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You should NOT work at a startup | Theo - t3․gg | YouTubeToText
YouTube Transcript: You should NOT work at a startup
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Core Theme
The content critically analyzes a startup job offer, highlighting its significant flaws and using it as a springboard to educate founders and potential employees on realistic compensation, equity, and the overall dynamics of working at and building early-stage companies.
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So, the base is 60K with 0.5% equity.
But most importantly, you'll be based
NSF with the title of founding engineer,
basically a co-founder without worrying
about dilution. And you'll learn so much
building the product from scratch. Oh
man, as soon as I saw this on my feed, I
knew we were going to have to talk about
it. In particular, the average YC
startup offer bit. This offer
is not good. And there's a lot of
reasons why it's not good. There's so
many parts that we have to discuss here
from the salary of 60K to the 0.5%
equity to the based in SF to the
basically a co-founder.
There's enough here that it has me
concerned about how people currently
understand startups. If this is the type
of offers that people are getting, you
shouldn't work at a startup. But I don't
necessarily know if this is the type of
offer people are getting. What I
absolutely know is that most people who
are considering these offers don't
understand the dynamics of a startup and
what they should expect as their equity,
as their pay, as their title and role
and how much work they should be doing.
There's so much confusion around what
working at a startup means, even more so
than what fundraising for a startup
means, which is already a topic people
don't get. I've been in the startup
world for quite a while now. I've
invested in over a hundred of them. I
help a lot of them with hiring. I've
helped at least three dozen people with
getting jobs at startups this year
alone. I know this stuff relatively
well. There are so many red flags in
here that I feel like we got to talk for
a bit. It's my goal to both break down
why this is an atrocious offer, both in
how it's delivered and what it actually
is, as well as show how working at a
startup should work, and if somehow you
still want to do it after everything I
talk about, what doing that right will
look like. Whether you're a founder
running their own startup that's
starting to hire, you're an employee at
an existing company that's considering a
startup, or you're just curious about
the dynamics of how getting jobs in this
space works, I'm going to do my best to
make this one useful, but it's going to
be a little bit chaotic, and I have a
bad feeling I'm going to piss off some
of those investments.
All of that said, the base pay here
isn't far from what I'm paying myself
with T3 chat. It's also a lot lower than
what I pay my team. I want to keep
paying my team. So, we're going to take
a real quick break for today's sponsors
and then we'll dive right in. I talked
to a lot of businesses and I've seen
them make so many different mistakes,
but there's one in particular that's
really hard to come back from. Bad
hiring. Be it bringing a recruiter in
too early, hiring a team that's way too
big for what you're building, or just
hiring people that aren't very good at
what you need them to be good at. It is
impossible to find good candidates right
now. And even if you do, are you hiring
them for the right thing? Do you
actually need them for a full-time
engineering role? It's hard to know. And
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This offer is atrocious. Let's break
down the parts really quick. So we got
60k salary 0.5% equity based in a sef
basically a co-founder without worrying
about dilution.
God the sheer volume of red flags here
is hard to put into words. This also
came with the context from the original
post of average YC startup offer. I feel
like I want to jump in front of that bit
first because none of this, okay, the
equity part would be not unlikely in a
YC offer, but everything else here, no,
that that's not happening in a YC offer.
The floor for salaries I'm seeing for
these YC startups for in person,
reminder, is around 125K. And everything
else they say here is just [ __ ]
nonsense. So, let's go through this
piece by piece. First, let's do this by
talking about the startup itself.
Startup journey. Step one, person or
people want to build a thing. This could
be you and some friends from work. It
could be some friends from high school
or college. It could be your loved one.
It could be your cousin. It could be
whoever. It starts with the desire to
build a thing. Mistake I'll often see is
going the wrong way here, where they
have the team, but they don't have any
idea what they want to build. That's
fine, but figure that out first. It's
better to build the wrong thing than to
not know what to build. Go build the
wrong thing. Learn those lessons. Figure
out if these people are worth or not,
and then do the next step. So, usually
you have a thing you want to build.
Usually, you'll start building the
thing. There are some exceptions here.
They're not worth necessarily getting
into right now. Video for another time,
perhaps. Then, you have to ask yourself
an important question. Can this
eventually be worth a billion dollar? If
the answer to that question is yes,
cool. We can continue. If the answer to
that question is no, awesome. You just
made a lifestyle business. Go run that
one as far as you can. Don't talk to
investors. Don't call it a startup. It's
not. It's a lifestyle business. That's
fine. You can make a lot of money
building bespoke tools that can make
millions of dollars a year that aren't
worth billions. Because investors aren't
looking to make a 2x return on a startup
investment. They're looking to lose
their money most of the time and 10 to
100x it some of the time to balance it
out. That's how investing works in early
stage because the harsh reality is that
99% of these companies fail. That isn't
they get acquired that is they fail. The
majority of the money that's going into
these VC backed companies goes to zero.
That's just the reality of startups. You
have to want the thing badly enough to
ignore the stats and go do it anyways.
And if you get into YC or something like
that, awesome. It helps a lot. 95% of YC
companies fail. To be fair, failure for
YC companies looks different. I think
it's around, don't quote me on this
number. I think it's like 50% go to zero
roughly. 10 to 20 get buyouts for low
valves. 10 to 20 have weird states and
just things can get weird in startups.
And then 5% eventually reach that
billion dollar valuation roughly. varies
a lot based on year, based on batch,
based on technology types, based on
team, based on a lot of things. But the
YC value ad is the five to 50x the
likelihood you have a billion dollar
exit just by having that associated with
your brand. It's significantly like if
you get into YC, there's a significantly
higher chance you're successful than if
you make a startup without it. It's also
worth noting that at this point in time,
0% of nonYC
accelerators have had a billion plus
exit, which means all of the
alternatives to YC that you could get
into instead, they don't seem to add
anything cuz right now their hit rate is
literally zero. None of them have had a
successful exit. None of them should be
considered in my opinion. I want to I
don't want to name drop. I don't want to
talk about the alternatives. I just want
to point out the reality in which non YC
accelerators have an abysmal hit rate.
YC has an industryleading hit rate. Be
considerate of that. Regardless, not
what we're here to talk about. What
we're here to talk about is assuming you
can be worth a billion. You raise maybe
YC, maybe mistake, maybe straight to the
bigger firms. To be clear, there's a
difference between an accelerator and
traditional VC. An accelerator is like a
program you go through kind of like a
boot camp for startups to make
connections, have peers, learn a bunch
about how startups work and sprint to
the finish. Or you can just raise money
from traditional firms like the Sequoas,
Anderson Horowits's, Excels.
So many more of these firms exist. But
then you don't get that hands-on
acceleration that can help a lot with
these startups. It's a huge part of why
YC companies are so good. All of the
people at YC aren't just VC bros.
