Because you probably won’t see enough of the $$$

I started my life in the Valley as an engineer fresh out of CalTech. I was young and I was eager to make it BIG. I had heard numerous stories and seen movies of the tech billionaires starting their empires from garages in Palo Alto, and young college grads building multi-billion dollar companies from their dorm rooms.

I dreamt of being one of them, and I was quite confident I could be one of them pretty soon. I thought I knew the answer. I thought the answer was simple: founding a startup or joining a cool pre-IPO startup. I would start my career in a big corporation, go up the corporate ladder, and start, or join, a startup and BAAM, I would be a billionaire.

Like many people, I focused only the money $$$. Yes yes yes, I knew in my head that you had to love the product that you were building, love the team that you worked with, and love the users that you were serving. But my heart was not with the product I built, the team, or the users. I felt that my desire for more money would MAKE me love the product and the life I was living to build the product. It really didn’t matter what I built, as long as it made the money.

I was skeptical of all the people who told me not to follow the money. I thought that they could say those things because they already had it all. I now realize that I was wrong. Completely wrong.

So in this post, I wanted to convince you why you should NOT join a startup for the money — backed by real data. I also hope that you grow more skeptical about startups trying to recruit you for money.

Most startups fail — but you knew that already!

According to a statistic published in a Harvard Business School study by Shikhar Ghosh, 75% of venture-backed (yes, venture-backed) startups fail. In a study by Statistic Brain, Startup Business Failure Rate by Industry, 50 percent of all U.S. companies fail after 5 years, and over 70 percent fail after 10 years. This is if you are lucky enough to get some venture funding.

To give you some context on the percentage of companies that actually get venture funding, here is a nice data point about how selective Andreessen Horowitz is in selecting its applicants.

_Image data [source](https://www.youtube.com/watch?v=JYYsXzt1VDc" rel="noopener" target="blank" title="). Graph is not to scale.

So, the odds of you getting funded by one of the most prestigious VC firms is 0.7%. The actual odds of getting funded by any VC, according to here, is around 600~800 companies in over 2 million companies created each year, which is around 0.04%. So, the probability of a startup getting some VC funding and succeeding is around 0.01%, making the success rate around 1 in 10000.

You can see how hard it is to get some VC funding and how hard it is to succeed even after getting it. Of course, you can succeed without getting funded by a VC, but these data points are here give you a perspective on the difficulty of success.

How much do startups pay you?

Well, given that they are very likely to fail, do they pay you enough to compensate for the failure rate?

First of all, from my experience, unless you are one of the founding members, it is very difficult for an engineer to get more than 5% of the company shares. So, let’s be very hopeful here and let’s assume that some company treated you like a rockstar and offered you 5% of the company.

Then, let’s define the success of the startup as when the startup becomes a one billion dollar company. Then, the 5% that you are getting has an expected value of around $1,000,000,000 * 0.05 * 0.0001 = $5,000 (if you can cash out, that is). This is over some number of years until the company reaches the one billion dollar valuation. This article shows that Slack was the fastest to reach that milestone, which was in 1.25 years.

So, if your company gets really, really lucky and gets to the same milestone in the same time, the chunky 5% share that you are promised has an expected worth of about $4,000 in a year. If your company takes longer to reach that milestone, your expected yearly profit decreases. And it usually takes between 5~8.2 years to exit, according to this article.

So, consider this when you compute your yearly profit of that chunky 5% you are getting. Yes, this calculation has a lot of assumptions, and it may be flat out wrong. But the message I am trying to send is that becoming a billion dollar company is hard, getting 5% of the company is hard, and it USUALLY takes a long time to get to that billion dollar valuation. Compared to that, the expected return of the stock is quite low.

How much do large companies pay you?

Sample breakdown of a Google Engineer Total Compensation (TC)

If you have ever been on Blind, a popular anonymous chatting app, you should be quite familiar with the term TC (Total Compensation). TC is a term that represents the yearly earning that you get from salary + bonus + stock. Employees in major large companies in the bay area (Facebook, Apple, Amazon, Netflix, Google (FAANG)) earn average TCs that range from $200K ~$1M and more according to their experience.

This and this article shows the range of engineer TCs according to their level. This range is quite stable, and these companies are quite good at keeping the TCs consistent with the market.

What are you losing by joining a startup?

Assuming that the startup you are joining can MATCH the salary, often times they do not or are not able to match the annual bonus or the signing bonuses. Plus, they often do not have the nice perks that these large companies offer (free food, snacks, massages, etc…).

In addition, you are losing on the potential to cash in on the annual stock bonuses, which can be quite hefty (compare $4k/yr in the previous calculation to the $59k/yr Google engineer’s bonus).

I won’t get into work-life balance and how many hours you put into a startup vs a large company, because everyone works hard everywhere :) So, in summary, you are likely losing a stable salary and bonus, higher expected profit, and nice perks when joining a startup.

So when should you join a startup?

