$20K into a startup, which was sold to midrangeSoftwareCompany, which was in turn sold to Oracle. Wound up with 17 shares of Oracle, worth about $2000 at the time.

Another experience: $2K of "hell, I'm leaving so why not buy the shares I vested in". Eight years later the company is wildly successful (public and valued at $1B). I call them up, and my shares are worthless through some stock shenanigans.

A third: $5K investment turned into $21K. Yay. I guess I almost broke even on the Silly Valley slot machine.

Lastly: I did much, MUCH better with options and other stock-related stuff at a couple of large companies, spread out over 16 years. It's not unreasonable to make a few million on these in the course of your career.

Get a good salary. Don't trade a good salary for equity, because in general it's a bad deal and you're just going to get screwed.

If you're good and you take a low salary for the "developer class" equity that I've seen, take a hard look and see if you're getting anything else worthwhile (an education in technologies you wouldn't be using otherwise, good contacts, a possibility you'd be identified as a principal "must have" in an acquisition, with incentives to match, etc). Otherwise you're being taken advantage of.

That's offset by the fact that a meaningful fraction of the 10% that have value to the holder can sometimes generate life changing wealth.

To me, substitution of stock options for cash is a function of how much financial risk you want to take or can afford.

If you have fewer financial obligations (eg. unmarried, no mortgage, no kids, no or low debt) and want to take a risk at a company by taking options in lieu of cash, do so.

If, on the other hand, you have financial obligations (any of the Big Financial Four above), it's probably better to get a salary that keeps your nose above water, take the token sign on equity they offer and then earn more shares by being awesome.

In any case, it's wise to objectively evaluate the value of your equity every six months or so. If it seems to you that it's got a lot of value, try to get more (ways to get more include being awesome and asking). If you think it's not worth much on two consecutive bi-annual reviews, see if there's another place where you could get a better deal.

It's no one's job to manage your career but yours.

That is, who would leave Google in 2002? Dell in 1993? Facebook in 2006?

In my opinion, the best stock exercises are cashless, one time events, paying full short term capital gains. Those trades represent almost no risk to the exerciser (exercisor?) and are pure financial upside.

Companies love trying to get you to take a 5-40% pay cut because "It's a startup" and "we'll give you equity". Total BS. You will be better off spending an hour every week minding your money in other ways, with your appropriate salary.

To which the answer is: "The success of this company will depend much more on management's strategies and the vagaries of the market than on the code that I write. Besides, you're not sharing your financials and other private business information with me, so I have no basis for guessing whether the company will be successful or what the value of the equity you're offering me will be. And in any case, I need to be able to pay my rent and other expenses regardless of whether the company is successful or not. So I'm expecting to receive a competitive salary."

And you're better off not being there.

My usual bargaining gambit is to ask how much salary they will give me over the vesting period to buy back the options. If nothing else this puts a price floor on how much the options are worth to the company.

BTW British telecoms latest share save 5 years maxed out at £200 a month - just came out at £100k effectively tax free.

RSUs tend to be better because, unless your company goes out of business, they're usually at least worth _something_ when they finally vest. One thing about stock, however, is that after they're all vested, you're effectively seeing a decrease in your overall compensation. An RSU package that fully vests after 4 years incentivizes you to start looking for a new job after 4 years.

When I get an offer that contains options, I usually mentally value it at $0 and THEN consider whether the salary still seems competitive.

EDIT: I generally value _options_ at zero.

I also LOVE kasey_junk's strategy below of asking companies what they'd hypothetically offer in cash instead of equity. That's pretty much guaranteed to make the company get real about how they value their equity. I remember once negotiating ~$5K more in base salary to "give up" what OMG COULD TURN INTO MILLIONS OF DOLLARS IN OPTIONS!!!! The company eventually went bust and sold for pennies on the dollar.

The "usually" part, and "if you do well" part means there is some risk but if companies like you they will make sure you have a lot of RSUs vesting years from now.

If you're doing well and the company is sensible they will continue to offer you additions equity grants so there isn't that incentive to leave as your compensation falls. This post describes the "evergreen" aspect to granting equity: http://firstround.com/article/the-right-way-to-grant-equity-...

Without knowing any details whatsoever, couldn't someone say the company went bust because it didn't align incentives, hiring people who insisted on $5K more so they had nothing riding on the company, and did not end up with any incentive to make it succeed?

If someone hypothetically did say that, what would our response be?

They have very low effect on the success of the company other than doing their job well.

By 'they' did you mean engineers at tech startups? They have a huge effect on the success of the company and options-based incentives directly cause vastly greater alignment and output.

(in general the shares reflect engineers' preferences, as they do require a certain level of salary and don't want to take as big risks as the founders. founders would be happy to give them more share and less salary! they have a huge impact on success.)

It's not directly relevant to me as I don't have options, but I suddenly feel like I don't understand stock again.

They are specialists; they do this all day, every day, and since you are just an unsophisticated code monkey, it's vaguely like playing one-on-one basketball with Lebron. So unless you have something their bosses really want (perhaps domain knowledge of the business) you almost invariably end up with pennies and fake smiles.

"Sorry, it's the red options that have worth, all of those blue options were devalued in [some arcane legal event] and are worthless now."

I've thought about talking to a lawyer, but I'm guessing that what they did was totally legal, on the order of selling the company's assets to a company of the same name for a dollar in hand, or something like that, with some kind of structure to keep the major investors happy.

> As a result of a transaction in 2001 that created CompanyName Acquisition Corporation, now named CompanyName, Inc., all equity interests in the predecessor companies were extinguished.

I guess I'll talk to a lawyer. They were sold for $3.5B, so that might be an interesting up-side.

Oh, and they were recently acquired by BAE for a lot of money. The officers made a killing, but my friends made around 4-figures. I have no idea what they did to get board approval but it feels like they rejiggered things to dilute everyone else.

I just mean that the idea of dilution suggests to me that the original company has been dissolved and reconstituted somehow. That sounds like something seriously in need of regulation...

Edit: I should add that even publicly traded companies do this, issuing more shares and diluting current shareholders to raise capital.

Yup, that's it exactly.

