Ask HN: What up with these startup salaries?
I see job postings for a couple of startups here and they are offering approximately between $60k and $110k and 0.5-1% equity for what appear to be significant positions - mobile or full stack developers, director of marketing, etc.
Is this really the going rate? If so, my mind is boggled. I was under the impression there is competition for great employees in Silicon Valley.
Here in NYC, if I wanted to be very competitive to hire into any vital position with rare skills, I would anticipate a floor on pay of $125k. I don't care if that's a designer or a developer or a marketer or what ... I just mean anyone working full time who has a good head on their shoulders and some rare skills.
And 0.5-1% equity wouldn't move the needle much. I mean, if you have a 5 person company and you bring someone in and give them 1% equity, what is their equity relative to the person sitting next to them? IMHO It's a joke. Their ownership is purely symbolic, in a relative sense, and it's a symbol of how little they own relative to a founder.
Am I completely insane? I would love to understand the logic here, I am not so much criticizing as trying to know more about the dynamic and the industry culture/standards.
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[ 2.8 ms ] story [ 305 ms ] threadReal companies in SV do pay real money but for the average startup it is the 22 yr old who has no experience that hopes the 19 yr old working for him doesn't realize he is faking it before he makes it. They are not going to get a good marketing director at that price but they can find one who doesn't think he needs health insurance.
However, I was very surprised to find that they were making hires at the intern pay rates with even fewer perks. Seems to be somewhat of a bait and switch. Then again, they're on the short list of places where I'd actually consider the equity worth more than the paper it's printed on.
I'd be pretty surprised if that was true. I took an offer similar to my intern pay, but between my private office and high quality health insurance, it actually ends up being a lot more.
Just reminds me of people sleeping in their cars in Silicon Valley. I still absolutely cannot believe that people do it, but to each their own I suppose...
The biggest irk I have with a number of these posts is indeed the equity offering. Whilst I can't comment, or be correct on all the companies, most of them seem quite early stage. I would expect them to offer a larger amount of equity (higher pcg). This to a lot of early stage hires can be a big a motivator. If the company offers a large chunk then it shows a commitment to that person that they value their contribution and see them as critical in the success of the company.
We need to let in more technical workers to address this issue.
My previous job had difficulty finding talented engineers, party due to comparatively low salary offers. When I and two others left our team of 8 and two more made it known they were actively looking because we saw all trends outside our office, it became clearer to management. Only when 3/8ths of their staff left did they make major changes to their existing packages. And even then, pay is significantly below market. (Though they have the best time off and fringe benefits in town.)
We need to replace the math courses in a CS degree with something more useful. Maybe some classes on Javascript, NoSQL, and whiteboard coding.
On the other hand, these companies do need talent who never the less have skills that are rleatively rare. They shouldn't need to pay engineers the $200k+ salaries of big companies, but expecting to get median quality engineering without paying more than $110k/yr is as ridiculous as a non-degreed "webdev" expecting $180k/yr because he can slap some customizations on bootstrap and poke around a Ruby codebase.
The last piece is in many start-ups I've seen the programming team will own or co-own Analytics because of a lack of statistics skills on the business team. Again with a small team not having a solid math and stats background has huge implications on the data analysis portion of roles.
For many (including myself) what we do is nearer to been builders than civil engineers and beyond a basic grounding time would be better spent on the other skills that make up a good developer.
Aside from that, what the heck would you teach in a course on NoSQL? The theoretical underpinnings of key/value mapping? Proper denormalization of data? I'm honestly curious here.
I'm not serious. The primary thrust hat people who have taken the math required by an undergraduate computer science or engineering degree can probably see at a glance that the typical startup salary offer is shit. Thus, I sarcastically suggested we should remove math from the CS curriculum in order to make graduates less able to understand this.[1]
I did so in a way that was also supposed to caricature the "programming doesn't need math" crowd, but apparently I came off as a member of the crowd. I was hoping that my sarcasm would be indicated by throwing in "whiteboard coding" as something a degree should cover. That so many people thought what I intended to be caricature was serious worries me.
[1] Hence the reason I said "abundance of math skills"; potential candidates know too much to be suckered.
Just guessing here. We would need to ask someone who accepted an offer and they might be, understandably, reluctant to discuss it in public.
For early stage startups, I was being told 100k + 1% was standard in NYC. This was by several places, or you could just go look at AngelList where they often explicitly list it.
I ended up getting rejected by tons of NYC late-stage startups (Percolate, Recombine, Betterment, YCharts, Digital Ocean, SquareSpace, Airtime), and I'm 90% sure that compensation expectations were a big reason, since I usually got past the tech screen but things broke down once we started talking compensation. I also got knocked out by some tech screens because they are crapshoots, and when I do 15 code screens I'm bound to make a few mistakes.
The market is in a weird spot, tons of companies desperately want engineers but they are freaked out by how fast salaries are climbing. They really don't want to go into bidding wars over people, and they really don't want to give new hires more then current hires and then be forced to give their entire engineering staff raises. Based on some conversations, I think they actually expect salaries to go back down but I think they are delusional, I hear an incredible amount of companies that are planning on ramping up hiring. Now granted if I could reliably predict macroeconomic trends I wouldn't need to work for someone else, so I'm just guessing. I do think there might be an "app"/"big data" bubble but there are so many traditional businesses ramping up on software hiring for things like ecommerce, logistics, and operations.
Companies will say they can't find talent and will pay whatever (i.e. pg), but it's bullshit, cost is still an enormous factor and they are working hard to keep it down via information asymmetry, bait-and-switch tactics (had several companies tell me one number on Hired and then go significantly lower in person), immigration lobbying, etc. De Blasio just signed some "tech talent pipeline" thing, which is pretty ridiculous given how many places rejected me.
