by working for a venture capitalist - and not just any venture capitalist, Peter Thiel, the man who is sad about women's suffrage because it means unchecked libertarianism is less likely to be chosen by free elections - for spy firm Palantir?
Go work for a big tech company, it's far more ethical if you think capitalism is bad.
Also keep in mind that there simply isn't $200M to go around for every software engineer, let alone every human. These concentrated payoffs only come at the expense of others. It's not universal advice and it can't be.
> These concentrated payoffs only come at the expense of others
Capital creation is not zero sum. It's positive sum and makes us all better off. This idea that if one person succeeds, it's because he's stolen from someone else has led to immense misery in history.
Working for a consulting firm with a lot of startup clients can also be a great experience if you plan to go that way yourself down the road, at least in what YC would call "hard tech."
You get to see the inner workings of a bunch of startups in your field, and you get to see which ones work out and which ones don't. Of course, the pay isn't great, but you do get to work on a lot of cool stuff in a "startup-ish" environment.
His "cost me $200m" is of a $20b company, so by the math he's suggesting he would've had 1% of the company after it went through all the dilutions on its path to $20b.
So yeah, if you have a chance to get nearly a cofounder's amount of equity in a company that will end up 20x a unicorn (which got that name because of how rare they are), then definitely go for it.
Another big iff here: iff the true owners of the company permit you to do so. Most startups do not permit this, afaik, which further indicates what a longshot it was that he turned down an offer from one that does.
I think they only started doing that recently, after they stayed private so long that many employees started approaching the 10 year mark at which point their options would expire.
I can't find it now, but I remember reading about a guy who was arrested in China for buying winning lottery numbers after they'd already been announced. The semi-surprising thing, to me, was that he did this more than once.
Seems like a clear example of when you should take the win, and then leave in dignified haste.
This isn't a case of an unknown mechanism. The guy noticed that the lottery didn't close for a few minutes after the winning numbers were announced, making it possible to just watch the announcement and then buy the numbers.
As such, there is no reason to believe it's anything more than it appears.
No, but he did have the option to buy that lottery ticket.
If Apple had gone bust there would have been nothing to write about. By the same measure I can review my life and take every decision I took with hindsight and re-calculate what my net worth would be if I had taken the other fork, I'm pretty sure I could come up with a few hundred million as well but that doesn't matter, you only get one life.
Next time you have to make a decision like that: take the other fork in the road, and likely you'll still end up frustrated because of the road not taken.
Life is a series of 'and' ports, if you miss one it will look like that was the one that did it but in the end random chance had as much to do with it as that one decision did.
So the comparison with a lottery ticket is on the money. Besides all that I think you ended up quite well so 'cost' is probably not the best term anyway.
> No, but he did have the option to buy that lottery ticket.
From Garry's blog [0], it looks the it was more than just buying a lottery ticket. Peter Thiel cut him a great deal, by all accounts, and he still let it go. The equivalent to that, imo, would be to have refused ticket offered to you for free which then won the lottery.
[0] (Peter Thiel said) "Cash this check, quit your job. This is a zero risk opportunity for you." I said, "Thank you very much, Mr. Thiel, but I might get promoted to Level 60 next year."
If Peter's company hadn't worked out then your decision would have been correct in hindsight. It is very hard to tell with foresight which startups will succeed or fail. Given the statistics, at the time your decision would have been the most probable one to produce more personal wealth. Even if you had chosen differently, you may not have made the $200 million anyway. If you were given stock options, decided to quit before a liquidation event, then the rational choice would be to not exercise the options because you can get hammered on taxes.
I think your choice was perfectly reasonable and was not a mistake at all.
but everybody at a startup gets offered equity and almost all of it ends up being garbage, so maybe you made a poor assessment of the startup & founder but it seems a silly thing to thinking about and a dangerous one from which to draw lessons or advice.
I think it's great to learn from your previous decisions but this one seems (1) emotionally dangerous, (2) logically faulty and (3) largely selected for the headline.
That's amusing, because shortly after that I was converting MSFT ESPP into AAPL shares (started as diversifying, then turned into an appealing strategy).
Still a lottery pick, though; I'm no financial genius. I just really enjoyed the iPods we had recently purchased.
> Not buying Apple Stock in 1999 cost me $200M too.
When I was the TA for my high school physics teacher back in 1994, he couldn't ever stop talking about how terrible Apple stock was and how he wished he never bought it. He kept trying to sell it to me; I didn't have a brokerage account or I probably would have just to get him to shut up about it.
This vlog is more of a cheap advertisement for the "oh work for a startup it's great" nonsense school. I don't really understand why I would work in an environment where the pay is shit and the issued stocks can be re-classified or diluted or just taken away by lay-offs. Makes no sense.
> But for many, it's about having a (tiny) shot at changing the world. It can be a thrill.
Honestly this seems like Silicon Valley bait for getting people for work in an abusive mismanaged environment. And I hope most people stopped drinking the Kool Aid.
> You are also a bigger fish in a small pond - more responsibility, no bureaucracy
This I can understand, I mean if you are talented enough that you don't want to jump through corporate hoops, then it makes sense. But I would only do it for a company that has competitors. Atleast that way if you do well and get mistreated (because some founder assumes that employees are sheep), then you can always take your talent to a competitor. Better if you have the ability to take others with you.
There are a lot of envs that are not abusive. Having your workplace generalized and called abusive on the internet when it's not in real life, definitely feels abusive, however.
I've seen people join abusive personal relationships with worse pay than startups, it happens with friendships and marriages everywhere. I've also seen very bad relationships between founders and teams that have caused lots of pain...
The only way this is worthwhile is if you really believe in some product + are working with non-abusive people you trust and have known for a while + actually get paid enough to live a comfortable life. You can't join a startup thinking that the world owes you and will make you rich and the startup is how it will do that. But I just hope people reading your comment don't think that any small group of friends working on something is abusive to new folks that join.
The main question is to ask what can you make out of it as an employee assuming the worst. I know full well that there are several great people working in tech as founders. I also believe that ambitious people who really think they are fantastic at delivering products can and should try the testy waters of startups knowing full well what the true market value is of the skillset that they are building. I would never ever join a startup where your market value keeps degrading. Yet many people join startups as employees with mostly worthless stock and continue to do meaningless work that doesn't help increase their market value because they are sold the Kool Aid of "belief in product" and "changing the world" or whatever so hard. As an employee, it is important to stay mindful of your market value and where it is headed.
Yeah this definitely makes sense. I think the startup work you do should build your personal portfolio. Open source (like with an actual open source license like MIT and no weird edge cases) work helps a ton too. I think also being paid in actual cash is actually pretty good and you don't have to make weird money bets.
I started here on Hacker News as a software engineer. I learned that I could build software for others, ship it and release it. I did end up taking the venture path, and now help others on that path.
The key here is that magic can be created by people, and I'm not that different than a lot of people on this site. I also got very lucky, and I'm thankful for that.
