Very tough career choice (ego, startup, San Francisco Bay Area)

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deanmoriarty
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Very tough career choice (ego, startup, San Francisco Bay Area)

Post by deanmoriarty »

Hello,

This forum has always been extremely full of sound advices from people with much more life experience and wisdom than me, so I hope to steal some more today.

I am a software engineer living in Sacramento, CA. I joined a software startup 3 years ago as the first non-founding engineer (right after the seed round). I worked pretty hard and efficiently, and became the de-facto technical leader of the engineering team.

A few months ago (company size ~40 people), after our third round of funding, the founder of the company (technical) decided to hire an experienced VP of engineering, and put him formally in charge of the engineering team. I was in my heart expecting to be promoted to a CTO/VP of engineering position, considering my extremely good performance (confirmed by my compensation increase over the 3 years: 90k -> 120k -> 150k -> 165k -> 180k -> 180k + bonus (small % of the revenue)). I stated my interest to be an official leader to the founder, but I've been told that the company needs someone experienced and that he needs me doing actual technical work rather than upper level management.

This is a very bad personal blow and it's hard to not feel demoted. I am too attached to everything that I built and directed to just step down and leave all the technical decisions to this new person while I just see my figure become irrelevant in the company that I technically bootstrapped, so I feel the best decision is to leave the company. Mind you, I am not adverse to subordination, I am an extremely professional person and have worked in a hierarchical structure before and plan to do so in my next gig as well. It's just that I can't tolerate stepping down from my current role.

The main problems with this decision are two:

1) Since the company is based in San Francisco and I live in Sacramento, I was able to essentially get a Bay Area salary even in this area (much lower cost of living). If I change job, I'll have to relocate to the bay area, giving up my life here. Considering that I am single, this is not a terribly bad deal, but it's still something to consider (including the high cost of living of the SF area)

2) I have equity in the business (~1% after dilutions) under the form of stock options and if I leave I am required exercise those options within 90 days, or I lose them. Exercising all my options will require ~100k between cost of exercise and amount of AMT tax to immediately pay to the government. I am definitely against "investing" such a huge amount of my savings into something that could completely be worthless (I already risked enough of my personal time by staying there 3 years).

The most reasonable action plans I came up with are these:

1) Suck it up and stay, hoping the company will get acquired (a reasonable timeline for this event could be in about 3-5 years from now, so not immediate at all) and hoping I'll get a financial retention plan big enough to have justified the invested time and the bad blood.

2) Leave now (few weeks/months) and try to find a new employer that would provide me a signing bonus big enough to cover (fully or partially) the exercise of my options (these things are rare, but not unheard of in Silicon Valley). The idea would be to just try very hard to join one of the big companies (Google, Facebook, ...), getting a compensation of around 250-300k (average number for performing software engineers, considering salary + stocks after a 5 years tenure in the company) and enjoy my new life.

3) Leave, but try to reach a compromise with my current employer that goes like "I'll stay for n more months if you'll finance my exercising options as some sort of severance package". The founder has been historically very aggressive against the people who decided to leave the company, so I'm not assuming he would behave differently with me.

A few more info about me:

Age: 30
Status: Single
State: CA
Income: 180k + small bonus
Taxable accounts: ~270k at Vanguard
Non-taxable accounts: ~70k
Emergency fund size: 50k (~20 months of living expenses)

Thank you very much for reading all this.
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cheese_breath
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by cheese_breath »

You can make your own decision. But I'll tell you you're not the first person to miss out on a position you thought you deserved, and you won't be the last. The founder's reasoning makes perfect sense to me.
The surest way to know the future is when it becomes the past.
BrooklynInvest
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by BrooklynInvest »

OP,
Sorry for your problems. Corporate life can be hard on the ego sometimes. I struggle with that a lot. A counter thought -

4. Do nothing for 6 months except express disappointment to the founder but also your continued commitment to him and the firm. Current issue aside, you've got a job you like and a very good salary. Either the new person is a good hire and you'll learn something about management that you'll apply when you become a manager or they won't be a good hire and by demonstrating that you're a team player you'll improve your status.

Good luck!
dad2000
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by dad2000 »

I agree with cheese_breath. If they are preparing for a liquidity event, it doesn't surprise me that they'd bring in a few more experienced executives.

