191–200 of 211 posts
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Employees should have more rights. I wish we could make this standard.
Employees have plenty of rights, you're talking about giving them additional privileges. No one forces people to take equity compensation instead of salary and as long as employees continue to do so the practice will continue.
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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…
I expect that the vast majority of tech employees with agreements about stock options do not have full transparency about how they work. Thought experiment: ask random (US) employees with stock options "What is an 83(b) election" and "Should you make it, and why/why not," and see how many people have coherent answers.
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The twist here is that the options end up worthless despite the hard work of the employee that leads the company to be successful. The options are supposed to incentivise this. Something about the incentive structure is wonky---in the case of Uber going bankrupt then the options "should" be worthless. But if Uber succeeds, then the incentive should pay out.
That makes sense to me? So have options just become a total con?
(Fun fact: the above sentence is also true about lottery tickets and shares in a Ponzi fund.)
> Not only does it not allow employees to sell their shares to secondary buyers, it also won’t allow them to use services like those offered by 137 Ventures, which makes loans to founders and early employees using their stock as collateral. (Snapchat, Dropbox, and Airbnb have similar policies.) Does keeping early employees "handcuffed" essentially as indentured servants until IPO align with YC's ethics policy?
"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…
I've made other people rich multiple times, with my ideas and effort, and gotten dick in return. I definitely would have been better off with a corporate job.
To my shame, I honestly don't understand the accounting behind all this. You'd think I'd learn. But each time I've been screwed a new way. Not knowing how to defend myself, I've mostly opted out. Which also doesn't seem like a good strategy.
> Not only does it not allow employees to sell their shares to secondary buyers, it also won’t allow them to use services like those offered by 137 Ventures, which makes loans to founders and early employees using their stock as collateral. (Snapchat, Dropbox, and Airbnb have similar policies.) Does keeping early employees "handcuffed" essentially as indentured servants until IPO align with YC's ethics policy?
Sam Altman has commented on this before. Among other things, he advocates for much longer (10 years) exercise periods for equity grants.[0] He also discusses the need for a change in tax treatment by the IRS. One of the fundamental issues is how options are taxed. Should you exercise an option, you will need to pay taxes on the spread (delta of strike price and current FMV, i.e. latest 409A valuation). In many cases,…
This isn't really true with ISOs (hence the point of them). You may get an AMT gain which is ugly, but you don't owe regular taxes on the spread unlike Non-Quals where you would.
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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 dimin…
> Provided you don't hit AMT I think people downplay how easy it is to hit AMT. A single, no dependents, standard deduction filer making $120k will hit AMT after $26k of on paper gain for ISO exercise. Everything after that will be taxable. Filing jointly, 2 people who each earn $120k can absorb $18k in on paper gains from exercising ISOs. Add in a kid and it drops to $15k. That's a paltry sum, basically breaking any…
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I wonder how many Uber employees asked for early exercise and got it in their offer letters. It is definitely not standard practice AFAIK.
At some companies it is in the standard offer letter. Unless you are coming in very senior or very early (or both, really) you are unlikely to get a modified option grant, other than just number of shares negotiations. IMO the gold standard here is to issue actual founder shares as long as possible (up to and possibly past series a) and then to do options with early exercise and extended validity, and of course compl…
http://blog.detour.com/introducing-progressive-equity/
Early exercise for the vast majority then is something you have to know to ask for in addition to number of shares.
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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.
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But if Uber isn't yet public, and won't allow a market in its shares, who would one sell the shares TO to cover the tax?
RSU's are only restricted until vest. Once they vest, they are unrestricted stock. Uber cannot control what you do with that stock (or at least, i'm not familiar with any company that has done so, and not sure that it's legal to do so)
Typically this is only for short periods for higher-up people but it can affect "normal" engineers too (say you do a tech due diligence for an acquisition etc....)