Startups are hard, and most fail, and most startup stock is worthless. But if you read my post, I'm trying to point people to the fact that the deeper lesson is to be able to learn to ship to real customers quickly.
Anyway, I appreciate the feedback. It's shockingly hard to get something that is both nuanced and clickable in video format, but I will keep trying to get better.
The first time we met, you had just announced Initialized and had hired two people to work for you. I asked one question about it hoping to see if you guys were hiring more and send a resume, and you said something along the lines of: “Yes, one of the perks of raising money is you get to hire your friends”.
I am saddened by this, since the “shipping to customers quickly (and iterating on the product based on feedback)” is the foundation of a successful growth economy.
There are so many gross inefficiencies in my market (US) that could be successfully addressed if more people has this type of orientation.
> But if you read my post, I'm trying to point people to the fact that the deeper lesson is to be able to learn to ship to real customers quickly.
The video title is "My $200M mistake" and you spend 90% of it talking about the money. In what way is the point of this learning to ship to real customers quickly?
Flipping the coin on survivor-ship bias here, I worked at a start up for 4 years that was going to "change the world". Came out with experience in all sorts of problems solved, projects implemented, customers reached, hell I even have some equity(not that it's worth much). I was young and wanted to work on problems I thought would have high impact, shit they did have large impact.
Yet when I left finally as a jack of all and a master of none. I essentially had to start completely over.
> I was young and wanted to work on problems I thought would have high impact, shit they did have large impact.
I read something to the effect that post-WWII, the British government decided the future was in three technologies: nuclear power, aviation, and computers. So they set out to make sure the UK took its rightful place as master of the future, slanting policy heavily towards those ideas.
And wow, they were three for three on predictions. But somehow the place of the UK in those technologies isn't quite what they would have hoped.
I'd be interested in seeing where you read that, because they absolutely failed to do anything useful about it almost all of the time. And at the expense of the rocket program too.
Dunno about the government, but ARM and Rolls Royce have certainly done very well in their given fields.
Curiously they are parts suppliers, not whole product manufacturers.
ARM are one of the few fully homegrown tech success stories, along with Racal/Vodafone. Unfortunately the UK has a history of "technologically successful but economically unviable" projects, and isn't able to take advantage of the startup logic where investors cover the losses.
How many countless others have invested years of their lives, in exchange for equity and comparatively low pay, in promising-sounding startups only to see those companies fail?
Should they be retroactively counting the money they could have had if they'd went to a more stable firm and had the same years of pay increases, bonuses, RSUs, etc. as a loss?
This is hollow clickbait, but the author is clearly intelligent enough to know that hence why it's mainly focused on a youtube video which I'm presuming he's doing in the name of trying to build an audience and "clout" for himself with.
> How many countless others have invested years of their lives, in exchange for equity and comparatively low pay, in promising-sounding startups only to see those companies fail?
My intuition leads me to believe its more than the cumulation of these "I could have made $N" stories :)
Not being buddies with Peter Thiel in 2003. Don't make my mistake, go back in time and be buddies with Peter Thiel in 2003.
Just the fact that he had a buddy who could cut him a check for $70,000 before his startup succeeded says a whole lot about the situation he was in. If you have a buddy who tosses around this kind of cash, your options are different from the options available to the overwhelming majority of us.
I had the opportunity to take a job as lead programmer at a dot com that ended up becoming one of the biggest entertainment companies of the early 2000's and I passed for a job at a company that went bust in 6 months.
The only lesson I got from this post is one I already know - don't regret your decisions because you can't see the damn future.
>> There’s no telling that the current outcome is inevitable if you had chosen to participate.
True. Judging from the author's terrible decision-making abilities, the company would probably have gone belly up before it got to series A if the author had joined sooner as a director.
It's obvious from early in the article that Garry wasn't "buddies" with Thiel. He had just graduated, and a college friend was the connection. That means your point reduces to: people who go to elite colleges encounter opportunities as a result. No one disagrees with that, certainly not Garry, but it's a tangential, generic and therefore a weak response to the point of this article, which is about taking the opportunities that do come your way.
I disagree with this. Why was Thiel willing to cut him a check - would he have done so for any software engineer straight out of college? Did he technically interview Tan?
If the original comment is revised from "Be buddies with Peter Thiel" to "Be in the set of <1000 people who has connections with Peter Thiel sufficient to get him to write you a check," the point still stands - this article is not generically applicable advice, and your point (which I agree with) that you should take the opportunities that come your way generally implies you should take the Microsoft job and hold out for promo - and I think you're shallowly dismissing this comment.
Having finished the article, I was just coming back here to edit my comment, because I described it inaccurately. The article isn't only about taking the opportunities that come your way; it's more specific. It's about owning more of the value that you create and having more creative autonomy in your work.
Some people are going to respond positively to that message, others not, for various reasons, but it obviously has nothing in principle to do with Peter Thiel or "Be in the set of <1000 people who has connections with Peter Thiel sufficient to get him to write you a check".
I see what you mean and yes we should probably change the title (edit: done now). But that doesn't excuse breaking the site guidelines by adding more provocation of one's own. The intended spirit of HN is the opposite: to respond to provocation by getting more thoughtful, not less.
When people respond to provocation or negativity with provocation and negativity of their own, we get a Tacoma Narrows Bridge situation. Most of the internet is doing that every day, so there are many places to enjoy that energy. Here we're trying for something different, and each user who comments is responsible for that. Not that that's easy!
I don't think pointing out that the article only applies to a very tiny minority of readers is a shallow dismissal.
I seriously doubt the overwhelming majority of people reading this article lost $200m from any single decision in their lives. Hell, most of us haven't lost $1 million from any single decision in our lives.
If anything, what this article most effectively points out is the fact the value of being born with or building connections is greater than ever in history. Maybe if the author had spoken about that it would have been an interesting piece. As it stands, it's more or less meaningless.
Keep in mind, the author has a huge vested interest in developers like us working at startups for equity stakes.
The article plainly doesn't apply to only a very tiny minority of readers. It's an argument to talented people not to undervalue themselves.
The sensational detail of "a check from Peter Thiel" is blowing the stack here, and flushing everything else the article says out of memory. I think it's worth keeping to the point.
As feedback, you are overreacting and not being empathetic to the opposing view. The post you are calling out does not strike me as a rule violation at all; it is just normal discussion.
In a real sense, this article is very biased. The author had a rare and unique combination of luck, timing, and privilege where the normally highly-irrational calculus of throwing away such a highly prestigious job actually made sense.
Nowadays, FANG dishes out 200k TC offers to new grads even — work hard and do well, and you will make 400k as an L5 in five years at Google or Facebook.
Meanwhile, startups are staying private and only enriching their founders at the expense of their employees (see Adam Neumann), and the standard 120k plus “equity” new grad offer for the first engineer employee at some YC company that just graduated Demo Day no longer makes any sense.
