[HN Gopher] There's no such thing as "a startup within a big com...
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There's no such thing as "a startup within a big company"
Author : isolli
Score : 403 points
Date : 2021-02-18 11:17 UTC (11 hours ago)
(HTM) web link (hunterwalk.medium.com)
(TXT) w3m dump (hunterwalk.medium.com)
| lifeisstillgood wrote:
| I think this misunderstands the process by which any project gets
| funded. There is not a nice orderly process where the CEO says
| 'right we are now going to build a website so users can track
| their order - here is the spec, and the cash go do it.'
|
| The CEO (or other CxO) _picks_ from a multitude of projects _that
| already exist_ in different forms of completion - both internal
| and external.
|
| For every conceivable project in a large company, there are
| already 5 different unofficial versions of the project - two
| spreadsheets on an analysts desk, one knocked up by a senior lead
| who needed a solution and 2 being hawked around by a MD who had
| some spare cash and let someone run with a side hustle. On top of
| which there are 3 SaaS options and Oracle probably has one to
| sell you, and McKinsey will do a demo next Thursday.
|
| I will lay good money that when they bought Waze there are two
| projects in Google already that did the whole 'tell us what is on
| the road ahead' thing.
|
| But the CEO picked an external buy - and those projects went the
| way of the Dodo.
|
| By time you have big co sign off to do a 'internal' start up, you
| have basically hit Seed / series A level. Someone with money
| believes in you. You are past the major points of startup failure
| (I don't know what the stats are for failed before raising A and
| after but I bets its waaay lower)
|
| I have been in both sides - the small scrappy start up, the
| funded start up and the getting something off the ground
| unofficially in a bigco.
|
| And they all feel the same until you get 'blessed from above'
|
| The Series A slowdown - this is point where all the crazy starts
| to slow - you actually have lawyers to read things, etc etc,
| someone starts to consider holiday pay and HR stuff. In a bigCo
| this hits all at once - all compliance needs to come in. People
| look over your shoulder. But its not that different to the Board
| suddenly asking new questions.
|
| So, yes entrepreneur startups are different to 'intrapreneur'
| startups, but not that much. Its a fight to get anything off the
| ground, usually in spare time, and internal politics looks a lot
| like marketing plus who you know in the real world.
|
| Finally - yes if google is giving out equity for free, then yes
| incentives are misaligned. This seems to be a google problem (one
| exacerbated by the fact that most previous tech giants had
| smaller tech giants after their lunch within a decade or two - we
| don't seem to see that in FAANG.)
| data_spy wrote:
| This is correct. When I was at Allstate they had a 'labs' team to
| come up with innovative new technology. They were the only ones
| with standing desks, treadmill desks, bicycle desks, and over two
| years the only thing they accomplished was design a phone holder
| for a bicycle.
|
| They had much greater success using Kaggle for data science
| competitions in terms of innovation.
| 5600k wrote:
| > Perhaps Corp-Tech should move to employee share buy back where
| employees must sacrifice some of their salary for equity or
| change equity to vest by a product related metric to connect the
| teams performance with the employee returns.
|
| This doesn't work all that well in my experience.
|
| Employees focus in the stock which is not in line with the
| success of the product.
|
| ESPPs aren't bad. They're seen as a bonus by most employees and
| some get excited watching the stock climb. Some may try to use
| that as a motivator.
|
| But it's more like watching your favorite team on TV that you've
| bet on with no control. That doesn't inspire the right behavior.
|
| Vesting stock based on some product metric would still be
| hindered by the futility of attempting to tie stock price to the
| actual success of the product.
| username90 wrote:
| Ask yourself this, would your "startup within a big company" have
| managed to lure Mark Zuckerberg or Larry Page to join them
| instead of founding their own companies? And even more important,
| would it even let such people have lead a significant part of the
| company in order to realize their ideas?
|
| If you answer no to either of those, there is your answer to why
| your "startup within a company" can't hit it as big as real
| startups.
| aerosmile wrote:
| The predominant sentiment in the comments is that equity is
| worthless, which very well may be a fair statement. It would also
| explain why relatively few people decide to start companies, let
| alone do it back to back several times after getting burned over
| and over again. But those same people will then argue that
| founders should not get 10x more equity than employees [0]
| (which, for the record, may or may not be justified, but you
| can't argue that founders would be better off keeping their jobs
| at mega corps, and also at the same time criticize their upside).
|
| My personal take on this is:
|
| - Stay at the mega corp if you're exclusively optimizing for
| wealth generation. I don't know if I would recommend pursuing the
| Skunkworks opportunities, since they are by definition not core
| to the business and your contributions won't produce a lot of
| profit for the company for a long time. It's unlikely that the
| company will remunerate you more than someone who's paying all
| the bills. After all, this career path is all about maximizing
| your risk-adjusted likelihood of wealth generation.
|
| - Start your own startup if the journey matters to you. Important
| caveat: you will get better at this over time, so if it made
| sense to you to start your first company, it will make even more
| sense to stick to this career path and do it over and over again.
| Don't invest your own money, and hope for the best but expect
| each company to fail. Be ok with earning sub-market salary, and
| treasure the upside of being your own boss. This approach works
| best if you're able to raise pre-product seed financing, which
| brings me to the next point...
|
| - Before you start your own company, be an early employee at a
| startup that's run by a serial (and ideally successful)
| entrepreneur. You will get the worst of both worlds - not enough
| salary and not enough equity - but you will dramatically improve
| the odds of success when you start your own company (and will
| also improve the chances of raising a pre-product seed round).
| Don't do it otherwise.
|
| What I wouldn't do: keep a job at the mega corp, and work on new
| ideas nights and weekends. This may seem like having your cake
| and eating it too, but it works far less frequently than you
| would expect (you end up sucking at your job and at your startup,
| not to mention that your work-life balance is possibly worse than
| in any other scenario). Again, the alternative would have been to
| be an early employee and learn first-hand about entrepreneurship.
|
| [0] https://news.ycombinator.com/item?id=17288343
| nonplussed wrote:
| I can't stress the the "ideally successful" part enough. I've
| worked at a couple startups where the entrepreneur was serial
| but this was their first "success". I felt I learned very
| little. Both companies reached a comfortable point and then the
| founder didn't know what to do beyond that.
|
| I came to understand why there's a lot of stories of VCs
| forcing out the founder and bringing in a new CEO who had
| experience in growing a company.
| aerosmile wrote:
| I agree. I didn't want to make too much of a point of that,
| because if you filtered just for founders with prior exits,
| you might have a hard time scoring early opportunities with
| them (they usually have plenty of people to fill the first
| 20-50 jobs). But yes - joining Square the day it was
| announced that Jack Dorsey started another startup would have
| been a no-brainer for that career path (same with Max
| Levchin's Affirm and many other examples).
| zeroonetwothree wrote:
| This is very cherry-picked. Actually research has found
| that prior business success does not predict future success
| at all. Though failure does predict failure, so at least
| avoid that.
| [deleted]
| tlb wrote:
| How is it mathematically possible for prior failure to
| predict failure, without prior success predicting
| success?
| curiousllama wrote:
| If (past failure) then (future failure)
|
| Else if (past success) then (future Unk)
|
| In other words: you can be successful for many reasons,
| but typically fail for one.
| claudiulodro wrote:
| It's very possible:
|
| - Prior failure, most likely the next venture will fail.
|
| - Prior success, most likely the next venture will fail.
|
| Basically, odds are that a venture will fail regardless
| of past performance, similar to how past lottery winning
| doesn't predict future lottery winning. Personally, I
| don't think it's necessarily true (successful founders
| will already have an existing audience and investors for
| their next product), but mathematically this could be one
| way it holds true.
| buzzerbetrayed wrote:
| Yeah, I'm wondering the exact same thing.
|
| 1. Take a population of 100 people. There is a 50% chance
| that a random person from that population can create a
| successful business (obviously 50% is a made up number)
|
| 2. All 100 attempt to start a business. 50 succeed, 50
| fail.
|
| 3. The 50 that failed now have a 25% of succeeding in
| their future business endeavors. The 50 that succeeded
| apparently have the same 50% of success.
|
| 4. Now, given the same population, there is only a 37.5%
| chance that that a random person will succeed in their
| next business, which is in direct contradiction to point
| number 1.
|
| I'm not entirely sure I did that right. I'm no
| statistician so there may be some glaring logical flaws
| there, but that seems correct according to my intuition.
|
| (edit: formatting)
| 23iofj wrote:
| _> There is a 50% chance that a random person from that
| population can create a successful business... All 100
| attempt to start a business. 50 succeed, 50 fail._
|
| This is the most glaring wrong assumption that causes
| your and GP's confusion.
|
| 90+% of startups fail.
|
| Note: _" failure predicts failure but success does not
| predict success" could still be true even if business
| failure rates were >= 50%!_ But the fact that failure
| rates are higher than 50% is the first and simplest
| mistake in this line of reasoning.
| buzzerbetrayed wrote:
| I know nowhere near 50% of startups succeed (and have
| heard the 90% failure rate many times). However, I don't
| think that is relevant to the mathematics of it.
| 23iofj wrote:
| Remember that these are _correlational_ studies! They 're
| not directly comparing raw counts of data points, they're
| checking for statistical significance.
|
| It can be that COUNT(failure ->
| failure) > COUNT(success -> failure)
|
| while also being the case that "there is not a
| statistically significant correlation between past
| success and future success".
|
| Think about generating a dataset using the process you
| outline and then performing a statistical test for
| correlation on the resulting dataset.
|
| Think about the percentages in step 2 and 3. If those get
| small enough, then there could be a statistically
| significant (failure, failure) correlation in your
| generated dataset and also _not_ a statistically
| significant (success, success) correlation in your
| generated dataset.
|
| The 90% number [0] explains how those percentages get
| small enough that (success, success) is not picked up by
| a significance test but (failure, failure) is.
|
| You don't have to take my word for it, though. You can
| actually implement this process, run your favorite test
| for correlation, and verify that as those success
| probabilities get small you have the above effect.
|
| What you've proven above is that
| COUNT(failure -> failure) > COUNT(success -> failure)
|
| But just because this is true doesn't mean that there
| will be a statistically significant success -> success
| correlation.
|
| Again, the most fundamental reason that can happen is
| because failure rates are over 50% [0].
|
| --
|
| [0] I mentioned in my first comment you can get this
| result even with a 50% failure rate. How? Companies and
| founders aren't 1:1, founders drop out of the data
| generation process, etc. You can play with that to create
| similar effects even in extreme cases like failure rates
| dropping to 50% but it'd be a bit contrived.
| [deleted]
| aerosmile wrote:
| I should have added some context for why in my opinion
| it's important to have an experienced founder when you're
| an early employee. Remember - based on the framework I
| presented, the goal is not to optimize for wealth
| generation - for that you would have stayed at your mega
| corp. For simplicity, I am assuming that you cannot
| predict success at this early stage of your career
| (although clearly some people have phenomenal track
| records).
|
| Instead, the goal is to learn the best practices (lean
| startup, hiring above your weight, shipping early, doing
| things that don't scale, etc), meet the right people
| (colleagues and investors), and also very importantly,
| learn how to build the right culture (this is a far more
| complicated issue than most first-time founders realize -
| hence the need for someone with ideally some historical
| perspective).
| staysaasy wrote:
| I was curious on this and did some googling.
|
| One thing that I found per a paper from 2008
| (https://hbswk.hbs.edu/item/performance-persistence-in-
| entrep...):
|
| "All else equal, a venture-capital-backed entrepreneur
| who starts a company that goes public has a 30 percent
| chance of succeeding in his or her next venture. First-
| time entrepreneurs, on the other hand, have only an 18
| percent chance of succeeding, and entrepreneurs who
| previously failed have a 20 percent chance of
| succeeding."
|
| I remember reading something that had a collection of
| anecdata indicating that b2b success seemed to be
| repeatable but b2c did not.
|
| Would love to see what other research data is out there.
| sdljfjafsd wrote:
| Can you share your sources?
| staysaasy wrote:
| I would add to scenario 3 that the startup needs to do well
| enough to grow at least a bit (growth is a great teacher) AND
| your position at the startup has to scale with that growth.
| Otherwise from what I've seen you might be better off just
| starting your own company sooner, as founder equity is 1-2
| orders of magnitude higher than non-exec early employee equity
| so it's arguably worth just taking more shots on goal.
|
| "What I wouldn't do: keep a job at the mega corp, and work on
| new ideas nights and weekends. This may seem like having your
| cake and eating it too, but it works far less frequently than
| you would expect (you end up sucking at your job and at your
| startup, not to mention that your work-life balance is possibly
| worse than in any other scenario). Again, the alternative would
| have been to be an early employee and learn first-hand about
| entrepreneurship."
|
| I like this point a lot, it mirrors my own experience watching
| many extremely smart people try and fail at this. This is
| actually potentially the single activity that I've seen really
| smart people fail at with the highest frequency.
|
| What _does_ seem to have some payoff is investing
| /advising/sitting on boards while keeping a job at a mega corp.
| But that isn't the experience that a lot of people are going
| for and is also hard.
| tarr11 wrote:
| Isn't sitting on boards while you work at megaCorp a conflict
| of interest / violates your employment agreement?
| acomjean wrote:
| Wait. In a lot of these startup companies the business plan seems
| to be grow the customer base and worry about profit
| later.(youtube, Instagram, waze) Selling to a big company with a
| lot of capital seems to be the goal or a survival technique.
|
| Johnson and Johnson I'm told handles the aquiring of businesses
| well (it's a business conglomeration of hundreds of entities). I
| know someone who left after their division was sold from JnJ and
| everything started going south.