They're all founders, most of which have
exited. They understand how actually
running a company works, unlike
investors that like to talk about it a
whole bunch. So, you start building, you
identify this could be worth a billion
dollars. You raise money. Maybe you go
through YC, maybe you go to some of
these other firms. You now have a
business that is ready to go. You don't
have the business yet. You have the
pieces to assemble it. A big mistake
I'll see and it's very common. A lot of
people treat the fund raise as the
accomplishment for the company. Like
they are successful because they raised.
No, it's like saying you won F1 cuz you
showed up with a fancy car. It's just so
far from the actual thing. It's
literally just the ahead of time prep.
So now you've raised the money, you have
the start of a product, you're ready to
go. Now the actual work starts. This
actual work includes a lot of pieces.
One of which is hiring. And here's where
the hut takes start. Most startups hire
wrong. Just like outright, like not even
close to doing it correctly. I can't
tell you how often I see this. There's a
bunch of different types of fundraising
failures that I see. The most common is
what I like to call cosplaying startups
or cosplaying big companies, I guess, is
better way of putting it. This is when
you see what other companies are doing.
You see somebody like cursor that's
blowing up. They're really successful.
They are killing it. Suddenly they have
three offices instead of one. Suddenly
they're hiring a bunch of people.
Suddenly they're acquiring things that
are kind of competitors, kind of not.
You see all of that. You see their fancy
marketing videos and all the cool things
they're doing and you're like, "Okay,
successful companies are doing that, so
I'm going to do it, too." You got your
order of events wrong. The cart before
the horse is very common in the space.
The horse was running. The company was
doing well. They had endless users
coming in. They were making a lot of
money. Things were growing like mad.
They begrudgingly started to do those
things because they kind of had to due
to the speed at which things were
accelerating. They didn't hire to make
themselves grow faster. They were
growing so fast that they had to hire.
Very, very common mistake I see in the
space. There's also hiring for what you
hate. This is the one that pisses me off
the most because it to be fair, I didn't
get this initially either, but it's so
obvious to me now that when I see people
screwing it up, it hurts me. Most of us
are engineers, right? Like the people
hanging out in chat. We all write code
for a living. Who's had a manager that
didn't write code? Where you were the
technical person on the team, but your
boss wasn't? You wrote code, but your
boss didn't understand code. Let's see
some me in chat quick. Raise your hands.
Drop ones. Say me. Want to see who's
experienced this. Not every You'd be
surprised how many people have never
experienced this. People showing up.
Scale of 1 to 10, how awful was it? Drop
a number or explain how much you
suffered. You can give me a sentence.
You can describe it. I got a couple
sevens. We got a 9,000. We got a 10,000.
8 7 11 8.1. I'd rather use Flutter. Quit
the job. Some people saying it was okay,
but other people saying it caused
post-traumatic stress disorder for them.
It's not fun. The one nice point is that
you can sometimes lie to them about the
job. That's actually a really, really
important piece, Jack. I'm happy you
brought that up. There's a couple
problems with hiring for what you don't
like doing. The biggest by far is that
you're going to be a [ __ ] boss. We're
all technical. We've all had the moment
where we spent two weeks overhauling
some really annoying, painful thing. We
finally get it working. We finally
unblock ourselves. We're going to make
things way easier for the team. We're so
pumped about this work we did. And we
have a one-on-one with our manager.
We're like, "Oh, we did it. I just spent
two weeks figuring this out. This was so
hard. I'm really proud of the solution I
made." to which your manager says, "Oh,
that's cool. Can you get that ticket
closed already? It's been there for 2
weeks." It's the worst feeling ever to
be so invested in the solution to the
problem and to not have that energy
matched by the other side. It will take
great people and churn them so fast.
It's unbelievable.
Can't tell you how many times I've seen
this throughout my career. I have been
lucky that a vast majority of my
managers have been very, very technical
and also very hyped on the stuff I do.
Honestly, many of them lived vicariously
through me because they were so hyped
about the work I was doing. That's the
best when you have a manager that wishes
they could do the job that you're doing.
So, they're constantly asking you
questions that are actually fun to talk
about. They get hyped on the things
you're excited about. They will go play
with your changes. They'll look at the
code. They'll be excited with you about
it. That's the best. Those are the most
important managers I've had in my
career. The ones that are matching your
energy and pushing you even further with
it. So, what happens if you're a
technical founder and you're hiring for
sales? What happens if you're a
non-technical founder and you're hiring
engineers? What happens when you're
hiring for roles that you don't like and
often don't even respect? You become a
[ __ ] manager at an increasingly [ __ ]
company. Every single time, almost
without fail. So, what I recommend doing
is hire for the thing you love as a
founder. I love writing code. So, all of
the hires at our company are engineers.
So, I can go focus on all the other [ __ ]
that I have to do. My CTO, Mark, loves
support. He's been deep in the support
trenches for most of his career. So, he
needs to start hiring for support so we
can do everything else we have to do.
We're hiring for what we love so we can
go focus on the [ __ ] that we don't love
yet in hopes that so we can get good
enough at it that we'll kind of miss it.
The best time to hire for something is
when it's distracting you and you'll
miss it when you stop doing it. I cannot
tell you guys how much I miss doing all
my thumbnails and editing my videos. I
love doing that type of work. I don't
get to anymore because it's not the
right place for me to use my time.
Instead, I'm living vicariously through
Ben, who's making a lot of the
thumbnails and helping with a lot of the
sponsor stuff. And with FaZe, my editor,
we talk about fun editing techniques and
random plugins and things we find all
the time. It's so fun. Hi, FaZe. Hanging
out here as always. I like to think I'm
a much better boss now than I was for my
previous editors because I didn't like
editing when I had them. Now that I love
editing, I can live vicariously through
FaZe. And he even says he loves watching
those rare edits when I do my one video
a month when I do get to do a little bit
of editing. You got to love what you're
hiring for. So these are the most common
mistakes that I see. Another really
common one, hiring how you raise. This
is a very common problem for startups.
They spend so much time in this step
four where they are [ __ ] fighting VCs
to get money into their bank account
that it rots their brain a bit. And then
when they're done with that part, their
brain has been so rotted by VC that
they're pitching everything the way they
pitch to VCs. They're not pitching it
the way you would pitch to a potential
employee. They're not pitching to the
way you'd pitch a customer. They've been
so brained by VCs, they don't know how
to talk about the thing that they're
doing anymore. So painfully common. I
like that people in chat are relating to
this. It's very bizarre. You were
interviewing the founder. Yeah, exactly.
This feeling that you're interviewing
them, not they're interviewing you, is
weirdly common. I see this very often.