People are just making decisions in their best interest, and you cannot fault them for that. I think it’s a bit disingenuous to encourage talented young people to waste their time otherwise by working for a startup. Let’s revisit the terms of the deal for talented young people first before lamenting that most of them are not willing to be volunteers.
I have a friend exactly like that and it’s been basically worthless for me. I don’t really engage with him any more.
His car is worth more than my house. He seems to think that gives him the right to allocate my labor to his pet projects. Had I quit my job when he urged, years ago, I would have had a boss with untreated ADHD and unlimited money waste a half-decade of my life.
This is such a weird post. Big fan of Garry, but I don't agree with most of this.
1. Just because it turned out that you would have made $200mm doesn't make it a mistake. If anything, that outsized return proves just how rare this kind of outcome is. If you look at the YC startups graduating every year, maybe 1 will ever generate $20mm for an early employee, let alone $200mm. Joining a new startup for that kind of outcome is stupid, even (especially?) if the founder is a big personality.
2. What is the bizarre pie chart in the middle of this post supposed to show? I'm very skeptical that it's actually based on data of any kind.
3. What is the line about it being hard to believe that any company other than Google is going to make money? Apple and Microsoft both earn more than Google, don't they?
Bottom line, if you care about comp, you should know that no early stage startup of any kind offers an expected outcome remotely close to the big tech companies. Yeah, you might make a few million after working your ass off for many years. But realistically, you won't. But you would make close to that (or more) if you worked for the big tech companies for those same number of years, at a much lower risk.
If you want to do the startup thing, do it as a founder, not an employee. Start with 30-100% of the equity, not 1% or 2%.
Again, I'm a fan of Garry's, but I'm very skeptical of these posts by VCs trying to convince you it's a good idea to work at an early stage startup. Startups are great for them since they have a whole portfolio of companies to spread their risk across, but it's a shit deal for employees if you care much about comp. I don't envy the hassle of trying to hire at a startup when big tech companies literally pay 2-3x as more, but that's where we are.
Interesting, I guess, but pretty useless stat for the topic of this post. It also ignores about 200 companies in the middle that have huge market caps as well. Like Visa or Walmart or Disney. More here: https://disfold.com/top-us-companies-sp500/
Could you recommend good reading from this guy? That article doesn’t reflect well on his judgment- the story, the decision to post this story- the idea that Peter Thiel literally told him to quit his job (after he answered the question of his current salary?!?)- none of it makes any sense to me.
Agreed. On the surface Im like, oh ok yeah that is good advice. But as I pondered the situation and remembered what I was doing at that age. If someone waved my annual salary in my face to join a startup there is no doubt I would take it. But how many of us hob knob with hundred millionaires or billionaires and get approached to leave their job? maybe .01% of the folks who frequent HN. It feels a bit humble braggy.
I guess what I wanted to say was that if you are capable of building great software, you should join the .01%, because that was my experience.
I started as a reader of Hacker News just out of college, and it taught me a lot. Many of the founders we back came through Y Combinator and learned about startups here.
I grew up poor as the child of refugee immigrants. I was food insecure. My dad was an alcoholic. Being obsessed with computers was literally the thing that changed my life.
The vast majority of people like that aren't (and don't) getting into Stanford, period, because impressive-to-admissions-committee folks are usually children of other impressive people (not always, usually). I don't think it's possible to interpret this as anything but "pulling yourself up by your bootstraps".
I guess I was one of those middle class scholarship kids. There were lots of them around and they were my friends. The private school kids honestly tended to keep to themselves. It's a part of my Stanford experience I found most jarring.
I know several "middle class" kids who went to Stanford. All of their parents were professors (or at least PhDs). The rest had parents who were doctors.
I hope that eventually as more and more people realize how much more they could make at big tech (IME a lot of people just straight up don't know, esp. when a lot of the comp comes as equity grants), startups will have to start paying more/offering bigger slices of equity. But seems we're not there yet.
I also wonder how much of this is driven by software engineers who couldn't (or, probably more realistically, don't think they could) get a job at Big Tech?
Oh I agree— big tech is fantastically lucrative! I wouldn't dissuade people from spending some time there.
Separately I also agree that there's a big problem of credentialism in software engineering. We meet lots of amazing software engineers who didn't go to the right schools— that's a big reason why I funded Triplebyte.
The other big thing messing up startup comp right now are super-high valuations for mid stage companies. When you’re getting options based off an inflated evaluation your upside is low, and the probability your options become worth $0 even if the startup does moderately well (eg if it raises a round at $4b right before you start and goes public for $3b). Doesn’t matter how many options you got, they were pegged to an inflated evaluation
Agreed. People are madly in love with working at companies like Stripe and Airbnb right now, but I'm not convinced the risk is worth it. They're giving out equity as if it's liquid, but it's not. So if I can get $200k per year in equity from Stripe or $200k per year in equity from Google, why exactly would I choose Stripe or Airbnb? Just in the hopes that the $200k will end up worth $400k or $800k? I mean, maybe it will, but that feels pretty speculative. Put another way, if you already worked at Google and had the opportunity to invest cash into those companies, would you put all your equity comp in Stripe or Airbnb?
In the example where you have equivalent equity packages available at Google and Stripe/Airbnb, I think you're right -- it's hard to see how equity that has an uncertain liquidity horizon is equal in value to Google's, which you will definitely be able to sell in a year. However, I've found that offers from these companies compensate for that -- Stripe/Airbnb will offer more in equity than Google precisely because of the liquidity premium. Then it comes down to, how much of a liquidity premium do you demand as an investor?
Google at least is insanely profitable. Are Stripe and Airbnb?
Seems to me that there's less risk in the Google stock than the others, because the others need a lot of potential future upside to justify their high valuations absent major profits, and if that upside fails to materialize the valuations will tank (as we're seeing with, e.g., Lyft).
RSUs are the solution to this problem. With a double trigger a pre-public company can offer them without employees suffering a tax liability on illiquid equity.
These things are crazy rare. I didn't do a good job of explaining then how weird this experience was. In the moment it felt like any other startup. Peter was great and well known but not outrageously famous the way he is today.
I also didn't do a good job of doing an intro on this idea that tech startups are taking over all of the economy. There are some things that I just take for granted— I guess in abstraction now there are trillions of dollars of market cap in just tech firms, and this fits with my overall view that software is eating every part of GDP. We see this every day, but it's not well explained in my video/post.
I was making a joke about Google eating all of the world's revenue, but it didn't land. Sorry about that.
Really appreciate the feedback here. You're totally right that it's more directly lucrative and lower risk to work at a big tech co. I just still think people should consider making things for themselves though.
Yeah, I hope none of the criticism was too harsh. I'm a big fan, we've actually met in person, and I almost got into YC while you were a partner. Oh well :)
Agreed on most of your points here, especially about software eating the world. There's a good post here, just not sure this is it yet!
> I just still think people should consider making things for themselves though.
