[malisper]

If you do the Math, 1% seems fair. The typical YC company raises a seed round at a valuation of around $20M. 1% of that with standard vesting terms equates to $50k/yr.

If the typical founding engineer equity was 5%, that would equate to $250k/yr which would mean most startups would have greater total comp than Google.

[BeetleB]

> If you do the Math, 1% seems fair.

The math is simple:

As a founding engineer, I do almost the same amount of work as the founder (e.g. 90%), and get only 5% or less of the reward.

If the founder is the main source of capital, I can understand. But if all the founder does is build the product and raise money, how different is (s)he from you?

[malisper]

> As a founding engineer, I do almost the same amount of work as the founder (e.g. 90%), and get only 5% or less of the reward.

If you believe you're doing 90% the work of a founder and getting paid 5%, then you should be an actual founder and get paid 20x as much as you be as a founding engineer

[shalmanese]

What % of startups fail before they even get to the stage of being able to hire a founding engineer? You can either make the choice to be a founder and start before this selection filter or be a founding engineer and start after the selection filter.

Of course, the odds are not static and some people genuinely do have a better RAROC by being a founder but most people overestimate their founder abilities vs the odds and feel like they're not fairly compensated at 1%, which is fine, most people shouldn't be founding engineers either.

But there's a reason it's equilibrated around the 1% mark because early equity compensation is about risk, not effort.

[naet]

A lot of startups don't ever get a YC seed round or $20M valuation. There's a significant risk that your equity ends up being worthless.

[duped]

1% at seed is not going to stay 1% at the first raise after dilution

[malisper]

The 50k/yr value of the 1% equity already prices in future dilution. Just because the equity is going to be less than 1% in the future doesn't mean it's not worth $50k/yr today

[rgbrgb]

If you have proven yourself indispensable then it definitely can via additional grants.

[bpt3]

You forgot to account for the likelihood that 1% is liquid at any point with a valuation close to or higher than the current one.

[malisper]

That's already priced in

[mempko]

Why shouldn't a startup engineer earn more than an engineer at Google? Think about it, they take much much more risk. Their comp can go to zero. It's not liquid like a google engineer. Also they are creating something net-new that can benefit society in the long run. We want, as a society, to reward people for taking those kinds of risks!

In other words, we need more startup engineers and less google engineers.

[malisper]

Because Google's revenue is $2M/employee while a startup's will be $0/employee

[mempko]

You do understand equity scales with the success of the startup right? It's not cash.