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Handcuffed to Uber

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Re: Handcuffed to Uber

#81

Post by xiaoma »

gogopuppygogo wrote: post #77
xiaoma wrote: post #75

Earlier quoted context omitted.

You disagree in terms of diction. It was an analogy, after all. History doesn't repeat itself. It rhymes. Do you actually support the practice from an ethical standpoint? Employees are recruited to start-ups with equity. That's a core part of their compensation for their work (for which they likely could have received more salary from Google, Amazon, Facebook, etc). Then after they've already done the work , that com…

As long as the employee's enter into the agreement with full transparency that this is how the compensation works then it's completely fair. This isn't the result of some kind of secret court deciding that it's how a company should pay employees. Adults are consenting to this arrangement. There is only so much "fair" to be had in business. It's not like there aren't 1,000 other "mini ubers" that want to own the marke…

>"As long as the employee's enter into the agreement with full transparency that this is how the compensation works then it's completely fair."

That's literally the logic that was used to justify indentured servitude.

Re: Handcuffed to Uber

#83

Post by [deleted] »

toomuchtodo wrote: post #46
matchagaucho wrote: post #43

Earlier quoted context omitted.

The latest Uber investment rounds require that employees hold onto their shares for one year after going public. This will prevent employees from flooding the market post-IPO and devaluing the stock.

It also prevents employees from realizing any value if the stock price drops in the first year. EDIT: Nothing quite like watching the public stock price decline while you're in your lockup period.

[deleted]

Re: Handcuffed to Uber

#84

Post by solidsnack9000 »

gogopuppygogo wrote: post #77
xiaoma wrote: post #75

Earlier quoted context omitted.

You disagree in terms of diction. It was an analogy, after all. History doesn't repeat itself. It rhymes. Do you actually support the practice from an ethical standpoint? Employees are recruited to start-ups with equity. That's a core part of their compensation for their work (for which they likely could have received more salary from Google, Amazon, Facebook, etc). Then after they've already done the work , that com…

As long as the employee's enter into the agreement with full transparency that this is how the compensation works then it's completely fair. This isn't the result of some kind of secret court deciding that it's how a company should pay employees. Adults are consenting to this arrangement. There is only so much "fair" to be had in business. It's not like there aren't 1,000 other "mini ubers" that want to own the marke…

> As long as the employee's enter into the agreement with full transparency that this is how the compensation works then it's completely fair.

Fair carries with it a connotation of plain dealing, that is true; but one can consent to things which are not fair in the sense of "without unjust advantage".

Re: Handcuffed to Uber

#85

Post by sib »

sopooneo wrote: post #39
yummyfajitas wrote: post #8

Earlier quoted context omitted.

Yes. It's a huge problem - the IRS demands liquid cash in order to pay tax on illiquid in-kind transfers. The problem isn't just in startups with stock options; another big place it arises is closely held businesses. You receive the family business as an inheritance and suddenly you need to pay - in cash - 40% of the value of the business. Such a large cash hit can and does destroy many companies. The solution is of…

I'm surprised financial services have not popped up just to help people in such situations. The service could confirm the person has as much coming as they say, have him sign his life away to them, and then float him enough cash to buy the stock and pay the taxes on time. Then the employee pay some portion of his new wealth to the financial services company. Does that really not exist?

Often life insurance is purchased for this exact purpose.

Re: Handcuffed to Uber

#86

Post by yummyfajitas »

gamblor956 wrote: post #71
yummyfajitas wrote: post #8

Earlier quoted context omitted.

Yes. It's a huge problem - the IRS demands liquid cash in order to pay tax on illiquid in-kind transfers. The problem isn't just in startups with stock options; another big place it arises is closely held businesses. You receive the family business as an inheritance and suddenly you need to pay - in cash - 40% of the value of the business. Such a large cash hit can and does destroy many companies. The solution is of…

The problem isn't just in startups with stock options; another big place it arises is closely held businesses. You receive the family business as an inheritance and suddenly you need to pay - in cash - 40% of the value of the business. Such a large cash hit can and does destroy many companies. Not true at all. For the last year for which data is available, 2013, only 20 inheritances of a small business were subject t…

Your citation gets that number solely by defining "small business" extremely narrowly and in such a way as to mostly exclude businesses affected by estate taxes.

Re: Handcuffed to Uber

#87

Post by hkmurakami »

zwily wrote: post #68
austinl wrote: post #24

Pinterest allows employees to hold onto their options for seven years after leaving (if they stay at the company for two years) to avoid this scenario. I think there are a few other companies that have done similar things. http://fortune.com/2015/03/23/pinterest-employee-taxes/ Disclosure: I work for Pinterest

I heard that Pinterest has to issue NQOs instead of ISOs to do this. If that's the case, they come with their own potential downsides.

ISOs convert to NQOs once a certain amount of time has passed after leaving the organization, so there's not much difference there.

Having ISOs matters most when the underlying shares are illiquid, and you can defer the tax obligation until a sale event (provided you don't hit AMT). When you have a 7-10 year exercise window, the company will likely have IPO'ed or have failed. The tax benefit of ISOs are greatly diminished.

Re: Handcuffed to Uber

#88

Post by CamperBob2 »

xiaoma wrote: post #75
ploxiln wrote: post #72

Earlier quoted context omitted.

"indentured servants"? That's ridiculous - startup tech workers are paid well compared to the average person, and they face no financial penalties for leaving their jobs if they do not exercise their stock options. They do face the gnawing possibility that they could be rich , if only they could sell immediately, or keep the options for later, or or or ... if only! But they can always just find another reasonably int…

You disagree in terms of diction. It was an analogy, after all. History doesn't repeat itself. It rhymes. Do you actually support the practice from an ethical standpoint? Employees are recruited to start-ups with equity. That's a core part of their compensation for their work (for which they likely could have received more salary from Google, Amazon, Facebook, etc). Then after they've already done the work , that com…

You disagree in terms of diction.

No, there really is a pretty massive material difference between a startup employee and an indentured servant. It takes extreme naiveté or extreme privilege to confuse these two concepts.

Re: Handcuffed to Uber

#89

Post by seeing »

Uber’s position is that if it learns [of a sale or loan] that goes around its share-transfer restrictions, there will be consequences

What consequences?

Re: Handcuffed to Uber

#90

Post by hkmurakami »

kelukelugames wrote: post #29
austinl wrote: post #24

Pinterest allows employees to hold onto their options for seven years after leaving (if they stay at the company for two years) to avoid this scenario. I think there are a few other companies that have done similar things. http://fortune.com/2015/03/23/pinterest-employee-taxes/ Disclosure: I work for Pinterest

I read the Pinterest policy last year and ask my CEO about doing something similar during a company meeting. He just laughed. Then he apologized the next meeting for misunderstanding the question and still said no. I left the company.

Frankly institutional investors still have leverage over founding teams, and unless the company is a "darling" that has investors fighting for cap space, being "nonstandard" will be a possible liability.

Laughing at the question is obviously uncalled for, but there are legitimate cause for concern for adopting such policies.

Currently, late stage high growth companies and YC companies are the two segments best positioned to negotiate against VCs for these terms to become "standard".

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