Ask HN: Those who've joined a friend's startup as an employee, how did that go?
While much has been said about co-founding with friends, the dynamics of joining a friend's startup as an employee aren't as widely discussed.
Have you gone to work for your friend's startup as an employee? How did that go? Would you do it again?
299 comments
[ 2.9 ms ] story [ 352 ms ] threadYour boss cannot be your friend (or vice versa). It simply does not work out well, you can't be a leader while being friends with your followers, so I expect everyone who worked for their friends will most likely describe it as a miserable experience.
A decade passed and same guy is a direct report again. So far, it’s going well again.
I’ve been fortunate to never face a round of budget cuts while a close friend was reporting to me. That would be difficult to navigate, regardless of the outcome.
This ultimately comes down to the characteristics you seek in friends, friendships, and work.
Not that you’d ever know of course.
Similarly, individuals can judge success by their one sided satisfaction with the result. e.g. "I am still very happy with the relationship" = success.
I don't know about that. Sure, they might not have been totally happy with it, but if they're still friends with them, clearly they didn't hold any grudged. I think it's reasonable to give someone the benefit of the doubt that they aren't just being oblivious to the fact that they've been ghosted or something unless you have evidence to the contrary.
I think being very clear with yourself, your partner (if applicable), and your friend-employer, while being able to engage in potentially tough conversations in a friendly manner will go a long way to managing expectations on all sides.
Working with friends you can be totally honest and comfortable with can be amazing.
More context would help. Your age? Startup stage? You have kids? Etc
I also repeated my mistake (sort of) by investing in a friend's small business. When the business wasn't successful and we didn't see eye to eye on the path forward that totally killed our friendship.
Regardless it is possible and common to be taken advantage of even with your basic survival needs covered for you
In mu experience, people don't want equity as much as they want a living wage. They want a proper salary, every month, not some mythical payday in the future.
If you can find a place that does both, thats fantastic.
Incidentally if you have meaningful equity that comes with a bunch of stress as well. Our responsibility is to make payroll every month. In good years we get some profit (so do employees) in bad months we get paid last, sometimes short, sometimes late.
I've voted you up, not because I agree with your point, but because you help readers to understand that different people have different goals. And the trading of stability for equity is not necessarily exploitation.
The economy is cyclical. Tech runs on speculation and (used to) on lax tax rules. Likewise, hiring is based on asinine processes, asinine vogues of fashion, and asinine practices. At any moment in time you could be made persona non-grata in tech.
If you joined tech for the passion of if, and you’re not independently wealthy, I think that is a foolish thing — no different than doing a physics PhD while inhabiting the middle or lower classes.
The most logical and rational path is to make as much money as quickly as possible, and enter the capital class. After that, do whatever you want. Anything else is just sticking your head in the ground.
Although, I'd say this view, much as I share it, makes it harder to find companies to work for. Especially in a tougher job market like right now.
I'll do conversational technical interviews all day. Leet code and 6 interviews unrelated to the job, hell no.
It's cynical, but once you've been through the meat grinder with layoffs, obsessive VC overgrowth and unfulfilled promises, I don't see another way so get to where I want to be financially without either letting go and becoming a hermit or as you say "enter the capital class".
Naturally if you revolve only in that space it may seem like it. And I can certainly see that culture leading to your viewpoint.
Fortunately, my experience has not been like yours.
I don’t understand what you are saying. I have this condition called “living”. If i am exposed to the elements for prolonged time I get cold, then sick, then I stop living. Likewise i need to eat regularly otherwise i will also stop living. In the current system we live in one meets these things by paying for them. They don’t accept IOUs, or not for long anyway.
These are non-negotiable minimums I need to fulfill. Even if someone offered me a deal where they pay me a huge sum after years of hard work, and this would be a certainty but nothing before, i could not accept it because i would have no means to sustain myself for the duration.
This is what bruce511 describes when they write “They want a proper salary, every month, not some mythical payday in the future.”
If a place offers me both a huge payday in the future and enough money in the meantime to stay alive I may accept that depending on the amounts in question and the probabilities as i see them.
This is what bruce511 talks about with “ If you can find a place that does both, thats fantastic.”
> most logical and rational path is to make as much money as quickly as possible, and enter the capital class.
Sounds good! I will surely do that once i can. Until then I will need that paycheck thank you very much. And call me a fool.
But lots and lots of tech workers go to work, get paid and repeat till they retire. So I don't think your thesis is universally true.
such PhDs are funded last I checked.
I'd add the caveat that equity is worth more than it isn't so limited in usage for those it is distributed too.
1 year cliff, 4 year vest, but company likely to just retrench you? Worthless. Developers don't stay that long on average, and the sale terms are basically handcuffs waiting for an exit event. Constant promises of revshare when profitability is reached? Worthless.
