As an employee, you need to look at early-stage startups where you're being compensated with equity the same way that an investor would. If you can cut out the bottom 50% of startups, that's basically "doubling" the value of your equity.
Granted this is tougher with higher level dudes, as it's hard to ascertain credit in success, but it usually works.
- Harvard dropout
- couple of Stanford grad students
- seasoned guy who started a major national bookstore chain
third sounds like a winner?
The answer depends on whether you are trying to maximize expected value or the probability of hitting a black swan event.
Are they the sort of person that can hit the deadlines we need and doesn't mind the stress and extra hours involved?
Will they be comfortable with our business philosophy and practices?
What kind of outlook do they have on their career? What at this point in their life is important to them (career? kids? sailing around the world?)
Hiring is messy, mainly because it involves humans. Past work may be a good chaff filter, but it's by far not the only consideration to finding a good candidate for your needs.
I'm just saying if I'm looking to work for a startup as a non-founder, the first thing I'd want to know is... what did the founders do before this? If it's related and was successful that's going to give me more confidence than just about anything else.
I would imagine if you took a sample of failed companies, and interviewed their investors and their employees, in most cases the employees knew the ship was sinking long before the investors did.
Taking the "outside view", the success rate of startups is small. VC's, whose entire living depends on picking the right startups, are still living with low odds.
It's true that VC's have different priorities, in that they are optimizing for large successes and therefore are part of the reason that the success rate is so low. On the other hand, if you join a startup and get options, it almost certainly raised VC money, and is therefore also being pushed in the "get big" direction. And if it's not, your payday won't be particularly big either.
In other words, taking an outside view in this case, you probably can't do better than VC's, and their success rate is what the article talks about.
1. Given the experience VCs have, having seen much larger number of startups than a common founder, some validation of the startup's concept and also the founders' rationality quotient already comes from a money raising event.
2. Success statistics are very different if you include vs. not the startups that are unable to raise money. A startup that is unable to raise funding is probably not even getting included in the statistics, even if the founder may loose all his savings into it to consider it a failure.
3. I follow your point about optimization for getting big.
Thanks
If your decision to join or not join a company hinges on the assumption that you're better at picking winners than Paul Graham, well, that's a big assumption.
After having conversations with a few startups, this is what I figured too. Unfortunately though, the other side would not agree to the numbers that result for my salary-equity if my contributions were to be treated the same way as theirs. They correctly cite what the numbers typically look like at startups (covered by the OP too) which happen to be sub par to what I would propose based on such analysis.
I had found this post very helpful: http://jacquesmattheij.com/first-employee-or-cofounder