Founder vs Employee Risk

First of all, there is not "far less personal risk" for employees. If the company you work for goes under, every employee is hurt by that, not just the founder.The founder may have lost more money, but he had more money to gamble with. The employee does not, and losing his personal income stream is probably equally or more damaging to him.

It's not zero risk; startups pay less than market rates and make up (hopefully more than) the difference with equity. The gamble (risk) is that you'll end up with less after 3-5 yeas than if you had just stayed at a BigCo and invested well.

Start up employees take on far more risk than startup investors. Investors can diversify over 10s or 100s of companies but an employee has to pick just one and bet their career on it.

It's something we're looking into. Would be a great market But for clarity, it's generally understood the employees do not bear the same risk as the founders, who contributed months/years of sweat equity as well as actual capital. Oh and risk of lawsuits.An employee is paid day 1 and the risk beared does not surpass opportunity cost of a paid job at a successful startup vs a failed startup.

Employees do not take the same risk as owners/founders.If a startup fails:Founder loses two years, his life savings, and gets paid nothing.Employee loses two years, keeps his life savings, and gets paid salary for that time.Completely different risk propositions.

More risk than any of workers employed in these startups have taken, unless they are compensated with equity.

The level of risk is significantly different. An employee bears the risk of losing their job. That's a bad thing, but you can go get another one.The founder has likely foregone salary altogether for some time and run up personal debts while doing so. They've probably tipped a lot (relative to their net worth) of initial capital into the company to get it off the ground. If everything goes wrong, they need to go find a job _and_ deal with the mountain of debt they're now in.I

"give up the risk by being an employee"I have observed many folks join startups as employees, take on risk without understanding it and without a clear benefit.

> Everybody involved is taking some fraction of that risk.I think that by "that risk" you're talking about "the overall increased risk of investing in a new company". I deliberately use the word investing because that's how employees should think about their participation in a startup: They're usually giving up something now... salary, extra work hours... in exchange for some possible upside in the future, often in the form of stock o

10-15% less salary does not equal "several magnitudes" more risk. To my mind, for a funded company, the risk is the same for founders and employees. The worst that can happen for both is unemployment.