<story><title>Big Tech Companies Pounce as the Allure of Startups Fades</title><url>https://www.bloomberg.com/news/articles/2016-11-14/big-tech-companies-pounce-as-the-allure-of-startups-fades</url></story><parent_chain></parent_chain><comment><author>poof131</author><text>I recently made the jump from startups to bigger co.  For me there were a few considerations:&lt;p&gt;1. We’re at the end of a bubble and doing a slow pop.  Multiple companies that have raised a lot of money don’t have the revenue or unit economics to be sustainable.  Employees with compensation tied up in stock aren’t going to do well.  Had a friend leave two companies within 6 months (didn’t bother vesting) that both raised over $100 million because the executive teams were celebrating $900 deals.&lt;p&gt;2. Startups don’t exit anymore.  Waiting 8-10 years for an exit is unacceptable.  It might be okay for founders who take a couple million off the table at the B round or VCs who keep the IRR on their books, but for employees it’s a fail.&lt;p&gt;3. Founders as rockstars.  The narrative is hurting the industry.  People I like and respected raise money and become narcissistic assholes.  Last founder I worked for who I considered a friend told me “he was like Elon Musk or Larry Paige, a technical genius, and not to question his leadership”.  This was after he fired his cofounder and chased off the one other employee of our seed stage startup.&lt;p&gt;4. Risk vs. Reward.  As an employee with founders trying to keep 50% of the company to be like Zuck, companies never exiting, and no idea what the terms of later rounds are, working at a startup is becoming stupid.  Saying it’s about the mission, it’s about learning not earning, when the VCs and founders are doing great is disingenuous.&lt;p&gt;We’re at the end of the cycle.  I’ve seen 3 now: 2001, 2008, 2016.  Hopefully in the next round the powers that be will figure out how to better reward everyone who takes risk working at startups.  Right now employees take almost as much risk as founders for much less reward.</text></comment>
<story><title>Big Tech Companies Pounce as the Allure of Startups Fades</title><url>https://www.bloomberg.com/news/articles/2016-11-14/big-tech-companies-pounce-as-the-allure-of-startups-fades</url></story><parent_chain></parent_chain><comment><author>hibikir</author><text>The way startups run today and the way compensation is often structured just makes startups a bad deal economically in the best of times.&lt;p&gt;Imagine for a second that you become employee 10 in a new startup that you believe in. You dedicate it 15 hours a day for 5 years, everything went awesome, and now the company is worth 5B. Your stock options would be worth millions in case of a liquidity event. Great, right?&lt;p&gt;The thing is, it&amp;#x27;s 5 years later the company is probably 300-800 people now, and therefore is a very different company than the one you joined, and if it&amp;#x27;s still growing, it&amp;#x27;s be a different company still next year. But there&amp;#x27;s no liquidity event: You cant exercise your options because you can&amp;#x27;t pay the taxes. If you want to exercise anything, the company has to go public, and you sure don&amp;#x27;t control that. So you either wait in a job that probably doesn&amp;#x27;t fit you anymore, or your stock compensation was worth nothing. Therefore, whether the startup does great or not, you have to apply the &amp;#x27;I might want to quit&amp;#x27; discount. If I am assuming 8 years to IPO, which is not insane that discount is going to be huge by itself. I&amp;#x27;d not rate my chances of staying in a job for 8 years as 1&amp;#x2F;10. And that&amp;#x27;s without considering that, career wise, you&amp;#x27;ll be learning more changing jobs every couple of years or so.&lt;p&gt;Let&amp;#x27;s compare this to a public company: Their stock compensation has none of that complexity, especially now that RSUs are the way to go. You can sell them for cash immediately at the stock price that day. The downside is minimal, and chances are your first block of shares comes after one year, so if you hate your job, you sit there a year, sell your shares and quit.&lt;p&gt;Given how much stock the bigger companies are awarding developers, you have to completely ignore compensation to go to a tiny startup: You kind of have to bet in the world around you changing to make exercising options early to be more or less free, along with believing that the startup will go the distance. Those are odds I&amp;#x27;d not take</text></comment>