ditonal

Early executives at those companies did very well. Early employees did well, but risk-adjusted , not really. I know people who were fairly early at those companies and they own nice SFH in the Bay Area but they're still working as Directors or whatever.

Consider that if you could make 400k (including liquid stock) in compensation at FAANG but you take 180k at the startup, you're basically betting 220k a year on the company. Except unlike any other company you bet 220k on, you won't get a board seat, you won't get access to key metrics, your influence will be dominated by "real" investor's influence.

If your NW is less than 10M, which presumably it is, anyone who's heard even heard of the words "Kelly Criterion" would tell you your nuts for betting 220k a year on one startup. And yet, you get treated like "an employee" and not like "an investor" for taking that insane risk.

So YC has invested in 5000 companies, and you can name 3 that had top-notch outcomes, thats 0.06% success - and you had to work like a dog to realize it! And that money was locked up. Those same early employees could have taken that $220k/ year, put it on Bitcoin or Apple stock, and retired off that. And Bitcoin and Apple were much easier "picks" than an given startup.

The math simply does not add up and the whole system runs off mystique and naivety. And I've worked at startups that gave me a hard time about asking about outstanding shares, about asking about the cap table, about asking about liquidation preference. This is _critical_ information before you invest a significant portion of your life and net worth on a company and that they're guarded about and it should raise the ultimate alarm bells that they don't fall over themselves to explain every part of it.

There's a bunch of propaganda out there "Explaining ISOs, written by a16z" that's a smoke screen of the truth. The math does not add up.

The dream startup employee is really really good at Transformer architectures and really really bad at personal finance. Fortunately for startups, a shocking amount of these people exist. But it doesn't change that if sharp financiers looked at employee equity packages at startups objectively, every single one would agree it's a scam deal.

This is the “startup myth” that lets the scam perpetuate.

The world has changed. Google IPOed just a few years after it founded. Now Stripe, objectively one of the most successful startups ever, still hasn’t IPOed after 15 years.

Liquidity preference Dilution

Even the F in FAANG had a major movie made about early employees getting shafted by dilution!

FAANG is 5 companies founded a long time ago. Since then VCs have completely rewritten the rules of the game. But they’ll still point to extreme outliers in the old rules. The fairy tale of the Google masseuse has probably cost tens of thousands of engineers millions in compensation.

You need to get things in writing and do the math and startups make it as difficult as possible to do that and then the math never adds up. So they resort to fairy tales.

You’re obviously overstating the FAANG SWE lifestyle.

But beyond that, it’s interesting you picked FAANG SWE and not startup SWE as the basis of your comparison.

The whole premise of the article is that startup employees are often sold a bag of goods about equity and upside that’s simply a terrible deal. Not terrible in the sense that it’s highly risky, but that it doesn’t even come close to compensating for that risk premium. Its sold as FAANG is low risk medium upside but startup SWE is high risks high upside but really its extreme risk and almost no upside because VCs find dozens of ways to carve it out. And people will say startups pay “market” compensation but they almost always mean base salary only, and the equity is such a horrible deal, it’s borderline fraudulent scam on the part of founders to sell startup employees on the equity as a fair deal.

As an aside, when people think SWEs don’t need unions/ professional associations, they think of teachers unions or autoworker unions where pay is standardized on seniority. Instead, we could have something where our lawyers in our camp could review equity terms and we could collectively advocate for things like liquidity deals. That will never ever happen if you only trust the deals the VCs and founders offer.

I’m only excited to work on a product that’s my baby but by my definition , startups that I’m not la founder /exec of can’t offer that.

A stranger can’t tell me how to dress my baby. So if CEO overrides me on how my product looks it’s not my baby.

If you have a baby, you don’t hyper focus on just one aspect of raising it. But even the tiniest startups rarely let engineers do things like work on marketing and customer development, so it’s not my baby.

A baby can only be taken away from you in extreme circumstances of neglect. But a startup job can lay me off at any time so it’s not my baby.

For me the only real job that fulfills this desire is bootstrapped founder. Being a startup employee is more like being a nanny than a parent.

Because FAANG pays equity too.

Google will pay a senior engineer 200k base and 250k in liquid stock a year for 450k TC. That stock is also incredibly low risk.

If a startup paying market means 450k cash, absolutely there’s no need for equity. But if it means matching the 200k base then obviously you’re screwed with no equity. And I’m theory it should be a lot of equity given the much higher risk premium.

One thing people need to remember is the world runs on incentives. And on this topic, there is a HUGE incentive to mislead people.

The facts are:

1) Tech startups usually need a bunch of good engineers

2) Investors and founders want these engineers for as little money as possible, as almost every owner-labor relationship in history has gone

3) Stock options have mystique from once-in-a-lifetime companies like Google but are overall very complex financial instruments

4) Many engineers are a combination of poorly informed about these complexities and easily impressionable to be “sold” that these options are a good idea.