I've worked for startups and big companies. In both cases you're making something for someone else. Even then, at least at a "Big Company" you can sometimes choose to work on a product that you personally use.
Sorry about that. Lots of other companies are going to make money, and that's a good thing.
It's certainly a bad thing for large tech firms to take out increasingly large portions of global profits. It also might be a secular trend without end.
What I got out of the post is that the value you bring to a company, doesn't at all align with what you're actually paid, which is typical of our society.
I think the truth is more complicated than that. The synergistic existence of the company itself is what allows each person to be able to create millions of dollars in value. And there was a risky bet made with capital to create that company in the first place, and those investors / owners / etc. making a solid risk-adjusted return on their investment hardly seems like a travesty to me.
I wish we did have more employee-owned cooperatives though. I think that's a better way to fix the inherent tension of owners vs employees.
Yup. It's almost axiomatic that you are being paid less than you are worth to your company. This is a foundational piece of the capitalist mode of production.
I wish there were more software cooperatives, or worker owned businesses out there.
A cynical reading is this: he missed out by not buying a $200M lottery ticket, so the next generation of engineers and designers should buy lottery tickets.
Conveniently, the author is now in the business of selling lottery tickets.
(Then again, if he’d stayed at Microsoft he probably wouldn’t be in a position to sell lottery tickets).
Yeah, the moral of the story, as far as I can tell, is: 1) make sure to know the kind of person who can write you a $72,000 check as if he was leaving a tip at Starbucks, 2) impress him enough that he’s willing to offer you $200 million when you’re 23.
Surprisingly, these sorts of people are both not that rare and relatively straightforward to connect with.
A year of low level engineer’s salary is, relatively speaking, not a lot of money in our industry/society, regardless of what that figure ultimately works out to as an integer.
There are 607 billionaires in the US out of 320 million people. You need to meet over half a million people to average one person with Peter Thiel's level of wealth.
My personal controversial opinion is that life doesn't work like that half million people math. In reality, one either can meet a billionaire with very little effort, or won't meet one regardless of effort. Another controversial opinion: that ability to get the desired results with little effort is something that needs to be earned, it's not a casino.
I'm not sure if this is sarcasm? I went to an unranked state university myself - I'd love to experience even a fraction of the respect these folks get.
It is not sarcasm. Stanford does indeed have the most alumni who founded unicorns. But Harvard, UC, and MIT round things out nicely, for American schools at least.
I understand the general skepticism, but if Peter Thiel writes you a check for your current annual salary as a signing bonus and asks you to join his new company - you’d be stupid to turn that down now.
Worst case you can just go back to Microsoft on failure without too much lost.
Today the salaries are higher, but they’re often pretty high at VC funded startups too.
> If you look at the YC startups graduating every year, maybe 1 will ever generate $20mm for an early employee
YCombinator -- like all other VCs -- has the data trivially available to show actual compensation of early employees across entire classes of startups and not just cherry-picked best cases. After all, they have the cap tables and the exit dollar figures and how long it took to reach those exits and how many never exited. They probably show that stuff under NDAs to their LPs.
Just not to engineers.
Since YC, like every other VC, has never bothered to publish that kind of data I have to assume it doesn't support their boosterism case for working for a startup.
I really hate speeches like that. They are always told by one permile (or even less) of people that succeeded. The voice of all those that have lost are never heard. Same as blockchains, there are a few very loud people explaining how easy is to get rich, while those who gave them their money are rarely heard. I would laugh if it wouldnt be sad.
An anecdote (just a detail, I am developer for almost 30 years, I know the industry from downside up), a month or two back, two greenhorns were fanatically explaining me, how they were on a talk of X billionaire that told them it was never so easy to be a billionaire as right now. You only need a 2k laptop. I laughed on inside, but today kids really believe stories like that. Sure, gauss will do its game and a few will get filthy rich. But lottery seems a better game to me.
Maybe more poker than a lottery. A lot of luck, but there's still a little bit of skill in there.
I appreciate the feedback though. I know this is just one voice of many, but it's also what I experienced. I think it's up to the viewer to decide if my experience is applicable.
I think Paul Buchheit said it best: Advice is merely n=1 experience.
> I appreciate the feedback though. I know this is just one voice of many, but it's also what I experienced. I think it's up to the viewer to decide if my experience is applicable.
How do you feel comfortable spreading your own experiance in a manner that purposefully tries to persuade opinions while you know your experiance is non-generalizable?
Hm, is it truly totally non-generalizable? There are a lot of people who are very capable for whom the real risk is not taking risk at all. I meet them regularly.
It's not the norm, but just because it applies to a set of the very skilled doesn't mean it is not generalizable. It just isn't applicable to all people. I admit that.
It took me a good number of years to realize that working for startups cost me years of being underpaid, working long hours and no real benefits in the end. I joined a corporation a couple of months ago and now I'm getting twice as much in compensation, plus financial incentives to actually stick around for a longer time. Survivorship bias is real.
For people trying to draw false equivalencies between buying Apple stock, buying lottery tickets, etc I think it's useful to look at the difference in circumstances and how _close_ Garry was to joining.
If you compare this to Apple stock it would be like if you had the cash in your bank account and your stock broker called you up and said "You should buy 1000 shares of Apple stock. In fact, I'll just give you 1000 shares of Apple stock, there's no risk to you". And you said no.
Or if someone said "I'll give you this lottery ticket, do you want it?" And you said no.
Now obviously, not many people find themselves in such a situation. But if you're a developer this situation isn't _that_ uncommon. i.e. you have a friend from school, or a someone you used to work with that is starting something new and asks you to join. This percentage goes up the "better" school you go to and the companies you join. i.e. I'm sure a large percentage of MIT/Stanford CompSci grads and early Goog/FB engineers know someone within 1 to 2 degrees of separation that have started fairly large companies.
Probably the most sure way to wealth (50M+) in modern times right now is to go to a good CompSci school, join a larger hot startup 200-500 people, spend a few years solving hard problems, getting a good salary and building a strong network. Then when one of your network starts a company joining that company as employee < 10.
For 1-5M the surest way is to join a 1000+ employee tech company as an engineer.
In the video Garry mentioned that Thiel offered him a check for his salary. Not quite no risk, but effectively so. He'd be able to go back to MS after 6 months/1 year no problem and would have only lost out on some vesting. He probably would be able to go back to a better position which often happens.
> He'd be able to go back to MS after 6 months/1 year no problem and would have only lost out on some vesting.
And internal tenure and connections. Yes, for some companies, it's easier to get promoted as a new applicant. At others it's easier to get internally promoted and losing out on a year of that costs you quite a bit of future value.
The director of my product unit took me out for coffee and basically said as much. Congrats on the move, and if you ever want to come back, email me directly.
It was one of the classiest things that ever happened to me in my business career.
It's also self-serving. There simply doesn't exist $200M for every software engineer out of college. But if this guy, a venture capitalist, can get a thousand more people to think they'll win the lottery, invests in all of them, and 999 go bust, he'll still make money on the one startup that succeeds by being in the right place at the right time.