That advice turns into: "You could fight this and possibly win, but it would take a year and it would cost more than you'd get back." I get what you are saying. You definitely can't really "trust" anyone, but there are so many ways to legally screw you that I'm not sure you can trust protection using a lawyer.

The last 2-3 years I have made more money than I have ever made and it was coded 100% remote (from Hawaii). I had one meeting at the clients place. Made somewhere around 180K and this was me full time with a part time developer subcontracted out which didn't actually bring in much additional revenue < 10%. It did bring throughput.

As of about a month ago I was let go as the top developer in the Saas company because I was deemed too expensive by the board. I am pretty sure the CTO didn't want to give up me as a resource.

All of a sudden I have realized that overseas developers have become a priority and it is my feeling that as an hourly developer my days are limited in making $80-$100/hr (corp 2 corp contract).

It is my feeling that I have 2 possible directions. 1) Start an outsourced overseas development company and use my 'Software Architect" title (which is so funny to me because architect is thrown around so much in software) and manage resources overseas. 2) Start selling software on a per usage basis or in some value add model. I believe both of them are solid bets however #2 takes more commitment.

At this point I think the reason salaries are topping off is because of the global market. That is just my take from being in the industry. Thank you.

Thoughtworks are expensive though...

- startup gets some funding, but not a lot, and needs (more) developers

- startup founders think they can find good developers at rates that are similar to those of 'regular' developers outside the Silicon Valley / HN bubble / web development scene. Possibly because these founders are non-technical and mostly have experience in bigger, more 'boring' companies where developers aren't 'essential' (or don't seem to be), or groomed inside the company and happy with lower salaries.

- startup finds out that nobody will take the jobs at the offered salaries

- startup decides to be more creative and - if they're very lucky - find:

    1. competent, usually remote developers who are willing to work for much less than the going rate in home country  
    2. oblivious developers or developers just out of college who have no clue how much they can make

And the founders of these companies, if they're not technical, might never quite realize that in the end they're probably wasting more money because the codebase is terrible.

While I would never argue that the only competent developers are those in the 'SV/HN/web bubble', I do think it makes sense that there's a correlation between developers who are oblivious to their value and the rest of their field, and developers who are still stuck in older, less efficient approaches to many startup's problems.

Pay your developers well!

A terrible code base that serves customers is better than a beautiful codebase that goes unused. I think your criteria is expressed poorly. Perhaps you meant that bad developers are unable to produce code that serves customers well? Add in, a terrible product. (Product != codebase)

A terrible codebase will _eventually_ fail to serve customers for a few different reasons. Scalability is huge and may be very difficult to find performance problems and fix. maintenance time, and time to add new features are places where a terrible codebase will eventually impact a customer.

Ability to add new features without breaking things is nice. Uptime is nice.

Many products do just fine with a few thousand occasional users, but too many developers think that they are building the next Amazon or something, and overcomplicate things to death for performance reasons.

When I'm saying 'the codebase is terrible', I'm talking about front-end code for a web app that is a convoluted mess of jQuery written by someone who is clearly not used to writing javascript, and quite possibly a bad developer even in the language they are comfortable with.

Even if they're decent at whatever their primary language and 'domain' is, the front-end side of things is such a mess that it noticeably impacts performance and the ability to work on the app well before even the MVP is done.

I've worked with front-end apps (and even websites) that were multi-megabyte monstrosities that loaded multiple versions of jQuery, hacks upon hacks to make things work, and not even the simplest of optimizations (lazy-loading images, 'browser-side' caching, etc).

I've worked with jQuery-only front-end apps that took more than a month to build, did only the most basic of things, and were almost impossible for me as a contractor to work with. I would rewrite the whole thing in either Backbone or some variation on the react/flux approach in, at most, two days, and be able to get the in-house developer up to speed in another one to two days if they were capable and, perhaps more importantly, willing and remotely curious.

In part this has been due to the current speed of development in browser technologies and frameworks/libraries, and in part it's just part of working with in-house developers who have no love for their job or have other things that they prioritize (35+ with kids, understandable!).

Usually this level of horror only presented itself in older, more established companies with 'legacy devs', but I've seen similar issues with (web) startups that hired without knowledge of the domain.

So, to be clear: getting the job done is the priority. I've worked on Backbone projects where I would've loved to use the latest and greatest, but happily worked with stuff that I would consider, in front-end-hacker-news-hipster terms, old-fashioned. And I've come to realize that if you have clever developers with curiosity, you can get a 'front-end app' done that isn't pretty, but works well. But too often, especially in the 'cheaper' startups with little founder-level technical know-how of the domain (front-end), I've seen things go very, very wrong.

Terrible code base says that the value per customers is decresaing while customers increases because your costs (of software QA) are eating your margins.

Ugly codebase that does not scale with increasing efficiency for instance.

Remember low OPEXes always beat KPEX (investment)

People focus on features in software as the only value, I think it is the recuring costs per feature that should be the value.

For instance storing digitalized book is plain stupid. The first book printed is still there because paper/ink are cost efficient in terms of recurring costs for their value of keeping information whereas servers/software ... will doom data to an end because of reccuring costs that don't scale.

That'll give you the best idea of your market value. You don't need to take the position, and if the bureaucracy of an enterprise gig isn't your thing, then maybe you shouldn't, but that'll give you the best float test for what it is that you're actually worth, with which you can parlay into knowledge for salary negotiations elsewhere.

Knowing that Oracle would pay you is great for evaluating whether or not it's worth a $30k difference in salary to not have to worry about a business casual dress code, corporate politics and a rigid command structure.

Not knowing the difference in pay, it's harder to evaluate whether or not it's worthwhile.

Many of the old-school Caribbean pirates were in the navy first, after all...

You could walk into Cisco, VMware, EMC, Pivotal, etc. etc. and find yourself working with close to cutting edge tools, hard problems, etc - BUT have a stable salary, perks, training courses, huge amount of corporate resources to lean on and learn with.

Don't rely on your university for advancing your career. I've basically never seen a university career department with good connections or any knowledge of tech at all.

(Also, shameless plug, but we're hiring in NYC: https://angel.co/cafe/jobs)

If you're not in the area, it gets substantially harder. Some random sources.

https://news.ycombinator.com/jobs

AngelList: https://angel.co/jobs

StartupHire: http://www.startuphire.com/

If you're looking for remote work, you could start with the list of YC companies. Or just go with any young companies whose products or blog posts or people you admire.

