You are paying a startup to work there

Startups provide a universe of experience, but good compensation may not be one of them.

I have worked at 20, 200 and 2000 people startups over the last couple of years. If you are more than the 100th employee in a startup, make sure you work there for the learning, adrenaline rush, autonomy, etc but not to win the IPO lottery. Otherwise, 9 out 10 of you reading this will be disappointed.

Startups are pitched as “high risk for high reward”, but it is more like ‘insane risk for moderate reward’

As a normal senior engineer, your compensation in a startup is going to be equity heavy (paper money). At the time when you join, the total compensation is likely 1.5x of real money another post IPO company may offer you. The promise is that this equity will grow to be 15x.

Here are reasons why that 1.5x may end up being 0.5 and not 15x.

Most companies do not IPO

This is real. Companies shut down or get acquired. This is a higher likelihood than being a successful post IPO company.

Acquisitions almost never ends up being beneficial to employees. For the ones that IPO the likelihood is worse than 1 in 1000 startups. Think of it this way.

You are betting 200,000 dollars on a roulette with 1000 red and black numbers

Money losing proposition with dilution

The promise is that the outcome will be 15x if the company became 15x more valuable. That is unfortunately a lie.

A company having 15x more valuation does not mean an employee stock will 15x. There are tons of dilution along the way from acquisitions, divestures, stock compensations and more.

As a rule of thumb, avoid joining a startup beyond 100th employee if their outlook is not absolutely promising if you care for the financial outcome from the experience.

Everything else about working in a startup rocks.