So, as a result, a lot of startups hire
really poorly. There's another important
problem here, which is that most
founders have never hired before. Some
founders are fresh out of college. Some
founders were IC's at a company just
contributing code directly, never
managing employees. Some of them have
pivoted between industries and never ran
a team before. The majority of startups
are being run by people who don't know
how to run a team yet. That doesn't mean
they won't figure it out. In fact, some
of the best leaders I know fell into
this position as a founder type role
like Luke from LT. He did not join LT
with a bunch of engineering experience
as well as management experience. And
now he manages dozens if not hundreds of
employees. He grew into the role. You
can absolutely do that. That's one of
the things that you need to expect when
you join one of these companies is that
you'll be teaching them how to manage as
much as they'll be teaching you how to
build. And that back and forth, that
relationship, the give and take there is
an essential part of a startup. Everyone
is growing, everyone is [ __ ] up,
everyone's learning together. Good point
from Christian here. Any startup that
pitches the company funding specific
product details instead of the team,
probably not the best place to work. So
most startups are hiring wrong. The
cosplaying big companies part in
particular is brutal because they hire
way too many people and then don't have
anything for them to do and then they
have to downscale when they realize
they're not making enough money and
can't afford to keep paying them. Chaos.
So, let's go through the mindset of
someone who is hiring after doing the
raise, starting to build, and realizing
they need more employees. We're going to
good faith it a bit. We're going to
assume they're not necessarily making as
many of these mistakes. So, now we're
hiring. I'm just going to give numbers
for as average an average YC startup as
I can fathom. Just like straight middle
of the road numbers here. YC gives you
500K with kind of weird terms. The terms
are that 7% goes for 125K. The other
375K is an MFN. MFN bit complex. I
talked about it before. It means most
favored nation. It means that whatever
the best deal you give somebody else in
the future is, it matches that. That
said, 500k is enough to pay a couple
people a year or two, then you're out of
money. Especially if you're paying all
these crazy AI bills, too. That's just
not going to sustain jack [ __ ] So,
that's the YC deal. That's not what
matters for a YC company. What matters
for the YC company is the raise at the
end of the batch, the demo day raise.
After the 3-month inperson YC program,
you get thrown in front of a bunch of
investors to pitch your company. The
funny part is that the majority of those
companies have already finished their
raise before the pitch. Demo day is such
a strong lever that investors have
learned they have to get in before if
they want to get to these best
companies. So, a lot of these companies
have already finished their rounds and
it's almost like a bragging rights thing
or networking for future raises when
they do demo day. But, it's also an
opportunity for the companies that
aren't leading the batch to get a little
bit of money before they like the YC
thing ends. So, straight down the middle
average is that a like totally average
YC company has raised 2 mil at around a
20 mil valuation. It's not a real
valuation. To be clear, this is a
valuation cap for a safe equity
investment. I've talked about that a lot
in other videos. I'm not going to do it
here. This is effectively 10% of the
company gone. It's actually a bit worse
because the 125k 7%. So, it's 10% for
the 2 mil at 20 effectively. But since
125 is worse, it's probably closer to
15% of the company has now been sold to
investors. So if you have the company,
this is all of the company's equity and
before this is your equity. So the
employees or the founders have 100% of
the equity. We'll say that there are 10
million shares. Before this raise, 100%
of the equity is owned by the founders.
Since it's under a safe, this is still
technically not real equity. It's an
IOU. But once that converts, it doesn't
take away from the other investors.
They're not taking my shares. I still
have my 10 million shares or in my case
it's 5 million split between Mark and
me. So we both have 5 mil. When the
investors get their stock, they don't
take our shares. New shares are created.
So another it'd be like 1.1 mil shares
in order to make sure it's still 10%.
Another 1.1 mill share shares will be
created. That is the 10% that goes to
investors. That means we've been
diluted. We're no longer 100%. We still
have 10 million shares, but we're now at
90% of the equity. That's the
difference. This is what dilution means,
by the way. It's when new shares are
created, your shares become a smaller
percentage of the company. You might
have noticed that the original thing
said that you won't have to worry about
dilution. This is co-founders, the
original founders here dilution. That
statement is literally just a lie.
Anyways, so the it's not 10%. It's
probably going to be closer to 15 to 20
post YC. So what's left is 85% of the
equity that the founders own. Usually
you think about this a little different
though. So instead of the founders
having 100% and then getting diluted,
the founders have 90%, so it's the 9 mil
shares would be theirs, but then there's
a little bit cut off at the end between
5 and 10%. And this part is the options
pool. It's usually between 5 and 10%.
We'll say it's 10% for the sake of this.
This is equity that is saved and
allocated for future hiring. So if you
bring on a new employee, they're going
to come from here. If at series C you're
granting stock, you're probably granting
it from here. If you run out of the
options pool, you have to again issue
new stock to have more. So most
companies try to avoid it. Generally
speaking, around 10% of your company's
stock from the start is reserved for
employees going forward. This is
important. So remember that like over
the history of the company roughly 10%
in like the best case the most equity
going to employees 10% goes to employees
total and that 10% still gets diluted
that 10% has to be split over time but
you have to be very careful about this
because it's not trivial to get more
stock. If you give out all 10% you're
[ __ ] because you have to take dilution
to give out more stock. So generally you
try to extend this. So every round you
give like half of what's left. So pre-
series A you give up 2.5 to 5%. Now
you're left with 7.5 to 5. Series A to B
you give up another 2.5%. Series B to C
you give up 1.25 and you keep reducing
how much you're giving up because
hypothetically that percentage is worth
way more money because 10% of 20 mil is
a lot less than 5% of 2 billion. So,
back to this hypothetical company. We're
talking about 2 mil at a 20 mil
valuation. They have diluted around 15%.
They have 2 mil in the bank and they
have a goal series A in 3 years or less.
So, they have 3 years or less to get to
their next raise. Generally speaking,
you plan with a year or at least 6
months of buffer. So, we'll say they're
planning for 3 years, but they want to
raise within 2.5. You should have enough
money in the bank to survive all three
years. So that's 2 mil over 3 years.
That's around 600k a year of burn. This
company can lose 600k a year and still
make it to series A hopefully as long as
they can raise at that point. But if
they can't, they're [ __ ] So, the goal
is to spend 600k or less a year to make
their company look as good as possible
and be as set up for success as possible
so that you can raise a next round at a
hypothetically higher valuation cuz that
series A, if all goes well, might be
another 10 mil at a 150 mil valuation.
Maybe it's 20 mil at 150 mil valuation.
Totally reasonable numbers to expect.
That'd be another 13% dilution roughly.
But now you have 20 mil in the bank and
suddenly you go from being able to spend
600k a year to being able to spend 6 mil
a year. That's a huge difference. Again,
going with the three-year window. So the
goal here is to get through all the
stages, not run out of money, and look
as good as possible for the next
potential investor. So now let's think
about hiring here. We can only spend
600k a year. Let's say you have two
co-founders. So founder A makes 150K a
year. Founder B makes 150K a year.
Office costs 70K a year. And you spend,
I don't know, 15K a year on operation
BS. Things like paying your lawyers,
dealing with taxes and all of that [ __ ]
We're already at what is that 385K
spend before we even have employees. The
founders could pay themselves less. Not
much less though. And SF rent has
skyrocketed again due to the AI bubble.