It's better to start with the companies you want to work for, and check their own jobs pages (or ask someone who works there), than to start with aggregated job boards, which are really a wasteland.

Only if your job offer is in the Bay Area. Some of these companies have branches in smaller cities where the cost of living (and consequently pay) is lower.

Here is the best writeup on startups I've ever read:

http://www.geocities.ws/drhenke/startupmemo.htm

I expect to hear how tone deaf and pessimistic the above advice is, and said pessimism will lead to this post being downvoted, but I have found it most helpful. It meshes with my own philosophy that the only startups I'd choose over a well paying BigCo position are ones that offer a founder's position with 5+% equity. Risk should be proportional to reward.

To put this into perspective, a friend of mine was the 20th or so employee at a startup that was eventually purchased after dying and coming back to life over a decade or so. In exchange for a decade of his life and going without compensation for nearly a year, he got ~$400K. A nitwit co-worker who had 50x his equity in the original incarnation that died and who had nothing to do with its resurrection and its eventual purchase got ~$20M on the basis of having a 3-letter title in that original startup. Don't end up like my friend.

If you want to do the math your self, for most companies the cost is predominantly determined by salaries. If you can figure out the number and positions of employees, you should be able to estimate it fairly accurate.

Figuring out how much they make on the top line is slightly harder, but you can usually estimate it if you can find out how many users they have (which is often not very secret) and if you can guess at how much they make per user (usually roughly the same figure across an industry - so again, not overly secret)

If you make your calculations up front, you will know which variables you are least confident about and can try to pry about them at an interview.

The veteran engineers from the company's earlier days are often true-believers in the company/product, and probably joined for below-market at a time when market rates were lower. As a result the comp structure at these companies gets into a really weird state where a new market-rate junior hire cost about as much or more than the seasoned technical staff they already have on payroll.

That's a tough pill for companies to swallow, and even if you do manage to hire you'll have a mutiny on your hands if you don't do something quickly to close the 40+% gap between the comp your existing employees are getting and the market.

If you're in SF and your rent is rising by 10% p/a then your salary needs to be keeping track unless you already have FU money.

Or you work a couple of years to get a little vested, then jump ship using your unvested equity as a bargaining chip in your next negotiation "I'd be leaving so much on the table..."

I guess that there's a reason that the average tenure is ~2 years

If the top devs are getting screwed you're just as likely to have an exodus as a mutiny.

Real companies in SV do pay real money but for the average startup it is the 22 yr old who has no experience that hopes the 19 yr old working for him doesn't realize he is faking it before he makes it. They are not going to get a good marketing director at that price but they can find one who doesn't think he needs health insurance.

Just reminds me of people sleeping in their cars in Silicon Valley. I still absolutely cannot believe that people do it, but to each their own I suppose...

Your point about "what is that compared to the person next to you" reflects this: you're thinking about equity relative to others as important, vs. the odds that 1% turns into various amounts of money. YC companies get soft landings/acquihires at a high rate and also often become worth a lot. 1% equity in a YC company you believe in is equity worth having. (key words: you believe in).

1% equity in a $10M exit would net you $100k. Given a four year vesting schedule, that's $25k/yr. Since you're working for a startup, your salary might very well be much less than $25k/yr of what you're normally worth at other companies. Aggressively negotiating your salary at a non-startup company can get you that much and then some.

So it's about whether you believe the company will make a >$10M exit, knowing that most companies die and many exit for $10M or less.

It's also about other factors. For example, whether you get paid depends on liquidation preferences, and how much you get paid depends on dilution and taxes.

Also cost of living. I've heard that decent apartments in SF can go for $3k. (Zillow seems to confirm that many apartments are around $3k.) Compared to a $1,500 apartment in a place with reasonable cost of living, that's an extra $18k/yr that you'll need to pay just to live there. Actually, that's $18k/yr of post-tax salary, so more like $36k/yr of salary.

via: http://finance.zacks.com/stock-options-vs-rsus-3356.html

RSU is a direct grant of shares, not dissimilar from a cash bonus.

Stock options are the opportunity to purchase shares at a set price, which as I understand it will be lower than market value. If stock price remains stable, you have essentially been granted the difference between the market price and the set price.

If that exercise point is at an IPO or other exit event, it is largely irrelevant because the deal itself will typically finance the conversion of the options to stock. If you quit or get fired on the other hand, you are on the hook for the money to exercise the options. That is on top of your lowered salary and your vesting time period, in order to get any value out of the options you have to give the company you are leaving for one reason or another, real actual cash.

"The tally of 42 companies means about 6.7 percent of all Y Combinator-funded companies have hit the $40 million figure so far"

A sub-10M exit might be rare, but sub-10M exit + failures together migth not be rare at all.

That would be because the ecosystem hasn't given any reason for developers to trust it and the equity is, in fact, largely worthless.

YC company or not, taking a lot of equity for a lower salary it's still a gamble. At the end it's a matter of you believing the team you're joining can make it big or not.

Thanks to Second Market this is no longer true.

Probably the most ludicrous to me is Buffer's ridiculously low pay: https://open.bufferapp.com/introducing-open-salaries-at-buff...

I'm offering a minimum of $125k with significant equity in a well-positioned company, but I rarely see good engineers interviewing. Yet somehow these other companies are building engineering teams for way less.

Ultimately, I think it comes to developers way over-valuing hype. Appearing on Hacker News regularly, or showing up in Techcrunch a lot, or getting funded by YC, can apparently provide an automatic $50k bonus on all salaries you offer.

Even in SF (an "A" location), they seem to be paying below market: https://docs.google.com/spreadsheet/ccc?key=0AgrWVeoG5divdE8...

The blame for that rests with the senior engineers and not the graduate or middle level ones...

I interviewed at a big company and they told me that regardless of what happened I should be out there trying to make more (I didn't tell them how much I made, I only said that at a small startup with very little funding, I would be afraid that my compensation might reflect negatively on my abilities and that I didn't feel comfortable disclosing it).

