"Early startup employees get completely and utterly screwed."
Except that early Google employees all had stock worth over a million dollars. Same with all early Sun employees, all early eBay employees, all early Amazon employees, all early Yahoo employees (basically anyone with an employee # < 100 was in darn good shape at all of these companies.
The generalization that all employees get screwed, is based on your experience. and I understand that pain, my first startup I was employee #9 and my stock at the time it was acquired [1] was worthless. But it is just that, a generalization. And it is perfectly reasonable to say "My threshold for risk is lower than the risk of working at a startup." And by telling a startup you won't work for less than 10% equity or even going in with that thought is one way of saying that.
I interviewed a guy for the second startup I did, FreeGate, who told me basically he had 'done his homework' and he needed 4 million (about 5% of the outstanding at the time) shares and a competitive salary (which during the boom was insane) and while I loved his skills I wasn't comfortable risking that much equity on this guy who might or might not work out. So we passed. He eventually went to work for Oracle because no startup he talked to would (or perhaps even could) hire him based on his risk tolerance.
In that case I think the market did the right thing, he didn't work at a startup. Now had he come to work for me at the 'standard' offer during that period, he would have done OK, better than 4 years of Oracle salary + their option, but not the multiple millions he was dreaming about. I always recommend that people who absolutely have to be employed for the next 'n' years, avoid start-ups. Too much existence stress.
That being said, I like Joel's approach. The only wrench I see in it is that there often comes a time when you need 'that guy' (or 'that gal') who will take the company to the next level. Could be a VP of sales, or a Manufacturing, or some other part of the company that it needs to do, but nobody in the company is experienced or ready to take the company to the scale it needs. That is a person who comes late but you end up doling out lots of equity to. The return is that everyone's equity value will go way up. Sometimes this person is the difference between continued climb and spiraling death. So in that regard their 'impact' is as much as a founder who got the company to this point.
When that situation comes up, it's always got its own wrinkles to deal with, but generally it comes up because you are doing well, not you're shopping yourself around to try to exit with a positive spin.
Except that early Google employees all had stock worth over a million dollars. Same with all early Sun employees, all early eBay employees, all early Amazon employees, all early Yahoo employees (basically anyone with an employee # < 100 was in darn good shape at all of these companies.
The generalization that all employees get screwed, is based on your experience. and I understand that pain, my first startup I was employee #9 and my stock at the time it was acquired [1] was worthless. But it is just that, a generalization. And it is perfectly reasonable to say "My threshold for risk is lower than the risk of working at a startup." And by telling a startup you won't work for less than 10% equity or even going in with that thought is one way of saying that.
I interviewed a guy for the second startup I did, FreeGate, who told me basically he had 'done his homework' and he needed 4 million (about 5% of the outstanding at the time) shares and a competitive salary (which during the boom was insane) and while I loved his skills I wasn't comfortable risking that much equity on this guy who might or might not work out. So we passed. He eventually went to work for Oracle because no startup he talked to would (or perhaps even could) hire him based on his risk tolerance.
In that case I think the market did the right thing, he didn't work at a startup. Now had he come to work for me at the 'standard' offer during that period, he would have done OK, better than 4 years of Oracle salary + their option, but not the multiple millions he was dreaming about. I always recommend that people who absolutely have to be employed for the next 'n' years, avoid start-ups. Too much existence stress.
That being said, I like Joel's approach. The only wrench I see in it is that there often comes a time when you need 'that guy' (or 'that gal') who will take the company to the next level. Could be a VP of sales, or a Manufacturing, or some other part of the company that it needs to do, but nobody in the company is experienced or ready to take the company to the scale it needs. That is a person who comes late but you end up doling out lots of equity to. The return is that everyone's equity value will go way up. Sometimes this person is the difference between continued climb and spiraling death. So in that regard their 'impact' is as much as a founder who got the company to this point.
When that situation comes up, it's always got its own wrinkles to deal with, but generally it comes up because you are doing well, not you're shopping yourself around to try to exit with a positive spin.
[1] http://www.linksv.com/compSummary/2172/GolfWeb