[patio11]

I've seen those generalists left out in the cold when it comes time to focus and scale.

A particular subclass of this problem: the person who heads up your (pick a department randomly) Marketing from e.g. your seed round through your Series B is a) likely to be young and on-paper unprepared to run a Marketing department with 10 direct reports, b) likely to have a perceived lack of gravitas, c) likely to lack industry connections. Your VC fund and/or senior management may decide to bring in someone More Appropriate For The Role when you need a Director of Marketing.

This presents a dilemma: what happens to the person who built your entire marketing strategy when someone has just been brought in to own the entire marketing department going forward? Is new person going to report to them? No, that's an obvious non-starter. Are they going to report to new person? A surprising number of people would prefer to not have perceived issues with the existing team (most of whom were, after all, hired by the existing employee) deferring to that person rather than their new titular boss.

This is a time at which you either pray you are listed as a founder of the company or the founders are willing to go to the mattress for you, because otherwise the outcome is "Thanks for your service; best of luck in your next job."

[kasey_junk]

This is one of the things I find so pernicious about startup options. One of the literal, best outcomes for all parties in that case (which I agree with you is surprisingly common) is for that young early career person to happily make room for the new regime, often by leaving to work at another startup or something new.

But the way options work they are incentivized to stick around when it doesn't make sense and penalized if they do want to move on. That same early person probably does not have the capital to exercise their options when they leave.

[patio11]

Yep. Not representative of an individual who might have motivated my comment, but:

Seed round: "Marketing Bob, you'll be employee #2. 1% -- 4 year vesting, 1 year cliff. You'll do everything from writing blog posts to attending conferences to talking to every single customer."

B round (2.5 years later): "Marketing Bob! Great news: we're now worth a billion dollars! That owes an incredible amount to your heroic efforts! You have excellent ability to become a co-founder at your next gig! Which starts whenever you want it to! We strongly recommend you start planning for it right now, and we'll even clear your calendar for the next two weeks to allow you to devote all of your efforts to planning! We hope you are socially aware enough to understand what we are saying here!"

Marketing Bob may well be CEO Bob at his next gig, but he'll be entering it being a) fired and b) having had ~$3.75 million stolen from him. (One would hope that the co-founders would go to the mattress with their VCs when the VCs say "Come on, vesting, we all know how it works. Of course the employee stock pool gets the 37.5 basis points back. That's like twenty engineers -- we need every point now!")

[irremediable]

This was a good example for finance noobs like myself -- what does the last sentence mean, though?

[nsp]

37.5 basis points is 0.375%, the percent of his stock that had not yet vested and this is returned to the stock option pool to be given out to future hires

[loumf]

Bob has 1%, so it's 37.5% of his stock that is not vested after 2.5 years. (0.375% of the company's stock)

It's 25%/year with 4 year vesting (so 25 + 12.5 for the 1.5 years left)

[emmett]

While I think you describe the unfortunate common case, my personal experience has not run this way.

Much more often, there has been agreement that there is a need for a new layer of leadership that we did not have before, and then we have to decide whether we promote or hire on top of someone. When we have had to hire on top of someone, they have taken that option gracefully while gracefully also keeping the package of other options that they were handed when they joined.

"Report to the new person" works surprisingly well if you sell it the right way.

[kriro]

I have no idea about these issues but couldn't this scenario be handled by some sort of legal agreement where the options are transferred to the new guy for compensation? What's usually in contracts for the situation "in case you leave before everything is fully vested"?

What I'm thinking about is basically transferring the options to the new guy (so he also gets more stuff in the future once it's vested).

[morgante]

Alternatively, you grow with the role and thus have a faster career progression than you would otherwise.

Even if you do end up being replaced, you can manage that transition so that you can parlay that experience into a more senior role at another company. If you have a good relationship with the founders (a necessity of any startup), they should give you plenty of heads up and help in navigating this, even if they do decide to bring in someone with more experience.

[tptacek]

That's often a lot harder to do than it sounds. Engineers don't feel this pain as much, but marketing and sales both see explosive increases in complexity at scale. If you've never managed a direct sales team before or worked for a long time on a well-managed direct sales team, you're probably not going to be any good at managing one yourself. It's hard.

[w1ntermute]

The nature of a lot of engineering (bog standard business logic and UI implementation) is such that a good engineer can adapt to shifting needs and focuses. For example, an engineering team can weather a shift from consumer to enterprise much more easily than sales/marketing. But non-engineering positions are also more monetarily and professionally rewarding in the case of success - a textbook example of high risk, high reward.

This is also related to how engineering is often viewed (correctly or not) as a young man's game. The most commonly cited reason for that is how there's always new stuff to learn, but even if there wasn't so much churn in the relevant knowledge, the fact that younger employees can grow and "catch up" professionally much faster than in other business functions plays a role.

[timr]

You don't necessarily get fired (if you're an engineer) when this happens, but you probably do get socially brutalized. The founders/investors inevitably begin bringing in "experienced managers" -- people whose primary qualifications are a few years in low-level management at a big-name company. They might even be the same age as you, if not younger. Important decisions begin to bypass you in favor of the new management structure. You get less and less authority in roles that you helped define. It's a really crappy experience.

The problem is that you're a known quantity, and the founders/investors see you as a great worker -- in a certain role. They perceive some problem, and since you're part of the system with the problem, you are seen as incapable of fixing the problem. Better to hire Magic Mike from Facebook or Brilliant Bob from Google to come in and make everything better.

I've seen this happen so many times. If you're an engineer, your choices are generally a) swallow your pride, ride out your vest and don't advance in your career, or b) quit, lose the money, and hopefully move into that more senior role somewhere else, so that you can be Magic Mike next time.

[w1ntermute]

Yeah, that definitely happens. If being a founder is out of the question (which, as others have said, is the only situation in which you should value options as nonzero) yet you want to work in startups, then your focus should really be on becoming Magic Mike. Actually getting a chance to "grow with the company" is the exception, not the rule, even if it occasionally happens in engineering.

The idea that just hiring a team lead from Amagoofacesoft will solve all your engineering management problems is deeply embedded in the Valley ("nobody ever got fired for going with IBM"). Never mind that you'll be scraping the bottom of the middle management barrel at those companies, since the really good ones aren't going to leave.

[borvo]

> This is also related to how engineering is often viewed (correctly or not) as a young man's game

Startup engineering is a young man's game in part because it's harder to fool more experienced engineers into drinking the koolade.