Cash is king because equity is not only a lottery, but a lottery that you can't even control when you play or get rewarded for it.
"Anyone giving you a wage while seeking a profit instead of partner equity is taking advantage of you tautologically"
assume all startups have huge exit and don't account that equity can actually go down to $0 - that $100 I get today wired to my account does not go to $0 suddenly.
Then you might be stuck with equity because there might be no one who will buy it off - or company board won't approve of sale, so you might be sitting on loads of "theorethical cash" that you won't be able to materialize.
Still $100 wired to my account - if I can spend it - is not getting voted by company co-owners and if things go south, believe me, you will have a hard time to bail and getting any money back from the equity.
Just like lottery ticket, people don't see the downsides only that there is $8 000 000 to win and they hear in the news every 2 weeks someone wins. Where no one is making news stories about people who spend $100 every week for years and never won.
Worker cooperative structure sounds like a different thing that I usually read about which is people accepting lower compensation for some equity, which is usually bait and switch to get young talents work for less but for "some future unknown riches".
Getting equity has to be done with enough due diligence and by people who understand the downsides. People who can do due diligence and understand the downsides will most likely rather get their money in the bank unless it is really good deal to get equity.
People also don't want to be screwed over by their friends. A little equity costs the startup's founders very little, while making sure their friends see some benefit from a successful exit is worth a lot to those friends.
If I hire a friend, then the transaction is simple - do the work, get a salary. Whether the business does well, or badly, is irrelevant. How much I do, or don't, take home is irrelevant. There's no "fairness" in play here, it's a simple business transaction.
If you can't live with that then don't take the job. Join as a founder, or go start your own company.
Feeling "screwed" happens when you feel entitled to the upside, but don't take the downside along the way. When the business folds, and the owner loses his house, are you chipping in? Are you signing paper to cover liabilities?
I'll be honest, most friends cannot separate friendship from business. So yes, it usually ends badly. Usually because the employee I expecting things not in their contract.
Hard disagree here. A startup only works if you get really motivated people to sacrifice a good portion of their lifetime to work for you. Most startups can't provide competitive wages with "big corp". If the startup folds these people lose their jobs, too. If it succeeds they should see a good part of the upside, too.
Working for a startup is a risky investment of your time. And should be rewarded accordingly. A startup that doesn't give you a living wage and at least a bit of equity is trying to screw you over.
>> A startup only works if you get really motivated people to sacrifice a good portion of their lifetime to work for you.
Either pay them for their work, or take them on as founders with founder level equity. Then you all float or sink together.
Employees who sell their time at low rates with the "hope" that they'll get rewarded on the day of sale (but without an agreement) are, well, bad at business. Hope is not a good strategy.
I completely agree that employees who pour in their time for little salary, and no formal equity, then they are fools.
Incidentally, if you think anything below Fang level salary is "low" then your thinking is too binary. Salaries are a continuum. There's no long long way between making a good living and Fang.
They may be bad at business, but we were talking about joining a friend's startup here. If they're indeed your friend they wouldn't try screwing you over like this. And if you're joining a random startup, then of course be aware that most are trying to screw you over.
My point was rather that startup level salaries without equity _are_ being screwed over. Nobody expects the founders to give the same amount of equity to all employees. Of course the founder has an outsize risk here. But the employees do face a lot of risks with startups as well, so they should get some level of equity to match that. Otherwise they don't get any reward for that risk. Which is again, being screwed over. And also they usually have to invest more time in the startup than a normal corporate job, so that should be reflected in the equity they get, since most startups don't have the funds to reflect it in high salaries.
>Incidentally, if you think anything below Fang level salary is "low" then your thinking is too binary. Salaries are a continuum. There's no long long way between making a good living and Fang.
No, I was thinking about normal big corporate salaries. I don't live in the US though, so maybe that influences this. They usually offer more work-life balance, low risk, and a better salary than most startups.
Whenever this topic comes up I always feel like I'm in some weird Silicon Valley Twilight Zone where "friendship" is some sort of code for "people I have access to exploit when necessary"...
Of course, friend or not, all you have to be, to not be exploitive is to agree on a salary, and pay it.
How major shareholders can change the deal by dilution, how can they just spin up separate entities to compete with what you have even though it might seem they are on the same boat while in reality they are not.
One would say "you can always go to court" - can you? If guy that gives you equity was already in the game he already has lawyers and most likely more capital in his pockets. If your equity will be worth $200k and he drags court case so you have to pay for your lawyers $300k in fees is it worth? Especially if you are an engineer that has mortgage instead of loads of cash in bank or other investments. Can you stretch $100k over to win the case and then even if you win and he has to pay you back all the costs with interests, you believe someone will just wire up it in one day instead of dragging it out for another 10 years where you as small time guy cannot sleep at night because all of the crap.
