That said, if a startup is doing something that really turns my gears and I like the company, then I'm absolutely willing to work for less pay in order to be a part of that.
In software instead, that's incredibly common: several of my coworkers (late stage private company) are in mostly for the thrill of working on our technology since we operate in some interesting niche, and I know for a fact they are paid much less than me (30%+), even if they have a bigger impact than me on the company (and they are also older, with more experience!).
It's so common that many times employers use it at their advantage, by preferring people that can be sold purely on the tech rather than the tech AND the market rate for the position.
To me, both the financial aspects and the technical challenges must be absolutely satisfied in order to join a company. Maybe I'm too practical because I'm not a trust fund kid and grew up dirt poor, so I know that in my limited ~20y engineering career (assuming ageism) I need to make enough so that I will be able to retire comfortably, while making sure I work on stuff that stimulates me so I can give my very best.
I know multiple photographers whose passion is landscapes/nature and only grudgingly supplement that income with weddings/portraits.
In other words, teachers are not willingly giving up a portion of the compensation that they could otherwise be making doing the same job somewhere else. In software instead, that happens ("Oh, you work on FOO v2.0, I'll happily take 40% less than what I could otherwise be making doing this job in another company").
I don't know about public defenders, you might have a point there.
Basically, startups are a terrible place to work. I wouldn't recommend them to anybody. However, there are some folks, myself included, that love them.
Tech or IT or whatever you call it tends to happen at a glacial pace in structured organizations. Most IT projects fail. Most folks don't care. They want to come to work, do their thing, potentially excel at their thing, go home at the end of the day, and enjoy their life. At a startup, someone that's eager to contribute can really make a difference. One inspired idea has the potential to really move the needle when it comes to the success of the business.
But for public service, not because there is a 0.1% chance they'll get a lot of money.
Source: married to an md phd, meaning ~half the potential salary is both forgone and that time is used to be in public labs solving cancer. Hours still stink tho and every day is life and death, so aggrieved programmer discussions of hours, burnout, compensation, and ability to own equity come off sounding similar to how bankers do. Clearly real for those living it, but odd from the outside.
Something to consider as well, is that while the salaries might be lower, they are often not that far off from what one would make in their respective industry. So someone working at a biotech startup will probably be making a lot less than a FANNG engineer, but would probably be pretty competitive with their peers in 'BigBiotechCo'.
And the other thing to consider is that engineers, and in particular programmers, tend to be pretty bad negotiators. Its possible that your co-workers would gladly take a 30% raise if they knew they were making that much less. I highly doubt they are 'trust fund kids' (those folks tend to found crappy startups, cause if you are set for life, why would you work for someone else?). And if they are older (as you imply) its also possible they were starting to feel the impacts of ageism in tech, and took a low ball offer as a result. Or perhaps they have saved up enough from previous jobs and just don't care that much if they are maximizing their pay, and are more focused on working on cool things and with non-toxic co-workers!
Yes. My willingness to work for less pay if the work is interesting enough only applies to those sorts of companies. The stereotypical SV-style business has no appeal to me regardless of what sort of work is involved. Been there, done that, learned my lesson!
This applies equally to me.
Here's the thing -- a job that isn't fun and interesting is a job I can't tolerate regardless of how much it pays. Life is too short to suffer on a daily basis.
But I do have a minimum amount of income that I can tolerate as well. I have to earn enough money to live, after all. How much the minimum is depends on the cost of living in my area.
Hence, what I really strive to make now is actually 3-5X my cost of living expenses every year, so I can ensure a decent retirement down the road.
Based on that math, I really can't afford the luxury of taking a job that will just cover my yearly expenses. In my case, I really have to go for jobs where swes make $300-400k/yr, and I live pretty frugally myself (I spend 60k/y post tax in the Bay Area). I don’t think it’s safe to assume software engineering is a career that you can keep up until your 60s, unlike teachers for example, so you have to plan for it.
I’ve seen several people actually employ this logic and justify to themselves a 120k software job at a cool Bay Area startup, because it fully covers their living expenses in the Bay, despite not letting them save even one single dollar for retirement. I think that’s very irresponsible though, and they’re in for a sad surprise when they’ll discover in their late 40s that employers don’t consider them as hireable as they once were, and now they have to drive Uber to not become destitute (not that there’s anything wrong with that, but it’s hardly a great outcome).
For startups whose stock has 0 actual value in a market, then yeah stock options are worth nothing.
Restricted Stock Units are cash. They are new shares issued to you with restrictions on exercising them. Once they vest, there is no value in not selling them immediately. The tax consequences are the same if you hold them, and you gain the value of diversification by selling.
The above should tell you something about the calculation you are espousing. Yes, the very risky asset called stock options is much less likely to hold any future value. The risk implied should also tell you that for a rare good pick with lots of well managed influence to the outcome, you can succeed with fantastic gains where you cannot simply by holding public shares.
YMMV. The only way to win the startup lottery is to work very hard to influence the outcome. I can't think of any other lottery like that.
The gains that occur after vest-and-release are capital gains. Capital gains for assets held over a year are much lower than ordinary income rates for most people receiving RSUs. (It's still reasonable advice to diversify in the typical case.)
