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Remember that 9 out of 10 startups fold in a year or two. they have longer working hours, less benefit, lower salary. How many startups actually made it?
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<p>Actually, working for a startup almost certainly pays better, on average. As Paul Graham said:</p>
<p>While perhaps 9 out of 10 startups fail, the one that succeeds will pay the founders more than 10 times what they would have made in an ordinary job. That's the sense in which startups pay better "on average."</p>
<p>The</a> Power of the Marginal</p>
<p>That holds not just for founders, but also for early employees. For example, the early engineers at Google are easily worth in the in the 9 figures if they had held onto their stock options, maybe even in the 10 figures. After all, with Google now having a total market cap of nearly $200 billion, even holding 0.5% of the equity of the company - which the early engineers could each have easily received - would be worth $1 billion. </p>
<p>Now of course, clearly not everybody is lucky enough to choose Google. But even if there were 1000 total competing search engines and 999 of them completely failed and Google was the only 1 that succeeded, that would mean that the average stock option payout would be $1 million. Remember - that's just from the stock options; it's on top of the salary that you would also be paid once the company is investor-funded (and Google and others were funded quite quickly). Furthermore, there weren't 1000 competing search engines out there. Not even close. In fact, probably no more than 100. </p>
<p>I would also dispute the notion that you are really working longer hours at startups. What - you think you're not working at long hours at established companies? Trust me, engineers at Microsoft, Intel, (now) Google, and these other big firms work pretty darn long hours. The major difference is that they don't have a chance to become filthy rich. The days of hypergrowth of those firms is long gone. </p>
<p>Lower salaries and benefits are also a point of contention. In my personal experience, startups actually paid the most: often times nearly twice or (in one case) nearly three times what established firms were paying in salary, without even talking about the stock options. That's because when a startup is looking to expand and compete quickly (i.e. when they've just received a large infusion of VC cash and are looking to ramp up fast), one of the most effective ways to do so is to simply overpay salaries to attract people. For example, during the dotcom boom, there was one firm that literally didn't pay any of the technical staff less than $120k just to start, and this was back in 2000 dollars. There were guys fresh out of school who were immediately being appointed to Vice President and Director positions. Heck, one guy hadn't even graduated from college at all yet was offered a Director position. You never have that in established firms. </p>
<p>I think what you mean to say is that the startup lifestyle is riskier in that while the average outcome of joining a startup is clearly better than that of joining an established firm, the variance of the outcome is also far higher. You can end up filthy rich. Or you can end up with nothing as the company goes bankrupt. That is true. </p>
<p>But to that, I have 2 responses: First, let's not pretend that established firms don't have risk. Since you mentioned AMD, let's talk about AMD. Last month, AMD announced they were going to lay off 10% of its staff. Similarly, Intel instituted layoffs in each of the last few years, and may institute another round this year. Oracle has bought numerous large software companies in the last 5 years and after each acquisition has followed a large-scale layoff. If Microsoft and Yahoo had successfully merged, then that would have also meant big layoffs. Hence, we shouldn't kid ourselves into thinking that working for a large company is particularly safe. They're safer than startups, but not that much safer. You can lose your job at a large company at any time and with no warning. </p>
<p>Secondly, it is precisely when you're young (i.e. when you're right out of school) that you can afford to take on high levels of risk. You join a startup right after you graduate and it fails, so now you're 23 and broke. So what? Most 23 year-olds are broke anyway. Sure, I can agree, when you're older and have kids and a mortgage to support, the risk may be too high for you to take. But when you're young and have no responsibilities, what does it really matter if what you do fails? If nothing else, you can at least tell yourself that you tried. That's a heck of a lot better than spending the rest of your life wondering 'what if?'. </p>
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It's literally one in a million.
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<p>Uh, literally one in a million? Please. Use some common sense and some basic math: do you numbers really work out? Surely we can all think of the following 5 highly successful SV-headquartered tech firms just on the Internet *: Google, Ebay, Yahoo, Facebook, YouTube (Ok, now part of Google, but it was a standalone startup recently). And that's just talking about some of the most successful *Internet startups, that's not even talking about other successful startups in biotech, enterprise software, telecom equipment, medical devices, semiconductors, etc. </p>
<p>So, we have 5 highly successful Silicon Valley consumer Internet companies. Yet you said that the odds of a startup being successful are "literally one in a million". So that must mean there were 5 million Internet startups created in the Valley, right? Do you believe that? There are only 2.5 million people in Silicon Valley, and obviously the vast vast majority of them do not work in startups, or even in the tech industry in general. </p>
<p>I think a far more reasonable calculation would be as follows: probably at most 10% of the entire population in Silicon Valley works for startups. I think even that's generous, but let's go with it. So, 10%: that's 250,000 people. Obviously many of those startups are not Internet startups (i.e. they are in biotech, medical devices, semiconductors, etc.) So let's say that 1/3 of them were Internet. That leaves about 80,000 people. Let's say the average startup has perhaps 15 people. So we're talking about 5000 total startups. Hence, of those 5000, 5 of them became the superstars (Google, ebay, etc.). That's only one in a thousand, not one in a million. And even of those that didn't become superstars, plenty are still moderately successful. </p>
<p>Look, I don't disagree that startups are riskier, and so the question you have to ask is whether you can take the risk. I would argue that if you are young and free of commitments, you probably can take those risks. </p>
<p>Nevertheless, I think what is quite clear is that Stanford has the edge in terms of employment opportunities. After all, even if you don't intend to work for a startup, the threat that you might can serve as useful leverage when you negotiate with an established firm for better salaries or bennies.</p>