Husband wants to take a huge paycut to join a startup

[Anonymous]

So is it possible Op DH waited too long?

https://techcrunch.com/2017/10/22/ask-not-for-whom-the-deadpool-tolls/

Now TC is generally very click baity.. but they do tap into the zeitgeist somewhat

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

If he has the skills to develop a company, and you trust the team he's joining (no major personality issues), then I say take a leap of faith. You have done the financial prep work to make this risk possible. But you have to take control of the home finances and home front and keep him in line and prop him up. He'll be very busy elsewhere if he's doing it right.

Startup person here. I sold my car and some other stuff and started mine with $25k. Now I make $1mln/year. Anyway, definitely look at the management team he'll be joining at the startup. Sometimes I see people eager to join any startup that comes along, just to do it, but they aren't always the right ones.

It's like a friend I had who came into some money and decided to become an angel investor. He was eager to invest in anything, including industries he had no experience in, just to do something. Those didn't work out so well. (lesson learned: engineers don't know much about the hospitality business)

A 10% stake gives him zero control. You husband needs to make sure how he GETS OUT of the startup. If is his concern is about creating value for others, he's going right back into that. He needs to be very sure how his partners plan on getting out, otherwise he may find himself back in the same spot.

So true. He is just a well paid employee. Hopefully lottery ticket pans out

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

If he has the skills to develop a company, and you trust the team he's joining (no major personality issues), then I say take a leap of faith. You have done the financial prep work to make this risk possible. But you have to take control of the home finances and home front and keep him in line and prop him up. He'll be very busy elsewhere if he's doing it right.

Startup person here. I sold my car and some other stuff and started mine with $25k. Now I make $1mln/year. Anyway, definitely look at the management team he'll be joining at the startup. Sometimes I see people eager to join any startup that comes along, just to do it, but they aren't always the right ones.

It's like a friend I had who came into some money and decided to become an angel investor. He was eager to invest in anything, including industries he had no experience in, just to do something. Those didn't work out so well. (lesson learned: engineers don't know much about the hospitality business)

A 10% stake gives him zero control. You husband needs to make sure how he GETS OUT of the startup. If is his concern is about creating value for others, he's going right back into that. He needs to be very sure how his partners plan on getting out, otherwise he may find himself back in the same spot.

A 10% stake in a Series A company is huge! But 10% in a startup that hasn't taken any dilution is tiny.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

If he has the skills to develop a company, and you trust the team he's joining (no major personality issues), then I say take a leap of faith. You have done the financial prep work to make this risk possible. But you have to take control of the home finances and home front and keep him in line and prop him up. He'll be very busy elsewhere if he's doing it right.

Startup person here. I sold my car and some other stuff and started mine with $25k. Now I make $1mln/year. Anyway, definitely look at the management team he'll be joining at the startup. Sometimes I see people eager to join any startup that comes along, just to do it, but they aren't always the right ones.

It's like a friend I had who came into some money and decided to become an angel investor. He was eager to invest in anything, including industries he had no experience in, just to do something. Those didn't work out so well. (lesson learned: engineers don't know much about the hospitality business)

A 10% stake gives him zero control. You husband needs to make sure how he GETS OUT of the startup. If is his concern is about creating value for others, he's going right back into that. He needs to be very sure how his partners plan on getting out, otherwise he may find himself back in the same spot.

A 10% stake in a Series A company is huge! But 10% in a startup that hasn't taken any dilution is tiny.

10% of nothing is nothing. 95% of startups fail and of the balance, many live on as zombies - enough funding and revenue to survive, but never reach the exit goal. Maybe a few % of startups result in successful exits, and many of those are quick, like being sold to a big player. The startups you need to look for are the ones that are self funded by people who have successfully sold companies before. It won't have the massage chairs and ping pong tables, but it might actually make you $. If the see a job title of VP of Culture and other such nonsense - run away. No one spending their own money on a startup pays for BS like that. All the crap about culture and community is millennial mumbo-jumbo so they are spend VC $ on parties and ropes courses, and not bathe before heading to work.

[Anonymous]

Anonymous wrote:I'd be very wary of startups in the DC area. Many more of them look like Living Social than AOL. When you see the Class A office space, the cold brew coffee, and the VC money, you should in general run the other way. Seems like success definition for most startups around here is funding, not exits.

The key questions that I've asked of startups to see if they're "for real": (1) VC/PE funding round; (2) burn rate of funding; and (3) firm date on going cash-flow positive. Perks are nice to attract talent, but you should also keep track of how the executives are spending money on themselves.

Potential Red Flags:

Executives with none of their own money invested? (ding)
First class travel? (ding)
Well-appointed individual offices? (ding)
Luxury cars leased through the company? (ding)
No "adult" in the executive ranks? (ding)
CFO without big company experience and a little grey hair (ding)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

If he has the skills to develop a company, and you trust the team he's joining (no major personality issues), then I say take a leap of faith. You have done the financial prep work to make this risk possible. But you have to take control of the home finances and home front and keep him in line and prop him up. He'll be very busy elsewhere if he's doing it right.

