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Comment by jarjoura | Hacker News Reader

For all the startup founders and VCs in this conversation, you are cheap motherf*ckers. When I read that engineers and employees prefer FAANG companies because they pay better, I want to remind you that it wasn't always like this. 10-15 years ago startups paid way better than big tech. Big Tech rewarded you by getting to specialize on problems and working at scale. The reason FB and Google pay well is because when they were startups, they were paying WELL!

Let me ask you all this, if you could make the same (or more) money working at a startup that you make working at a big tech company for 4 years, would you pick the startup? The answer should be based on what kind of working style and project you prefer, not finances.

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Google and FB were paying less when they were founded than most startups I see today, adjusted for inflation.

The difference is that now Google and FB pay way more. More than startups could ever dream of competing with. Everyone I know at FB or Google is making $225k+, with the average/median being around $300k/yr. Absolutely no way new startups can play ball with those salaries, and FB/GOOG certainly weren’t paying that as they got off the ground.

> The difference is that now Google and FB pay way more. More than startups could ever dream of competing with.

Logically speaking, the only way that a company can pay more and still be profitable is if they produce value more efficiently. On a general, macro level.

So, if startup founders cannot even dream of providing either cash or equity (adjusted to risk) comparable to the big-techs, does this mean that startups are no longer the best way for society to become more productive?

I only see if two ways (again at the macro level)

a) Startups are better than BigTech for society economically: so make sure you hire the best-of-the-best, and give them high equity, and later compensation when you have more cash.

b) BigTech is better than startups for society economically: here, the proof is in the pudding, better hires leads to more profits, so hire the best of the best, and just give them mountains of cash.

I feel like we're seeing b) for the last 5 - 6 years.

Could it be because BigTech, collectively, have created an oligopoly? Perhaps making it easier for startups to compete is another reason for antitrust.

BigTech is insanely big right now. Basically advertising and cloud are humongous cash cows. It’s a good time to work for BigTech and build some safety net.

But then again it’s only Google and FB that pay above the line. Microsoft and Amazon salaries, last I checked were pretty subpar.

Apple is not known for paying great, either. So one wonders if it really is just Google and Facebook pumping the market up.

My theory (I could be wrong) is that both Google and Facebook and startups trying to emulate them are trying to exclusively hire from the same dozen elite universities. That would explain the salaries.

SRE has a lot of people without degrees. I don't know if SWE is still an ivory tower but just SRE salaries at G and FB can debunk this theory.

A lot of Amazon engineers have done amazingly well over the past 5 years what with the huge run-up in stock prices. This may not continue going forward, but don't underestimate how much bank they've made recently.

I think that's true but a good number of my coworkers at Apple got offers from Google as well and Apple outbid them

Or alternatively (and in my mind, more likely), the massive gains coming directly from computer technology has reached its peak. There will never be another new purely "technology" (i.e. where the business is primarily built-on computer software, internet, and/or hardware) company that's as profitable and powerful as Google or FaceBook

There will always be scope for solid good new businesses with big and small margins, but maybe the next FB / Google will be in some other field? Maybe biology or nutrition, maybe quantum physics, who knows. I wish I had some ideas though.

I don’t think it’s crazy to say that a line of code written at Google will, risk adjusted and averaged across all lines of code written at Google, create more value for society than the risk adjusted and averaged line of code at a random startup.

But in startups averages don’t matter as much - it has power-law style returns, so if you happen to work at an insanely valuable startup those lines of code might be 1,000x as valuable as the average line of code written at Google.

Ergo, if you can/want to play the odds with those kind of risks you go to a startup, even knowing the risk adjusted value is lower (loving your work also matters, and some prefer startups - myself included). If you want a sure thing you go to Google.

> Logically speaking, the only way that a company can pay more and still be profitable is if they produce value more efficiently. On a general, macro level.

sed 's/produce more value/extract more wealth from dominant positions and regulation then control/'

C) The largest tech companies are receiving windfall profits after a decade of successfully engaging in predatory anti-competitive behavior and regulatory capture.

> Absolutely no way new startups can play ball with those salaries

Are their ideas just not that promising, or are they just not raising enough money, or what?

Google has an ATM printing money in the basement. Startups do not.

> Google has an ATM printing money in the basement. Startups do not.

Venture capital is supposed to be (and certainly was a few years ago, though it may have gotten more conservative) the transfer pipeline between the money printing enterprises and the high-risk, high-reward startups that provides the unlimited cash the latter don't otherwise have while unlocking the return potential the former lack.

I mean my company raised $14 million from Google Ventures, so it’s working to some degree

>> Google and FB were paying less when they were founded than most startups I see today, adjusted for inflation.

You'd have to adjust quite a bit for inflation. The average rent has skyrocketed 300% since the time Google was a pre-IPO company. I would not mind a "low" Google 2004 salary if I could somehow also lock down a Mountain View 2004 mortgage. Also, tuition and student loans have risen. So while im at it, i'd love to lock down a 2004 student loan burden.

> average rent has skyrocketed 300%

The world is bigger than SF. Seattle enjoys the same payscale with half the housing costs.

Pretty sure house prices in Mountain View would've been way higher in 2004 if everyone knew where they'd be in 15 years.

Most startups can't match G/FB on cash, but they can do much better than they are on equity amounts, equity terms, work-life balance, etc.

For example, what is the option exercise window if you leave Lambda?

> startup can do much better on work-life balance?

really? i never heard anyone said that

They can do better on equity, but they absolutely no longer do. My last startup was acquired for $1.1B. The founder walked away with $400M, and the average engineer (there were 60 of us) received less than $100k each for 4 year grants.

