The prestige asset generated by YC is interesting, because I bet it's going to have an unintended consequence of increasing the social difference between founders and employees.
If you're a YC founder, you're in the club. You were picked. It's great if you succeed; if you fail, you have a network. If you're a YC employee, you're just an employee of a small startup. YC founders seem, at least from this, to be blind to the fact that their employees aren't able to cash in on the prestige of being YC and will therefore expect hard currency.
I think that crappy benefits send a pretty awful signal: we're not committed enough to making your life not suck. A 25-year-old founder is going to think of that stuff as an afterthought, while the 40-year-old is thinking, "kid, if I wanted to take on that kind of risk and insanity, I'd have your job". Health insurance is a goddamn mess and a company can't expect to get it right in an afternoon, but it is important.
As you've noted here, it seems like most startups support the traditional executive/employee status divide, but with better marketing. Using startup culture as a substitute for benefits, compensation and autonomy within a company is now standard practice. Unfortunately, it just a variation of the old Sociopath/Clueless/Loser paradigm (I am a frequent patron of your blog).
I recently discovered a blog with some interesting proposals on how to run a company, and an economy, in a radically different non-sociopathic manner. I submitted the link to HN , but didn't receive any traction. Perhaps you may find it interesting:
Heh. My company pulls that "we're a startup" crap every time they pull that sociopathic crap on us. It doesn't matter that we've been a public company since the late-90s (although changed the business model 6 years ago). We might be one of the worst offenders in regard to what you're talking about.
They cut our benefits package a year or two ago and now we're instituting a company-wide paycut (after finally having a profitable quarter). The best part about the paycut is that they dressed it up as if they were giving out performance-based bonuses (the top bonus is worth less than how much my pay got cut...).
If it weren't for the fact that I can work from home, I wouldn't be here anymore...but I don't see myself here this time next year. I don't see myself working for a company based out of the Valley ever again unless it's a very stable, mature business. The culture is so toxic.
Is there anything going on on that blog these days? The analysis of The Office was captivating, but I can't even find those posts by Googling for them...
Basic Income is a good idea that won't exist until society has no other choice. I like the concept, but I don't see it as getting through, politically, until the options are either that or revolution.
People of means use educational justification for their own private basic income system. An unpaid internship isn't a case of someone relying on the parents. It's "investing in his career". It's a bit hypocritical that people who rely on the government for these services are "moochers" but those who get a parental hand until 22 (or 26, or 30) are not. People should just admit that unpaid internships are a sign of a problem.
I'm in agreement with his argument about the virtue of BI. It will bring the balance of power between employers and workers back to fairness.
"If you're a YC founder, you're in the club. You were picked. It's great if you succeed; if you fail, you have a network. If you're a YC employee, you're just an employee of a small startup. YC founders seem, at least from this, to be blind to the fact that their employees aren't able to cash in on the prestige of being YC and will therefore expect hard currency."
Well said.
It's actually infuriating when one joins a pre-YC company and contribute to the company, yet don't get to attend any of the events. It's like as a non-founder you are not worthy of ever setting foot in their room or gaining knowledge, despite the fact that so many non-founders have contributed significantly to a company's trajectory. Though I think the Silicon Valley community has an especially strong fixation on founders.
I guess, there is some correlation between being worthy of YC club and successfully negotiating yourself a founder title. That's probably one of the reasons, why somebody with a non-founder title can't get in that easily.
Saying that, such situation is likely to has negative outcome for the company. A conflict in the founding team and high likelihood of significant contributors leaving the company and abandoning projects can't be good.
IMHO, anyone who has been around a company since the last major pivot (significantly different product, market or business model) should deserve the founder title.
I am employee #1 at the startup I'm at and I've been here since we were a completely different company, targeting a different market with a different product. Being present before these major pivots, means you are very likely to make major contributions to the new direction of the company. This in a way makes you a founder. You may not be the founder of the legal entity, but you are a founder of the company insofar as product, market and business model are concerned, since all were conceived with your involvement. It's very frustrating to be on the other side of the founder-employee divide.
