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Startup Stock Options – Why a Good Deal Has Gone Bad

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Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#161

Post by toomuchtodo »

refurb wrote: post #155
goobynight wrote: post #88

Earlier quoted context omitted.

It's "pissing in the pool" for the rest of us. I know it feels validated internally because it worked out for you though. Even when I did a startup, I held pretty normal hours. Working on someone else's problem to make them rich is silly to me. I think it's something that you either get or you don't. I don't plan to convince you to change sides, but I'd 100% of the time rather spend hours 8 or 9 through 12 working on…

Sorry, but that's ridiculous. People have different levels of dedication to their work. If you want to do 40 hours a week, that's fine, but don't crap on someone who wants to put in more effort. Sounds like a union where they'd beat on the new guy who actually tried to be more efficient.

Versus management demanding everyone work 50-60 hours a week in an at will employment state? I won’t disparage your work ethic, but recognize that allowing yourself to be exploited enables your company to more easily exploit the unwilling, and without labor protections, it leads to systemic employee abuse.

You can’t say it doesn’t happen. HN is littered with these abuse stories.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#162

Post by toomuchtodo »

landryraccoon wrote: post #149
akoumis wrote: post #134

Earlier quoted context omitted.

You are being exploited. Do you get compensated 1.5x your base for all those 12 hour work days?

Making multiples of what the median American household makes, sitting in front of a computer, in an air conditioned office full of free food is being exploited? I'm sure a lot of American workers are being exploited but I'm not.

So you recognize the abuse disparity. Good! You can then understand why people fight against abuse despite the complaints from the comfortable.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#163

Post by closeparen »

nostrademons wrote: post #118
matthewowen wrote: post #71

Earlier quoted context omitted.

SF startup cash comp for engineers is comfortably in the 150k-200k range, and often higher. This is series A, series B stage companies. If you have a few years of experience and are making less than this then I'm please to be able to inform you that you are underpaid. If you have one of those incomes at the higher end, you can do these things in the bay area. If you have more than one then that stuff is not hard at a…

You pay for it in commute time, though. I just checked Zillow; the houses that are anywhere within walking distance of BART go for $1.7-$2.8M, with the $1M homes clustered near the freeway. Driving across the Bay Bridge into SF can easily take an hour; hell, I know people who've been stuck on the bridge for over an hour.

For precisely this reason, the most valuable real estate in Berkeley is BART parking. It's also (officially) not for sale at any price. You have to sit on the waitlist for a few years. I'm sure there's a black secondary market somewhere but I haven't found it.

BART is looking to eliminate all its parking, so this strategy won't work much longer. (They claim that the parking program doesn't bring in much revenue, but also refuse to charge a market-clearing price!)

Maybe the houses away from BART will get a little more affordable and those willing to walk 45 minutes or so will get a break. Or it'll end up like Sunnyvale where most of the "Caltrain" parking is actually provided by the City.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#164

Post by jakemoshenko »

conanbatt wrote: post #70
btilly wrote: post #19

To his suggestions, I have another. Offer internal Dutch auctions on a regular basis to provide an opportunity for investors/the company/etc to buy stock from employees at a reasonable price. This makes the value of the company, from the point of view of the employee, not "funny money" but something very tangible. With an opportunity to cash out long before it is public.

The easiest solution is that startup employees should be able to sell their shares in the open market, as they please. Then all the problems go away.

Until you're forced to start publishing quarterlies, or until the employees all unwittingly sell to the same would-be hostile takeover buyer.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#165

Post by ryanisnan »

refurb wrote: post #155
goobynight wrote: post #88

Earlier quoted context omitted.

It's "pissing in the pool" for the rest of us. I know it feels validated internally because it worked out for you though. Even when I did a startup, I held pretty normal hours. Working on someone else's problem to make them rich is silly to me. I think it's something that you either get or you don't. I don't plan to convince you to change sides, but I'd 100% of the time rather spend hours 8 or 9 through 12 working on…

Sorry, but that's ridiculous. People have different levels of dedication to their work. If you want to do 40 hours a week, that's fine, but don't crap on someone who wants to put in more effort. Sounds like a union where they'd beat on the new guy who actually tried to be more efficient.

I get what you're saying, but don't try to act like working more is equivalent to being more efficient.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#166

Post by pnw_hazor »

jessaustin wrote: post #132
dnautics wrote: post #108

Earlier quoted context omitted.

Nobody ever said that about the As!!

I'm pretty certain I've heard Amazon described as "evil". Apple are less objectionable, but I'm sure there are some things that some body wouldn't like.

It seems Amazon's evilness mostly stems from their reputation for how they treat their employees - not how they treat their customers.

My weak sauce rationalization re Amazon is that I wouldn't work there (I love hearing the big sigh from recruiters when I ask if the client they are hiring for is Amazon.)

Others who choose to work there do so voluntarily. They haven choosen their own pain.

In my mind this is different than using your PhDs to build dark patterns to trick consumers, survelience tech to monetize people, using that surveillance information and neuroscience to manipulate people, and so on.

edit: to add -- I forgot about Apple, since I stopped buying their stuff a few years ago. At least they see that privacy protection may have some value in the marketplace.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#167

Post by maxxxxx »

seibelj wrote: post #3

Valid reasons to work for a startup: - You are a cofounder. - You have little experience and you are using this to break into the industry, and get experience on many different technologies ("wear many hats"). - They are working on a very specific problem or using a specific technology that you strongly desire to work on and it's difficult to do it anywhere else. - You want to work a certain way (remote, on the beach…

"- You want to work a certain way (remote, on the beach, whatever) and they are willing to go this route."

for this you have a much better chance at an established small company that doesn't need crazy growth. From what I see most startups prefer putting everybody into a big bullpen.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#168

Post by dalbasal »

The weird thing is that this state of affairs (a) doesn't save investors very much dilution.

Meanwhile, (b) options do a much poorer job of motivating/recruiting employees, (c) an even worse job of aligning interests and (d) the risk/downsides aren't reduced at all.

If stock "values" start to drop, it can really make a company feel like a sinking ship. That's the risk of equity sharing. They can make bad times worse. This happens no matter how distant/unlikely a liquidity event is.

The solution has been mentioned all over this thread: make them liquid somehow.

Alternatively, stop doing options and do something else instead. Aren't startups supposed to be breaking conventions and being creative?

I agree this Steve B's implication, the average stock option scheme is a vestigial artefact. Unless you're in a position (and of a mind) to negotiate terms, it's a checkbox.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#169

Post by kemitchell »

seibelj wrote: post #3

Valid reasons to work for a startup: - You are a cofounder. - You have little experience and you are using this to break into the industry, and get experience on many different technologies ("wear many hats"). - They are working on a very specific problem or using a specific technology that you strongly desire to work on and it's difficult to do it anywhere else. - You want to work a certain way (remote, on the beach…

What's "valid" isn't a matter of immutable natural law. Clearly there are some contributors to startups---founders and early investors---who demand and get low-probability, high-reward financial bets that can, albeit probably won't, pay off big. Whether that bet is available to others, and to what extent, is a matter of choice.

If you've got something valuable to offer, and want founder-like exposure to risk and reward, negotiate a founder-like equity package. If they won't give it to you, it's not because they're a startup. It's because they're unwilling to give it to you. Perhaps they don't think you're worth it. Perhaps they just don't want to share the pie like that.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#170

Post by matchagaucho »

Sure companies are worth more in 10-12 years. But when VCs are managing 7 year funds, their LPs may require returns sooner.

I'm surprised this article didn't mention Investors ability to simply hold shares post-IPO. Leave it to the LP pension managers to decide how much upside they want to risk.

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