Big IPO, Tiny Payout for Many Startup Workers (2015)

https://www.bloomberg.com/news/articles/2015-12-17/big-ipo-tiny-payout-for-many-startup-workers

by patmcguire • 10 years ago

155 134 10 years ago

lostboys672• 10 years ago

To put this in perspective some one who was in last years 5 Year share save at British telecom made about half that tax free.

And this is the share options scheme for every one even the lowliest call centre worker and not a senior role.

neffy2• 10 years ago

Even more perspective. Let's say hypothetically the salary difference came down to being able to afford to buy a starter home in London versus renting for that period. The tax free property appreciation would dwarf the return on the options.

lostboys672• 10 years ago

Don't think £200 a month would make that much of a difference

anthay3• 10 years ago

I was one of the first employees in a UK tech startup. I was given share options that I calculated represented about 0.5% of the value of the company. When the company was sold about 10 years later, making the founders multi-millionaires, I got about £30K. I was clueless and didn't realise the shares could and would be diluted many times.

_lbaq• 10 years ago

Yea, and dilution is just one issue, its almost impossible to know as a employee what the stock options represent, you have no insight in to the corporate structure and what entity the stock options are given for.

Its just all a lottery ticket...

new299• 10 years ago

It is possible to know. In the UK it's easier to know than in other countries, private companies still have to disclose share ownership and file public accounts (which you can download from companies house).

It's just that this information is often not provided or explained. Why companies think it's ok to say "you'll get X shares" when X is a meaningless number without more information, is beyond me.

aedron2• 10 years ago

But the dilution happened because your company had to sell out a lot more of its equity in order to succeed. You were not cheated. You could argue that you should have been offered to buy into the additional financing rounds in order to retain your share, but in all honesty, would you have taken them up on such an offer?

cmdrfred2• 10 years ago

I think the issue is they probably offered lower than market pay and "half a percent of the company" but what he ended up with was lower pay and .00025% of the company. Sure it's all legal and his fault for not understanding the fine print but I understand why he would feel cheated.

anthay3• 10 years ago

You may well be right and to be honest I don't really understand exactly what happened. But I do know I thought I'd get more than I did.

briffle• 10 years ago

Seems like as a shareholder (well, I guess potential share holder, since they are options) you should have some say in that.. Is it okay to dilute my shares by x%, in order to continue functioning as an employee..

Of course that kind of insight would lead to employees jumping ship when there is trouble...

adrianN• 10 years ago

You did not specify "multi" further, but 30k * 1/0.5% is around 6 million. So your assessment seems at least in the right ballpark?

anthay3• 10 years ago

It was a private sale to a US company. I believe it was for an amount many times that figure.

neffy2• 10 years ago

Ten years ago it was much harder to find information on all of this - and even if you went in knowing it, there was little or nothing you could do about it.

I knew enough then to discount options to 0, but I'm permanently jaundiced in retrospect by just how many outright lies I was told at interviews, and saw being told to my colleagues.

st3v3r4• 10 years ago

Diluting shares should be straight out illegal. There is no reason for it other than fucking over employees. You know, the people who have actually worked to make the company a success.

danielweber9• 10 years ago

Dilution is way too easy to abuse, but there's a lot more to it than just "fucking over employees."

mywittyname• 10 years ago

In egregious cases, you could probably sue the board and win. Another user here discussed an example where employees were diluted to a literal penny right before a sale.

If the employees didn't win in that case, then there's some fundamental, structural flaw in American laws.

katzgrau3• 10 years ago

If you're in it for the big windfall, consider bootstrapping your own company.

It's hard, it's depressing, it's exciting, it's terrifying, and it's rewarding. Learn to set goals and execute, sell a product, deal with happy and angry customers, build partnerships, market, price, negotiate, and more.

