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Comment by Iftheshoefits | Hacker News Reader

The whole notion that "employees have a guaranteed paycheck" or "employees are taking no risk" only applies to large, established corporations, or well-funded (in a meaningful, cash-in-hand sense; not the promises-and-notes sense) new companies. Even then it's only marginally applicable and tenuous at best, because office politics and other things beyond the employees' control makes their positions insecure (at best).

At start-ups the concept that employees are taking no risk is just laughable on its face.

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The level of risk is significantly different. An employee bears the risk of losing their job. That's a bad thing, but you can go get another one.

The founder has likely foregone salary altogether for some time and run up personal debts while doing so. They've probably tipped a lot (relative to their net worth) of initial capital into the company to get it off the ground. If everything goes wrong, they need to go find a job _and_ deal with the mountain of debt they're now in.

If the company is at a stage where it has paid employees, a significant part of the risk of failure has already passed. There's plenty more risk to come, but you cleared the first few hurdles; and they're big ones.

Source: Founder that did all that stuff.

I don't disagree that the level of risk is different, or even that the level of risk is within, say, an order of magnitude. There's no doubt that some founders risk more (in some cases, much more) than employees. Wouldn't argue otherwise.

However, I would caution you that "racking up debt" isn't something only founders have as a risk. What you've described in your second paragraph is where just about anybody who isn't rich or well connected and has to rack up debt going to college finds himself, at least in the US. I would also caution you that employees frequently cannot merely walk out the door of the failed start up and into a paycheck across the street (as it were). They have to spend time, and their own savings, looking for work, in most places.

Compounding this is that odds are said founder has accumulated something the fresh college graduate or now former-employee hasn't: connections and the ability leverage his 'failure' into lucrative employment or future business opportunities. This helps mitigate the risk significantly.

I would argue that within the Valley your second paragraph actually isn't true. I've found that most people coming out of startups have a very easy time finding a job, unless they choose not to (i.e. they start their own business, etc.). I can't speak to other locales.

There are many places where tech startups exist that aren't the Valley. I've lived in both places. Outside of the Valley I've never had a job search take less than two months (time to offer from start of search); most often it took four to six months. I haven't had to search for a job in the Valley yet, so I'll have to defer to the experience of those who have.

That's why you start the search when you don't need it, yet.

Who's to say you will need it?

If nothing else, an outside alternative improves your negotiation power within the company.

debt?? it's investors' money. where's the debt? there's no debt at all.

You're treating employees as though they had the same tenure requirements as founders did. They just don't. If an employee starts a job at market salary, 18 months later the company dies, so they start another one at market salary, then the same thing happens, so they start another one, and yet again the same exact thing happens, so they start a fourth job, and that's the one they can stay at for several years..... then they've received substantially the same number of paychecks as if they had stayed at the first company for 6 years. It just doesn't matter that they had to change jobs a few times.

If a Founder is working for equity in a company for 18 months and it dies, it's an absolute personal disaster. There's no way to repeat that four times in a row and remain solvent and sane.

This simple example shows the fact that really it doesn't matter whether a company really guarantees an employee a paycheck or not. If it has enough money to pay you for a few months, you're good to start.

I wonder how true that is now.

There are mergers and acquisitions in companies of all sizes, so to some degree no jobs are safe.

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