wasted my 20s being the "lead engineer" at a 6 person company. company exited for $100m. i only got 100k. 40 now and im still working while the other 5 are retired. f those guys
This is exactly what happened to me. I was 1 of 3 founders at my last startup and I'm the only technical co-founder. I got 5% equity, and the reason the CEO got 65% and the other guy got 25% was that's their idea; while I was building the products they were even part time working for some investors on some marketing stuff; the other 2 founders were in the board of directors while I was not. I didn't get much exposure to the investors unless they insisted to see me. I quitted too late, now think back. I have grown the tech team to 10 engineers and built the product to raise a few millions in series A, and my share was worth only about $100k. Yep totally ripped off.
I don't mean this to be disparaging but I'm actually curious. Why did you agree to the terms? Did they do something misleading that others should watch out for?
I was a senior engineer at a cloud data aggregation startup, non founder hire with a 1 year vesting cliff. Top contributor across their core product and was let go 1 week before my vesting date for "performance".
Sorry for you, this sounds awful man... It seems like there is no real way of protecting yourself against this right as long as you are "only" an employee, right? If the founders are douchebags, they could always pull this off
I just joined a company as their CTO and they wanted a vesting period of 4 years. I laughed and said if they want that, then I vest evenly month over month and you're only cause for termination to remove me is gross negligence or illegal behavior.
In my case, I was the first engineer hired to write code alongside the only co-founder who also wrote code. I received 1%. Two of us, along with one tech intern, developed the prototype. I worked like a dog to write code, develop demos, handle sales, and implement pilots that eventually led to contracts. We raised 5m in seed funding and closed series A last year. Three years into it, I finally realized I was doing the hard work to make someone else rich. So I left and started my own startup and applied to YC. However, I must admit, I'm rather shocked to learn that I have been exploited. They didn't even allow me to call myself the founding or lead engineer.😂
People who do what they do just because they want to be rich will always exploit others (even if unintentionally). This is what I have identified since I started my working life (if anyone has a counterexample to this, I am happy to read it). If you don't want to be exploited, identify people whose only goal is to be rich and stay away from them.
@@JoshIbbotson 1% with salary for first non-founding engineer is standard practice in silicon valley. founders often don’t get paid until they’re able to prove the idea has value. if you want significant equity, start your own company and work without a salary until you can get funded or go bust
I'm in the college student category. Didn't know my true value and spent 8 months building an application while constantly being told that they were waiting on me to launch. Didn't sign or get any equity because it was family and I was told I would "be taken care of" aka an "IOU". Worked like a dog, didn't get to enjoy my summer, and was barely able to afford to live. Anyways, they blew thru all the funds, I finished the MVP, and they still haven't gotten a single customer. The only thing that kept me sane and held me back from quitting early was that it was an opportunity for me to learn and expand my skill set while still in college. In the past year I've learned more about server architecture, website development, frontend, backend, etc. than I would ever have in college. Plus I've learned a ton about starting a business and how to lead one. Of course I'm only in my early 20s and got a lot to learn, but I'm confident I'd be able to start something of my own in the next 5-10 years. This past year has definitely been a "1 step back" year, but I know it'll put me 10 steps forward in the years to come.
@@TSERJI It was a NextJS + ExpressJS setup so I used Typescript for both. About 2 years ago I knew nothing about websites or web applications. Started with a few tutorials on youtube then just went on my own from there.
Did the same Worth the grind even if I didnt get rewarded fairly after for what I put in The knowledge gained is worth more than anything Only thing is that it must not go on forever
Joined 2 other guys as the only technical person for 10% 6 months ago. They said “you build it, we’ll sell it” then about a month ago, I got on some sales calls with them and realised they had absolutely no idea what they were doing. Like they didn’t understand basic stuff like what SaaS was, what “scalability” meant or even what an API was and they would offer implementations to people for $10000 with a 95% discount and other ridiculous things. Then they got upset with me for revealing company secrets to customers such as the fact that we use AWS. Meanwhile I’ve run out of money, can’t pay my credit card and they’re flying around the world doing whatever. So thanks for the video! Leant some cool AWS and Django skills along the way though!