You'll get much more out of it than working for someone else. When you work for someone else, someone else's dreams are the priority.

brianwawok• 10 years ago

This. Don't expect your startup to make you rich.

hackits2• 10 years ago

Being the devil advocate, sometimes startups are the only place you can land that they're experimenting with a technology that interest you and you can use them to pay for your education. Adamant the pay is less than your peers, but you're trading it for career advancement.

After you get the required skills and knowledge jump ship and re-market yourself and get pay rise.

ithinkinstereo4• 10 years ago

Now that we're past peak VC-backed startups I've noticed a trend on HN pushing the benefits of the bootstrap path.

There are many positives, true. But the negatives should not be understated. If you don't fail outright, the most common outcome from bootstrapping is often worse than raising VC or working for a VC-backed startup. That is, you'll work years and years and years with lower pay, work more hours, and endure a hell of a lot more stress only to fizzle out at the end (also without a big payout).

Try to go back to corporate after wasting the best years of your life bootstrapping your small-name, small-reputation startup for 5-10 years. And if you do go back to corporate, watch them lowball you on salary and position.

If you do succeed, yes the payout is greater. But chances of a big exit are rare in the VC-backed world as is, and imo, even rarer in the bootstrapped world.

This is the negative side of bootstrapping that is rarely mentioned. YMMV of course.

dman• 10 years ago

On the other hand if you land into the uncanny valley of revenue in the low millions, being bootstrapped is the far better choice. Ie there are a wide variety of outcomes which would be considered a success on the bootstrapped route, but will be considered a failure if you accept VC money.

mavelikara4• 10 years ago

I agree with the gist of your post, but:

That is, you'll work years and years and years with lower pay, work more hours,

...

And if you do go back to corporate, watch them lowball you on salary and position.

_You_ underpaid yourself for years and years, bootstrapping your startup. If you had succeeded, you'd end up with way more money than your peers who chose to stay in corporate jobs. If so, it is not fair to expect to have the _same_ salary and position as your corporate peers, when you come back vanquished. While you were learning skills to bootstrap your dream startup, your corporate peers were learning skills useful for the corporation - they get higher pay hence.

If any of the skills you learned during your bootstrapping days are useful in the corporate world - and it very often is - you'd surely get rewarded for it sooner than later. But don't expect to be rewarded for it the day you start back again at the new job.

jpmattia• 10 years ago

If you don't fail outright, the most common outcome from bootstrapping is often worse than raising VC or working for a VC-backed startup.

Anyone have stats on this?

desireco42• 10 years ago

Well, there is huge difference between options available to you as VC backed startup and as bootstrapped one.

Your warning about dangers are all very true, most people don't think about those.

On the positive side, your upside can be great, and since you didn't take VC money, you can be happy with much less then VC backed startup. You can make big company, small company, lifestyle business, you can get acquired if you desire so.

brilliantcode6• 10 years ago

MRR of $100,000 USD from a bootstrapped business I think still beats the elusive payoff that everyone is gunning for-it tends to not happen (that's why there's relatively few compared to failures) and VC's really don't like to talk about it. They can afford it because the have the capital and it doesn't cost time so they get away with it but you can't.

The marginal returns diminish after around 70,000 USD / year, the only real winner is VC who will have their eggs in multiple baskets with only their capital at stake which won't break them. There's all sort of fancy ways to cover their ass, all at the expense of you, the founder and your employees who have traded the most valuable commodity, time.

It's clear who values their time more than the founder & employees. Bootstrapping means you control the destiny and a higher chance to pocket more than a C-Suite's salary combined. So you make 100k every month from your bootstrapped business but you never IPO, you can buy the world's smallest violin. Operating at break even to meet your VC's needs for a quick IPO is a fool's game, your life is now a financial speculation vehicle for the rich.

FUCK. THAT. SHIT.

katzgrau3• 10 years ago

If you put in 5-10 years bootstrapping and made a living, then:

1. You clearly built something of value and should have an exit coming (or already had one)

2. If you were the victim of some unfortunate circumstance that put you out of business, you probably have made friends or partners in the industry that would instantly recognize your value and bring you on board (I'd personally hire an old competitor in a second)

3. You've probably learned quite a bit that is applicable to engineering, sales, marketing — chances are you don't even identify as a software dev anymore. You might want to shoot for something c-level, exec-level, sales engineering, project management, etc.

