I agree with you except I don't think it's that binary. There's a lot of hiring going on at YC startups, so "everyone now knows and agrees on this take" is a considerable overstatement.
Here's where I do agree: (1) the impact of FAANG compensation is enormous, to such an extent that a lot of people (including on HN) simply refuse to believe what they hear about it, because it breaks their model of the world—even though those things are often true; (2) startups need to adjust to this. I've felt for years that the equity shift that took place from investors to founders needs to be followed up with a comparable shift in favor of early employees.
On the other hand: while this shift has been happening somewhat, it's surprising to me that it hasn't taken deeper hold yet, which makes me wonder what I'm missing. I would have thought, and it sounds like you think so too, that startups have little choice but to make this shift quickly or die from starvation for top talent. It's not playing out that way. Startups continue to thrive, even though there haven't been massive structural changes yet. (I'm looking at it through YC-colored glasses, which is a privileged position, but not one that's so dissociated from the larger ecosystem as to change this point.) It may not be thriving to the extent that FAANG is, with some exceptions—but that's because nothing is.
> There's a lot of hiring going on at YC startups, so "everyone now knows and agrees on this take" is a considerable overstatement.
Consider this sentence in my response:
"It's widely accepted that you'd look at any non-unicorn non-pre-IPO startups only as a fallback option after completely failing to get an offer from any of the above."
Only a minority of engineers can secure employment at top-tech and pre-IPO unicorns. The rest will have to settle. My claim isn't that companies below the top won't be able to hire at all, but rather that they will have to settle for engineers:
1. Who couldn't get hired at top tech or pre-IPO unicorns which are universally seen as better options.
2. Who would leave if they can get a shot at these better options.
> (2) startups need to adjust to this. I've felt for years that the equity shift that took place from investors to founders needs to be followed up with a comparable shift in favor of early employees.
Yeah, I agree. When I get startup offers these days, the equity portion is so small that I just ignore it.
So when I get the startup offer, I hear "$200k base + <some equity number I just ignore>", while FAANGs are offering me $400k of cold, hard cash. The startup simply don't have a chance.
> On the other hand: while this shift has been happening somewhat, it's surprising to me that it hasn't taken deeper hold yet, which makes me wonder what I'm missing.
My theory: startups just accepted that they'll have to initially scramble with 2nd tier, overworked staff. This isn't actually new, just the well-worn B-team/A-team strategy of startup staffing: you start out with a small team of B-players willing to take the risk (often for a very small upside) because they have no prayer of a better offer so just paying them market rate is good enough to get them to work hard and sacrifice their WLB. If your business pans out, you are now in the coveted "pre-IPO unicorn" position and can start hiring the A-team to replace your current B-team.
> Startups continue to thrive, even though there haven't been massive structural changes yet.
Indeed, as long as founders and VCs see it this way, then the situation will continue. I suspect the A-team/B-team strategy is just working well-enough for their needs: the B-team gets them a pretty minimal viable product, and by the time they need to deal with the difficult scaling and reliability issues associated with success, that success allows them to hire the FAANG-grade A-team that can actually deal with these.
It's hard for founders and VCs, the hoarders of startup equity, to give it up unless they absolutely have to. There are no clear statistics like "if we gave up X% we can expect Y% better chance of success", and like you said, the current state seems "good enough" and still far from the catastrophic failure mode that would force them to act.
So all that's really happening is that the B-team/A-team paradigm reigns unchallenged, and under that paradigm, it's actually expected and accepted for engineers to see B-team startup positions as fallbacks.
> It may not be thriving to the extent that FAANG is, with some exceptions—but that's because nothing is.
Personally I think there are huge long-term issues with the level of concentrated success that FAANGs are enjoying, but that's a topic for a different conversation.
Thanks for the very interesting comment, and discussion generally!
My understanding, from what YC has been seeing from its Work at a Startup initiative of the last few years (sort of a hiring pool made available to YC startups as a whole) is that there is a population of really good engineers who just don't want to work at a FAANG. That seems to contradict what you're saying to some extent. I mean, I can relate to this a little, because I would find it really hard to drag my ass back to a big company. I never worked for a big tech co, but I did have a stint in the software wing of a big company. Would I squeeze myself back into that sclerosis for 2x my current compensation? Probably not. Would I do it for 10x? Well...at some multiple, one considers anything. But we're talking closer to 2x than 10x in the startup/FAANG dichotomy at present.
The question is how big this population—let's call them "A-team engineers whom externalities tilt to startups rather than FAANG"—really is. Unfortunately, that's not going to be very easy to examine objectively. From everything I've learned moderating HN, it's obvious to me how such a discussion would go: FAANG people will say "they can't be that good or they'd be at a FAANG" and startup people will say "I could totally do that, I just don't want to".
First of all, of course the number of A-team engineers willing to work for half the pay is small.
But staying out of FAANG means more than just 50% less initial total compensation.
FAANGs offer career growth, including pay growth, that simply doesn't exist in startup world. Even if reality won't hit you when you just accepted a $200k startup job when your college friend with the same experience got $400k, it will hit you 4-5 years later, when you're hunting for your next job for $200-250k while that friend is making $500-600k+ because your startup fizzled out or got acquired for peanuts while his FAANG just kept growing and carrying his career up with it.
Or it will hit when you try to get into your next startup and realize that startups are the first to look up to FAANG engineers. That engineers with FAANG experience get all the interviews, and are lavished with the best offers and most senior positions in startup-land. While the only reward you get for staying in startupland is... being considered a B-player.
Finally, let's profile the "FAANG-hating" engineer willing to work for startups for half the pay. As you said, this engineer is sacrificing most of their pay for a work environment in which they feel more comfortable. Is that great for the employer too?
Would that engineer agree to sacrifice other aspects of their comfort, such as WLB, to make the startup succeed?
Of course not. Their equity stake is negligible, they're unaligned with the company's goals. They work there for the fun, and once that fun stops, there are dozens of other startups waiting to hire them at the same (low) comp package.
Startups today don't just underpay - they completely fail to align their senior employees. The combination of minuscule equity stake, no career growth prospects, high risk and constant job-hopping means as a senior engineer you will not be rewarded for good performance. Much as we love to disparage "sclerotic big tech", I've seen more mission alignment there because employees expect ample reward - in pay and long-term promotions.
In fact the typical profile of an "A-team engineer who'd rather work at startups" is someone who spent several years in FAANG, acquired FU money there, and now looking at startup work as fun CoastFIRE if not a harmless retirement hobby that pays a bit of money as well.
On top of all this, let's not forget that even if you're absolutely obsessed with working at a small "non-sclerotic" company, there are still options for you, including unicorns and plenty of small successful shops that aren't startups.
Here's where I do agree: (1) the impact of FAANG compensation is enormous, to such an extent that a lot of people (including on HN) simply refuse to believe what they hear about it, because it breaks their model of the world—even though those things are often true; (2) startups need to adjust to this. I've felt for years that the equity shift that took place from investors to founders needs to be followed up with a comparable shift in favor of early employees.
On the other hand: while this shift has been happening somewhat, it's surprising to me that it hasn't taken deeper hold yet, which makes me wonder what I'm missing. I would have thought, and it sounds like you think so too, that startups have little choice but to make this shift quickly or die from starvation for top talent. It's not playing out that way. Startups continue to thrive, even though there haven't been massive structural changes yet. (I'm looking at it through YC-colored glasses, which is a privileged position, but not one that's so dissociated from the larger ecosystem as to change this point.) It may not be thriving to the extent that FAANG is, with some exceptions—but that's because nothing is.