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I Don’t Care How Well You Code, Understand Your Compensation

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Re: I Don’t Care How Well You Code, Understand Your Compensation

#21

Post by JumpCrisscross »

cloudjacker wrote: post #7

> So talk to the CFO about the numbers — when you’re hired, when it’s fundraising time, and any time in between. Hahahaha, oh man so here's the part where I just dump all my emails about the answers I have gotten back from CFOs over the last decade: - "common stock shareholders aren't privy to financial details" - "we don't share that information" - "I discussed it with the board [consisting of myself] and they decid…

> common stock shareholders aren't privy to financial details

Delaware law lets you make a Section 220 request [1] to inspect a corporation's books and records for a proper purpose, e.g. to identify potential buyers and sellers or for investment valuation purposes.

[1] http://www.pepperlaw.com/publications/what-every-corporate-c...

Re: I Don’t Care How Well You Code, Understand Your Compensation

#22

Post by 20yrs_no_equity »

marssaxman wrote: post #6

It's really quite simple: you assume it's all worthless, because that's how it starts and that's how it generally ends. Even if it were going to be worth something, you'd have been better off taking the money up front and investing it however you wanted in the meantime. But it doesn't really matter, because you have no control over this anyway. All you have to do is decide whether the salary is high enough; the rest…

If it's worthless, and you're taking below a market salary, and you're working much harder than you would have to at a company paying you that market salary... then you're getting a raw deal.

Better to get the market salary for a 50 hour a week job and do your own startup on the side as a side project.

The thing is, early employees (first 1-4 years) put in as much effort and take as much risk as founders, and take a lot more risk than investors (who can spread their bets over a dozen other investments) yet generally get poor terms in their options packages.

Options do have a calculable value, if you can determine the risk of failure for the company. I think they correct answer is to get RSUs that vest and have the same terms as the investors do. That's a lot more fair- investors still get to spread their bets around and have less risk, but employees have reasonable participation in all outcomes in that case (and the RSUs vest like options would.)

Re: I Don’t Care How Well You Code, Understand Your Compensation

#23

Post by debaserab2 »

cloudjacker wrote: post #7

> So talk to the CFO about the numbers — when you’re hired, when it’s fundraising time, and any time in between. Hahahaha, oh man so here's the part where I just dump all my emails about the answers I have gotten back from CFOs over the last decade: - "common stock shareholders aren't privy to financial details" - "we don't share that information" - "I discussed it with the board [consisting of myself] and they decid…

No, I have no interest in being a part of a union and have absolutely no doubt that I can negotiate on behalf of myself better than a giant body responding to the wants of many.

Re: I Don’t Care How Well You Code, Understand Your Compensation

#24

Post by 20yrs_no_equity »

dboreham wrote: post #15

One of the cases where jwz is spot on : it's a lottery ticket, nothing more.

Except that you can pay $1 for a lottery ticket with long odds of a $100M return, here you are paying $70k for a $1M lottery ticket with equally long odds of return.

Re: I Don’t Care How Well You Code, Understand Your Compensation

#25

Post by aub3bhat »

vacri wrote: post #18
YuriNiyazov wrote: post #16

Earlier quoted context omitted.

This is really wrong. You can very well assume that it's worthless. If you do, chances are you will not do your research on things like early exercise and 83(b) filing (whether, for example, you work at a company that even allows things like that). Then, in the very small chance that your equity is actually worth something, you will be kicking yourself really hard because if you'd only prepared, you could've been pay…

That all sounds like a fancy way of saying "playing the lottery".

Thats like saying programming is fancy way of saying "banging fingers on keyboard".

Re: I Don’t Care How Well You Code, Understand Your Compensation

#26

Post by 20yrs_no_equity »

UK-AL wrote: post #11
Animats wrote: post #8

Earlier quoted context omitted.