4. At this point, you know how to negotiate and market yourself. You will not be victim to some piddling lowball offer unless you're desperate. After 5-10 years in the game, you probably won't be. If that's your only route, take the job and use it as a launchpad to something better like everyone else does.

If you bootstrap for 1-12 months and quit (like 90% of my peers have), then right, you'll probably have nothing to show for it.

rglover• 10 years ago

It's hard, it's depressing, it's exciting, it's terrifying, and it's rewarding.

Perfect, and yes.

maxxxxx3• 10 years ago

Smaller bootstrapped companies would make tech much healthier. The focus on the big guys and VC creates a monoculture and destroys real innovation.

lordnacho3• 10 years ago

Clearly there needs to be some sort of transparency about how many shares are outstanding, what terms are for new investors, etc.

If people are misjudging their packets by 10x it would suggest they are being underpaid, because they think they're negotiating for a lot more than they are.

As someone who worked in options I can tell you there's a lot of depth to how to price an option. If you don't know how Black-Scholes works along with more esoteric subjects under option theory, you should heavily discount whatever you're being told.

The exception is firms which have already gone public, where you can just look up what the market thinks your shares/options are worth.

elmar• 10 years ago

You can't use Black-Scholes on private company options.

lordnacho3• 10 years ago

But you can use some of the considerations that BS theory talks about.

People don't use BS theory for any other options either.

ska• 10 years ago

As far as I can see you can't use anything very effectively for early stage private companies, the information is low and the variance is high.

Even with perfect transparency for very early employees, predictions are pretty worthless. The only realistic thing you can do is make sure the shareholders agreement doesn't have any tricks in it and have a feel for the domain you are working in.

preetish• 10 years ago

Took the following from https://medium.com/positiveslope/dont-get-trampled-the-puzzl...

"Another interesting idea to reduce complexity for employees came from Brian Neider at Lead Edge Capital, who suggested a single question for employees to ask management: “Can you please let me know how much money I’d make from my options if the company were to sell or IPO for $100m, 200m, 300m, 400m, etc?” Of course, the answers will inevitably have some disclaimers and dependencies, but the answers will expose the potential impact of terms from late-stage financings."

zeroer• 10 years ago

As others have pointed out, this is impossible to determine without knowing the dilution between today and the sell date.

edraferi• 10 years ago

True, but this should be a straightforward calculation every time the cap table updates. It can be very difficult to work out the implications of preferences, ratchets, etc, but it's still just a math problem.

This should be a standard report off of cap table management software. Every time the cap table changes, all current equity holders get a report showing their stake and expected payout for various liquidity events.

wowdidntreal• 10 years ago

Why give employees big payouts, when they'll work just as hard for mere unsubstantiated promises of such payouts?

The article shows how most employees are too occupied counting their imaginary fortunes to seek the most basic grasp of how their options really work.

The race for riches in early-stage startups has become a gold-rush, and now that we are clearly after the peak, most employees are chasing the dreams of yesterday's big-payoff exits, failing to look around and notice that these were rare even back in the day, and now they hardly ever happen at all.

Investors got savvy about protecting their investment, while employees are just as clueless as ever, so even when big IPOs do rarely happen, the employees see very little profit.

This works very well for the investors. The downside is the erosion of equity as an incentive, but even more so - any sense of working towards a common goal and shared success, which is what startups are supposed to be about.