If talent was really short, they wouldn't make people with 8 years of experience and a portfolio explain the difference between a linked list and array over the phone, they would be upfront about salary numbers (and actually show up with that number rather than one that was 10k lower) etc etc.
There is a ton of VC money out there and a lot of companies still think it's 2009 and they can get people cheap, a lot of average engineers are now VP of Engineering at some random startup with no team, and still thinking they can fill out that team with people making less than them. In reality, you have to pay me _more_ to take a lower role, not less like they expect.
Also this is unrelated to salary but I got rejected by tons of places for seemingly no reason, when it's not compensation expectations I think it's a general sense of elitism and "we have a high bar", "we need false negatives". It's idiotic to do that then complain you can't find people but they all do, I think they take a sick pride in rejecting people and feeling selective, even if it hurts them. I'm pretty sure if you are a qualified heart surgeon, most places looking for heart surgeons will hire you, but if you are a qualified engineer you go through an insane interview process and no matter how good you are, 70% of the time you get rejected for some bullshit false negative reason. Feel incredibly lucky I snagged that Google offer.
There is not tech talent shortage, it's 100% about cost. Meanwhile, in-house counsel with comparable experience can easily swing 160k base, the VCs and the CEOs pay themselves well, etc etc. They still view engineers as rank-and-file bitches who are at the bottom of the totem pole and whose salary must be kept low.
/rant
There are a few elements of it:
1. There is a set salary table based on objective factors (e.g. years of full-time, professional programming experience). Your salary is 100% determined by that table and isn't negotiable.
2. The table gets updated every year for market factors. Everyone gets a raise if the market moves. You get raises by progressing through the table's objective criteria.
disclaimer: I am an engineer at Trello and we're hiring: https://trello.com/jobs
I have had a lot of visibility of developer salaries in previous positions (ran development and hired devs at 3 startups) and I spent a year as a developer evangelist (in recruiting). I found the Trello offer in line with my expectations of salary.
Well, the obvious difference is that someone who is a heart surgeon has had about 16 years of general education and about 12 years of specialised education and has a certificate that proves that other doctors and heart surgeons believe that s/he can do the job EDIT: and can be sued for any mistake s/he makes... someone who is an engineer has a laptop (there's no such thing as a "qualified" engineer, IMO).
The tone of your messages make you sound a little bit demanding, or difficult to work with. You may have voiced strong opinions during those interviews. When you say that a startup will make you come back several times, it's a sign that they like you, but have a concern that they are trying to figure out. My guess (again, just a wild guess), is that you were technically very strong, but had possibly a bit of an attitude. That would explain the startups behavior. The main two reasons a startup would hesitate to hire a good engineer is either they are asking for too much money, or the candidate seems inflexible.
Again, I'm likely to be completely off.
It is frustrating that startups do not want to pay anywhere close to what reflects what that quality of engineering may entail. Companies like Google will pay $100k more than what typical startups will pay for quality senior engineers as far as I can tell, and that too is even a bit of a bargain. Increased responsibilities do not justify a shortfall of that much when it means it is close to 33-50% of a potential candidate's salary that is chopped off for them.
Strongly disagree. OP clearly knew exactly what he was looking for and actually got it. It's the startups that wasted time on interviewing him but didn't make their hire that clearly lost out.
I don't doubt that some of those companies could have perceived an attitude problem, but that's a huge reason not to work for those companies. They're looking for serfs, not collaborators.
When I interview a senior dev, I deliberately test to see if they will contradict/debate me on something technical. If they won't, they're not really senior or they're just yes-men who won't call out my mistakes and make the organization better.
Everybody talks a big game about giving employees responsibility and autonomy, but many lack the guts to follow through and hire smart people who have actual spines and opinions.
Sure, I should get over myself, but I end up exhausted, we spend the day doing these stupid things instead of talking about what the job is and what I can do to help, and so on. Not to mention that I cannot remember the last time I had to delete a node from a red black time (grad school?), but I'm expected to be entirely fluent at that and potentially dozens of other things that I don't do, but no one can be arsed to ask me about the stuff I have done, because it's not relevant or something.
And, oh, give up 50K+ in salary because options.
I think you're right. They set salaries low and the bar insanely high, reject a bunch of candidates to make themselves feel like they can be the next Google, then ultimately settle on a lucky person who just happens to be there as they've gotten acutely desperate and given up hope of finding a mythical 10x engineer.
I was at a Fortune 1000 company and we interviewed one guy. He answered every technical question flawlessly. He was personable. The lead turned him down. I argued it since he was the best we had seen. He said "I don't think he'd appreciate it if we called him at 3AM to do some work". This was the reason to not hire him, since no other rational reason could be given. The position wound up being filled by his friend, whose skill set was way below the interviewed guy, and who ambled in at 10:30-11:00 AM every day.
When I saw a really positive reaction to YC posting a template sales agreement the other day, that's a signal that it has jumped the shark. Venture companies are supposed to be taking big risks, but it's a big deal to have a "best practices" based sales form? Sounds like when my big enterprise CIO looks for validation from Gartner, etc for any decision making.
I worked at a late stage startup in the dotbomb days and walked away with a decent equity position that based on the "best practices" discussed today would have been somewhere between 75-90% lower. If you look at total lifetime compensation, my decision to work for the government is financially much smarter than one of these startups. Salary is the midpoint between startup and a bank, but benefits are very rich. Add in the future value of pension & benefits, and it is a bad deal to leave unless I was a co-founder.
Also were you asked about linked lists / trees during your google interview? Did you have to write code on a white board?
Google gives you restricted stock units which you can sell immediately upon vesting (or hold onto one of the hottest stocks of the last decade). No need to pay any money out of pocket and risk getting burned, you can only make money.
