Based on https://news.ycombinator.com/item?id=9052727 (What up with these startup salaries?) I tried to do a rough calculation of whether it makes more economic sense to work for a large tech. company (apple, google, etc...) or startups. Modulo other factors, it seems that working for a large tech. company pays more on average. Here are the calculations: https://gist.github.com/MichaelGLarson/d916a6984271ea136e3f
The general sentiment is that startups pay lower. Yes, startups have the potential for a higher payoff in the long run but I'd like to think that most intelligent people realize the long odds on that one.
"Am I missing something here?"
Not calculating in the factor that money ain't everything. To some folks, the ability to be on the ground floor of a small group and driving the future of a company is a lot more meaningful than being one of a 50,000 member army who will have little impact on the big picture.
I mean it just depends, I am making more at my current startup job by about 11% than my big corporate IT job I left.
But my startup is also through a few rounds of funding. I also feel like the experience gained here will translate into higher salary later should I transition back into larger organizations.
This is something not too straightforward to compare, and will be different for different individuals/situations.
If you just change job you will typically earn more in the next job. You should factor this in to any change.
I've worked in start ups and large companies. I quickly realized that I could make more money consulting/contracting for large companies, than working for either. This is at the sacrifice of not doing the most interesting work. If money wasn't an issue I'd love to do a start up again.
"At big companies, you can expect to get ~$400k-$500k of stock"
Where did you get that figure from? That's a bit surprising to me, there's no way you could get that kind of stock grant as an engineer in any of the big companies I've worked at.
You are way off. I would estimate $100-200k for 4 years for someone with around 4 years experience when they join. This is based on some quick googling, glassdoor, quora and knowing that 600k+ stock for 4 years at established company for relatively junior positions doesn't make economic sense.
Acquihires and very rare skill holders or more senior roles? Higher -- if your friends of either of these, then maybe.
Are your friends very experienced? I went to Cal and afterwards went to one of the major tech companies. None of my recently graduated peers anywhere (including Facebook, Dropbox, etc) got anything close to $500k in stock. If you got lucky and timed valuation before a stock boom, you might get $250-300k. In general, the offers were around $60-150k in stock over 4 years. With more normal growth, it could reach $200k. For many people, especially in later years or if you had bad timing, it could be signifanctly less than that.
All that being said, money is terrible motivation for working at startup, unless you are the founder and CEO. I left said company after 6 months because the team was dissolving and terribly mismanaged. I had several offers, but the one I went with gave the lowest salary. The draw was that everyone I interviewed with extremely sharp and friendly and that the CEO would allow me to work remotely while I sailed around the world after a year and a half.
Yes, experience is in the 4-5 year range. I don't know what their previous stock compensation (at earlier companies was before they made the switch). I assume that that may have had a role to play in these numbers since it would be virtually impossible to hire someone by giving them less stock than what they already have.
That said, there's a sufficient sample of such folks that I am very willing to believe that such numbers are entirely reasonable, and not hard to get.
Agreed, this seems insanely high. Factor of ten at least. I don't work at those three companies mentioned: maybe I just don't know the sector (and maybe I should move to CA). I'm And at the very least, there's stipulations tied to vesting and grants that aren't considered here. Or a portion of bonus is in the form of equity, which isn't accounted for, either.
Risk-adjusted returns for startup equity aren't even close to accurate ("let's assume that you're one of the lucky few" isn't a good estimation strategy).
I heard hundreds of long time employees were newly minted millionaires at IPO, but from what I heard from my peers, new grads don't get anything close to $1m. In fact, everyone I knew with an offer at Facebook 2012/2013 declined it to work elsewhere.
In terms of money you can't even make an argument. Working for a big company will usually be better for you fiscally speaking. Even the average exit or IPO won't usually make up for the investment opportunity cost. There will always be a lucky few who have life-changing exits, but this is the minority.
HOWEVER, money is not the main reason that most people in startups are there. Try surviving your 7th, 8th, 9th, 10th year in a big company, while still caring about what you do. Big companies will always struggle with internal politics, because they are the brand-name place to work, so they are going to attract political types who want to struggle for a piece of the pie.
If you work for a startup you will likely have a level of freedom, responsibility, and chances to do interesting things that only a select few people (who are both talented, lucky, and adept at politics) at larger companies get to do.
Big companies are a great place to start a career, because they are super invested in making the best engineers and retaining them. Especially at Google, so many resources are given to junior developers and the code that you get to work on will be world-class. However, after a few years of working at a big company you will probably be overqualified for whatever you are doing and it will be very easy to get bored unless you are very clever at maneuvering into the right positions at the right time.