BTW, as a manager in a similar field, I feel like my skills have deteriorated because I've been doing less technical work. As long as you're compensated fairly (I think you are), it's not a raw deal. You might also learn something from the new VP to help prepare you for your next position.
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Meg77
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by Meg77 »

It seems to me that the primary factors to consider are those yet unknown: what kind of other job opportunity you could land, and what it would pay (and where it would be located). I think it's completely reasonable to put out some feelers in this situation and be willing to leave if you can get a compelling opportunity elsewhere. But at the same time you aren't in a terrible place, assuming this new manager isn't a mean-spirited dictator. He may in fact need and appreciate your help. And you may be able to negotiate continued raises.

If you're single and not married to CA, you could also look for work in other parts of the country. You might very well find you can land a similar salary with a much lower COL even than Sacramento, while slashing your commute to boot.
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Ninnie
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by Ninnie »

Wait it out for 6 months to a year. See how you feel then. If you're unhappy working for this new person, you can make a decision at that point.
Rodc
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by Rodc »

I am not sure you should wait a year, but maybe.

More you need to wait until you cool off some and are in a better place mentally to make a fully informed rational decision (to the extent humans can do such a think anyway.)

I was passed over in a not totally dissimilar way once, perhaps with less justification, but then later got the promotion. Jumping ship immediately because I had my ego bruised may not have been the best thing.

Best of luck.
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dltnfs
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by dltnfs »

Unless there's something specific that you want to do instead, my suggestion would be to stay. If you've been working at an unsustainable pace, then maybe dial back a bit. In a certain sense, that's what they've just told you to do. If the founder is the type to scream at and emotionally manipulate you in response to that, then ignore such efforts. If you're as good as you seem to imply, then you're almost certainly delivering much more value than it would cost to replace you at $180k base (plus a bonus that I'm assuming is small by comparison).

If the new "experienced manager" is good, then maybe you'll learn something. If the new manager flames out (>50% likely, in my personal experience; it usually took about a year), then you'll be ready to take advantage. If neither happens, this at least gives you time to think and plan your next move.
AlohaJoe
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by AlohaJoe »

I'm a little confused so I have two questions.

Have they actually already hired this new VP of Engineering? Or have they just started the search?

Assuming they've already started, has this new VP of Engineering actually overruled you on some technical decision or made one without consulting you?

My reading of your post was the person hasn't even started yet and you're worried about hypothetical scenarios but it is a bit hard to tell and I might be mis-reading.
Topic Author
deanmoriarty
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by deanmoriarty »

AlohaJoe wrote:I'm a little confused so I have two questions.

Have they actually already hired this new VP of Engineering? Or have they just started the search?
He already started a few weeks ago, and is gradually taking on all the tasks that I have been doing for the past couple years, so I'm more and more funnelled into a pure software development role, which was my very first original position that I did full time for about one year at the beginning of the company, and after the team started expanding I did mostly part time until now (I'd say 1/3 of my time was spent on pure development while 2/3 were spent in managing, architectural designing and miscellaneous).

Also, a big thanks to all the people who have commented so far, as expected the bogleheads community always conveys a lot of wisdom. It's hard not to feel this as a painful demotion.
quantAndHold
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by quantAndHold »

It's called bringing in adult supervision. Startups can get to a certain size with inexperienced founders, but need people with experience to grow the company from 40 to 400 people. A person whose main job experience is as a tech lead for a tiny startup, who also happens to be remote, is never, ever going to get that job.

So anyway, you can stay or go. You're probably not going to get salary parity at any job you can do from Sacramento. You're probably also not going to get standard of living parity at any job you have to move for, but you know that already. I wouldn't expect any company to pay severance to someone who is quitting because they didn't get promoted. I've never heard of that.

If you leave, do not exercise the options. Most options end up not being worth the paper the contract is printed on. Frankly, even if you stay with the company, you're probably facing a lot more dilution. The are a lot of VC's in line ahead of you, and will likely be more before the exit event happens. Most VC contracts are written to protect the VC interests, not yours, and if there's a down round or the liquidity event doesn't pay as much as the contract calls for, you will hear a giant sucking sound when you hold your wallet up to your ear.

Sorry. Working for a startup is a passion project. If you want money, you should get the Google job.
Yes, I’m really that pedantic.
Topic Author
deanmoriarty
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by deanmoriarty »

quantAndHold wrote:It's called bringing in adult supervision. Startups can get to a certain size with inexperienced founders, but need people with experience to grow the company from 40 to 400 people. A person whose main job experience is as a tech lead for a tiny startup, who also happens to be remote, is never, ever going to get that job.

