Silicon Valley has a lot of dreams. One dream – the Hollywood version anyway – is to start a beginner's founder in tampering and coding in their famous garage, and ultimately build a product loved by humans all over the world and become an emerging billionaire in the process.
However, the most common and most common version of this dream in Valle is to join a company at an early stage before its growth. Sure, these early employees may have only a set of stocks, but these shares could be worth a lot of money if they joined the right operator.
Each emerging company has a window of opportunity, with a time frame that early employees can join while stock option prices are low and equity is high. He joined before the big rise in valuation, and suddenly what may have been otherwise pleasant was hundreds of dollars K in the coming years, in fact, in the Gulf, home of a reasonable size.
However, this appropriate window appears to be shrinking in size, making it difficult for potential startups to determine the timing necessary to earn their best financial return.
for every Roblox, Which we have described so deeply this week, It took nearly two decades to reach the current television, there Brex, Which seems to reach Unicorn's status in no time at all. Such stories – though certainly narrative – seem more common than ever.
Part of the reason for this rapid growth of early assessment is that the Silicon Valley simply learns how to grow faster, even before that. As an adventurous adventurer Reed Hoffman And Chris Yeh discuss in their book Blitzscaling, There are now tried and true frameworks and methods not only for the development of startups, but for their development at a staggering rate. Through better marketing channels, growth strategies and product development, we have already made progress in reducing at least some time to better valuations.
This rapid shift from nothing to everything although it gives little time for early employees to discover startup through grapes when financial conditions are still interesting.
Half a decade ago, I wrote about the plight of the early employees in an article entitled "The problem with the foundersThen I wrote:
The secret of Silicon Valley is that the benefits of working at startup are almost entirely back to the founders, and This Why people repeat advice just to start a business. There is a hard reason to rent it in Silicon Valley today, and there are not many start-ups. That is because engineers and other creators realize that cards are stacked against them only if they are responsible.
My thinking was simple: the early employees were as risky as their founders did, but for a fraction of the stock. Now, with start-ups jumping to Unicorn's position in less than a few months, it seems that the risk-to-yield ratio is out of reach of these early employees.
It does not have to be Brex The transformation is also extensive. The rapid increase in the size and valuation of the A series of funding rounds over the past three years means that engineers and salespeople who may have a number of employees in double digit numbers suddenly see their options reach hundreds of millions in valuation. Meanwhile, exits do not become richer to make up for.
I've begun to notice this pattern over the past few weeks during several conversations with software engineering friends who liked the very early companies – for example, a handful of employees – but those who stayed away from their offer messages because of company ratings are already high.
Now, there is an argument to be made that joining these types of companies is exactly where the best opportunities lie. Assessments are certainly high, but these are companies with financial resources and support that could allow them to compete effectively. So stocks may be smaller and more expensive, but in the end, if the startup is likely to succeed, the expected value function may already be favorable.
Can. However, it is also difficult to see how these emerging companies, which despite their rich valuations hardly laid any foundation for success, are a safer bet than emerging value-based companies with years of experience under their belt and a growth strategy that relies on reliable results. Worse, early employees may be exposed to greater financial risks, because the preferred investment capital stack may mean that the smaller exits are particularly unfavorable to them.
In addition, the shrinking window of opportunity for leading companies means that the difference in financial results between two early employees – which could be millions of dollars at the time of exit – could have been determined by who joined the previous week. This does not seem fair or true, but it is widespread in our industry.
As with most macroeconomic structural changes, there is not much to do for anyone. Founders will not make less or less money to make their employees' lives more rosy, and venture capitalists will certainly not be able to reduce their offerings in a highly competitive investment environment. In fact, surprising rhinoceros may be the best attraction for candidates to hear the start tone and finally join.
But when it comes to the Silicon Valley dream of a beautiful home from a decent return on exit, it becomes narrower and less widely distributed. Blitzscaling makes a lot of people a lot of wealth, but the first employees? not much