Be careful about thinking that you’re learning lots makes up for being financially screwed. It’s easy to think that in the moment and then regret it later. Remember that you can usually get similar experience at another place that will pay you more honestly.
This hits freaking HARD. I mean, in one hand it made me get emotional just to realize others have clearly gone through this sort of exploitation from business people. For me, I grew up on the U.S. Luge team… so my mental strength and drive today are blatantly due to my sport background. Business people really take advantage of this. But I didn’t get that until recently (like the last few years). My only advice to people out there trying to not get exploited as devs/unicorns/leads, is only trust people that can produce actionable user facing product characteristics. If you don’t have that or can’t find that, then you have to start a firm and go it alone. It sucks, but it’s just the way it is for now.
I'm technical looking for an awesome non-technical co-founder to startup something. That's my horror story. It's actually pretty difficult in my opinion to find someone who doesn't just talk and get motivated, but also has DISCIPLINE to put their head down, get to work, and discuss ideas.
Hi, I’m the other side. I used to be just a non technical founder now I’ve just started again and I’ve made an MVP etc: let’s talk happy to discuss anything that might help you guys. I’ve done 3 fundraising rounds myself whilst being a non technical
Connected with this 100%. I was tech co-founder, exploited for 3 years as slave labor, and my equity (which would be 10-15% max by then) has still never been transferred. ZERO. While I was personally sabotaged financially, the company I helped build grew to have the financial resources to now weaponize against me for a long and expensive legal battle for the money and shares I am owed… I’ve seen almost identical situations happen to colleagues with shares that never vest. Stay safe out there folks, there’s some real sharks who will eat you alive and keep on swimming with no conscience or consequences.
I appreciate the extent to which all of this applies to someone “technical” in a non-engineering, yet irreplaceable function in a growth business. Thinking of a specialized finance contributors in a fintech (legal / legal startup ; biologist / biotech med tech) etc.
The moment you see yourself as a software engineer you are having a difficult time, because those business people will always use the argument that engineers is everywhere but they are special. Sometimes you just have to reject those people and go with someone else that value your skills as special.
This happened to me, and from looking at the comments, its a common thing that happens in the world. The funniest is when they tell you "Let us know how we can help" And they can't even use a CRM right. These stories deserve their own videos.😅
Listening as a founder who wants to do the software engineer right. I’m hiring but hopeful to make them the co-founder and CTO, but they will get equity regardless. Thanks for this YC! No one should be taken advantage of.
In my case. My cofounder was a hired situation first. Being paid a fee for the work provided, we had a contract in place. Then he liked what we were building. He wanted to come on board. But he didn't actually build the product. I built the prototype first b4 he came around & his team built our app. Otherwise the Desktop platform has been built by me. My lawyer agreed with my assessment and we put in a 2 year cliff for protection.
building a prototype and a even an MVP (let alone a product ready for customers) are wildly different things. Sounds not far off from what YC is describing here.
Hello there, I'm solo developer and founder. I almost tried to work with 3 non technicals and I gave up to work with others since then. They was not motivated at all about the process but they always love the end ☺️. Please give me some advice if you read so far and have something to let me know
Business person here, ask questions like this: 1. What does commitment mean to you? (Hours? Meetings? Results? Effort?) 2. What kind of legacy do you want to leave behind? 3. Can you describe a time when you made a dream into a reality? 4. What is your purpose? I know these sound fluffy, but I think they’re strong indicators of how hard someone wants to truly build something
@@davidkang3518hey business guy please understand engineers only like technical stuff everything else that requires me to put a happy face in front of you just because it makes you feel nice is none of my concern
We have the reverse situation: I as the technical founder of a social network have 85.95% of equity, and the marketing has 10% and fundraising has 4.05%. Do you advise me to subtract from my equity and add to them?
This is great. Most developers including me does not inherently care about these stuffs but these are extremely important to avoid feeling screwed later. This is a great checklist.
i spent an entire year building a yoga app, was in YC summer program back in 2019. The "business side" of things didn't deliver on the customers we wanted and I had spent 6 months building the entire app and adding features.
