Ask YC: Why Did Your Company's 20th Employee Join?

[byrneseyeview]

Peter Thiel is the first outside investor in Facebook, the guy who sold PayPal to eBay for billions, and a Founders Fund partner. He told today's Ice Ideas conference audience that there is one question he asks entrepreneur looking to begin a startup. He asks: Why will employee number 20 join your company?

Thiel says it's easy to figure out why someone wants to be a CEO or another very early employee in a startup; they'd like to run a company and get rich doing it.

He says its also easy to know why employee number 1,000 joins; the company is clearly on its way to growing into something huge, and will provide a nice, stable living.

Employee number 20, he says, will have to join for different reasons.

By then, the big equity stakes will have already been handed out.

Also, a company with only 19 employees won't have "made it" yet; it won't be a place someone looking for a stable income will join. So what's the right answer?

According to Thiel: for the only companies worth starting – perhaps the only companies he'd invest in – the right answer is that employee number 20 will join because you are doing something nobody else has done – "something fundamentally new, fundamentally different."

Via: http://www.businessinsider.com/the-most-important-question-peter-thiel-asks-any-startup-looking-for-money-2011-7

[priv_acy]

There is so much wrong with Thiel's logic it's not even worth commenting on. It's soundbite material, nothing more.

[qq66 → priv_acy]

His point is that joining as the 20th employee is often an suboptimal position economically. There's a lot of stability in joining a thriving company that's not going to go bankrupt (e.g, Dropbox). There's a lot of financial upside in being an early employee at a company that becomes successful.

Joining as the 20th employee is what Thiel thinks is the worst risk-adjusted financial outcome for an employee -- so what other reasons are you creating for people to join you?

[malandrew]

The best reason for being employee #20 is the chance to grow with the organization and take on a leadership role in a company early on so you can be sitting pretty when the company is a 1000 people (assuming you are competent enough to grow with the company). Small growing companies provide more vertical mobility than a 1000 person company (unless that 1000 person company is growing the same % YoY as the small company, but this is unlikely, since the % YoY growth typically slows as a company grows.)

[princeverma]

Well, I don't think question is dumb ...I don't agree with answer though.

[staunch]

Because they find the quality of the work/environment/people attractive.

[blackboxxx]

Dumb question. Dumb answer.

[Hisoka → blackboxxx]

Dumb responder.