So anyway, you can stay or go. You're probably not going to get salary parity at any job you can do from Sacramento. You're probably also not going to get standard of living parity at any job you have to move for, but you know that already. I wouldn't expect any company to pay severance to someone who is quitting because they didn't get promoted. I've never heard of that.

If you leave, do not exercise the options. Most options end up not being worth the paper the contract is printed on. Frankly, even if you stay with the company, you're probably facing a lot more dilution. The are a lot of VC's in line ahead of you, and will likely be more before the exit event happens. Most VC contracts are written to protect the VC interests, not yours, and if there's a down round or the liquidity event doesn't pay as much as the contract calls for, you will hear a giant sucking sound when you hold your wallet up to your ear.

Sorry. Working for a startup is a passion project. If you want money, you should get the Google job.
Thank you for your brutal, albeit honest, opinion. I just wanted to clarify I'm not "remote", in these past couple years I essentially hired a team of engineers in my town (and we formed an office with the biggest engineering presence, headquarter is full of sales and marketing folks), and I am at the moment managing all of them plus another handful who are either in the bay area or remote from other parts of the US. I'm sure that doesn't change the whole point, but that's just something I failed to mention to begin with.
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Watty
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by Watty »

Ninnie wrote:Wait it out for 6 months to a year. See how you feel then. If you're unhappy working for this new person, you can make a decision at that point.
+1

for six months at least.

At the age of 30 you have had limited experience and you only grew into your current position recently. It doesn't sound like you have an MBA or any management experience other than what you have done in the last year or two. I don't think that the expectation of getting the VP was very realistic.

Be very sure that you really want to get into management. If the company fails then as a software engineer you would likely not have any problem finding a new position. A VP of a failed company may have a hard time finding a comparable position since they may be seen as part of the reason the company failed. In the long term not getting the VP position might have been a very good thing for you. After you have been a manager for a few years then getting back into the technical side could be difficult since you may have lost your technical edge, or at least be perceived that way.
dltnfs
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by dltnfs »

quantAndHold wrote:It's called bringing in adult supervision. Startups can get to a certain size with inexperienced founders, but need people with experience to grow the company from 40 to 400 people.
Maybe. I watched the "experienced manager" hired to adult-supervise me make repeated bad decisions, misrepresent the state of development to investors, and get fired within roughly a year. I did a pretty good job cleaning up his mess, and by this point, his incompetence has probably been net beneficial to my career (and net worth). Your experience may vary.
quantAndHold wrote:If you leave, do not exercise the options.
It's hard to value options. It's even harder to value a total stranger's options based on a message board post that reveals basically nothing about the options or the company's business. This is terrible absolute advice.
quantAndHold wrote:Sorry. Working for a startup is a passion project. If you want money, you should get the Google job.
I don't understand this comment. It's a business like any other, not a charity. A startup certainly requires greater dedication than a large company, and the expected value of your compensation is out in an improbable tail of the distribution; but if you don't think that expected value is there, then why are you working to make money for someone else?
Bruin
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by Bruin »

Somewhat similar situation happened to me.

My supervisor retired, recommended me for the position. They opted to hire from the outside without even interviewing me (I get the decision, someone with experience vs someone with no experience) but it really upset me, that didn't work out - person was never hired. Then they split the position and hired someone else to do part of it, which didn't really work out either. At the end of the day I ended up getting it. Yeah, I wish it would have went differently, but it ended up in the right place.

Now, for your situation, there is no choice at this moment, you were passed over, and you're asking what to do based on no real options. Those options are:

1. Deal with it.
2. Quit and not have a job.
3. Deal with it and start floating your resume out there to see what else you can do.

You're obviously not going to do #2. You're asking about if you should take another hypothetical job when you don't have another job to take. Yes, float your resume, see if something better comes along, if it does analyze it then. If it doesn't, keep plugging away until it does.

Most importantly, yes it sucks, but if there is someone they hired that is truly more experienced than you, learn from them.
rgs92
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by rgs92 »

I think you may be letting your value go to your head because of all the good things that have been laid upon your table.
It sounds like the work is fine, the money sure sounds fine, and you like where you are living.
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chocolatemuffin
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by chocolatemuffin »

My guess is that they want to bring in someone with more business experience to communicate with the investors and customers, which is not an unreasonable thing to do depending on the stage of the startup.

What is your career goal? Where do you see yourself 5 - 10 years from now?

