[potatosareok]

Hey Nostrademons,

I appreciate your thoughtful responses so I was wondering what your thoughts are on importance and corresponding compensation of the 1st employee at a company.

If the first employee is important enough that in your mind, it's possible that with depending on the first employee they may or may not be a billion dollar company, do you think the first employee compensation is commensurate with that? Aston also mentions specifically the commitment he has as a first employee, and how he feels "you're basically a founder" in terms of responsibility.

In my opinion, he made off about as well as any first employee could reasonably expect (even unreasonably I'd argue).

I don't have the perspective of either a startup founder or the first employee anywhere so I'm not trying to slight the Dropbox founders in any way.

I guess my question boils down to two parts 1. What do you think a reasonable level of compensation is for a first employee 2. Given the success rates of startups (low), why would someone want to be the first employee somewhere versus either their own startup, or a later stage company that could pay them a much higher salary then the typical startup compensation. My unstated assumption here, which you might disagree with, is that someone who could have the impact of Aston, could become a staff engineer at somewhere like facebook/google/microsoft/etc and pull total compensation of 300/400k with a significantly higher chance.

[nostrademons]

I think the key difference between founders vs. early employees is in risk tolerance. An early employee should be able to go to work reasonably confident that he will get paid for his time and his efforts will not be completely futile. The job description for "founder", however, involves finding a reason for the company to exist, and that inherently involves the risk that you could put in a lot of work and it'll still count for nothing.

Aston (presumably) made out with a lot more than the $300/400K a year that a Google/Facebook engineer tops out at. He also took on more risk, but the risk was largely technical risk: the possibility that him and his teammates couldn't deliver what 65,000 people said they wanted. That risk is largely under their control, while as a founder, the primary risk is that nobody wants your product or it can't be built economically.

I do think that the large amount of money in the funding ecosystem lately has distorted this bargain somewhat. In boom times, you get cases where the founders get funded on hope & pedigree and draw a salary immediately (meaning that their financial risk is more akin to an early employee's), and then they go and hire a bunch of naive employees at below-market rates before getting any validation that people want their product (meaning that the employee now takes on market risk that was previously reserved for the founder). This doesn't do either the company or the employee any good; these companies are significantly more likely to fail than ones who stay founder-only while they prove out the market, and they ruin more peoples' lives when they do. If you look at employee #1's who have actually made out well - eg. those at Google, DropBox, Thumbtack, AirBnB, SnapChat, etc. - all of those companies had validated demand, had raised funding, and in many cases were already in use by thousands of people when they hired their first employee.