I took the $300K

http://boundary.com/blog/2013/05/26/i-took-the-300k/

by geekfactor • 13 years ago

281 101 13 years ago

nedwin2• 13 years ago

I'm surprised that they kept you on below market salaries after the acquisition. But I'm guessing that the bonuses more than made up for it?

enjo2• 13 years ago

I'm more surprised folks fell for the "take it or leave it" gambit.

pdenya• 13 years ago

What's the third option?

dmourati2• 13 years ago

I agree. This sounds like tough talk. I can understand why they would say that but I can't undertand why anyone would believe it. What they are really saying is look, we wan't to roll you all up and it would be much easier for us if you weren't comparing notes with your buddies. Fine, I recognize that we as a group have collectively a stronger bargaining position than we would if you had approached just one of us. Use that to your individual (or even collective) advantage.

Hindsight, 20-20 and all that but the point stuck out for me.

Anyway, sounds like OP played the game the way he wanted so props for that. Something to think about next time someone claims something is "take it or leave it:" get up right away and leave it.

PallarelCoedr• 13 years ago

They probably didn't want them to stay around permanently, just long enough to complete knowledge transfer.

djt• 13 years ago

cognitively it probably makes more sense. ie Im on the same wage but i can brag Im getting $300k extra. If they offered them market rate and an extra $100k it wouldnt sound so great and wouldnt make as much blog traffic ;)

nedwin2• 13 years ago

I wonder if there was some kind of accounting reason behind it as well.

ndesaulniers• 13 years ago

I like the picture, $8 on a cat. http://stuffonmycat.com/ http://stuffonmymutt.com/ http://stuffonmyrabbit.net/

ZirconCode• 13 years ago

How does one make a ban happen?

edit: Did I miss something, all the other comments are good? =/

azakai• 13 years ago

Account hacked perhaps?

S4M• 13 years ago

Maybe he got his account hacked or something...

onli• 13 years ago

Soemone should write him, he is on linked in and twitter: http://www.linkedin.com/pub/nick-desaulniers/34/203/755 https://twitter.com/LostOracle

I have no account on either of that and can't find a mail address.

Lightbody• 13 years ago

No, I think he's just commenting on the amusing picture of eight $1 bills on top of a cat in the original blog post :)

gus_massa• 13 years ago

Perhaps it was only one stupid comment. He saw the cat with the bills and remembered the cat's photo site. It's not a very relevant comment and it breaks the "no cat's photos" rule. But it's not extremely offensive or plain spam or tinfoil hat talk, and the older comments from the user look good. So IMHO I think it deserves only a few downvotes (maybe 0 or -1?), banning the user for this is too much.

obviouslygreen• 13 years ago

Thanks for the counterpoint. It's definitely great that it worked out for both of you, but it's also nice to have a more balanced/grounded view of what happened to others coming out of the same situation.

austenallred• 13 years ago

This goes to show that what may be right for one person may not be right for another, despite the terms being the same; all too often we fail to take external circumstances into account.

Yet, at the same time, if you hustle and are scrappy you can always find a way to make something come about.

zedpm• 13 years ago

Could someone explain what he means when he writes "...the payout breakdown was 30, 50, 20, meaning that Microsoft will probably get a 20% discount on your bonus if you were planning on leaving"?

furtivefelon• 13 years ago

He may have meant, if you quit after first year, you get 30% of the bonus, quit after second year, you get 30%+50% = 80%. If you are going to quit, you will probably quit after second year. So for most people who are quitting, MS would not have to hand out the last 20%.

aaronbrethorst5• 13 years ago

    [T]he bonus was a life raft against personal
    debts racked up while living in San Francisco
    at a below market salary

Never accept a below market salary unless you have serious skin in the game (i.e. founder-level equity). I probably sound like a broken record about this, but you have to assume that your equity in the company will never be worth anything, and—even if you are part of a 'successful' acquisition—you are liable to get an amount that brings you up to parity with the market...if you're willing to accept the golden handcuffs.

Think of your options (or RSUs, or whatever) in a company as being a lottery ticket. Odds are, it won't pay out. If it does, it's likely to be a trivial amount. For the rare cases where things really work out well (early employee at Facebook/Google), please try to remember that you were really lucky.

jessedhillon4• 13 years ago

I don't know why you're posting the same advice that, apparently, you know gets circulated here continually. In this case the guy got the base employee package, and that money allowed him to build a company that's on a great path. If he had followed your advice who knows where he'd be.

aaronbrethorst5• 13 years ago

    I don't know why you're post the same advice
    that, apparently, you know gets circulated
    here continually

Because prospective startup employees get dazzled by promises of riches that, if they were to stop and do some basic arithmetic, they would know are highly unlikely. I hope that if I beat this drum long enough, more people will hear it. All that said, I'm glad that things worked out for Cliff.

    If he had followed your advice who knows where he'd be.

He wouldn't have worked for "well below market rate" wages. That's for sure.

