Tonight at its headquarters in Mountain View, California, Y Combinator invited dozens of programmers to a new event called Work at a Startup. The event, which was announced last month, is meant to help expose programmers to what they should expect when they go about joining a startup (YC’s Paul Graham thinks that a lot of them tend to join more established companies like Microsoft simply because startup life seems so nebulous). The event is complementary to Y Combinator’s Startup School, which is meant to help entrepreneurs start a company from scratch. My notes from the event are below, and you can watch an archived video of the event here.
The event kicked off with a talk from Graham, who detailed what programmers should think about when they’re debating whether or not to join a startup.
Graham says that the two main things that prospective employees should be gauging are fun and money. You obviously want to maximize both, and the startup end of the job market is the “bargain”, because you can have fun and make a lot of money. Assuming, of course, you pick the right startup.
The second thing you need to figure out, Graham says, is whether or not the startup lifestyle is really for you. In general, he’s found that startup founders who join a large company after being acquired aren’t as happy in their new home as they were when they were running the show. The reason? Bureaucracy. There are meetings and you have to ask for permission to get things done — things that aren’t issues at most startups.
Graham says that some people (and all founders) are like that. But others aren’t. The way to tell, he says, is to ask yourself if you like the prospect of having (and implementing) many ideas at work, in which case a startup is probably the place for you. If you don’t think having ideas are a part of the job, then he says you’re probably better suited for corporate culture.
The next step is figuring out which startup you want to work at. Graham says this is actually a lot like being an investor, the difference being that investors are giving startups their time and money, while you’re giving them your work. So how do you tell which startups are promising? The secret, Graham says, is to look at the founders — even if they have an unsexy company or domain, if you have great founders, the company is more likely to go on to great things.
Alright, so you’ve found a great startup — can you expect to make a lot of money? This varies a lot, depending on how early you’re joining. Graham says that if you’ve found a startup that you want to join, you should do it quickly, because things can change fast (and the amount of equity you can expect can drop precipitously). He relayed an anecdote about a company Yahoo was thinking about acquiring for $1 billion a few years ago. After mulling it over for a few months, Yahoo agreed to pay $1 billion, at which point the company told them they’d grown and now wanted $2 billion (the unnamed company sounds a whole lot like Facebook). Moral of the story: don’t sit around thinking about things too long when startups are involved.
As for how much equity you can expect, Graham says that at the high-end, for a one-founder company with no employees, you may be able to get 50%. From there, things drop quickly — if you’re talking to a company with two founders and angel funding, you may be able to get 5-10%. Post series A, it’s hard to get more than 1%. The trade-off here is risk — most companies never get to their Series A.
Ultimately, Graham says that when you’re joining a startup, you’re looking for a company that is undervalued for the stage it is at, and that’s most likely to eventually IPO. Of course, that’s all easier said than done.
The event then switched to pitch mode, when over thirty startups gave a whirlwind series of presentations telling the audience why they should join them (it was like a speed dating job fair for startups).