Startup person here. I sold my car and some other stuff and started mine with $25k. Now I make $1mln/year. Anyway, definitely look at the management team he'll be joining at the startup. Sometimes I see people eager to join any startup that comes along, just to do it, but they aren't always the right ones.

It's like a friend I had who came into some money and decided to become an angel investor. He was eager to invest in anything, including industries he had no experience in, just to do something. Those didn't work out so well. (lesson learned: engineers don't know much about the hospitality business)

A 10% stake gives him zero control. You husband needs to make sure how he GETS OUT of the startup. If is his concern is about creating value for others, he's going right back into that. He needs to be very sure how his partners plan on getting out, otherwise he may find himself back in the same spot.

A 10% stake in a Series A company is huge! But 10% in a startup that hasn't taken any dilution is tiny.

10% of nothing is nothing. 95% of startups fail and of the balance, many live on as zombies - enough funding and revenue to survive, but never reach the exit goal. Maybe a few % of startups result in successful exits, and many of those are quick, like being sold to a big player. The startups you need to look for are the ones that are self funded by people who have successfully sold companies before. It won't have the massage chairs and ping pong tables, but it might actually make you $. If the see a job title of VP of Culture and other such nonsense - run away. No one spending their own money on a startup pays for BS like that. All the crap about culture and community is millennial mumbo-jumbo so they are spend VC $ on parties and ropes courses, and not bathe before heading to work.

100% agree with this. Nothing wrong with free food at the end of the business quarter to encourage sales folks to "dial for dollars". On the other hand, simply copying Google, Facebook, etc... in these areas is an exercise in failing to recognize that "correlation doesn't equal causation" - in other words, no 30-minute massage is going to help engineers slog through the grind to get a product ready for the market.

Culture is important, as long as it's focused on productivity (and rewards hard work). You don't need team building activities if you hire carefully. The right people with integrate seamlessly with existing employees - because they want the company to succeed.

[Anonymous]

Anonymous wrote:
A 10% stake gives him zero control. You husband needs to make sure how he GETS OUT of the startup. If is his concern is about creating value for others, he's going right back into that. He needs to be very sure how his partners plan on getting out, otherwise he may find himself back in the same spot.

This. I turned down a much better situation than this (cut from $240K to $170K + 6% equity some with zero vesting cliff and I'm not even the primary BW and we can afford mortgage on DH's salary alone). Ultimately, I calculated out the expectation value, and while there was certainly a possible upside the most likely buyout outcome was similar to if I kept earning my current salary.

You need to know a lot about how the shares are distributed and what the intention for future funding rounds is etc.

[Anonymous]

People, it's pretty clear that the OP knows nothing about the details of any of this. OTOH, it sounds like OP's husband knows what he's doing. I don't know why people keep responding to this thread. She's not coming back because she can't answer any of these detailed questions.

[Anonymous]

Anonymous wrote:People, it's pretty clear that the OP knows nothing about the details of any of this. OTOH, it sounds like OP's husband knows what he's doing. I don't know why people keep responding to this thread. She's not coming back because she can't answer any of these detailed questions.

DP... the point of OP posting on here was to ask for advice. Some people have given some really good advice, especially those who have been exposed to startups. Maybe she's reading the responses and asking her DH about some of the things discussed on here. I know that's what I'd be doing. I'm a PP, and my DH worked for a startup, and I had the opporutnity as well. DH thinks OP has every right to be concerned. $600K salary is a huge deal, and he said he'd be seriously questioning the decision to quit and join a startup if his salary was this high. We both have worked in SV and have been exposed to lots of failed startups.

If they had maybe one young child, maybe the decision wouldn't that hard. But OP has three kids. That's a huge thing to consider.

[Anonymous]

Anonymous wrote:

Anonymous wrote:People, it's pretty clear that the OP knows nothing about the details of any of this. OTOH, it sounds like OP's husband knows what he's doing. I don't know why people keep responding to this thread. She's not coming back because she can't answer any of these detailed questions.

DP... the point of OP posting on here was to ask for advice. Some people have given some really good advice, especially those who have been exposed to startups. Maybe she's reading the responses and asking her DH about some of the things discussed on here. I know that's what I'd be doing. I'm a PP, and my DH worked for a startup, and I had the opporutnity as well. DH thinks OP has every right to be concerned. $600K salary is a huge deal, and he said he'd be seriously questioning the decision to quit and join a startup if his salary was this high. We both have worked in SV and have been exposed to lots of failed startups.

If they had maybe one young child, maybe the decision wouldn't that hard. But OP has three kids. That's a huge thing to consider.

+1

A $600k compensation package (presumably with a solid company) is nothing to walk away from based on a mid-life crisis urge - even if you're planned for it. I'd bet the vast majority of start up executives would switch places with the OP's husband for that kind of guaranteed income. If the OP's husband truly wants to check the box on a start-up, he might consider doing so when his kids are older and he can simply walk away into retirement if it doesn't work. While start up founders may worship youth (anyone under 45, and preferably under 35), investment firms value an executive who can safeguard and grow their money.