Super grateful that they took a chance on me. Really happy that I got a chance to earn my stripes and was trusted enough to dig into and shape the infrastructure, but I've been thinking about jumping ship mostly for money. I feel like I should bring it up, but I have the distinct feeling there isn't any more money (they share the financial info from time to time).

I thought I'd just share some anecdotal info from my time on the ground. I put my email in the profile and would love some advice if anyone has some (it's a throwaway account).

I think this is one of the more useful comments here; companies offering $60K/yr are looking for the untested, the brand new and the long-term unemployed. People that need a chance.

I mean, no judgement; those people need jobs, too. And sometimes, sometimes you can find someone really good in one of those categories. There's a huge difference between a not so good and a really good developer, so you can sometimes do well as a company hiring from that pool, but you are shutting yourself off from all the good people that are proven, so it's a lot more work to find good people.

fullstacknyc:

My advice to you? Ask for more money, in a non-confrontational way. Leave out the "or I leave" bit.

Regardless of the answer, spend some time interviewing around. If you can get a 30%+ raise, and you almost certainly can, well, I'd switch jobs, personally. If nothing else, it feels good to know you can.

I was in a similar position about two years ago; was hired by BigCo far below market rates and quickly excelled as one of their best devs on a 200+ contract. Long story short, their corporate policies hampered my career progress, I left after a few years and got a 100% pay increase, better benefits and options from a company who saw the value.

Just stay away from many of the other BigCo's as they tend to have a policy of lifetime wage suppression, and was shocked to hear of the relatively common policy of never giving more than ~15% over the new hire's last pay.

Thankfully, I've grown to feel that I'm actually pretty good at this stuff, but as someone who came into the field through the side door, knew it might be hard to convince someone I could be.

While for the past year and a half the compensation has been a bit low, the experiences have been worth their weight in gold.

I wanted to clarify a couple of (perhaps erroneous) assumptions in my original question:

- I see many comments comparing these salaries to recent grads hired by i.e. Google, but I didn't intend to use the words "skilled" and "talented" interchangeably. Recent grads aren't usually as effective as people with experience, and salaries tend to reflect that. I can see many reasons why a founder might be interested in hiring someone with little to no experience, but the job postings didn't specifically say "junior" in them.

- I see many comments referencing the realities of what is affordable. Yet some of these startups are advertising more than one job opening. Therefore, it would appear they are considering hiring three people instead of one person for 3x the salary. My question is informed by real world experience and written material: advice, essays and quotes including obvious and much repeated ones by Paul Graham, Peter Thiel, and Bill Gates which emphasize the concept that great employees are magnitudes more effective than good ones. Every knowledge-industry employer I've talked to agrees. Much startup advice emphasizes how bad it is to grow your team too quickly, and how a low performing employee hurts far more than a high performing employee helps. Given some of the companies are hiring for multiple positions, this could imply the salaries are considered competitive, and paying more wouldn't get a better employee.

But if it's true that good employees wind up in golden handcuffs, companies should advertise that! It's been several years since I've seen a salary that is competitive with freelancing, but if a company had a published plan about performance-based raises and could point to some happy employees who could verify that theory aligns with practice, I'd be more willing to consider their offer. Conventional wisdom is the opposite: the only way to get a decent raise is to leave. One obstacle to using high raises to attract talent is that a company would have to be more transparent about what salaries everyone is earning.

No company will promise you millions of dollars in long-term incentivized compensation (whether that's a stock option or a RSU) because it's highly dependent on the output of the individual and circumstance. I do think you can safely assume this is happening all around you (like I said: I meet many people who we cannot get) but they may not be publicizing it on forums like HackerNews (I am not sure many people find it kosher to boast that they made a lot of money as opposed to people who have been burned).

To be constructive though, I think prospective employees could ask the following set of questions to figure this out:

- Are there people in your company that are making above $X dollars a year in total compensation (options + salary)? I'd like to know what's possible if I worked hard and made a huge contribution.

- If I worked very hard and killed it, what kind of total compensation could I expect down the road? How is it split between long-term incentives like options and salary?

- What's an example of a project that someone did an amazing job on that changed the trajectory of the company? Was this rewarded? (Does the company have projects that they valued and has acknowledged that it made a difference?)

- How long has the most tenured Engineer in the company been at the company? What about the 2nd most tenured? 3rd? (This can tell you if the company has talent at the company they believe is top-tier and if they value them presumably because they are incentivized to stay)

I am sure there are other questions you could ask but these were just the ones at the top of my head that I feel would be pretty convincing.

1) Funds are limited, yes that's not a lot of money, but I have several friends who went to work at startups because they enjoyed the atmosphere.

2) A fair number of people accepting those job positions have zero experience and/or dropped out of college.

3) Some of the people who join startups at those wages are based out of other countries, where those salaries are massive. I know two people who are working remotely for starups in that fashion and they love it.

4) 1% equity is very, and YC is pushing to increase that. However, if it wasn't working they wouldn't/couldn't do it.

Let me say that again for anyone working in CA in software as a salaried, overtime exempt employee:

If you make less than $85,981.40 a year and cannot collect overtime, your employer is not paying you a legal wage in California. You should do some research and consider contacting a labor lawyer.

Edit: [1] https://www.dir.ca.gov/dlse/LC515-5.pdf

I actually don't think this is unreasonable. Even if you are employee #5, you probably didn't work on the product for a couple years without paying yourself, pay 30k+ out of pocket for a patent, designers, and other initial expenses, raise the money to hire employees, etc.

At most startups, even if they are successful, there still isn't enough money to make everyone super wealthy. So I think it's reasonable that the bulk of the equity goes to the folks who took the most risk, and everyone else gets a decent salary, a reasonable work week, enough equity to be worth a nice bonus if the company is sold, and ownership over whatever side projects they create. Now if the company really was started two weeks ago and you're getting paid dramatically under market then that's a completely different story, but a lot of times even the earliest employees are only seeing the tip of the iceberg.

1. The "significant positions" are relative to the size of the company. Startup X's director of marketing /= Twitter's director of marketing. So the competence needs aren't the same and as a result the salary reflects that.

2.Funding levels aren't there to offer higher salaries.

There is no good answer to either of these.

