[tzs]

> the difference between the first engineer and one of the founders never seemed so categorical to me

The categorial difference is that if the company flops in a few months the founders are out a lot of money, whereas as first engineer you are merely in a similar position to before you took the job, but with some nice experience on your resume and a few months worth of pay in your bank account.

[moe]

Wait, what?

Most founders I know would pay themselves a salary after the first funding round. A small one perhaps, but I don't think the difference is as big as you make it out to be. Especially when you consider that the first engineer in a startup gets at least the same workload as the founders.

[tzs]

That assumes there is a round of funding. Not all startups are in the kind of sexy areas that cause VCs to throw money at them. Some are funded by the savings of the founder (and sometimes a second or third mortgage on his house). At that kind of startup, the founder often only gets paid his salary if the company has profits.

[danssig]

>whereas as first engineer you are merely in a similar position to before you took the job

Not at all. An Engineer can only have one job at a time so they most likely quit one to get this one. Now they have nothing, no income at all. Some founders will be in a similar position but many still won't have to get an office job if their startup fails.

[earl]

Of course, less the quite possibly considerable difference between market rate and the reduced rate the engineer is being paid. If you go by Fred Wilson's numbers [1]: $10k per month per engineer, the engineers are probably accepting a $60K/year salary. That's an enormous pay cut for me at least, and well below market for virtually all engineers. So certainly the founders are taking very little money, but the engineer may well be making a $4k/mo investment as well...

[1] http://www.avc.com/a_vc/2011/12/burn-rates-how-much.html

[davidcuddeback]

$10k/month x 12 months/year. Isn't that $120k/year? How did you come up with $60k? This is a serious question, because I assume there's an unspoken assumption in your post.

[earl]

David -

That's the fully loaded cost of the employee, so the sum of salary, payroll taxes, health insurance, unemployment insurance, office rent, and whatever else I'm forgetting.

Edit: also called the fully burdened cost