Let’s go back to the calculation. If you truly truly believe that your startup will succeed with 100% probability, the expected value of the 5% is worth$1,000,000,000 * 0.05 * 0.004 = $20,000, which is somewhat in line to what the big companies pay you.

This calculation only makes sense if you truly believe you are going to succeed and if you truly believe that your company will make it to 1B valuation (which most companies don’t). If you are more confident that your startup will get funded, this value goes up. In fact, this is why no startup will give you 5% after they are funded by a VC. So can you see a pattern here? The more confidence you have in your company and in your product, more the expected value that you believe your company has.

What I am trying to say is, if you truly believe in the product, love your life working at THE startup, and you can stick around from the beginning until the end, you should stick around. If not, you shouldn’t join a startup.
It just doesn’t make sense financially.

Final thoughts

So, am I saying these stuff because I have it all? No. I am now a grad student worrying about when my landlord will raise the rent higher than my current grad student salary. But, I love what I do. I am happier now than I was when working for a miserable startup that I joined for the money. And now I’ve grown to be less skeptical when reading this quote from Steve Jobs:

“Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do.” — Steve Jobs

One year ago, I was working part-time as a route setter at a rock climbing gym in Tennessee. Today I’m working as a software engineer at a cyber-security startup in San Francisco.

My journey to this point has been unforgettable and life-changing. And yet as challenging as everything was, I think that any sufficiently-motivated person could do the same.

Knowledge has become democratized. All you need to reach a competitive level in your field is time and dedication. This is especially true for the field of software engineering.

In 2016, my life was falling apart

When I started learning to code in 2016, I guess you could say my life was falling apart.

I’d gone to college as a pre-med student, with degrees in biochemistry and anthropology. But I quickly became disenchanted with science and medicine, and left college with no clear path.

I started working as a routesetter at rock climbing gyms for almost 2 years, but things were not going so well. I knew I was in need of a big change.

I had been putting off learning to code for a long time, but I knew this was what I wanted to do. Finally, on my birthday in 2016, I committed to learning to code. I didn’t look back.

At this point in time, I was vaguely familiar with the coding bootcamps that have become quite ubiquitous over the last few years. Luckily, I quickly discovered freeCodeCamp. When I realized that finishing their curriculum entailed writing software for non-profit organizations, I promptly joined and resolved that I would finish freeCodeCamp’s open-source curriculum before even considering a bootcamp.

freeCodeCamp rapidly became the core of my education. I supplemented it with many other resources, such as podcasts, tutorials, open-courseware, and healthy doses of documentation and Stack Overflow when needed.

Typical days involved me working through freeCodeCamp challenges and projects, which allowed me to progressively improve my skills.

When sitting and writing code became unproductive, I would absorb material through other channels: audio, video, and so on. I moved back and forth between different learning methods, which was very useful in maintaining a strong level of engagement and focus. This was basically my process, and it allowed me to dedicate many hours to learning.

Here it is by the numbers (roughly estimated):

• Total duration learning: less than 12 months
• Total hours: ~2,500
• Total projects completed: 70+
• Total CS courses watched: ~10
• Total GitHub commits: 1,500+
• Total lines of JavaScript written: 20,000+

Most of this learning took place in Knoxville, Tennessee, where I was living at the time. I had a strong desire to move to one of the major tech cities, so one day I woke up and naturally decided it was time to drive to San Francisco. That’s about exactly how it happened.

That night I left, and about 3 weeks later arrived in the Bay Area. Plenty of time to listen to podcasts on the road.

Somewhere in midwest USA.

Arriving in San Francisco for my first real job search

After arriving in San Francisco and completing the core freeCodeCamp curriculum (front-end, data visualization, and back-end certifications) I had a brief go at job applications. Around 65 or so. Literally no response.

Remember, I had just driven into the Bay Area from across the country. I had no idea how competitive it would be, nor how much my skills were even worth to employers at their current level. Did freeCodeCamp actually measure up to the education of an in-person coding bootcamp?

These feeler applications gave me a clear reading: I had to do more. The market is pretty competitive. So I rapidly revised my plans, extended my time horizon, and reached out to freeCodeCamp to begin a non-profit project, since I was now eligible to start one.

Meanwhile, I began networking in the city as much as possible. The networking came easily enough, as freeCodeCamp has many self-organized campsites throughout the world’s cities.

I got a quick response from freeCodeCamp’s team about the nonprofit projects. Some of my React projects had caught the eye of Quincy Larson, and he asked me whether I’d be interested in helping write their React curriculum. (freeCodeCamp itself is a nonprofit.) I also helped build a conference management tool for the Conference on Crimes Against Women.

I was very excited about the opportunity to give back to this awesome community, so I quickly accepted the challenge. My React and Redux challenges are being incorporated into their newly expanded curriculum, which is now live in beta form live here.

In addition, I chose to advance my timeline to 2017. I would continue studying on my own for the remainder of 2016 before applying for jobs again. I left San Francisco, droving north through Portland and Seattle to Bellingham, Washington.

It was during these weeks in the Pacific Northwest that I worked non-stop to complete the React and Redux challenges. I collaborated with another freeCodeCamp contributor from New York, Peter Weinberg, and built around 80 coding challenges in total.