Rent in the city right now is upwards of
3.5K for a decent studio apartment. It's
not uncommon for founders to pay
themselves less. But if you like are
struggling to make rent, that's no good
for anyone. Even if we bump that down to
100, which is the lowest I would
reasonably live in SF4 at this point,
that still is 285k of spend. Like even
best case lowering your salaries quite a
bit. You could cut the office and just
pay yourselves more. Honestly, not the
worst case, but I see a lot of people
spending even more than that for their
office early stage. It's pretty sad.
We'll we'll make a more responsible
version. Just let's again, we're trying
to best faith. So, we'll say 20k a year
for the office spend. Honestly, 15k a
year on lawyers and operations is
probably low, too. I'm going to bump
that to 25 to be even more reasonable
there. So, now we're at 245k a year of
spend. This is like being reasonable in
founders being a little cheap with how
much they're paying themselves. I was
paying myself way less. I paid a lot of
my other founders way more. Depends on
how you want to do things. So now we
have 245k to spend which leaves us at
most 355k a year budget left over. A lot
of that's going to go to paying for AI
inference. A lot of that's going to go
for servers. Lot of places that you're
going to spend this money, but let's
just hypothetically say that's all going
to go to employees. I personally would
not recommend anyone pay an in-person SF
employee less than 125k a year absolute
minimum. So we are at best three
employees there. When you consider all
the other expenses of employing somebody
it's like two to maybe 2.5 maybe 2.5.
We'll say two to be reasonable here. So
at 125k a year, you can have two
employees at these general reasonable
numbers for three years before you need
to raise more money. This is why
founders want to pay less because if
instead of 125k a year, you paid 60k a
year, you can go from two employees to
like five or six. So if you scam them
with 60k a year, suddenly you can have
like five plus employees easily. But you
have something else as the founder. You
have your money that you raised that's
in your bank account, but you also have
equity. You have that 10% pool that you
reserved earlier. So, if you are low on
cash and want to hold it for as long as
you can, you can instead of giving a lot
of cash, give more options. So, you give
them 125k with a small percentage or you
give them 60k with a high percentage and
tell them, "Oh, this will be worth so
much money." For a lot of reasons, don't
do that. This offer is atrocious. But
we'll get to all those details in just a
bit. Hopefully, this helps you
understand why founders would want to
pay less is not just because they're
scammers. It's because they want the
company to last longer and potentially
have more employees, right? Paying you
less because they're not making money
like it. YC companies don't have an
increasing amount of money in their bank
account every month. They have less
money in their bank account every month.
They are burning money. They're not just
being greedy. They're trying to plan
their survival. They are being stupid,
though. I'm not here to say they're not
being dumb. I'm just here to say that
they're not as malicious as you think.
They're just not that good at this yet
because they're learning as they go.
None of them have any real experience.
Another really good thing that Dogpaw
had pointed out is if you hire two
people at 60, you just added more years
of runway. Huge deal. If you think
outsourcing, I saw a lot of people
saying that what about outsourcing? If
you think outsourcing is a solution, you
don't understand how early stage works
at all at all. Like it just no. No one
outsourced their successful startup. You
can't do that. No. You outsource the
legal team. You outsource your freaking
accountants and [ __ ] You don't
outsource the actual building of the
product. That's just obvious. I don't
know how to like be kind about how dumb
that is. It's just dumb. Just it is. So,
what went wrong all the way back up
here? Let's break down all of the parts
here that I hate. I'm going to move this
piece to the bottom for reasons we'll
get to in a bit. First, we have the 60k
salary. This plus based in SF [ __ ]
[ __ ] Rent alone is going to be more
than half of this. Also, covering food,
covering general living and transport
costs, covering clothes and furniture
for your new apartment in the city,
covering the inevitable theft and car
break-ins if you actually make the
mistake of bringing a car. Don't have a
car in if you can avoid it. It'll make
life way harder. 60k salary NSF is it
was bad 5 years ago when rent was
cheaper. It is basically untenable at
this point in time. And if these
companies are hiring remote, they're not
doing their jobs very well. Remote does
not allow for the level of flexibility
that early stage needs. The amount of
shared context, the amount of pivoting,
the amount of important conversation
that happens in person at these
companies is really, really important.
And it just you cannot make that work
over Slack or Discord. There are early
stage companies that have had success
going all remote and every single one of
them said it's the hardest thing they
ever did. And if you don't have to, you
shouldn't do it. We were largely remote
with Ping and I've been going out of my
way to get our team here. If all goes
well, Julius will be moved to SF very,
very soon after a grueling, painful,
slow process with getting a visa. It
helps so much to have your team in
person. I spent a lot of money getting
Ben, my channel manager, moved out here
so that we could move faster on the
channel. If you're building a startup
and trying to move fast, remote is a hit
that isn't necessarily worth taking.
When you're making a startup and you're
trying to make it successful, you should
try your best to game all of the odds in
your favor. If you're trying to roll a
six with dice and you can choose how
many dice you have in your hand, you
want to have more dice cuz your goal is
to roll a single six. Adding more dice
just increases your odds. If you don't
like one of the dice, yeah, you can
throw it out, but you just hurt your
odds of success. This is why I don't
take companies outside of SF very
seriously. I've had the opportunity to
invest in some startups that aren't SF
based and I'm super skeptical because SF
significantly increases your chances of
succeeding as a startup. I've had the
chance to invest in companies that
turned down a YC offer and I immediately
rejected them because they're not doing
the costbenefit analysis properly in
their head. I don't want to invest in a
company that isn't doing everything they
can to increase the likelihood of
success. And hiring remote employees is
an immediate hit to the likelihood of
success. We can argue if it's 1%, 5%,
10%, or 50%. I don't care. It is
objectively a hit. And if you can avoid
taking it, you should. If you can spend
more money to avoid that hit, do it. But
if there's an exceptional, unbelievable
person that you know will accelerate the
thing that you are doing. You couldn't
be more positive. You can't imagine the
company without them. Maybe bring them
in as a contractor for a bit and see how
it goes. But the the lack of in-person
collaboration, context sharing, the
flexibility and the understanding, and
most importantly, the ability to like
disagree and make amends and just build
a close bond with the team. Like early
stage, I I know the family thing is
cringe. It's the best thing I can
describe here. Not because like you
should treat the company like a family,
but families can fight and bounce back.
You need to be able to go through hard
[ __ ] together and it becomes
significantly easier when you are in
person and able to build these
relationships and no amount of cringe
[ __ ] Zoom hangouts is going to be the
same thing. You need to just know the
people. So the base part absolutely
makes sense. I would argue it's almost
essential at this point. I've helped a
lot of founders move employees over to
the US, move employees over to SF from
other places. Startups are a long,
grueling battle. It's a long journey.
