How Startup Employees Get Rich (without getting lucky)

ABOUT JOHN COOGAN:

I've been an entrepreneur for the last decade across multiple companies. I've done a lot of work in Silicon Valley, so that's mostly what I talk about. I've raised over 10 rounds of venture capital totaling over $100m in funding.

I work mostly in tech-enabled consumer packaged goods, meaning I use software to make the best products possible and then deliver them to the widest possible audience. I'm a big fan of machine learning, python programming, and motion graphics.

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Disclaimer: This video is purely my opinion and should not be regarded as a primary source. I am not a financial advisor and this is not a recommendation to buy or sell securities. Always do your own due diligence.

[carlaldric]

Starting early is the best way of getting ahead to build wealth, investing remains a priority. The stock market has plenty of opportunities to earn a decent payouts, with the right skills and proper understanding of how the market works.

[christsciple]

Having worked for a few different startups as an engineer and architect, there are a lot of pro's and cons to working in this space.
- You work long hours, tight deadlines, all under immense stress in an environment you're learning to navigate as you go. Sort of fly-by-your-pants stuff. Compensation can vary in terms of structure, take-home pay, and benefits, and at the end of the day you're not guaranteed to succeed as a company.

At the same time, many of those cons are pros. You learn a lot, gain a tremendous amount of knowledge and confidence in your abilities to think, speak, and get sh*t done. And hopefully, you earn a fair amount of coin, especially if the startup is successful

All that said, it can burn you out quick if you aren't prepared!

[henrikraymond]

The wisest thing that should be on everyone's mind currently should be. To invest in different streams of income that doesn't depend on government, especially with the current economic crises around the world.

[stevenirby]

Most people *do not* get such payouts at all. I've worked in tech for 16 years now. I only know a few people who made any kind of decent money on their equity. Most of those folks only made $50-200k. Only one friend really hit it big and made $500k when their startup IPO'd.

I think luck is a big part of the game.

[CharlesWeill]

I've heard the best time to join a startup is right after they raise a Series A, because they already have some traction, and are hiring agressively.

[theyearexperiment]

Reminds me of this reddit conversation where software developers explained how they work at FAANG and managed to get into positions where they can coast and only work 5-10 hours a week. But earn several 100k a year.

[drcinematic.youtube]

The moral: avoid working at startups whose founder has been featured on Forbes! 🤣

[johnpoter]

*Great channel and highly informative video. I was able to retire early and also successful by building a passive income stream, living frugal, and investing. I’ve always said this to everyone that Investing is key to financial freedom*

[jewishbusinessadvice]

I have a cussin that just cashed out his stake for $12 million on a unicorn 🦄 startup he is working at

[kwoknation]

🔥 really valuable content & definitely agree that being an early startup employee is not talked about enough compared with being a founder, etc.

[arnaudsm]

Why illustrate all your videos with cringey Wolf of Wall street scenes ? He's a literal criminal

[MubashirullahD]

Moment of silence if you work at a startup and wasnt offered stock. The US has better market forces at play.

[whydeemos]

“Without getting lucky” — goes on to immediately describe the process of getting lucky by backing a winning horse.

97.6% of “seed” series startups never get to an exit event (read: employees never make a single $ from their stock). Only 17% of series A startups go on to have an exit event. You are *very much* gambling when you accept compensation in the form of equity in a startup. While the odds are better for later-stage (56% of series B, 86% of series C startups have a successful exit), the chances they will sell or go public at a price that makes your equity worth very little or even $0 also goes up. Generally less risk also means less rewards with later-stage startups.

How do VCs deal with this? Why are they OK with investing when the failure rate is so high? You cannot think like a VC when picking a startup to work at; while you can only work for ~one startup at a time, VCs have anywhere from dozens to hundreds of investments in different startups at any given time, and they know their profits will come from just the handful that succeed and make it big. That’s right, when that startup tells you they’re backed by “big name brand VC, ” that VC *knows* they’ll probably fail, and is ok with that. Of course they try to pick winners, but they only need something like 1/20 investments they pick to really succeed in order to make money. Even with those odds, VCs spend weeks to months scrutinizing each startup they choose to invest in, and have teams of people doing due diligence. If you work an average of 4 years per startup, that means you’d have to work 80 years to have the same odds as a VC to pick a winning startup, and that’s *assuming* you can pick your startups as carefully as they do (when was the last time a startup handed you all their financial records before you decided to take a job with them?) How do you like your odds?

Make your decision to join a startup based on the assumption that it will fail and your equity will be worth $0. Would you still consider your compensation at least adequate, would you still be growing your career, would you still be happy day-to-day and enjoy the people you work with even if the company failed? If the answer is no to any one of these questions under the assumption you’ll *never* be able to make a single dollar from your RSUs/options, you’re not ready to join that startup.

[johnl.]

You need to also time the economic cycle right. Like right now any startup just starting will have a hard time getting funding.

[ameerashhab]

Yes I've been working as a Software Engineer for 1 year and a half at a Sillicon Valley startup. Great salary, equity, and more. Hopefully I'll become wealthy in the future. Company has great funding, strong traction, and it's going very well.

[AlexanderTsepkov]

OP, you make it seem easier than it actually is. The unicorn startups where your stock option will be worth 100x what you paid for it are very rare. You're deceiving viewers who don't understand survivorship bias. I've joined several startups prior to IPO, 2 of them can be considered industry leaders in their niche, yet their stock still tanked after IPO (at it often does). You can definitely make 100k+ from options/stocks, but it's very rare to get millions this way, most companies will not be the next Google and your options will not 100x. Maybe if you're a super-early employee, but in that case your life will be hell for the next 5+ years before the IPO as you work 80+ hour weeks, sleeping at the office, fearing that in 6 months the company won't be able to raise the next round and will be forced to declare bankruptcy - definitely not the picture you painted in your video.

[xena_]

Hey John, some feedback about the editing: I felt like this video had too many movie clips. I prefer seeing you and your energy come through your gestures and mimics!

[alarriag]

If you need to uncover and know all the variables that could lead to success for a startup company so you can decide whether to work for it or not, you might as well start your own company.

[TBMzz]

Haven't watched the video yet. But I know its gonna be informative.

Thanks john

[neylz]

John, you are easily one of my all time fav youtuber! The quality of each of your content is amazing, so much work, so well planned, so much information. Big respect to your work!