|
| https://en.m.wikipedia.org/wiki/Johnson_%26_Johnson
| varispeed wrote:
| This happens with companies who are not big enough to take over
| other companies, so they try to latch on the loophole in
| capitalism by spawning different products often completely
| unrelated to original purpose of the company. Such company will
| have a competitive advantage over someone starting from scratch
| with a similar product. Question is should it be allowed? This
| ultimately leads to creation of those companies that are too big
| to fall, that have enough budgets to buy laws designed to keep
| competition at bay, do creative accounting and other measures
| that small company cannot afford to do. Fortunately these
| "startups" within a company usually fail and are not as effective
| as take overs. I think take overs should be illegal unless the
| technology your are buying is going to be incorporated into the
| original company line of products and does not spawn completely
| new business.
| decafninja wrote:
| On a similar note are "tech company inside a non-tech company".
| Sometimes referred to as "innovation labs".
| whymauri wrote:
| Now this I sprint away from as quickly as possible.
| TuringNYC wrote:
| You should check out:
|
| - Skunkworks groups
|
| - Corporate Venture
|
| - Corporate Labs
|
| - Spin outs
| wiremine wrote:
| I'm a VP for a software firm focused on IoT. I work closely with
| both actual startups and Fortune 500s companies looking to launch
| new connected products.
|
| I agree there is no such thing as a start up within a big
| company.
|
| But that's not the point.
|
| The point is to innovate. And a lot of innovation can happen
| within a true start up. But a lot of innovation can happen inside
| big companies, too. I see it all the time. Most of it, though, is
| just incremental innovation, not massively disruptive innovation.
|
| But that's true of most startups, too. Most startups (the ones
| that survive) are incremental in their impact: they make
| incremental improvements to some part of our world, and they get
| bought. Very few transform into the next Fortune 500 giant and
| have that level of impact on society.
|
| Final thought: I have seen a few world-shaking ideas emerge from
| corporate America. The problem is it typically cannibalizes the
| core business, or is so outside the core business, and the
| C-suite doesn't know what to do with it.
| GiftCard22 wrote:
| This Is Why You Should Adopt a Cat https://bit.ly/3qt4MHk
| gijoeyguerra wrote:
| Of course there isn't. The financial risks (all the risks in
| general) are totally different. Risks, and lack thereof, drive
| behaviors, decisions.
| offtop5 wrote:
| Having worked for several startups I'll argue they're extra
| overrated. You're very likely to work much harder, what's a
| holiday when you're the only QA person or the only engineer.
|
| And for what, on the off chance the IPO goes public and you make
| hundreds of thousands of dollars. Give me a big company job
| during the day, and I can work on my startup idea at night .
| signa11 wrote:
| in the days of m.p.l.s _engineers_ at csco, there used to be...
| sys_64738 wrote:
| Lockheed Skunk Works.
| jl2718 wrote:
| This can mean many things. Examples: - we don't know what we're
| doing yet - we'll be overworking you - our funding is getting cut
| off - we're irrelevant to the corporation - we have an open
| office - we fire quickly - we wish we didn't work here
| s17n wrote:
| OP and Noam Bardin both dance around the core issue which is that
| you can't give more than a handful of people enough equity to
| actually care about your company.
| s_dev wrote:
| Because a startup within a company will always be making more
| money for other people than you.
|
| Only when you own a startup and that means outside a 'company'
| can you ensure your efforts profit you primarily.
| zirkonit wrote:
| Most successful startups have less than 50% founder economic
| equity, some - FAR less.
|
| It's the capital holders who primarily profit from your work,
| whether you're an entrepreneur founder, or a salaried employee.
| kenrose wrote:
| My own experience ([1]): the biggest different between "startup
| inside BigCo" and an actual startup is availability of resources.
|
| "Startup inside BigCo" generally revolves around spinning up a
| new team that's product focused and delivering quickly.
|
| Depending on which BigCo you're at, delivering quickly could be a
| departure from how things are normally done. e.g., You don't have
| to worry about writing a big up front proposal doc, going to the
| architectural review board, or using the standard infra tooling.
|
| For engineers on a team, this "feels" like a startup. There are
| daily standups. They talk to users and have a sense of ownership
| on what's built. There can even be some sense of urgency to ship
| quickly.
|
| While "BigCo startup" teams mimic a lot of the same procedures
| and activities as a startup, there is an underlying support
| structure at BigCo that isn't there in an actual startup. IMO,
| that makes the experiences substantially different.
|
| Some examples:
|
| - The cost of failure is different. At BigCo, if the project
| fails, it's generally OK. Each engineer can be reassigned to some
| new team at BigCo. At a startup, if the project fails, the entire
| company fails.
|
| - There are more people to ask for help. At BigCo, if you're
| stuck on some hairy engineering issue, you have a swell of
| engineering talent to lean on for help and guidance. At a
| startup, you have StackOverflow, Google, and maybe some folks in
| your personal network to lean on for help.
|
| - There's more than just product development. At BigCo, generally
| only the engineering / product development team is structured
| like a startup. After the code is "done", the regular product
| marketing org, marketing org, and sales org (if that's a thing),
| can kick into gear. At a startup, there is no such massive
| support structure.
|
| - On the topic of marketing, having the brand of BigCo is a huge
| boon to a new product. For mobile apps, there's a lot more trust
| in seeing "NewProduct by BigCo" vs. just "NewProduct" in the app
| store. Your rockstar CEO may even tweet out the launch
| announcement to his millions of followers.
|
| - And yes, at BigCo, when it's lunchtime, you can go to the
| cafeteria and decide if you want the steak or the coq au vin for
| lunch. (well, before COVID at least)
|
| ---
|
| [1] - I've worked for really small startups (< 8 people), really
| big companies (I was person 2000+), and small companies that
| became big (joined at 20, left at 200+, now at 500+).
| aloukissas wrote:
| It's interesting that nobody has yet to bring up all the Cisco
| startups (ok, ok spin-offs), i.e. Andiamo, Insieme, etc. Yes,
| typically they were all independent companies but the people
| there all but wore Cisco badges (they mostly used Cisco
| buildings, too). Very successful model to bypass issues e.g.
| hitting quarterly earnings goals, while innovating at startup
| speed.
| cletus wrote:
| I saw several of these attempted at Google. They never went
| anywhere. Probably the most public was Google Wave.
|
| Here's the problem: you can't create the same environment without
| the same risks and rewards. Google employees get compensated very
| well, better than all but the luckiest startup employees. If the
| "startup" fails, no biggie. You just move to another project.
|
| At the same time, the "startup" needs to retain talent so you're
| competing with other projects. So what happens? The "startup"
| creates an incentive structure that rewards mediocrity that has
| nothing to do with the original goals.
|
| This happened with Wave and it happened with Waymo.
| throwaway234378 wrote:
| When Google acquired Waze, Waze was nearly running out of money /
| dead. Google paid the acquisition very well. It's something Waze
| people didn't talk about.
| jiriknesl wrote:
| There are lots of startups within big companies. Example is Zonky
| (peer to peer lending startup) within Home Credit - multibillion
| dollar lending entreprise. But they have been created with a
| strong team which felt ownership. And as Home Credit was growing
| like crazy themselves too, they left this internal startup to
| self-manage too.
| emidln wrote:
| IDK, I worked for a startup (Curiosity.com) within a big company
| (Discovery Communications) that spun off and raised a series A to
| become an actual company (and was later reacquired by the same
| big company).
| srg0 wrote:
| So, we're commenting what appears to be a comment on another
| person commenting his career choice.
|
| Just in case, this is the original piece written by Noam Bardin:
| https://paygo.media/p/25171
| kludgekraft wrote:
| What is the main reason though? The BigCo being too risk averse?
| Or employees having too much of a safety net? Or BigCo processes
| weighing the team down? A combination of these?
| AdrianB1 wrote:
| Big companies are risk adverse. At the same time, the
| motivation for the people is missing, in a startup you have the
| chance to become a billionaire or at least a multi-millionaire,
| in a big company you can get them a billion and be the employee
| of the month with a $100 gift card. I saw it myself some years
| ago when I got my company a ~ 5 million/year saving project all
| by myself with a one-time cost of ~ 20k, I got a $250 reward on
| top of the regular salary. That was a lesson to not care too
| much. 2 years ago I got them over half a million per year in a
| 3 days of work mini-project, I got nothing, not even a formal
| thank you note. That project was not regular work, it was none
| of my business and I came with the idea and the execution
| alone, so you cannot say I was paid for such work. Translate
| this into a risk adverse big company play-pretending to do
| startup stuff.
| sgt101 wrote:
| If you work for someone with $80bn of shareholder capital at
| risk you can take 1/10000th of the risk at work than if you
| have $8M of shareholder capital at risk.
|
| It's that simple.
| notahacker wrote:
| That depends on what the risk is. If the risk is to the
| credibility or business model or relationships of the $80bn
| core business, then sure, the big company absolutely must be
| more conservative. On the other hand, if only a tiny fraction
| of that $80bn is needed to underwrite losses from your
| skunkworks' niche product taking too long to launch, lack of
| rapid uptake isn't an existential threat (even if the project
| gets canned, most of the team will still have jobs and they
| might even keep the profitable part of the project alive) and
| resources can be shared with other areas of the business,
| there are other risks that are easier to take.
| frongpik wrote:
| It's ownership that's the problem. A would-be entrepreneur
| can't negotiate a 50% stake with executive rights in a bigco.
| rovek wrote:
| I don't know if there is a "main reason" for all instances. For
| me, on this kind of project at one of the Biggest Co's, it
| seemed a bit like the safety net point you make and it creeps
| into everything. There didn't seem to be much pressure because
| the project was never going to be pulled and had infinite
| money. This seemed to manifest in "good people" (my opinion)
| working at about 40% capacity and new hires having a background
| in companies more like BigCo than InternalStartup.
|
| Edit: To clarify my last point, my assumption being that the
| point of InternalStartup was to allow deviating almost entirely
| from BigCo's approach to everything and that those people from
| OtherBigCo would be less likely to have that mindset.
| kingkongjaffa wrote:
| There is, the concept is known as a skunkworks.
| https://en.m.wikipedia.org/wiki/Skunkworks_project
| baxtr wrote:
| I have heard that Apple does something like that when
| developing new products?
| cdavid wrote:
| What's interesting about skunkworks is much it gets invoked by
| people vs how much it actually happens in practice.
|
| We engineers love skunkworks: working on cool stuff, without
| accountability and a lot of freedom ? Who would not want that !
| But there are very few situations where this is sustainable,
| for reasons well explained by OP.
| jiofih wrote:
| Strongly recommend reading the book - they had _tons_ of
| accountability as critical projects were handed to them on
| tight deadlines. Yes, working on cool stuff, but delivering
| at an extremely high level.
| sgt101 wrote:
| The final accountability of someone dying if you screw up
| must weigh heavily on people designing aircraft. I think it
| would make me pretty diligent...
| ChuckNorris89 wrote:
| _> We engineers love skunkworks: working on cool stuff,
| without accountability and a lot of freedom_
|
| I'm pretty sure people who keep saying this have no idea what
| working at Skunkwork was actually like.
|
| If you read Ben Rich's book, which I recommend you do, you'll
| find out that they had tons of accountability, the more
| classified their projects were, the more they were drowning
| in paperwork. No employee was to be left alone with the
| blueprints and if one of two needed to go to the bathroom
| then the plans had to be locked in a safe during that time.
|
| Also, the hours of work and the stress they were under was
| insane as shit would break unexpectedly all the time.
|
| I'm sure this is not what engineers love, and what they tink
| they mean by Skunworks is cowboy coding and being paid
| handsomely to play like kindergarten kids in the sandbox with
| the latest shiny toys, while leaving work at 5 PM.
| sgt101 wrote:
| >I'm also pretty sure most engineers don't want this, and
| what hey actually want is cowboy coding, playing like
| kindergarten kids in the sandbox with the latest shiny
| toys, while leaving work at 5 PM.
|
| Nope. They want autonomy, mastery and purpose. They want to
| be able to apply what they know appropriately - not to be
| micromanaged or frustrated by instructions that make no
| sense. They want to be able to develop skills that make
| them valuable to their peers and their organisation -
| valuable enough to be secure and able to earn sufficient to
| protect their families. They want to know why they are
| doing the things that they are doing and to be able to
| believe that their efforts will contribute to something
| worthwhile.
|
| If you can provide that all your engineers will both love
| you and jump into a bonfire for you.
| Aeolun wrote:
| Except for that last point, I agree.
|
| Maybe if it's a tiny bonfire.
| sgt101 wrote:
| I didn't say that it was alight...
| cdavid wrote:
| I should have explained a bit better what I meant by
| accountability in that context: reduced direct oversight
| from general management, almost kinda "chinese wall" style.
|
| Besides the reasons given by OP, an issue w/ skunkworks is
| that it requires two things that happen much less often in
| practice than people like: you need very strong, skilled
| team, and the need for high impact that management believe
| cannot be achieved any other way.
|
| Similarly, at the heyday of xerox park, it sounds like
| Taylor was key to enable true, long term autonomy for his
| teams.
| ChrisMarshallNY wrote:
| The most famous version of this (where the name came from), was
| Lockheed's. A family member's father worked there, and had a
| lot to do with some rather exotic avionics.
| switch007 wrote:
| Skunkworks, also what some deluded people believe you will
| remain/be when you get acquired by a big company.