Also, it seems somewhat disingenuous, given this topic, that you don't mention you work for Greylock.

tptacek• 13 years ago

Cliff Moon's own post is pretty clear on this point: he wasn't impressed with the outcome of having worked at Powerset for below-market wages.

sliverstorm3• 13 years ago

Is it not possible they simply were having trouble finding work elsewhere, or were willing to accept below market salary to work on something cool? Etc?

I know there are certainly folks out there being taken for a ride. But take me for example- I know I personally could find more extravagant wages if I wanted, but I am not optimizing for salary. I am optimizing for happiness, which is what keeps me where I am.

aaronbrethorst5• 13 years ago

    I am not optimizing for salary. I am optimizing
    for happiness

I'm actually right there with you. But, I don't think this is the case for most people.

jsnell• 13 years ago

Anything is possible. But at the time Powerset was a high profile startup with a reputation for being engineering driven. The financial crisis hadn't hit either. So it's not really plausible for them to have been hiring engineers who were unable to find any other work.

As for taking a paycut to work on something particularly cool, sure, why not? I've certainly done it in the past. But accepting a salary lower that doesn't even cover your cost of living (as implied in the article), when joining a company that's reportedly taken $20M in venture capital... That seems pretty unreasonable. Even exploitative.

kamaal2• 13 years ago

In case of people who don't have money. A lot of money means happiness.

And most of the times it is.

Not optimizing for money is setting yourself up for long term sadness. Though it might make you feel comfortable for the meanwhile.

mc-lovin2• 13 years ago

My impression is that people know they will get less money working at a startup than a big company (including the average payoff when things go really well).

They do it for the experience of working on something really new, and working in that kind of environment, not the money. The big tech companies try to be startup-like, but they can never truly emulate the startup experience.

georgemcbay2• 13 years ago

I'm not sure this is true. There is lots of sage advice out there pointing out what seems obvious to older, more jaded folks, which is that unless you are an actual founder, you'll probably not make too much money even on a successful exit. The information is certainly out there. It is mentioned on HN a lot.

But on the inside of these places you tend to have a lot of people at the founder level who speak about how well off everyone is going to be when the business really hits it big, and this type of talk can be pervasive to the point of almost being cultish. It becomes the go-to pep talk when the going is tough -- "Sure we're working 90 hours a week, but just think how great it is going to be when we all have Lambos in the parking lot!" And I do think a lot of younger folks who are less experienced with the game do tend to believe the bullshit even if all available data (save for ridiculous outliers like Google) states otherwise. When you're inside an echo chamber, it is really hard not to start believing what everyone is echoing, even if it seems obviously wrong to objective bystanders.

As far as the founders go, I think in some cases they are just being purely manipulative, and in other cases they aren't but are just naive themselves and not really thinking about the enormous drop in EV you can expect when you are a common share pleb.

JumpCrisscross• 13 years ago

Is this advice really on a broken record? I recently saw a pitch from a bank marketing an LP stake in a prominent VC firm, and one of the first slides highlighted the willingness of Silicon Valley engineers to work for below-market rates in exchange for psychological benefits.

tlogan• 13 years ago

How do you know if someone at a party is working for YCombinator startup? Don't worry, he/she will tell you.

The advice is "broken record" and it will be ignored by majority of young engineers. Working for a cool startup is very very cool. Working for big corporation is not cool (and considered evil if that corporation is Microsoft or Oracle).

And that is actually good for economy, for startups, for VCs, and for engineers (not in monetary sense but they will become wiser).

dcraw• 13 years ago

It's true that non-founder equity has a trivial chance of becoming life-changing money. But working at a fast-growing company has benefits. For inexperienced by ambitious people, the work-to-employee ratio makes it possible to take on projects that would normally go to someone more senior, prove your talent, learn quickly, and earn further options grants as a bonus. Even if you never get a windfall from that company, when you leave you'll have skipped a few years in job growth and be able to enter the next company in a better position.

To make a lot of money joining a startup, you probably have to be better at evaluating startups than VCs are, which is pretty difficult. Luckily, picking a startup where you can develop your skills, work with smart people, and have a lot of fun is easier than that. But it's still not automatic--you need to evaluate the founders and other employees to find out if you'll fit.

mattm• 13 years ago

Sorry for my naivete but what the range for founder-level equity?

dsugarman• 13 years ago

YC chooses >=10%

greghinch• 13 years ago

Depends on the valuation of the co., number of founders, and how many rounds of investment they've done (every round dilutes things). Basically though, if you weren't there when the company was founded, you probably won't have it.

Assuming a YC 3 founder model After 1 or 2 seed rounds, likely 10-20% Decrease by 20-40% per round after

kevinpet2• 13 years ago

I'd expect the real founders to be in for no less than 1 / (num founders * 2). But in this context for taking a below market salary (as opposed to forgoing salary entirely), I think he's trying to convey >5%, as opposed to the standard SV lure of around 1-2% for an engineer they want to work for peanuts.