I see stupid comments on here all the time like, "Well if you can't pay me 200k a year with unlimited vacation and healthcare and a 401k then you aren't ready for those positions." Fine, go work for Google and don't worry about startup jobs, that shouldn't prevent Startup X for trying to fill that position with those skills.

People also need a reality check. 110k is double the median salary for California [1], so if you are getting those offers anywhere else than SF you are making out like a bandit.

Their ownership is purely symbolic, in a relative sense, and it's a symbol of how little they own relative to a founder.

This is naiive. An employees risk is several magnitudes less than the founders across many factors. That said, some of the first employees get shafted on equity/pay and I think that is worth addressing, but again it is based on market rates. The other thing you can choose is to go work for a employee owned company if you choose.

[1]http://www.npr.org/blogs/money/2012/07/16/156688596/what-ame...

I read often about founder risk, but I think it is overstated for non-bootstrapped companies. If you are a founder of a funded company, you get a salary the same as everyone else. In that case, what exactly is your "magnitudes greater" risk?

Only in the Silicon Valley bubble, where everyone is all about "other people's money", would someone actually believe this. Back in the real world, entrepreneurship involves personal credit risk. You don't get anything for free.

Depends on the stage from what I have seen. Most of the other founders I know, including myself, take 10-15% less salary than many of the employees. Also once funded, investors will expect founders will take a haircut for a while.

Second, many times(always?) a founder has personal savings wrapped up in the company.

Third, an employee can always just quit and find a new job. The founder is much more tightly bound to his/her company because of obligations to investors, other employees, clients, etc. To say that "the worst case scenario" for both is unemployment is true, but you're ignoring many other factors that make it far more likely for the founder to be stuck going down with the ship while employee walks away Scott free.

One trick to figure it out is to imagine founder being hit by bus: who will be hurt? Will family be hurt (besides losing the founder himself)? Employees? Clients? Investors? Anyone else?

This is irrelevant to the discussion. Startups aren't hiring cashiers and fry cooks. Engineers make more than the median.

SV median salary for software development jobs (loosely defined) was about $122k in 2014. SF was about $110.

Well fortunately we don't have to decide salaries based on what a founder's self-serving definition of "totally reasonable" is. Instead, we have a well functioning market that finds efficient salaries.

(That is, when large tech companies aren't colluding to artificially lower salaries through illegal no-poaching agreements).

Except that's not the case. Those numbers are what the market is signaling and apparently the OP doesn't like it. That's my point.

The OP is saying, the market isn't offering enough. I say, well apparently it is otherwise it would be higher. So it much be good enough for most people.

I work in Delaware and $110k per year salary for software engineers would be an average salary for someone with some experience. According to a cost of living calculator, someone making $110k per year in Wilmington, DE would need to make $170k per year in San Francisco for the same standard of living.

Also when it's sunny many people like to go to the beach and swim in the ocean. For water temps above 62 F, don't go to SF.

Right, and apparently it's $60-110K, which is my point.

You seem to think these are different markets - it's the same. If people are choosing them then apparently it is competitive. It may just not be what people think they should be making.

Developers should actually expect lower wages because there are more market entrants. The whole push for everyone to learn to code, almost 100% pushed for by developers, would have exactly that effect. This is why I think it's silly when the dev community pushes back on organizing as though it's going to stay a sellers market forever - especially as they push the idea (rightfully so) that being a developer/engineer is a great job and drive people into the market.

This is, by the way, why they're having such trouble filling these positions. You can't just see what salaries are offered and say "that's the market salary." Companies actually offering the market salary don't have the level of hiring difficulties that startups paying $75k in SF do.

Organizing to keep new coders out would just help existing coders relative to everyone else, and as a whole we're a group that's relatively well off.

[0] - http://time.com/76655/google-apple-settle-wage-fixing-lawsui...

Talk about myopic. Apply your calculus in year 2000 and you'll see the folly there. That is insulting to everyone else making lower wages and assumes that "value" is accurately assigned.

You telling me a Nurse or teacher provides less value than a dev working for a Startup that dispatches food quicker? Please make that argument for me because this idea is what is wrong with SV.

[1] http://money.usnews.com/careers/best-jobs/registered-nurse/s...

The average salary of a registered nurse working in San Francisco is $127,670

Average is often very different than median, but your point is taken. Regardless, my point stands that developers across the board provide more value than basically any other profession is shaky.

If we were talking about CEO pay or some other value that doesn't have an effective upper bound, average would be meaningless. But we're talking about salary for RNs. There aren't many RNs making more than $250k, so you wouldn't expect the average to be too far from the median.

It's how much profit your work generates for the company.

Leverage. Its all about leverage. The more people you affect, the greater the value.

Don't get me wrong: I'm working on such products now. I love it. I don't have to deal with discipline problems or students' home lives. It's a different job and the products are not comparable.

I think it is largely dependent on the hire what this ratio should be and shouldn't be a formula - despite what "the industry" says. At the end of the day it's whatever the individuals think is fair.

The answer is that we don't pay people based on risk. Fire fighters truly have a high risk job, yet they typically earn less than many skilled white collar jobs. Rightly or wrongly, we pay people roughly according to their economic output, and probably not even their fully captured economic output (see: teachers).

The reason people use this risk language when it comes to startups is because there's a place where there _is_ some economic risk being experienced, and these people talk about "de-risking" the business all the time: investors. Investors are risking capital, typically all of it, for the chance of an outsized return. As a company de-risks, meaning as it becomes more of an actual business vs a business model search engine, the return an investor might expect for their money is naturally reduced (from 100X to 10X to 2-3X over the course of funding a 'typical' SV startup).

Founders often put capital into a business as well, in the form of maxed out credit cards, deferred salary, and sometimes actual bootstrap $$$. Their monetary contribution is typically quite a bit smaller than an investor's, though, so why do they get such a huge share of the ownership? Again, it comes down to economic value. A founder is producing a huge amount of economic value simply by taking an idea and turning it into a real thing that people can evaluate, invest in, work for, etc. An employee isn't creating nearly as much value, although I think it's pretty obvious that the first employee at a YC startup is probably creating more than %.01 of the value in the company so an offer like that isn't fair.

