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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

#71

Post by nitrogen »

flexie wrote: post #56

I think it's mostly supply and demand, timing and where you live. But those are the factors we rarely talk about. Instead, people complain they are not compensated enough relative to the importance of their work, their intelligence, the hours put in, their title or the length of their education or the risk they take. If people were paid according to the importance of their jobs, I would argue that plumbers, sewage wo…

The measure of "importance" that results in programmers being paid a lot of money is the ability to do something once and have it benefit millions of people.

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

#72

Post by discordianfish »

I don't get why everyone is criticizing this article. I think the main point is simply: Understand your compensation. And this is important. For instance, it makes a huge difference if you're allowed to sell your shares on the secondary market or not. That way a friend-of-a-friend made a bunch of money while other employees who joined a few month later can't and probably won't ever be able to sell those shares at a good price.

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

#73

Post by yladiz »

flexie wrote: post #56

I think it's mostly supply and demand, timing and where you live. But those are the factors we rarely talk about. Instead, people complain they are not compensated enough relative to the importance of their work, their intelligence, the hours put in, their title or the length of their education or the risk they take. If people were paid according to the importance of their jobs, I would argue that plumbers, sewage wo…

Yeah, this is quite true. Even if it doesn't seem like it, the fact that programmers have a relatively stable job and stable income -- worrying about getting the right about of pay vs equity is much different than worrying, "Will I get paid?" -- it show some lack of self awareness to even complain about these kinds of topics. Yes, you might have a difficult time making ends meet in SF with a $100k job in a nice apartment, but you can always move to a city that doesn't have obscene rent and living costs and live more comfortably, and most likely be able to afford the associated moving costs, something many, many people can't even begin to think about.

Barring those comments, I think this article is actually good advice for software developers who don't know that much about how this works and what to ask, and could be burned in the end. Many people don't think about the specifics and if they have less than scrupulous founders, if they're not careful they can be in for a lot of trouble. I actually wish this would touch on the more psychological aspects of this topic, because you might want to understand these things, but might be worried about pressing buttons when applying them, and shouldn't be. For example, when you initially interview, don't be afraid to negotiate and definitely don't be afraid to leave if the terms aren't to your liking. If the company is profitable or is "awesome and will be worth tons of money, we promise!" they should put their money where their mouth is and compensate well, not just with equity. If you're not getting paid what you should be, or not getting the equity you think you should be getting, talk to the founders or whomever you can, and don't be afraid to leave if the situation is toxic or isn't acceptable (of course, this is mostly startup advice; when at a larger company you might get some say in the compensation package, but it's likely mostly up to bureaucratic processes unless you're being hired way up like VP/P/C level). It's not necessarily true that they need you more than need them, what's probably more truthful is that neither party needs the other.

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

#74

Post by mcherm »

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".

No, it really isn't. I agree roughly with the claim that you should plan your life based on the assumption that your stock options are quite likely to be worthless, but the comment you replied to is making specific and highly meaningful points that anyone receiving options really needs to understand.

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

#75

Post by Xyik »

Let's be honest, the only reason companies aren't transparent about these things is because of investor/founder greed. Whether or not the numbers are 'fair' isn't even relevant until employees fully understand their compensation. It's basically like how landlords in SF take advantage of the housing market by unnecessarily raising rent to absurd levels just because they can - it's the same with investors. They have the money so they try and scalp those who need it under the guise of taking on risk. In reality, if an investor lost the 10M he/she invested in a company, it probably wouldn't change their life at all.

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

#78

Post by disc »

xiphias wrote: post #28
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)

Absolutely this. All comp evaluations should start from what you could reasonably expect (salary + annualized stock) at a public company.

Startup comp is a little different; salary + the value of equity at (a reasonable) exit (but derated by a healthy 80%, because 80% of all startups fail, right?) It might also be wise to discount for any difference in preferred shares vs. common stock.

This might just be my personal experience, but I feel like a lot of people don't derate startup equity for (the statistically expected) failure correctly.

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

#79

Post by j_jochem »

Having seen these types of articles crop up a number of times now, I've started wondering if the issue of preferred stock vs. regular stock vs. options is something that is specific to how stock ownership works in the US or if this also applies to other countries.

In particular, I would be interested in information on stock ownership in British ltds and how things work in the EU in general. Can anybody with experience in those markets clue me in?

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

#80

Post by throwaway729 »

aub3bhat wrote: post #52
lmm wrote: post #40

Earlier quoted context omitted.

If you walk into a casino you're going to lose money. I don't even know the rules of any of the games and I can tell you that. Some situations are so tilted in favour of one side or the other that it's not worth trying to compete on that playing field. Valuing the options at zero and demanding adequate salary without them is the opposite of meekness.

Rather than loudly proclaiming your ignorance about casions and options, you should introspect. I know several people who successfully negotiated better terms. Demanding "adequate" salary and valueing options at "zero" are two seperate tasks. You assume latter (options not valued at 0) implies former (salary not adequate) its a statement about your risk averse world view, not a statememt of fact. As far as meekness,…

> I know several people...

And for every person you know there are dozens of stories about people who didn't even come close to recouping their salary differential. And those are just the "successful" startups that had some sort of exit. So the risk is (obviously) real.

> its a statement about your risk averse world view, not a statememt of fact.

No, it's a (true) statistical statement that you're misrepresenting as a categorical one.

> loudly proclaiming that you are valuing options at zero is great way of letting your co workers and others know of your level of interest in the success of company

Does the VC who's investing in a profile of N other companies also not have much interest in the success of the company? I mean, if they REALLY believed in the success of the company, then why aren't they just throwing all N at the company?

The only difference between the VC and the employee is that the employee is providing a limited resource (time) that can't be split among N bets, while the VC has enough cash to afford to make risky bets.

So it's entirely possible that the company has an negative expected value for an employee and also a positive expected value for the VC (and founder, but for different reasons).

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