When to join a startup
tomblomfield.com
tomblomfield.com
But if you ask whether they give you more money because you are now in another relationship with them (consulting?), then absolutely, yes.
It's one thing to hire just a developer. It's another thing to hire a developer who knows first-hand what's it like to run a startup, what's important for management and what concerns do they have.
The best decision I made in my career was to ride the 2003 recession in a small catalog company that wrote its own code and wanted to grow. Since they were that small, I had responsibilities that had nothing to do with what people of my experience had to do in big companies. I was making stack and architectural decisions quickly. Since we didn't have an army of people, I had to do infrastructure, project proposals, requirements gathering, database administration, and decisions on stack changes. We just couldn't afford specialists. My pay was not exactly competitive, but when I left for a bigger company, I had major advantages over my coworkers, because I had such a breadth of experience compared to them, pigeonholed in roles that did a lot less, and never had to care about what was good for the business, just doing what the next guy in the totem pole said. Your idea of big bucks might be different from mine, but making over 300k in the Midwest sounds pretty good to me.
And it's not just my story: The rest of the people in that team are all doing extremely well. One is a senior architect in a cloud provider. Another is a pretty big conference speaker. The last one is the top technical gun in a consulting firm. All my friends that didn't take risks to go for better experience are doing far less interesting work, for far less money.
That said, a startup just makes it easier to get a job that teaches the right things. If all you end up doing is writing a web app in Rails, you might as well do that in a bigger place that pays better. It's not really about the office being cool, or thinking the company has a good chance at making it, but about finding ways to get a competitive advantage over other developers for the long haul.
Which is better depends entirely on the problem.
Do you have any advice for an undergrad trying to find his way in today's tech industry? You mentioned "competitive advantage" and learning the "right things" - could you elaborate on what you think that is today, especially for someone who'll be joining the workforce in about a year?
Fixed it for you :-)
I think salary IS a motivational factor in real life, as for many humans it is a yardstick of superiority compared to other humans (whether it is right or wrong is another matter).
Thinking about the brighter side of things I suppose that in the more than enough side of things you would be paid with happiness. That to be wealthy would be to have something you enjoy doing all of the time. Success however, would be measured in a currency that is more difficult to track, respect.
I have asked many people this and only two people have said yes to this. One was someone who already sold his startup so probably didn't have to work ever again. The other was someone who could have retired but he was afraid if he shut down his company his employees would struggle to find new jobs.
I'm torn between thinking of Hacker News as benevolent or delusional and self-righteous.
I get the benevolent vibes when I see comments like golergka's. I get the delusional, self-righteous vibes when I see founders and VCs comparing themselves to JP Morgan and JD Rockefeller, saying "Hey! Look! I'm just as important as those guys!" "Silicon Valley is important!"
That said, Silicon Valley may very well be an important part of history. But the self-centeredness makes me wary.
>I get the benevolent vibes when I see comments like golergka's
I think his comment is benevolent, not delusional.
But. There's a reason why certain people choose it. You can be less of a cog.
Thanks, but why? My comment works in completely capitalist self-interest way, even when you forget about all the joy of programming.
I've never heard that before but I realize now that it summarizes my motivations fairly succinctly
When I was a manager in big corp, here what was important for us. These things you will not gain in some start ups (and in some you will definitely learn):
- How to write and communicate functional, design, and QA specs
- How to properly setup unit, module, program, product, and system testing
- Understand security issues
And the funny thing is that startups which will help you to grown in areas above are anyway going to be ones which do offer market base salary.
If you are the founder you get the best deal overall on expected value.
If your offer is generated before the A Round closes, you can negotiate equity at a pre-A-round valuation, but you are never exposed to any pre-A-round risk, and you can negotiate a post-A round salary that is contingent on the round closing.
But would it be fair if you are good and putting in that much work? Hell yes. But likely you're good, and hopefully the work/life balance isn't that lopsided either. Are you going to get it? Unlikely.
A month ago I talked with a founder of a company with a huge angel round in the bank looking for an experienced technical lead, and he was very comfortable giving ~2-3% equity for it (smart guy!).
