When everybody seems to be getting rich but you, it’s a disconcerting feeling. However, after 20 years of living in San Francisco, the startup capital of the world, I say that if you want to get rich, don’t join a startup.
We always hear about hugely successful startups in the news. Names such as DoorDash and Airbnb are the flavors of the month. With monster post-IPO share price performance, thousands of new millionaires will flood the San Francisco Bay Area. However, we seldom hear about the failures or the zombie startups that end up treading water for years.
Most startups either fail or have a mediocre exit. As a result, the below-average salaries employees earn to join a startup in exchange for equity often ends up being a bad trade. Employee shares are either diluted away or early investors have a ratchet clause that make them worthless.
When a startup does get bought out, it is the founder or founders who usually walk away with something meaningful. Sizable payouts typically aren’t going to the employees who helped make the founders rich. Founders know this, and sadly, they often still don’t try to take care of their employees once they receive their liquidity event.
In my quest to prevent people from entering startup purgatory, here is a new case study of how the founder of Baremetrics, Josh Pigford, walked away with millions while his employees were left with peanuts.
Pigford was very transparent, which should help future startup employees make better employment decisions.