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What I Wish I'd Known About Equity Before Joining a Unicorn

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Re: What I Wish I'd Known About Equity Before Joining a Unicorn

#541

Post by Hbthegreat »

iamcasen wrote: post #280
johngalt wrote: post #236

The equity payday funnel looks bleak. 1. Will this company succeed? 2. Once it succeeds will my equity be valuable? 3. If my equity could be valuable, will it be diluted before I can get paid? 4. If not diluted will it ever be liquid? 5. If there is liquidity will I be able to participate? Or only founders/investors. 6. If employees are able to extract real dollars, will I be forced out, laid off, constructively dism…

Your funnel is so spot on it hurts. I made it all the way to number 6, and boy let me tell you, it was a shit show. People being strong armed left and right, people suddenly not showing up to work, and management offering a memo like "Larry has decided to pursue something different in his career."

Also got to 6. Hugely disappointed.

Re: What I Wish I'd Known About Equity Before Joining a Unicorn

#542

Post by [deleted] »

superqd wrote: post #412

This has caused me some level of sadness in the past. I worked for a startup (started 6mo after founding with only 20 people and stayed for 8 years to 200+ people and 50million in revenue). During a number of phases, I worked for months at a time giving up weekends, late nights, holidays and even vacation time to get product out the door and beat the competition. I racked up 50k options, mostly all for less than a do…

[deleted]

Re: What I Wish I'd Known About Equity Before Joining a Unicorn

#543

Post by xynny »

jes5199 wrote: post #429
bookbinder wrote: post #410

Earlier quoted context omitted.

How was it affecting your mental heath--stress, sleep deprivation?

well, I developed a kind of generalized anxiety - I think it came from the long hours in a fairly large and crowded open-floorplan office - it was just way more constant social contact than I'm comfortable with. I guess if it was stress, it was stress from trying to perform while conforming to an environment that I found profoundly uncomfortable. Also there were nebulous culture mismatches that made me feel like I ha…

i call open floor plans "sweatshop chic"

Re: What I Wish I'd Known About Equity Before Joining a Unicorn

#544

Post by passiveincomelg »

CalChris wrote: post #540
passiveincomelg wrote: post #532

Earlier quoted context omitted.

It sounds like you realized you needed a break before it was too late (i.e. "burnout"), which is obviously good. But why did you return to this grind?

Interesting work and stock. I was partially vested and I could/should have looked around. Don Knuth said something (about TeX): never spend more than 2 years of your life on something. I've broken that rule several times but I'd counsel following it on startups, especially someone else's startup.

Sounds like a good rule. One that I happen to have followed when it comes to work and broken when it comes to studying (which I know consider mostly a waste of time).

Re: What I Wish I'd Known About Equity Before Joining a Unicorn

#545

Post by agiamas »

maverick_iceman wrote: post #263
finnh wrote: post #210

Earlier quoted context omitted.

There's a growing secondary market for illiquid shares of private companies; I would look into that before letting the options lapse. There a few market-making websites as well as VCs that specialize in this. You need to be pretty savvy to marshal the whole process and understand the contracts, though - it is not turnkey.

Many private companies, e.g. Uber, doesn't allow unapproved secondary selling of their shares.

can't you sell a future security on your shares though? This is a "promise" to sell at some point in the future, can't see how can this be prohibited.

Re: What I Wish I'd Known About Equity Before Joining a Unicorn

#547

Post by spoonie »

superqd wrote: post #412

This has caused me some level of sadness in the past. I worked for a startup (started 6mo after founding with only 20 people and stayed for 8 years to 200+ people and 50million in revenue). During a number of phases, I worked for months at a time giving up weekends, late nights, holidays and even vacation time to get product out the door and beat the competition. I racked up 50k options, mostly all for less than a do…

Why didn't you exercise any of the options during the 8 years you worked there? I'm not trying to blame you, but it seems to me like you took the low-risk (short-term cap gains, exercising near an exit event) approach. You lost the compensation by not exercising, but you didn't have to give up any of your own money (free time though, which does suck). You said your salary was decent so you could have exercised at least some of the options to get different tax treatment fora riskier play.

Re: What I Wish I'd Known About Equity Before Joining a Unicorn

#548

Post by adekok »

superqd wrote: post #468
nugget wrote: post #307

Earlier quoted context omitted.

Just to play devil's advocate - as a founder, I've both made money and lost money. Some of my ventures were self-funded to failure and I had to write off hundreds of thousands of dollars. I repeatedly remind my family that my worst case is not a year of unemployment with zero income but rather a year of business failure with a painful amount of red ink. One or two experiences like that and you become very aware of th…

Interestingly, one person's time can be worth more than another person's money. For founders, this is sometimes factored in, but usually not for employees, even when they take a reduced salary. At best, if you are taking a 100k job for 50k, you are, in the eyes of most founders, only investing 50k in the company. But if you are putting in beyond 2k hours that year, anything beyond that is an investment and can be wor…

> Such invested time is usually completely unrewarded, it's assumed to be "factored in".

i.e. "completely ignored".

Re: What I Wish I'd Known About Equity Before Joining a Unicorn

#549

Post by CalChris »

jacobush wrote: post #534
CalChris wrote: post #494

Earlier quoted context omitted.

I worked my ass off at a startup, sleeping under the desk, weekends. The usual. At one point I needed a break and informed them that I was taking a break. Two months cycling through Europe. When I came back, they'd moved and I had the best cubicle reserved for my return. They missed me but only because I forced the issue.

Sorry it sounds like the Stockholm syndrome.

I don't recall the Stockholm captives being well paid, free to leave at any point, with medical benefits and stock options doing interesting work with some decently cool people. Gotta Wikipedia cite on that, skipper?

Re: What I Wish I'd Known About Equity Before Joining a Unicorn

#550

Post by sedachv »

cookiecaper wrote: post #162
adekok wrote: post #97

Earlier quoted context omitted.

I agree. I worked for one startup which got bought. The founders made money. All of the employees lost money. One of the founders reached out to me a few years later, asking me to join his new startup as employee #2. I said "yes", but only if I made 10% of what he made. The answer was "No". OK... maybe 1% of what he makes? "No". Thanks, but no thanks. If you admit that you're not going to share the benefits, I have n…

Yeah, most of the time, there is an expectation that employees will be employed at a market salary and remain content with that. There are not many ways around this. If you don't want to be a wage slave, it's hard to wage slave your way out of it. Just have to save until you can start something on your own, rinse and repeat until you strike it big. The systems are always going to be biased to the people who have the…

> Making your employees too prosperous can really hurt your company, because everyone will quit when there is no longer a financial imperative to work together.

This is not a problem for law firms, medical practices, consultancies, investment firms, or management in any public company. Your argument is just that employees who are in shitty, exploitative jobs will take the money and run, so try to exploit them harder by paying them less. Are you really "not necessarily saying there's anything wrong with that per se"?

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