This will hurt the entire industry. On an individual level, if you accept substantially lower pay, for a tiny unprotected bit of equity and someone's unsubstantiated promises that it will be "one day" earn you millions, then you are a fool.

ones_and_zeros• 10 years ago

Nothing will change, the industry won't suffer. There is a new crop of fools every May.

simonebrunozzi• 10 years ago

Do you say May in relation to the "eternal September" (+ 9 months to have a baby?)

maxxxxx3• 10 years ago

Sometimes I admire investment banks. They screw over anybody else who doesn't work at their company but within the company the pay seems really generous for everybody. Tech companies could easily pay much, much more and still make a lot of money for investors. Why are bankers so highly paid? Is it because they are asking for more money?

mavelikara4• 10 years ago

Why are bankers so highly paid?

The skills acquired at their day jobs also enable them to be much more financially savvy than tech workers. Tech workers, I imagine, get better work computers for similar reasons.

rm_-rf_slash2• 10 years ago

Same reason the top paid executives aside from CEOs tend to be CFOs: they know what they are worth and know to ask for that and often refuse to settle for less.

danielweber9• 10 years ago

Why are bankers so highly paid?

Because a job candidate being told at an interview "we are looking for people who are motivated by things other than money" would walk out, and the banks know it.

brilliantcode6• 10 years ago

That is my dream. I would love to share the wealth with my employees, nay that is in accurate, partners that show up 9-5pm who weather the ups and downs not funding some coke snorting gordon gekko wannabe fuckboy lifestyle who thinks $100,000 USD is pocket change.

I'd give my hard working employees a good chunk of the company over VC any fucking day. I'd love to see a PHP developer take home high six digit bonus checks, even after they leave if the stuff they build keeps making the company money, sort of like the million dollar royalty fees that were paid to developers of Tomb Raider II.

user59944614• 10 years ago

The jobs of bankers, lawyers and businessman is to negotiate and evaluate risks. They do that all day along.

The jobs of an engineer at a startup... oh wait is that a job? I thought they were just naive kid fucking around and making money for the board[1].

[1] Don't worry. You'll understand when you'll see your CEO negotiate £8 millions more shares while children are taking the job for less than 4k and they think it's a good deal. Best day ever! :D

You can't fix other people but you can choose whether you want to be a naive child or a business man.

nylonstrung4• 10 years ago

For one, they routinely work 80+ hours a week and are on call constantly.

Almost every day of their job is managing extremely time sensitive transactions that are often the most important single event in the lifecycle of any given company.

serge2k• 10 years ago

Why give employees big payouts, when they'll work just as hard for mere unsubstantiated promises of such payouts?

That's why we should start teaching people that they won't get rich.

seattle_spring2• 10 years ago

Not to detract from its message, but this article is from 2015.

Anecdotally, the expectation I had for my shares at my last startup ended up being 10x (as the article stated) what they were worth after acquisition.

Eridrus• 10 years ago

Did you figure out the breakdown of what ate into your expectations? Mostly investor preferences or solution or an even mix of both?

seattle_spring2• 10 years ago

My expectations were based on forecasts given to me by the manager at the time of recruitment, and those forecasts were far higher than reality. I believed those forecasts mostly due to ignorance.

IMTDb• 10 years ago

Dude earns $750K in 4 years what must have been probably very long hours but with : No health risk. Not being confronted to violence in any way. No legal risk tied to his profession.

Complains that he hoped he did enough work for a lifetime and that he could retire, but that he actually still has to work.

This is not how this works. This is not how any of this works.

aianus• 10 years ago

Ironically $750k is more than enough to retire if you're willing to move outside the first world.

harryh• 10 years ago

Lots of places in the first world too. At a 4% withdrawal rate (the rate many people believe is safe to do indefinitely) that's 30k a year which is about 40th percentile in the US. That's not living like a King, but it's totally doable.

sjg0072• 10 years ago

Yeah, buy a house, work for 5 more years, sell house at 5x, then retire.

sjg0072• 10 years ago

I don't understand the down-votes.. property in the Bay area seems to be the magic ticket. The IPO gets you the down payment..

mavelikara4• 10 years ago

$350K, not $750K

Let’s be clear: Sutton knows it worked out just fine. He made about $350,000 before taxes on his Box stock

aetherson3• 10 years ago

Plus his salary, which one assumes was at least $100k/year.

segmondy3• 10 years ago

Don't do startup for the potential payout. If you are not going to be happy and content with the salary don't do it. Most won't have any exit. Any exit that leaves one with $350k windfall beats many that leaves people with $0 and jobless. Negotiate hard on the salary. Assume the shares are worthless.

