[JonFish85]

"Don't settle for common stock"

Unless you're a C-level employee, you're not going to have the choice. And even then you're probably still not going to have a choice except in very rare cases (e.g. Uber's new CEO might have some decent protections). If you're "just" an employee, you're going to get laughed at if you demand anything besides common stock.

[celdon25]

That's the point. Being "just" an employee is not a fair deal anymore.

[mikeokner]

Why not? No one's stopping you from starting your own venture. What makes you entitled to a larger piece of the pie if you aren't putting in the extra work or shouldering the extra risk of a founder?

[redditmigrant]

You are shouldering risk, by presumably not working at big co and having an assured higher paycheck.

[jonny_eh]

Not everyone wants to work at Facebook or Google, nor can they start their own gig from scratch.

[trhway]

>shouldering the extra risk of a founder

founders give up ((potential salary + RSU at a megacorp - salary at the startup) multiplied by number of years at the startup) while employees give up ((potential salary + RSU at a megacorp - salary at the startup) multiplied by number of years at the startup). Did you notice any significant difference? I mean there may be difference between megacoprs and numbers of years at the startup, yet does it warrant like 100x and larger (like div by 0) difference in the outcomes?

[zcrar70]

Founders usually give up their family lives, social lives, leisure time, and sometimes their reputation, sanity, initial investment in the startup and self-esteem on top of what you list, depending on the outcome. The stress level for a founder is usually quite high, and the success rate is quite low.

[hpcjoe]

This. +1000.

When you are the person worrying about making your number on a monthly basis, so you can pay your team ... whom aren't worried about this, because they get a salary ... and you sometimes/often can't pay yourself, so that you make sure that everyone else gets paid ...

... yeah.

When you do that, you are putting real skin, real risk into this game. Your reward should be commensurate with that risk if it pays out.

In my case, it didn't.

I got all the stress, pain, heartache, overdue bills, while dealing with skittish customers, people who demanded free things, etc.

All the while, growing a business from nothing to millions in revenue, with no VC involvement (not for lack of trying). To watch it shot in the head by the bank after sinking my entire worth into it.

I understand why founders/CEOs should expect excellent return upon a positive event. If they don't, then why, exactly, should the bust their behind as hard as they do?

[mikeokner]

> growing a business from nothing to millions in revenue, with no VC involvement (not for lack of trying). To watch it shot in the head by the bank after sinking my entire worth into it.

I'd be interested to hear more of the story if you're willing

[DubiousPusher]

Early startup employees are risking almost the exact same set of things. The moral of the story is that even as an employee, you're playing the lottery with a startup and you should only join on that will reward you as such if everything works out.

[mikeokner]

Depends a lot on the startup, especially outside the Bay. In other parts of the country, you usually don't get substantial stock grants from corporate employers, and you usually do get market salary or close to it from a startup. There's a relatively small difference between working for a startup and working for a corp, but there's a huge difference between founding a startup and working for a corp.

[trhway]

What i see around, ie. friends & acquaintances, is at some point, usually after a good stint at one or a couple places a midlevel manager/executive decides "time to make next level of money", and together with several like minded guys and established good connections they pick up some investors from a line up of the investors eager to get in, and the rest is a well defined process. There is no risk, no giving up of any live, reputation, etc. There is only improvement on all of these fronts. If their venture doesn't make it big, it will be acquired with a nice premium and they would end up somewhere at the same or higher positions anyway. One such is already a unicorn in a pretty short, even by SV standards, time. List of the advisers/investors and other involved people of another such venture, started pretty recently, is impossible to read while maintaining steady breath :)

[ykler]

It sounds like you're complaining, but if it is really so easy, just become a founder. In a way, it is impossible for there to be an unfair distribution of wealth between people who do A and people who do B if everyone has the choice whether to do A or B.

[sgs1370]

"There is no risk"

What? You're wrong.

[sillysaurus3]

It's not. And the moment employees collectively figure this out, founders won't have a choice anymore. Not if they want employees.

[celdon25]

It's not even necessarily up to the founders. In a VC-backed startup, the VCs make the call when it comes to compensation ranges. There is little diversity between companies on how that actually happens. We can pretend that it is a market equilibrium, but the analogy I would rather use is that of the medieval professional guilds, where prices were often rigged for the benefit of those at the top.

I am not claiming that the VCs are evil, or even a necessary evil. I don't think they are evil nor necessary. I think that they may be very inefficient when it comes to providing for a healthy economy that benefits everyone and not just themselves. Hate the game, not the player.

[skgoa]

Yeah, but there seems to be an endless supply of startup success story fan employees ready to be exploited.

[regulation_d]

Honestly, I'd be surprised if any employees, C-level or not, get preferred stock. Unless you're putting skin in the game, you're probably stuck with common stock.

[vkou]

Working for below market rates is putting skin in the game.

[csallen]

The reality of the situation is that it's not about what you do, but about how hard it is to find someone else to do what you do.

If it's easy to find programmers who will work for below-market rates, but hard to find investors who will contribute millions of dollars, then you can expect programmers to have much less negotiating power.