As far as the Google interview, there is a massive amount of information about it which the Google recruiter will provide, but check out Glassdoor interview questions, Cracking the Coding Interview, and Steve Yegge's "Get that job at Google" post.
Linked-lists/trees are absolutely fundamental data structures so of course you should know them. Every single engineering interview at Google _requires_ a coding question, so yes there was whiteboard coding in every interview. I would highly recommend buying a whiteboard and practicing at home because things like space management and hand-writing matter.
A lot of the industry has copied the Google interview one way or the other so you might as well study for it even if you don't get the job.
But you have to pay taxes on those RSUs at the moment of grant (if you do an 83(c) election), or at the moment of vest (if you didn't). How does Google or anyone else work around that? Do they also give a tax-covering bonus with the vesting?
From your description, sounds like the only difference would be fees (instead of Google issuing shares, selling them, getting money, giving money to employee, who then buys Google shares) - but surely there's some other advantage?
1) Funds are limited, yes that's not a lot of money, but I have several friends who went to work at startups because they enjoyed the atmosphere.
2) A fair number of people accepting those job positions have zero experience and/or dropped out of college.
3) Some of the people who join startups at those wages are based out of other countries, where those salaries are massive. I know two people who are working remotely for starups in that fashion and they love it.
4) 1% equity is very, and YC is pushing to increase that. However, if it wasn't working they wouldn't/couldn't do it.
1. The "significant positions" are relative to the size of the company. Startup X's director of marketing /= Twitter's director of marketing. So the competence needs aren't the same and as a result the salary reflects that.
2.Funding levels aren't there to offer higher salaries.
There is no good answer to either of these.
I see stupid comments on here all the time like, "Well if you can't pay me 200k a year with unlimited vacation and healthcare and a 401k then you aren't ready for those positions." Fine, go work for Google and don't worry about startup jobs, that shouldn't prevent Startup X for trying to fill that position with those skills.
People also need a reality check. 110k is double the median salary for California [1], so if you are getting those offers anywhere else than SF you are making out like a bandit.
Their ownership is purely symbolic, in a relative sense, and it's a symbol of how little they own relative to a founder.
This is naiive. An employees risk is several magnitudes less than the founders across many factors. That said, some of the first employees get shafted on equity/pay and I think that is worth addressing, but again it is based on market rates. The other thing you can choose is to go work for a employee owned company if you choose.
[1]http://www.npr.org/blogs/money/2012/07/16/156688596/what-ame...
I think it is largely dependent on the hire what this ratio should be and shouldn't be a formula - despite what "the industry" says. At the end of the day it's whatever the individuals think is fair.
This is irrelevant to the discussion. Startups aren't hiring cashiers and fry cooks. Engineers make more than the median.
Well fortunately we don't have to decide salaries based on what a founder's self-serving definition of "totally reasonable" is. Instead, we have a well functioning market that finds efficient salaries.
(That is, when large tech companies aren't colluding to artificially lower salaries through illegal no-poaching agreements).
Except that's not the case. Those numbers are what the market is signaling and apparently the OP doesn't like it. That's my point.
The OP is saying, the market isn't offering enough. I say, well apparently it is otherwise it would be higher. So it much be good enough for most people.
I work in Delaware and $110k per year salary for software engineers would be an average salary for someone with some experience. According to a cost of living calculator, someone making $110k per year in Wilmington, DE would need to make $170k per year in San Francisco for the same standard of living.
Also when it's sunny many people like to go to the beach and swim in the ocean. For water temps above 62 F, don't go to SF.
Right, and apparently it's $60-110K, which is my point.
You seem to think these are different markets - it's the same. If people are choosing them then apparently it is competitive. It may just not be what people think they should be making.
Developers should actually expect lower wages because there are more market entrants. The whole push for everyone to learn to code, almost 100% pushed for by developers, would have exactly that effect. This is why I think it's silly when the dev community pushes back on organizing as though it's going to stay a sellers market forever - especially as they push the idea (rightfully so) that being a developer/engineer is a great job and drive people into the market.
Organizing to keep new coders out would just help existing coders relative to everyone else, and as a whole we're a group that's relatively well off.
This is, by the way, why they're having such trouble filling these positions. You can't just see what salaries are offered and say "that's the market salary." Companies actually offering the market salary don't have the level of hiring difficulties that startups paying $75k in SF do.
[0] - http://time.com/76655/google-apple-settle-wage-fixing-lawsui...
Talk about myopic. Apply your calculus in year 2000 and you'll see the folly there. That is insulting to everyone else making lower wages and assumes that "value" is accurately assigned.
You telling me a Nurse or teacher provides less value than a dev working for a Startup that dispatches food quicker? Please make that argument for me because this idea is what is wrong with SV.
Don't get me wrong: I'm working on such products now. I love it. I don't have to deal with discipline problems or students' home lives. It's a different job and the products are not comparable.
[1] http://money.usnews.com/careers/best-jobs/registered-nurse/s...
The average salary of a registered nurse working in San Francisco is $127,670
Average is often very different than median, but your point is taken. Regardless, my point stands that developers across the board provide more value than basically any other profession is shaky.
If we were talking about CEO pay or some other value that doesn't have an effective upper bound, average would be meaningless. But we're talking about salary for RNs. There aren't many RNs making more than $250k, so you wouldn't expect the average to be too far from the median.
It's how much profit your work generates for the company.
Leverage. Its all about leverage. The more people you affect, the greater the value.
SV median salary for software development jobs (loosely defined) was about $122k in 2014. SF was about $110.
I read often about founder risk, but I think it is overstated for non-bootstrapped companies. If you are a founder of a funded company, you get a salary the same as everyone else. In that case, what exactly is your "magnitudes greater" risk?