I do find it fascinating that so much of the investment language of risk gets used when speaking about employees. I think some of this is just lazy thinking, but it's also partly psychological -- you want employees to feel like investors vs having them feel like contractors, for instance. And honestly, if a company gets really big, an employee with 1% stake in a company is still filthy rich, even if the guy he had beer with the whole way is now going to Davos on his private jet.

Given that backdrop, the value that employers offer to employees is reduction of risk. Employees are not exposed to the downside risks of the market, nor do they participate in the upside when the business does well. Employees do risk losing their job, but that risk is generally pretty low.

Startups, though, offer less risk reduction than more established companies. Some of this is intentional, to align incentives and select for employees comfortable with the big-risk-big-reward reality of a startup. Some of it comes from the inherent instability of startups. Chances that a startup employee will abruptly lose her job, or not get paid for work already done is much higher employees of established companies. Even the "big reward" scenarios tend toward instability—for example, "Good news, we being acquired by Google! Now we all have to move to Mountain View."

Because of this, evaluating a job offer from a startup has to involve an assessment of the risk it involves. A portion of compensation is usually equity, and that equity is of completely unknown value, compared to say, RSUs as Facebook. The job being offered is inherently temporary, since the company will either fail, be acquired or transform into a completely different company within a few years. It's less risk than freelancing, but much more risk than working at a big company.

I agree with the point that we don't pay people based on the risk though, as I worked at arguably one of the most dangerous jobs in the U.S. (pizza delivery in a top-5 violent crime rate cities) for years, making far less than a fire fighter.

[1]http://www.portlandoregon.gov/bhr/article/462925

Bay Area is not California. You can rent for less than $1K in Sacramento, and life is cheaper there. But generally you can't live in Sacramento and work in SF.

TODO: find out the median salary for Bay Area

They tended to remote when they could, but also stayed with family or motels in the near east bay certain weeknights.

That also didn't include the people who flew into SFO every Monday morning from home 1000+ miles away. They always won the "how awful my commute was" game.

So while the table lists 0.5-1% for early stage lead engineer, it might be bigger for team of 3, 5 or 10 people in seed stage.

"To allocate the option pool from the hiring plan, use these current ranges for option grants in Silicon Valley:

Title Range (%) CEO 5 – 10 COO 2 – 5 VP 1 – 2 Independent Board Member 1 Director 0.4 – 1.25 Lead Engineer 0.5 – 1 5+ years experience Engineer 0.33 – 0.66 Manager or Junior Engineer 0.2 – 0.33 These are rough ranges – not bell curves – for new hires once a company has raised its Series A."

The system I'm inheriting is pretty bad. Security holes, bad EC2 setup and the web front end is unmaintainable.

I can handle the work but the time required to fix everything is significant and I feel underpaid. I got promoted to VP of engineering but my pay and amount of stock I get didn't increase.

We're in the middle of raising series A. We are strapped for cash until series A is completed.

I'm meeting with my CEO soon and would like to talk about a significant pay increase as well as more equity. I don't want to seem like a jerk and say I want at least $175k per year as well as .2% equity per month now or i'm gone since we're in the middle of raising series A and I'm the only programmer. I also don't want to keep kicking the can down the road.

How do I go about asking for fair compensation? How much money and equity would you guys ask for? Anyone have any ideas like get 120k now and after series A raise it up to 175k?

Little more about myself. Came from a top 15 CS program, placed in a couple programming competitions, was part of a company that previously exited as a back end dev, been programming for 17 years and I'd I've been at start-ups since I graduated in 2007.

If you are dealing with the CEO or person approving the raise and you feel the need to justify yourself I would keep it short and simple like "In order for me to move forward in this position my salary has to be at $175K". There really isn't much else to say. Just like 50 Cent - you must to be able to walk away - and that is your power. You 100% should ask for the raise or leave. Don't get caught up with letting OPP affect you. OPP = Other peoples problems. For example the CEO is a f#ck up for a large variety of reasons so he gets you believing they are in the middle of "raising series A" or whatever else bullshit that you have no control over therefore has nothing to do with you. It's all about you mo fo. His problem is actually more like he is "in the middle of raising series A and is about to lose a top developer who knows the code base". Don't worry if the CEO is worth his weight he will solve that problem.

Catch my drift? You only live once my friend - DO NOT LEAVE MONEY ON THE TABLE.

Remember, you CEO is going to have to explain your raise, or termination, to the board. What story would be easiest to deliver?

there will be negotiations to dial down your demands invariably and you can keep your "jerk" like demands as the absolute floor...

Perspective: the average gross salary here is between £25-30k or around $46k max. $125k or £80k is senior staff pay in most organisations.

Even among general engineering positions (not necessarily coding), a 'good' salary here is £35-40k. From what Google tells me it looks like wages top out at around £50k for experienced devs.

1. Tax advantages, the 13.8% employer's payroll tax is avoided by be being employed as a contractor and taking your income as a dividend.

2. Tech career ladders are pretty specific to the tech industry and London just doesn't have the medium and large tech companies you see in Silicon Valley. So you hit the ceiling pretty fast and in order to be valued for your skills you pretty much have to become a contractor. This is not so different to working in tech in a non-tech organisation in the US.

3. The National Health Service means you and your family are not reliant on your employer for health insurance. Individual health insurance is super expensive in the USA. Most people I know who contract in the US have health insurance through their spouse's employer.

I ended up moving to CA because of the career opportunities. I'd probably be better off contracting in the finance world in London, but most of that work just isn't very interesting.

Overhead of a permanent employee in UK is pretty high. I've heard estimates as high as 50% of base salary, maybe more. On top of that are the usual perks, 3 months notice, and an onerous process to get you fired. Once permie, you're basically guaranteed employment unless your company goes broke.

Compare that to the contractor. There is virtually no overhead for the company. They claim VAT, and expense your rate. And it's very easy to get rid of you, or hire you. A company can ramp up and ramp down as the need arises for new projects - which has a lot of appeal.

It's interesting for me coming from the U.S.. I think it's largely a result of the regulation. An at-will permanent employee system, like in the US, seems to benefit in-demand professions a lot more than the UK/EU regulated system.

And the NHS helps flexibility as there is no down side to working for a start up if you or your family have health issues.