If management is your end goal, then you can talk to the new VP and the founder about retaining some management responsibilities. If management is not particularly interesting to you, and it's just an ego thing, then it's probably a good idea to focus on developing your technical skills.
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JamalJones
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by JamalJones »

Lived in Sac-Town (as we natives call it) for many years. Whatever you decide in the short-term, at some point Get. Your. Self. To. San. Fran. Cisco... Don't worry about the high cost of living. There's a reason that's the case: SF is awesome. Sac-Town? Let's just say, it's a little bit less than awesome. But you know this already. Heed my advice. 8-)

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tigermilk
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by tigermilk »

There's a difference between a technical leader and manager. If you truly rose to the "de factor technical leader" and that implies you really know your technical stuff, you are likely recognized for just that - the guy that knows which bolt to turn. In many cases, those people are more cherished than a manager whose technical skills start eroding. Much larger organizations than yours recognize this and have roles like tech fellows and the like. These are the most respected, high achieving, go to technical folks that get the luxury of high pay without dealing with management issues. In other words, the best of all worlds.
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LiveSimple
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by LiveSimple »

Seems to me, OP you are thinking too much.
Just do the technical stuff and leave all the organizational stuff to the VP.

Once you do the technical stuff, for the next 3 to 5 years, many opportunities will come to you.
You can be a founding engineer, founding CTO, CTO ( Not a VP ), etc.

Do not see any issues, here, just enjoy and deliver valuable contributions to the company, you will be well rewarded.
t3chiman
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by t3chiman »

deanmoriarty wrote:...
1) Suck it up and stay, ...
I was a techie (HW/SW engineer) for the longest time. Got a chance to be a "manager" in a startup, and, despite the discouraging odds, took the leap. Based on my experience, I say "stick it out". Reasoning: you are young yet, you have a lot to learn and contribute technically. You have a taste of being a big shot manager, and realize that they are not magicians, they're plain folks just like you. This is a great position to be in. Best outcome is that the company takes off financially, and that rapid growth creates all sorts of managerial slots which you are nicely suited for. As they evaluate candidates for these positions, your dignity and ethical behavior will be highly valued. You may even get some points from the new guy if he is clueful enough to realize that you quietly helped him out of a couple of jams.

So, stay in the trenches for a bit. A further consideration: If the company should fail, at least you would have some marketable skill to make a buck. "Former manager at failed startup" would be far less attractive to potential hiring managers.

HTH
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vitaflo
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by vitaflo »

deanmoriarty wrote:I joined a software startup 3 years ago as the first non-founding engineer (right after the seed round).
This was your first mistake. Never be "employee #1" at a startup. You put in the same amount of work but get none of the rewards.
deanmoriarty wrote: A few months ago (company size ~40 people), after our third round of funding, the founder of the company (technical) decided to hire an experienced VP of engineering, and put him formally in charge of the engineering team. I was in my heart expecting to be promoted to a CTO/VP of engineering position, but I've been told that the company needs someone experienced and that he needs me doing actual technical work rather than upper level management.
Very common and many startups do this. Very often VP or C-level hires do not come from within, and sometimes come at the request of the investors.

Whether you want to believe the company is doing something great or not, it still has to market itself and convince people (buyers) it's more important than it actually is. Executive level hires do this. It makes it seem like the company is a hot commodity that everyone wants in on. Promoting you would not give that same outcome.

These are just the games startups play. It's unfortunate but it's usually the reality.

What would I do? I'd check my ego and realize you're getting paid a SF salary in Sacramento and make hay while the sun shines. Use it as a learning opportunity and save up a nice nest egg while you can.
Last edited by vitaflo on Thu Jun 23, 2016 11:35 am, edited 1 time in total.
btenny
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by btenny »

Well you have a problem. Unless this company grows like mad they cannot afford your big salary and this new guys big salary. One of you has to go. Plus you centered the engineering team in Sacto and they probably wanted it is SF but have never came out and told you that. So I suspect you have bigger problems than you are currently aware or discussing. I am an old guy who did startups and engineering and then into full general management. I think you need to look for a new job. The new guy is going to take over (if he is capable) and do a lot of your previous job and then try to get rid of you. So unless the company starts a ton of new development or new projects for you to develop you will not need to do much "technical lead engineer stuff". So find a new job and then move on. Welcome to the politics of the working world.

