When Joe Developer graduates from college with a shiny new Computer Science degree, it is likely that he won't have a job, let alone become a millionaire. But, ten years later, if he isn't a millionaire by then, he has an even worse chance than he did when he started.
Veteran software developers like to think of themselves as Fighter Pilots, Big Game Hunters, Bullfighters. We make Software happen. Software is super-hard and takes super-intelligence. Software, good software, is super-rare and takes Supermen to create it. We are damned necessary. We are the Prized Bullfighters, or at least, the Prized Bulls.
Let's divide our ranks into two categories.
There is us, the veteran software developers. The Bullfighters.
There is them, the fresh graduates. The Mice.
Joe Developer, whether he is a Bullfighter or a Mouse, has three options:
Flash in the Pan. Joe Developer can accept a job as the first employee with a bootstrapped startup for no salary and some equity. If the startup becomes profitable or gets venture capital ... and he is treated fairly and is very lucky, he becomes a millionaire. But, most of the time, ... poof! ... the startup fails and all his work, possibly years of work, disappears quickly without a trace.
Mister Paycheck. Joe Developer can accept a job as the fifth or five-thousandth employee for a nice salary and a piddily, token amount of equity. It'll take a Miracle to turn that equity into millions. But, hey, at least he got salary. That's something.
The Great Pretender. Joe Developer can try to do his own startup for no salary and all equity. It's a heck of a lot of work. He's got to do a lot of other things, like managing, marketing and selling. Joe Developer becomes Joe Startup.
But, let's be realistic. Bullfighters, is Numero Uno above really an option for you?
Nah.
Why?
We know better.
If you've been around this industry for 10 years, somebody has almost certainly already burned you. You worked really hard somewhere and got zilch. The bosses blew it. That bozo got rich. It was unfair. Lots of work, lots of crooks, lots of crashes. And, then, you got nothin'.
And you swore never again. And, why should you? You've got experience. Lots of companies want to hire you for nice salaries. No risk. And, maybe, just maybe, that piddily, token amount of equity will be worth something.
It's like the best of both worlds. You'll just sort-a ignore that your equity is so small. It's okay. It's a good bargain. At least, you'll get something.
What's the difference?
About 10x. That's the difference between $100,000 and $1,000,000. That's the difference between needing the startup to be worth $50M and $500M.
Say, you started a company. You develop all the software yourself. If you hired somebody else, he could develop the software while you did managing, marketing, legal, support, QA, web site and sales. That first developer is a big help. But, a second developer? He just makes things a little faster and a little better. He's worth something but not a humungous amount, like that first developer.
This is what I call equity flight.
A startup is like a rodeo. It's riskiest right out of the gate. The very first employee is easily thrown but, if the startup works, he gets all the glory, that is, the equity. Equity goes to those who join very early, not those who are really smart. The third guy to ride a tired bull barely gets a nod; he's smart to wait but also the glory has already flown away. If a startup has more than a few people or a startup can pay decent salaries, the real equity is gone. The early software developers, no matter what their experience, will get 2x to 20x more than the later ones.
Of course, as a Bullfighter, you can't become a Mouse again. Being a Flash in the Pan at a bootstrapped startup is for Mice. Mice get thrown and squished. Even if a few Mice don't and become millionaires. So, veteran software developers are limited to being either Mister Paycheck or The Great Pretender.
And, realistically, is turning from Joe Developer to Joe Startup an option?
For some, yes. But, it's a huge undertaking. And you're not really a developer, anymore.
It's a trap. For many veteran software developers who want to remain that way, the only choice is being Mister Paycheck with a razor-thin chance of ever becoming a millionaire.
How can we escape?
Recognize the trap. If you can see the trap, you'll do better than if you don't.
Consider doing your own startup. That's one way.
Save your money. More money gives you more choices.
Talk less about other developers who suck. They may have more equity than you. Being smart doesn't equal being rich. Being early does.
Joe Developer, you're out there. The trap waits for you, ready to spring. Every experienced software guy who later launched his own startup faced exactly the same situation that you face now.
Watch out!
E-mail Dan Howard about this article
