Paper Money, Startups and Risk
Can someone explain to me why paper money (options or pre-IPO RSUs) are considered zero or low value here? And why most startups are considered not a good career move? Is it the risk? It seems that most of my friends who joined series B/C startups are say they are doing exceedingly well both in (paper) worth and career. Also, I’ve seen many more examples of 5-10x growth than 0-return acquisitions or failures.
Series B and beyond definitely has some stability, but they represent the <1% that made it that far. Pre seed, seed, etc. startups have an high likelihood for failure, so 1,000,000 x $0.00 is yes, zero.
Representing the entire outcome distribution as 0% success is nonsense. You wouldn’t choose some obscure seed company that can’t even get acquired. If you are a senior FANG engineer you likely have your pick of the top {YC, Sequoia, A16Z, breakout} companies, and have the upper hand. It’s more like 30% failure, 60% mediocre and 10% life-changing outcomes at that point. Calculate the expected outcome how you’d like.
Lmao what. You realize that most YC startups fail right? The only reason YC is reputable is because they had some knockout hits - if a company went though YC that should not be a strong signal for you to join
Is the growth still on paper, or were they able to make it liquid?
A few were able to get in on liquidity events during funding rounds, acquisition. No IPOs yet.
Hey it's something
Lottery tickets have value in theory too
True, but the expected value is a known (mostly), and you have no control over the distribution. In startups, you can control whom you choose based on factors you can seek out, and then also the outcome based on your own contribution.
lottery is gambling, startups are poker.
I did two startups before going to Oracle. I was getting paid in Trident gum but I honestly learned a boat load, about tech as well as what I want to pursue. People here just like to flex their TC.
I've worked in both, and in non tech fortune 500. I've been through two IPOs. Both times I got in too late to have life changing money, and had to wait a long time at one to get anything out of it beyond a below par salary. Most important thing is making a decent living and enjoying your work, but until either there's a liquidity event or a chance to sell on the secondary market it is all funny money
Because I like paper money I can fold!
Related question: where are the founders/early employees? Any on blind?
i was at a startup previously. most of my coworkers had been together for 10 years through 3 to 4 startups in that time ranging from series a to almost unicorn. most of them didn’t make any money on the stock.
Really? Were any acquihired?
startup 1 - sold for around 300 million. founders did very well but everyone else barely made enough for a down payment startup 2 - shut down after the a round startup 3 - grew to almost unicorn status back when that was a big deal. now it’s dying and they tell me the stock is effectively worthless startup 4 - raised a series d but i’ve been told it’s been missing sales targets for over a year now. they left to join the founders of startup 1 startup where i met them - most of them joined around the a round up around 30x on paper since the series a. i’m not optimistic about the business and left. the company would have to exit in a several billion dollar ipo to match my current comp
Start ups are the best! They are the most fun and best learning opportunity. The equity has zero value because it's non liquid and cannot be traded for goods and services. The goal of course is to change that and reach a liquidity event such as sale or ipo.
Why are they the best learning opportunity?
Opportunity to wear multiple hats and work outside or above your comfort zone consistently. I've always learned the most at small companies but again honestly it's all about the fun!
Because most people here are not from startups and would rather diss the non-big5.
Any the herd is not wrong in a risk-adjusted sense. You could got to Vegas and gamble and theoretically earn a 100x multiple. Problem is, that never happens.