IR 35 really hit contractors hard in the It industry so you cant do most IT contracts as a personal company - you have to go for an Umbrella company

Hi can you explain what you mean - great post but dont quite understand your last paragraph...

I'm only aware of it through HN etc; so I'll just point you to Wikipedia: http://en.wikipedia.org/wiki/At-will_employment

My experience here has been the same - as a good developer with several years experience, it wasn't hard finding offers at 65k from big tech firms (plus substantial but slow-vesting stock in one case). I spoke to a couple of startups, and they didn't want to pay that much, but I would guess that they could have done 55k. If I went contracting, I think I'd be looking for 550-600 a day.

In my network, I also see fresh graduates getting hired on anything from 18K to 35K, and I'm thinking of one who just settled for 18K after a 6 month job hunt and one interview who I'd rate among the better ones.

I've 6 years experience at a scientific charity, but I only get paid £35k. It's interesting work, but since December I've been in a "team" of one — not fun. Pay is very inflexible — £70k is more than my manager's manager is paid.

There are two normal routes into the City if you don't have an amazing CV - knowing someone, or working for a non-City firm on City projects (e.g. Accenture, KPMG, or many of the 100s of smaller financial services specialist companies.)

Also note, not all City jobs are created equal, and many are worse than typical London IT jobs, with only marginally better pay and significantly larger expectations on hours, out of hours work, etc.

Btw this is direct from a course I had to do on handling serious work place issues ie ones that would end up in court.

It is surprisingly hard to figure out your value in the UK tech scene. I suggest looking for tech-oriented companies with healthy balance sheets and asking for as high a number as you can without blushing and see what happens.

There are multiple price points available for people to join the startup life, so it's a good thing. Of course startups would love to pay much more, but when all you have raised is $150K, you can't offer huge salaries to many people.

That said, I see folks in New York doing this sort of thing all the time, just mostly in creative fields.

Full disclosure: I work at AngelList.

I spent a lot of time on AngelList jobs page looking for companies aligned with my interests and I finally interviewed at two of them. When we got to the salary negotiation stage, their pay scale were nothing close to what was advertised on their AngelList jobs page. I also have to say, that I don't care about equity (I've had some disappointments before regarding equity). I ended up at a different company that I found on Stack Overflow Careers. (I don't have any affiliation with SO)

I don't know if someone else has had the same experience with AngelList companies, but I think they advertise high salaries only to get more visibility and a better ranking on search results. I don't know if there is a way for AngelList to control this, maybe allowing candidates and employees to add reviews about the interview process could be an idea.

Our guidelines require companies to list fair and accurate compensation [1]. We receive and act upon candidates' reports of bad company behavior -- from unprofessionalism to salaries not matching the ranges they've posted -- every day. Many companies who get reported are banned from using the service. And to help combat this specific problem, I've recently (in the last month) made our job posting form much more explicit about our rules around compensation and recruiters.

Your suggestion that we accept reviews from candidates and employees is a good one -- it's on our to-do list for the next quarter. I think it'll go a long way towards solving this problem.

We can't catch every job or every bad actor -- there are about 17,000 active listings on the site right now, with many more posted each day. But we're working to improve the experience for both sides, and we rely both on algorithms and reports from users like you to make that happen.

I'd really like to hear more about your specific situation. If you care to share, ping me at dave@angel.co -- I'm based in NYC and have a vested interest in making sure our marketplace operates well here.

Thanks for your time and for bringing this to our attention.

[1] angel.co/help/talent#rules

At one point I was making in annual salary six times what a high end new Camaro cost. Now that would be ballpark $240,000, and jobs were plentiful.

That's something like the situation when companies really want good employees.

Net, so far Silicon Valley doesn't really want good employees. Neither do NYC or Boston. Not yet.

For early stage startups, I was being told 100k + 1% was standard in NYC. This was by several places, or you could just go look at AngelList where they often explicitly list it.

I ended up getting rejected by tons of NYC late-stage startups (Percolate, Recombine, Betterment, YCharts, Digital Ocean, SquareSpace, Airtime), and I'm 90% sure that compensation expectations were a big reason, since I usually got past the tech screen but things broke down once we started talking compensation. I also got knocked out by some tech screens because they are crapshoots, and when I do 15 code screens I'm bound to make a few mistakes.

The market is in a weird spot, tons of companies desperately want engineers but they are freaked out by how fast salaries are climbing. They really don't want to go into bidding wars over people, and they really don't want to give new hires more then current hires and then be forced to give their entire engineering staff raises. Based on some conversations, I think they actually expect salaries to go back down but I think they are delusional, I hear an incredible amount of companies that are planning on ramping up hiring. Now granted if I could reliably predict macroeconomic trends I wouldn't need to work for someone else, so I'm just guessing. I do think there might be an "app"/"big data" bubble but there are so many traditional businesses ramping up on software hiring for things like ecommerce, logistics, and operations.

Companies will say they can't find talent and will pay whatever (i.e. pg), but it's bullshit, cost is still an enormous factor and they are working hard to keep it down via information asymmetry, bait-and-switch tactics (had several companies tell me one number on Hired and then go significantly lower in person), immigration lobbying, etc. De Blasio just signed some "tech talent pipeline" thing, which is pretty ridiculous given how many places rejected me.

If talent was really short, they wouldn't make people with 8 years of experience and a portfolio explain the difference between a linked list and array over the phone, they would be upfront about salary numbers (and actually show up with that number rather than one that was 10k lower) etc etc.

There is a ton of VC money out there and a lot of companies still think it's 2009 and they can get people cheap, a lot of average engineers are now VP of Engineering at some random startup with no team, and still thinking they can fill out that team with people making less than them. In reality, you have to pay me _more_ to take a lower role, not less like they expect.

Also this is unrelated to salary but I got rejected by tons of places for seemingly no reason, when it's not compensation expectations I think it's a general sense of elitism and "we have a high bar", "we need false negatives". It's idiotic to do that then complain you can't find people but they all do, I think they take a sick pride in rejecting people and feeling selective, even if it hurts them. I'm pretty sure if you are a qualified heart surgeon, most places looking for heart surgeons will hire you, but if you are a qualified engineer you go through an insane interview process and no matter how good you are, 70% of the time you get rejected for some bullshit false negative reason. Feel incredibly lucky I snagged that Google offer.

