"Because founders take at least 100x the risk of an early employee, and 100x the personal risk and commitment."
The risk part of this isn't remotely true in many cases,or rather it's offset by so many other benefits accruing to them. Founders generally are drawing at least a small salary and, in this context (YC/VC funded) they are not necessarily risking much if any of their own capital. Moreover they are benefitting in ways early employees don't (e.g. social/network connections).
Be careful about assuming that how the company looks when the early employees are hired is how the company always looked.
It usually takes 2-3 years before a typical founder can get seed funding and even think about hiring employees. During that time period, they are funding the company themselves, and doing all the work themselves. Yes, they usually draw a small salary once the company is VC-funded. By that point, ~95% of founders have been flushed out of the market and failed.
There are a small minority of people who can raise VC on just an idea because they're white, wealthy, and went to Stanford or because they're roommates with a VC's daughter or because they're an unusually slick salesman who can swindle lots of people. I would highly recommend not working for these people - or really, any founding team who did not build and sell the initial version of the product themself - because they generally do not know what they're doing, and these startups become a miserable experience for the employees. But they are, I'll reiterate, a very small minority of founders. They are a somewhat larger minority of the founders who can hire employees, because getting VC investment automatically puts you in the pool of startups that is looking to hire. That's an information distortion between the viewpoint of employees (who only see the startups who have gotten at least to the first funding round) and founders (who see all startups, including the ones that struggle for years to get their first revenue).
I say "white, wealthy and went to Stanford" because that is the reality of it. The "Hi, I'm going to raise money on nothing but an idea because trust me" strategy does not generally work if you are Indian, Chinese, or any other minority ethnicity, unless you previously had an exit (in which case you know just how hard actually building a business is, and my comment doesn't apply to you). It largely also does not work even if you are white, if you happen to lack the cultural capital that comes with growing up wealthy and going to Stanford. I know a number of East and South Asian founders (I'm one of them) who have taken VC (I'm not one of them), and they all got to that point the old-fashioned way: they built a product and sold it, themselves, before any VCs invested. These are all folks who have plenty of credentials, including working at major successful Silicon Valley companies (Sun, Google, Microsoft) or graduating from Stanford.
(Exception: if you are Chinese and your investor is Chinese and you have a personal connection to that investor you can sometimes raise money on "Hi I have an idea and trust me." This is a recent development and comes from the massive amount of Chinese capital floating around these days, and is sometimes not actually the best move for your startup.)
Do you think (a) White applicants are more likely to get into YC? (b) Founding teams with no white people that get to demo day are less likely to get funded than those who do?
I know YC is a relatively small part of the VC ecosystem but it’s pretty influential. If the VC ecosystem is as racist as you say there should be plenty of opportunity to make better returns out there for some enterprising VC.
I think YC is pretty unrepresentative of the VC industry in this regard, simply because the VC industry is as racist as I say and YC is hoping to be that enterprising VC that seizes this opportunity for better returns. The YC partners have been pretty open about this - racism creates a market opportunity, and so they've put in a significant amount of working in retraining their own unconscious biases so that they don't miss the market openings that are left behind by other firms. (I should probably also say that they're not doing this just for better returns - it's also the right thing to do, but it has the side-effect of being economically rational.)
There are a few other VC firms that similarly work hard to avoid missing promising founders of minority backgrounds, but they are still the exception rather than the rule. Over time, the "rich, dumb, and prejudiced" folks will get flushed out of the market, but that's over a lot of time. Besides, they'll probably just get replaced by a different set of prejudices - nobody can be 100% unbiased, you can only hope to replace biases that are useless and arbitrary with ones that are somewhat more useful.
You have a very narrow view of startups if you think that's how they all operate. Many many companies never raise money. Many founders are unpaid, or just paid the bare minimum legally allowed. And numbers alone do not tell of the significant social and psychological pressures while employees can always quit and go work somewhere elsewhere. Even successful acquisitions don't guarantee riches to founders and that's completely overlooking the fact that many don't find success and are left with nothing.
"while employees can always quit and go work somewhere elsewhere."
This is an exaggeration at best. For the vast majority of employees there is a lead time to begin employment at most places. Typically this will be a minimum of one month (interviews + decision + org readiness to onboard).
By the way, it applies equally to founders as you describe (anecdotally I've seen a number of founders get regular jobs while they wound down a business).
"Left with nothing" except social connections and, exactly like the employees they had to fire when the business failed, a need to generate income from another source.
How is that an exaggeration? I talked about the ability for them to go to another company. Founders cannot just leave and have a much greater lead time if they lose it all.
What social connections do you think founders get that employees somehow dont? And what is this worth? So founding a company and losing everything is fine because you make some friends? If you talk to any entrepreneurs, you'll quickly realize you'll lose more friends and connections than you gain, precisely because of lack of time and ability to relate. It's a very lonely road, not some glamorous jet-setting adventure.
What's absurd is thinking that starting a company is just some hobby that is no different than any normal job. Until you actually do it, it's easy to overlook the incredible personal investment and stress it takes to put something together from nothing. Most companies fail, and many do not raise capital or have some quick meteoric rise but rather suffer through years of trying to make it work. The upside for founders is incredibly rare while the downsides are very common. Employees get paid either way.
It's only a lonely road because of decisions they made themselves.
Maybe if they stopped treating themselves like some anointed class and shared the equity with their employees instead of viewing them like lower-class citizens it wouldn't be so hard to find comrades.
Employees aren't friends and really shouldn't be. Maybe you've had a bad experience with some founders, they certainly are just as varied as people, but the role itself is anything but easy.
> Employees aren't friends and really shouldn't be.
That's a fine view to take! But don't come rattling the cup around going "but poor founders, so lonely, nobody to talk to" when they've made that choice.
You seem to be missing the point, as the prior comments are talking about "social connections" that founders get as a significant benefit, and which I'm saying isn't true.
Nobody is complaining really, certainly not the founders who chose what they do. In fact it seems like people who aren't founders that are complaining about the supposed benefits and lack of work without actually understanding what it entails.
When the founder starts with a million bucks in his personal bank account, and is pretty confident that even if the thing fails _someone else_ is still gonna pay him six figures for _something_... yeah.
The risk part of this isn't remotely true in many cases,or rather it's offset by so many other benefits accruing to them. Founders generally are drawing at least a small salary and, in this context (YC/VC funded) they are not necessarily risking much if any of their own capital. Moreover they are benefitting in ways early employees don't (e.g. social/network connections).