“I made 3 CEOs rich – So why am I broke?”
forbes.comAnd this, boys and girls, is why you should never join a second start-up. Join one early, see how it works & learn as much as you can. Do not expect $$$ - you will not make any. Then decide if you want to start your own, or want comfortable well-paid employment at GOOG/AAPL/FB/etc
Do not expect to make money from a start-up unless you started it. If you did not start it, you are the disposable labour. Sorry.
Note that the situation has evolved over the last 20 years. During the first tech wave, general employees actually made decent money when the company got sold. I know a bunch of people that walked into early retirement in the 90s.
But, in that first wave, the founders were more likely to be the ones who built the original product. Since then, there's been a dramatic shift from the inventor-run tech company to the financier-run or salesperson-run tech company. In this second generation company, there's considerably less leverage for a non-sales or non-finance employee. I've known a couple people who've gotten rich during the second wave, but none were from the creative team.
If people took your advice Silicon Valley would be toast.
Silicon valley is built on naive dreamers who time and time again expect to make money as startup employees against all rules of logic and contrary to historical data.
Why don't people understand, you don't get rich without risking capital.
Yes, your time is capital. But not when you've already traded it for salary.
Brokers risk their time to try to sell speculative deals. This is why they make a chunk of the deal. No guarantee.
Lawyers get paid by the hour for their time. This is why they can earn a nice living but won't get wildly rich unless they take speculative cases on contingency.
What did the founder risk? OtherPeoples'Money?
Not sure why they're naive. Even if you don't get rich you still make very good money and get nice perks. Why must the end goal to be filthy rich?
Most startups don't even pay enough to rent a 2br apt. Must the end goal be to be single and family-less forever? ;)
From what I can see, the odds of getting rich through stock options at a startup are similar to winning the lottery.
True but this doesn't mean he's not right. 9 out of 10 startups fail. And you usually do make more money if you started it.
Just want to say I found this extension today:
https://chrome.google.com/webstore/detail/forbes-splash-scre...
It disables that annoying splash screen that asks you to turn off ad blocker.
You're welcome.
There's a concept called "being the master of your own destiny". It requires that one views themselves through a lens of a business owner even while having a W2 job. Someone that believes a CEO when the latter says "I will take care of you" has not developed that ability. It's like believing a customer that walks into your shop and says "I will bring the money tomorrow."
Anyone that uses the phrase 'monthly expense profile' to indicate they have large monthly expenses is clearly great at marketing. Your credentials are proven sir.
As an employee you get paid employee wages. If you want founder wages then you need to become a founder. Instead of joining an existing company/start-up I recommend you reach out to your network and join up with others starting a company.
Alternatively you could start your on your own. As a marketing expert you should have the skills to market your new business to others that need marketing skills. If you cannot, then your marketing skills are not that great!
I think you are being overly presumptuous, CEO != founder.
A CEO does not get hundreds of millions unless they have a large chunk of the company. So either a founder or given lots of shares so they are like a founder.
In my 30+ years in the workforce I've worked at large companies, small companies, startups, government organizations, and not-for-profits. Whether or not I ever get rich, I'm planning on spending the rest of my career working for startups. Why? Because it is exciting, it is fun, it is fast paced. I get to build things, I get to innovate, I get to play with and try the very latest technology. There is minimal bureaucracy. I know the names of everyone in my company. I find my work is infinitely more satisfying than just going in, doing what I have to, collecting a paycheck (regardless of its size), and coming home. Young people think I'm cool. It is a lifestyle and career choice and after all those other experiments - one that is working for me.
I work in a gigantic company and I feel I get a lot of flexibility and the scope to be creative. I worked at a startup previously and I was tightly bound by the technology stack and had to deal with silos.
Dear Abby type article. No actual data on compensation packages (salary, % options of company) for any of the companies, nor a clear financial perspective of any of the "exits" these companies saw.
Spidey sense is tingling.
Being an employee at a startup does mean you took a risk, but nothing in comparison to the founders who built it.
Most employees don't understand that a lot of things change along with way when building a company. Most product companies start with dreams of IPO or getting sold to a large company at a massive valuation. This seldom happens for the vast majority of startups - who either go bust, sell to slightly larger players or becoming SMBs for life.