Now that I've said that, hopefully someone more knowledgeable will jump in to correct these numbers.

jshen• 13 years ago

I completely agree, but I want to add one caveat. People will often learn far more spending a year or two at a startup than they will at a big company. In the long run, that will often pay dividends once they get to a good big company.

aaronbrethorst5• 13 years ago

That's a fair point. If you do choose to accept a salary reduction, do it for the right reasons, not because you're going to rolling in dough in two years after your SoLoMo startup IPOs.

Timothee2• 13 years ago

I often present it this way:

- when you join a company as an engineer, the best case scenario is probably something like 1%.

- a pretty good case scenario would be for a company to be bought in the $100M range. Say, $250M? You'll have cases in the billion-range, but that's exceptional.

So that's $2.5M! Nice! But a couple of things:

- you've been diluted in the meantime. - investors have liquidation preferences, so your percentage is coming out of a smaller amount.

That $2.5M got reduced a bunch. And you'll have to pay taxes on this. So, you're likely under a million in the bank at that point. That's honestly fantastic. But it won't last forever (meaning you're not set for life) and to compare it fairly, you'd want to divide that amount by the number of years you've worked for the company. (compared to a more stable job that pays more, with a regular bonus plan, less hours on the job, probably better benefits, etc.)

But the thing is that in most cases, people don't get 1% and in most cases, companies don't get bought for $250M or more. So, no you most likely won't get rich. Some do (the people at Instagram and Tumblr recently), but they are lucky exceptions. And even then, reports say that most people at Tumblr would get somewhere around $350k. Certainly very nice, but not life-changing and the reason it's been discussed at all, it's because it's an exception.

aaronbrethorst5• 13 years ago

Yep, totally agree. I like to juxtapose it with the relative likelihood of exits at various orders of magnitude. A $1mm exit seems way easier than a $100mm exit, right?

In the ideal case, how much would you make on that $1mm exit if you were the sole, bootstrapping founder?

How much are you going to make in the ideal case as an employee at the $100mm exit after Series A and B rounds of funding when your initial stake was 1%?

basway• 13 years ago

It is all too easy to celebrate wild success as the "right" plan but we have to remember that success happens only to a very small minority and not everyone has the luxury to throw caution to the wind. For every wild success there are thousands of failures but of course we never talk about those.

Glad it worked out for both parties in this case even though they took very different paths

jcampbell12• 13 years ago

Microsoft's unwillingness to bump people to market is short sighted. I'd take the offer, then shift my hours to the bare minimum. I'd spend all the new free time learning or working on side projects. I damn sure wouldn't be all that committed to helping Microsoft beat google at search. This seems like the obvious thing to do, and not far from what the author did.

SurfScore• 13 years ago

This is why big companies get slow and bloated. Behavior like this only happens when people are in it for the money and don't really care about what they're building.

jcampbell12• 13 years ago

From what I have read, Google doesn't operate this way. My understanding is they don't keep everyone from an acquisition. While this seems a bit rude fire someone or make talented engineers re-apply for their own job, it does mean the people they do keep become Google engineers rather than 2 year indentured servants who have no incentive to join the company culture.

All strategies are problematic.

cad• 13 years ago

sometimes optimizely's cdn doesn't seem responding from Turkey or it goes just haywire. fyi

yekko3• 13 years ago

This is why you should NEVER work for below market salaries, you loose all leverage.

cgopalan2• 13 years ago

I worked for below-market salary for a year and a half just so that I could get out of .NET development and start working on Python. Now after a year and half, armed with more Python experience, I have switched to another Python job at what I estimate to be at least market, if not above-market salary.

Bottomline, never say never. You may have to take a temporary hit so that you get to do what you want.

hkarthik• 13 years ago

I did the exact same thing when I switched from .NET to Ruby. Took a one year hit to work with Ruby at an early stage startup and left after a year to join a Fortune 100 making more than I ever did in .NET.

yekko3• 13 years ago

You should NOT have gotten yourself into that situation in the first place. ALWAYS be looking.

taude2• 13 years ago

Seems like there's a lot of upset people commenting abou the realities of a good startup exit explicitly pointing out the realities of a non-founder. Probably why startup culture targets youthful employees.

nhebb• 13 years ago

Completely off topic, but the boundary logo is one of the coolest I've ever seen. Just wanted to give a public kudos to the designer.

brendano• 13 years ago

It was great working with Cliff and many other folks at Powerset. I think I got cynical a little earlier than some of the other folks and left before the acquisition, so I might be less justified in my opinion, but anyway,

On the below-market wages issue: I think Powerset's really crazy marketing/hype allowed it to hire stronger engineers than would have been justified given its product and technology. All the startup spinoffs he mentions (Serious Business, Crowdflower, Github... and later some more I can't even keep track of...) I think are an indication of that. I guess that's how you hire using equity. You could say it's taking advantage of the psychology of overvaluing low-probability, high-impact outcomes. Or you could say, those people were duped.

I'm just glad for all the folks who, like Cliff, were able to take the bonuses to help support families or later business ventures.

I took the $300K

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