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Comment by Rapzid | Hacker News Reader

I'm seeing a few "founding engineer" roles that pay pretty well and offer up to 1% equity for highly experienced candidates. Honestly some pretty unique opportunities.

But yeah, I'm not building out and MVP without pay for 1%.

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1% at seed stage also become 0.1% after a few rounds of funding, plus you are way down the preference stack and have no liquidity power.

Startup equity is pretty much objectively a terrible deal except for founders. Be a founder or get paid market comp in cash.

A factor 10 dilution is huge and I'd like to see the math on that.

There are different roles founders hire for under the "founding engineer" umbrella.

There is your fresh out of bootcamp "founding engineer" brought on during pre-seed or seed stages to help bash out POCs and mocks used to sell the vision.

Then there is the "founding engineer" they bring in post money and customer commitments to actually deliver the MVP and help build out a professional engineering program.

I'm in the later category and those roles can pay very well for early stage startups.

If you actually get 1% at seed stage and the company goes through a "few rounds" of funding (and subsequently exits), you're doing great. You've basically won a small lottery and have an excellent chance of being a millionaire.

The problem with startup equity is that this is a very rare scenario, and most of the other scenarios aren't so good. If the company doesn't exit, your equity is worthless. If they exit at a value below your strike price, and you exercised your options, you could end up in debt. Lots of ways for this to end badly.

That’s my point. Even in massive outlier upside cases getting a 1% equity deal at seed is not really worth more than just being a standard FAANG worker. And that requires many rounds of funding an and dilution and an exit. It’s worth remembering exits are very hard right now and founders have far more liquidity options. There have been multiple unicorns I’m aware of in the past 5 years with founders taking 8 figures in secondary and employees getting nothing. Now those unicorns have worthless equity for employees and the founders are on the beach.

>There have been multiple unicorns I’m aware of in the past 5 years with founders taking 8 figures in secondary and employees getting nothing.

I assume you are referring to employees who have an equity stake in the company. Can you explain how the scenario you describe happens?

It can certainly be worth more; I know engineers personally who became wildly wealthy, tens of millions of dollars from their equity—— but you’re right that most of the good outcomes are comparable to working in big tech over the last few years. (Worth noting that big tech itself has had some remarkable stock gains, which plays into this as well.)

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