I started learning about startups only after I started reading Hacker News in 2006. I was an engineer for most of my career up until then. Reading Paul Graham's essays changed my life, and it changed the life of thousands of people I've met now known for over 10 years, as an alum, a partner at Y Combinator and now an investor.
Guilty, it is self-serving. It's my business. But I also know from direct experience people who can make software are capable of building billions of dollars worth of value.
I funded more than 200 companies worth over $36B now.
And I started just like you, here, reading Hacker News.
Do you think that every reader of Hacker News can do that? Logistically, how would it work?
I'm not disputing that "people who can make software are capable of building billions of dollars worth of value." Of course that's true. I'm disputing that everyone who makes software can individually capture even hundreds of millions of dollars worth of value.
VCs feel the need to constantly remind us that working at a startup is worth our time as a means to fuel the startup workforce. I understand that he was simply sharing an anecdote, but I found the conclusions and headline misleading even verging on dishonest. I've worked at an early stage bay area startup -- hiring progressively got harder and harder because candidates were becoming more aware of the career risks involved and the perks they'd be missing out on at big companies. In almost every case, you're working far more for less with very little structure -- if that's your cup of tea and have an obsession for the product, then go for it. If you're hoping to make $200 million, don't bother.
Yeah, at the end of the post I tried to reference this: You probably shouldn't work at a startup for the money per se. The real value is short cycles with users and being able to make decisions and ship.
This is also cautionary for startups. You have to be an actually rewarding place to work, otherwise there is literally no reason to work there.
I agree -- ideally, it shouldn't be about the money. But, everything comes at a cost, and the cost to short cycles with users and more control over your product is quite literally thousands of dollars, endless perks, and a cushion not affordable by most startups. That's the classic early-stage startup dilemma I've experienced -- when left to the decision of good potential hires, I've noticed a disproportionate number not willing to forgo all of that. Big companies are only getting larger and the requirement for startups to outcompete them on everything besides money and perks is higher than ever. At the very least, I think startups should be fully transparent about this instead of waving equity in front of you as though it will be worth anything.
To me it comes off as a bit contradictory to say "you shouldn't work at a startup for the money" when the title of your post and video prominently feature the "$200 million" figure.
Spot on! Clearly author’s intentions were to convince people that being an employee at a startup pays monetarily. Which is now denied by him? I am confused.
> If you're hoping to make $200 million, don't bother
... And unless you’re IC number 1, you’re not going to make more than a million bucks even in the best case as well, which makes the risk/rewards ratio higher.
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[ 3.1 ms ] story [ 252 ms ] threadJust understand the trade-offs of your decision and the probabilities involved with your decision.
You’re implying that less successful IPOs mean less liquidity options for private company employees. That increasingly isn’t the case as private markets opens up to sales of startup equity. Success is no longer the same as an IPO and the number of companies that are becoming successful and the cumulative value in those companies are both increasing
> probabilities involved with your decision
While this is a good general approach to life IMHO as well — if you mean "be rational, not just emotional" and "work on your cognitive biases, seek objectivity" — it might also prove terribly counterproductive in this context.
It would take a book or five but briefly:
- you just can't use statistics when they say "95% fail", otherwise you just don't do startups, ever. With that mindset, joining an established company is more likely to "succeed" for you and maximize serenity.
- another stat for you: most entrepreneurs fail "about twice" before making it, i.e. you'll probably fail 1-3 times for sure before entering the 5% of those who create a profitable business. Trick #1, thus: you can roll the dice several times (consider 2-5 years per "real try").
- most valuable ideas were either not identified (rarely) or not well executed (often) before someone eventually nails a product. You thus iterate quickly on the market (MVP, feedback, lean cycles, etc) to find your best fit curve, to hone in on the product that works. Chances are you'll find a local minimum, not "the best", you'll pivot, you'll reconsider, you'll maybe focus entirely on a subsystem, a 'feature' become 'product' — think how Docker, the company, appeared after the same name product.
The reality is that a "fast scaling startup" a la California is rare and a moonshot most often — unicorns and all that — but a diligently conducted, ground, sustained effort to make a business growing organically to reach sustainability for you and a few others in 2-5 years is a realistic goal (but all things considered, e.g. probably not on your first try, likely 10 years after you began for the first time).
I don't want to claim that it's easy to create a business, it's by far harder than working the jobs in most cases; but SMBs make up anywhere from 80 to 90% of our economies, they're the real bread and butter of our collective wealth, and these 'small' entrepreneurs are our true heroes. Not many of them make it big, and that's the 'gamble' you speak of, but it's not the only way, nor is it at all required to go down that path.
Actually, you certainly can do that. Most people do. And depending on what you're optimizing for, it seems pretty rational to me.
Another stat for you: most entrepreneurs fail "about twice" before making it, i.e. you'll probably fail 1-3 times for sure before entering the 5% of those who create a profitable business. Trick #1, thus: you can roll the dice several times (consider 2-5 years per "real try").
Yes, but that's for founders, not employees. If "success" here is defined as "made more in risk-adjusted income as early-stage startup employee than I would have made as big tech company employee", I doubt any early stage employees are "successful". Every failed startup you participate in (2-5 years of your life gone) adds to the opportunity cost "debt" you have to make up once one succeeds.
What I meant however was a bit meta: those who are deeply cut for entrepreneurship and startups are not motivated by money first or even at all; they thus don't and shouldn't care about statistics aiming at maximizing personal benefit... to a founder, "personal benefit" is more about getting things done, creating the dream. They'd rather optimize for long-term success (the kind that's much harder to take away from you, that creates real value).
Wealth, personal or collective, is but a consequence of a successful economic endeavor. As an employee, you'd choose to work for a startup because there's something in it that corporations money can't buy for you. There's no bet if you already believe in the work, you will get what you want every single day on the job. Different values, different goals, different rewards for different people I guess.
From working with many, many founders, this isn’t my experience at all.
I've never heard of this stat. Seems like a case of survivorship bias more than anything else.
For every entrepreneur that "made it" on their third try, there are millions who had to declare bankruptcy and set their career back years because their ventures didn't work out.
Average is ~3 times, and your typical successful business (across sectors) takes ~2 years in "survival mode" (most don't make it past that mark), then 3 more (~5Y total) before things may feel "sustainable", cruising.
So indeed, we are not all considering those who don't make it in this picture. Creating a business is hard, very hard.
Still these numbers are general, not tech specific.
The mindset in entrepreneur circles:
- failing is ok. Happens to most. Those who eventually succeed try again, and again.
- you have about 2 years of surviving hell to overcome first
- going alone (by design) lowers your chances of success; hiring gets you in the right growth mindset, strategy (eg most people don't charge enough in the beginning)
Honestly, it's almost masochistic when you've failed twice yet keep trying. Obsessive. You could but just won't fold, get a regular job. This is what it takes.
