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by ahomescu1 4308 days ago
> Startup employees work hard, but the founders still bear most of the risk and responsibility.

As much as I am a fan of startups and their founders, this statement seems excessive. In many cases, the financial risks are passed on to either angel investors or VCs (there are some startups funded by the founders' own savings or mortgages, which is a big risk, but there are still many that aren't). I don't see any significant negative consequences to the founders if a startup fails (they're not risking personal injury, bankruptcy, a lifetime of debt or anything else as severe).
2 comments
throwaway7808 4308 days ago
Risk of employees is actually a lot higher than that of a founder. Founders have access to crucial financial information, employees do not. Thus higher risk. Founders have all the control, employees do not. Thus higher risk. Founders can make almost arbitrary hiring/firing decisions that can affect a future (!) career of an employee. Last, but not least, employees may need a reference from their former bosses, founders don't.
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nilkn 4308 days ago
You forgot the obvious detail that the founder also stands to make far, far more money from an acquisition than most employees, but (if it's VC funded and not bootstrapped) is mostly insulated from any sort of real catastrophe if it fails.
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throwaway7808 4308 days ago
Yes, and that's the reward part of the risk/reward equation.

I'm actually not concerned at all about the rewards, 'unfairness' or any other philosophical issues. What I don't like is that there's a myth "the founders bear most of the risk", while in fact, for VC-financed startups the opposite is probably true "the VCs and employees bear most of the risk."

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karmelapple 4308 days ago
How about bootstrapped startups?
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nilkn 4308 days ago
In my experience, which may or may not be representative of the general case, bootstrapped and profitable startups with no funding often don't offer equity at all to employees.
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ahomescu1 4308 days ago
Those are what I meant when I mentioned founders' savings, and I agree that they are risky:

> there are some startups funded by the founders' own savings or mortgages, which is a big risk

EDIT: Sorry, I now realize you meant startups that grow from their own income (or am I still misunderstanding?). Those don't seem very risky to me, since there's not much high gains/high losses potential to them.

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