[Anonymous]

Many DC startups are someone's idea on how to change the world one click at a time. While reducing pollution or educating people are great ideas, very frequently there is no real revenue model behind these start ups. They sound all idealistic and wonderful, and they get Al Gore or Revolution to put some $ in, but long term they do not work as businesses. If you cannot capture the business in a phrase like 'We're going to be the Netflix/Uber/Google of the _______ market/industry", you should probably be looking for something else.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:People, it's pretty clear that the OP knows nothing about the details of any of this. OTOH, it sounds like OP's husband knows what he's doing. I don't know why people keep responding to this thread. She's not coming back because she can't answer any of these detailed questions.

DP... the point of OP posting on here was to ask for advice. Some people have given some really good advice, especially those who have been exposed to startups. Maybe she's reading the responses and asking her DH about some of the things discussed on here. I know that's what I'd be doing. I'm a PP, and my DH worked for a startup, and I had the opporutnity as well. DH thinks OP has every right to be concerned. $600K salary is a huge deal, and he said he'd be seriously questioning the decision to quit and join a startup if his salary was this high. We both have worked in SV and have been exposed to lots of failed startups.

If they had maybe one young child, maybe the decision wouldn't that hard. But OP has three kids. That's a huge thing to consider.

+1

A $600k compensation package (presumably with a solid company) is nothing to walk away from based on a mid-life crisis urge - even if you're planned for it. I'd bet the vast majority of start up executives would switch places with the OP's husband for that kind of guaranteed income. If the OP's husband truly wants to check the box on a start-up, he might consider doing so when his kids are older and he can simply walk away into retirement if it doesn't work. While start up founders may worship youth (anyone under 45, and preferably under 35), investment firms value an executive who can safeguard and grow their money.

You could become an investor with some of your spare cash, sit on the board, and keep your day job.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:People, it's pretty clear that the OP knows nothing about the details of any of this. OTOH, it sounds like OP's husband knows what he's doing. I don't know why people keep responding to this thread. She's not coming back because she can't answer any of these detailed questions.

DP... the point of OP posting on here was to ask for advice. Some people have given some really good advice, especially those who have been exposed to startups. Maybe she's reading the responses and asking her DH about some of the things discussed on here. I know that's what I'd be doing. I'm a PP, and my DH worked for a startup, and I had the opporutnity as well. DH thinks OP has every right to be concerned. $600K salary is a huge deal, and he said he'd be seriously questioning the decision to quit and join a startup if his salary was this high. We both have worked in SV and have been exposed to lots of failed startups.

If they had maybe one young child, maybe the decision wouldn't that hard. But OP has three kids. That's a huge thing to consider.

+1

A $600k compensation package (presumably with a solid company) is nothing to walk away from based on a mid-life crisis urge - even if you're planned for it. I'd bet the vast majority of start up executives would switch places with the OP's husband for that kind of guaranteed income. If the OP's husband truly wants to check the box on a start-up, he might consider doing so when his kids are older and he can simply walk away into retirement if it doesn't work. While start up founders may worship youth (anyone under 45, and preferably under 35), investment firms value an executive who can safeguard and grow their money.

You could become an investor with some of your spare cash, sit on the board, and keep your day job.

Yep. I know several "angel investors" who ponied up $100k for local tech companies. However, they were screwed royally when PE/VC funds finally made their entrance.

[Anonymous]

Anonymous wrote:People, it's pretty clear that the OP knows nothing about the details of any of this. OTOH, it sounds like OP's husband knows what he's doing. I don't know why people keep responding to this thread. She's not coming back because she can't answer any of these detailed questions.

Poor guy.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:He well earned that shot. Let him or he will regret it.
Even if it fails, that's life. With your assets you don't have to live in fear. I guess as a SAHM you don't feel powerful enough to dig yourself out of a hole. Maybe work on that.

What does this mean? Not being snarky, I just honestly don't know what you're saying here.

NP. It probably means the for OP the man was her plan, and she has no means to support herself by her own admission.

And honestly a man like this who makes half a million and saved up millions and still isn't satisfied may have ambitions for improvements outside of his career, not sure if OP is worried about their marriage too. Hence be supportive and weather this phase, OP seems vulnerable

OP here. No I am not worried about my marriage. We have always seen ourselves as a partnership and that the money he makes is "our" money. He is asking me if he should do this, he's not telling me. I don't think it's fair to paint me as a leech. I've made sacrifices too. He went back to work two days after I had each of our babies and I didn't say anything. He frequently goes on last minute business trips and I don't say anything. It's not like I've been on easy street all these years. I've been home with three little kids.

Never meant to paint you as a leech. But your financial plan is solely your DH.

For most working parents DH has to go back to work a couple days after having kids too; it's actually much worse to leave you 6 week old crying infant with some sub daycare worker you just met, so please shut the F up about sacrifice in your paid off McMansion and MILLIONS in assets.

FFS, you are the living defintion of EASY STREET.

But your DH wanderlust for better pastures does seem to be jeopardizing that, hopefully just professionally.

I am curious how you consider yourself partners when he has been crafting this secret plan (paid off mortgage, huge growth stifling cash savings) and not discussing with you years ago.

Your jealousy is disgusting. Very obvious too.