For each of the 10 product ideas people have brought to me, i've asked them these questions: Do you have anyone you'd describe as a co-founder? If yes, I'm out. Otherwise, I'd simply tell them If I must build this product, I should be your only major co-founder. In that case, the least equity ratio I'd accept is 45 - 55 if its just the two of us or 40-60 if we're 3 and i'd require that the third partner must be a finance or marketing professional.
I was grossly undervalued at several companies for years. Some of that is because of my geographical location and some of that is because I didn't push as hard as I could have to get proper compensation for my work. The best negotiation tool is looking for better positions in my experience.
Ha 9:14 I was working with a small startup (where I had decent founder-level equity) and I was the first person to see it "not working", especially having recently worked on something that took off like a rocket, within about a week running the backend and watching adoption and stickiness numbers it was obvious to me the whole idea was not going to fly. Bless their socks...
Not necessarily as others are saying. The customers tell you what they want. You do what they want. You take their money. That’s how all businesses work.
I worked with 30 technical people and I was the only non technical person.... It was so difficult to lead the group away from failures. They saw no authority in a person who is non-technical. They all were reinventing products that already existed, believing small new features would create value customers wanted. They were jumping to solutions without defining problems properly. They were throwing pasta against the wall, basically to see which which one would stick. All these 30 technical people were MIT and Harvard students.
dude , i'm technical etc... i just lunch my startup ( 10 month a go ) , i pay all my team alone, we work we have the same skill but the time i spend on this project it's crazy, and all my save money go for this project, and i pay small salary to all my team, but i can't give too mutch share it's impossible, they don't want work for free.
Dalton and Mike: Equity imbalance satisfies the following conditions: 1. If the start-up must be capital-intensive and requires a lot of hand holding and legwork on the part of the nontechnical founder before any material code is written (e.g., many highly regulated industries) 2. If the original technical co-founder was able to write a material part of the code (useful enough that he's able to bootstrap the start-up) before inviting others to be his co-founders I'm sure there are other complicated examples. A lot of people you call solo founders remain that way without co-founder help for a long time because of the humans have treated them in the past; especially if they're now able to work on their own for a considerable amount of time before involving the rest of the world in what they do.
If you're being offered equity by a private company then 99% of the time your probably gonna get "screwed". To avoid: just assume that the equity you're being offered is worth zero (you'll be right a vast majority of the time). There all all kind games that get played with start-up funding so it doesn't matter what percentage you have--it can and will get diluted over time and locked-out for a number of reasons--both malicious and benign. If you don't bring money to the table then you have no standing and by the time you put in enough sweat equity to really matter the company will have already cashed-out, gone public, or gone broke. No, you are not as valuable as you think you are. That said, there is a TON that can be learned by working for a start-up. It's a trial by fire for sure. Highly recommended, especially for younger folks with few commitments.
A major reason for lob sided equity is that the engineer is drawing a huge salary and the bisness co-founder isn't and further more, needs to pay the coder out of pocket
Fair Equity: What about someone gets like 5% but he does all the technology work -- coding in frontend, backend, infrastructure, deployments, etc but he didn't shell out cash and some other people insisting they get 95% (shared or solo) because they shelled out cash. Asking because this is usually the offer I get HAHA
@@hylje they usually shell it out as salary of course, but they would use the 5% equity to offer you a drastically low salary, like usually even less than 50% of what should be your salary.
cool. I thought it was about burnout as per thumbnail, it was more. Thumbnail could do with better representing the great content as I nearly skipped it 🙂
It depends on the amount of money they put up. If it was Elon Musk fronting $100M then maybe 1% is fair. If it's Joe Schmoe putting in $100k then def not.
Its risk vs reward. Who takes the liability if it does not work out? Yes, technical people are important but there are more then one person that can do the job. With out the idea you have nothing.
@@masterkraft4746 that idea that is worth something and the person who risks everything is usually more valuable. What kills me is the technical person who wants to be paid and expects equity.