Analemma_• 10 years ago

The thing about this advice is, it basically reduces to "don't work for startups". Because paying below-market salaries in exchange for equity is pretty much universal. It's not even malice, most startups just don't have the cash on hand to pay competitive wages.

Negotiate hard on the salary.

Recent CS grads (who are the most common startup workers) don't really have the leverage to the do this. And experienced (or, ugh, "10x") developers can probably always get a better deal at a big company.

I feel like "working for a startup is almost never economically rational" is the elephant in the room that everyone is trying not to talk about. (As for me, I do take my own advice and deliberately work for BigCorp, but when I've tentatively brought this up to others I'm usually met with hostility so I don't do it in person anymore)

6548694354186472• 10 years ago

I could understand the hostility if you approach the subject with unsubstantiated statements like "almost never economically rational".

It would be easier to support the claim that most startup employees earn less over their career than those who only ever work for BigCorp.. Though I've never personally seen data suggesting that's necessarily true. You have to consider length of career, job and city mobility, career mobility, etc.

"Economically rational" does not mean BigCorp > Startup career pay.. it means it's not rational to accept startup career pay. That's a much harder statement to defend (honestly, I don't think it's the case).

brilliantcode6• 10 years ago

OP and article's point is that startups are sort of like a crapshoot. You can have the best product, the best team, do everything you read on HN and elsewhere and still fail. That's the type of environment-high risk but not necessarily high reward. It's not like speculating on financial markets because startup costs a chunk of your life. I've toiled for years trying to be a startup and what I realized is, people are so focused on startup they forget that it's just a business at the end of the day with checks and balances to answer to. Early stage VC funding is fuelling this aggressive style which only works in the favor of VC's not necessarily the founders and their employees.

You are just a naked call option for these VCs-unlimited upward potential, limited capital loss. It make sense for VC's to spray and pray to see what sticks.

I don't want my life to be a fucking call option for somebody to fulfill their ephemeral desires for more wealth with diminishing returns and benefit to society.

danielweber9• 10 years ago

The start-ups could do the very hard work to make sure that employees can trust the stock options.

I've seen all sorts of games. One of the most common, which is surely a violation of fiduciary duty but no one cares to do anything about it, is when the VCs with 3 of 5 seats on the corporate board negotiate a sell-out that matches, down to the dollar, the amount of money needed to make the VCs represented by those 3 seats 100% whole, and not one dollar more.

In order for options to pay out, there are bunch of hurdles that all need to be cleared in a row, with no mess-ups in between, and many of them are not in your control at all.

rm_-rf_slash2• 10 years ago

Working for a startup is worth it when you are looking for experience or something you couldn't do at a big company. Everybody should work for an early startup at least once just to see what it's like.

Startup compensation, however, is a roulette table you have to work to sit at.

logfromblammo3• 10 years ago

I read that as "most startups should fail before trying to hire skilled employees".

If you don't have the cash on hand to pay competitive wages, you should not be hiring the employees.

I would never again work at a startup for the unilaterally renegotiable lottery tickets they are somehow allowed to call "options", instead of salary. If they really, really needed to compensate me with something other than cash, maybe I'd do it for actual stock and retained copyrights in my code. Maybe I'd do it for bonds with a coupon rate 10% above t-bills. But they would definitely also have to do something to polish my resume in case the company fails early. Overblown job title. Gratuitous supervisory authority over someone not needing supervision. Authority to do a side project using a rising-star tech stack.