This was probably one of the key moves that helped set my resume apart, because it represented a significant project that served a real-world organization’s needs.

In late December, we finished the initial draft of the challenges and moved them into an official alpha release which is still generating feedback from the community.

My triumphant return to San Francisco

Going to California.

Back in San Francisco, I was almost ready to dive into job applications again. I had decided to join Outco, a crash course in interview preparation for software engineers. I had always been pretty opposed to spending money at a coding bootcamp (partly because I didn’t have the money), but I chose to join Outco because in my view they are trying to serve a different purpose. Outco is specifically targeting the interview process for software engineers, a process which causes friction for many, even experienced and skilled engineers.

Although I could write JavaScript pretty well at this point, I definitely was not prepared to solve arbitrary algorithm questions on a whiteboard. That’s one of the key areas Outco tries to prepare students for, because, for better or worse, whiteboarding remains a favorite interview tactic of tech companies. In addition, I could defer payment to Outco until after I got a job.

And, a reality check: I had been going many months now at a strong pace of probably 50+ hours a week of coding and learning, and I was now literally risking it all on my ability to get a job in one of the most expensive and competitive cities in the US.

I had already made a sincere effort to apply to companies and failed miserably! The pressure and stress were definitely bearing down on me at this point.

I knew success was going to depend heavily on my performance of the next few months. I joined Outco because I expected that their structured program and support would prove indispensable in this last miles of my journey, and it did.

Writing code on paper to prepare for interviews, classic.

2017 arrived and I started Outco. I began to work even harder than before. Tons of algorithms and data structures practice, whiteboarding questions, technical questions, pair programming, mock phone screens, systems-design questions—you name it, and lots of it. Not to mention applying to jobs again, and a lot more than I did the first time.

And, of course, once you begin to get responses from companies it becomes very time-consuming (not to mention very stressful) to begin juggling all of these interviews at once.

Practicing for interviews everyday is hard enough. Standing in front of a whiteboard in a real interview as they ask you about binary trees is much harder (and yes, interviewers asked me about binary trees).

Again, the numbers tell the story more eloquently:

• Total applications: 192 (including the 65 from 2016)
• Total phone interviews: 17
• Total take-home code challenges: 6
• Total technical screens: 5
• Total onsites: 3
• Total offers: 1
• Total time to offer: 6 weeks
• Success Rate: 0.52%

That one offer was from TruSTAR Technology, and I have been so happy to join their team! TruSTAR is building a platform that allows companies to share cyberintelligence data in order to prevent and mitigate cyberattacks.

I’m working on the frontend side of their application and putting to use the JavaScript skills I gained through freeCodeCamp. The experience has been incredible so far, and I have been honestly surprised by how well prepared I have been to begin making meaningful contributions to their codebase.

Lessons I learned over the past 12 months

Now, finally, here is some advice I would have for anyone looking to do something like this:

• You need real-world skills and you have to learn a lot. That means a lot of hours of work, there’s no way around it. Passion helps.
• Building projects is an excellent way to learn, and once you know enough it is not very hard to find open-source projects or other high impact projects to work on.
• JavaScript and React are great to learn and in high demand! But learn what interests you.
• It’s critical that you cultivate a community of others who are learning to code or working as engineers. Network in your city. Network online. Find collaborative projects to work on. Ask for help.
• If you can afford it, try to have some patience. This is what I struggled with the most.

There you have it — the journey that led me across the US to begin a career as a software engineer! I’m sure everyone’s path will look different, that’s part of the fun.

Find your own path and don’t be afraid to disregard other people’s views if you believe strongly enough in your own. That includes my views.

The opportunities in the tech industry are real, and if you want them badly enough, you can find a way there.

As an engineer, your job will be to solve problems, and if you are self-taught, the first problem you must solve is how do you teach yourself?

Cheers everyone, and happy coding!

P.S. A huge shoutout and thank you to the entire freeCodeCamp community and everyone I mentioned in this article (and a few others: Archie, Christian, Susan, Beemer Girl and all my friends from home). You have all proven invaluable in helping me accomplish this goal.

#1 Unless you’re a designer or a developer, the billboards are pure gibberish.

#2 If you’re not talking about tech, then you’re talking about people who talk about tech.

#3 If you see a cute sign with one word and possibly a period, its probably a design agency.

#4 Facebook is Disneyland for adults.

#5 No matter where you work, how you work, or the perks, you’re probably pulling 80 hour weeks without knowing it.

#6 If you live in Mountain View or Palo Alto, then you’re missing out on the city. If you live in San Francisco, then your rent is through the roof. The grass is always greener on the other side. Either way you’re screwed.

#7 The 101 is ugly. The 280 is beautiful. The problem is most residential areas are on the 280, whereas offices are on the 101. Again, you’re screwed.

#8 Evernote’s building is far bigger than it should be considering what most people use Evernote for.

#9 How’s your bumble life?

#10 Only in San Francisco does a cheese startup get acquired.