| dbattaglia wrote:
| I worked for a "startup within a Big Co." for a few months, set
| up as an "innovation lab" for a big stuffy 3-letter HR tech /
| payroll vendor everyone knows (at least in the US). It wasn't
| bad, and I felt like they really tried to make things feel all
| fun and "silicon alley" (I'm in NYC), but boy did that whole
| facade disappear once you realized you need to use on corporate
| VPN to view things on the public internet and a second one to
| connect to source control. Or when the companies patent lawyer
| comes by to talk to the team about the importance of patenting
| every last little idea you have.
|
| I don't even blame them either, they are a huge company that
| can't just change the way they fundamentally do business. But it
| does make the whole thing feel a bit artificial. I'm sure for
| startups that are acquired it's a bit different but in the end
| the same result.
| vyrotek wrote:
| It worked ok for Carvana which was incubated within DriveTime.
| They eventually spun off as a separate company and went public.
| DriveTime is still private.
| Macha wrote:
| Got hit with a medium login wall.
| acco102 wrote:
| https://archive.vn/TBDz0
| patatino wrote:
| no login wall in incognito
| sixhobbits wrote:
| I mean, sure, but it also misses the point a bit. "Startup in a
| big company" doesn't mean "yo take some cashdollar and try build
| and release something to the public", but it does mean "hey, take
| a small team and do your own thing with less oversight and
| process overhead from higher-ups".
|
| The team I worked in at AWS was like this and it felt a lot like
| startup teams I've worked with. That didn't mean we could take
| 'brand and legal risk', and if that's what you want then
| definitely go and start your own thing.
|
| If you want more autonomy and higher velocity than is normal at
| corporates, then a 'startup within a big company' might actually
| work out for you.
| lamontcg wrote:
| The creation of EC2 originally (which at the time was not AWS
| -- AWS was originally the XML-RPC and SOAP APIs that allowed
| people to interact with the www.amazon.com website) was done by
| a skunkworks project in South Africa. That team was very, very
| far removed from Amazon proper and actually delivered.
|
| That's probably the only time I've seen that kind of startup-
| with-a-large-corporation work. I can think of other examples
| (like Amazon's google-competing search engine) which tried to
| copy that and failed pretty completely.
|
| I suspect other successful things that happened after I was
| there were run as "startups" though (I'd guess Alexa?).
|
| But in general every other time I've seen those happen at other
| companies they've been completely miserable failures.
|
| Working in IT, usually those "startups" are full of Dunning
| Krugers who mostly go to war against the corporate IT and don't
| actually have very good business ideas (and honestly the
| corporate IT has been run like crap and deserved it, but that
| doesn't actually help launch your product). They're usually fed
| a bunch of ego-food about how they're the special children
| which will entirely transform the next generation of the
| company, and then they wind up fighting with everyone else.
| ignoramous wrote:
| > _The creation of EC2 originally (which at the time was not
| AWS -- AWS was originally the XML-RPC and SOAP APIs that
| allowed people to interact with the www.amazon.com website)
| was done by a skunkworks project in South Africa._
|
| AWS did indeed start out with E-commerce Services (2002) and
| Alexa Internet APIs (2004), but in mid-2003, when Andy Jassy
| took over AWS from Colin Bryar, he completely changed its
| charter to build an "Internet Operating System" instead. EC2
| happened in South Africa in 2004 _after_ Jassy and others had
| ear-marked compute as one of the key building blocks, along
| with Storage (S3) and Database (RDS / SimpleDB). In fact, S3
| launched before EC2 did. SQS launched even before that, in
| 2004, though in limited beta.
|
| https://en.wikipedia.org/wiki/AWS#History
| bovermyer wrote:
| Yeah, this. People who are used to actual startup culture and
| talk about how "startups" at big companies don't work have a
| different internalized concept of what startup autonomy looks
| like.
|
| The success criteria are different, and measured differently.
| bitwize wrote:
| The word for this is "skunkworks". Even the most independent
| skunkworks still serves big-company goals, often taking
| advantage of big-company resources and generating IP for the
| big company.
|
| In some ways, a skunkworks is startup-like but in many critical
| ways it's way different.
| teleforce wrote:
| Just came here to say this. The popular examples were the
| legendary work at Lockheed Martin, and also at Bell Lab for
| Unix. I was under the impression that Unix was well supported
| in the beginning at Bell Lab. Apparently according Ken it's
| not so and initially they need to piggyback on a grant that
| did not even mentioned OS or system research due the
| outstanding issues with the Multics project.
| nerdponx wrote:
| From the data science side of things, this works if and only if
| upper management has the discipline to leave you alone,
| including letting you procure your own tooling & compute if
| needed.
| virgilp wrote:
| While I worked for Adobe, one of the executives there (Mark
| Randall, serial entrepreneur that was "acquired" by the
| company, awesome guy) launched the "Red box" initiative that
| eventually become https://www.kickbox.org/. The red box was
| essentially a "toolbox" that he created on how to build a
| startup (set of training materials + $1000USD credit card that
| you could use however you wish), and the purpose was to get
| enough proof so that you get executive buy-in to continue your
| idea - if you achieved that, you got the "blue box" (whose
| content was a "secret" but was essentially custom-tailored
| support for your project). The entire process banks on the fact
| that you validate your ideas _without_ involving the Adobe
| brand, because if you slapped "Adobe" over it of course people
| and press would get interested. There were some legal caveats
| here and there (e.g. you couldn't outright lie and claim you
| were _not_ with Adobe), but I think it is to some extent the
| closest thing that you can get to "startup within a big
| company".
|
| I personally got to the blue box - but then I gave up, when I
| realized that to get it to actually ship I had to sacrifice
| nights and weekends. Which would have been maybe fine - except
| that I knew that I didn't get to keep any upside. I had most of
| the risks of a startup, but very little of the payoff. Great
| learning process, but for me - it only managed to convince me
| that I shouldn't try within a corporation, if I want to try I
| need to actually do it by myself.
| aloer wrote:
| Is the expectation with the kickbox that you work on your
| idea in your own time or was there a process to work on it
| during work hours as well?
| thinkmassive wrote:
| In the link[1] virgilp shared it says red box participants
| get 1000 CHF budget, 20% of working time, and access to
| experts.
|
| So they want you to prove out your idea with an allocation
| of one workday per week. I'd bet most people have to add
| their own nights and weekends to make it successful.
|
| 1: https://home.getkickbox.com/
| virgilp wrote:
| Do note that they appear to have fine-tuned the program.
| I was one of the early participants - initially the blue
| box was a "secret" because Mark Randall genuinely didn't
| know what to put in it. In the meanwhile, the blue box
| was refined and it appears that a gold box turned up.
| True to his form, he approached the entire process as an
| MVP that was evolved & enhanced in time.
| virgilp wrote:
| Basically, you work it out with your managers/
| organization. Getting the resources to do the product is
| part of the challenge.
| gifnamething wrote:
| >I knew that I didn't get to keep any upside
|
| That does partially answer what is _not_ in the blue box.
| taneq wrote:
| > I didn't get to keep any upside. I had most of the risks of
| a startup, but very little of the payoff.
|
| That sounds super exploitative tbh. Using people's passion
| and naivety to give you free moonshots.
| nmfisher wrote:
| I agree that an incentive structure is probably needed as a
| matter of practice (since few people will want to do extra
| work with zero upside), but I wouldn't call it
| exploitative.
|
| You're an employee, you work for a guaranteed salary now in
| return for someone else shouldering the risk. That's the
| nature of the deal. If you want to share in the upside, you
| have to share the risk.
|
| It's not like anyone's being forced to do this extra work
| (unlike, say, game dev, which _is_ exploitative). It 's
| just an option for people who want to tackle interesting
| projects.
| jlangenauer wrote:
| Reward being tied to risk is only for the little people.
| One can point at numberous executive compensation
| packages where they have plenty of exposure to upside,
| and almost no risk (or even negative risk: a golden
| parachute if you get pushed out).
| kmonsen wrote:
| Sure, in that sense it's "fair". It's also meaningless,
| as this example shows most people will not make a really
| great product if there is no upside for them so they will
| mail it in. So sure you can try to squeeze your employees
| but maybe if you gave them some more you would get a
| smaller percentage of a much bigger pie giving a win win.
| It's very unlikely big corporations can do that for the
| precedence it sets.
| RHSeeger wrote:
| But the company isn't shouldering all the cost/risk.
|
| > I realized that to get it to actually ship I had to
| sacrifice nights and weekends.
|
| If you have to work nights and weekends, but get none of
| the benefits for it, you might as well work nights and
| weekends on your _own_ side project.
| JumpCrisscross wrote:
| > _the company isn 't shouldering all the cost/risk_
|
| It's paying your salary. Not having a salary, or having a
| lower and/or unreliable one, is part of the risk of a
| start-up.
|
| > _you might as well work nights and weekends on your
| _own_ side project_
|
| Nights and weekends _plus_ working days. Not just nights
| and weekends. Start-up means all in. Hobby means just
| nights and week-ends.
| RHSeeger wrote:
| We're talking past each other here, so I'll try to
| simplify where I'm coming from...
|
| It is exploitative by the company to expect you to work
| nights and weekends, but then all the possible benefits
| go to the company. If you're going to do work on your
| nights and weekends, then do work for yourself, not for a
| company that won't compensate you for it.
|
| The above has nothing to do with whether or not it's like
| a startup; it's speaking only to the deal in question
| being exploitative.
|
| _(Side note: I don 't have a problem working some nights
| and the occasional weekend for my job. But it's very
| rarely expected of me; it tends to happen when I make a
| commitment to delivering something in a certain timeframe
| and then it turns out my guess as to how long it would
| take was wrong. Because I'm flexible, so is my company;
| if I need to take a half day to help my daughter with
| something, nobody is going to push back on that. I just
| wanted to make it clear that I don't consider the
| occasional night/weekend exploitative automatically...
| just that the situation described by the OP appeared to
| be so.)_
| JumpCrisscross wrote:
| > _It is exploitative by the company to expect you to
| work nights and weekends, but then all the possible
| benefits go to the company_
|
| We're disagreeing, not talking past each other. (Which is
| fine!)
|
| Above-market salaries, bonuses and the promise of
| promotion (within the company or without) are fair
| compensation for aggressive work expectations. The upside
| is sharply capped in comparison with start-ups. But the
| downside has been practically eliminated. Nobody bemoans
| investment bankers, who have largely this compensation
| model.
| RHSeeger wrote:
| My understanding was that this person's normal job did
| not include working nights and weekends. It was the act
| of taking on the "company side project" that necessitated
| that extra work.
|
| If the person's job includes working nights and weekend
| and compensates fairly for it, and they have the option
| of working on an official side project _instead_ of their
| normal work, then I agree with your analysis of the
| situation.
|
| If the person's job does not normally include nights and
| weekends, and they are compensated based on that, and
| adding the official side project to their work adds this
| time with no added benefit, then the company is being
| exploitative.
|
| At the high level...
|
| - if the side project can be done instead of your normal
| work, all good
|
| - if the side project is done in addition to your normal
| work, with no additional compensation, then it's
| exploitative.
| throwaway744678 wrote:
| The (implied) benefits you get is that you can work on
| interesting things, and probably get much more freedom in
| your day job. Looks very fine to me if done on a
| voluntary basis.
| sonofaragorn wrote:
| Just like any other internal hackathon-type event
| virgilp wrote:
| > That sounds super exploitative tbh.
|
| It's not, at all. You know very well what you get into, and
| have every option to get out at any point, with zero
| downside to your career. You get paid, get to learn a lot,
| get to experience building a product with basically zero
| risk for yourself. Why would the company also give you the
| upside? They put a lot of resources into this program.
|
| Also, it appears that Mark enhanced the program in the
| meanwhile/ I was one of the early participants. There's
| more structure now, and there's a "goldbox" that suggests
| he figured a way to give employees some guaranteed upside.
| spaetzleesser wrote:
| "except that I knew that I didn't get to keep any upside. L
|
| Same at my company. They have similar programs but you also
| don't get any stake in the outcome and are still controlled
| by executives who in the end get the credit.
|
| Same for hackathons they tried to organize. The idea quickly
| turned from fun projects basically into overtime to check off
| Jura tickets quickly but with the addition of free pizza.
|
| I think leadership in big companies is almost by definition
| very controlling. They simply can't let go. It's against the
| instincts that got them into their positions.
| vmception wrote:
| Pretty much all company hackathons are just tech debt day
|
| At startups and big companies
| [deleted]
| cambalache wrote:
| It is astounding to me how smart, conscientious adults can
| be manipulated with kindergarten-level tactics.
|
| I dont know if psychopathy (or the whole dark triad?) can
| be quantitatively measured but I would not be surprised in
| the least if after the mean value, any % of incremental in
| psychopathy is way better than its equivalent in IQ to
| survive and thrive in the corporate world.
| simonebrunozzi wrote:
| Super interesting. Would you mind sharing more about it?
| virgilp wrote:
| I wouldn't mind, but I don't know what - ask if you have
| specific questions. There's ample material on
| https://kickbox.org and https://home.getkickbox.com/
| (basically all the contents of the red box, minus the
| cash), plus it appears one even has access to a "kickbox
| community" from what I can tell.
| andrewguenther wrote:
| Agreed on this feeling within AWS. The product I worked on came
| out of an engineering brainstorming meeting, we had to get it
| funded, small team, etc. Felt very much like startups I've
| worked at before and was part of the reason I stayed at AWS so
| long.
| caturopath wrote:
| I was really shocked to see into a couple 'startup in a big
| company' teams at my company and to realize just how little
| they actually went off-leash. I don't know the details -- how
| much of it is not being allowed, how much of it is people
| who've worked here 10 years believing we're doing things the
| right way -- but I was really taken aback by the number of
| things they had to slow them down and the amount of oversight
| that seemed to be in place, given the general concept.