Good work life balance necessarily doesn’t mean that the work being done is not impactful (may be the dude is very efficient in what he does so it may looks that he is having a good WLB but at the same time he is pumping a lot of code and impact), so giving the BS that oh hey man you had a good WLB so probably just manage with peanut size compensation.
@@ihmpallnah. I genuinely thought I’d just put up with the bad management and bs at a startup for a year, then COVID hit and my dad had a stroke. And I felt trapped in the situation for an extra year. In hindsight, I could have quit but in the moment it felt too dangerous to quit when it looked like we were heading into a depression. It’s just a downward spiral. If you don’t feel like it’s worth staying, leave immediately. Don’t wait it out thinking you’ll ruin your resume or something if you leave early. It’s easy to overthink and make a stupid decision. Often ever more than doing things impulsively.
Wait till you hear about foreign software engineers in USA (h1b, etc) who can’t even start their own startup and thus are forced to work for other people for almost no equity. Oh wait I forgot, foreign swe are actually hated here for bringing competition.
At my company, non-technical idea guy created most value (and he didn’t know how to fix the platform on a Sunday night). Brilliant technical people could not manage the growth and the fundraising ( and selling the future). So this is not a good approach. Capitalism is about exploiting doers. Being smart is not wrong.
All employees are exploited by definition. Funny thing is most people want that, they don't want to have a startup. If they did they would try. So this video has some logic issues
I used to listen to the 50/50 advice and I realised YC is quite left ideologically and that this doesn’t always work. You need a benevolent dictator to get you out of conflict, and in general both parties should be putting equal hours. My previous tech cofounder wanted to work part time for 4-7 hours a week (if that) for 50%. Remember that YC rules are flexible and if it is 50/50 its built on genuine merit.
this is very biased... for starters, it assumes every technical founder is a good person and only non-technical founders are inclined to be bad people... anyway, long story short, technical people are always free to start their own startups by themselves... spoiler alert: it's usually a dev shop
biased??! 😂. The point of the video is to address engineers getting taken advantage of. They have already made videos talking about founders getting taken advantage of by "dev shops". This video is very relevant. Business people thinking they are so slick that they have the idea when most ideas are not original at all. What matters is execution.
I think this is a terrible advice. If you are employed with a great salary and satisfied with your work and compensation then don't jeopardize this situation based on a random you tube advice. It's already tough out there to find a job that fits you well.
This issue is near and dear to my heart. I've been there and I see this all. the. time. Technical founders, first engineers and the first handful of employees get absolutely shafted. It's a pretty systematic issue. Having YC speak about this publicly is a huge step in addressing this issue. Thank you for all that you do.
I have a product about 80% done with the MVP I wrote by myself. what exactly is a fair equity to give to a cofounder, possibly a tech lead I could bring on to help me?
@@SacredCASHcow It can vary massively, but you want to make sure whomever you bring on is as motivated as possible to help you build your company. If it's a co-founder you'd want them to be as motivated (and incentivized) as you are. A co-founder that has half the equity as you do will be half as motivated. @3:30 Michael says "the vast majority of the journey is ahead of you, not behind you, and you want your co-founder to feel like owners and partners". The way to achieve that is with as close to equal equity as possible.
Early employee. Git history shows high churn. Build the product nearly from scratch. The number of iterations grayed my hair. I got the same pay as a normal company engineer. No equity, no healhty work life balance (partly self blame for pushing myself). Effort imbalance would burn my flesh. Asking why to decisons would get me, dont ask questions by the 'idea guy'. Idea guy would additionally do a shitty job of research leading to needless iterations. Deisgn guy would watch movies and sandbag. Saving grace: getting a good deal. The high learning opened other doors. Contract over, didn't even say good bye to old employer. Still angry after months. Getting counselling to let go.
