I ran across this article about where new CS grads are going, and was somewhat disturbed by the 'advice' being given by Paul Graham, and someone named Harj Taggar. They push the idea that new grads should not be looking to work for the established companies, but instead should be looking to work for companies that will be "the next big thing". They hold out a number of (probably made-up) statistics comparing overall earnings (Going with a known company gets you a 90% chance for $1.1 million, while the new thing gets you 10% chance for $10 million).
Now, Paul Graham has a history of success, but I think he's being disengenuous here in claiming that a new grad has a 10% chance of selecting the next big thing (NBT) at a point where they will get the big payoff. VCs are much more predatory these days, locking up preferential stock so that they get their money back before any of the engineers get a payout, so even if you were able to find the NBT and get hired, you might not get anything more than a few years' worth of income from it. He also seems to be forgetting that there were so many new things back in the late 90's that it was very hard to pick the winners. Graham picked Google, but it was in no way a sure thing at that time. I'm sure the engineers at WebVan thought well of their chances of becoming millionaires.
Finally, there is the issue of basic compensation. Startups generally cannot pay as well as established companies, and often have much lower benefits, which makes working for a startup in Silicon Valley much less viable, given the cost of living out there. Seattle is similar; likewise NYC.
(PS. A conspiracy-theory view is that VCs want to keep the supply of engineers working at startups high, to keep salaries lower (you can pay less, offer more stock options that may not vest fully, etc) so that there are enough startups for the VCs to hit their percentages for success)
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