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Comment by logicallee | Hacker News Reader

It's kind of your fault.

That's a provocative statement, here's the justification:

Instagram had "only" 18 employees. Wherever you are, will1000, hiring 18 employees of the caliber who built Instagram for 18 months would cost you $2M. Instagram was able to pay for them with equity, instesad of starting with $2M in the bank.

The direct reason that this doesn't work outside silicon valley is that outside silicon valley you, will1000, will not work for me for equity instead of a market salary. That is only possible in Silicon Valley.

In other words, you don't want to believe that a % is worth anything, and that's why you won't accept equity based compensation (outside silicon vallye).

look in your heart and you know it's true. what's the lowest salary + equity compensation you would accept?

Could instagram have afforded you?

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> The direct reason that this doesn't work outside silicon valley is that outside silicon valley you, will1000, will not work for me for equity and no salary. That is only possible in Silicon Valley.

Right, because only in Silicon Valley will people work for equity and no salary. They live off the air.

Explain to me how talented coder 'x' (whoever, maybe will1000) will be able to live without any compensation whatsoever during 18 months.

Even in SV that's an exception, not a rule, and even in SV people need to eat. So the more commonly employed scenario is that there is a bit of funding which is made to stretch as far as it will go by compensating key employees with equity rather than salary for some portion of their total package.

0 salary and just equity is an exception.

The portion you refer to is pocket change - it would not retain these employees outside Silicon Valley, where such caliber of employees are willing to give great weight to equity.

Read http://www.dailymail.co.uk/news/article-2127882/Meet-OTHER-n... and it becomes clear that the 18 employees were recruited mostly with equity.

Hiring the quality of talent that we're talking about, in will1000's market, just doesn't happen using the kind of equity (e.g. 10% pool) that instagram was using, without enough cash in the bank to pay a large base salary to each of those extremely talented people.

Outside silicon valley that's what you would need to do something like this: a whole ton of cash, or lower your standard of employee. Only in Silicon Valley can equity be used for this kind of bargaining power, to retain 18 people who are of such a quality that they are able 36-handedly to build a company in 18 months that is worth $1Billion.

As a simple example: I could never get you to work for me part-time for $0 and 30% equity in our company: except in silicon valley, where I could do so extremely easily, just by showing a product that is near completion.

It's your fault. You're the one who doesn't want the riches and results. You're the one who doesn't want to change the future, by working for next to free for it, and having just equity.

There's a reason a couple of kids in silicon valley can build multibillion dollar companies while on a ramen diet, and you can't.

you (and the market you're in) just doesn't want to.

> The portion you refer to is pocket change.

You're currently running a company with in excess of 18 talented engineers without a viable income stream?

And your payroll is 'pocket change'?

> Hiring the quality of talent that we're talking about, in will1000's market, just doesn't happen with the kind of equity (e.g. 10% pool) that instagram was using - outside of silicon valley that is.

Of course it does.

You make some outrageous statement, then fail to back it up, next you make a new outrageous statement which is even further from the truth.

I'm a bit confused, we might have misunderstood each other.

There's nothing to "back up" - I said that the most talented employees in the world, who can build a $1B company up in 18 months, will not do so outside Silicon Valley in exchange for a 10% employee equity pool, and a low base salary.

Outside Silicon Valley they would only do so for a very high base salary.

Are you a foreign national who can't move to the valley? Because you certainly have an extremely distorted view of reality. People are not being hired with pure equity with the ease you seem to think. Also, I might add as the co-founder of a growing startup with offices in both Palo Alto and London, salaries are higher and competition for employees stiffer in the valley.

Let me put it to you this way. Can you hire a talented CEO in London within the next month, who will work for you for below half the median wage in London and be able to build a company with you and a cofounder that is worth $10M within a year?

In the valley, this is easy. You do have to give up equity though.

In London, the above will get you shown the door, with a grin. Haha, good luck.

I'll ignore the fact that hiring a CEO is something that startups pretty much do not do and ask you this: why do you think it's so easy to hire top talent on primarily equity?

It's not easy to hire top talent with either primarily equity or primarily salary anywhere in the world: in the valley, the former is at least possible.

You are an incredibly lucky person if living for 18 months with no salary is plausible for you. Either that or you've already worked somewhere for a large salary. You shouldn't talk down to people because they haven't experienced the same luck as you. Instagram was an exception to just about every rule, and I don't think it's a bad thing that a majority of the world would laugh at anybody trying to sell them the idea of work in it for equity.

  Explain to me how talented coder 'x' (whoever, maybe 
  will1000) will be able to live without any compensation 
  whatsoever during 18 months.

Savings? Perhaps if Bitcoin rises and deflation becomes the norm, it will become more common to have 18 months of savings before quitting your job.

That was part of my point that Instagram would be less likely to work out outside of SV. This article helps us on the outside looking in understand how many things you have to have going for you other than just talent and a good idea to achieve the level of success Instagram has.

All right, that's fair. But people hugely underestimate the difference that employees willing to consider equity as serious compensation makes. It's the difference between being able to afford to change the world and not being able to afford to do that.

That is one of the biggest things about the valley.

Whoah! Instagram didn't pay salaries to any of their 18 employees?

The portion you refer to is pocket change.

Read http://www.dailymail.co.uk/news/article-2127882/Meet-OTHER-n.... and it becomes clear that the 18 employees were recruited mostly with equity. Hiring the quality of talent that we're talking about, in will1000's market, just doesn't happen with the kind of equity (e.g. 10% pool) that instagram was using - outside of silicon valley that is.

It would be interesting to know how they pitched the jobs to their future employees? If someone came to me saying "Hey dude, work for free and you get 5% stake in a photo sharing app for the iPhone. It's cool app. We have filters!" I'd show him the door.

So there must have been some "we know people at $comp and they will buy us out"-talk to convince people to work for free.

I'd be interested in knowing where you're located. Not quite for "free" but including a very low salary what you've just derided seems like a fairly standard startup pitch...

There is no mention of salaries in that article. It seems like you are a little bit jealous and rampantly speculating about this whole scenario.

Obviously with the trajectory Instagram was on it was much easier to hire with equity. I don't know what you mean about the "level of talent" though. There are hundreds of small teams with the talent level of Instagram both in and out of the valley, but talent does not guarantee traction. What makes Instagram extraordinary is a confluence of factors, not just an amazing team.

I'm not jealous at all. Talent is one thing, but do you honestly think you can have a professional team working on the payroll that (I assume) Instagram had?

I just don't see it happening. one thing is you are right, I don't have detailed payroll figures. I was going on the prevailing wind and the fact that the employees were 20-somethigns.

You're just piling one assumption on top of another.

yep, these are my assumptions and experience.

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