The owners of a company will make money in most of the above cases - employees won't, and rightfully so.
> Being an employee at a startup does mean you took a risk, but nothing in comparison to the founders who built it.
Bullshit. I hate this sort of rhetoric. Founders took no more risk than the first employees. The founders got funding, and if they did not they convinced some poor schlub to waste their time on the startup. That's the only difference between early startup employees and founders. Many employees at tech startups may be just as capable as the founders, but are not in the same position of power. That's the only difference. Founders take no more risk and get much more reward, if a startup succeeds, than employees, often not for any good reason other than they did it and the employee did not. I mean obviously chances of success are only ~<30% if you do your job well, but still.
If a startup fails the founders still got paid a salary, just like employees, as long as they got funding. If not then they paid out money out of their pocket, to pay a few employees a small salary which was below market. This is the only case in which founders come out worse off than if they took a job with a salary, so take more risk. The rest of it, their outcome is much better just because they did it and you did not and you believed them.
> founders still got paid a salary
Founders get paid a salary? That hasn't always been true in my experience.
> Founders took no more risk than the first employees.
If it's actually that easy you should go be a startup founder. After all, there's no risk, right?
Let's be honest: people who found startups fall in three categories:
* Those who have funds to fall back on in case the startup fails
* Those who got VC funding
* Those who are actually risking things because they invested everything in their startup
I'd wager the first two categories make up 90% of startup founders. These people take absolutely zero risks. Whoop, startup fails. Oh well, it was either not your money or you've still got a comfortable amount to sit on.
Thsoe last 10 percent, yes, they do take risks. Don't expect me to cry for the others.
This word "risk." I do not think it means what you think it means.
Just because someone has lots of money (their own or a VC's) doesn't mean they aren't risking that money when they put it into a startup. The money is at risk because it probably WON'T be returned, let alone increased.
I think what you're conflating with risk is actually diversification. You're only willing to cry for the people who are "all in" on a single investment. Arguably, being diversified is the sensible thing to do and it's the idiots who don't make sensible choices who you shouldn't cry for.
So, if they have "funds to fall back under" isn't that a risk?
The way I see it, the first time you 'make it' you make someone else rich. It's only the 2nd time you make it that you make yourself rich.
Company 1) "I got my first job working in the marketing department for a wireless device company, ten years ago. I got paid the market rate which was very good, but as you know, Northern California is an expensive place to live. My first company got sold. I had stock options but they ended up being worthless after the deal."
---> That does not count. You stayed for 10 years, learned a lot, and it seems you came in at the wrong time and were under water. It is unclear whether your CEO made "millions," but if somebody did, it was the owners, and you were not a significant owner. And you chose to live in the Bay Area, so hey, it costs to be there but you got compensated by living in a great spot. So you chose to spend the money on real estate, blah blah. Seems a little whiney right now since there are people who are REALLY struggling to live in SF and feed their families. It does not seem that you were in this category.
Company 2) "The CEO told us, 'We have an exit strategy. We will get bought by a public company and your stock options will be converted into stock in the company that buys us, or else we will go public and then your stock options will have liquidity.' That was false. We ended up merging with another company and then the combined firm was bought by a privately-owned tech company and once again I had nothing to show for my hard work. When I got laid off the second time, I had a huge monthly expense profile and I had to get a new job quickly. "
---> No, it was not FALSE. It simply did not work out the way the CEO thought it would. Now, it's not like CEOs don't want their company to be the next hot IPO or acquisition target, but hey, welcome to the real world. Things CHANGE. It is unclear whether the CEO this time made "millions," but I assume some people did: the "owners." Again, you were not an OWNER, or at least it is unclear that you had skin in this second company. Did you take a huge hair cut to work there? Did you invest your own money? But again, you kept living beyond your means. HINT HINT.
Company 3) "I had a couple of opportunities, and I took a job with a well-known serial entrepreneur who has been on many magazine covers. Once again, just a few months ago, I got laid off with three months of severance. That’s better than nothing, but my marketing programs and advice helped my ex-boss, the CEO, to make hundreds of millions of dollars. Now I sit in northern California with a $6,500/month mortgage and no job, and I’m disgusted. What am I doing wrong? How could I make three CEOs filthy rich and make nothing more than my weekly salary for myself?"
