Why do most startups offer relatively low pay for engineers?
I understand they have limited funds in early stage, but it's disappointing. Because there are a few startups that I would like to join, but would need to take a pay cut. This does not include late stage "startups" like Uber or Pinterest of course.
They don’t have the money. I’m sure Facebook employee number #5 wasn’t making $300k / year.
Faang + M earn billions in profits each quarter. Quite simply they can afford it. Startups are burning cash. Plus equity gives u a higher upside, so that's the tradeoff
What does M stand for?
Microsoft
Depends on the stage and funding. Some startups can be very competitive but it will always be lighter on the cash side. Equity is always like a lottery ticket. It would be great if you wan but the odds are not in your favor. So make sure the cash is enough and make sure you have enough in the bank to be job searching at any point.
Various reasons - 1. Engineers working at startups might not be a FAANG material else they would be at FAANG and similar companies. We are talking about Seed, Series A, B, C, with non-unicorn valuation status. Once companies have that status, they dont care about money and more focus on talent because that talent would take them to next level. 2. ISO - they pay in stock options. One of my previous company made me a millionaire because of a successful IPO. In the end, the choice is yours. No one is stopping anyone from joining more stable, high paying companies.
Why pay more when you can exploit for less?
So in general do startups have less talented people because people who can go into FANG or similar?
Brilliant! 😁
Most of the initial engineering work in a startup is grunt work and very random - doing one off features, prototypes, demos for investors, "growth hacks" and so on. Most of this doesn't require high quality engineers or building anything scalable. So, they can get away by hiring relatively inexperienced, cheap, new grad-types who value the experience, the lottery ticket and can impress their friends by telling them they work at a startup. If the product looks like it has traction and they get funding, they can then afford to pay more to hire engineers with experience in building scaled systems.
“Hey we have a million dollars in VC money to build a development team! How many can we get?” “After benefits and free food? Maybe 2.” <business goes under> *pikachu face*
Because low strike price for getting in early?