If you can't give me cash, you have to give me something of equivalent value. If, in the long run and in aggregate, people who have ever been startup employees are earning less than those who were always employees of established companies, the startups are simply not compensating appropriately. And in that case, "don't work for startups" is the correct advice.

st3v3r4• 10 years ago

So if you're not going to do it for the payout, which was the main reason to do it, then why do it? Why put yourself through the crap and the unpaid overtime and the stress and the subpar pay for the chance to make someone else rich?

6548694354186472• 10 years ago

The whole point of OPs remark was the payout is not the reason to work for a startup. (precisely because most startups never end in a payout)

There are many other reasons why a startup would be attractive to some people. Professional autonomy, personal growth and learning, different work culture to name a few. For many people, once you're earning "enough" to cover your expenses the pay difference between employers is worth the trade off.

In the end, unless you're founding the company yourself you're always working "to make someone else rich". That's completely irrelevant to your personal choice of employer.

mook• 10 years ago

One possibility is that, if you get in earlier, as the company grows you're more likely to be promoted to more senior positions, which might be good for professional development. Relatedly, you're more likely to work on a larger variety of things since there isn't enough manpower to let you specialize, which can help develop a larger skillset.

Whether they balance unpaid overtime/stress, however, can be iffy. If you can get in without the bad parts, though, it can be good (but that's less start-up and more small company).

bobthecowboy• 10 years ago

Not all startups are like that. The one I work at (in San Diego, not SV) has a better work-life balance than a lot of non-startups I know. I very rarely work past 5pm.

AngeloR• 10 years ago

I took a 1/3 pay cut to work at a startup because I believe in what the company is trying to do. That's the only reason I keep doing what I do, because the long term goal for the company is in line with my beliefs. Even though I commute for 2+ hours each way, work long hours, and am on call 24/7 for the last 3 years. At some point it may become too much, or another offer might be more interesting, but at the moment, I believe very much in what the company is trying to do.

segmondy3• 10 years ago

fun, interesting idea and tech, might be more fun to work for a company pushing the edge of machine learning, or working in VR or that would let you use haskell or rust. The startup might be started by a group of friends/colleagues that you love working with, it might be 2 miles from your house. They might be the only one willing to hire you and take a chance at you. You are willing to GAMBLE and accept that it might fail and all you will have is the pay you got while employed. There are tons of valid reasons for working for a startup, and what else is wrong with making someone else rich? Not everyone is an eagle, some people are little birds that must find an eagle's back to climb upon so they can soar higher than they ever can on their own.

WalterBright• 10 years ago

Be careful what one wishes for. I know some cases of people who eschewed stock options for a larger salary. When the payday came, and they got none of it while their buddies did, they were very bitter. This held true even when the payday was relatively small.

segmondy3• 10 years ago

If we take that attitude, we will be pretty miserable, at least for most of us. We all know people who have hit it big for various reasons. They moved to SV, NYC, they learned poker, they bought a lottery ticket, they took stock options in a non name startup, they applied to an unknown startup, they decided to learn ML when it wasn't hip, They played sports when I didn't and went pro, they wanted to sing and now I hear them on the radio, whatever the reason, they did something and it worked out for them. At the end of the day, it's taking chances. Don't take chances blindly.

aetherson3• 10 years ago

If you IPO at substantially lower prices than you thought you were valued at, or you IPO at a fine price and then shortly post-IPO, the stock value drops considerably, then it wasn't a big IPO.

Not to dismiss issues of employees being at the "back of the line" for equity payout. That is certainly a thing. But this article lists a bunch of examples of employees getting somewhat disappointing payouts when the ultimate valuation of the company was somewhat disappointing, while presenting it as employees getting somewhat disappointing payouts from "big IPOs."

A lot of people seem to have a problem with understanding that you can't just look at absolute numbers for a company's value. If your company raised a lot of money with the expectation that they would be a $4B company, and then they were a $750M company, well, $750M is a lot of money, but sorry, you had a disappointing IPO and preference is going to eat up a lot of the company's value -- maybe all of it.

danielweber9• 10 years ago

Employees usually have no visibility into preference, even when explicitly asking about it.

aetherson3• 10 years ago

Sure. And I'm not saying that's not a problem, but here's the basic thing you need to know about preference:

If your real valuation turns out to be lower than what you raised money at, preference will eat a bunch or all of your valuation.