"I bet it's going to have an unintended consequence of increasing the social difference between founders and employees."
I bet it exacerbates the current problem of too many startups fighting for too few competent people. There's no surprise here that working for a startup is usually a raw deal (worst of both worlds).
I wonder if the lessons of 1999-2001 were forgotten. Makes sense, given that it's been more than a decade.
True. I live in San Fran and would be much happier engineering for Wells Fargo than any startup (from a total-compensation viewpoint).
that's why it's so hard to hire.
This is probably more of an issue where the salary offered needs to match the risk of the job. There was an HN discussion some time ago about how wall street workers have to sign stiff non-compete agreements, but they get a substantial golden parachute if they are ever laid off.
I've been disappointed with the response when I have commented on such matters in the past. Responses are typically along the lines of, "I guess you're just not good enough" and "Not all of us just care about money."
I was honestly surprised to find replies along these lines in the comments of the blog post, given the author's very well reasoned explanation of his position and the psychology of people like him in skill/experience/obligations.
>Health insurance is a goddamn mess and a company can't expect to get it right in an afternoon, but it is important.
How about just throwing money at the problem and outsourcing to someone like Trinet? Even if the company doesn't contribute much to premiums, I've always liked, as an employee, having Trinet.
I have had a series of bad experiences with Trinet. Not so bad that it's ruined my life, but bad like "I can't believe this is the best we can do for HR". I like the idea of outsourcing that sort of thing so we can focus on the hacking, but I feel like that particular space is ripe for disruption (to use a clichéd term).
Without getting into details, there was some significant mismanagement of my user account, resulting in incorrect tax being withheld until I noticed the problem and notified them about it. After an unreasonable amount of time spent resolving the problem with a number of different people on their end, the end result was a large tax bill that I had not budgeted for.
There have also been other less significant issues, mostly regarding my status as a foreign employee. I speculate that it stems from a lack of properly engineered software on their end. In all cases, my problems would have been fixed by some logic along the lines of "If (employee.status == X && !taxesApplied.include(correctTaxes)) then trigger alert Y". Perhaps I'm too much of an engineer, but I find it hard to believe that a company that focusses solely on HR can even operate without this kind of automated check.
A great company solving the "Back-office / operations" side of a startup, including HR and benefits management, is Advisor. http://Advsor.com Yeah, the website is being updated, but with clients like Uber, ZeroCater, PandoDaily, Buffer, Expensify, and 70+ more, they are a SOLID solution.
We've been generally happy with TriNet, and it's worth having a great benefit package and an HR call center. It's not free, but I think the math works out about the same way free meals do.
Same question on Trinet - since they also have no prices on their website - based on your experience, how do they charge (per employee, per transaction, etc) and how much does it cost, roughly? 100$/empl/mth, 1'000$/empl/mth?
About $150/employee/month, for almost all services. Of course if you elect to pay a portion of benefits (e.g., health care), that's on top as a pass-through. Certain special requests have a la carte pricing, but you most likely won't need them.
Per employee, with something like a minimum of $2k/mo for 4 or 5 employees and something that approaches $160/mo per employee with a larger number. There's also some several thousand dollars of initial cost.
Disclaimer: My data is from an answer to a LinkedIn question several years ago, so it's oudated at best.
The benefits described by OP are not that crappy. Lost of large companies also have employee contributions for health insurance, especially for family members. $100 for employee+child is actually quite cheap. He acts as if what he was offered was somehow insulting (though we don't know the salary offered). 15-20 days vacation is also standard, not 30 days.
> ...while the 40-year-old is thinking, "kid, if I wanted to take on that kind of risk and insanity, I'd have your job".
So what made that 40-year-old think he wanted to work for the startup in the first place? if the founder's position is too risky and insane for his taste, how is an employee position going to be any better?
I mean, everything he's saying is true, and the take-away seems to be that 40 year olds with families (or anyone else who requires stability) are not a good fit for early-stage startups. Didn't we already know that? One poster hilariously bemoaned being "put out to pasture," but the demand for more compensation (even if deserved) has a lot to do with it. You can't have a stable cushy job and be on the ground floor of a startup at the same time.