Go get baptized at a big company, make some cash, pay off those student loans, go join a startup and have fun.
Edit:
OR, you know, you could come join the light-side right away ;)
I'm currently a devops consultant embedded in a big enterprisy company. The scrums, endless pointless meetings, pointy haired bosses and general incompetence is soul crushing.
After almost a year of doing this I can't wait for it to be over and just pack a bag and go a-travelin'. I honestly don't believe this can even be classified as work really, as the output from these places is so low or even negative.
These places are weird little cults or oppressive political regimes that you are an insider at. You could enjoy life as part of the politburo, it is objectively the rational way to go.
I believe the poster means that while the world of start-ups is full of charlatans, it's also where you have to go find the most interesting people and ideas, since anyone inside the 100 meter radius (inside the established software industry) who has an interesting idea is shunned or banished to the world of start-ups.
(Not espousing this view myself, just trying to clarify the analogy.)
The talk of getting something done far outweighs the getting something done. People want/need things in certain ways, and at some point someone is issuing the commands that can't be argued with anymore.
I'm often given tasks which I know how to deal with in and out, but I have to dig out all the details prior to implementation and put together specifications, just so someone who doesn't understand the codebase or how A relates to B can ignore me through a meeting and give me the ok. When I first joined the company, before it was sold, and before it increased its workforce 10x, I felt productive most of the week, and more importantly felt happy with my job.
I'm amazed you've survived a year at a place like that. I had a very similar environment and quit after 6 weeks. You're right, it's soul crushing and will destroy any interest you have in your career.
Lots of places seem to fall into this trap. It's frustrating because most of the time it's simply a matter of politics rather than merit.
In my own businesses, I make it very clear from the start that no amount of brown-nosing, staying late, passing blame or any other political tactics will work with me. In fact, they have a MASSIVE negative effect.
Let's be honest, not everyone can just leave these kinds of places and startup their own company so often they are stuck. I'm on a bit of a mission right now to improve employee's lives and hopefully that will have a positive effect in the long run.
I have been a Software Engineer in the field for around 18 years and have worked at numerous companies.. I've been employee #1, and have also worked at a company with around 100K employees across the globe.
I haven't yet been a founder, but I've been at 3 startups which have been acquired. At this stage in my career, if compensation is your primary concern, my opinion and experience is that your best bet is a bigger company who offers stock as part of your compensation somehow. I've definitely made more at a bigger companies than I have as an employee of successful startups with liquidation events.
However, when I was younger, startups were a great place to get interesting experience and network with some great people. I'd recommend working at them if you are in your twenties, or founding one if you have the right personality and backup plans for that. I'm in my mid 30's and would be relatively hesitant to be an employee of startup in its early days now.
You also need to consider if it's a true startup, or just a smaller mom and pop lifestyle type company which is not growing like crazy. The latter is probably better for someone like me, but a quality startup in your 20's is something you'll look back on fondly no matter how much it may have sucked at the time. It's a roller coaster ride but you'll get great experience and have a great network of people to know when you get older.
Keep in mind I'm speaking as an employee-- a founder of a startup is a totally different thing.
In my experience, bad advice (though I agree it may work for some).
I made the mistake of joining startups early in my career. I still suffer because of those decisions. It is much better to work for a big brand when you are young. Yes, in startups you get to wear a lot of hats but unless you are really lucky, you never learn anything in depth. Big companies have enough good people to learn from if you are motivated enough (as I was). And worst of all, unless you are one of the founders, and the startup is reasonably successful - then they will bring a "VP of Engineering" from a big company after two years irrespective of how much you have helped them build their systems and probably deserve that role.
Truth is, YMMV. I have only worked at startups and smaller companies (& a mid-sized non-profit for my first job), and I mentor my junior developers quite frequently on improving code quality & code design. They also get the space to work on features & sink or swim based on their decisions so the lessons hit harder - the responsibilities are great, and they aren't just siloed into maintaining existing code. They also get to see the difference between excellent code & code that they have written.
It is hard to speak for all startups since they're a dime in a dozen.
My hypothesis is that working in small companies (or startups) like Fog Creek where the goal of the founder is to be sort of "be happy and make some money at the same time" is going to be a far better experience than the typical company whose goal is "Let's acquire users so that there is potential to display ads which means that I get funding or get acquired". Of course I have no data to back that up.
I guess my startup experiences were different. In one startup I worked at, I learned A LOT about data, databases, JDBC, connection pooling, JVM tuning, etc, because the volumes of data and we were working with were just unheard of at the time and the traffic to that data was not cacheable. I had to disassemble a vendors JDBC driver and tell them why it crashed all the time for instance.