Good Luck with your next position.
mac808
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by mac808 »

Read all the great professional career advice people posted because this seems like more of a career decision than a purely financial transaction decision. That said, presumably the company has risen in value between when you were granted stock and today. If so, then if you do end up deciding to leave, one of the existing investors may be willing to partially cash you out. You could use the proceeds to hold on to the rest of your stock. I see this happen frequently. Common stock will typically trade at a discount to the last investment rounds which are likely preferred stock, but if the investors feel bullish on the company, then they often like to increase their position with common stock, either because they can get it at a discount or because other investors have crowded them out of the preferred rounds.
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sunny_socal
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by sunny_socal »

You're doing very well for such a young guy! Many people would give their left arm to be in your position, don't take it for granted.

Some thoughts:
- So you're in a relatively low cost of living area on a good salary, you can actually save a lot. In SF you'll be spending most of it.
- There is no perfect company, there will always be politics. You might be going from the frying pan into the fire.
- I think the best reason to jump ship is to get more experience. You've been there long enough, if you're craving more experience then it's a fine time to leave. Someone recently told me "spend the first 20 years of your career gaining experience, then you'll be truly valuable during the next 20." It sounded like good advice.
- I'd probably stay there a little longer and milk it, maybe a couple years. You have a good thing going! (Read some of threads about people trying to buy a house in SF to get some more perspective.)
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SmileyFace
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by SmileyFace »

As a start-up with 3-rounds of funding I'm sure they are looking at an exit strategy and having a seasoned VP-Engineering could be crucial to that strategy (someone who has worked through an IPO or Acquisition in the past) so you shouldn't feel put-off. You can hold your head high and use this as an opportunity to learn from a seasoned VP. Talk to the VP-Eng about wanting to move into a leadership role - if the company continues to grow perhaps he becomes your mentor and you get promoted under him.
Of course only you can make the decision but you didn't tell us one critical piece of info: What's your equity stake in the company? Do you know what your percentage of equity currently is given 2 additional rounds of dilution? Given you joined early I assume you have a reasonable amount of equity in the company? If you feel they truly value you - you could use this opportunity to ask for additional equity to make your hard-work and sticking with the company worthwhile.
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Tamarind
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by Tamarind »

I'm your age and work for a later stage company, albeit not in the hothouse of the Bay Area. I've seen several layers of engineering leadership develop since we blew past 40 people. If you are not hired at a VP or C level you are not going to rise to it, but performing well and moving up while developing a record as a good manager sets you up for a higher start at your next company in a few years after you hopefully get some payout.

It is the norm for young companies to bring on an experienced outside hire for their first VP of Tech/CTO. When it does not happen it's because that role was one of the founders. The board had a major hand in the selection. It does not reflect a lack of confidence in you or your skills. If you are otherwise happy with the company, simmer the heck down and work to detach your ego from this business decision. If you can't get your head out of that aggrieved place after 6 months, then start hunting.

The best advice I've ever recieved re working in startups is: work every day to make yourself obsolete. Are you doing that?

When you succeed you will find that you have created the space to contribute at a higher level and brought value to the company. Rinse, repeat, and make sure that you tout the accomplishments of yourself and your team. If you are still managing a team, figure out what you can do to make them as happy and productive as possible.
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ClevrChico
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by ClevrChico »

cheese_breath wrote:You can make your own decision. But I'll tell you you're not the first person to miss out on a position you thought you deserved, and you won't be the last. The founder's reasoning makes perfect sense to me.
+1

It sounds like you're in a great spot already and have excellent technical skills. I'd be more than happy to let someone else play manager and stay technical. SMB CTO's are a dime/dozen anyway. :-)
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arthurdawg
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by arthurdawg »

Lots of good advice here...


1) Sounds like you are in a sweet spot... wouldn't make an immediate jump until something just as good or better comes along. Sounds like the financial aspects are well worth it at the moment, and that you'd be hard pressed to do better.

2) There might be something that comes down the pipe in your company going forward... if the guy they brought in flames out you are well positioned to become that much more valuable.

3) Jumping early might hurt some feelings and burn some bridges. I think you need to give it 6-12 months for the transition. Then if you find that things are sliding you can jump to a new position with everyone happy for your advancement.

4) OTOH... if this is the beginning of the end and the signs become clear that they are selling out and your position is in jeopardy... never hurts to be surveying the market and networking for that next position either. Having some good leads and options available never hurt.


But I wouldn't do anything quickly or rash as long as you are banking the savings at a good clip and not being harassed.
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deanmoriarty
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by deanmoriarty »

Once again, I am extremely thankful with all the honest replies I received that put things in perspective and help me see the that I am not in a terrible position. I am now definitely leaning towards not doing anything and evaluate in a few months.