They may have been paying less, but they were granting actual meaningful equity, and it paid out. Startup equity offers are absolute jokes now, and on top of that you run the risk of a recap zeroing out everything you've worked for.

Absolutely this.

A lot of startups these days skimp by hiring sub-FAANG SWEs with less than 5 yoe, and it shows in their products. Lack of product maturity, bad engineering (worst horror story I’ve heard recently is Wayfair), resume driven development / over-engineering / cargo culting, huge teams to work on simple features. All so they can hire two middle-skill 22 year olds instead of a skilled 35 year old.

If you’re able to work at FAANG it is just bad financial sense to work at most startups unless you want to play the lottery. If a place offered 40-50hr/week, $250k salary, 15% target bonus AND generous RSUs/options it would be able to compete with FAANG. But not a lot of places do that, and those that do are often the very bubbly ones with uncertain futures

Who/what is a “sub-FAANG SWE”? Are you suggesting software engineers who don’t work at one of the FAANG’s are subpar? Apologies if I’m misunderstanding.

I think it's more referring to compensation. If you're only offering half the pay of some of the alternatives, you're simply not going to get a shot at most of the highest-skilled job seekers. They will, sensibly, tend to go work for the highest-paying employers. Free market for labor and all that.

I guess I can see that (to a certain extent), thanks for offering your explanation.

What about all the skilled software engineers that DON'T want to live in SF.

From what I've seen most startups DO expect you to move to SF, though. They just don't want to pay a competitive salary.

I assume they’re saying there’s a certain bar for FAANG SWEs. That doesn’t also imply all (or even the average) SWEs outside of FAANG are below it.

Sub-FANNG SWEs? 250k+ or gtfo? I sincerely hope Google and it’s Ilk don’t represent the best of the best because that would mean the best of our indistry would be found severely wanting.

The average at these companies may not be very good given the inherent noise in hiring and promo processes, but most very good engineers end up at one of these companies since it's a much better deal than going to a startup.

I thought FAANG weren't hiring 35-year-olds?

There are tons of 35 year olds at FAANG and they do hire a lot of people who are currently 35 too.

Correct. The hard threshold is 40.

Definitely not true. It seems to me that, if anything, Google has been prioritizing experienced industry hires recently, many of whom are in that age range.

That's interesting. Does "recently" mean it was not always so? My untested and rumour-based thoughts had been that they skewed towards younger (no family/ties/more energy/less negotiation skills) employees, and you were dead after 30.

I think the problem is that startups don't offer enough equity. Google offers a couple hundred thousand PLUS options worth > 100k present value.

If a startup wants to pay you enough to compensate, the options need to be worth > 100k present value (even if this means 1% of the company). Otherwise you'd be better off working for google and buying equity in the startup rather than breaking your back working there.

> and buying equity in the startup

Yeah, just go to Walmart and find the startup equity behind the underwear to your left.

> The reason FB and Google pay well is because when they were startups, they were paying WELL

100% this. Most people didn't work at Google or Facebook back in the day in the hopes of winning the lottery. Those companies paid really well, had the best benefits, culture, and mostly they were working on a ton of challenging problems unlike most of the "giant tech companies" of the time.

This hits home. I worked at 3 different small startups in my career. The first two failed and I left the last one for finances. I started contracting because it pays better but it's sapping my soul. I loved each one of those startups. I loved the people, the creative freedom and even just the vibe of trust and determination in the office. I loved the parts closer to the end even more because of the thrill of being on the edge. I didn't mind liquidation because I have a good recruiter and I was always ready to get back on the horse.

Now I contract out days for an agency. I estimate predefined tasks and then execute them. I talk nicely and calmly to clients who don't do me the same courtesy. I work only with the technology I have the most experience with and don't have opportunity to try new tech. But I have to pay my rent and I have to start putting money away to eventually get on the property ladder so working at a startup isn't really an option for me any more.

> The reason FB and Google pay well is because when they were startups, they were paying WELL!

they most decidedly were not. everyone there was taking $25k if not $50k pay cuts to be part of it.

Exactly. There get so many startup positions advertised, even here on HN, where the job description summarizes as “build our product from the ground up” and the offere salary is below par and the offered equity is an insultingly low number like 0.2%.

It's because the founders think too highly of themselves, and have the thought that since it's their "idea", they deserve the lion's share of equity.

Do not ever work for a startup where the founder(s) have this sort of mentality.

Startups paying better than tech giants seems counter intuitive to me.

The giants can pay high salaries because they're hugely profitable and don't need to worry about being hyper efficient to make the most of VC money.

Startups on the other hand, are still weak on the profitability part, but have massive room for growth when it comes to valuation. Therefore, the equity they can offer has way more potential value than stock in a large company that's averaging 5% growth or something.

I don't see how a founder of a startup would benefit much from cheaping out on salaries for employees. The vast majority of the payout for founders is company value increasing, not how much of the VC money they keep.

Founders are not even giving enough equity for employees to match the income they lose not working for big tech. Its common to still make less on equity + salary after a successful exit compared to the yearly total compensation at big tech.

Fair point. However another selling point of working at a startup vs a big company is the impact you get to have on a product. Being able to say you were one of 5 people that built out a core feature of Uber in its early days is immensely valuable for career trajectory.

Once a company is large, it's hard to have that level of impact until you're a director/vp/etc.

Google makes so much money that it makes sense to overpay? I mean that keeps people from leaving and starting their own thing that might be competition to Google. Plus give them the resources inside Google and they might build something there.

The average turnover is a little over 2 years at BigTechCo so half of the people never see that 4year total compensation.

That _position_ pays that much over the 4 years, irrespective of how many different people filled those positions in those years.

I doubt this very much.

https://www.inc.com/business-insider/tech-companies-employee...

You'd be wrong.

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