I think jwz sums it up best in another post, where he talks about the best case scenario: becoming rich from your startup:
I've known dozens of instant-millionaires so far (from Netscape as well as other companies), and basically, I don't speak to any of them any more, because the money changed them and turned them into fairly creepy people. People who spend $10k on a wristwatch and then brag about it (while trying to aloofly sound like they're not bragging about it.) People whose sense of self-worth has gone nonlinear, because when they look at their brokerage statement, they forget that, while skill was certainly a component of why they got to where they did, luck was also a huge component. Most of these people have never worked for a company that built a good product and failed anyway. They don't have any understanding of the fact that skill is often necessary, but always insufficient. They believe their hype.
I don't think people appreciate the money aspect enough. It does change people and not always along a vector you would expect. It also changes people who don't get rich.
Your a low number employee and your company goes public, woohoo you are rich, but people who work with you and came later and are doing the same job as you are not. The cognitive dissonance is huge, people sometimes feel guilty that they are rich and their co-workers aren't, sometimes they feel like they 'must be smarter' because they are rich and their co-workers aren't. Newly rich people want to marvel in it, and share how amazing it is that they can spend 10K on a watch if they feel like it, and the people around them, doing the same work and not rich, well they often aren't all that appreciative of what it must be like.
Those relationships get awkward quickly. And people separate so that they can be with other people where their lifestyle (or lack of it) won't be a source of awkwardness.
Not a lot of people talk about the side effects of 'success' but they should think about it.
My point in quoting that wasn't that success is necessarily bad for you (Alex Ohanian seems to be doing okay, and jwz is himself a counterexample) it's that success in that sort of business has a large random component.
The point of the OP's post is that huge sacrifices are necessary for great rewards. I think the truth is more like, your huge sacrifices are necessary so that our investment strategy works.
Meanwhile, guys like patio11 and the 37 Signals team have shown there's plenty of different paths to success. And if you think about what people like Jimmy Wales or Tim Berners-Lee have done, there's lots of ways to "make a dent in the universe" without even forming a traditional company. I know this is crazy talk, but not all roads to greatness involve making a VC rich.
But you know, now that I think about it, I think people are going to read what I just posted and only zero in on the "dozens of instant millionaires" sentence and ask how can I get in on that?
The definition of success itself varies among most of the people. Some people wish to make a dent in the universe, some people just want money. Some people want both.
Some people just want to be famous and remembered. Some people want to be something important part of an ecosystem who get to decide a lot of things. Some people just like Power and social status. Some people are in just for the fun of the game.
Some people just want to be happy. List can be really long. Basically its what you truly want.
Depending on that there are different things you need to be successful. There is no silver bullet.
"Your a low number employee and your company goes public, woohoo you are rich, but people who work with you and came later and are doing the same job as you are not."
You're leaving out risk and experience:
* Employee #3 takes more risk than employee #30 who took more risk than employee #300.
* More importantly, even if they have the same roles when employee #30 joined, odds are that employee #3 was involved in quite a few other things in quite a few other roles and has had a fundamentally different impact on the team and organization as a whole.
Disclosure: I'm with a startup popular around here.. but my number is well into the double digits. ;)
Don't confuse the 'why' some folks are more handsomely rewarded at a liquidity event, with 'what it does to them.'
Here is the situation, person A in a four person cube is a multi-millioniare on paper, person B, C, and D are still unable to come up with a down payment on a house.
Person B, "Hey A, what are you doing this weekend?"
Person A, "We're flying up to Oregon to go helicopter skiing on Mt Hood, its wicked cool, I got a new set of bump skis and that Rossingol gortex super suit, can't wait to try it out. How about you?"
Person B, "Uh, a BBQ on the balcony of C's apartment. I guess you're busy."
Now person A might be a douchbag here but they might simply be honestly answering the question. And in the answering, its awkward because its hard to imagine them not going helicopter skiing so that could could come over and have tri-tip at your place and play Wii or watch the game.
But at work they all work on the same part of the system, they all have similar roles and similar levels of responsibility.
