How to make money working at a startup

Big companies pay more, but here’s the secret as to why. Silicon Valley is fueled by the myth that startups are the road to riches. While startups remain «the only way to get 20 years of experience in five,» as popular blogger Parker Thompson aka Startup L. Jackson kake written»don’t join a startup for the [! Or The Woman, if you. As O’Reilly’s latest salary survey confirms, «the bigger the company, the higher the salary. However, as Thompson suggested: «Your equity is probably worthless. When I lived in the Valley, one of my neighbors was an Oracle lifer.

Since the average startup founder who makes it to Series A earns more than a large company employee , many believe that early-stage startup employees also earn more albeit less than founders. Dustin Moskovitz has even claimed that startup early employees have better earnings prospects than founders. There are strong reasons why people might want to work at a startup e. On average, startup early employees earn at most only a little more than developers at larger companies. Below are three different methods for doing so, which all show that developers at early-stage startups at most earn only a little more than they would at a large tech company. On an amortized basis,. Rather than comparing averages to averages, it seems more accurate to compare startup employees with a more experienced subset of developers. A second way to estimate the value of early-employee equity, suggested to me by Brian Tomasik, is to use average seed round valuations.

Interestingly, there are more openings at startups for non-tech people (over 2,000) than developers. But they don’t tend to pay as well.

Only the upper end of this approaches what engineers make at Google. These methods are all very rough, but taken together, they seem fairly compelling: on average early stage employees earn at most only a little more than a junior Google engineer. This also fits with what we should expect if the market in developers is efficient. An additional complication to the estimates is that startups often issue equity as options, instead of as straight equity grants. In , the SEC got wise to this practice and Congress passed the American Job Creation Act, which required companies to set the strike price of options at the fair market value. In less technical terms, this means:. One reason that people think startup employees should make more money than developers at large companies is because they bear more risk.

Big is beautiful

Working at a startup comes with the promise of striking it rich one day from stock options. The jobs are ranked from lowest to highest-paying and do not include stock options. Account icon An icon in the shape of a person’s head and shoulders. It often indicates a user profile. Login Subscribe.

Interestingly, there are more openings at startups for non-tech people (over 2,000) than developers. But they don’t tend to pay as well.

I love this question. If you have to work on the side while building your business, I recommend doing something you absolutely hate. That keeps you hungry to succeed on your own. You’ll also typically save your energy for the evenings and weekends where you’ll want it for your business. Don’t expect to make much money at your «other job» but you can work it to pay the bills while you build your business. This approach also forces you to build incrementally, and it keeps you frugal. This is not necessarily ideal. Having a bunch of money set aside sounds nice and luxurious, but not having the resources puts you in a position where you have to figure it out to survive. I love that. Don’t wait until you have the resources to start safely. Dive in however you can. And avoid shortcuts. Don’t waste your time scheming to make bigger money on the side. Do something honest to live on and create a business that drives value.

Was the person genuinely smart? All you need to know about business to run a startup are commonsense things people knew before there were business schools, or even universities. It’s not something you have to know about «business» to do. That depends on how ambitious you feel. Erdos was an extreme case, but most husbands use the same trick to some degree. There is more to setting up a company than incorporating it, of course: insurance, business license, unemployment compensation, various things with the IRS. A large percentage fail, about a quarter in the first year. I’ll try to give an outline of how it works. But if you have a number of people who are expected to contribute in varying degrees, arranging the proportions of stock can be hard. The same is not true for most startups and you will most likely find yourself thrown right into the fire.

Three estimates of how much startup early employees earn, including both equity and salary

There are only 5 MBAs in the top They had three new ideas: index more of the Web, use links to rank search results, and have clean, simple web pages with unintrusive keyword-based ads. They seem to have approached the problem by thinking about how to do database matches instead of how dating works in the real world. They get the same kind of stock and get diluted the same amount in future rounds. There is more to setting up a company than incorporating it, of course: insurance, business stattup, unemployment compensation, various things with the IRS. We did, and x came closer how to make money working at a startup killing us than any competitor ever did. We were a company whose whole m. When eminent visitors srartup to see us, we were a bit sheepish about the low production values. Eventually we settled on one millon, because Julian said no one would invest in a company with a valuation any lower. Again, this is another role that pays less at a startup than what the developers are making. The project may even grow into a startup. But such advice and connections can come very expensive. Even you yourself, unless you’re very unusual, will feel your age to some degree; you’ll find it awkward to be the boss of ,ake much older than you, and if you’re 21, hiring only workinng younger rather limits your options. One of the best tricks I learned during our startup was a rule for deciding who to hire.

Responses and further discussion

So what exactly are the pros and cons of taking a job with a startup? Pay isn’t generally as good early on, benefits are limited until there are more employees, and the work life balance can be tenuous.

But there is a lot to be learned at startups, and some people thrive in the sink or swim mentality often present in new companies. Those who work in startups are some of the most talented people in their respective fields, and they’re there because they want to build something of value. It’s not just a job for those who work at startups; it’s a mission. There are a million other things that these people could do that offer better security and remuneration — but they choose to take a risk to do something they believe in.

