Add the effects of "preferred overhang" on employee payouts for various different exit outcomes like acquisitions. Usually only founders and investors with "preferred shares" see anything and those with common stock (employees) see theirs get completely eaten by the overhang.
Show HN: Startup Equity Adventure Game
11–20 of 32 posts
Re: Show HN: Startup Equity Adventure Game
#12Quick equation: 1. is it an ai lab with a well know founder -> equity might be worth something 2. are you the CEO founder? -> equity might be worth something 3. are you a non CEO co founder? -> equity might be worth something, will probably be stolen from you 4. is the company a year or two from a certain IPO? equity might be worth something 5. all other cases likely zero
Seems like 3 is a bit pessimistic. After all, if there are 3 founders then that greatly decreases the chance that the CEO steals equity from the other 2 cofounders. The CEO generally wouldn't have > 50%, so the non-CEO co-founders could keep the CEO in check.
Re: Show HN: Startup Equity Adventure Game
#13so many erroneous statements in this game. also it's not much of a "game", is it.
Care to explain where are the errors?
Re: Show HN: Startup Equity Adventure Game
#14Quick equation: 1. is it an ai lab with a well know founder -> equity might be worth something 2. are you the CEO founder? -> equity might be worth something 3. are you a non CEO co founder? -> equity might be worth something, will probably be stolen from you 4. is the company a year or two from a certain IPO? equity might be worth something 5. all other cases likely zero
Seems like 3 is a bit pessimistic. After all, if there are 3 founders then that greatly decreases the chance that the CEO steals equity from the other 2 cofounders. The CEO generally wouldn't have > 50%, so the non-CEO co-founders could keep the CEO in check.
Is there even a CEO per-se in this situatuon?
Re: Show HN: Startup Equity Adventure Game
#15Quick equation: 1. is it an ai lab with a well know founder -> equity might be worth something 2. are you the CEO founder? -> equity might be worth something 3. are you a non CEO co founder? -> equity might be worth something, will probably be stolen from you 4. is the company a year or two from a certain IPO? equity might be worth something 5. all other cases likely zero
Seems like 3 is a bit pessimistic. After all, if there are 3 founders then that greatly decreases the chance that the CEO steals equity from the other 2 cofounders. The CEO generally wouldn't have > 50%, so the non-CEO co-founders could keep the CEO in check.
Seems accurate according to my experience. It’s the new investment banks in later rounds that cause it. Bigger investments, stronger guarantees, better preferences, and lack of understanding on the part of inexperienced founders, plus lack of power held by the employees options pool … recipe for “only the banks see any upside.”
Re: Show HN: Startup Equity Adventure Game
#16Earlier quoted context omitted.
Seems like 3 is a bit pessimistic. After all, if there are 3 founders then that greatly decreases the chance that the CEO steals equity from the other 2 cofounders. The CEO generally wouldn't have > 50%, so the non-CEO co-founders could keep the CEO in check.
Is there even a CEO per-se in this situatuon?
Depends on country and type of business entity. Some of them require one legal representative.
Re: Show HN: Startup Equity Adventure Game
#17[flagged]
Re: Show HN: Startup Equity Adventure Game
#18Useful! I like playing such games where u simulate something from real world so you get playground to do mistakes.
Re: Show HN: Startup Equity Adventure Game
#19Quick equation: 1. is it an ai lab with a well know founder -> equity might be worth something 2. are you the CEO founder? -> equity might be worth something 3. are you a non CEO co founder? -> equity might be worth something, will probably be stolen from you 4. is the company a year or two from a certain IPO? equity might be worth something 5. all other cases likely zero
Seems like 3 is a bit pessimistic. After all, if there are 3 founders then that greatly decreases the chance that the CEO steals equity from the other 2 cofounders. The CEO generally wouldn't have > 50%, so the non-CEO co-founders could keep the CEO in check.
its so common that I am shocked people willing enter roles like co-founding CTO without serious legal protections in place. go spend time in NYC/SF and talk to actual cofounders
Re: Show HN: Startup Equity Adventure Game
#20Earlier quoted context omitted.
Seems like 3 is a bit pessimistic. After all, if there are 3 founders then that greatly decreases the chance that the CEO steals equity from the other 2 cofounders. The CEO generally wouldn't have > 50%, so the non-CEO co-founders could keep the CEO in check.
Seems accurate according to my experience. It’s the new investment banks in later rounds that cause it. Bigger investments, stronger guarantees, better preferences, and lack of understanding on the part of inexperienced founders, plus lack of power held by the employees options pool … recipe for “only the banks see any upside.”
alot of financial engineering happens if the company is raising large rounds, if you leave early as a cofounder, they will absolutely mess with your equity. And even if you are there, youre considered an expense, unless the CEO explicitly advocates for you