The basic thing to understand is the concept of "dilution". Companies can issue new stock in exchange for new investment funding, driving down the value of existing stock. Sizable dilution is rare in publicly held companies, but common in privately held ones. There are often contractual terms which protect some parties against dilution. Founders and early stage investors may be protected, while other employees are no…

I think its rare to have any anti dilution protection for anyone in a high growth company. At most you have then option to buy into further rounds, so you keep your percentage the same.

I've seen anti-dilution clauses in founder documents, and really you should have one that limits dilution under certain circumstances (so you don't get arbitrarily or selectively diluted out.)

They are probably extremely rare for general employees, but they are not rare for people who have negotiating power (eg: C level executives.)

====

Apparently I am blocked from responding too often as a new account, so adding here because I can't add a new comment to the parents parent:

It really is quite shocking how often people act like these things are not the business of employees. On one hand they want you to take a lower salary, and they claim that options will make up for it, but on the other hand they think it is somehow unreasonable for you to ask basic questions necessary to value the options?

I recently had a CFO act incredulous when I requested a copy of the Stock Option plan. Like I didn't deserve to have a copy of it, even though he was requiring me to sign a contract agreeing to its terms.

At that point I basically wrote off the options, and have written off the company and am on my way out.

The reason they get away with this kind of obfuscation is, I think, that most engineers just go along to get along and aren't too demanding.

Unions would be worse, but we need to start sticking up for ourselves a lot more.

Re: I Don’t Care How Well You Code, Understand Your Compensation

#27

Post by 20yrs_no_equity »

jfoutz wrote: post #3
nibnib wrote: post #2

I don't understand most of the financial terms used in this article. Where do I start?

Eh, the gist is employees take on very little risk. We get paid every two weeks up to layoff or retirement. It's different when you are looking for investors.

Employees take more risk. Each one is putting in an amount of money equal to an angel, often with options that give them far less compensation compared to that angel. You can't work for 10 companies so all your eggs are in one basket.

You would be right if the employees were getting market salary and working a market/normal work week of say 50 hours.

Re: I Don’t Care How Well You Code, Understand Your Compensation

#28

Post by xiphias »

marssaxman wrote: post #6

It's really quite simple: you assume it's all worthless, because that's how it starts and that's how it generally ends. Even if it were going to be worth something, you'd have been better off taking the money up front and investing it however you wanted in the meantime. But it doesn't really matter, because you have no control over this anyway. All you have to do is decide whether the salary is high enough; the rest…

The default should be working for a big public company that offers a big salary package. Anyone can code some cool stuff in his/her free time anyways. The startups don't generally compensate for the risks, just try to keep the best-case scenario better than multiple promotions at a big company (which is still hard)

Re: I Don’t Care How Well You Code, Understand Your Compensation

#29

Post by xiphias »

marssaxman wrote: post #6

It's really quite simple: you assume it's all worthless, because that's how it starts and that's how it generally ends. Even if it were going to be worth something, you'd have been better off taking the money up front and investing it however you wanted in the meantime. But it doesn't really matter, because you have no control over this anyway. All you have to do is decide whether the salary is high enough; the rest…

The default should be working for a big public company that offers a big salary package. Anyone can code some cool stuff in his/her free time anyways. The startups don't generally compensate for the risks, just try to keep the best-case scenario better than multiple promotions at a big company (which is still hard)

Re: I Don’t Care How Well You Code, Understand Your Compensation

#30

Post by aub3bhat »

marssaxman wrote: post #6

It's really quite simple: you assume it's all worthless, because that's how it starts and that's how it generally ends. Even if it were going to be worth something, you'd have been better off taking the money up front and investing it however you wanted in the meantime. But it doesn't really matter, because you have no control over this anyway. All you have to do is decide whether the salary is high enough; the rest…

This can be applied to everything why bother making an informed decision about choice of University or Spouse or anything else.

Your explanation is a self fullfiling prophecy disguised as if it was some wise advice.

In reality employees can and should make informed decisions, this advice is equivalent of covering ears and screaming bla bla bla.

Power is given to those who demand it. If you start with assumption of being treated like meek, you are simply setting yourself up for a defeat.

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