There is not tech talent shortage, it's 100% about cost. Meanwhile, in-house counsel with comparable experience can easily swing 160k base, the VCs and the CEOs pay themselves well, etc etc. They still view engineers as rank-and-file bitches who are at the bottom of the totem pole and whose salary must be kept low.

/rant

I think you're right. They set salaries low and the bar insanely high, reject a bunch of candidates to make themselves feel like they can be the next Google, then ultimately settle on a lucky person who just happens to be there as they've gotten acutely desperate and given up hope of finding a mythical 10x engineer.

I was at a Fortune 1000 company and we interviewed one guy. He answered every technical question flawlessly. He was personable. The lead turned him down. I argued it since he was the best we had seen. He said "I don't think he'd appreciate it if we called him at 3AM to do some work". This was the reason to not hire him, since no other rational reason could be given. The position wound up being filled by his friend, whose skill set was way below the interviewed guy, and who ambled in at 10:30-11:00 AM every day.

When I saw a really positive reaction to YC posting a template sales agreement the other day, that's a signal that it has jumped the shark. Venture companies are supposed to be taking big risks, but it's a big deal to have a "best practices" based sales form? Sounds like when my big enterprise CIO looks for validation from Gartner, etc for any decision making.

I worked at a late stage startup in the dotbomb days and walked away with a decent equity position that based on the "best practices" discussed today would have been somewhere between 75-90% lower. If you look at total lifetime compensation, my decision to work for the government is financially much smarter than one of these startups. Salary is the midpoint between startup and a bank, but benefits are very rich. Add in the future value of pension & benefits, and it is a bad deal to leave unless I was a co-founder.

Also were you asked about linked lists / trees during your google interview? Did you have to write code on a white board?

Google gives you restricted stock units which you can sell immediately upon vesting (or hold onto one of the hottest stocks of the last decade). No need to pay any money out of pocket and risk getting burned, you can only make money.

As far as the Google interview, there is a massive amount of information about it which the Google recruiter will provide, but check out Glassdoor interview questions, Cracking the Coding Interview, and Steve Yegge's "Get that job at Google" post.

Linked-lists/trees are absolutely fundamental data structures so of course you should know them. Every single engineering interview at Google _requires_ a coding question, so yes there was whiteboard coding in every interview. I would highly recommend buying a whiteboard and practicing at home because things like space management and hand-writing matter.

A lot of the industry has copied the Google interview one way or the other so you might as well study for it even if you don't get the job.

But you have to pay taxes on those RSUs at the moment of grant (if you do an 83(c) election), or at the moment of vest (if you didn't). How does Google or anyone else work around that? Do they also give a tax-covering bonus with the vesting?

From your description, sounds like the only difference would be fees (instead of Google issuing shares, selling them, getting money, giving money to employee, who then buys Google shares) - but surely there's some other advantage?

Well, the obvious difference is that someone who is a heart surgeon has had about 16 years of general education and about 12 years of specialised education and has a certificate that proves that other doctors and heart surgeons believe that s/he can do the job EDIT: and can be sued for any mistake s/he makes... someone who is an engineer has a laptop (there's no such thing as a "qualified" engineer, IMO).

The tone of your messages make you sound a little bit demanding, or difficult to work with. You may have voiced strong opinions during those interviews. When you say that a startup will make you come back several times, it's a sign that they like you, but have a concern that they are trying to figure out. My guess (again, just a wild guess), is that you were technically very strong, but had possibly a bit of an attitude. That would explain the startups behavior. The main two reasons a startup would hesitate to hire a good engineer is either they are asking for too much money, or the candidate seems inflexible.

Again, I'm likely to be completely off.

Strongly disagree. OP clearly knew exactly what he was looking for and actually got it. It's the startups that wasted time on interviewing him but didn't make their hire that clearly lost out.

I don't doubt that some of those companies could have perceived an attitude problem, but that's a huge reason not to work for those companies. They're looking for serfs, not collaborators.

When I interview a senior dev, I deliberately test to see if they will contradict/debate me on something technical. If they won't, they're not really senior or they're just yes-men who won't call out my mistakes and make the organization better.

Everybody talks a big game about giving employees responsibility and autonomy, but many lack the guts to follow through and hire smart people who have actual spines and opinions.

It is frustrating that startups do not want to pay anywhere close to what reflects what that quality of engineering may entail. Companies like Google will pay $100k more than what typical startups will pay for quality senior engineers as far as I can tell, and that too is even a bit of a bargain. Increased responsibilities do not justify a shortfall of that much when it means it is close to 33-50% of a potential candidate's salary that is chopped off for them.

Sure, I should get over myself, but I end up exhausted, we spend the day doing these stupid things instead of talking about what the job is and what I can do to help, and so on. Not to mention that I cannot remember the last time I had to delete a node from a red black time (grad school?), but I'm expected to be entirely fluent at that and potentially dozens of other things that I don't do, but no one can be arsed to ask me about the stuff I have done, because it's not relevant or something.

And, oh, give up 50K+ in salary because options.

There are a few elements of it:

1. There is a set salary table based on objective factors (e.g. years of full-time, professional programming experience). Your salary is 100% determined by that table and isn't negotiable.

2. The table gets updated every year for market factors. Everyone gets a raise if the market moves. You get raises by progressing through the table's objective criteria.

disclaimer: I am an engineer at Trello and we're hiring: https://trello.com/jobs

I have had a lot of visibility of developer salaries in previous positions (ran development and hired devs at 3 startups) and I spent a year as a developer evangelist (in recruiting). I found the Trello offer in line with my expectations of salary.

The biggest irk I have with a number of these posts is indeed the equity offering. Whilst I can't comment, or be correct on all the companies, most of them seem quite early stage. I would expect them to offer a larger amount of equity (higher pcg). This to a lot of early stage hires can be a big a motivator. If the company offers a large chunk then it shows a commitment to that person that they value their contribution and see them as critical in the success of the company.

In my opinion, the only person that takes that job is someone without a current job who is getting desperate.

They'll work there for however long it takes them to get a better job and then leave them abruptly.