I wish there was an alternative way to thank the community of this forum, the answers I received are simply invaluable, and I don't have enough life experience to contribute back with anything meaningful.
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sunny_socal
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by sunny_socal »

deanmoriarty wrote:\
I wish there was an alternative way to thank the community of this forum, the answers I received are simply invaluable, and I don't have enough life experience to contribute back with anything meaningful.
Quite the contrary! You're contributing your perspective of technology development in a startup. I wish I could have been in your shoes, I started @ $30k/year as a new engineer and thought that was good money! Look where you are now :beer (Hint: you're killing it)

I think I should go ask for a raise :wink:
CedarWaxWing
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by CedarWaxWing »

You are making a darned good income, presumably with a group of people you like and believe in... so why leave over one disappointment that you may be letting tarnish your over all outlook on a very good place to be?

If you believe in this group, and like the evolution of what they do... and Sac is not a bad place to be making that kind of salary.... I would stick around if you think this place is going to make it big... if you truly think not...take a year or two to see how the recent changes evolve, continue to make yourself very useful, and enjoy the ride up with the company until you find a REAL reason to leave or a very enticing opportunity elsewhere.

If you have no passion for your job, and do not feel an affinity for the folks there... no amount of money is worth staying when the right option arises... If you do, stay on, see how the new management sorts out, make yourself more valuable to to the new and old management daily doing what you do best... and keep learning more about everything you can.

Some of the best changes in my life were unexpected... so make lemonade out of what disappoints you now... and be prepared for a good ride.

Best

m
hardrain
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by hardrain »

quantAndHold wrote:If you leave, do not exercise the options. Most options end up not being worth the paper the contract is printed on.
I just want to caution taking advice like this without us knowing the parameters of the options. You're not just buying stock, you're buying it at a set price that is different from the current value. The current value is very difficult to determine because it's not liquid, and the only indication you're going to have are preferred share prices, which have financial advantages you won't have. The fact that you're claiming a lot of AMT suggests to me you're getting a pretty decent discount from the 409a price (which by the way is way lower than the preferred "implied" valuations you read in the WSJ). That's a good sign. It's still very risky, but I'd suggest thinking about it like this: what are the chances the company sells one day for less than your strike price? If you're in a volatile or trendy line of business it might be high, if it's a more traditional tech company with several clear acquisition opportunities (independently valuable technology that someone could leverage, large and valuable customer base, ect.) things are mitigated. I can't tell you what to do but I can say there are several scenarios where even a dedicated boglehead could want to exercise stock options. Context is everything.
quantAndHold wrote:Sorry. Working for a startup is a passion project. If you want money, you should get the Google job.
I definitely agree with this though. One very under-discussed aspect of the way the startup world is headed is the move to bring in more "big company" managers as the companies grow. There was a time when someone like MZ could start, run and IPO a company, but even the IPO market alone in incredibly difficult to navigate now, impossible for many types of businesses, and to pursue that kind of growth, regulatory issues, and market PR is not a wise move if you don't have people on the team that can manage it. It makes career progression at these places pretty wonky.

All that being said: If you were in a different situation (not flirting with moving to an insane town in SF, major lifestyle change to maintain income, ect.) I'd suggest leaving...I've been in work situations where that saying "you can't go back home again" comes to mind, and I can empathize with you. That being said, if you stay and just resolve to be positive I suspect you'll do great financially and even learn a lot you aren't currently, if the VP hire was a good one anyway. Having a boss can be underrated in many instances, especially if you're ~30.
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BolderBoy
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by BolderBoy »

deanmoriarty wrote:Once again, I am extremely thankful with all the honest replies I received that put things in perspective and help me see the that I am not in a terrible position. I am now definitely leaning towards not doing anything and evaluate in a few months.

I wish there was an alternative way to thank the community of this forum, the answers I received are simply invaluable, and I don't have enough life experience to contribute back with anything meaningful.
You just did...and we thank you, too!
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
freebeer
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by freebeer »

...
...I just wanted to clarify I'm not "remote", in these past couple years I essentially hired a team of engineers in my town (and we formed an office with the biggest engineering presence, headquarter is full of sales and marketing folks), and I am at the moment managing all of them plus another handful who are either in the bay area or remote from other parts of the US. I'm sure that doesn't change the whole point, but that's just something I failed to mention to begin with.
Congratulations on your accomplishments and you should not feel too badly for not being considered for this position at this time. I do think that trying to have a real heart-to-heart with the founder about their take on why you didn't get considered for the position would be useful. I think the "we need you to keep doing technical work" is mainly a smokescreen.