Edit: The disparity between founders and employees is definitely an issue, which could be fixed by a more even equity distribution, but I don't think that would solve all of OP's issues.
> if the founder's position is too risky and insane for his taste, how is an employee position going to be any better?
The founder has upside potential to compensate for the risk. If the employee position has much less upside potential (i.e. equity), but just as much risk, it had better be balanced by higher compensation than you could get in a "stable, cushy job."
Correct me if I'm wrong, but the kinds of companies in question normally don't have the capital to offer that kind of compensation. That's why I added the edit to my comment: the employees should certainly get to share in the reward as compensation for their risk.
The whole point of this thread is that startups don't typically offer early employees enough equity to justify the combination of risk and often below-market salary.
Right. So my proposal is to offer more equity. Yours is a higher salary. I think we're mostly in agreement.
My view is that a startup is inherently risky and unstable. I think it makes more sense for everyone to share fully in that (risk and reward), than for some employees to simply collect a paycheck. But that's how some talented people work, so I suppose you have to be flexible.
Why just as much? It is often said that, but in reality it is not so. Employee risk is vastly higher.
Essentially an employee has 1) all the risk of a founder; 2) plus more uncertainty risk; 3) plus the risk of founders screwing up an employee stock options; 4) plus the risk of getting a bad reference from a founder who screw an employee up.
On "uncertainty risk". More uncertainty always means more risk. Founders have all the information and control over what is happening in the company, while employee only has indirect access to both. That means more uncertainty for an employee. And consequently more risk.
Also, consider employees and founders future career. Founder don't need good references from employees, and an employee does. That actually means, that an employee has take that into consideration as a risk. Should there be any falling out between an employee and a founder, than not only stocks options and position, but even future career of an employee can be impacted. That is a huge risk for an employee. And, it is not so for a founder.
A startup doesn't have to be an unstable get rich quick scam as you seem to imply. In other industries besides our's, people expect a new company (also known as a startup) to also be ... you know ... a company. Honestly, it's comments like these that I feel make tech startups look like caricatures and just silly.
But that's the culture we've created, isn't it? Is my comment inaccurate? The "tech startup" has become a different animal from a general "new company," largely due to greatly reduced overhead and initial costs. There are still "new companies" in tech, especially hardware.
I'm not sure why you call this new model a scam...it's fiercely competitive and certainly high risk, but what makes it a silly caricature? Do you feel the same about YC in general? Because they've definitely been at the forefront of fostering this "start lean and grow fast" mentality.
I'm genuinely curious if being an early YC startup employee increases your chances of being accepted as a YC startup founder 3-5 years later. If so, then the payout doesn't come from equity from the first company your worked for as an employee, but from the second company you founded that has the YC cachet.
What is the factual basis for this statement ? Its not like this network will clothe & feed you & find you your next gig when your startup goes south. There are several yc alumni who, after their startup went bust, also went bust.
I think your underestimate the strength of the YC network. I've worked at a YC startup before as an early employee (early enough to go to some events). I'm fairly sure if a YC founder's startup failed, the founders would get snapped up by another YC startup.
I'm not sure about this. Your network's primary purpose is to help find you your next gig. Who are the YC alumni that "went bust"? I would be interested in talking to them.
If you're a YC founder, you're in the club. You were picked. It's great if you succeed; if you fail, you have a network. If you're a YC employee, you're just an employee of a small startup. YC founders seem, at least from this, to be blind to the fact that their employees aren't able to cash in on the prestige of being YC and will therefore expect hard currency.
I think that crappy benefits send a pretty awful signal: we're not committed enough to making your life not suck. A 25-year-old founder is going to think of that stuff as an afterthought, while the 40-year-old is thinking, "kid, if I wanted to take on that kind of risk and insanity, I'd have your job". Health insurance is a goddamn mess and a company can't expect to get it right in an afternoon, but it is important.