| bitcharmer wrote:
| Glad you shared your experience. The title of the article is
| completely misleading and many people in the comments who claim
| it's impossible are either wrong or don't understand the
| meaning of this phrase.
|
| I have been a (very happy) part of two such startup-within-a-
| big-corpo initiatives during my career in investment banking.
|
| Although on different (in my opinion: better) terms, it does
| happen, although quite rare.
| pembrook wrote:
| Sounds like in your case it worked out, but I would consider
| AWS to be an insane outlier...also from a company still
| founder-led (Bezos is an exec with proven startup success--
| hence why Amazon exists in the first place!).
|
| I think the point of the author is that, inside a big company,
| the fundamental risk/reward incentives that drive startup
| innovation are removed. Autonomy alone doesn't drive people to
| make crazy decisions. Risk/reward incentives do.
|
| Google is never going to say to one of their internal
| employees:
|
| _" We're cutting your salary to $50k/yr, but you get 80%
| ownership of the business you create if you succeed. But
| there's a 95% chance you won't. And if you don't succeed you're
| fired. Good luck!"_
|
| That's the equivalent environment needed if you want to mimic
| the human decisions and behavior that drive innovation inside
| startups.
| varjag wrote:
| That's the environment startups exist in due to economic
| realities of having little money to go on rather than some
| grand strategy.
|
| There is a possibility a better balance of risk/reward (say
| 5% of ownership and 150k salary) could well produce just as
| good or better outcomes.
| pembrook wrote:
| The problem is, if this employee is the perfect person to
| create this business, why are they working at Google and
| not on their own starting this venture already?
|
| Why waste time letting one of your clearly risk averse in-
| house employees (hence why they work at Google in the first
| place), fumble around for 5-10 years trying to build
| something? While your competitors might be doing the same
| thing and will actually succeed? And while the rest of your
| employees start complaining, "why can't we also play
| startup for 5-10 years on the Google gravy train like
| John?"
|
| Google can just sit back and let the _real_ startup
| ecosystem do its thing. Then buy whatever they see that has
| shown success in areas of strategic value to Google. No PR
| or legal risk while the startup does necessary but shady
| things to force itself into being. This is a much better
| model, hence why innovation is most often acquired, not
| incubated.
| varjag wrote:
| I assume 150k at Google is enough salary demotion to
| provide motivational filter, but feel free to adjust the
| figure as you see fit.
| brandall10 wrote:
| I think the point he was making is it's a half measure
| compared to having no safety net. The "adjust as you see
| fit" would be not operating under the Google umbrella at
| all.
|
| The simple act of having to do the rounds to repeatedly
| secure financing and letting that, or the actual
| performance of the business, gate growth or survival and
| being a cofounder or employee in this environment has a
| different emotional and operational strain on the
| business.
|
| I worked in a company like this btw for about five years,
| we were started as a subsidiary of a successful medical
| device company by that ceo as a "what if", to take the
| already developed dispensing hardware by our parent and
| adopt it to the general supply chain management industry.
| We were doing decent business ($30M ARR for a 40 person
| company) and were minimally profitable but eventually
| shuttered by our parent company after it became apparent
| the hockey-stick like growth was not coming.
|
| I've also worked at startup that failed after about 6
| years. The difference between how those two companies
| screeched to a halt was stark. In one case it came out of
| the blue and suddenly 1/3 of the employees were sucked up
| into the parent company and the rest got pink slips. In
| the other case it was a really wild final year with the
| writing clearly on the wall, multiple furloughs and
| downsizing for survival.
| paulryanrogers wrote:
| Big companies buying startups looks like the most likely
| 'successful' outcome today. Yet with effective antitrust
| maybe it shouldn't be.
| bluefirebrand wrote:
| > "yo take some cashdollar and try build and release something
| to the public", but it does mean "hey, take a small team and do
| your own thing with less oversight and process overhead from
| higher-ups"
|
| Or what we used to just call "An R&D department"
| apohn wrote:
| >but it does mean "hey, take a small team and do your own thing
| with less oversight and process overhead from higher-ups".
|
| If you are interviewing for a "startup in a big company" job,
| one of the first questions you should ask is "how much
| oversight and process do we have from the larger company?" Make
| sure you ask a lot of questions about how decisions are made,
| who the product is being built for, how it is being sold, etc.
|
| I've worked in two "startups" in two very different big
| companies. In both situations, the every major decision had to
| go through the larger org, which meant basically the whole
| thing was a waste. The only things that were approved were
| things the big company was already doing.
|
| I'll provide a concrete example. I was involved in a product
| where our people had to work with the larger account execs of
| existing customers. The idea was the account execs could take
| the product to existing customers easily and grow very rapidly.
| What really happened was the account execs refused to put the
| product in front of customers unless it fit into the larger
| enterprise architecture strategy. They didn't need a startup -
| they needed a typical huge enterprise software team. So
| basically the product that got built was a completely half-
| baked POS that only looked good on slides. It was a market
| failure.
| xyzelement wrote:
| This seems kind of obvious and does this article stem from
| someone taking the term startup too literally?
|
| Obviously it's not the same - nobody hears "startup in a big
| company" and assume start-up things like "paid inequity, on your
| ass if this fails, barely health insurance, etc.". Those things
| are part and parcel of a startup life and both create the
| conditions and attract the kind of people who do that.
|
| Startup within a large company always just meant a fairly
| independent team that is exploring a new space, and having been
| "there" a bunch of times I can tell you it's awesome. I am now at
| a real startup that's awesome as well but different.
|
| Just making the point that to write this scathing article drawing
| a distinction that is actually just obvious, seems pointless.
| Deestan wrote:
| A lot of affirmations that it is not possible, with examples of
| where it didn't happen, but doesn't really go into "why" at all.
| The closest they get was near the end by alluding to risk-
| aversion and having to wear Google badges to the cafeteria.
| nojvek wrote:
| When I was at PowerBI in Microsoft, all the execs hailed it as
| Startup within Microsoft. Come work here instead of Uber. I
| worked like a dog, sometimes till 2am in morning. My manager
| would routinely ask us to come on weekends. I was naive, I
| thought we are growing customer base, this is what a startup
| looks like.
|
| The ultimate realization was in a startup you have equity, a
| decent amount in a good startup. At Microsoft it was a base
| salary and set amount of stock. What we did moved very little of
| the top revenue metric. It made little difference if I worked
| like a dog, or slacked. The promos were very much "buddy buddy"
| system.
|
| In the end I realized you can't have startups in big companies
| (esp as an engineer you don't have the huge upside if the startup
| is successful, your upside is capped)
|
| Startups work because you have skin in the game, when you build
| something people want, you get to reap rewards proportional to
| it. That correlation and feedback loop is very important.
|
| At big companies you don't have the the same correlation. Some
| big shot exec they hired reaps far far more on the work you did.
|
| Equity is what builds wealth.
| abhinav22 wrote:
| Off topic, but were you involved in PowerQuery/PowerPivot as
| well?
|
| I have moved away from Excel, but was one of the first users of
| PQ/PP, it was a great step forward and my understanding is
| PowerBI was an extension of that.
|
| Congrats because everybody I know loves PowerBI! Well done,
| even if the rewards may not have been commiserate.
| somberi wrote:
| I would like to offer an extended view from the wealth
| accumulation angle. True, equity builds wealth, but in a
| startup, since there is no floor protection, when the startup
| becomes worthless (can happen for any number of reasons, and
| often do), then one wishes one had taken a salary (and
| reinvested in stocks or as seed investment - ways to gain
| equity exposure).
|
| One could argue that PowerBI, in this example, gained any
| traction at all because it benefited from the large customer
| base and marketing muscle of Microsoft.
|
| To extend further on the point Nojvek makes about how PowerBI
| moved very little of the topline revenues of the company; this
| also means that the bonus accrued to the author was because
| _some other team moved the needle_. This grouping of risk for a
| mean payoff, could be a desirable outcome as well, if one has
| better avenues to invest the capital. It all comes down to how
| one views risk, its mitigation, and wealth accumulation
| horizon.
| munificent wrote:
| _> when the startup becomes worthless (can happen for any
| number of reasons, and often do), then one wishes one had
| taken a salary (and reinvested in stocks or as seed
| investment - ways to gain equity exposure)._
|
| Well, sure. And when the startup becomes worth billions, one
| wishes they had taken the options instead of a higher salary.
|
| This is just an observation that having information lets you
| make better decisions. Unfortunately, most of the best
| information lives at a point in the future after we must make
| the decision.
| thegginthesky wrote:
| The point is that the odds of any startup to be worth
| billions, or for an employee stock option be worth a lot
| more than accumulated high base salary, is very very low.
|
| So if one optimizes by using the expected value over time
| the conclusion is that high base salary tends to trump
| employee equity. One can make this sort of inference at any
| point in time, without hindsight at all.
| wwww4all wrote:
| Most engineers at startups get very little equity and most end
| up worthless due to dilution or failure.
|
| Even if engineers hit the startup lottery, the payout for most
| are not that much. Very few end with multi million dollar
| payouts.
|
| Statistically, financials are better with big company offers
| for most engineers.
|
| Some engineers that get in early with a unicorn can hit the
| jackpot. This is mostly combination of timing and luck and
| network. Some just happened to be in the right place at the
| right time with right group of people. PayPal engineers, early
| Google engineers.
|
| Early Apple engineers were not so lucky.
| ghaff wrote:
| Apple stock was essentially a flat line until about 2004. At
| which point, a random person who put in $10,000 would today
| have $4,000,000 had they held.
| vinger wrote:
| Another point. If you are outside of SV / California your
| startup payouts are generally very small.
| codemac wrote:
| This is why it was a founder that complained about the
| equity/pay problems, rather than any engineer.
|
| If they actually rewarded their Waze employees with enough
| equity, the employees would have pushed much harder to not
| get acquired and been much more upset afterwards. You should
| be highly suspect of any investor or founder that thinks an
| acquisition is a successful outcome.
|
| What's clear is that Waze employees finally got compensated
| fairly, and the founders suddenly didn't have 100x upside.
| There's a reason it's a founder with the frown at TGIF at
| Google, and all the employees are excited and smiling.
|
| They're finally getting paid.
| stuff4ben wrote:
| Yes, while financially you may be better with BigCorp, there
| are some benefits of startups that I experienced first hand.
| First is the experience of being a fast-moving startup and
| the comradeship that you build with your colleagues. I'm
| still friends with people I worked with at my first startup
| 15 years ago. Second is the learning experience of being
| around very smart people. I learned so much in my 4 years at
| my first startup. From how startups work (and that my equity
| was worthless) to how to do modern (at the time) development
| in Java. Finally, as someone mentioned earlier, you get to
| see how your work moves the needle. That feedback cycle is
| addictive! Also, you can see when you screw up the opposite
| happen (I once personally caused a loss of a couple hundred
| dollars in revenue due to a bad SQL query).
| DebtDeflation wrote:
| >The ultimate realization was in a startup you have equity, a
| decent amount in a good startup. At Microsoft it was a base
| salary and set amount of stock.
|
| I joined a startup in 1999. There were 3 founders and I was
| employee #2 after that. I received a ton of options (this was
| before RSUs became popular). We had a great product and a great
| team, but 18 months later ran out of money and unfortunately it
| was right after the dotcom implosion of early 2001 when funding
| had completely dried up.
|
| My takeaway was that base salary is actually the most important
| component of TC. Cash bonus based on some metric that you
| control comes second. Equity comes third. If you work for a
| FAANG, maybe equity can move higher up (though it remains to be
| seen how long this will be true).
|
| Outside of FAANG (and top executives at F500 sized public
| companies) very few people are getting rich off of the "equity"
| component of their TC. The vast majority of startups go bust
| before IPO or acquisition.
|
| Time is the most valuable commodity you have, don't squander it
| for lottery tickets and empty promises.
| spoonjim wrote:
| The flip side is that I valued my equity at $0 when I joined
| but it's now worth $2 million.
| marcinzm wrote:
| >Time is the most valuable commodity you have, don't squander
| it for lottery tickets and empty promises.
|
| That goes the other way around too, the only way to have
| massive amounts of free time without going FIRE is to win the
| lottery. So why not throw the dice once or twice when you're
| young and then settle into a stable corporate job if it
| doesn't pay out?
| Swizec wrote:
| Modern Silicon Valley lets you do both. Why not throw the
| dice and still make around $200k cash?
|
| As a [good] engineer you can have your cake and eat it too.
| Sure it won't make you a billionaire but you can live a
| comfy life, maybe win the lottery, and retire at 50 if the
| lottery fails.
| westurner wrote:
| Living and working elsewhere with the wages of the region
| reduces expenses and opportunities; but the wealth of
| educational resources online [1][2] does make it feasible
| to even bootstrap a company on the side. Do you need to
| borrow money to scale quickly enough to pay expenses with
| sufficient cash flow for the foreseeable future?
|
| Income sources: Passive income, Content, Equity that's
| potentially worth nothing, a backtested diversified
| portfolio (Golden Butterfly or All Weather Portfolio and
| why?) of sustainable investments, Business models [3];
| Software implementations of solutions to businesses,
| organizations, and/or consumers' opportunities
|
| Single-payer / Universal Healthcare is a looming family
| expense for many entrepreneurs; many of whom do get into
| entrepreneurship later in life.
|
| Small businesses make up a significant portion of GDP.
| Small businesses have to have to accept risk.
|
| There's still opportunity in the world.