[regulation_d]

Exactly. In my experience it's hard enough to find investors, try insisting that they have the same liquidation preference as the employees. Good luck with that.

[vkou]

Do you mean to say that investors aren't deeply passionate and dedicated to changing the world in a revolutionary new way?

[user5994461]

Correction. It's easy to find inexperienced programmers.

[regulation_d]

It's easier to find experience programmers who don't really care about liquidation preference than it is to find investors who don't really care about liquidation preference.

[vadimberman]

It is not. It is just a deal worse than average, not necessarily when it's possible to get a better deal (it's not that the early employees in startups are all rock stars, many just can't get a job in a better place).

Putting skin in the game is:

* paying from your own wallet when there's a cash shortage

* being mentally prepared to have guns pointed at you and your personal assets for violating an obscure regulation No. 389343A, or just attacked by employees, investors, partners for whatever reason they can come up with

* being a face of a commercial entity and putting your reputation at stake. Most people on this planet don't see a difference between a billion dollar corporation and a penniless startup, and assume all companies are powerful and have unlimited funds. Hence, their key people are to be hated and mistrusted.

* and, last but not least, being prepared to be woken up at any given minute to fix an issue of any nature

[vkou]

> paying from your own wallet when there's a cash shortage

What's the difference between donating half your paycheck to the company, and only being given half your paychecks?

> being mentally prepared to have guns pointed at you and your personal assets for violating an obscure regulation No. 389343A, or just attacked by employees, investors, partners for whatever reason they can come up with

VCs don't need to deal with the former. You don't get attacked in the case of the latter, you just get fired.

> being a face of a commercial entity and putting your reputation at stake. Most people on this planet don't see a difference between a billion dollar corporation and a penniless startup, and assume all companies are powerful and have unlimited funds. Hence, their key people are to be hated and mistrusted.

VCs make bad investments and founders make bad decisions all the time. The valley does not hold it against them for long.

> and, last but not least, being prepared to be woken up at any given minute to fix an issue of any nature

Here's where you're wrong - in a startup, engineers are the ones who get woken up at any given minute to fix an issue of any nature. Investors sure aren't.

[vadimberman]

> What's the difference between donating half your paycheck to the company, and only being given half your paychecks?

You really think there is a set percentage how much one needs to contribute?

Wait, you actually mean that "covering shortages" means "taking smaller salary", don't you?

>> being mentally prepared to have guns pointed at you and your personal assets for violating an obscure regulation No. 389343A, or just attacked by employees, investors, partners for whatever reason they can come up with

> VCs don't need to deal with the former. You don't get attacked in the case of the latter, you just get fired.

I was about to reply with "hahaha" but then thought you really don't understand.

1. Not all startups (in fact, only a small share) are VC-funded. In many cases, the funds come from personal savings. In case I need to break it down to you, loss of personal savings is not necessarily taken kindly. 2. There is exactly 3,493,231 ways things may go south, it is not at all guaranteed it will all be limited to firing. As a matter of fact, when things get serious, it usually isn't. I witnessed it more than once firsthand, from different angles.

>> being a face of a commercial entity and putting your reputation at stake... > VCs make bad investments and founders make bad decisions all the time. The valley does not hold it against them for long.

A couple of things: 1. America is not the entire world (shocking, I know). 2. Silicon Valley is not the entire America. 3. Bad reputation sticks for a very, VERY long time. Longer if you upset someone powerful.

>> and, last but not least, being prepared to be woken up at any given minute to fix an issue of any nature > Here's where you're wrong - in a startup, engineers are the ones who get woken up at any given minute to fix an issue of any nature. Investors sure aren't.

I assume you mean "founders", not "investors" (because why would investors be working?).

While startup engineers are overworked (depending on a startup - I personally think it's a bad idea, and never do it to my employees), there is a million unseen things going on outside of development which nobody bothers to tell you.

Do you think these funds arrive on their own without a fight after the invoice is issued? Do you think these investors just act rationally and it works as if you lodge your job application? Do you think the interaction with lawyers, accountants, authorities is limited to 5 minute emails, and they are picked randomly, or shopping around takes half an hour?

Finally, who wakes up the engineers - do the founders do it in their sleep, in your opinion?

[regulation_d]

Maybe, but it's not on the cap table.

[s73ver_]

But if we all do demand that, then they won't have a choice.

[csallen]

Yes, but that's a huge "if".

First, there are a lot more programmers than there are companies, and programmers are not unionized, so presenting a united front will be difficult if not impossible.

Besides, programmers want all sorts of different things. Plenty of us are happy to work for less pay at startups regardless of the equity situation, and the reasons vary: maybe it's a big step up from their last job, or the location is great, or they like small startup environments more than BigCo, or they didn't get the job at BigCo, or they're trying to build up a specific skillset, etc. It's not at all clear that common vs preferred shares is the hill that most of us would choose to die on.

[lostboys67]

Interesting in the UK companies cannot use shares with different rights in employee share schemes