Depends on the stage from what I have seen. Most of the other founders I know, including myself, take 10-15% less salary than many of the employees. Also once funded, investors will expect founders will take a haircut for a while.
Second, many times(always?) a founder has personal savings wrapped up in the company.
Third, an employee can always just quit and find a new job. The founder is much more tightly bound to his/her company because of obligations to investors, other employees, clients, etc. To say that "the worst case scenario" for both is unemployment is true, but you're ignoring many other factors that make it far more likely for the founder to be stuck going down with the ship while employee walks away Scott free.
One trick to figure it out is to imagine founder being hit by bus: who will be hurt? Will family be hurt (besides losing the founder himself)? Employees? Clients? Investors? Anyone else?
Only in the Silicon Valley bubble, where everyone is all about "other people's money", would someone actually believe this. Back in the real world, entrepreneurship involves personal credit risk. You don't get anything for free.
Because apparently they don't want to take lower salary and higher risk? I mean we try to hire the best person we can afford - full stop. That means as much as we could pay and as much equity as we can give. At the end of the say it's a market and they will find the pay/risk level they want.
The answer is that we don't pay people based on risk. Fire fighters truly have a high risk job, yet they typically earn less than many skilled white collar jobs. Rightly or wrongly, we pay people roughly according to their economic output, and probably not even their fully captured economic output (see: teachers).
The reason people use this risk language when it comes to startups is because there's a place where there _is_ some economic risk being experienced, and these people talk about "de-risking" the business all the time: investors. Investors are risking capital, typically all of it, for the chance of an outsized return. As a company de-risks, meaning as it becomes more of an actual business vs a business model search engine, the return an investor might expect for their money is naturally reduced (from 100X to 10X to 2-3X over the course of funding a 'typical' SV startup).
Founders often put capital into a business as well, in the form of maxed out credit cards, deferred salary, and sometimes actual bootstrap $$$. Their monetary contribution is typically quite a bit smaller than an investor's, though, so why do they get such a huge share of the ownership? Again, it comes down to economic value. A founder is producing a huge amount of economic value simply by taking an idea and turning it into a real thing that people can evaluate, invest in, work for, etc. An employee isn't creating nearly as much value, although I think it's pretty obvious that the first employee at a YC startup is probably creating more than %.01 of the value in the company so an offer like that isn't fair.
I do find it fascinating that so much of the investment language of risk gets used when speaking about employees. I think some of this is just lazy thinking, but it's also partly psychological -- you want employees to feel like investors vs having them feel like contractors, for instance. And honestly, if a company gets really big, an employee with 1% stake in a company is still filthy rich, even if the guy he had beer with the whole way is now going to Davos on his private jet.
I agree with the point that we don't pay people based on the risk though, as I worked at arguably one of the most dangerous jobs in the U.S. (pizza delivery in a top-5 violent crime rate cities) for years, making far less than a fire fighter.
[1]http://www.portlandoregon.gov/bhr/article/462925
Given that backdrop, the value that employers offer to employees is reduction of risk. Employees are not exposed to the downside risks of the market, nor do they participate in the upside when the business does well. Employees do risk losing their job, but that risk is generally pretty low.
Startups, though, offer less risk reduction than more established companies. Some of this is intentional, to align incentives and select for employees comfortable with the big-risk-big-reward reality of a startup. Some of it comes from the inherent instability of startups. Chances that a startup employee will abruptly lose her job, or not get paid for work already done is much higher employees of established companies. Even the "big reward" scenarios tend toward instability—for example, "Good news, we being acquired by Google! Now we all have to move to Mountain View."
Because of this, evaluating a job offer from a startup has to involve an assessment of the risk it involves. A portion of compensation is usually equity, and that equity is of completely unknown value, compared to say, RSUs as Facebook. The job being offered is inherently temporary, since the company will either fail, be acquired or transform into a completely different company within a few years. It's less risk than freelancing, but much more risk than working at a big company.
Bay Area is not California. You can rent for less than $1K in Sacramento, and life is cheaper there. But generally you can't live in Sacramento and work in SF.
TODO: find out the median salary for Bay Area
They tended to remote when they could, but also stayed with family or motels in the near east bay certain weeknights.
That also didn't include the people who flew into SFO every Monday morning from home 1000+ miles away. They always won the "how awful my commute was" game.
http://www.cbsnews.com/media/top-10-priciest-us-cities-to-re...
http://www.fool.com/investing/general/2014/10/12/most-expens...
There are plenty of cheap, low crime places to live within the city limits with access to the subway and local supermarkets etc. They might not be the center of hipsterdom, but they are affordable.
In the Bay Area, Caltrans trains do not go south between midnight and 5AM. Same with BART trains leaving San Francisco. This was a problem when I was out there. New York is not like this - PATH, LIRR, Metro North, and NJ Transit have trains running at all hours. There are plenty of affordable places with a 20 minute commute to Manhattan, and even more within a 25 minute commute, and more within a 30 minute commute etc.
I see people move to NYC, insist on living in a nice part of Manhattan, then complain how expensive their apartment and groceries are and how small their apartment is. There are plenty of nice, cheaper places they could be living if they were willing to be part of the dreaded "bridge and tunnel" crowd.
The first thing is the range. More jr. candidates are on the lower end of both salary and equity. Yet relatively close to market rates. More sr. candidates are on the higher end of range and usually have to decide if they value equity or salary more, for the final compensation package.
The second thing is the type of start ups that offer this level of compensation: early stage / seed-funded. These are not Uber, AirBnb, Dropbox, Pinterest, etc. especially given that many companies that post on HN are graduates of YC, these guys have their first major investment to work with post-demo day. They aren't working with $25-50-100 million. They have $1-2 million to make the most out of. This limits the ability to pay market rate. Yet allows for engineers to be on the ground floor of a potentially a huge opportunity (or not).