|
| [1] Startup School > Curriculum
| https://www.startupschool.org/curriculum
|
| [2] https://www.ycombinator.com/library
|
| [3] "Business models based on the compiled list at [HN]"
| https://gist.github.com/ndarville/4295324
|
| From "Why companies lose their best innovators (2019)"
| https://news.ycombinator.com/item?id=23887903 :
|
| > _" Intrapreneurial." What does that even mean? The
| employee, within their specialized department, spends
| resources (time, money, equipment) on something that
| their superior managers have not allocated funding for
| because they want: (a) recognition; (b) job security; (c)
| to save resources such as time and money; (d) to work on
| something else instead of this wasteful process; (e) more
| money._
| ryandrake wrote:
| I'd you are going to start something on the side,
| carefully read your current employment agreement,
| particularly the part about IP assignment. Most Silicon
| Valley companies I've worked with, including FAANGs,
| claim ownership of _everything_ you produce, inside or
| outside of employment, at home or in office, using their
| equipment or yours. You don't want to lick into a unicorn
| idea and have your former employer's lawyers send you
| that letter...
| moneywoes wrote:
| Are these actually enforceable?
| ryandrake wrote:
| It probably doesn't matter in practice. They will have
| more lawyers and more money to burn on legal process than
| you. Who will go bankrupt first fighting a legal battle
| between you and, say, Apple?
| ptudan wrote:
| The only time they'd actually sue is if you made
| something worth money. in that case, there's a good
| chance you can get investors to pay the lawsuit.
| triceratops wrote:
| Investors would check if you were subject to an IP
| assignment clause in your employment contract prior to
| investing. It's part of basic due diligence. They would
| then most likely pass on the investment.
| lotsofpulp wrote:
| It does matter in practice in California.
| dv_dt wrote:
| In practice, I don't think I've ever seen a SV example of
| that kind of litigation from garage development of IP.
| Maybe I've just missed them?
|
| Theft of IP from one company to a new company on the
| other hand there are multiple public examples of.
| Mauricebranagh wrote:
| If its "related" to your employers business yes - unless
| you agree a variation of the contract.
| alwaysdoit wrote:
| I actually lost money when the first company I worked for
| sold.
|
| At settle, I received a wire transfer for $7.22. The bank
| charged me a $15 incoming wire transfer fee.
| CydeWeys wrote:
| > Equity comes third. If you work for a FAANG, maybe equity
| can move higher up (though it remains to be seen how long
| this will be true).
|
| Tech companies are the largest companies in the US economy
| these days. They _are_ the economy. For better or worse they
| 're now too big to fail, and in some severe recession they
| would end up being bailed out like the banks were in 2008
| since the alternative is a complete economic implosion.
|
| I treat my RSUs as cash that has some variance to it (less
| variance than crypto, and roughly the same as the stock
| market overall). I even auto-sell them.
| trimbo wrote:
| > The vast majority of startups go bust before IPO or
| acquisition
|
| In recent times, these giant late rounds with the amount of
| preference given mean that when acquisition happens, it often
| doesn't pay out for regular employees/common stock. The
| common stock employees get is for the moon or bust, or hope
| an acquiring company is generous.
| ptmcc wrote:
| The best many non-founders can hope for is a cushy acqui-
| hire deal.
|
| I've had several friends have the startups they worked for
| acquired, and their equity was worth nothing due to
| valuation and unfavorable liquidation preferences.
|
| They got a nice hiring package from a big company, but not
| significantly better than one can get from applying on your
| own. And the opportunity cost of taking a below-market wage
| for several years probably nets out to a loss in pure
| dollar terms.
| Viliam1234 wrote:
| In my humble opinion, Bitcoin is a better lottery that
| equity, because it does not require you to work till 2am in
| morning.
|
| Instead of equity, ask for higher salary, and invest the
| difference in cryptocurrencies, stock market, and even the
| old-fashioned lottery. Maybe a bit of everything, to balance
| the portfolio. Your chances are not worse, and you can go
| sleep before the midnight.
| wpietri wrote:
| I think an important difference between equities (your
| company's options, the regular stock market) and the other
| things (lottery tickets, digital commodities like Bitcoin,
| and traditional commodities like gold) is that equities are
| overall positive sum. The point of (most) businesses is to
| create value greater than their inputs. Speculating on
| commodities is in theory zero sum, but in practice
| negative. Actual lotteries are clearly negative sum. (US
| state lotteries return only about 60% of the input money as
| prizes.)
|
| So if people aren't sure what to do with surplus time/cash,
| equity will (on average, over the long haul) produce a
| better return. Buying an index fund gives you zero control
| but good odds on a steady return; trading your time for
| equity (a company you start or one you join) gives you more
| control and narrow odds on a higher return.
|
| There's no one right answer here, though. I'm happy with
| the startups I've done, but right now I'm happy to be
| banking a steady salary. A lot of this depends on one's
| situation in life and one's personal values, especially
| risk tolerance.
| iancmceachern wrote:
| Great thought! It doesn't have to be crypto, it could be
| any reasonable investment...
| sharkweek wrote:
| Friend of mine left MSFT back in the early 2010s for a
| startup that is set to IPO in the next year or two if all
| the prevailing winds remain relatively similar.
|
| He'll do pretty well in the IPO because he has some of
| those early enough options as one of the first 25ish
| employees.
|
| BUT!!!He left MSFT at $30-40ish a share, now worth $240 a
| share. Unfortunately, he divested most of it into more
| general index which has been fine, but not 6x.
|
| He would have EASILY covered whatever money he's likely
| to make in the IPO by just staying at Microsoft and
| holding company shares for the last 9 years, and in fact
| probably would have made way more given stock
| rewards/promotions/salary increases etc.
|
| That being said, he has enjoyed working at the startup
| and it has propelled him into a role that he wouldn't
| have been in at MSFT or any other big company so there is
| that to consider as well.
| t0mas88 wrote:
| Investing in the right single stock always outperforms
| the index. But risk adjusted returns may not be better
| than a diversified portfolio, Microsoft could also have
| dropped due to some scandal whereas the downside risk of
| a balanced portfolio is much smaller.
| sharkweek wrote:
| Absolutely, and him and I both _know_ this, but... I
| still like to remind him of it (only because we 're close
| enough to prod each other like this).
| xwolfi wrote:
| Well but how do you get the money to buy any bitcoin in the
| first place ?
|
| You don't invest in crypto currencies, you join early
| enough to sell to the next level of the pyramid you
| convince via social media post :s
|
| But well you're right to say people should balance
| portfolio, I however don't see the value of the lottery,
| it's like paying taxes twice, with no chance of winning
| ever. At least bitcoin slowly loses value, a lottery ticket
| will lost its entire value a few days after purchase in
| 99.9999% of cases
| tcoff91 wrote:
| Bitcoin slowly loses value? Even those who bought the
| very top in 2017 have more than doubled their money if
| they didn't sell. Bitcoin, when it does lose value, loses
| it very quickly but on longer time horizons nobody has
| ever lost money by holding bitcoin for 3+ years. That
| being said, buying at current levels is extraordinarily
| risky and more equivalent to gambling than anything else.
|
| The expected ROI of the lottery is so low though It's
| hard to take someone seriously that mentions playing the
| lottery as an actual smart financial move.
| np- wrote:
| People doubled their money on paper in unrealized gains.
| But since Bitcoin is being sold as a store of value and
| not as a medium of exchange nowadays, if you want to
| realize that value you need to sell. Where's that cash
| coming from? Other buyers, i.e. the next layer of suckers
| as indicated in OP's post. And if enough people decide to
| sell, then those doubled/tripled/etc values aren't going
| to last very long.
|
| Note I'm not saying that it's not possible to win in this
| system - clearly some people will, at the expense of many
| others. Perhaps it's my own ignorance, but I genuinely
| struggle to see how this isn't a zero sum game.
| ZephyrBlu wrote:
| The stock market is zero sum as well... When one person
| wins, another loses.
|
| Are people buying Google, Facebook and Amazon stock
| suckers as well?
| np- wrote:
| Well, no comment on if they're suckers or not, but I
| think this is a misunderstanding of what a share in a
| company is. With a share, you own something with actual
| tangential value, i.e. claim on dividends/voting
| rights/cash flow/etc. Plus the company itself can
| actually go and do valuable things and make money - Apple
| can go and sell a bunch of iPhones and make a ton of
| money, and then reward their investors through dividends,
| buybacks, etc. That's not zero sum, there was something
| of value created and provided to the world. I do
| understand that in reality many people play the stock
| market like it's a casino, but that doesn't change the
| fact that it's still fundamentally different.
| petters wrote:
| The stock market is certainly not zero sum.
|
| Bitcoin provides very little value outside speculation,
| not zero, but very little. That is the difference.
| Animats wrote:
| Stocks have dividends. The value of a stock is the
| present value of all future dividends. Otherwise you're
| hoping to find a greater fool.
| wpietri wrote:
| As somebody who also has a bunch of lottery tickets that
| didn't pay off, I feel your pain. But I think there's a bit
| of hindsight bias to your conclusion. I think it's entirely
| reasonable for people to trade salary for equity. I also
| think it's reasonable to stick with cash. As long as people
| are making well-informed choices, I'm entirely fine with
| gambling on a positive-sum effort.
|
| That said, there are good questions about how much things
| have changed vs 25 years ago, how likely an early employee is
| to see a big payout on exit, and how much the fever for VC-
| backed startups distorts employee choices. But that's another
| rant.)
| jjeaff wrote:
| There is also something to be said for the information
| asymmetry between employer and employee. From the outside,
| it is hard to know what the odds of winning really look
| like. Founders are always painting a rosy picture of how
| close we are to breaking out or getting that next huge
| round of funding. The reality may be totally different.
| Things may actually be rather bleak and they are hoping to
| just limp along, paying low salaries and giving out
| worthless stock in hopes that just maybe they will hit the
| startup lottery.
|
| At least with gambling, the house has to post the odds.
| g9yuayon wrote:
| Startup is not a lottery. Working for startup is risky, but
| the key is to build a system that increases your accumulated
| probability of success -- this is exactly why it's important
| to live in the bay area and work for some startups there, at
| least before the Covid-19. You get to see a large number of
| people who didn't fund any company, but still became
| financially independent or built an explosive career by
| choosing to join the right companies at the right time. You
| get to see how those people make their choices. You get to
| see how those people decide to jump ship. You get to build a
| social circle where you learn lots of first-hand information
| about startups.
|
| Yes, it's still risky to join a startup, but no it's not a
| lottery. The chance of being rewarded handsomely is orders of
| magnitude higher than buying lottery.
| jjeaff wrote:
| I wonder how many people each year make at least $1m from
| startup equity appreciation (that is actually liquid).
|
| Because it's between 1500 and 2000 people that win at least
| $1m in lotteries in the US every year. Granted, lots more
| people play the lottery than start or join a startup, but
| it's an interesting comparison.
| g9yuayon wrote:
| I'm not sure if the calculation is correct. 2000 people
| winning lotteries out of at least millions of people,
| right? Yet in the startup word, it is thousands of people
| out a few hundreds of thousands? Another factor to
| consider is that your equity keeps giving, while lottery
| is a one-off deal.
| chokeartist wrote:
| > Time is the most valuable commodity you have, don't
| squander it for lottery tickets and empty promises.
|
| This should be the first thing someone sees when they load
| the Hacker News homepage.
| kelnos wrote:
| I agree with your overall premise, but I think you and the
| parent are talking about fundamentally different things.
|
| If I'm at a startup and I'm constantly working 14 hour days,
| I want equity. Because I am not going to work 14 hour days
| (or even 10 hour days) for just a normal base salary. I mean,
| sure, I wouldn't mind instead taking 4x a normal base salary
| to work those 14 hour days, but no company (startup or
| established business) is going to give you that deal. That
| equity may end up being worth nothing over the long term, but
| by joining an early startup, I am betting on a solid founding
| team and the product, and the team's ability to execute. And
| because it's a small team, I'm betting that I personally can
| be a big component in whether or not the company succeeds or
| fails. (Often it'll succeed or fail despite what I do, but
| that's not the point.)
|
| We can debate the wisdom (with regard to productivity and
| health outcomes) of working habitual 14 hour days at all in
| the first place, but the bottom line is that if I'm going to
| be pouring so much of my life into something, I at least want
| the _possibility_ (even if the _probability_ is low) of a
| life-changing financial outcome. It 's pretty rare that
| you're going to get that with a base salary, even at a
| larger, well-established, public company that has decently
| high growth.
|
| And I get it, some people just don't want to make the base
| vs. illiquid-equity trade off. An early-stage startup is
| probably not for those people anyway, and there's nothing
| wrong with that. I did it three times: one was a complete
| flop (after I'd paid to exercise options that became
| worthless shares), one was a mediocre flop (got out of there
| in under a year, knew they were incapable of shipping, turned
| out I was right), and one was more successful than I ever
| expected. And yet I'm happy I joined all three, even the
| first one.
|
| > _Outside of FAANG (and top executives at F500 sized public
| companies) very few people are getting rich off of the
| "equity" component of their TC.
|
| Not even _at* FAANG. A new hire (today) at one of those
| companies is not going to get a life-changing equity grant. A
| hire from back when they were relatively new companies (or,
| as with Apple, down in the dumps circa 2000) can get that.
| But, a hire at that point will be expected to work more
| (often much more) than a normal 8-hour day.
|
| I think people forget that a mulit-millionaire Googler who
| has been there since 2003 and is still there now is likely
| mainly rich because of the equity they got in the first 3 or
| 4 years. As companies mature, their equity comp declines
| rapidly. If that same person had joined Google 5 or 7 or even
| 10 years ago as an individual contributor, their equity comp
| would not make them rich; they're now getting most of their
| wealth from base salary.