That's why I said the money is far from the first goal of those who succeed. At best that kind of money is 10 years later when you first try. You'll suffer so much and statistically would probably do better at a regular job. You'll be broke often. Stressed and uncertain. Unable to make promises in your personal life to a certain extent. So why?.. Doesn't make sense from a utility standpoint. You do it because that's what you do, like artists or athletes. This is the general profile of entrepreneurs who make it, and age of success is 45-55 on average.
Opportunity cost is a very real thing, the vast majority of startups fail, or do not deliver any meaningful amount of equity to their employees (compared to the huge pay cut they take).
This is a blog by a VC so its pretty obvious where his interests are aligned on this.
Getting to see what works and what doesn't work in the context of a bigcorp is really valuable, and I think this post discounts that. A lot of technical mistakes I've made could have been remedied by simply seeing industry best practices, and there was no way I would have learned these things in school.
The bigger benefit is working with really smart people. I think you’re over valuing the utility of a lot of the stuff that goes on at bigger firms, mostly out of necessity but also many times due to managers trying to justify their own existence in the company so they create ‘processes’. But also just merely the scale of the operation where highly automated fancy systems would be a complete waste of time for a startup with a small team and a short run way.
That wasn't a proper response to OP's comment.
An (admittedly controversial) example is repos-per-service vs a monorepo: now that I've worked at a bigco with a monorepo, I would have used a monorepo at my previous company.
I worked for Microsoft this year. Had an amazing experience, learned a ton, built a great network, had benefits and was well compensated. I did this all while taking almost 0 risk. The idea that working for a tech giant is "maintaining the status quo," but working for a startup is "making something new," is perhaps not accurate.
Working at a startup can be great. Working at a tech giant can be great. Just don't make your decision based on one guy who turned down a personal offer from Peter Thiel (and was later employee #10).
There's no foreseeable way around this , it's irresponsible, and all the suffering you're seeing it the world is the cost of many many millions of people giving themselves a pass on this.
I strongly urge you to recognize that any of the life benefits you get from working at one of these places are reaped from the lives of others. (https://www.youtube.com/watch?v=oQEO2P9j_vU)
There's a gradient. The point at which there's no point in going up against them is definitely too far. Competition is important to a healthy capitalist economy.
Cheers and good luck.
That being said by the numbers most startups fail, and there is no guarantee a startup role will get you a positive outcome vs other alternatives.
- the chances of a company not just closing their doors are low.
- out of those, the chances of a company becoming a “lifestyle business”, a profitable ongoing private business are close to zero once you take investor money. Investors aren’t looking for profitable private companies hoping to get a minor dividend. They are looking for their investment to get acquired or go public.
- speaking of which very few companies exit with going public instead of being acquired by big tech. Look no further than YC. Only two YC companies have ever gone public.
- Out of those that do go public, even fewer don’t end up getting acquired by big tech and/or are profitable. Again look at YC. Two public companies and Dropbox has admitted that it has no idea whether it will ever be profitable.
As far as “smart people”. All startups think they have “smart people.”
https://news.ycombinator.com/newsguidelines.html
Go work for a big tech company, it's far more ethical if you think capitalism is bad.
Also keep in mind that there simply isn't $200M to go around for every software engineer, let alone every human. These concentrated payoffs only come at the expense of others. It's not universal advice and it can't be.
Capital creation is not zero sum. It's positive sum and makes us all better off. This idea that if one person succeeds, it's because he's stolen from someone else has led to immense misery in history.
You get to see the inner workings of a bunch of startups in your field, and you get to see which ones work out and which ones don't. Of course, the pay isn't great, but you do get to work on a lot of cool stuff in a "startup-ish" environment.
So yeah, if you have a chance to get nearly a cofounder's amount of equity in a company that will end up 20x a unicorn (which got that name because of how rare they are), then definitely go for it.
Not to mention what not picking those winning lottery numbers cost me...
I can't find it now, but I remember reading about a guy who was arrested in China for buying winning lottery numbers after they'd already been announced. The semi-surprising thing, to me, was that he did this more than once.
Seems like a clear example of when you should take the win, and then leave in dignified haste.
As such, there is no reason to believe it's anything more than it appears.
If Apple had gone bust there would have been nothing to write about. By the same measure I can review my life and take every decision I took with hindsight and re-calculate what my net worth would be if I had taken the other fork, I'm pretty sure I could come up with a few hundred million as well but that doesn't matter, you only get one life.
Next time you have to make a decision like that: take the other fork in the road, and likely you'll still end up frustrated because of the road not taken.
Life is a series of 'and' ports, if you miss one it will look like that was the one that did it but in the end random chance had as much to do with it as that one decision did.
So the comparison with a lottery ticket is on the money. Besides all that I think you ended up quite well so 'cost' is probably not the best term anyway.
From Garry's blog [0], it looks the it was more than just buying a lottery ticket. Peter Thiel cut him a great deal, by all accounts, and he still let it go. The equivalent to that, imo, would be to have refused ticket offered to you for free which then won the lottery.
[0] (Peter Thiel said) "Cash this check, quit your job. This is a zero risk opportunity for you." I said, "Thank you very much, Mr. Thiel, but I might get promoted to Level 60 next year."
Knowing which will succeed and which will fail is sort of the whole caveat. You can't know the future when you make these decisions.
I think your choice was perfectly reasonable and was not a mistake at all.
I think it's great to learn from your previous decisions but this one seems (1) emotionally dangerous, (2) logically faulty and (3) largely selected for the headline.
Still a lottery pick, though; I'm no financial genius. I just really enjoyed the iPods we had recently purchased.
When I was the TA for my high school physics teacher back in 1994, he couldn't ever stop talking about how terrible Apple stock was and how he wished he never bought it. He kept trying to sell it to me; I didn't have a brokerage account or I probably would have just to get him to shut up about it.
Back then it was less than $1 per share.
You are also a bigger fish in a small pond - more responsibility, no bureaucracy. And usually the pay is enough to live modestly on.
Honestly this seems like Silicon Valley bait for getting people for work in an abusive mismanaged environment. And I hope most people stopped drinking the Kool Aid.
> You are also a bigger fish in a small pond - more responsibility, no bureaucracy
This I can understand, I mean if you are talented enough that you don't want to jump through corporate hoops, then it makes sense. But I would only do it for a company that has competitors. Atleast that way if you do well and get mistreated (because some founder assumes that employees are sheep), then you can always take your talent to a competitor. Better if you have the ability to take others with you.
I've seen people join abusive personal relationships with worse pay than startups, it happens with friendships and marriages everywhere. I've also seen very bad relationships between founders and teams that have caused lots of pain...
The only way this is worthwhile is if you really believe in some product + are working with non-abusive people you trust and have known for a while + actually get paid enough to live a comfortable life. You can't join a startup thinking that the world owes you and will make you rich and the startup is how it will do that. But I just hope people reading your comment don't think that any small group of friends working on something is abusive to new folks that join.
