Item — HN Reader

Just from own experience, startups these days pay quite well.

At my own startup, I just tell engineers I'll pay as much as their current company (excludes some of the salaries at the FAANG companies though) just that they will get much more equity that could become large.

Strictly better expected value.

Even so, very hard to recruit folks to early stage startups. I feel like there's much less appetite for risk these days. (Or perceived risk since we pay just as much so there's really not much on the line)

I had one former colleague turn down my request because his current company gives great health insurance and 401k contributions. I was like "you are 22 years old! Take a tiny risk!"

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Or perceived risk since we pay just as much so there's really not much on the line

I had one former colleague turn down my request because his current company gives great health insurance and 401k contributions. I was like "you are 22 years old! Take a tiny risk!"

Don't you realize you've contradicted yourself here? Perhaps you've failed to consider that great health insurance and 401k plans are part of the total compensation package. If you're matching base salary but ignoring other benefits, you're not matching anything.

> Don't you realize you've contradicted yourself here?

I think "there's really not much on the line" and "take a tiny risk" are consistent.

We have solid health insurance (not like the top plan), but no 401k contributions and therein lies the "risk" I refer to.

This tweet comes to mind: https://twitter.com/downloadcue/status/1160254519592144896

Personally, I would much prefer a company that offered a match that allowed me to get the full 401k amount pretax ($56k) over one that offered the equivalent in salary. Might want to look into it. If you don’t have a 401k at all, you should really look into it. Time in the market, and all.

That tweet is downright cringey. It's incredibly myopic to tell people you don't know that they're wasting their time working at one company vs another. You basically need to think you know the meaning of life... everyone's, not just your own.

Read the replies to get a dose of reality.

To make a counterpoint, a 401k match is very enticing and important. You're literally matching dollar for dollar up to a certain percentage which really adds up the younger you get into it. Starting a 401k at 22 is EXACTLY the right time to do so and waiting 10 years to start could mean you've lost out on a huge chunk of money that can further propel what you put in later.

Granted, you could be the next Google/Facebook... whatever, but the smart odds are generally on the safe company with the better overall package. I bet that company also doesn't require working weekends (something most employees would rather not).

"At my own startup, I just tell engineers I'll pay as much as their current company"

I'm curious what exactly you mean by this. Let's say an engineer's current compensation consists of:

- $N cash per year, and

- A single stock grant of shares in a publicly traded company (worth $4N at today's closing price), vesting linearly over 4 years

So the engineer's total annual compensation is worth $2N ($N cash, plus $N worth of stock vesting at the end of the year).

When you say you'll pay as much as her current company (and that she 'will get much more equity'), are you saying you'll match her current liquid compensation (cash plus vesting of marketable securities) or just the cash portion?

If the latter (you're only matching the cash portion) then, even if her compensation has 'strictly better expected value' (based on a coon understanding of the probability distribution of outcomes), she may still prefer to avoid the 95% chance that her new compensation turns out to be worth only half of her current compensation.

Perhaps...people are assessing this offer and deciding it doesn't, in fact, have strictly better expected value? The prevailing wisdom is that equity grants have an expected value near zero.

Once the prospective hire also factors in the common startup expectation that you sign over all your waking hours to the company, the surprisingly substantial value of benefits, and the added risk that the startup goes belly-up or can't make payroll regularly at some point, that offer of matching salary starts to look much less attractive.

Not saying that your frustration isn't warranted, or that all of these factors necessarily pertain in your startup - just that there are entirely valid reasons why the person on the other end of the table might refuse. (After all, the thing that makes much of modern economics / commerce possible is that risk is subjective.)