In another, it was lots of JVM knowledge (both threading and memory management/garbage collection), caching, distributing work which needed to be calculated, etc. We found several JVM thread locking bugs and worked with Sun to fix them. I worked with some really great people in their 40's at this one and learned a lot from them.
I suppose the majority of startups are different these days though? Mostly RoR and Node based social things. The biggest worry is if the Facebook Like and Share buttons work.
If you are working somewhere that is only a CRUD website at it's core and doesn't have anything else going on, I suppose there isn't much to learn on the backend side of things.
I think the sweet spot for a brand new developer is a company with about 50 people. That way there are other, more experienced developers you can learn from and yet there aren't so many people you're doing someone else's job when you step out of the very narrow confines of your own.
Some of the people from my graduating class in college started at really large companies and learned nothing because they were such a small cog in a really large machine. I went to a company which varied between 40 and 50 people and had the opportunity to learn as much as I could soak in.
Anyway going to a startup is a lot like gambling. You'll most likely be looking for another job soon, but if it pays off it may pay off really big. Who cares if they bring in a "VP of Engineering" if I can cash out my options for six figures?
If it's been two years, the options are worthless, and it looks like you're going to end up a low level employee at a larger company, then it's probably time to move on.
But aren't the big companies often very slow and boring to work in? Of course they have some interesting projects but if you really want to build something from the ground and work together where the whole company is in the same team it will hard to achive in a big one
The sweet spot is to find a company developing a new product or something of the sort.
Where I work now I started on a new product that was young, and since moving on from that project, we have replaced many legacy applications/products. I've done my longest employment stint (4 years) of my career because it's been my best job at this point.
Similar boat. I've found work quality wise it also comes down largely to the people. A traditional new-product "startup" has a lot more potential for a monomaniac egotistical founder that interferes in everything you do, appreciates nothing, and makes things miserable, far more personally so than the "big corp beaurocracy" people complain about (and yet still pay less than them). Big corp you can usually at least transfer departments / managers if things get too out of sorts. For me the best fit has been the small consulting agency; diverse projects with lots of flexibility, and stable enough to recognize the value of good employees and usually give decent raises and benefits.
From what I have seen (aside from the monetary argument) is the trade offs are stability vs freedom.
At a larger, more established company you can benefit from the knowledge that they won't be going under any given year. They will also most likely have most of their systems dialed in already, ie: build system, performance reviews, etc. This can be beneficial for a person who is just starting in their career or somebody who doesn't thrive in an uncertain environment.
Start ups tend to have a lot more flux in all things. When there is no established review cycle you are required to advocate for your own merit increases. Additionally you may be required to hack things together, or take on many roles in order get your product to succeed. The trade off is that if you are knowledgable/confident then you won't have existing mistakes from previous generations and you can help forge the path of the company. In a smaller company your voice is much louder (yes this is good and bad).
Finally from a finance perspective, you don't end up on top if your company goes out of business or never IPO's. You're investing in the startup with hopes of seeing a payout.
We are currently running a non-profit, 4-minute survey on exactly your (and some other) questions. We posted it on HN but it now has moved down to the 4th page or something like that. Results will be out in a couple of weeks. If you got 4 minutes, take part (or simply wait until the results come out): http://bit.ly/skjlls-EN
Supply vs demand. The supply of engineers wanting to work at small startup companies is huge, while larger companies will always dwarf the startups in demand. So yes, you're paying a premium in your salary for the opportunity to work at a startup.
I have a number of friends who work at Google. Meanwhile, I've worked at a variety of small companies, from privately held to "startups".
My advice is, hands down, to get on with the Googles of the world. They have actual career trajectories, and bosses who actually care about moving them along it.
Financially speaking, a startup is almost always the worst choice, unless you're a founder (and even then, the reward is most likely going to be satisfaction of seeing something through, rather than financial).
I hear stories of bureaucracy at large companies, but I've been amazed at the amount of it at so-called startups. Unless you're a founder or a principal engineer role, you're probably going to see the same endless meetings and religious arguments over minutia.
The best startup opportunities will pay off more than the best big company opportunities. On the flip side, even the worst big tech company job will pay off more than the worst startup job.
The problem is, it's a lot harder to determine which startup opportunities are capable of providing a big pay off. By the time a startup is clearly a winner, everyone is clamoring for a job there and the chance for a big pay off is usually gone.
With big companies, the best ones with the best pay offs are always hard to get into, but much easier to identify.
To justify going into startups, you need to love what they stand for and the work that you'll be doing. If money is a major factor in your decision-making for a job, it's best to stick to established companies.
Am I missing something here?