And having the people with you in person
helps so much. Not because you can
micromanage them, not so you can breathe
over their neck when they're coding, but
so you can go out and get a beer after a
really hard battle is won, or so you
have somebody there to commiserate with
you when you just lost a sale you fought
really hard for, or so you have your
team there to [ __ ] support you on
your goddamn birthday after you burn
yourself out for fundraising three weeks
straight. Definitely haven't been there.
definitely didn't close my round on my
[ __ ] birthday and then lie down as my
team breaks into my room to shake me and
congratulate me for being [ __ ] done
finally. That's why you need your team
in person. It helps so much. And giving
that up because well remote employees
are cheaper. No, [ __ ] that [ __ ] Be real
here. Speaking of being real here,
basically a co-founder, no. [ __ ] you.
Absolutely not. If if you're not there
for the raise, if you're not on the
table with over 10%. If you don't have
over 10% equity, you're not a [ __ ]
founder. And anything suggesting it is
bad. I don't even like the title
founding engineer for this reason. It
doesn't properly represent the role. I
hate that. Don't tell somebody they're
basically a co-founder. You either are
or you're not. I fell into this trap.
It's preying on people who don't know
better to an extent. To be fair, I think
these founders don't know better either.
I straight up don't know if this text is
fake or not. It very well could be. But
a lot of these early stage founders are
just like they get it heavily in some
places. They don't get it at all in
others. And they're pitching this to you
through their mindset of just getting
through a fund raise, but also thinking
of you as where they were 6 months ago.
If they were 6 months back in time,
didn't have a startup that could
potentially do well, but knew everything
they knew now, this is an offer that
they would have been excited about
because they are stupid and wrong. And
now they are pitching something stupid
and wrong because they don't know any
better. It's the the brain rod of the
mindset they have from just doing the
raise because like let's go back to that
20 mil number. So there's a 20 mil Val
cap and there's 0.5% equity. That's a
lot of money. That's 100K still. And the
reason this matters isn't because they
were handing you $100,000. It's because
they could have sold that same equity
and put 100k in the bank. This is a
company that in most of these cases just
raised a bunch of money against a
valuation like this. So they're not
thinking in 0.5%. They're thinking in
that's 100K. But if the next round is I
don't know 200 mil now it's 1 mil. It's
a little less because of dilution. We'll
talk about how this gets diluted in a
bit. But they're seeing this as an
opportunity to make a lot more the same
way investors do. An investor would be
really excited to get 0.5% of this
company. Usually, this equity also is on
a vesting schedule, a 4-year schedule
with a one-year cliff. That's just how
investing almost always works. So, you
get nothing if you get fired or you
leave within the first year. But if you
wait a year, you now have 25% of your
equity. And then every month you get
slightly more until four years pass. So
yeah, we'll talk about that amount of
equity in a bit because I want to
complain about the dilution thing first.
Everyone gets diluted. This was actually
a mistake I made with my initial offers
with Ping because I didn't know how
dilution worked really. I was still so
early and a lot of these founders don't
understand dilution yet. So if we go
back here with this section, previously
the founders owned 85% and then 15% goes
to this new equity. Now they raise 20
mil on 200 mil. Suddenly there's a lot
more money in the company but also this
is a priced round. This is money that is
turning into shares immediately. So that
gets added as another 10% at the end
here which means all of this gets
shrunk. The 15% from before becomes 13%
now. And the 85% before also shrinks. It
has about 76%. You still have your 10
million shares. It's just that another
bunch of shares were just introduced.
Let's say it's another 1 mil just like
rough napkin math. You get the idea.
Everyone gets hit with dilution. Even
though the company went from 20 mil to
200 mil, the equity is a smaller
percentage. This is still a really good
thing because this 10 million shares was
worth 17 mil at the time. And now those
same 10 million shares are worth 152 mil
even though it's a smaller percentage.
So yes, you're getting diluted, but you
are also theoretically worth a lot more
money at that point too. Apparently,
people thought that only the founders
get diluted. That's not how it works at
all. Everybody with shares gets diluted.
The way dilution works is there's a pot
of shares. There's, let's say, 10
million. You have a million. I have 4
million. Whatever. We all have shares.
And they are percentages of the total
pot, 10 mil. When a fund raise happens,
we're not all giving up some of our
shares. New shares are added. We no
longer have 10 mil. We now have 11 mil,
then 12 mil, then 14 mil. And every time
new shares are added, our shares become
a smaller percentage. Eventually, this
company might have 20 million shares or
200 million shares and people get
diluted every step along the way. So, if
you back up here have 0.5%.
That would be 500,000 shares. Oh, 50,000
500,000. My bad. That's the mistake I
made. It's 50k shares. Cool. Sorry,
brain fart. So, you have 50k shares. You
still have 50k shares, but that's now a
smaller percentage. That's now 0.413%
roughly. But that's not a bad number
against 200 million because now you went
from about 100,000 to about 826,000
in 2 to 3 years. And if this company
does end up doing really well and they
end up raising 100 mil on a 1.5 billion
valuation, more dilution's about to hit
for sure. I'm not going to do the
percentages here because it's too much
work to keep updating. They got the 10
million shares for the founders, 1.1 mil
for investment one, 1 mil for investment
two, and then your measly 50k hanging
out wherever it is. I'm going to make
these numbers easier for me. 150 mil,
1.5 bill. Now it's going to be 1.2
roughly cuz 10% of what the post money
valid just annoying math. It close
enough. You get the idea. So now there
are 13.3 mil total shares. You still
have the same 50k. So now you're down to
38%. But if you take that percent and
multiply it by 1.5 billion, you're now
worth almost $6 million.
That's the key. You are diluted. Your
percentage has gone down. You went
from.5% to 413 to 3816 or whatever. But
you went from 100K of equity to 126K to
6 mil. when and how the company hits
these stages varies and the likelihood a
company hits these stages varies even
more thing we'll talk about in a little
bit. The point I'm trying to make here
is that your dilution happens, but
you're also still making a lot more
money. And this is where the hottake
comes in that a lot of people are upset
about, but I don't really care. It's
reality. I'm going to get flamed so hard
for this. I already have been, so I'm
just going to eat it. 0.5% is totally
acceptable for an early hire. I know I
know how this sounds. I I know what you
guys are thinking when you see this. I
must be super greedy and delusional and
terrible, right? No. Hear me out.
Remember earlier when we were talking
about the employee pool that roughly 10%
so in this case 1 million shares is
reserved for employees over time. That's
over the life of the company. So we have
these 1 million shares that hopefully
will be enough to cover all employees
going forward. So, if we make these two
really early hires at 0.5%, we now have
two people totaling 100k shares, we've
already lost a tenth of the company's
lifetime shares for giving to employees.