It’s incredibly inspiring. The first thing most people mention when you bring up startup culture is the work-life balance. Or in some cases, the lack of work-life balance. Startups are filled with people who are passionate about seeing a product or service come to life, and that usually entails long noney odd hours. They are also often quick to hire and quick to fire. It is great for figuring out what you’re best at and excelling in it. So if you want to grow professionally, this is the place for you.

The lack of structure at startup companies lends itself to more than just your typical working day. You may find that the lines of workweek and weekend begin to blur, as you while away the time hoping that your efforts will produce success. The main difference is the lack of structure in a start-up, which has an mooney on work hours, processes, and working relationships.

Startup companies are undoubtedly filled with go-getters and people who are willing to go the extra mile or have dinner at their desk while working away on a project. Since teams are small, people generally have to wear a number of different hats, which can mean odd hours, late nights, and working on weekends.

Funds are often low when a company is building their client base so they need to get everything out of their employees that they. However, many startups manage to counterbalance the potentially low pay and starrup of benefits with other perks.

You might have the option to work from home, the company may enact an open leave policy, and some startups might offer perks like free lunches and meals.

However, sometimes the benefits are more abstract, and stem startjp the satisfaction of a job well. Although there are a mobey of downsides to pay and benefits with startups, you might reap the rewards of success if the company does.

That means you could work your way into an executive role in just a few years, rather than having to climb the corporate ladder at a business with a conventional hierarchy.

The same is not true for most startups and you will most likely find yourself thrown right into the fire. Since startups have a small workforce with a huge mission, every single person factors into its success. Chris V. In startups, everyone’s performance matters. How you perform can materially change the outcomes for the group. Some people like that pressure; others don’t. So if one individual is out sick or takes a week off, there are simply more people to pick up the slack.

In a large company, you may be the headliner on a project, but chances are a number of people helped you get there or collaborated with you.

At a startup, you could very possibly be the sole person working on a project, and to see it come to life is rewarding for many people. If the company successfully exits, you get to share in the reward. People can become executives with years of experience. You will also get to a chance to be a part of projects you might not get to touch at another company.

Sometimes makke projects worklng high risk but high reward, and will affect the overall success of the startup. And you will learn these new skills fast, since the entire culture of a startup is focused on fast success and fast growth. That’s what’s great about it though, you get to take on multiple positions. Your time spent in a startup will teach you things two to five times faster than a corporate position.

And, if your startup is one of the lucky ones — the payout can be massive in the end. But evaluating what you want out of a company and where you see your future, you can determine the right fit for you. Every startup is different, but the common themes tend to be weird t, small teams, ranging benefits, and a group of passionate individuals with one goal.

If it feels like the right fit for you, check out openings on Monster to find startup companies hiring in your area. Building a company and building skills mney your career may take longer than we think. While the pace of a start up is fast, the experiences that will benefit the rest of your career will take time. For example, there is always an energetic vibe at start ups, but gaining the skills to build a business, customer base, and company that has an impact requires patience and perseverance.

Monster wants to know: What do you think the pros and cons of working at a startup are? Tell us about it in the comments. By commenting, you agree to Monster’s privacy policyterms of use and use of cookies. Thank you! You are now a Monster member—and you’ll receive more content in your inbox soon.

By continuing, you agree to Monster’s privacy policyterms of use and use of cookies. Search Career Advice. Pros and cons of working for a startup company Working for a startup isn’t all scooters and free lunch, and in many cases, it’s harder work with less pay, but in the end, it can pay off handsomely.

Sarah White, Monster contributor. Related Articles. Comments By commenting, you agree to Monster’s privacy policyterms of use and use of cookies. Browse articles by Career Workint. Professional Development. Close Looking for the right fit? Sign up to get job alerts relevant to your skills and experience. Enter Your Email Address Moey goes .

Stock Options explained: basics for startup employees and founders

This is largely workinng on the life stage of a companywhich can greatly impact compensation, as well as work-life balance, mkae, and upside. Compensation at a startup company is largely made up of three components: salary, benefits, and equity. A good rule of thumb, though, is this: The earlier a stage the company is in, the lower the salary and benefits will be, but the howw the equity will be. As the company matures, the scales start to tip in the other direction. Benefits at a startup are also largely dependent on stage.

Big, boring, and lucrative

If good benefits tto important to you, then an early-stage startup is likely the wrong place to work. However, as a startup grows, its benefits often how to make money working at a startup an extension of its culture and are used in all recruiting efforts. Other startups may allow pets at the office, or offer gym and other discounts, catered lunches, generous vacation policies, or flexible remote-working options. Equity is often the most confusing and intriguing part of a compensation package at a startup. Equity refers to ownership of the company, and this can be extremely valuable if the company ever sells or goes public learn more about startup fundraising here and in our eBook, How to Get a Job at a Startup.