And BTW from the perspective of the founder you (and your Sacramento team) ARE remote. I would guess that part of hiring a VP Engineering is not just to have someone to "steer the ship" on product execution, but to have someone who brings the tech perspective into the "E Team", Board, investors, and customer discussions. Hard to do that from 120 miles away and it's not clear whether the founder sees you as a peer on the senior management team.

Just to take one example, suppose they are raising a round as part of proposing to grow from 40 to 150 people. Are you the person the founder would want to bring into the VC meetings to impress them with your ability to drive this? Even if you are confident that you *can* do it - and even if the founder shares that confidence - do you have the chutzpah to impress cynical VCs (without a track record at having done so)? Hiring a "seasoned" VP Engineering mainly for fundraising optics isn't totally crazy. Heck if the founder had brought you into the loop on everything he was thinking about you might even have agreed (as a major stockholder).
lostdog
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by lostdog »

Hi Dean,

You have it pretty good. If it were me I would suck it up and stay. I have been in IT for 15 years and I got passed up for a position but I decided to stay because I like the culture and have a few friends here. The grass isn't always greener on the other side.

Best
moneybags
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by moneybags »

I'm not suggesting you leave your company, especially with a significant number of stock options on the table. Leaving a startup before a liquidity event makes it very hard to retain any value from stock options. You do have a few options though:
1. Convince the founders/board to change the stock option plan to allow employees 10 years to exercise (Y combinator officially recommends this and I do believe it will be the norm 5-10 years from now)
2. Look into investors that help with this kind of thing eg. ESO Fund (http://employeestockoptions.com/)

If you ever join another startup at a very early stage, try to convince the founder to allow employees to exercise early and ask for a signing bonus to cover the strike price, exercise immediately and file an 83b. This prevents having to pay any AMT/taxes.
Grasshopper
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by Grasshopper »

The new VP is just window dressing for the investors. Stay and wait them out.
panchilly
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by panchilly »

Why leave? You have a great situation right now.

You are earning 180k in a much lower cost of living area. You have a very large equity stake in a growing startup. They are giving you significant large pay raises every year. Why not continue to ride it out?

What is the valuation of the company? How soon do you think there will be an exit? The way I look at it is this: most startups like yours are late/stingy with base salary increases. Many of them view the large equity stakes as the raise. You have the best of both worlds. You are sufficiently valued that they are continuing to increase your salary at a rapid rate AND you have very significant equity upside.
itstoomuch
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by itstoomuch »

The Curse of technical work. Once you become the expert, you become indispensable. But if you become indispensable, you become replaceable because you and they know that you are underpaid or under-recognized.

Three years is a fairly long time to be in technical.
If the company succeeds, what is your payoff?
How do you get along with the founders and new hire?
Always be looking for new opportunities.

Rereading thread: You may be in a very good position. The engineering team in Sacramento is essentially yours. You live in Lower COL. Your compensation appears to be fair. Treat your team well and you will be in the seat giving directions to the driver.

Disclaimer: DS (31) is into his 4th year in a tech company, Seattle (not Amazon), listed, median size company. He enjoys the supporting role and environment. Got a big raise this year for wage equalization for his skill set. Unsure if he will go beyond 5 years. :?:

YMMV
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo
rayson
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by rayson »

I didn't read the entire thread, so sorry if this is a duplicate suggestion. But, OP, since you are interested in pursuing a management career in Tech, your best option would be to negotiate a better title like "Director of Engineering" at your current startup. That will help you secure a VP of Engineering position 2-3 years later. Good luck with your decision.
cmdreset
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by cmdreset »

I am in the "remain" camp - quitting in a huff is almost NEVER the right choice in these situations. If you voluntarily leave a job it should be for a specific career goal. If you can't get hired into the position you want at another company (that you were passed-over for at your current company), that should tell you something right there.

From your description as 30 year old remote engineer who has built a small, presumably highly-functioning team - as someone else posted, you are almost assuredly not going to be the right choice for a VP position at a growing company.

FYI - I have also had layers of management inserted between me and the CEO at least once in my career. Try as best you can to be honest with yourself - my guess is the new VP has some experience you simply don't have yet, and you might not appreciate this. If your current boss is any good, they will be able to tell you exactly why you aren't ready yet. Try very hard to listen, even if you don't agree, because this is how you are perceived.

