An Offer
Recently, a startup made me an offer to move to San Francisco from Missouri to work with them. It would be great to get your thoughts and opinions, and to learn from your experience.
I'm nineteen, and I've been programming for seven years. I left high school when I was seventeen to work in the video game industry. Over the last few years, my job has improved my programming skill from "decent" to "pretty competent". I can hold my own, fix bugs that aren't mine, and implement new features and big systems. Some screenshots of my three-year-old demos can be found here: http://www.flickr.com/photos/16941908@N08/ and you can actually play those demos by downloading them from here: http://www.mediafire.com/?b9mvmstg04v
The startup is a group of seriously awesome fellas, and they're extremely smart. It would be fantastic to jump into the startup scene feet-first by joining them.
To keep confidentiality, let's say that I would be anywhere from the 7th to the 10th hire. I was offered a salary of $60,000. As to the stock, I'm extremely new to the terminology, so please bear with me. To avoid saying the exact share numbers, let's pretend that I was offered four shares, vested over four years. The total number of "authorized shares" is then 2391.56, and the total number of "issued shares" is 1916.1. (Again, those numbers are not the actual numbers, but they are accurate in proportion with each other.) There is a double trigger acceleration of 50%, so if they were bought before the shares were fully vested, I'd receive 50% of the rest.
Is that offer reasonable? I'm certainly not counting on them getting bought. I'd simply like to find an interesting project and then really throw myself at it.
Some other questions, if you don't mind: What's it like to live in, or near, San Francisco? What would you do in this situation?
Thanks a lot. I really appreciate your feedback on this.
Shawn
57 comments
[ 5.0 ms ] story [ 92.8 ms ] threadI don't have any direct knowledge of palish's qualifications, and I certainly mean him no disrespect -- but his self-description (19 years old, programming for 7 years, high school drop-out) doesn't exactly scream "uber-hacker" to me.
If I had to pick 10 applicants for a software company and I knew nothing about them except whether or not they had accounts here, I would take 9 news.yc'ers and one other, just in case.
The pay won't be what it should, you're likely to get a tiny percentage of stock that has a low probability of being worth much in the end. BUT, you'll be in the game, you'll learn a lot, and you'll meet smart people.
From this first experience you will enter into your second startup employment round better educated and in a better position to negotiate.
As long as you can live off the salary for a year or two, and they're covering your relocation, I'd say go for it and enjoy the ride. You can almost always move back to MO and be richer for the experience, if nothing else.
.16% of the company is low. You can try and get more, of course, but the offer as it stands is a great way for you to relocate to SF. If you don't fall in love with this company, you can always find a better job with a different company.
$60,000 is low for an uber-hacker in SF but it's plenty to live, especially when you're relatively young. Get a roommate if you want to live in a decent place in a safe part of town, otherwise, the less safe or more boring parts of town are cheaper. I'm trying to find a place on Craigslist now for an upcoming move to SF... right now I'm looking in the Castro, Mission, and Noe Valley areas. However, few places are available in advance on Craigslist. I think the way it actually works is the place is listed on Craigslist, you go to the open house the next day and beg the landlord to take your deposit, and maybe you can get the place. Things are not nearly as tight outside of SF proper, but there is a reason SF housing is in such high demand.
This is a good overview of SF neighborhoods. http://www.dreamworld.org/sfguide/Neighborhoods/index.html
What makes you think so?
I give the users of this site a lot more credit than that.
Especially a user like Palish who has been around long enough to read rms' comments;-)
If you really like the group of programmers, and you really want to move to the Bay, that's worth something, take that into consideration. And, there's always the "chase your dream" scenario that's worth something as well.
As to the stock options: If those are the ratio's, you're not going to be getting much if the company gets acquired. Think about it this way. If there are 3000 shares outstanding, and you get 4 shares, you own %0.13 of the company ( 4/3000). Now, whatever the company gets acquired for, you receive % 0.13 of that amount. So, if the company gets acquired for $10 million, you get $13,000. $100 million, and you get $130,000.
As an aside, there are precious few companies getting acquired for $100 million. There aren't that many acquiring companies that can afford it.
Another issue: There is a lot of competition in the Bay area as opposed to other parts of the country. There are a lot of incredibly smart people out here with several degrees and tons of experience. San Fran has some of the highest per capita Phd's in the nation. It can be a bit intimidating when your first arrive. You go from being one of the elite geeks in your small pond, to being just another techie in a huge ocean of nerds.
I've known a couple of people who came out here, and felt blown away by their own lack of education. It's easy to feel pretty inadequate. Paul Graham can write about the problems with the educational system, but Paul also has his PhD in Computer Science from Harvard. So, take that into consideration, too. He also recommends people finish their college degrees before starting their startups.