Perhaps 0.5%-1% is more common, but that doesn't mean you should take the job at that level. I was answering the question of what this type of hire is worth, not what they commonly get.
If you are an engineer that is good negotiating, you shouldn't be joining someone else's startup (you should be working on your startup, even if you are 15).
Won't this leave you with a huge tax bill, since the differential between the strike price and market price is so great? Options aren't worth anything if you can't afford to exercise them, so might a slightly smaller percentage after an A-round actually be preferable in practical terms?
Any job that doesn't have 2 years of reasonable stability need to be evaluated by your passion for the project. Do you want to take on personal risk because you believe in the project? Are you willing to lose money over it? Are you willing to lose time over it, and be broke at the end? Does this project improve the world, and do you want the work to be done even if you do not personally gain from it? Positive answers to those questions may lead you to join up.
But if you join a startup because you hope to get rich from it, you are gambling. There is nothing wrong with that choice, but you should see it for what it is - gambling your time for a small chance at future money.
This may be true in SV and a handful of other areas, but it is far from universal.
But if you are the type to be a lifer at a job, you don't need advice on when to join a startup in the first place.
It's a whole different ballgame if you join one that's actually making a profit and doesn't need someone else's cash. Get in as early as you can, if you like the idea and can see it's got longevity.
Startups rely on fast growth. If you have a very narrow market or your end goal is $200k/yr in profit, you are by definition not a startup.
If you're actually a startup, you should not have any profit in the beginning. You should be pumping that money back into the company and seeking external funding in order to pour gasoline on the fire.
There's nothing wrong with having a business instead of a startup (personally I prefer the bootstrapped business route) but to say that it's a startup is not accurate.
Only in the Hacker News / Silicon Valley echo chamber.
1. What are your expectations? 2. Are you a generalist or a specialist? 3. Do you want to work in a small room with two or three guys with a pay check? 4. Do you want to join a more established startup, but have less impact?
Make sure you understand the pros and cons of each option!
A particular subclass of this problem: the person who heads up your (pick a department randomly) Marketing from e.g. your seed round through your Series B is a) likely to be young and on-paper unprepared to run a Marketing department with 10 direct reports, b) likely to have a perceived lack of gravitas, c) likely to lack industry connections. Your VC fund and/or senior management may decide to bring in someone More Appropriate For The Role when you need a Director of Marketing.
This presents a dilemma: what happens to the person who built your entire marketing strategy when someone has just been brought in to own the entire marketing department going forward? Is new person going to report to them? No, that's an obvious non-starter. Are they going to report to new person? A surprising number of people would prefer to not have perceived issues with the existing team (most of whom were, after all, hired by the existing employee) deferring to that person rather than their new titular boss.
This is a time at which you either pray you are listed as a founder of the company or the founders are willing to go to the mattress for you, because otherwise the outcome is "Thanks for your service; best of luck in your next job."
Even if you do end up being replaced, you can manage that transition so that you can parlay that experience into a more senior role at another company. If you have a good relationship with the founders (a necessity of any startup), they should give you plenty of heads up and help in navigating this, even if they do decide to bring in someone with more experience.
This is also related to how engineering is often viewed (correctly or not) as a young man's game. The most commonly cited reason for that is how there's always new stuff to learn, but even if there wasn't so much churn in the relevant knowledge, the fact that younger employees can grow and "catch up" professionally much faster than in other business functions plays a role.
The problem is that you're a known quantity, and the founders/investors see you as a great worker -- in a certain role. They perceive some problem, and since you're part of the system with the problem, you are seen as incapable of fixing the problem. Better to hire Magic Mike from Facebook or Brilliant Bob from Google to come in and make everything better.
I've seen this happen so many times. If you're an engineer, your choices are generally a) swallow your pride, ride out your vest and don't advance in your career, or b) quit, lose the money, and hopefully move into that more senior role somewhere else, so that you can be Magic Mike next time.
The idea that just hiring a team lead from Amagoofacesoft will solve all your engineering management problems is deeply embedded in the Valley ("nobody ever got fired for going with IBM"). Never mind that you'll be scraping the bottom of the middle management barrel at those companies, since the really good ones aren't going to leave.