Third thing is the equity...and a bit of a reality check. The founders came up with an idea, worked on it for quite a while, with $0 salary, applied to and got into YC, raised (in all absolutes) a large amount of money (you try getting someone to give you $1 million), gave up some of the equity for that funding, and you want what, 10%? 20%? What sounds fair? Unless you're the first engineer, with a background of leadership that will make you qualified to lead the growing team, 1% is extremely fair. If the company is truly successful, you're looking to make over $1 million. Even if you're underpaid by $50k, that's 20-years worth of difference, which you'll see in under 5 years. Of course there's no guarantee, but that's business.
The other question to ask is are you getting options or RSUs - huge difference.
And finally, the low salaries are typically brought up to market rate after series A (the first big round). This round is usually raised with 0-2 years of the seed round. So you take a risk of $50Kx2 and stand to make $50x20.
That doesn't sound that crazy.
You can't evaluate the "equity" part of compensation like that. The chances of that happening are very low, and you're most likely to get diluted further. E.g. the chances of >$100M exit are 10% (which is a huge overestimate), it takes 5 years, and you get diluted 50% (so you end up with 0.5% of the company): you get $1M, which is $200K per year, with a probability of 10%, so the expected value is $20K. Sure, the exit might be an order (or two) of magnitude higher, but the chances of that happening drop even more rapidly.
Of course, you might be risk-loving, accept the equity not for the expected value, but for the variance, but then again, I don't think it's (usually) worth it.
If you're willing to lose $100k, that's your risk tolerance. Some of the bets you can make with that $100k are much stupider than others, based on expected value. If you just want the thrill of high variance, buy lottery tickets.
To put it another way: VCs take risks too, but they spend all their professional efforts trying to figure out which risks are worth it. If you can get the same terms that they get, then you at least have some validation that the terms aren't deliberately screwing you. Forgone salary is just dollars, same as the money the VCs put in, and just as useful to the company. If you're going to forgo $250k in salary over five years, you should expect to end up with equity equivalent to somebody who put that in as cash over the same time period. If you end up with less equity, or less senior equity, you're probably getting screwed.
$50x2 compared to $50x20x0.01 is more realistic. An employee's chance at equity is offset by the opportunity to gain experience.
In my opinion, the only person that takes that job is someone without a current job who is getting desperate.
They'll work there for however long it takes them to get a better job and then leave them abruptly.
Who do you want to teach your children? Would you want them to live in your community?
Beyond that, no one piece is particularly offensive, but the post overall paints the picture that they're trying to hire an entry level, mostly visual designer and then put this person in charge of a significant part of their product, in what should be research-driven role with a senior title.
This happens often, because engineering driven companies don't always know what to look for and demand from a high level design hire, in the same way that lots of cube farm companies are bad at vetting developers. The problem is that for this sum, they're not going to attract the kind of candidates that know about that, know what the position should actually be, and who will realign the company in a sensible direction. They're going to end up with an entry level candidate who delivers what's asked for without knowing what's needed, and the world will have one more mediocre product to show for it.
If you want to lure someone to your company, you have to compete a lot more on salary than you might have to in SF; in the back of their mind they're comparing you against the big bucks they could make down the street.
Why do I need to complete a product and make sales, get funding, before I can pay myself a salary? Building a company require resources. I have to eat and pay rent. But my company, without resources, can't pay me, even if I'm 100% of its labor pool, being a solo founder/CEO (on the startup I'm referring to - there's another I'm involved with with a cofounder);
No salary. Why can't I just write a SMALL check to myself, why do I need either investment or sales to do this? Can't the money just NOT have to come from somewhere? This is rather unfair, I hope people here will agree.
The only way I see out is building massive value. Unlike your example, where you get 1% while having a six-figure salary and chance to learn to do it all and become a millionaire on your own next, I am not even earning 5 figures.
how is this fair? Maybe I shouldn't be doing a startuuuuuuu -oh, I see what your problem is :) :) :)
</s>
Seriously. Why do you want to work for a startup if you don't want to end up with 1% of a $100M company, while receiving six figures for the privilege (i.e. someone is paying you, six figures, to play the lottery; and being highly technical and having direct effect in your role, you both have asymmetric information and can build the lotterys' RNG yourself, e.g. by building the best product on the market and protecting that status.) Finally you get to learn everything it takes to found your own startup and receive funding later.
there are a million BigCorp's that compete without regard for startup aignment or risk/reward. what makes you want to work for a startup anyway, given what you've described? Wouldn't you be a better match for Microsoft or Google?
honest questions here and a perspective from the other side - someone with a large founding appetite rather than salary requirement.
And let's be very clear about something: "making six figures" does not mean you are not being exploited. The magnitude of that exploitation certainly differs from that of economic underclasses, but the attitude does not. And I am mostly out of startups these days because of the attitudes expressed in your post. I cheer for a bubble, because it'll wash some of the toxicity out--and you espouse a lot of it.
but it's a fact, and statistically relevant.
if you have an allergy to hilarious facts, you probably should stop learning about startups, because there is a lot more where that came from.
[1] http://blog.ycombinator.com/yc-portfolio-stats
He asked why is there such a big apparent difference between similar roles in different places, which is a perfectly legitimate thing to ask and could have done without the holier than thou spiel.
It requires great skill to build a company or be the part of first 10 employees. You cant just pick up a person on the street who knows how to type and expect them to build a Google. And as far as the India/China situation is concerned, you get to brag only because of the currency conversion rates. Lookup the number of Indian and Chineese employees in top US copmanies and startups and also do some research about the startups in these countries, if you know how to type into a search engine.