On top of that, when the founders got
their equity, when Mark and I got our
50%, the valuation for T3 was around
$82. So, we both got 50% of $82, which
meant that we both got $40 roughly of
equity. When these employees are coming
in, they're getting over $100,000 of
equity because the thing is no longer
worth $80. It's now valuation cap worth,
like paper value, but still, it's now
worth 100K each. So, that's $200,000 of
equity, which is more than you would get
at most companies. But there's a huge
difference here, too. When you get a
100k of stock at Amazon, best case, you
maybe 2x. I was that best case. I joined
Twitch right as Amazon was acquiring
Twitch and Amazon was having a not great
quarter. So, I got a about I think it
was 80 or 90K of equity granted over
four years and it more than doubled by
the time I was at the end of that
four-year. My total comp looked way
better than a lot of my peers because I
came in at the right time where my
equity was worth jack [ __ ] But then as
it went up, ended up being worth quite a
bit more. That's normal company world
stuff. So just for comparison's sake,
here is what my offer looked like at
Twitch. It was like 125K a year base. It
was X number of shares, which at the
time was worth around 90K over four
years. And again, a cliff, which means
you don't get any equity for the first
year. And then every either quarter or
month, you get a grant, but you get the
whole first year of equity right at the
one-year mark. So you get 25% of this
right at the one year. And then you get
another month's worth or quarter's worth
until the four-year mark is hit. Which
means when I hit my four-year mark at
Twitch, my salary dropped a ton because
by the time I was four years in, this
90K of equity was suddenly worth like
200k instead. So that added a lot of
money to my base salary effectively. So
this is a common offer at a traditional
company. This is also again for an early
stage junior engineer. I'll say this is
a year 1. Let's talk about year two
though. Year two I got a promotion and a
raise. So now I'm making 200k a year
base. I still have this equity vesting
but I'm given a grant of another
probably 10k over 2 years. This is a
grant I'm getting as part of my
promotion. Notice how much less this is
than the original offer. That's very
common. On top of that, the company's
now worth more. So this 10% or so this
10K is fewer shares than the 90K divided
by 9 would have been. And this is what
ends up happening at these big
companies. As the stock value goes up,
they can't compensate you as much with
equity anymore. So they just bump your
base salary. So suddenly I'm making 280k
a year base and I get an equity grant.
And the equity grant is another like 8K
of stock over two years. Again, cool.
It's jack [ __ ] So, if this first time I
got 90,000 shares and the stocks
doubled, I'm not getting 10,000 shares
here. I'm getting 5,000. And then if the
stock 1.5xes again, I'm not getting
4,000 here. I'm getting like 3,000 at
best. Maybe less. Maybe like 2500. So,
at this big company that pays really
well, my base salary is going up, but
the amount of more money I make
year-over-year is going down
significantly. This is how traditional
real big companies work. Very common. I
got lucky getting in at such a low
valuation, but it like 2 to 3xed. I then
sold all of that stock and used that
money to fund my startup, which is how
we could get started in the first place.
This prior equity was worth a lot more,
which made my total comp look much
better, but I wasn't getting much in
terms of a raise. my raise was just
coming from my previous equity being
worth more money than it was before
versus a startup. Let's compare this to
what we're talking about here. Again, I
don't [ __ ] believe in the slightest
in that 60k a year starting point. So,
we're going to change this a bit. It's
still going to be 0.5%
of shares, but we're going to use the
real numbers here. We're going to
pretend there's 10 mil. So, this is 50K
shares, and that's 100K over four years.
I'm going to actually do the math here
for the like equity value changing. So,
we'll say at this point it's 1x then 1.5x
1.5x
then 2x for the stock value. My total
comp here is going to be around what is
that? 210 215k. Yeah, cool. The 215k is
my total comp. Then year two I'm going
to change it to 100k just to make the
numbers easier. So 100k divided by 4 125
+ 25 is 150k. Cool. Year 2, we're
getting an additional 10k over 2 years,
but we also have the 25k for this year
time 1.5 because it's now worth more. So
year 2, my total comp is 37.5 plus the
new 2.5 plus what did I say my base is
now? Uh 150. Cool. So now I'm making a
total of 190k a year. And now we have
year three. And here we're assuming it's
all 2xed. So the 2.5k or no that would
have been 2.5 that would have been five.
I did some bad math there. Yeah. So
that's uh another 2.5. So another 182.5
cuz uh that go over two years. That
means you're getting you're getting a 5k
of or a year of new equity. And then the
other one's old equity there. 192.5K a
year. Cool. Now you get another big
raise this time to 280K a year. $80,000
of additional base cash. 8K of stock
over two years. That's another 4K of
equity plus the 5K a year that went from
1.5 to 2. So 2 divided by 1.5 is yeah 1.3*
1.3*
5 6.6K
of last year equity plus the 25K
* 2 = 50K equity. So now our total comp
is $340,000.
And that's not a bad glow up, but a lot
of that glow up came from previous
equity now being worth more money. These
are fake numbers, but they're really
close to numbers I have when I worked at
Twitch, effectively going from 150k a
year total comp to 350k a year total
comp in 3 years. And that was really
good luck more than anything. All right,
I missed the 200k base. I did that math
wrong, too. Cool. I really [ __ ] that
up. Cool. Okay, so we had the 200k year
base plus the 5K of new equity plus the
37.5. Okay, so that would have been 242.
That was bad on my part. Thank you for
the catch. I missed the 200k there.
Cool. So, we went from 150 to 242 to
340. About 100K a year of raise, but a
lot of that came from the multipliers
here. A lot of it also came from the
80ishk base increases. I kind of killed
it after my first year at Twitch, so I
was able to increase my salary quite a
bit. The problem was that my equity had
gone up so much that the equity
compensation was being factored in. So
my next year, I didn't get jack [ __ ] for
a cash bonus. Year four, I was still at
280K. I got a tiny bit more equity, but
not much. And my salary had kind of
plateaued and relied entirely on the
stock going up. So let's go back to this
startup. Year 1, 125k a year base, 50k
shares, 100k of shares over four years.
So that's 25k shares this first year.
So, your total is around 150K. And now
year two, let's say the company hasn't
raised more money yet. They can't
justify paying you more yet. So, still
125k equity. They you don't get a new
stock grant or anything. So, it's still
50k shares. Still 25k shares. Still
150k. But those shares can't be sold the
same way Amazon stock can. You're just
kind of sitting on them. So, you now
have 25k of shares, but it's not cash
yet. You can't do anything with it. Year
three hits. Year three, the company
raised. Suddenly, they can justify
paying you more. You're up to 175K a
year. Still not great. Pretty good
though. They also don't change your
equity grant at all. So, you still have
the 50K shares over 4 years, but there's
a difference now. That was at a 20 mil
Val. Now, we're at a 200 mil Val. So, if
we do the like multiplier here, 1x 1x
10x. Now those 50k shares are worth
around 1 mil over four years. There is
dilution. So we'll I'll even factor in
the dilution. We'll say that's 900k over
4 years. Cool. Suddenly that 25k shares
isn't 25k shares every four years. It's
now 225k
shares a year. So your base salary just
went way higher. Now you're at 400k a
year. But what's even crazier is you
were holding these shares because you
couldn't sell them. So the other 50k of
shares that you had is 50% of the 900k.
And so that stock from before is now
another 450k of equity you're sitting
on. Yeah, that's the difference. If you
wanted to look at the total amount made
at the bottom of this three-year chart,
you have the 125k base times 2 plus the
175 * 1 plus the 900k time 3/4 say 75%.