|
| > _The vast majority of startups go bust before IPO or
| acquisition._
|
| Right. And that's why you shouldn't join a startup because
| you expect to get rich. You should join because you like that
| style of work better than large-corporation life. But if
| they're going to expect you to pour your life into that
| startup, you should get a big chunk of equity that can --
| _if_ things work out -- compensate you for those long hours
| someday.
| harikb wrote:
| The thing most people forget about options & RSU is that one
| is taking away a big chunk of the TC and delay it to a future
| year. Even when you hate your job, you will be hesitant to
| leave the company because of FOMO and sunk cost fallacy
|
| That said, anecdotally, every one of my close circle of
| friends made decent amount money from equity (one of the many
| companies they worked at did very well) - far higher than the
| 10% stat that I hear talked about. May be the last two
| decades was lucky for this group of people.
| ptmcc wrote:
| Let's be careful here and not conflate options and RSUs,
| especially comparing between startups and public companies.
|
| Options in a startup are extremely likely to be worth
| nothing, ever. Not only does the company need some sort of
| liquidity or exit event, but the valuation then also has to
| be higher than the strike price on your options. And
| options usually have punishing exercise-or-lose-them
| requirements if you leave the company before a liquidity
| event.
|
| RSUs, once they vest, are yours without having to exercise
| them. If it's a public company you can turn around and sell
| them on the open market immediately if you desire and get
| cash for them. If the company's stock declines, your RSUs
| are still worth something since the "basis" is $0. If you
| leave the company, your vested RSUs are still yours.
|
| Yes 1-year cliffs for vesting are common and do defer
| compensation, but 1 year is not a long time at all to be at
| a company especially a large public company. After the
| first year the regular vesting cadence sets in and it's
| just a slightly more complicated form of cash, with market
| risk.
|
| Over the past few years that market risk has hugely
| benefitted most tech companies and RSU recipients. In 2020
| my RSU comp was more than 50% of my total comp, basically
| doubling my (already high) base salary. ESPP further
| compounded that.
| FartyMcFarter wrote:
| > The thing most people forget about options & RSU
|
| These two are very different things and they shouldn't be
| conflated. If you have FAANG RSUs vesting every few months
| or every year, you can convert them to cold hard cash on a
| regular basis.
|
| Options in a startup, or a company that isn't traded
| publicly are a different animal.
| walshemj wrote:
| Very much so I (UK) have made some nice tax free returns
| on FTSE 100 companies share saves.
|
| Pity we didn't get an exit back in 2000 when I had 0.5%
| of Poptel (everyone was a dollar millionaire at one
| point).
|
| At the moment I have EMI shares in my current employer
| which vest on change of control
| CydeWeys wrote:
| > The thing most people forget about options & RSU is that
| one is taking away a big chunk of the TC and delay it to a
| future year.
|
| That's not my experience. My TC is the amount I'll
| _actually_ make this year (and have made in previous
| years), which includes my salary, bonus, and the value of
| the RSUs at vesting, which I auto-sell. I 'm not "delaying"
| anything; I'm making great money right _now_. Unvested
| shares only matter to the extent that your future income
| might over /underperform current predictions to some
| extent. I definitely don't consider them "mine" yet in any
| way; they're simply a leading indicator of my estimated
| future TC at this company if I continue to stay employed
| here.
|
| Options, yes, are a different matter, but RSUs in big
| companies are almost as good as cash (and when the market
| is going up, as it has been this past decade, they're
| _better_ than cash).
| AnHonestComment wrote:
| I think the point is HR counts your options 1 year in as
| part of year 1 comp, which it obviously isn't.
| xapata wrote:
| > my close circle of friends
|
| That's extreme selection bias. One of the major ways
| startups recruit is via friends.
| dhosek wrote:
| I have never had a stock option that was worth as much as a
| penny in the course of my career. In one case, a "can't
| lose" employee stock purchase program (where you put aside
| money for purchase and at the end of the year you would get
| stock bought at the lower of the price at the beginning and
| end of the purchase period with a 10% discount on top of
| that) ended up being a loss because the stock dropped 50%
| between the purchase of shares and delivery of the shares.
| The company was eventually bought out by 3M and I got a
| hundred bucks or so out of my initial investment (which
| was, thankfully only a thousand or two, if I recall
| correctly).
| laurent92 wrote:
| A company sold for 3 million is... I mean, in average, I
| see that the worth is about 1m$ per employee. If you sold
| for less, your stock performed poorly compared to others.
| Maybe the product or the engineering was great, but on
| the wrong market or never met its window. Business is
| difficult.
|
| The question is, would you have had excellent returns if
| the company had been worth $1m per employee?
| DamnYuppie wrote:
| Equity can also be bought with your excess capital for you
| work. At the current market salary for developers it should be
| quite obtainable to live well below your income and invest a
| sizeable portion of it in the markets, either stock or
| realestate. Do this for 10 years and about 20 years later you
| will have many millions of dollars.
| UncleOxidant wrote:
| You can certainly work like a dog in an actual startup with the
| hope that your equity will someday be worth something... only
| to have it be worth nothing because the company didn't make it.
| This is what happens in the vast majority of startups as few
| startups end up making the big time.
| onion2k wrote:
| _Equity is what builds wealth._
|
| In exceptional circumstances, yes. In _most_ circumstances
| equity in a startup ends up being worthless, even in the event
| of exit. Starting your own startup, or joining a startup as a
| very early employee can make you rich; anything else and you
| might as well be buying lottery tickets.
|
| That's not to denigrate startups _in any way_. Working in a
| startup is amazing. It 's just not how you get rich as an
| employee unless you are _staggeringly_ lucky.
| [deleted]
| Justsignedup wrote:
| Yeah if your stake isn't significant even in case of a huge
| exit, you're not making even close to what you'd make at a
| faang even in case of a massive ipo
| landryraccoon wrote:
| > how you get rich as an employee
|
| How do you get rich as an employee then? Because I've never
| heard of any salaried line engineer getting rich _except_
| through winning the startup lottery. I sure have friends who
| have done exceptionally well by working for the right startup
| with the right acquisition however.
|
| Even Google engineers don't feel rich when they have to
| stretch to afford the down payment on a house in Mountain
| View.
| ashtonkem wrote:
| Even when they're not worthless, most startup options end up
| being worth less than the salary that one could've gotten at
| a non-startup. Last time I looked into it, and it was a while
| ago, the median startup option package was exercised for a
| profit of $30k, not nothing but far less than what one
| could've gotten at a large company like ... Microsoft.
|
| Arguably the existence of several different types of stock
| options has broken the startup option system, incentivizing
| founders to play financial games with dilution and debt, and
| separating their incentive structure from that of their
| workers. Instead they now get paid with the VCs, which is bad
| for the workers.
|
| Nothing is worth working like a dog though. That's always a
| bad trade.
| fallingknife wrote:
| Are you sure that's the median? I would think that they are
| worth 0 >50% of the time.
| ojbyrne wrote:
| 0 doesn't fit in the category "exercised for a profit."
| ska wrote:
| It might only be counting equity that returned something,
| in which case 30k seems plausible.
| BurningFrog wrote:
| > _the median startup option package was exercised for a
| profit of $30k_
|
| That must be one of those cases where "median" and
| "average" are very different.
| lotsofpulp wrote:
| There are many different kinds of averages. Median
| average, arithmetic mean average, geometric mean average,
| mode average.
|
| People frequently, and intentionally when it comes to
| politics, use the word average to muddy the information
| and evoke whatever emotion they want rather than specify
| the type of average.
| htrp wrote:
| ^ This guy stats...
|
| In non normally distributed populations, the average is
| misleading because of skew at either end of the curve.
| onion2k wrote:
| Which is exactly why you should look at the median.
| BurningFrog wrote:
| The median won't tell you the difference between 20%
| chance of making $1k and $1M.
| scruple wrote:
| > most startup options end up being worth less than the
| salary that one could've gotten at a non-startup
|
| I took a lower salary to work at a startup I "believed" in.
| We were eventually acquired and my options were in the low
| six-figures when exercised. I worked there for 6 years. If
| I average the options profit and add it to my base salary,
| I'd have still been underpaid in the local area for my
| skills and experience level. And that's to say nothing of
| what the event did to my taxes that year.
|
| > Nothing is worth working like a dog though. That's always
| a bad trade.
|
| I never worked like a dog for the place in my story, at
| least. It had a _very_ sane work /life balance.
| ashtonkem wrote:
| > I never worked like a dog for the place in my story, at
| least. It had a very sane work/life balance.
|
| For sure not every single startup overworks it's
| employees, and not every overworked employee works at a
| startup. But there is a very common (but not universal!)
| trend for startup employees to be encouraged to overwork
| themselves so that their options will be worth more in
| the long run.
|
| Your mileage may vary, as yours did.
| Kranar wrote:
| I don't know how common it actually is. You hear about
| the startups that overwork employees far more than you
| hear about startups where people have a good work life
| balance, but there could be many reasons including the
| big one being that happy people who live well balanced
| lives don't tend to talk about it.
| solidasparagus wrote:
| Startups tend to have poor engineering management (due to
| lack of time and experience) and that can easily lead to
| overworking employees.
| ignoramous wrote:
| > _Equity is what builds wealth._
|
| Comes with a lot of caveats, though [0]. Amazon and likely
| Microsoft, has made many people wealthy, too. The surge in
| BigTech stock prices over the years has been nothing short of
| extraordinary, and there's no indication of that slowing down
| as more enterprises move to the cloud and even more consumers
| take to the Internet.
|
| Also, overworking like a start-up employee isn't necessarily
| what a start-up is about: A start-up's value is in its under-
| the-radar disruptive potential (that is, being dismissed by the
| incumbents as a mere "toy"). That said, a start-up must capture
| as much value it can (this is where working hard, being highly
| flexible, and moving fast likely matters) from the market it
| helps create, lest it be subject to irrelevance; but this part
| comes a bit later in a start-up's life, at which point (the
| start-up is no longer under-the-radar and investors are
| circling around it like bees) its stock-options wouldn't likely
| make an engineer "generational wealth" either (different story
| for executives) but would have to work hard anyway.
|
| Read also: https://danluu.com/startup-tradeoffs/
|
| [0] https://mashable.com/tech/2854/how-amazons-97-million-
| eero-a...
| otabdeveloper4 wrote:
| Monetary compensation is only part of the equation.
|
| Having "the guy who made PowerBI" on your resume can be worth
| more than some stock options.
| 6gvONxR4sf7o wrote:
| I don't think the issue is that working at a pseudo startup
| doesn't pay enough while a real startup does. Startups almost
| always pay less than big companies. Even most of the successful
| ones. For a worker, the pseudo startup is a great option. You
| get a high base salary, and a large stock grant, and the high
| growth stock we've seen at a lot of the big companies over a
| reasonably long period. By the end of your vesting, your $125k
| cash + $75k RSU = $200k/yr has (using apple growth, which is
| reasonably FAANG representative) grown to $125k + $245k RSUs =
| $370k/yr assuming no promotions and a linear vest.
|
| Equity does build wealth, and BigCo equity does it much more
| reliably than a real startup.
| ma2rten wrote:
| You can have payouts proportional to success even in big
| companies. Google famously payed $120M to Anthony Levandowski.
| This is because there was an agreement in place to pay projects
| in X based on the value that they create.
| wwww4all wrote:
| This has more to do with negotiation skills. Anthony
| Levandowki also negotiated deal with Uber to pay him more
| money. He knew his value and negotiated hard, and got paid by
| 2 companies.
|
| Every engineer should learn from Anthony about understanding
| the value and negotiating hard with companies. Companies will
| pay up for in demand skills.
| ryandrake wrote:
| True, but this is a vanishingly small edge case. You
| generally have to be a _certain_ person to negotiate
| something like this with a big company. Surely the "Ninth
| Cog Engineer From The Left" at Waymo will not have the
| negotiating power to get this kind of profit-sharing or pay-
| for-value comp package.
| CobrastanJorji wrote:
| I recall reading somewhere that Waymo had retention
| problems due to many of the early engineers were given so
| much money that they simply no longer cared to work. I
| don't know how true that is, but I believe it.
| g9yuayon wrote:
| Many comments below focus on failures with a single startup. I
| think it misses the point. Working for startups is risky, but
| the key is to build a system that increases your accumulated
| probability of success -- this is exactly why it's important to
| live in the bay area and work for some startups there, at least
| before the Covid-19. You get to see a large number of people
| who didn't fund any company, but still became financially
| independent by choosing to join the right companies at the
| right time. You get to see how those people make their choices.
| You get to see how those people decide to jump ship. You get to
| build a social circle where you learn lots of first-hand
| information about startups. There are a few simple steps that
| worked well for many people (again, no guarantee of success,
| but they do increase accumulated probability of finding the
| right company).
|
| - You bet on product you love. Airbnb/Pinterest/Uber before
| 2013, Netflix before 2010, FB before 2009, Google before 2003,
| Databriks before 2017, Tesla before 2017.
|
| - You bet on sectors. SDN, gig economy, search, big data, and
| etc.
|
| - You bet on company's productivity - the customers/engineer
| grows exponentially without Uber-style marketing cost -
| Instagram/WhatsApp; the company releases features faster than
| they hire - Google; people deliver without working like a dog -
| Netflix
|
| - You bet on people you know or you admire
|
| - You bet on the leaders in each sector
| Spooky23 wrote:
| It's a no true Scotsman scenario. Obviously working on a
| "startup" in a big company isn't the same as starting a new
| company.