What does that make the LP's, and VC's, and angels, and accelerators, who do no work, and sit on their yachts whining how much money that the workers who do all the work are making?
I do all the work and I create all the wealth. If I am being paid $80k, then on average I am creating $100k, or $120k etc. for the company. It's a joke that the parasites who live on my sweat, and their toadies like yourself would use the word entitled. Yes, I am entitled to the wealth I create, in fact I am entitled to more than that.
If the wealth I create does not go to me who worked to create it, who is it going to? To the lazy heir LP. You advocate more going to these parasites which just reflects how you think - like a parasite.
Well, if the idea that people who work and create wealth should keep the wealth they create is a "communist" idea, then so be it.
you have a moral duty to quit your job and code a site you own 100% of, using your laptop which is the means of production. how can you support the unjust social structure you're a part of today? The people working in your office as support staff are letting you generate value neither you nor they keep.
You have a moral duty to resign today and code a site on your own laptop, from home, owning and keeping 100% of the wealth/value.
or to update your philosophy to be practical, sane, and not hypocritical. either way you cannot continue as you have written. it is unjust.
</sarc>
In case it isn't obvious I say this tongue-in-cheek, and expect you to update your philosophy and not your work conditions.
but the choice is yours. Today, you are the factory owner. Go home and turn it on. or stop complaining. here HN literally supports both options.
So while the table lists 0.5-1% for early stage lead engineer, it might be bigger for team of 3, 5 or 10 people in seed stage.
"To allocate the option pool from the hiring plan, use these current ranges for option grants in Silicon Valley:
Title Range (%) CEO 5 – 10 COO 2 – 5 VP 1 – 2 Independent Board Member 1 Director 0.4 – 1.25 Lead Engineer 0.5 – 1 5+ years experience Engineer 0.33 – 0.66 Manager or Junior Engineer 0.2 – 0.33 These are rough ranges – not bell curves – for new hires once a company has raised its Series A."
There is no shortage of tech workers, but companies seem to have trouble finding qualified ones anyway. What puzzles me about this, is why a company would refuse to hire someone they really want because of salary, yet settle for someone that they're not that impressed with simply to save $10k or so a year.
EDIT: Note that I ignored the equity completely in this case as it's really irrelevant (generally worth nothing).
Everyday expenses, like food, are still quite a bit cheaper in Manhattan than SF. Even if it's just an issue of tax rates.
Manhattan, with their rent control laws, has one of the most bi-modal distributions of cost of living, probably in the world.
Doesn't really make sense when people talk about Manhattan as if there's only one way to live there. Tons of people still live the broke artist lifestyle there for very cheap -- although you'll have to be willing to have apartment mates and technically bend a few laws.
I just can't do roommates anymore at my age and I can't do that lifestyle much more either. If I didn't have this available I think I'd be looking for work in the midwest or south instead. That lifestyle is just necessity though, not really a "broke artist" thing anymore.
New York's bohemian culture (and it was probably the last city to really have one) packed up and moved on a long time ago: In the late 80s/early 90s or after 9/11, depending on who you ask. What we've seen since is really just a poor facsimile.
eg I work a 500m from St Pauls on the banks of the Thames but I don't live in the City its self.
Just did a quick search for Twitter for example and it's listed at only $112,760.
- startup gets some funding, but not a lot, and needs (more) developers
- startup founders think they can find good developers at rates that are similar to those of 'regular' developers outside the Silicon Valley / HN bubble / web development scene. Possibly because these founders are non-technical and mostly have experience in bigger, more 'boring' companies where developers aren't 'essential' (or don't seem to be), or groomed inside the company and happy with lower salaries.
- startup finds out that nobody will take the jobs at the offered salaries
- startup decides to be more creative and - if they're very lucky - find:
Unfortunately, what I suspect often happens is that they end up hiring subpar developers who just want to get paid an acceptable salary and know nothing about their potential value in their field, or developers who are under-qualified for the specific challenges that many startups face (web-based, mobile apps, rapid development, need for independence and taking initiative because it's chaotic).And the founders of these companies, if they're not technical, might never quite realize that in the end they're probably wasting more money because the codebase is terrible.
While I would never argue that the only competent developers are those in the 'SV/HN/web bubble', I do think it makes sense that there's a correlation between developers who are oblivious to their value and the rest of their field, and developers who are still stuck in older, less efficient approaches to many startup's problems.
Pay your developers well!
A terrible code base that serves customers is better than a beautiful codebase that goes unused. I think your criteria is expressed poorly. Perhaps you meant that bad developers are unable to produce code that serves customers well? Add in, a terrible product. (Product != codebase)
A terrible codebase will _eventually_ fail to serve customers for a few different reasons. Scalability is huge and may be very difficult to find performance problems and fix. maintenance time, and time to add new features are places where a terrible codebase will eventually impact a customer.
Ability to add new features without breaking things is nice. Uptime is nice.
Many products do just fine with a few thousand occasional users, but too many developers think that they are building the next Amazon or something, and overcomplicate things to death for performance reasons.
Terrible code base says that the value per customers is decresaing while customers increases because your costs (of software QA) are eating your margins.
Ugly codebase that does not scale with increasing efficiency for instance.
Remember low OPEXes always beat KPEX (investment)
People focus on features in software as the only value, I think it is the recuring costs per feature that should be the value.
For instance storing digitalized book is plain stupid. The first book printed is still there because paper/ink are cost efficient in terms of recurring costs for their value of keeping information whereas servers/software ... will doom data to an end because of reccuring costs that don't scale.
When I'm saying 'the codebase is terrible', I'm talking about front-end code for a web app that is a convoluted mess of jQuery written by someone who is clearly not used to writing javascript, and quite possibly a bad developer even in the language they are comfortable with.