IMO this is all about expectations. If you never lied to your friend about your actual experience and skillset and your friend offers reasonable compensation then it's win win situation. Working on a team of like-minded people is amazing.
It will also probably be hard for your friend to deliver tough feedback to you, so you may have to work extra hard to solicit real feedback.
For example, when you moved from being a peer to a position lower in the hierarchy, did this alter the nature of your friendship? And similarly, what changes occurred when the roles were reversed?
I've done this a few times and overall it went better than working with a stranger-founder.
ALTHOUGH - You should understand that, independent from the various forms of risk the business faces, and also independent from the financial risk and uncertainty you face through your agreements with the startup:
1. The social fabric of startups are highly unstable for the first few years.
2. The beliefs the participants have about the world, the other people in the organization, what to do, and so on is also highly unstable.
Your relationship is a minor player relative to the other(sometimes chaotic) forces affecting the organization, however generally it works in your favor.
Also, the normal rules for navigating a startup are still apply. Of those, the most important is selecting the right startup to join.
There's a significant difference between joining pre funding/product/revenue as an "employee" vs when it is a more established business or part of a larger team.
It comes down to the dynamics - if one is asked to join in, it's because one has demonstrated capabilities and the ability to execute in a team environment.
There are reasons he's right about what he did and there are reasons I'm right about being upset about it but it definitely cost us our friendship.
I think back that if he had operated with integrity and honored his agreement to keep me on for two extra months it would have not been upsetting to leave then. As it was it left me scrambling with three small kids.
The lesson to me is that even if the startup is flush with cash, there will be issues. How the founder manages those issues matters.
I recall when I had my startup I did a bunch of business coaching and really had to take on a lot of uncomfortable things about myself. I'm grateful for that. I invited him many times to participate in that work and he never did. When the money is good you think you don't need it.
you did not mention whether this early termination was communicated beforehand.
nevertheless this person probably never was your friend. sry
No, it's completely common for friendships to break down over business.
Very few friendships are robust enough to survive one party costing the other $20,000.
hence no money can be enough to compensate for a friendship
I have other friendships that have been tested for similar amounts that have survived. But, it leaves a mark.
I had an ex-employee who worked for me under starvation wages in a startup long ago. He was upset about that and some tax implications, and brought it up with me. I gave him a smallish lump sum and enabled him to put a down payment on a house. I need to ask him about that, it was really brave to ask me to clean something up, and I never did that with the friend from the OP. I wonder if it would have gone differently.
I'm seeing a lot of people in my circle struggling right now. I bet 2024 is going to be a bad year for friendships.
Is it possible to buy a real friendship for $20k? Is a friendship of many years worth more to you than $20k - would you stop being friends if someone else offered you that much to do so?
This isn't a paltry sum of money, it is a paltry sum to end a friendship over.
That probably depends on how critical that $20k is to you. If it's your only $20k, then yeah it'd be much more impactful than if it's just one of many.
But even when the loss causes little financial hardship, it could put a strain on a relationship.
Imagine you invest $20k in my business and I buy a $5k industrial juicing machine for the office so my staff can have freshly squeezed orange juice. I tell you that employees expect free luxury food these days and it'll make hiring much easier. You have your doubts.
If the business does well and we both make a big profit - we're both happy. You still think the juicer was a bit extravagant - but it all worked out in the end, and maybe I was right that it helped with recruitment.
But if the business fails - you might resent the fact I wasted $5k of your money on a juicer.
It all depends on what is a friend. Your statement makes me question what makes a good friend. I don't really know right now. It is a lot harder to make them at 50, of that I'm sure.
The issue with friendships is usually there's some expectation of being in it 'together' and to put in some sort of similar effort, despite the major power imbalance of employee vs. cofounder.
If the founder feels their friend is for instance, giving say half the effort they are (which I feel personally is reasonable for an early stage employee, that they have a life), they may feel their friend is violating some notion of trust, despite the friend getting maybe 1% equity at best.
On the other side you are a friend, I really don't know what he could have done differently, very hard.
I also have a list of friends who I would tell to just put their money in an index fund.
I can’t think of any friends who would be good founders, but I wouldn’t work under because they’re friends.
People said it might go badly; they said the same about living with a different colleague, and that also went perfectly for me.
An engineer I worked with for several years (and became friends with outside of work) started his own company, a couple of years later he recruited me to join as his business was taking off. He’d also brought in a business guy who seemed to put in lots of processes including a mandatory take-home coding assignment as part of their interview process.
So anyhow, this guy who I’d worked alongside for years, who’d seen plenty of my code and wanted me to join his company, was going to make me do this homework to get an offer.