|
| But... you get to enjoy the bigco benefits and security while
| avoiding a lot of bigco bullshit. I did something like this in
| a public sector org. We got to do something new and exciting,
| many of the team ended up getting promoted, and the big shots
| got to pay themselves on the back too. We did not get rich, but
| we did not risk much.
|
| Generally speaking, if you want to build wealth on a short
| horizon, working for someone is the hardest path.
| Mauricebranagh wrote:
| Lol I remember volunteering for a ground breaking RAD / DSDM
| ? Agile web project in 94.
|
| BT gave me a PS25 pound voucher which I put together with my
| previous projects PS25 voucher and brought a diamond Rio MP3
| player.
| decebalus1 wrote:
| > Startups work because you have skin in the game, when you
| build something people want, you get to reap rewards
| proportional to it.
|
| Eh... not really. Especially not for the rank-and-file
| employees. Most don't get proportional rewards even if the
| company exits successfully. Unless you're a founder or one of
| the early employees, for the high percentile of successful
| startups, rewards are proportional with what you'd have gotten
| at FAANG companies during the same time.
|
| Not to diminish your experience, but I think the idea there was
| that you get to work on something 'risky' but regardless of its
| success you'll still get your paycheck, health insurance
| benefits. And if it goes belly up, you can just do a lateral
| move to Azure or whatever instead of worrying about the very
| existence of the company.
| Uehreka wrote:
| This is also an issue I've seen with companies that began as
| startups, but then transitioned into the "big company" phase:
| Founders and early employees complain that "when we were
| getting started, we could've gotten this feature done in a
| week! What's taking so long?" There tends to be frustration
| that employees won't work nights and weekends, even though
| their work could "turn this company into the next Amazon!"
|
| When you bring up the fact that the difference is that they
| have equity and you don't, and that they would materially
| benefit from growth but you wouldn't, they tend to get grumpy.
| But they never do have a better answer.
| netfortius wrote:
| It depends, i.e. I would not be so definitive on the "no such
| thing" part, for sure. I witnessed (and enjoyed) such a startup
| experience, myself, a few years back, when Arity came into
| existence, from "under and within" Allstate. Spending even one
| single day working in Northbrook (Allstate HQ), and another one @
| the Mart, in Chicago (Arity office), and you could immediately
| tell the two worlds apart.
| softwaredoug wrote:
| Maybe you can't have startups at big companies, but you can look
| at your career and personal brand like an entrepreneur. Who are
| your customers/employers? What market niche are you capturing?
| How good are you at demonstrating your leadership in that niche?
| What do you need to change to put yourself in a better position
| with current/potential employers?
| frellus wrote:
| I was in a "startup inside a <mid-sized> Company" (about 5 years
| old at that point, pre-IPO) a few years back. It operated
| independently, separate building, separate recruiting with a
| large amount of equity compared to the main company.
|
| The benefits were that we could hire major talent who wanted to
| take some risk but not complete risk (i.e. our funding was
| "secured"), politics were completely removed, we operated in
| semi-stealth and we had an already established base of customers
| to do POCs and get feedback from. It was successful and post-IPO
| of the main company it merged fully and became a fully branded
| product under the same umbrella. It was almost like a Cisco-style
| "spin-out-spin-in" but way less equity.
|
| The downside was if the project failed for technical risk
| reasons, we would all be axed, of course, and the partially
| vested equity wouldn't have been worth as much of course.
|
| I think really think the biggest benefit was the removal of
| politics and distractions from the main company. Other large
| companies (Ex. Oracle) you cannot innovate internally unless you
| do it faster than someone can find it and kill it. After a
| company reaches a certain size and maturity, the only growth is
| through M&As not through internal innovation and taking risks
| IMHO.
| ajb wrote:
| I worked for a startup within another company. It got spun out
| and the CEO used it as his own escape hatch, while selling off
| the remaining parts of the original company. The startup had a
| successful exit, although it didn't become a unicorn.
|
| Any time someone makes a categorical statement like these, you
| know it's not wholly true. There are more permutations to the
| real world than anyone can think of up front.
| johannes1234321 wrote:
| I think there is a key point to this:
|
| Being a startup in a large corp works if you are the "famous"
| manager inside the corp and get your personal playing ground
| (skunk works?) project and are building something new.
|
| It works less, when you are being acquired and want to keep
| your independence. When acquiring the acquirer will look close
| at you to align the acquired product with the corporate
| interests.
| rmac wrote:
| this topic has been beaten to death (read these)
|
| https://www.goodreads.com/book/show/2615.The_Innovator_s_Dil...
| https://www.goodreads.com/book/show/11797471-the-idea-factor...
|
| you have to ask yourself: why would the most talented and/or
| visionary and/or defiant individuals want to stay at a large
| company to build new products? Be it in Labs, Spin-outs, Spin-
| ins, corporate accelerators, skunkworks projects, or what have
| you. The craziest of the crazy will go out on their own and try
| to build something. Most will fail. Those that persist eventually
| combine luck+opportunity and turn their hallucinations into
| mainstream-disruptive innovations.
| jackric wrote:
| Flagged for nag-wall. Can't see the whole article
| jonas_kgomo wrote:
| open in incognito
| corty wrote:
| I'm not sure why everyone seems so focused on the cafeteria
| thing. I'm not sure people and their attitudes towards amenities
| are really the problem here.
|
| From my understanding, the differerence is the companywide
| attitude to risk. A startup has a "grow at any cost, or maybe
| perish" attitude. If things go south, bankruptcy will take care
| of the leftover excess risk (barring criminal charges). A bigco
| cannot easily go bankrupt, even less a single department. There
| are tons and tons of capital to eat through if the accumulated
| risk is realized in cost. So a bigco has to do something about
| that risk somehow, because most of the company wants to keep what
| capital it has, only a small part of it really wants to risk
| things. So the only means to have a situation where you don't
| risk bigco for a single department is not making it a department.
| Make it a Ltd. in a holding or something.
| captainmuon wrote:
| If people really think of founding enterprises as a gamble with
| potential infinite reward, but limited downside (as bankrupcy
| will take care of it), I would say our economy has a problem...
| franciscop wrote:
| Why? Limited downside does not mean small, it just means
| limited. It can perfectly destroy a person's finances if they
| invest all their lifesavings in it. And the reward for a
| company is _normally_ a % of how much value they provide to
| their customers (yes, I know, not always, but generally that
| 's true). Unbounded does not mean infinite.
| chrisco255 wrote:
| It's this that makes entrepreneurship more abundant in the
| first place. If you have an economy with no risk taking you
| have no growth and no dynamism. Sure, 80-90% of businesses
| will fail, it's essential that people can fail without too
| much personal risk after all, but the 1 in 100 businesses
| that go onto grow to employ hundreds or thousands thanks to
| an effective business model are more than enough to make up
| for the failures. When someone fails in a startup it's not
| like they drop out of the economy altogether. Its not like
| they learned nothing. They go on to become effective
| employees at other companies, producing value there.
| mathattack wrote:
| It's a combination of risk and forced standardization.
|
| Big companies try to standardize to allow C players to perform
| as Bs. This crushes As.
| rightbyte wrote:
| I have yet to see this mythical standardization on big
| companies.
| DoofusOfDeath wrote:
| > So the only means to have a situation where you don't risk
| bigco for a single department is not making it a department.
| Make it a Ltd. in a holding or something.
|
| I was thinking that as well. Can anyone explain why this isn't
| common practice?
| yowlingcat wrote:
| > I was thinking that as well. Can anyone explain why this
| isn't common practice?
|
| If you squint a little bit, this is exactly what the whole
| premise of corporate VC is. Take the funds that you'd
| allocate to long shots and operate as a VC would, provide
| strategic distribution where you can add value as a bigco,
| etc. Problem here is that compared to pure VCs you risk
| portfolio conflict in a different way that may not be as
| attractive to founders, but at least it's viable.
| johannes1234321 wrote:
| The thing with the cafeteria is that it reflects company
| culture. If you in the office sit at a desk in the Google
| search engine area or youtube or Waymo is hardly noticable.
| People have settled in an if the neighboring teams go home at
| "normal" times, the "startup" team will go home at those times.
| Also you have a hard time to keep the small team culture when
| directly embedded. And then corporates encourage changing jobs
| internal over leaving and hiring somebody else, which means
| that there are ties on all levels. Pulling out and having your
| own startup culture is hard. The cafeteria symbolizes that, as
| it is a social place and culture to large parts is a social
| thing.
| watwut wrote:
| So like, the whole startup thing boils down to being at work
| late and working overtime, despite all the studies on crunch
| showing it is inefficient and less productive?
| johannes1234321 wrote:
| I think that summary is too narrow (i.e. the whole team,
| maybe even as "us vs. them" thing etc. are part of culture)
| but yes, for many of those startup guys "do 'hard' work,
| push things" seems to be an important piece and that's a
| reason for me to keep my distance.
| tony0x02 wrote:
| I forgot where I read it but I think statistics show that
| innovation at BigCo has only succeeded when the team is
| located at a separate location.
| gwbas1c wrote:
| IMO, the bigger issue is that many people don't know what a
| startup is. Yet, as a culture we glorify a "startup." Everyone
| wants to work for one, even though they don't really know the
| clear line between a startup and an exit.
|
| I remember seeing billboards in Silicon Valley. They were from
| AOL, trying to recruit. They said, "You're the startup, we're the
| VC." At the time, AOL had no defining characteristic that made it
| appear like a startup, even for people who don't fully understand
| what a startup is.
|
| Another time, I was in a post-acquisition "startup." I recognized
| the situation and focused on the area with clear product-market
| fit. The "CEO" tried to continue to find new product-market fits
| and blew through our R&D budget. (The R&D budget was supposed to
| improve the existing product, not find new ones.) When the
| situation came to a head, only people who worked on the clear
| product-market fit area remained. (Everyone who behaved like we
| were a "startup" was let go.)
| Apocryphon wrote:
| It's also complicated by how in the 2010s we saw the rise of
| unicorns that could amass huge amounts of funding, and remain
| late-stage startups for long indefinite amounts of time. Was
| AirBnB really a startup, even a late-stage startup, in 2019?
| For the average employee, was the experience any different from
| working at FAANG?
| theqult wrote:
| Thanks Captain Obvious
| hacknat wrote:
| Google is very aware of this, which is why Google Ventures is a
| thing. It's much better, ironically, to put yourself in a
| position to only provide benefits to another company and prevent
| yourself from extracting any benefit for yourself.
| dkobia wrote:
| I worked in a startup lab within a huge multinational company. In
| many ways it felt like a startup because we had very limited
| runway to incubate and commercialize our ideas, so that
| definitely put the fire under our feet.
|
| Despite an effort to firewall us from the larger organization the
| culture and processes of the mothership always seemed to leak in
| and contaminate the organic startup flows. Additionally a large
| organization is extremely risk averse unlike a real startup and
| this manifests itself in a multitude of ways.
| nabla9 wrote:
| In economics there is a research subject called "Theory of the
| firm". In 2016 Holmstrom and Milgrom got Economics Nobel for
| their research of theory of contracting and incentives especially
| as applied to the theory of the firm. It's theory that is
| actually interesting to read. They have papers like: The firm as
| an incentive system, The Boundaries of the Firm, Incentive
| Contracts, Asset Ownership, and Job Design, An Economic Theory of
| Promises, The Firm as a Subeconomy,
| anthony_r wrote:
| What exactly is a startup here?
|
| (serious question)
| yters wrote:
| Sometimes it is analogous, such as creating a new internal
| product and trying to get internal customers. The best part is if
| the effort fails I still keep my job and salary. On the other
| hand if it succeeds I can get a promotion and raise. Much less
| risk than real world startup, and better expected payoff.
| ckgjm wrote:
| The mindset would be very different. There's always a sense of
| urgency to get things done with the realisation that there's no
| safety net. You ask yourself different questions going to work
| and that drives different level of passion.
| drewzero1 wrote:
| This reminds me of the story of Saturn within General Motors. As
| I understand it, it was created to compete with popular imports
| like Honda and was given a long leash from GM to be "a different
| kind of car company" (in the words of their marketing). The first
| generation of cars were a lot different from any of GM's previous
| compact offerings. GM started reining in Saturn and moving toward
| badge engineering. Eventually it became the same kind of car
| company, because at the very top it always was.
| cs02rm0 wrote:
| It's just big company talk to pretend they're cool and
| innovative. Obviously ridiculous garbage that probably got
| someone a good annual review score.
|
| A small company I was working with had heard that IBM, who had a
| customer in common, were operating some sort of "garage" thing
| that the customer really liked. Rumours were flying around,
| someone had heard it was a video conferencing app, they were
| desperate to know more about this secret sauce.
|
| Eventually I got to speak to an opposite number from them on a
| piece of work that joined with our own. They were calling any
| team of people a garage (because of the Amazon, Apple, etc
| stories). That's all it was, just a different word for team, like
| toddlers playing let's pretend.
| theta_d wrote:
| When I worked at IBM Cloud they copied the Spotify model of
| squads and tribes and guilds. I remember having to watch a
| video about it on my first day.
| namdnay wrote:
| Woah I think we've stumbled on something here.. Spotify seem
| to be the source/example of all these new management fads. I
| remember having to sit through that hand-drawn sketch video
| (is there a name for these things?) describing how Spotify
| does SAFe (if you don't know what this is, pretend you never
| read it and continue your life as usual, please) and how
| awesome it is and why we all need to do it.
| Qwertious wrote:
| What sort of thing is SAFe? Is it some sort of unsuccessful
| corporate pantomime of a successful practice?