You made a total in 3 years of almost a million.
million.
We do the same here. Even if we assume
you didn't sell the equity, you end up
at around 772K.
And I want to be clear, I lucked out at
Twitch to have done that well. So in 3
years, startup makes almost a mill.
Twitch 800K. Where things get really
[ __ ] is year four because suddenly
your payout at this company is
significantly higher. And at Twitch,
mine almost went down. Our new base here
is 400k a year. and that maintains on
top of that you're sitting on the equity
and that equity could very well 10x
again which would mean that 900k is now
worth 9 mil the potential upside is
insane the best case here is what I
showed I had a best case scenario at
Amazon and I made a good bit of money
that I then spent to make my company but
if we were to knock these multipliers
down and assume you're not getting an
80k a year cash raise every year this
would be closer to like 4 to 500k but
this is the the calculations you need to
do when you're thinking this out. And
when I talk to startup founders that are
making these offers, I explicitly tell
them, don't put a percentage in.
Percentages make people's brains fall
out. Imagine if you got a percentage of
how much equity you were getting working
at Amazon. Here's my Amazon offer.
You're going to make 125K a year and
equity. Cool. Obviously, no one does
that. We need to talk about this in
terms of what this could be worth in the
future. At a company like Amazon, maybe
2 X's at a company like an early stage
startup, maybe 10 to 100 X's. So, of the
things here, the only parts I can defend
are the base and SF because early stage
startups should have their team in one
place and SF is the best place to
succeed as a company right now. And the
0.5% equity because that is enough
equity. I just would never have pitched
it this way. If you are a founder or
person hiring at one of these companies,
pay close attention to this part. And if
you're considering working at one of
these companies, also pay attention to
this part because this is how they
should be pitched. Here is what an offer
that is good would look like. 125k 125k
a year base salary. It's not uncommon to
say we will give you another 50k a year
at next raise because we only have so
much money in the bank. When we do our
next raise, we'll have more money and I
commit to paying you more when that
happens. when the money closes and we
have it in our account, I will
immediately give you a raise. I've seen
this in a lot of offers. I've done this
in my own offers. Think it's reasonable.
And then you would say you're also going
to get 50,000 shares worth 100K right
now. But let's play out some scenarios.
We'll say scenario one, this is a bad
one. Company is worth 20 mil right now,
20 mil of AL, but we have a bad sale. We
sell the company for 10 mil. We raised 2
mil which means that all gets liquidated
immediately. So we lose the 2 mil from
raising. That's how the safes work.
Watch any my other videos about this
stuff if you want to understand that. So
we have 8 mil left. It has to be split
across the current shareholders. So if
there's 8 mil left, there are 10 million
shares at the company. I have some
amount. My co-founder has some amount.
You have 50,000. you get the 0.5%
of the 8 mil, which is the bad scenario.
That equals to 40k. You got kind of
[ __ ] Well, let's look at scenario
two. Scenario two, we end up raising at
a 200 mil valuation and we raise another
20 mil, the 10% dilution. So now that
equity you had is slightly less. So the
0.5% times 90% because you're losing
some of your value here times the 200
mil that's 900k for the equity. And it's
not uncommon at this point for companies
to allow for secondary sales which means
you can finally turn some of that equity
into cash by selling it to some of those
investors when they come in. You can do
that if you want, whatever you feel
like. But then scenario three, let's say
that this company ends up doing really
well. let's say 20 bill valuation like a
a stripe or a cursor or something like
that that does really really well.
That's going to be multiple raises down
the line. So, I'll be a little brutal
with the dilution. We'll say these
founders weren't good at keeping the
rounds small percentage-wise and you
take a [ __ ] 50% dilution hit. That's
not worth $50 million.
That is absurd. The scenario two with
10% dilution, um I've seen it a decent
bit. I've seen some rounds like I just
saw somebody raise 10 at 125. It's even
less than that for a series A. Like I've
seen good rounds, but there have been a
lot of people who [ __ ] up round two. So
I I'll 2.5 it. We'll say the same val,
but we'll we'll double the dilution. So
you're at 80% left now. Cool. 800K.
Fine. Slightly more realistic. A 20%
dilution hit that or that stage. It
kills me when I see it, but it does
happen. We'll update scenario two.
Scenario three, we're much later in.
You've taken a 50% dilution hit. Your
stock's still worth $50 million. Fun
fact, a lot of the current VC funds,
like the companies that just do early
stage investing, were early Stripe
employees that got these 0.1 to 0.5%
equity grants that now have a shitload
of cash because Stripe did so well that
they're now putting it into these early
stage startups. But there's one last
piece here that's important, and I know
people hate this. The experience is
valuable. There's a good experience on
both the business side for like
traditional like working at Amazon or
whatever as well as working on a small
startup. At the big business, you make a
lot of important connections, especially
if you're a great engineer, I kind of
got known as the guy who made [ __ ]
happen on all the teams I was on, all
the teams that I touched. So when people
heard I was starting a company and a lot
of my co-workers had the same crazy
experience I did at Amazon that resulted
in them having hundreds of thousands of
dollars of cash in the bank, a lot of
them were interested in funding my
company. My early checks were almost
entirely my ex-coorkers from Twitch and
a couple people I went to college with.
Those connections ended up being
essential to us getting funded early.
They got me the money I needed to
survive long enough to then get into YC.
That said, if you join a YC company, you
are essential to them growing. And you
can say, I helped scale some AI from
100K revenue all the way to 20 mil revenue.
revenue.
You can now get into YC without doing
the early fundra. We gave up 5% of our
company doing an early raise before we
got into YC so I'd have enough money to
pay my rent. If I had done a startup
instead, I would have had less money in
my bank likely and it would have been
harder for me to fund it myself, but I
would have had the potential to skip
that 5% I lost and get straight into YC.
