The only fair way to analyze this is by looking at opportunity cost, which isn’t what TFA does.
Founders often have slightly higher market value (though not always) than first employees, so they are giving up more to go the startup route.
Separately, TFA further underestimates founder risk as they are typically not taking salary during pre-seed, and no or low salary during seed. However employees 1-5 typically get mostly cash, often much closer to market.
Thirdly, there is also often a lot more stress in being the founder. It is a complex, all day job. You have the weight of keeping things going for all employees, and when cash is low it’s your paycheck that gets delayed/cut first, not your employees.
That said I am all for reasonable early stage liquidity where it makes sense, but as many other commenters have mentioned, it tends to not be life changing super early for most early employees. Most employees would rather keep the bet on the table. Also, I am strongly against large founder secondaries. I think it’s helpful for founder to remain feeling “not financially successful”, especially first time founders, so that they keep their heart in the game. I followed this practice with my companies.
> Thirdly, there is also often a lot more stress in being the founder. It is a complex, all day job. You have the weight of keeping things going for all employees, and when cash is low it’s your paycheck that gets delayed/cut first, not your employees.
I've seen startups from a founder perspective and from an employee perspective (VC style startups). I agree there is more stress as a founder, but people really underestimate the toll as an early employee - the gap is smaller than many people think. Particularly those ideal missionary-type early employees, they take on just as much mental ownership burden as the founders. It is also an all-day job. Let me tell you, when the money runs low, it is immensely stressful as an early employee - it is both hard to be the one making the decisions and it is hard to not be the one making the decisions. The ability to walk away isn't a benefit, it's a burden.
Their jobs can be different (or can be very much the same - depends on people and every startup is its own beast) with founders needing to deal with fundraising, board management, and ultimately having the impossible problems land at their feet which is often out-of-scope (and out-of-sight) for early employees. But the same core problem exists for both - your actions will dictate the success of the company.
And there is a huge amount of understanding of the founder burden and support for them, from financial to emotional to reputational. Where are the support networks for early employees? People will say the founders, but this is a load of crap for the same reason that founders rely on relationships with other founders rather than talking to their board or teammates.
Early employee is probably the worst engineering gig in Silicon Valley on most dimensions. Unless you just want to 0 to 1 build things. Then I haven't seen a job that can compare.
Founders often have slightly higher market value (though not always) than first employees, so they are giving up more to go the startup route.
Separately, TFA further underestimates founder risk as they are typically not taking salary during pre-seed, and no or low salary during seed. However employees 1-5 typically get mostly cash, often much closer to market.
Thirdly, there is also often a lot more stress in being the founder. It is a complex, all day job. You have the weight of keeping things going for all employees, and when cash is low it’s your paycheck that gets delayed/cut first, not your employees.
That said I am all for reasonable early stage liquidity where it makes sense, but as many other commenters have mentioned, it tends to not be life changing super early for most early employees. Most employees would rather keep the bet on the table. Also, I am strongly against large founder secondaries. I think it’s helpful for founder to remain feeling “not financially successful”, especially first time founders, so that they keep their heart in the game. I followed this practice with my companies.