Even if they're decent at whatever their primary language and 'domain' is, the front-end side of things is such a mess that it noticeably impacts performance and the ability to work on the app well before even the MVP is done.
I've worked with front-end apps (and even websites) that were multi-megabyte monstrosities that loaded multiple versions of jQuery, hacks upon hacks to make things work, and not even the simplest of optimizations (lazy-loading images, 'browser-side' caching, etc).
I've worked with jQuery-only front-end apps that took more than a month to build, did only the most basic of things, and were almost impossible for me as a contractor to work with. I would rewrite the whole thing in either Backbone or some variation on the react/flux approach in, at most, two days, and be able to get the in-house developer up to speed in another one to two days if they were capable and, perhaps more importantly, willing and remotely curious.
In part this has been due to the current speed of development in browser technologies and frameworks/libraries, and in part it's just part of working with in-house developers who have no love for their job or have other things that they prioritize (35+ with kids, understandable!).
Usually this level of horror only presented itself in older, more established companies with 'legacy devs', but I've seen similar issues with (web) startups that hired without knowledge of the domain.
So, to be clear: getting the job done is the priority. I've worked on Backbone projects where I would've loved to use the latest and greatest, but happily worked with stuff that I would consider, in front-end-hacker-news-hipster terms, old-fashioned. And I've come to realize that if you have clever developers with curiosity, you can get a 'front-end app' done that isn't pretty, but works well. But too often, especially in the 'cheaper' startups with little founder-level technical know-how of the domain (front-end), I've seen things go very, very wrong.
That'll give you the best idea of your market value. You don't need to take the position, and if the bureaucracy of an enterprise gig isn't your thing, then maybe you shouldn't, but that'll give you the best float test for what it is that you're actually worth, with which you can parlay into knowledge for salary negotiations elsewhere.
Knowing that Oracle would pay you is great for evaluating whether or not it's worth a $30k difference in salary to not have to worry about a business casual dress code, corporate politics and a rigid command structure.
Not knowing the difference in pay, it's harder to evaluate whether or not it's worthwhile.
If you're not in the area, it gets substantially harder. Some random sources.
https://news.ycombinator.com/jobs
AngelList: https://angel.co/jobs
StartupHire: http://www.startuphire.com/
If you're looking for remote work, you could start with the list of YC companies. Or just go with any young companies whose products or blog posts or people you admire.
It's better to start with the companies you want to work for, and check their own jobs pages (or ask someone who works there), than to start with aggregated job boards, which are really a wasteland.
Many of the old-school Caribbean pirates were in the navy first, after all...
You could walk into Cisco, VMware, EMC, Pivotal, etc. etc. and find yourself working with close to cutting edge tools, hard problems, etc - BUT have a stable salary, perks, training courses, huge amount of corporate resources to lean on and learn with.
Don't rely on your university for advancing your career. I've basically never seen a university career department with good connections or any knowledge of tech at all.
(Also, shameless plug, but we're hiring in NYC: https://angel.co/cafe/jobs)
Only if your job offer is in the Bay Area. Some of these companies have branches in smaller cities where the cost of living (and consequently pay) is lower.
1. Lower risk (wether perceived or otherwise)
2. Better mobility ("I was hire #2 at prestigious YC company XYZ")
3. Better personal networking ("Hey founder, can you put me in touch with XYZ at YC company Foo")
Note - As many people point out, the same engineer who would work at a YC startup would make much less than going to Google/FB, etc. This is a pretty well known fact.
Perspective: the average gross salary here is between £25-30k or around $46k max. $125k or £80k is senior staff pay in most organisations.
Even among general engineering positions (not necessarily coding), a 'good' salary here is £35-40k. From what Google tells me it looks like wages top out at around £50k for experienced devs.
In my network, I also see fresh graduates getting hired on anything from 18K to 35K, and I'm thinking of one who just settled for 18K after a 6 month job hunt and one interview who I'd rate among the better ones.
My experience here has been the same - as a good developer with several years experience, it wasn't hard finding offers at 65k from big tech firms (plus substantial but slow-vesting stock in one case). I spoke to a couple of startups, and they didn't want to pay that much, but I would guess that they could have done 55k. If I went contracting, I think I'd be looking for 550-600 a day.
Overhead of a permanent employee in UK is pretty high. I've heard estimates as high as 50% of base salary, maybe more. On top of that are the usual perks, 3 months notice, and an onerous process to get you fired. Once permie, you're basically guaranteed employment unless your company goes broke.
Compare that to the contractor. There is virtually no overhead for the company. They claim VAT, and expense your rate. And it's very easy to get rid of you, or hire you. A company can ramp up and ramp down as the need arises for new projects - which has a lot of appeal.
It's interesting for me coming from the U.S.. I think it's largely a result of the regulation. An at-will permanent employee system, like in the US, seems to benefit in-demand professions a lot more than the UK/EU regulated system.
Hi can you explain what you mean - great post but dont quite understand your last paragraph...
I'm only aware of it through HN etc; so I'll just point you to Wikipedia: http://en.wikipedia.org/wiki/At-will_employment
And the NHS helps flexibility as there is no down side to working for a start up if you or your family have health issues.
IR 35 really hit contractors hard in the It industry so you cant do most IT contracts as a personal company - you have to go for an Umbrella company
1. Tax advantages, the 13.8% employer's payroll tax is avoided by be being employed as a contractor and taking your income as a dividend.
2. Tech career ladders are pretty specific to the tech industry and London just doesn't have the medium and large tech companies you see in Silicon Valley. So you hit the ceiling pretty fast and in order to be valued for your skills you pretty much have to become a contractor. This is not so different to working in tech in a non-tech organisation in the US.