Person A, if they have any empathy at all, will quickly recognize that it makes non-rich people uncomfortable to talk about stuff like this, and they stop (and then appear 'withdrawn' to people B, C, and D.) and they start hanging out with the other low number folks who are doing their own crazy things and so feel neither threatened nor jealous nor uncomfortable with discussions that involve spending 15 - 20 thousand dollars for a weekend outing.
Sometimes people B, C, and D will respond affirmatively and supportively, sometimes they will attempt to make person A feel like a douchebag (even if they aren't) to salve some inner wound. How folks respond to that varies by person, I don't know if you can know apriori how you personally will respond until you are in that position.
I completely agree that money changes the vast majority of people.. especially if it's a large amount very quickly.
I still think your "similar roles and similar levels of responsibility" point is incomplete. Employee #3 will always have a different relationship with the company - and its leadership - than employee #30. They've been through quite a bit together that #30 was not there for and there will be a different level of trust, authority, etc. It's not a criticism, just a situation.
It's the difference of going to school with the same kid since kindergarten and the new kid getting there in high school. There's quite a bit of history.. good or bad.
Yeah, this article left me speechless. Why would you use jwz to justify startup culture? jwz left the tech industry completely in 2000 and bought DNA Lounge.
People have been starting businesses with limited personal wealth since time immemorial. He may or may not have had the flexibility to do exactly what he did, but mortgages and business loans for things that aren't utterly ridiculous are not difficult to come by in good economic conditions (which is what he had at the time).
It's not that cautionary. If you went to jwz right now and asked him "If you went back in time and, knowing everything you know now about how much pain would be involved, would you sign up with Netscape again?"
I bet you he'd say yes.
"But who said everything has to be fun? Pain builds character. (Sometimes it builds products, too.)"
>>"But who said everything has to be fun? Pain builds character. (Sometimes it builds products, too.)"
Exactly. In fact all fun thing is said to make your position look a little good. Its not good if you depict the path to success as a painful journey. To make your story glorious you need to look like a hero and for that you need depict accomplishments in the most glorious way and make them seem effortless(fun).
Imagine a situation, if you are giving an advice to a young man. You will rather tell him to work on things he likes to work(fun) than on the ones he doesn't like. Although this is the advice in theory you would like to give. Deep within yourself you know very well, doing something big will require you to do stuff you don't like to do. Undergo, pain and sacrifice which you wouldn't like to endure normally.
Also 'struggle' is one the reasons most normal people are OK with their normal lives. I think most people just lack the required level of motivation and desire to overcome the pain to undergo the 'struggle' in the path to success. Most people just drop the plan to work hard calling it 'not worth it'.
People like to believe in a easy way out. They like to believe luck exists. Because that will give them an unfair advantage over others. That is, they can get rich even without working.
Hardwork is so inglorious, it make success look obvious. And moreover when you look at the big picture. It looks karma.
It is not enough. Luck has a lot to do with it. It is so upsetting to believe the role that luck has we come up with these fairy tales that if you just work yourself into an early health problems you will be rewarded with riches. But let's remember the basics, you can work this hard, yet most start up fail.
There are three possible outcomes for startups: (1) failure; (2) marginally successful; and (3) enormously successful. In case of (1) and (2) employees hardly make any money, and early employees may make money in case (3). More than 99% startups' outcome is either (1) or (2).
I feel startup world is highly skewed in favor of investors and founders. I have worked at a startup and now I would think twice before working for another startup, since rewards don't add up to effort and time because of odds.
I think jwz sums it up best in another post, where he talks about the best case scenario: becoming rich from your startup:
I've known dozens of instant-millionaires so far (from Netscape as well as other companies), and basically, I don't speak to any of them any more, because the money changed them and turned them into fairly creepy people. People who spend $10k on a wristwatch and then brag about it (while trying to aloofly sound like they're not bragging about it.) People whose sense of self-worth has gone nonlinear, because when they look at their brokerage statement, they forget that, while skill was certainly a component of why they got to where they did, luck was also a huge component. Most of these people have never worked for a company that built a good product and failed anyway. They don't have any understanding of the fact that skill is often necessary, but always insufficient. They believe their hype.
-- http://www.jwz.org/gruntle/corleone.html