I can't tell you how many current YC
companies I see that are a founding
engineer from one of like the last 3
years of YC companies leaving and going
to do their own thing and getting in
immediately because they have that
experience and they understand the grind
of the startup. There are benefits and
negatives to both paths, and it should
hopefully be pretty clear which one you
specifically want to do. I'll go as far
as saying the vast vast majority of
people should go the big company path
because there's one last piece that I've
touched on but haven't emphasized
enough. If this total is like a best
case in big company world, we'll say
that this is a a 10% chance of
happening. the worst case, the 90% case,
even we just say it's the actual worst
potential here, it's probably going to
be in the like 4 to 570 range. So, if
you're in the 90% of big companies that
don't double year-over-year, you're
still going to make a lot of money. But
if we go here, this is a 5% chance at
best. And there's a 95% chance that the
equity all goes to zero and you only
made your base salary, which would have
been 125 * 2 + 175. So it would have
been 250 320. So you would have made 425
instead at best because all your equity
went to zero. This is the difference. In
the best cases, the startup will win
handedly. But in the worst cases, big
business wins handedly and most startups
fail where 5% is YC numbers. Reality is
closer to like 1 or 2%. Obviously,
you're gunning for this assuming that
you can make this happen. You shouldn't
join a startup that you don't think can
be worth a billion dollars. The same way
as an investor, you shouldn't invest in
a startup that you don't see a path to a
billion dollar valuation. You shouldn't
join a company you don't see a path
there with either. There is one other
important piece here though, which is
that in this 98% chance, you're now
unemployed. And in this 90% chance,
you're coasting. This was the case for a
long time. Sadly, this has changed
because of layoff culture. I
legitimately believe that the rate of
layoffs at these big companies and the
randomness of the layoffs at these big
companies means that the quality of your
work and how hard you work no longer
necessarily determines the likelihood
you have a job next year at a big
company. I know a lot of incredible
engineers who got laid off because the
company just ran an algorithm and it
chose who to fire. If you're an
earlystage company at one of these
startups and you work 2x harder, you
might have just increased the chance the
company succeeds by 20 to 50%. Harder
work at this startup can meaningfully
affect the percentage of success and
failure. And even if it does fail, what
you get out of that is a ramp to go
start your own thing. If you work just
as hard at a big company like Microsoft
or Amazon, you don't materially impact
the likelihood the company succeeds. you
don't materially impact the likelihood
they have to do layoffs. You don't even
materially impact the likelihood that
you don't get laid off yourself. So that
fundamentally changed the risk profile.
So big companies no longer are as
massively less risky as a small startup
is. There's still a gap. Big companies
will always be a safer bet than a small
startup. But if you're motivated enough
to to make the chance of the company's
success different, that gets you nothing
at a big company other than a couple
connections to people who remember you
for being the guy who worked hard. It
might be the life or death of the
company for a startup. And even if it
doesn't succeed, if you did that, you
put in the work and you're known for
doing that, the connections you'll make
and the opportunity you have to do the
next big thing is unbelievable. Two of
the biggest startups from recent batches
and just recent VC stuff in general came
from Gatsby. One of the biggest failures
in full stack like software development. Gatsby was a disaster of a React
Gatsby was a disaster of a React framework. And both founders have since
framework. And both founders have since made their own things that are raising
made their own things that are raising against absurd valuations because
against absurd valuations because they're founders that have experience.
they're founders that have experience. They are building cool [ __ ] but their
They are building cool [ __ ] but their business was a failure and leaving that
business was a failure and leaving that has set them up for a lot of success. So
has set them up for a lot of success. So don't underestimate the value of the
don't underestimate the value of the experience on either side, but don't
experience on either side, but don't overestimate the safety of the big
overestimate the safety of the big business either now that we're in layoff
business either now that we're in layoff culture. One, don't pay somebody less
culture. One, don't pay somebody less than 125k a year to live in SF. Two,
than 125k a year to live in SF. Two, don't join a startup remotely if
don't join a startup remotely if everybody else is in person. Three, 5%
everybody else is in person. Three, 5% is fine, but don't lie about it. Show
is fine, but don't lie about it. Show real paths. Point four, stop hiring for
real paths. Point four, stop hiring for things you don't like doing. I think
things you don't like doing. I think that covers all of my hot takes here.
that covers all of my hot takes here. People don't get this stuff and I do my
People don't get this stuff and I do my best to break it down so y'all can
best to break it down so y'all can actually understand. And honestly, if
actually understand. And honestly, if you're a founder and you're struggling
you're a founder and you're struggling to explain this stuff to a potential
to explain this stuff to a potential candidate, maybe just send them this
candidate, maybe just send them this video. I went out of my way to try and
video. I went out of my way to try and be as transparent as possible about all
be as transparent as possible about all of this because this stuff isn't easy to
of this because this stuff isn't easy to understand. It's very different from
understand. It's very different from just getting paid a check every year.
just getting paid a check every year. But it's one of the best decisions I
But it's one of the best decisions I ever made was to come out here and live
ever made was to come out here and live this chaotic startup life. I wouldn't
this chaotic startup life. I wouldn't trade it for anything. And I think that
trade it for anything. And I think that might be my last point. You want to work
might be my last point. You want to work hard, don't waste it on fang. If you're
hard, don't waste it on fang. If you're the top 1% of engineers and you work at
the top 1% of engineers and you work at a fang company, you might go from 300k a
a fang company, you might go from 300k a year to 350k a year. If you're the top
year to 350k a year. If you're the top 1% of engineers and you go to an
1% of engineers and you go to an earlystage company, you might double
earlystage company, you might double their likelihood of success. You might
their likelihood of success. You might be the reason they become worth a
be the reason they become worth a billion dollars in the future. If you
billion dollars in the future. If you want to put that extra work in, don't
want to put that extra work in, don't sell yourself short. If things like the
sell yourself short. If things like the phrase work life balance means a lot to
phrase work life balance means a lot to you, if living in a rural area to raise
you, if living in a rural area to raise your family is something you care a lot
your family is something you care a lot about and want to do. If making less
about and want to do. If making less money for a few years because you just
money for a few years because you just want to grind and make this business
want to grind and make this business successful is exciting to you, do it.
successful is exciting to you, do it. But if you really care about those other
But if you really care about those other things like work life balance, living in
things like work life balance, living in a rural area, being able to work remote,
a rural area, being able to work remote, having flexibility, having options,
having flexibility, having options, being able to work less hard some weeks
being able to work less hard some weeks and work harder others, all of that is
and work harder others, all of that is fine. I'm not talking [ __ ] on it when I
fine. I'm not talking [ __ ] on it when I talk about this. I'm trying to make sure
talk about this. I'm trying to make sure you're realistic here. If you're the
you're realistic here. If you're the type of person that gets home from work
type of person that gets home from work and opens their laptop and codes more
and opens their laptop and codes more cuz they like to, do it. But do it at a
cuz they like to, do it. But do it at a company that will reward you for it. If
company that will reward you for it. If when you're done for the day, you want
when you're done for the day, you want to close your laptop and just relax and
to close your laptop and just relax and do other [ __ ] don't join one of these
do other [ __ ] don't join one of these early stage startups. And if you join
early stage startups. And if you join one and realize it's not for you and
one and realize it's not for you and leave, that's fine, too. Just make sure
leave, that's fine, too. Just make sure you can survive a year so you can get
you can survive a year so you can get that cliff payout. I think that's all I
that cliff payout. I think that's all I have to say on this one. I hope this
have to say on this one. I hope this helps you guys better understand how
helps you guys better understand how compensation works at startups. It's
compensation works at startups. It's such a common miss and I wish people
such a common miss and I wish people would better explain it. This is a video
would better explain it. This is a video that would have made my life much easier
that would have made my life much easier if it existed when I was looking at
if it existed when I was looking at joining a startup. And I hope it helps
joining a startup. And I hope it helps you guys out like it would have helped
you guys out like it would have helped me. Let me know what you'll think. And
me. Let me know what you'll think. And until next time, peace nerds.
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