And this shouldn't really surprise anyone. It's like some people at HN heard the old joke "How do you make a million in publishing? Start with ten million," and thought:

a. Yes, that seems valid.

b. Where's my share of the resulting million?

jartelt• 10 years ago

I like that this article places a portion of the blame on the founders or recruiters who try to hire new employees. In order to attract the best talent, it is easy for these people to say everything is going awesome and the options will be worth a million dollars. I think the blame for missed expectations and dilution is often placed on VCs. But in reality, it's the founders and the board who decide whether or not to take VC funding and who should communicate clearly and realistically with employees to keep expectations in check.

charlesdm• 10 years ago

Most people joining companies don't even get the entire capital structure disclosed to them. There is no way to know exactly how much your options are worth. You're trusting the company you're joining blindly, which can be a very dangerous thing.

geebee2• 10 years ago

This has been linked to a few times on HN.

http://danluu.com/startup-tradeoffs/

A quick summary: pay has gone up enough at top bigcos that simply working and accumulating money can exceed even very good outcomes at startups.

edoceo3• 10 years ago

10 years at MS will make you a millionaire - in liquid assets

3 years at my startup now I have a million - on paper. Hopefully in the next three there is an event I can cash out on.

One path is 99% chance One path is a 1% chance

I'm having more fun at the startup than I did at MS

gumby• 10 years ago

I'm having more fun at the startup than I did at MS

And as long as you can make your nut (housing, food, savings, some vacations) I don't see a problem.

(edoceo I know you weren't claiming a problem -- I just wanted to reinforce your point).

beagle32• 10 years ago

To be a millionaire after 10 years you need to save $100K/year - which means you need at least $150K post taxes (assuming you are without children and super frugal) - so ~$200K-$250K salary.

Not impossible - but definitely far from common for MS employees unless I'm hopelessly misinformed.

user59944614• 10 years ago

And remember to factor things such as pension, healthcare, working hours.

Forget about free food for a minute and you may soon realize that startups are terrible all over the board.

caniszczyk• 10 years ago

financial literacy is a huge issue in society and especially startup land, many folks don't learn about the pros/cons of 83(b) elections and how to properly calculate the value of your options... also negotiation skills aren't really taught so many people don't negotiate for a better deal

I found this repo on GitHub to be the best resource on startup equity, highly recommend it: https://github.com/jlevy/og-equity-compensation

danielweber9• 10 years ago

Hell, many years ago, before some of our HN readers were born, I co-founded a start-up that had trouble recruiting people because we only created 200,000 shares at founding, and other companies were giving away millions of options. How could we compete only offering hundreds of options?

I don't know if the candidates were playing stupid, or really that dumb, or trying to angle for something better, or just didn't like the company and were trying to back out politely, but it got damn frustrating.

Lots of people just want to be lied to. You know why employers spew bullshit to candidates? Because candidates eat it up.

user59944614• 10 years ago

Adapt to your audience.

If you want not idiots employees, or if you want to do training for real, you can explain it to them, then they're free to take a decision.

Is an employee good enough if he can't listen for 3 minutes and perform a quick check on IPOverflow.com to confirm it's the other company that's a bad deal.

grzm• 10 years ago

(2015)

yueq• 10 years ago

Companies should be more transparent about options they give to employees.

I was once offered with X shares of options from a well-funded startup. X seems like a relatively large number. But the company didn't want to disclose neither of the following to me but just selling me `this is a good offer`,

1. percentage offered 2. FMV per share 3. strike price

The company is OK and the job is interesting. But this opaque destroyed trust between two parties. This is a completely a joke and I turned down the offer.

Big IPO, Tiny Payout for Many Startup Workers (2015)

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