Yes he had a shot at changing the world, at Palantir.
I'm sure that it's a thrill, but it's not necessarily a benefit to the world.
The key here is that magic can be created by people, and I'm not that different than a lot of people on this site. I also got very lucky, and I'm thankful for that.
Startups are hard, and most fail, and most startup stock is worthless. But if you read my post, I'm trying to point people to the fact that the deeper lesson is to be able to learn to ship to real customers quickly.
Anyway, I appreciate the feedback. It's shockingly hard to get something that is both nuanced and clickable in video format, but I will keep trying to get better.
There are so many gross inefficiencies in my market (US) that could be successfully addressed if more people has this type of orientation.
The video title is "My $200M mistake" and you spend 90% of it talking about the money. In what way is the point of this learning to ship to real customers quickly?
Yet when I left finally as a jack of all and a master of none. I essentially had to start completely over.
I read something to the effect that post-WWII, the British government decided the future was in three technologies: nuclear power, aviation, and computers. So they set out to make sure the UK took its rightful place as master of the future, slanting policy heavily towards those ideas.
And wow, they were three for three on predictions. But somehow the place of the UK in those technologies isn't quite what they would have hoped.
ARM are one of the few fully homegrown tech success stories, along with Racal/Vodafone. Unfortunately the UK has a history of "technologically successful but economically unviable" projects, and isn't able to take advantage of the startup logic where investors cover the losses.
Should they be retroactively counting the money they could have had if they'd went to a more stable firm and had the same years of pay increases, bonuses, RSUs, etc. as a loss?
This is hollow clickbait, but the author is clearly intelligent enough to know that hence why it's mainly focused on a youtube video which I'm presuming he's doing in the name of trying to build an audience and "clout" for himself with.
To be frank I also quit Palantir far earlier than maybe I should have. A story for another day.
Thank you for the feedback though, I do appreciate it.
My intuition leads me to believe its more than the cumulation of these "I could have made $N" stories :)
Not being buddies with Peter Thiel in 2003. Don't make my mistake, go back in time and be buddies with Peter Thiel in 2003.
Just the fact that he had a buddy who could cut him a check for $70,000 before his startup succeeded says a whole lot about the situation he was in. If you have a buddy who tosses around this kind of cash, your options are different from the options available to the overwhelming majority of us.
I had the opportunity to take a job as lead programmer at a dot com that ended up becoming one of the biggest entertainment companies of the early 2000's and I passed for a job at a company that went bust in 6 months.
The only lesson I got from this post is one I already know - don't regret your decisions because you can't see the damn future.
True. Judging from the author's terrible decision-making abilities, the company would probably have gone belly up before it got to series A if the author had joined sooner as a director.
https://news.ycombinator.com/newsguidelines.html
It's obvious from early in the article that Garry wasn't "buddies" with Thiel. He had just graduated, and a college friend was the connection. That means your point reduces to: people who go to elite colleges encounter opportunities as a result. No one disagrees with that, certainly not Garry, but it's a tangential, generic and therefore a weak response to the point of this article, which is about taking the opportunities that do come your way.
If the original comment is revised from "Be buddies with Peter Thiel" to "Be in the set of <1000 people who has connections with Peter Thiel sufficient to get him to write you a check," the point still stands - this article is not generically applicable advice, and your point (which I agree with) that you should take the opportunities that come your way generally implies you should take the Microsoft job and hold out for promo - and I think you're shallowly dismissing this comment.
Some people are going to respond positively to that message, others not, for various reasons, but it obviously has nothing in principle to do with Peter Thiel or "Be in the set of <1000 people who has connections with Peter Thiel sufficient to get him to write you a check".
When people respond to provocation or negativity with provocation and negativity of their own, we get a Tacoma Narrows Bridge situation. Most of the internet is doing that every day, so there are many places to enjoy that energy. Here we're trying for something different, and each user who comments is responsible for that. Not that that's easy!
https://news.ycombinator.com/newsguidelines.html
I seriously doubt the overwhelming majority of people reading this article lost $200m from any single decision in their lives. Hell, most of us haven't lost $1 million from any single decision in our lives.
If anything, what this article most effectively points out is the fact the value of being born with or building connections is greater than ever in history. Maybe if the author had spoken about that it would have been an interesting piece. As it stands, it's more or less meaningless.
Keep in mind, the author has a huge vested interest in developers like us working at startups for equity stakes.
The sensational detail of "a check from Peter Thiel" is blowing the stack here, and flushing everything else the article says out of memory. I think it's worth keeping to the point.
In a real sense, this article is very biased. The author had a rare and unique combination of luck, timing, and privilege where the normally highly-irrational calculus of throwing away such a highly prestigious job actually made sense.
Nowadays, FANG dishes out 200k TC offers to new grads even — work hard and do well, and you will make 400k as an L5 in five years at Google or Facebook.
Meanwhile, startups are staying private and only enriching their founders at the expense of their employees (see Adam Neumann), and the standard 120k plus “equity” new grad offer for the first engineer employee at some YC company that just graduated Demo Day no longer makes any sense.
People are just making decisions in their best interest, and you cannot fault them for that. I think it’s a bit disingenuous to encourage talented young people to waste their time otherwise by working for a startup. Let’s revisit the terms of the deal for talented young people first before lamenting that most of them are not willing to be volunteers.
His car is worth more than my house. He seems to think that gives him the right to allocate my labor to his pet projects. Had I quit my job when he urged, years ago, I would have had a boss with untreated ADHD and unlimited money waste a half-decade of my life.
> "Garry, I'm so sure this is the right thing for you, "you need to quit your job right now."
How much does Pieter know the OP at the time? I'd probably be very wary working with someone with such a pitch.
1. Just because it turned out that you would have made $200mm doesn't make it a mistake. If anything, that outsized return proves just how rare this kind of outcome is. If you look at the YC startups graduating every year, maybe 1 will ever generate $20mm for an early employee, let alone $200mm. Joining a new startup for that kind of outcome is stupid, even (especially?) if the founder is a big personality.
2. What is the bizarre pie chart in the middle of this post supposed to show? I'm very skeptical that it's actually based on data of any kind.
3. What is the line about it being hard to believe that any company other than Google is going to make money? Apple and Microsoft both earn more than Google, don't they?
Bottom line, if you care about comp, you should know that no early stage startup of any kind offers an expected outcome remotely close to the big tech companies. Yeah, you might make a few million after working your ass off for many years. But realistically, you won't. But you would make close to that (or more) if you worked for the big tech companies for those same number of years, at a much lower risk.
If you want to do the startup thing, do it as a founder, not an employee. Start with 30-100% of the equity, not 1% or 2%.
Again, I'm a fan of Garry's, but I'm very skeptical of these posts by VCs trying to convince you it's a good idea to work at an early stage startup. Startups are great for them since they have a whole portfolio of companies to spread their risk across, but it's a shit deal for employees if you care much about comp. I don't envy the hassle of trying to hire at a startup when big tech companies literally pay 2-3x as more, but that's where we are.