3. The National Health Service means you and your family are not reliant on your employer for health insurance. Individual health insurance is super expensive in the USA. Most people I know who contract in the US have health insurance through their spouse's employer.
I ended up moving to CA because of the career opportunities. I'd probably be better off contracting in the finance world in London, but most of that work just isn't very interesting.
I've 6 years experience at a scientific charity, but I only get paid £35k. It's interesting work, but since December I've been in a "team" of one — not fun. Pay is very inflexible — £70k is more than my manager's manager is paid.
Btw this is direct from a course I had to do on handling serious work place issues ie ones that would end up in court.
There are two normal routes into the City if you don't have an amazing CV - knowing someone, or working for a non-City firm on City projects (e.g. Accenture, KPMG, or many of the 100s of smaller financial services specialist companies.)
Also note, not all City jobs are created equal, and many are worse than typical London IT jobs, with only marginally better pay and significantly larger expectations on hours, out of hours work, etc.
It is surprisingly hard to figure out your value in the UK tech scene. I suggest looking for tech-oriented companies with healthy balance sheets and asking for as high a number as you can without blushing and see what happens.
If people didn't accept them, they would offer higher salaries. They'd have to.
And if people are accepting those salaries, then that's fundamentally what the position is worth.
Why would they offer more money? There's no such thing as a salary floor for a position. There's a salary floor for a specific developer. It's based entirely on what that developer is willing to accept.
The developers who would accept those salaries either are a) worth less than the median salary b) don't know their value in the industry c) are naive about the true value of the equity part of the compensation or d) are happy to not maximize their earnings.
All of those filters seem to bias towards inexperienced developers without others who rely on their income (ie young developers from relatively financially stable backgrounds) or those who have no other choices.
So that seems to imply one or more of the following:
- software is the first craft ever where experience does not improve performance.
- writing good software is not important.
- neither is long term team cohesion, as that is very difficult to maintain in the face of chronic underpayment.
So the most likely thing this implies, is that the successes YC companies are shooting for on not predicated on writing long term sustainable good software. Again, there is nothing wrong with that. But I worry that when that isn't explicit it has negative ramifications in environments where writing good software is important for success. If people confuse success as a YC company with success at writing good software they may take the wrong lessons away.
But they've also been claiming that they're not getting enough qualified applicants and positions are going unfilled, which suggests that either there truly are not enough engineers to go around, or these salaries aren't high enough to attract them.
Now some speculation, if Google is offering higher compensation than they otherwise would, so will other companies competing for the same talent.
Even if you only think they are fiercely competing at the high-end of the market, I would believe there is some trickle down to the mid-range, which when then also go down to the lower end.
I actually don't think this is unreasonable. Even if you are employee #5, you probably didn't work on the product for a couple years without paying yourself, pay 30k+ out of pocket for a patent, designers, and other initial expenses, raise the money to hire employees, etc.
At most startups, even if they are successful, there still isn't enough money to make everyone super wealthy. So I think it's reasonable that the bulk of the equity goes to the folks who took the most risk, and everyone else gets a decent salary, a reasonable work week, enough equity to be worth a nice bonus if the company is sold, and ownership over whatever side projects they create. Now if the company really was started two weeks ago and you're getting paid dramatically under market then that's a completely different story, but a lot of times even the earliest employees are only seeing the tip of the iceberg.
Your point about "what is that compared to the person next to you" reflects this: you're thinking about equity relative to others as important, vs. the odds that 1% turns into various amounts of money. YC companies get soft landings/acquihires at a high rate and also often become worth a lot. 1% equity in a YC company you believe in is equity worth having. (key words: you believe in).
1% equity in a $10M exit would net you $100k. Given a four year vesting schedule, that's $25k/yr. Since you're working for a startup, your salary might very well be much less than $25k/yr of what you're normally worth at other companies. Aggressively negotiating your salary at a non-startup company can get you that much and then some.
So it's about whether you believe the company will make a >$10M exit, knowing that most companies die and many exit for $10M or less.
It's also about other factors. For example, whether you get paid depends on liquidation preferences, and how much you get paid depends on dilution and taxes.
Also cost of living. I've heard that decent apartments in SF can go for $3k. (Zillow seems to confirm that many apartments are around $3k.) Compared to a $1,500 apartment in a place with reasonable cost of living, that's an extra $18k/yr that you'll need to pay just to live there. Actually, that's $18k/yr of post-tax salary, so more like $36k/yr of salary.
via: http://finance.zacks.com/stock-options-vs-rsus-3356.html
RSU is a direct grant of shares, not dissimilar from a cash bonus.
Stock options are the opportunity to purchase shares at a set price, which as I understand it will be lower than market value. If stock price remains stable, you have essentially been granted the difference between the market price and the set price.
If that exercise point is at an IPO or other exit event, it is largely irrelevant because the deal itself will typically finance the conversion of the options to stock. If you quit or get fired on the other hand, you are on the hook for the money to exercise the options. That is on top of your lowered salary and your vesting time period, in order to get any value out of the options you have to give the company you are leaving for one reason or another, real actual cash.
"The tally of 42 companies means about 6.7 percent of all Y Combinator-funded companies have hit the $40 million figure so far"
A sub-10M exit might be rare, but sub-10M exit + failures together migth not be rare at all.
YC company or not, taking a lot of equity for a lower salary it's still a gamble. At the end it's a matter of you believing the team you're joining can make it big or not.
Thanks to Second Market this is no longer true.
That would be because the ecosystem hasn't given any reason for developers to trust it and the equity is, in fact, largely worthless.
But in reality, when you're in a salary-negotiation with any of those companies, the comp-level listed in their hiring ad goes right out the window.