And if your company does take off, there will be other opportunities and your options might be able to buy you back some lost ego :)
dltnfs
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by dltnfs »

cmdreset wrote:From your description as 30 year old remote engineer who has built a small, presumably highly-functioning team - as someone else posted, you are almost assuredly not going to be the right choice for a VP position at a growing company.
I agree with your net advice, but have you been to San Francisco lately? The culture celebrates youth, inexperience, and achievement, and that presumably adds to the perceived insult.

I'd agree that if the OP wants to become a manager, then he should be able to score a director-level title, and keep some people reporting to him. If they won't agree to even that, then I might be more concerned. I still wouldn't leave before I found something else that I specifically wanted to do.

If he doesn't really, and just wants the status, then perhaps he could continue to report to the CEO, as whatever the startup equivalent of a technical fellow is. I don't think that's totally nonstandard. That's mostly kind of pointless, but it does avoid the problem of manager jealousy limiting compensation. That might be significant, if he's an earlier employee and the startup is growing quickly.
anoop
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by anoop »

quantAndHold wrote: If you leave, do not exercise the options. Most options end up not being worth the paper the contract is printed on. Frankly, even if you stay with the company, you're probably facing a lot more dilution. The are a lot of VC's in line ahead of you, and will likely be more before the exit event happens. Most VC contracts are written to protect the VC interests, not yours, and if there's a down round or the liquidity event doesn't pay as much as the contract calls for, you will hear a giant sucking sound when you hold your wallet up to your ear.
I agree with this. Unless, there is a blockbuster exit (big IPO or acquisition without any further funding), the average employee won't be making much. Usually the acquiring company with then provide some significant financial incentives that vest over time to keep from losing the employees. Unless you have some throw-away money that you're essentially willing to gamble away, I wouldn't recommend doing it.

It doesn't hurt to look for other positions. In the best case, you might find something you like. In the worst case, you may start to better appreciate what you already have, even if it isn't an ideal situation.
Capsu78
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by Capsu78 »

The only bit of "Dad" advice I can offer... Your threads title indicates a nice level of maturity and common sense- you are way ahead of numerous 30 year olds I have encountered over the years in that you have correctly identified what I think are the most important elements... many folks have a blind spot, be it ego, situation or location.

PS- for what its worth, my first job when I arrived in CA was in Modesto, and it took me close to 2 years to escape to the East Bay... lived their during the birth of Silicon Valley, yet selling products for a 100 year old company that no longer exists and whose products have nearly been completely replaced by technology.
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Watty
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by Watty »

I am not real keen on them since I have seen so many bozos have them but you might also consider getting an MBA if you really want to get into upper management.
dltnfs
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by dltnfs »

anoop wrote:
quantAndHold wrote: If you leave, do not exercise the options. [..]
I agree with this. Unless, there is a blockbuster exit (big IPO or acquisition without any further funding), the average employee won't be making much.
Why do you think that's true for the OP? From the limited information available (40-person company in SF, ~1% stake, ~$100k in strike price plus AMT if exercised), I'd guess that if the company were acquired tomorrow at the price implied by its most recent round of funding, he'd net something approaching $1M, and the acquisition would rate a few brief articles in the tech press, hardly a blockbuster.

Of course, it still might be a bad idea to exercise. The OP is much more able to value this stock than anyone here. Blanket advice to the OP based on the situation of an "average employee" (which he is obviously not) seems particularly useless.
anoop
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by anoop »

dltnfs wrote:Blanket advice to the OP based on the situation of an "average employee" (which he is obviously not) seems particularly useless.
Good point. When I said "average employee", I meant folks that are not part of the executive management team. But I agree that there is simply not enough information for us to know how well the stock is going to do.
edge
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by edge »

Smartest thing you can do is make it clear to your employer that you will continue to be a highly productive member of the team, accept your role and the new leadership, and then ask for some things from them to allow them to show their commitment to you.

1). Title. This will help you when it is time to move.
2). Retention compensation. This should be cash and equity that vests in 12 months or change of control or if you get axed for any reason other than criminal.

If you don't like how things turn out in the office then you have plenty of time to plan your exit in a way that works for you.
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Re: Very tough career choice (ego, startup, San Francisco Bay Area)

Post by Minot »

deanmoriarty wrote:I wish there was an alternative way to thank the community of this forum, the answers I received are simply invaluable, and I don't have enough life experience to contribute back with anything meaningful.
I agree with the posters who've said you've made a real contribution. Just by bringing your situation to this forum, you've called forth the best that Bogelheads have to offer; it's now there for others to read in similar situations.

That said, you can also click on Support this Site (top of the page, on the blue/gray line that starts out with Home) and make a donation.
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