EDIT: apparently the graph I referenced in #2 is showing that the top 5 companies in the S&P500 (as of sometime back in 2018) are equal in market cap to the bottom 282: https://www.newworldadvisors.com/post/the-role-of-private-ma...
Interesting, I guess, but pretty useless stat for the topic of this post. It also ignores about 200 companies in the middle that have huge market caps as well. Like Visa or Walmart or Disney. More here: https://disfold.com/top-us-companies-sp500/
I started as a reader of Hacker News just out of college, and it taught me a lot. Many of the founders we back came through Y Combinator and learned about startups here.
That's just my experience, YMMV.
The vast majority of people like that aren't (and don't) getting into Stanford, period, because impressive-to-admissions-committee folks are usually children of other impressive people (not always, usually). I don't think it's possible to interpret this as anything but "pulling yourself up by your bootstraps".
So, maybe things are different now.
I also wonder how much of this is driven by software engineers who couldn't (or, probably more realistically, don't think they could) get a job at Big Tech?
Separately I also agree that there's a big problem of credentialism in software engineering. We meet lots of amazing software engineers who didn't go to the right schools— that's a big reason why I funded Triplebyte.
Seems to me that there's less risk in the Google stock than the others, because the others need a lot of potential future upside to justify their high valuations absent major profits, and if that upside fails to materialize the valuations will tank (as we're seeing with, e.g., Lyft).
These things are crazy rare. I didn't do a good job of explaining then how weird this experience was. In the moment it felt like any other startup. Peter was great and well known but not outrageously famous the way he is today.
I also didn't do a good job of doing an intro on this idea that tech startups are taking over all of the economy. There are some things that I just take for granted— I guess in abstraction now there are trillions of dollars of market cap in just tech firms, and this fits with my overall view that software is eating every part of GDP. We see this every day, but it's not well explained in my video/post.
I was making a joke about Google eating all of the world's revenue, but it didn't land. Sorry about that.
Really appreciate the feedback here. You're totally right that it's more directly lucrative and lower risk to work at a big tech co. I just still think people should consider making things for themselves though.
Agreed on most of your points here, especially about software eating the world. There's a good post here, just not sure this is it yet!
I've worked for startups and big companies. In both cases you're making something for someone else. Even then, at least at a "Big Company" you can sometimes choose to work on a product that you personally use.
Honestly, I found it slightly offensive.
It's certainly a bad thing for large tech firms to take out increasingly large portions of global profits. It also might be a secular trend without end.
I wish we did have more employee-owned cooperatives though. I think that's a better way to fix the inherent tension of owners vs employees.
I wish there were more software cooperatives, or worker owned businesses out there.
Conveniently, the author is now in the business of selling lottery tickets.
(Then again, if he’d stayed at Microsoft he probably wouldn’t be in a position to sell lottery tickets).
I see now where I went wrong in my youth.
A year of low level engineer’s salary is, relatively speaking, not a lot of money in our industry/society, regardless of what that figure ultimately works out to as an integer.
I think the answer to that is "Go to Stanford". For literally 99.999% of people that is never possible.
https://www.theatlas.com/charts/HJSgAUdPx
I'd argue that all meritocracy has completely failed people like me so I can't take that seriously at all.
I'd also argue for a replacement, but I guess I'm not credentialed enough to propose one.
Worst case you can just go back to Microsoft on failure without too much lost.
Today the salaries are higher, but they’re often pretty high at VC funded startups too.
YCombinator -- like all other VCs -- has the data trivially available to show actual compensation of early employees across entire classes of startups and not just cherry-picked best cases. After all, they have the cap tables and the exit dollar figures and how long it took to reach those exits and how many never exited. They probably show that stuff under NDAs to their LPs.
Just not to engineers.
Since YC, like every other VC, has never bothered to publish that kind of data I have to assume it doesn't support their boosterism case for working for a startup.
Probably not. I can’t imagine why LPs would care. it’s not their problem.
An anecdote (just a detail, I am developer for almost 30 years, I know the industry from downside up), a month or two back, two greenhorns were fanatically explaining me, how they were on a talk of X billionaire that told them it was never so easy to be a billionaire as right now. You only need a 2k laptop. I laughed on inside, but today kids really believe stories like that. Sure, gauss will do its game and a few will get filthy rich. But lottery seems a better game to me.
I appreciate the feedback though. I know this is just one voice of many, but it's also what I experienced. I think it's up to the viewer to decide if my experience is applicable.
I think Paul Buchheit said it best: Advice is merely n=1 experience.
This was my n=1.
How do you feel comfortable spreading your own experiance in a manner that purposefully tries to persuade opinions while you know your experiance is non-generalizable?
It's not the norm, but just because it applies to a set of the very skilled doesn't mean it is not generalizable. It just isn't applicable to all people. I admit that.
If you compare this to Apple stock it would be like if you had the cash in your bank account and your stock broker called you up and said "You should buy 1000 shares of Apple stock. In fact, I'll just give you 1000 shares of Apple stock, there's no risk to you". And you said no.
Or if someone said "I'll give you this lottery ticket, do you want it?" And you said no.
Now obviously, not many people find themselves in such a situation. But if you're a developer this situation isn't _that_ uncommon. i.e. you have a friend from school, or a someone you used to work with that is starting something new and asks you to join. This percentage goes up the "better" school you go to and the companies you join. i.e. I'm sure a large percentage of MIT/Stanford CompSci grads and early Goog/FB engineers know someone within 1 to 2 degrees of separation that have started fairly large companies.
Probably the most sure way to wealth (50M+) in modern times right now is to go to a good CompSci school, join a larger hot startup 200-500 people, spend a few years solving hard problems, getting a good salary and building a strong network. Then when one of your network starts a company joining that company as employee < 10.
For 1-5M the surest way is to join a 1000+ employee tech company as an engineer.
That's not the same. See https://en.wikipedia.org/wiki/Opportunity_cost
And internal tenure and connections. Yes, for some companies, it's easier to get promoted as a new applicant. At others it's easier to get internally promoted and losing out on a year of that costs you quite a bit of future value.
It was one of the classiest things that ever happened to me in my business career.
Guilty, it is self-serving. It's my business. But I also know from direct experience people who can make software are capable of building billions of dollars worth of value.
I funded more than 200 companies worth over $36B now.
And I started just like you, here, reading Hacker News.
I'm not disputing that "people who can make software are capable of building billions of dollars worth of value." Of course that's true. I'm disputing that everyone who makes software can individually capture even hundreds of millions of dollars worth of value.
This is also cautionary for startups. You have to be an actually rewarding place to work, otherwise there is literally no reason to work there.
... And unless you’re IC number 1, you’re not going to make more than a million bucks even in the best case as well, which makes the risk/rewards ratio higher.