The end result is a massive amount of effort expended to hoodwink engineers on this topic. The existence of the term “founding engineer” is exhibit 1, they are an employee and could simply be called software engineer, the term was invented to add the mystique (and workload) of a founder to what’s just a regular employee without founder equity.

Exhibit 2 is this idea that being a founding engineer is a path to being a founder , this gets repeated ad nauseum despite being easily disproven by 5 minutes on linked, a slim percentage of hot startup founders had previously been “founding engineers” . Of course some startup experience might be useful but just as often you’re the code monkey hired precisely so that the actual founders have more time to do the founder stuff you’re not doing and therefore not learning.

YC is basically a VC firm so it’s like taking Exxon Mobiles PR about climate change risk at face value. There’s a huge potential for bias. And even by VC firm standards YC has been shown to be exceptionally employee- hostile in their communications to founders and the behavior of their portfolio companies.

Once again, people ask “what would a union do” and once again, here’s an answer. It could hire lawyers with a collective budget to review startup option terms and make them less likely to screw over early employees. Because the lawyers that the VCs hire are working to protect the VCs, not you. And the blog posts they publish on employee equity are written to serve their interests, not yours.

So tired of companies that raise hundreds of millions from some of the wealthiest and most powerful people in the world trying to pull the “we’re a startup” card. You’re not two dudes eating ramen in a garage and you don’t get to use that image to excuse your shitty behavior.

Also tired of the “other people in poverty are exploited even worse! You asking for basic labor protections shows your lack of empathy for them!”

I’m seriously having a hard time imagining any of this was written in good faith.

The real solution is, and always will be, collective bargaining. These VCs aren’t going to make sure you have healthcare. They could give it to you directly, or they could use their wealth and power to make sure the government gives it to you.

People ask “what can a union do? My office already has free kombucha”. Imagine if all the SWEs at all these VCs backed companies went on strike unless the laid off Convoy employees got six months of healthcare (it would have been in the initial employment contract). The money for this stuff would magically materialize. It doesn’t materialize because there’s no organization to advocate for it, it’s that simple.

It is similar to crypto in that it’s relentlessly hyped by VCs and the product quality does not match the hype or funding.

The article is literally about the fundraising so the comments about the fundraising are more on topic than your pointless dismissal of them.

Silicon Valley used to have engineering managers who managed engineering.

As the money got bigger we got more grifters / professional manager types. First thing they do is rebrand middle management as “leaders” and the other thing they do is make management non technical.

This has even bled into making higher level IC engineering roles being “above” coding. “Staff engineers don’t code, they set high level architecture “.

This is toxic to an engineering org in many ways. Firstly you now have a bunch of highly paid technical employees completely removed from how things actually work. But what’s worse is you created a culture where you’re incentived to follow - a senior engineer who wants to get promoted should write less code because coding is associated with being a low level employee.

The fundamental root cause is a misunderstanding of code as low level factory work and not intrinsically tied to the design and architecture. But it’s one of many ways in which traditional business structures and software engineering do not mesh and you need an extremely strong engineering leader to keep software culture on track, which very few organizations have.

That’s the opposite of what would be better. We need more engineer solidarity not more divisiveness. Give me a list of your past employers and I can guarantee I can find some sketchball business practice you indirectly contributed to and make some tenuous argument for you to be blackballed.

95% of shitty tech industry practices can be root caused to people identify more strongly with their employer than with their profession. We desperately need a professional organization / union with teeth and the main thing that should be shunned is rhetoric that divides rather than unites it .

Engineers can hang together or hang separately.

Let’s not forget that Flexport is one of the darling representatives of YCs portfolio. YC has some verbiage about ethical behavior on their website, but when it’s come to actual tough ethical situations like DoorDash pocketing drivers tips, Flexport reneging on signed offers, or all sorts of insanely narcissistic behavior by other YC founders, it’s been shown their “ethics” are words and not actions.

This shouldn’t just reflect poorly on Flexport leadership but on their investors. Especially because the more time you spend in Silicon Valley you learn that your “scrappy startup” is really a product division of the VCs who really call the shots.

Pay close attention to what you hear from pg, Garry Tan, Michael Seibel, etc on this issue. Very very easy to talk ethics in the abstract. Real ethics and integrity are defined in exactly tough times like this. And if you see the cowardice that I expect like we saw with DoorDash, keep that in mind before you “Work at a Startup”

First, moving from an engineering role to a management role is not "career progression", it's a lateral career switch.

Secondly, you don't have to explain anything. Smart hiring managers will understand that you focused your career mastering a craft and that you're still working on that craft you mastered. As for the dumb hiring managers, it's best if you can avoid working for them. One thing you'll learn as you get older is that you can't please everyone all the time and if someone is foolish enough to hold stupid things against you, good riddance to bad rubbish. If you look around a bit, you'll find there's far, far more opportunities for intelligent old coders than unintelligent old managers.