---> well, it seems you were not given significant ownership. And why would you spend $6500 mortgage if you could not afford it?
It seems your best decision was to move to San Francisco and buy a house. What is your return on that? I bet not insignificant. You deserve that. I don't see how you deserve any of the millions the owners got. Seems you got compensated well for the job you did, so it seems your bosses were square with you on each pay day right?
Or are investors now supposed to dilute themselves on the company they own when they are already paying market rate for the people who work at their companies?
> I don't see how you deserve any of the millions they got
I also don't see how they did. Did they work so much harder as to 'deserve' a ten to hundred fold turnout of their investment?
Whether they were funded or bootstrapped, they did a lot of speculative work or fundraising that someone earning a paycheck from day 1 didn't. It's not about working hard, it's a willingness to take risks. The person asking the question wasn't willing to take risks. They've got the $6500/mo mortgage and the comfortable life with almost zero risk. They were compensated as a wage earner rather than an investor.
Yes, working that way will come with equity, but it's table scraps rather than a full meal. If you want the full meal, you need to work on something before the company is anything. If you wait until they can pay you, that's your compensation.
Capitalist success isn't something paid out by the hour. They capitalized on an opportunity. They made out big. Its the system we live under.
Well, it seems like the OP was supposed to get stock options at these places where they worked, but somehow their stakes vaporized in some kind of finance shell game. But of course, it's all caveat employtor, right? Silicon valley companies were illegally depressing wages for years, and it's all about the individual workers not "negotiating good enuf". Fuck off. Capitalism is broken because the owners are scamming the workers en masse.
Yeah if it takes too long, initial valuation may suffer and stock options vaporize. Its dangerous to stick around after a revaluation downward, with no new stock options offered.
Off-topic, but if Forbes don't disable their adblocker-blocker, they will soon be broke too...
yeah, i hit that wall, then came into the comments..... on the plus side i just saved hella time by not reading the article, so i guess im the winner either way.
People with adblockers don't make Forbes any money to begin with; losing them doesn't cost anything.
That's one way to see it.
Another way is that the people who cannot access Forbes will access something else. Soon everybody will be going to this something else and Forbes will be another dinosaur.
Bullying the users never worked in favor of any online company.
A non-subscribing, ad-blocking readership is no different from 0 readership at all. There is no reason to retain a user whose LTV is and always will be $0.
Professional journalists aren't going to decide one day that paychecks are overrated. Your "something else" will be one big native advertisement (in which case, why are ad-blocking users reading it at all?) or else a hell of a lot lower quality.
Employing people to serve users from which you don't and can't extract value only works in tech, and only for a few years before the next crash.
I think I didn't make my point clear, which was that by not allowing the ad-blocking users they risk losing the paying users too.
That doesn't follow. If they had one reader, who paid them a million dollars per year, then they'd still be in business. So, if they had a million users, who paid them one dollar per year, they MIGHT be in business because it would cost a lot more to deliver to a million people than to one person.
By throwing up the ad blocker wall they're saving the cost of serving anything more than an ad blocker wall to the people who aren't paying them. Sure, they're limiting their audience, but they're limiting themselves to a PAYING audience.
The people who are willing to pay them might change their minds in the future, but their decision won't have anything to do with the unknown number of people bouncing off of the ad blocker wall.
> That doesn't follow.
What do you mean? Look the short-history of internet. It is full of stories like this. Companies that refuse to find other ways earn money from users who don't want to pay (be it actual dollars or ads) open the opportunity to new businesses who are willing to to do so.
Emails. You had to pay to have access to email. Then hotmail said, screw that, we are giving email for free, and we will find other ways to fund this.
How many companies charge for email today?
>(be it actual dollars or ads)
There are none. All publishing can reach for right now are more subtle forms of advertising (sell editorial influence, pass off highest-bidder content as if it were reporting). This is a horrific societal problem and also still advertising.
Companies give away email for free because it helps them sell ads, or ropes you into an ecosystem that monetizes you in other ways.