So I did a verrry basic solution to this thing and sent it back. A bit later I got an email from someone in their office that they regretted they didn’t have any positions that fit my experience.
Later my friend (and his wife) encouraged me to do the homework thing again but I laughed them off. I didn’t want to work for a small company that somehow had hamstrung itself with unnecessary processes that kept the founder from hiring someone he wanted to hire.
A few years later they sold and a couple engineers I know made multiple millions. So yeah, I dunno, I felt good about my decision at the time, but in retrospect it would have been better to act like any job seeker and just go to work for my friend.
Your mileage will certainly vary.
Am an EE and I cannot stand the CS people at work. Oh you wrapped well known math in machine syntax sugar, none of which you invented, or defined? High 5, edgelord.
While I know what you're saying that the founder is vouching for your experience, its still going to cause friction, I think. Especially, again, to all the people that fought for the job.
i agree with you that once the company is large enough that the founder is no longer involved with hiring decisions then they should not just go over the hiring team.
more specifically, as in this article: https://www.cio.com/article/236189/5-reasons-ceos-should-be-...
i am talking about smaller companies that don't yet have senior management and HR teams
Had your friend delegated the engineering hiring decisions/process to someone else, and was trying not to step on their toes?
Or friend had instituted the process, and didn't think it would go well with the other people, if you looked like a nepotism hire who bypassed the process?
Or friend was trying to put you in your employee place (where you had to meet his process), or otherwise was getting a bit full of himself, or a bit sleep-deprived and nutty?
This would be a strange take. CEO shouldn't be letting people in on the nod. If hiring is someone else's job, CEO shouldn't be overriding. At best suggesting candidates but saying that it's totally the hiring manager's call.
If a candidate didn't pass a hiring process because they didn't put effort in as they felt they should get the job due to connections, I would agree with the company's decision.
To the company it was never, and as high a recommendation as the CEO would be; most people would agree they did the right thing. Unless you're hired before a hiring manager or whomever is doing the hiring you should follow the process. If you treat it like a joke because you feel entitled by your connections then be willing to accept the outcome.
That person should be fired, for being unprofessional and for inability to adapt to a trivial non-standard situation ("normally we test the applicant's technical competency with a take-home test; now it already has been established; so I need to stop wasting everybody's time and spend my time doing something actually useful".)
Obviously, HR could still be useful in establishing a culture fit, but even then it's pretty much a formality since the CEO worked with and recommended the guy.
None of the other stuff you're saying is relevant. No point doing armchair psychoanalysis.
Clearly, the process (of cutting technically incompetent people while letting through the technically competent ones) is not working properly; that alone is fireable incompetency ("You had only one job and you failed at it!").
Another fireable thing is that HR does not understand that they are under the CEO, they are implementing the CEO's vision, in the way he envisioned. But instead of that, HR is indeed ego-tripping.
OTOH, it may be that the company already have one or some super programmer, that he/she carry the company to success. Having OP, if we assume is another super programmer, may halt the company rather than improve it.
I think it's kinda intuitive that this could happen. Startups tend to require early people to figure out and apply a ton of diverse skills. You can guess many founders will think "I'm hiring my friend, and I don't know how the power dynamic will work out". And some percentage of those will then think, "...so I should establish from the start that they're the employee, to avoid problems later." And from there you get the dance-for-our-approval tests that so many techbros have cargo-culted.
You also could have just smiled and nodded and actually done a good job to demonstrate your skills. It looks to me like you pulled your punches.
I think it's best not to mix the two because a shitty business decision will eventually need to be made at your expense and it will most likely ruin the friendship.
Overall it was a very positive experience and I think it strengthened the friendship. I felt like I was able to be way more honest throughout my tenure about what I wanted and how I thought things were going.
I’ll also say I did it carefully. I waited until the Series A was raised and joined as the ~50th employee so I was able to get compensation I was happy with and I didn’t come in needing to carry the company.
I will say that I would not have done this with a closer friend. Not worth the risk to the friendship.
I was uninformed on how stock grants worked and trusted their advice. They said "I'll take care of you."
They made millions from the venture. I was able to buy a motorcycle.
Any chance you could elaborate on this? What about stock grants were you unaware of (or misunderstood) until it was too late? What should people reading this watch out for?
Philosophically, even if not written in the contract, someone could convince you to dilute at the last minute. The best interest of a buyer is to put the target in close bankruptcy before buying it. Anything is possible in peer-to-peer negotiations, and legal framework can only go so far.
they gave a fraction of a fraction of a percent, from a particular share class that likely was subordinate to other liquidity preferences.
like, even if you were personally more informed the outcome wouldn't be different? you would have rooted for an even bigger upside for the whole company.