| kthejoker2 wrote:
| The A stands for Agile if that gives you a clue ...
| shp0ngle wrote:
| it's "scaled agile framework".
|
| Move on.
| azemetre wrote:
| Opinions are my own, but it's basically a worst version
| of agile (safe = scaled agile framework) that removes all
| autonomy from teams and gives upper management/leadership
| more power in making decisions at the team level.
|
| If you never heard of Allen Holub look him up on
| YouTube/Twitter. He's one of the same voices when it
| comes to agile frameworks.
| 2sk21 wrote:
| Indeed, it was the same in the Watson group where I worked
| about 6 years ago. It was pure cargo cult activity that
| ultimately resulted in much lower productivity.
| jonfw wrote:
| I actually liked my experience with the guild structure, as
| somebody new to the industry. I had my specialty, was the
| leader in my team in my particular specialty, but that's
| mostly because I was the only one in my team with the
| specialty. The guild structure got me the opportunity to
| network with people who were more experienced in that area
| lonesword wrote:
| When I worked at a startup we copied the Spotify model as
| well. We called it "functional teams" and so on but the idea
| was the same - we watched the spotify videos as well. To be
| honest it helped. I think this is a point in IBM's favor
| because they saw something better, and adopted it even though
| "it was not invented here".
| laputan_machine wrote:
| Where I work we have teams and guilds. Guilds operate every
| other Friday, they work on cross-team concepts (e.g.
| automation, ai/ml, security, open source). Some guilds work
| better than others. The downside is around ownership (e.g. A
| guild creates a useful tool that ends up being used
| throughout the org, who fixes the critical bugs that arise?)
|
| We originally cargo-culted the Spotify model, but changed it
| to fit how we want to work, it seems OK.
| jonfw wrote:
| I worked within IBM garage, it's not 'any team of people', it's
| a specific organization that mostly does services work. Their
| 'secret sauce' is that they're trying to consult on technology
| and company culture at the same time, in line with Conway's
| lay.
|
| I.E. If you want to be more agile you'll want to adopt CI/CD,
| if you want micro services you'll want smaller more autonomous
| dev teams.
| mrcwinn wrote:
| Former CEO at Creative Market here (though at the time, I was VP
| Eng). Call me an optimist, but I believe this can work, though I
| accept the premise of the headline generally.
|
| We were acquired by Autodesk in 2013. We may make for an odd case
| study: we had a very unique opportunity to spin out and return to
| be an independent startup in 2017, thanks to Autodesk's support -
| not to mention the leadership of our co-founding CEO at the time.
| (Parenthetically, I could write a book about acquisitions and
| spinouts, but that's for another day.)
|
| During my time at Autodesk, we were very much a "startup within a
| big company." They wanted us to continue doing what we do,
| because it was clearly working. We continued to grow. We
| continued to have more resources and support thanks to Autodesk.
| We found ways to preserve our culture, but also adopt some of
| Autodesk's. We built relationships and got to know people in
| other business units. We never felt like there was some ulterior
| motive or felt our hand forced.
|
| There are disadvantages, sure, but I think it would lack nuance
| to pin all that blame on the acquiring company. Relationships are
| a two-way street. If you're going to sell, I think it's incumbent
| on the founders to normalize being proud of being a part of that
| bigger company. I think it's okay to say, we're going to change
| and we're going to reach out and connect with the larger
| organization. It may not be helpful to try to be the "pirates"
| within the organization, like the Mac team during Jobs' first
| stint. It's isolating and corrosive to be the smaller piece of
| the puzzle, yet view yourself as the greater cause.
|
| People can criticize big companies. In many cases, that criticism
| is warranted, fair, and important if we're going to increase
| competition and innovation. For my own part, looking back on my
| time there, I always felt valued and respected as an Autodesk
| employee. I was always proud to hold my employee badge.
| Fede_V wrote:
| If you are a great engineer that can get a job at FAAG, joining a
| start up is almost never worth it from a strictly financial point
| of view.
|
| 17 years ago, Paul Graham was able to post this essay:
| http://www.paulgraham.com/wealth.html - nowadays, the
| compensation in tech has shifted upwards so much
| (https://www.levels.fyi/) - that start ups are just not
| competitive when you adjust for a risk premium. Finance captures
| this concept using metrics such as the Sharpe ratio
| (https://en.wikipedia.org/wiki/Sharpe_ratio) - which measures how
| much extra returns you are getting in exchange for the additional
| risk you take on. For start ups - your expected returns are
| lower, and the risk is very significantly higher.
|
| Are there other great reasons to join start ups? Absolutely:
| several start ups are working on exceptionally cool science
| problems, some are solving tasks that will make a meaningful
| improvement in the lives of people
| (https://detroitwaterproject.org/, etc), some people just prefer
| working in a small company, you get a chance to work with your
| friends - but - if you are going to work for a generic SAAS
| company, don't accept a pay cut.
|
| The VC that's financing your start up evaluates their investments
| with a spreadsheet and zero affection. Ask them how they
| sacrifice their own income to work on more interesting work, and
| they'll (politely) laugh in your face.
| lcfcjs wrote:
| What's a FAAG?
| caturopath wrote:
| Big tech salaries are at this point high enough that even with
| some acquisitions, I see folks getting payoffs that didn't
| catch them up to where they'd be financially if they went the
| big tech route.
| k__ wrote:
| The main problem I see is ownership.
|
| If you don't really own your company, you won't ever behave as if
| you owned it.
|
| It's basically a less rigid version of a big corp job, not more,
| not less. Which isn't bad, big corps have to rejuvenate
| themselves in some way, but selling it people as a "win-win"
| because they get to work in a big corp AND do a startup is a
| simply a lie.
| JackFr wrote:
| There is no such thing as "a startup within a big company" on
| it's face is a tautology, so we can assume the author was not
| speaking literally.
|
| So if he's not speaking literally, what does 'startup' mean? Is
| it characterized by the ownership structure? The maturity of the
| market? The culture of the team? The flexibility and nimbleness
| of the management team to pivot and move targets?
|
| Since none of this is clear I think its possible that there is
| some disagreement even with the best intentions on both sides.
| muglug wrote:
| I know this is not what the article is talking about, but there
| have been some success stories of companies incubating startups.
| An obvious example is Tinder, incubated at IAC.
| redis_mlc wrote:
| I'm not sure Tindr is a good example, since it has a more
| complicated founding history and IAC was initially not the sole
| owner:
|
| > In March 2014, media and internet conglomerate IAC increased
| its majority stake in Tinder
|
| Also, IAC (Match Group) owns most of the top US dating sites,
| so they were already in the dating market.
|
| https://en.wikipedia.org/wiki/Tinder_(app)
| ignoramous wrote:
| With all due respect to the author, I think the article kind of
| romanticizes start-up founders and their perils.
|
| Amazon famously dubs itself with being the biggest startup in the
| world. There's a company that espouses Clay Christensen's
| philosophy of building enduring businesses. Over the years, a lot
| has been said and written about how Amazon manages to do it, I
| mean, this is better demonstrated by Jeff, its founder, whose
| wealth went from $10B in 1997 to $1B in 2002/3, but still bet big
| on AWS (2003), Prime (2005), and Kindle (2007) in an
| unprecedented run of series of innovations that'd could have
| killed the company.
|
| --
|
| "working backwards"
|
| I want to draw some parallels to the YC application process with
| how Amazon operates, from what I've read and what I've
| experienced as an ex-employee:
|
| A lot of product development is funded at Amazon after review of
| what's called a PR/FAQ doc [0] (this is the "working backwards
| from the customer" part). The PR needs to clearly articulate in a
| headline or two what the product is about; whilst the first
| paragraph must present a complete summary of what the product
| would be in its v1 form at launch. The next few paragraphs detail
| the current problem and the proposed solution interlaced by
| imaginary quotes from would-be customers; and the concluding
| paragraph has a clear call-to-action on exactly how customers can
| make use of the proposed solution.
|
| If you've ever filled out a YC form, you'd find yourself going
| through a similar exercise.
|
| And on what merits is a product funded [1]?
|
| - If it works, would it be really big?
|
| - Is the customer / target market well-served today?
|
| - What in Amazon's approach is the key differentiator? And is
| that compelling enough?
|
| - Should / can Amazon build it in-house, or do they need to buy
| some / all of the expertise?
|
| Again, pretty similar to the process YC has [2].
|
| --
|
| "two-pizza teams" [3]
|
| The team that's put together to run is encouraged to own the
| product end-to-end ("single-threaded owners" aka STOs), in the
| truest sense of the word: That is they're free to duplicate
| effort, not be beholden to another team's priorities, build
| whatever they need to, buy whatever they need to, and so on...
| Other STOs running existing but overlapping business or
| businesses at the risk of being cannibalized by this newer one do
| not absolutely get any say. This approach to incubating newer
| products within Amazon is what led them to build AWS in the first
| place, because they didn't want various internal engineering
| teams to be truly duplicating their efforts in building
| "undifferentiated parts of their businesses" which, on the
| Internet, is building all that Infrastructure required to start
| small and yet be able to scale. AWS, interestingly, itself was
| removed / isolated from Amazon's Infrastructure team at the time
| and was completely a separate under-taking (there's probably a
| Harvard case-study in there somewhere demonstrating the
| effectiveness of STOs).
|
| --
|
| "disrupt yourself"
|
| The other thing Amazon does is it is truly customer-focused as
| opposed to product-focused or competitor-focused. If I were to
| take the example of Android: How many customers do Google have a
| direct line to? If you are a FireOS user, you could chat with
| customer service about its annoyances, send an email to kindle-
| feedback@ or even escalate it to jeff@ and all those complaints
| are root-caused and fixed to whatever extent deemed necessary,
| with FireOS MayDay being an extreme example of this customer-
| obsession. Amazon believes in listening to its customers and
| disrupting its own cash-cows if it means it delivers value to the
| customer. No one flinches a bit in taking these decisions.
|
| --
|
| "you can't fight gravity" [4]
|
| As opposed to reacting technology changes constantly and riding
| the wave, Bezos instead believed in focusing on universal
| constants (like gravity) that never change: For example, for
| Amazon's e-commerce business, those constants are customers would
| always want lower prices, larger selection, and faster
| deliveries". That was never going to change. But this simple
| framework then lets his management team decide on what bets to
| take with respect to technologies that help move the needle in
| the right direction, because if they don't, someone else will eat
| their lunch by doing those three things.
|
| --
|
| "the best way to predict the future is to invent it"
|
| To truly create an atmosphere of invention within Amazon, there
| are a lot of processes in-place, to make sure bureaucracy ("a
| single no" vs "a lot of yes") doesn't kill a promising idea. Of
| course, there's nuisance here, in that some decisions need to be
| carefully vetted ("one-way doors") vs ones that needn't be ("two-
| way doors") and the key is knowing which is which (and escalate
| when in doubt).
|
| --
|
| "simplify"
|
| If you follow AWS, you'd know how primitive and lacking the v1s
| really are: For instance, Lambda launched with just NodeJS
| support with no observability story of note, no "local
| development" environment, no support for other runtimes, and just
| 1 minute of execution time. This stems from the PR/FAQ process
| (distill down the v1 to the absolute minimum but deliver
| comprehensive value to the under-served) and two-pizza teams (too
| many resources to work on a problem is never approved of, so it
| is paramount to do things that don't scale for the v1).
|
| --
|
| This isn't to say Amazon hasn't been disrupted at all: It has
| been, by instacart, daipers.com, doordash among some examples
| that come to mind.
|
| I am no expert (either in the ways of the likes of Amazon or the
| nimble start-ups), but I believe that to reduce innovation /
| invention being a playground for start-ups just because they've
| no access to a "fancy cafeteria" is telling half the story [5]
| and probably misinterpreting symptoms for cause.
|
| [0] https://www.youtube.com/watch?v=aFdpBqmDpzM
|
| [1] https://www.hbs.edu/forum-for-growth-and-
| innovation/podcasts...
|
| [2] YC also fund all sorts of "uninteresting" ideas too (from
| outside, what looks like a spread and pray, but is likely a
| heuristic that they are working off of from).
|
| [3] https://www.youtube.com/watch?v=XavPl5t9dS8
|
| [4] https://www.youtube.com/watch?v=O4MtQGRIIuA
|
| [5] I mean, at the end of the day, Waymo wasn't even a startup by
| the time Google acquired it and also it isn't like Google doesn't
| have a track record of successful acquisitions...
| [deleted]
| nojito wrote:
| This isn't true. The digital service team for the US Government
| is indistinguishable from a high quality startup/consultancy that
| goes around and solves pretty cool problems in modern ways.
| rgblambda wrote:
| Can you give some examples of those projects? I would have
| thought a government in house software team would be doing
| things like replacing paper forms with web forms and replacing
| old COBOL applications with Java, along with being an approval
| board for government contracts.
| jonas_kgomo wrote:
| A startup studio is essentially this. Also, every big company has
| a X for Startups, plus open-source projects. Most big companies
| derisk by acquiring competitors, you can think of that as a
| startup inside a big company.
|
| * where X is an element of FAAMG
| patatino wrote:
| If you sell your company for millions/billions to a FAANG
| company, stop lying to yourself, you did it for the money, which
| is fine. Pack up your things and do something else with that
| money
| aeoleonn wrote:
| The 4000 person video game company I work at, has in some of its
| job descriptions something about "understands what it's like to
| move at a fast paced startup"
|
| yet, the company:
|
| - was founded in early 2000's
|
| - has about 4,000 employees
|
| - from my experience, does not move fast. too much bureaucracy &
| too many management-compliance related tasks impede developer
| speed, focus, and context-stability.
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