Startup engineering is a young man's game in part because it's harder to fool more experienced engineers into drinking the koolade.
But the way options work they are incentivized to stick around when it doesn't make sense and penalized if they do want to move on. That same early person probably does not have the capital to exercise their options when they leave.
Seed round: "Marketing Bob, you'll be employee #2. 1% -- 4 year vesting, 1 year cliff. You'll do everything from writing blog posts to attending conferences to talking to every single customer."
B round (2.5 years later): "Marketing Bob! Great news: we're now worth a billion dollars! That owes an incredible amount to your heroic efforts! You have excellent ability to become a co-founder at your next gig! Which starts whenever you want it to! We strongly recommend you start planning for it right now, and we'll even clear your calendar for the next two weeks to allow you to devote all of your efforts to planning! We hope you are socially aware enough to understand what we are saying here!"
Marketing Bob may well be CEO Bob at his next gig, but he'll be entering it being a) fired and b) having had ~$3.75 million stolen from him. (One would hope that the co-founders would go to the mattress with their VCs when the VCs say "Come on, vesting, we all know how it works. Of course the employee stock pool gets the 37.5 basis points back. That's like twenty engineers -- we need every point now!")
It's 25%/year with 4 year vesting (so 25 + 12.5 for the 1.5 years left)
Much more often, there has been agreement that there is a need for a new layer of leadership that we did not have before, and then we have to decide whether we promote or hire on top of someone. When we have had to hire on top of someone, they have taken that option gracefully while gracefully also keeping the package of other options that they were handed when they joined.
"Report to the new person" works surprisingly well if you sell it the right way.
What I'm thinking about is basically transferring the options to the new guy (so he also gets more stuff in the future once it's vested).
Another approach is to consider what non-monetary goals you have - e.g. growth. For a junior engineer, going to a top-tier public company or unicorn is often a pretty good idea since you can learn a lot about best practices and can be mentored by more senior talent. Going to a startup mid-career is often useful since you get a broader perspective outside of engineering (on business, marketing, etc). etc.
If you're going to take a risk, may as well maximise the risk/reward and be (co) founder. In the mean time enjoy a well-paying job you enjoy in a space that you'd like to disrupt; learn on the job, build your network, then leave to found the startup that will disrupt your previous employer...
One word of warning - It would be nice if most startups became happy "CEO-on-Forbes" unicorns at round C, but not all do. I've seen a startup take a handfull of millions into Round F.
Which is of course, rather much the flunk round. And a lot of very health companies continuing to raise many small series rounds.
I think most people know this - but don't equate funding stage or amount of money raised with startup success. A better gauge would be paying customers and while you can't often get a feel for burn rate, find out as much as you can.
All being said, I've had some good educational times on slowly sinking ships too.
Sometimes the product is a little bit ahead of it's time.
I'll take the former, please.
Has any recent British tech company/startup ever had such a raise? (Boo.com did but that was 99.)
My experience is that MBAs looking for money go into corporate roles, not startups. Around me it have been the more idealistic ones that join or start a startup, and for very different reasons than getting rich. e.g. feeling that they can be more valuable here than in corporate, wanting to create something new, etc. (all the normal reasons for start-ups, MBAs are no different)
disclaimer: I have an MBA, and I did apply to Mondo (did not work out, but no hard feelings), and I usually don't daydream about making a billion dollars
In any case, this is changing all the time. The seed-stage startup in 2016 might be three or four people from all over the world, working over Slack.
Want to work from home? Ask them. Most normal/bigger corps won't let you do this. A Startup probably will.
It's also good if you like green field projects, haha.
Also, at some point, does a startup not become a company?
So is a newly-opened mom & pop grocery store, then, I guess. But that kind of business isn't likely to generate blog write-ups.
This is the best answer I've seen. Most startups are companies, and most startups are businesses. Graduating from a startup to a business doesn't make that much sense. But when your identified customers, product, and business model are repeatable and financially stable for the company, you aren't really a startup anymore.