This doesn't address the core problem with startup cap tables which is the liquidity rights of the executive team vs. early employees. You could be the first employee at a successful, growing company. You could have a significant equity stake %-wise in the company. But the founders could still raise a venture round, liquidate their own personal equity in a secondary transaction as part of the round, check out of the company, run it into the ground, and you as an employee without the same liquidity rights can still end up with nothing. Until the liquidity issue is addressed, all of this advice is meaningless because you can follow all the advice in this video and still get horrifically exploited.
could you explain more please or point me in the right direction of resources? Im a new grad in the interview process for a startup and I don't want to get screwed over
@@avidreader6534 I can elaborate what happened to me at the previous company I worked at. I was the first employee, had a large equity %, but was not a founder. the company was successful and we were able to grow our revenue very quickly once we began monetizing. off the back of the insane hard work the initial team had put in to get the company to that point, the company raised a very large Series B venture round. As part of the Series B round the 3 founders of the company each sold some of their personal equity stakes and became personally rich. They then proceeded to check out of the company, made nepotism hires, hired incompetent middle management etc.. and ran the company into the ground. The company had enough cash from the Series B to sustain itself as a personal piggy bank for the executive team to loot for the next decade, but will never justify it's valuation and the employees who worked to build the product will ultimately end up realizing no value from their equity while the executive team got personally rich off the backs of our labor. the core problem is the executive team was able to essentially exit the company off the backs of their employees labor without needing a formal liquidity event to do so. This is increasingly common in private startup markets, so unless you have guarantees around your rights to participate in liquidity on your equity you can be exploited this way
@@avidreader6534as a new grad to a startup - unless you are like an amazing engineer I wouldn’t worry too much. You’re there to get a salary and eventually move out somewhere else. I would argue its more common that you can get promised like .01% equity bc they promise u the startup will become a billion dollar company and they skimp you on your salary. So optimize on actual cash value salary
what clauses would be good to include into our contracts to have the same liquidity rights? I feel like depending on the company stage and skill level of the employee something like that can be negotiated
a liquidity guarantee that if the executive team is going to sell a % of their equity in a secondary transaction, that you as an employee have the same right to sell the same % of your equity in that transaction. Or else you can just get dumped on by the executive team if they choose to.@@nothingtoseeherefriends
This is why co-determination needs to be codified. The monetary investor and the labor investor should both have a seat at the table regardless of their function
This is the video I wanted to show to the bussiness founders, that wanted to exploit me by giving nothing and asking to work and in future they said they might provide ESOPS. So I told them I would be interested to help the junior dev instead of me actually working my yass hard for the startup.
🤣 SWE here. I had a biz founder approach me and offer me 30%. He had given the other cofounder 10%, and kept the rest for himself. Needless to say, I kept my job.
I have been that "you are not considered a founder, but are the only engineer in a company of 3 people I was young and naive, and believed in the product. I accepted a lot of late hours and literally being paid 1/3 of the going rate because I had no idea I could do any better. When I figured it out and walked away, my whole life turned around for the better.
Chapters (Powered by ChapterMe) - 00:00 - Intro 00:22 - How To Not Get Screwed As A Software Engineer 00:29 - Technical Folks Getting exploited 02:40 - Fair Equity 04:33 - The Early Employee 05:38 - The Googler 06:33 - The College Student 06:52 - Decision Making Process: A Seat At The Table 07:38 - Effort Imbalance 08:40 - Is it Working? & Opportunity Cost 10:36 - Things Are Going Well: Getting A Good Deal 11:55 - Your Are Not Exploited If You Are Part Of The Problem 12:31 - Expectation Setting: When People Are Honest & You Made The Choice 13:35 - How Do I Fix This? 16:35 - Know Your Worth 17:24 - Outro
I applied to YC with cofounder. My cofounder quit.Should I change the application?How much my chances would be affected as I would become a solo founder?
I was working as a technical founding members. Our initial launches were not great but I am working my butts off. We're 3 members. One member has not write a single line of code in the last 6 months and started doing freelance work. Now I feel, I have wasted so much my time and money. I feel left behind.
I thought this topic was taboo as it’s been festering for decades but no one talks about it, not even media. And I was in media who could never even talk about it. Big business is too powerful for an employee. There are still many issues they glossed over in this talk but it would scare many people to even know the ugly stories out there.
