Startup Stock Options – Why a Good Deal Has Gone Bad • Hacker News Board

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

#301

Post by MobileVet » Wed, Apr 10, 2019, 11:48 PM UTC

I was part of a very well know incubator and a very early employee at a flagship company. Founder blew tons of cash and dilutions but that is part of it and I didn’t mind.

What was ethically shady was shortly after I left with 4yrs vested they decided to restructure the entire company so they could attract investment. They took all the debt from the original company and put that in a shell company that then owned a portion of the new company. Guess where early employees’ stock went? The debt vehicle.

I actually did make some money on the eventual exit, but probably 1 or 2 orders of magnitude off of what it would have been if my stock was in NewCo. Consider the tech we built was a major driver of the acquisition, it was frustrating.

People are greedy, no matter how nice they are to your face.

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

#302

Post by wbl » Thu, Apr 11, 2019, 12:00 AM UTC

dalbasal wrote: post #222

wbl wrote: post #201

Earlier quoted context omitted.

Going to IPO doesn't mean investors can't invest.

It means they have more competition. It also means the way the company operates is different. Public markets don't allow (at least they're currently extremely intolerant of) high risk-reward strategies in practice, or cultural weirdnesses.. especially in a major stock. See: Tesla's issues, contrasted with spaceX's "must not be listed if we want to go to mars" stuff. So, in practice, buying 2015-ipo Uber stock is a di…

Biotech companies are frequently public and are rolling it all on a single drug.

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

#303

Post by seattle_spring » Thu, Apr 11, 2019, 12:23 AM UTC

MobileVet wrote: post #301

I was part of a very well know incubator and a very early employee at a flagship company. Founder blew tons of cash and dilutions but that is part of it and I didn’t mind. What was ethically shady was shortly after I left with 4yrs vested they decided to restructure the entire company so they could attract investment. They took all the debt from the original company and put that in a shell company that then owned a p…

A company I used to work for is in the process of doing this right now. Makes me feel really stupid spending ~10k exercising the shares.

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

#304

Post by rottencupcakes » Thu, Apr 11, 2019, 12:24 AM UTC

MobileVet wrote: post #301

I was part of a very well know incubator and a very early employee at a flagship company. Founder blew tons of cash and dilutions but that is part of it and I didn’t mind. What was ethically shady was shortly after I left with 4yrs vested they decided to restructure the entire company so they could attract investment. They took all the debt from the original company and put that in a shell company that then owned a p…

Curious why you don't mention their name? Feels like there's little recourse against this sort of thing other than reputation risk, why not out them publically?

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

#305

Post by fj39dkf » Thu, Apr 11, 2019, 12:27 AM UTC

djakjxnanjak wrote: post #197

pnw_hazor wrote: post #103

Earlier quoted context omitted.

Though at F and G there is the cost of having to rationalize working for an organization that is evil.

If you put a lot of mental energy into organizing your ideology to think of them as evil, sure.

Can you elaborate?

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

#306

Post by icedchai » Thu, Apr 11, 2019, 12:30 AM UTC

deanmoriarty wrote: post #251

everdev wrote: post #248

Earlier quoted context omitted.

Threaten to shut down the company. Then your shares are worth zero.

I believe I am the kind of person who would just say "Go ahead, shut it down if that's the only alternative. If you would like me to sign a deal to restructure the company, then I'll happily do it, but the company needs to pay me a one time cash bonus that reflects the value of the shares that I am forfeiting". I am not naive enough to believe it would work, as they would probably find a way to screw me regardless, b…

They usually don't need your signature anyway. They'd just say no and move on. The vote of the majority of the shareholders, or often, just the majority of the preferred shareholders, are enough.

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

#307

Post by screye » Thu, Apr 11, 2019, 12:30 AM UTC

ryanSrich wrote: post #152

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…

> Work / life balance Disagree here for one specific type of startup...remote (which I know you mentioned). Here's an example day at BigCorp: - Rise and shine at 5am to work out early enough - Leave the house by 7am - 1+ hour commute into work - Start work at 8am - Stay until 8pm - Get on/in the car, train, bus for a 1+ hour commute home - Late dinner around 9pm - Veg out because you're exhausted and go to bed by 11p…

Most people work around 7-8 hrs/day at big corp. It is also possible to stay inside of 15 minutes from work (A lot of Boston, Seattle people I know do this)

I know some people who go back home for a quick lunch or disappear for an hour in between. Many of these companies only care about you getting your work done and being present for all the meetings.

Ofc, there are just as many where your case applies. But, it is certainly not the norm for FAANG-eque companies

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

#308

Post by entangledqubit » Thu, Apr 11, 2019, 12:43 AM UTC

rottencupcakes wrote: post #304

MobileVet wrote: post #301

I was part of a very well know incubator and a very early employee at a flagship company. Founder blew tons of cash and dilutions but that is part of it and I didn’t mind. What was ethically shady was shortly after I left with 4yrs vested they decided to restructure the entire company so they could attract investment. They took all the debt from the original company and put that in a shell company that then owned a p…

Curious why you don't mention their name? Feels like there's little recourse against this sort of thing other than reputation risk, why not out them publically?

While I'm sure it would be quickly sued out of existence, are there sites specializing in this sort of information? I'd love to see names of founders/early investors/board members/... easily associated with these kinds of decisions (i.e. track records of the good and bad). I have to send feelers out into my network to dig up this kind of information but that's not an option for a lot of people new to the industry.

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

#309

Post by entangledqubit » Thu, Apr 11, 2019, 12:49 AM UTC

seattle_spring wrote: post #303

MobileVet wrote: post #301

I was part of a very well know incubator and a very early employee at a flagship company. Founder blew tons of cash and dilutions but that is part of it and I didn’t mind. What was ethically shady was shortly after I left with 4yrs vested they decided to restructure the entire company so they could attract investment. They took all the debt from the original company and put that in a shell company that then owned a p…

A company I used to work for is in the process of doing this right now. Makes me feel really stupid spending ~10k exercising the shares.

While you're probably bound by some restricted shareholder agreement, you may get a lot of mileage by just asking a lawyer to ask some questions on your behalf. If this restructuring is going on in the context of some larger time sensitive deal, they may throw something your way to not screw up the timeline. Of course, this all depends on your tolerance for pain.

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

#310

Post by djakjxnanjak » Thu, Apr 11, 2019, 12:50 AM UTC

fj39dkf wrote: post #305

djakjxnanjak wrote: post #197

Earlier quoted context omitted.

If you put a lot of mental energy into organizing your ideology to think of them as evil, sure.

Can you elaborate?

The world is at peril, and full of people who are suffering. I can easily call an oil company evil, because they are burning the earth. I can call a food manufacturer that knowingly puts poison in their products to save a few bucks evil. I cannot bring myself to call Facebook or Google evil because they are configuring computers to display ads that introduce people to products they might want to buy. It’s really a triumph of human progress that they have managed to amass such wealth while causing so little harm.