Comment by steven2012 | Hacker News Reader

Comment by steven2012 | Hacker News Reader

The point about only founders getting rich is one that is in stark difference to the way Silicon Valley was pre-bust.

The first company I worked for went IPO a year or two before I joined. The very first admin of that company got so rich from stock options that she bought a vineyard and retired in 1999. Lots of people bought houses with the money they made, including the first engineer who bought a house in prime PA.

I joined another startup just a few years ago, and they were extremely stingy with options. "Less-important" people (ie. anyone non-engineers, or non-management) were getting a few hundred or maybe a few thousand options, which I thought was a bummer. I think everyone contributes to the success of the company, and everyone should get a chance to do well if the company does well. But I've seen this case several times where the founders keep everything for themselves.

I'm not sure what changed, but it's probably reflective of how greedy and self-centered SV is getting. It feels like it's more like Wall Street and less about classic Silicon Valley, which is a shame. Go watch "Triumph of the Nerds", the classic tv special during the dotcom boom and see if you can reconcile the difference of those companies and the ones today.

I suspect the cause is the shift in how startups are viewed in Silicon Valley. Even though there've been startups here for a long time, they were always considered risky, marginal and low-status. So the supply of potential employees was low and the early payouts you're thinking of were paying people for taking a risk.

Today startups are considered to be glamorous. They have access to a lot more investment and potential employees. The whole country seems to be making a beeline to pony up for the high rents because the salaries more than compensate for it. There's no longer much risk of lost earnings. Is it any surprise that the equity has gone lower? Arguably the valley as a whole has taken the deal suggested in OP: more salary, less equity.

> The whole country seems to be making a beeline to pony up for the high rents because the salaries more than compensate for it.

Only if you're at the top of the income bracket (for engineers in SF specifically, not overall for the industry or area). The average SF developer would be better off with an average salary in an area with reasonable real estate prices and state income taxes.

But in an "average" area I can't walk across the street to get a new job as an engineer. There's a LOT of safety that comes from that.

Its because startups have become much "cooler" now, compared to back then. Plus its hard to get good returns investing elsewhere. Plus the lowered-bar (i.e. cloud) to starting a large scale company

So this pushes more people to do it, more companies, more investors ... and so over time "stuff gets figured out" and optimized and here's where we end up.

For instance, pretend you have a water leak and call 5 plumbers...how many of them charge basically the same (high) price ...

I too had an experience like you ... company IPO'd in 2001 and many initial engineers got $5+M including someone who started as the admin ... turning $2m into $1BN with no addiitional funding or down-rounds will do that :)

>Plus the lowered-bar (i.e. cloud) to starting a large scale company

This, I think, is a good point. It's much easier to scale a startup these days, and scaling is one of your major headaches as a founder with a good product.

I'd love to see the cap tables of some of those companies, to quantify where the differences are between then and now. Does anyone know of any publicly-available repositories of late-90s cap tables?

There's The Autodesk File, which has most of the early financial history of Autodesk.[1]

Autodesk was established with $60K put in by the founders. There was no additional funding prior to the IPO. There was only one class of stock. Autodesk sold AutoCAD for cash, and that generated enough money that they were able to grow based on real profits.

At one point VC funding was considered. That's an important story, and it's fully documented.[2] Here's part of why it was turned down: "In particular, our ability to grant stock options to new employees was severely constrained by limits on the number available, by forcing the option exercise price to above the price paid by the investor (who received much better terms on his preferred than the employee would on his common stock), by retiring from the pool any options granted to an employee who subsequently left the company, and by imposing a four-year vesting period on all options, which the founders of the company felt transformed the options from their original purpose of allowing employees to share in the company's success to a kind of twentieth century indentured servitude which compelled employees to stay with the company or face forfeiture of their financial gains."

That's what it was like before the era of hyped dot-coms, when companies built real products which people bought.

[1] https://www.fourmilab.ch/autofile/www/autofile.html [2] https://www.fourmilab.ch/autofile/www/chapter2_32.html

This is my favourite https://www.fourmilab.ch/autofile/www/section2_2_12.html

The more things change, the more they stay the same :-)

Not really. There was such a software vacuum back then. There were lots of obvious, needed products that nobody had written yet. All you had to do was write them. Now, all the obvious products have been done.

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