I've always been one to chase my dreams, however despite what anyone else said. If you really want it, you'll find a way to make it work.
If this is the industry you want to be in, you're best bet is to make the move out here. The job is reasonable, and even if it doesn't work out there are a hell of a lot more opportunities.
$60,000 a year. Let's say it's $42,000 after tax. That gives our pal $3,500 a month. $1600 gets him a very nice studio apartment without roommates and covers utilities (no fiber internet available, unfortunately). He has $1900 a month to buy food, clothing, and entertainment... this would be enough to eat three solid meals a day in mid priced restaurants. Food isn't particularly expensive in San Francisco either, it's not like New York. Doesn't sound like a bad standard of living to me in the slightest, unless I'm missing something.
For a 19 yr old kid with minimal needs and few fixed expenses, 60k is fine I think. I still might recommend roommates, though you'll want to be picky. In addition to saving a ton on rent, it's nice to have people around especially when you move to a new area.
Utilities: Cell phone: $40-50 a month easy Internet access: $60 a month Other utilities? Electricity? Water? Garbage? $50-75 Food: $15 a day x 30 days a month= $450 (This is the low end. Have you been to Safeway lately?) going out to eat twice a week for one month? $20 bucks a plate = 160 Cable? $30-60 a month. or $110 a month Comcast cable/high speed bundle.
So, the total for those utilities you're looking at 700-900 a month, unless you can get some of those bundled with your place.
Transportation: Car? $100 a month in insurance on the low end. Car payment?: 300 a month (low end more for a new car) Gas? $100-150 Parking??? To have a car, you're talking a total of 500-700 a month in expenses. It'll be cheaper if you take the Muni, of course, but then you have to factor in occasional cab rides and car rentals if you want to go out of the city.
So, just in expenses, you're talking $1100 - 1800 a month. That doesn't include clothes, any bills that you have to pay like credit cards, or school loans. You will probably have to fly home once or twice a year to visit mom and go to the required family reunion. If you're like me, when you're living on your own in a large city by yourself, you go out a lot more often, and eat out a lot more than twice a week. That also doesn't include emergency expenses like parking tickets, car repairs, a new laptop once a year, World of Warcraft subscription, new IPod, etc...
You could probably manage on 60k a year, but it's going to be really tight. And, if you don't watch out, those credit card bills will start creeping up in a hurry. That's all I'm saying.
60k is enough to live on. A small percentage of the company is enough to make it extra lucrative.
What I would personally use the experience for was seeing how the industry works, meeting people with similar interests as you and people you would want to work again in the future.
Good luck!
It seems like a good opportunity to jump into the scene.
The thing about getting some work experience before you go to school is that it may make you a better student. You'll have a better idea of what you want to learn and why. You'll be better equipped to recruit future colleagues from among your fellow students, and you'll have better war stories to tell them when you're sitting at the bar.
The idea that "a degree is a nice thing to fall back on" is true, but the reverse is even more true: If your career falters, you can always go to college. (If you have the money, of course... but if you won't have the money then, you probably don't have the money now either!)
But, seriously: I agree that the college experience may be most enjoyable when you're in your twenties, if only because that's how old most of the other students are. You may not want to be so old that you feel a generation gap with your own classmates. But the guy is nineteen. He's got eleven years to go before he's thirty. He can afford to work at three or four startups and still graduate from college before he's thirty.
BUT, I think the most important factor is the experience. If the guys you're going to be working with are top-class and if you think you'll learn a lot (sounds like it), then take the job and don't worry about the compensation too much. Working with intelligent colleagues is the best way to become a better hacker, not to mention making great networking contacts and positioning yourself for a higher-paying job down the line. When you're just starting your career, 60k vs. 75k doesn't make nearly as much of a difference as working with "B" coworkers vs. working with "A+" superstars.
As far as living in SF, there's a big difference between living in San Francisco itself and living in the SF Bay Area. SF will be somewhat more expensive, but it's a blast when you're young, and I'm guessing a big upgrade from Missouri. The Bay Area is a lot more suburban; there's less culture, and you typically need to go to San Francisco or San Jose if you want to go out.
I agree with rms though. Just remember that you should choose the next step based on whether you're going to learn something new. If you are, take it.
Now, how much do you think the company will end up being worth? $10M? $50M? $100M? Divide that number by 2000 and that's what your annual stock grant could be worth -- in the above cases, $5k/year, $25k/year, or $50k/year -- but remember that you won't get that money until the company has a "liquidity event".
Is what you've calculated your potential stock windfall to be worth enough to balance out the fact that your salary will provide for a lower standard of living over the next few years than you're used to? There's your answer.
I'm a 20 year old guy in almost the same shoes as you, except I dropped out freshman year of college. $60k sounds cool, definitely a good net ~15000$ more than the $40k I am getting, but I have no idea what SF living costs are ( i live in a suburb of a small metro with 4 roomies for $300/mo ).
Do you plan on getting rich with them when you say "I'd simply like to find an interesting project and then really throw myself at it", or do you plan on starting your own thing? I've worked at 2 jobs (both enterprise; one was crazy hours and high pay when I was 19 (yup, red bulls all day), and the one I have now is very smooth at 9-5), and I can honestly say that I haven't found any truly interesting projects at either of them. If the answer is yes, and you think they have a good shot at getting rich within 4 years, the $60k should be a small factor in your decision.
The game industry is organized kind of like the music industry. Small studios are the bands to the publisher's record companies. Small studios (typically under-funded and over-ambitious) beg the big guys for money to work on projects. They often get screwed. Fight to get your name in the credits of any game you release. OTOH, many many games never get released.
Hm. Re-reading your post, it occurs to me that the startup may not be a game company.
$60K is great for 19. As usual there are a bunch of people talking about how it "isn't much for the bay area." But - ignore them. Most people outside of the tech industry in SF don't make $60K, and they get by. Most 19 year olds are making $7/hr, part time.
How to live large on $60K in SF:
- Don't rent your own place at first. It is better to live with roommates. You can rent a room for $600-$1000, depending on how nice of a place you want and what neighborhood you're in.
- If you are working in the city, don't bring a car.
- If your job is in the city, don't live outside the city. Commuting costs aren't too bad, but if you live somewhere far out, like Berkeley or down on the Peninsula, and have to work late, you will get stuck covering a huge Taxi bill from time to time.
- Learn to love cheap food. Burritos, Pho, Bahn mi, pizza slices, etc.
- Being 19, you're too young to go to bars, so you will automatically save a lot of money on the weekends...
- Craig's list, Chinatown and IKEA for all your house stuff
- Costo, Trader Joe's for groceries and sundry items
It should be pretty fun.
I moved to Manhattan when I was 19. Manhattan was and is still way more expensive than SF. I only made $55K, and I managed to save about $10K my first year there, and I went out and did random stuff all the time.
As for leaving the car at home... I mostly disagree. It's good to get out of the city and go hiking or whatever. You need a car for that.
Most of all, yes, come to SF. Where else can you find things like this: http://superhappydevhouse.org/ ? You won't regret it. Post here again if you are looking for more advice.
I switched to City Car Share (www.citycarshare.org) and spend maybe $60 every three months on a car. They have a new plan where you can rent a car for an entire day for $40, which is a good deal. Especially since a 19 year old cannot rent a car from one of the standard car rental places (usually have to be 25+).
Two thing to consider about stock options: dilution and additional options grant.
You can be diluted at any time. That is the company can award additional shares and options that will make your 4 shares a smaller part of the pie.
In theory, this should only happen if the person getting the extra shares puts more money into the company, so you will have a smaller share of a bigger pie.
In practice, it doesn't have to be. You can just get a smaller share of the same pie...
On the other hand, should you prove you worth to the company, it is customary that you will get additional options granted later on, as the company will want to keep you interested and motivated.
For an early stage startup, both have an even chance of happening.
I've had both happen to me (with the same startup). By the time the startup was bought I had a bigger option grant then I started with - but it was worth much less due to dilution.
Bottom line: the amount or portion of stocks you are granted when you start working is meaningless or close to meaningless.
But I'd take the job anyway. San Fran is cool.
Good luck! gby
An overlooked part of SF life is people who are sick of living in a city. They want to go to bed at a reasonable hour, know their neighbours and feel like a handshake can close a deal. I've never had to submit a credit report to a landlord.
However, most of my computer/finance friends (late twenties) have not had the same experience -- because of the company they keep. Do not hang out with other posh kids the time! They aren't much involved with the City and know little but the bars.
As far as a car goes, definitely don't bring one with you. On the few occasions when you need to drive, you can rent a car for a few hours (one service is called ZipCar, there are others) and then be done with it.
Food in SF is good -- as good as any city in the States, and some items (wines, of course, but also bread and cheeses and chipotles) have international renown.
For example, suppose that in the near term the OP will either move to San Francisco for this startup or attend college.
If he takes this full-time job, he'll miss out on the unique educational and social opportunity that is going to college full-time.
If he takes this opportunity to go to college, he'll miss out on the unique educational and social opportunity that is working on a startup full-time.
Obviously these two seem symmetrical. I'd argue, though, that after going to college for four years, it would actually be easier to replicate the startup experience he'd miss now than it would be to replicate the college experience four years from now when he'll be "the old guy" in his freshman dorm. Unless he's Van Wilder, that may not be the best social situation in the world.
Of course, this is all a red herring if he's not interested in going to college right now.