Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Startup Stock Options – Why a Good Deal Has Gone Bad

steveblank.com

Post reply on HN
Print view View original

361–370 of 391 posts

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

#361

Post by retiredcoder »

systemBuilder wrote: post #351
blackflame7000 wrote: post #331

Earlier quoted context omitted.

That happened to me too. Owner restructuring companies or moving from LLC to LLC and then starting the vesting schedule over again. It's fairly common it seems that owners play games with the people who actually build the company after the work is done.

What's amazing is that you didn't realize that all CEOs are like this. To be a CEO you have to believe that you deserve 99% of a company's profit. Also you have to feel like it's a mistake if the employees get more than 1%!

You are right (well at least from my experience). For a long time I decided to believe that people weren’t that selfish until I worked for this start-up where the CEO openly admitted that he didn’t want reward employees with options. Yet, at the same time the company couldn’t hire competitive employees... that’s 2019 in Europe.

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

#362

Post by njepa »

CPLX wrote: post #345
entangledqubit wrote: post #308

Earlier quoted context omitted.

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.

Shame we don’t have fuckedcompany.com around for this any more.

Valleywag was essentially that, but did get sued out of existence.

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

#363

Post by empath75 »

antt wrote: post #285
mavelikara wrote: post #207

Earlier quoted context omitted.

> Employee options holders can't just decide to take a company public, so their interests can stay misaligned. Not for long, though. The standard HN advice of "value options at $0" came about from a generation of employees conned by this, as you call it, misalignment. Also, when you trap employees into heavy golden handcuffs, abuses of power in line management thrives (as what happened at Uber).

Given tech workers complete inability to form a union or guild I wouldn't bet on it.

Tech workers now have a lot of power in negotiations and are using it to demand high salaries. If options were ever offered to me in lieu of salary I would simply say no.

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

#364

Post by mutagenesis »

blackflame7000 wrote: post #352
anonytrary wrote: post #340

Earlier quoted context omitted.

Is that illegal? Sounds pretty illegal. I'd imagine the owner getting sued by his employees.

What would you sue for in a startup that doesn't yet have value? Later on, if the company became worth something then yea you could sue but how do you work with the people to build something successful when you know that they are screwing you? It sucks because you sign on to something and change your whole career but once you do that they kind of have you trapped in a way. They can change the deal arbitrarily once yo…

A startup clearly has value even though it isn't a public company yet. Figuring out that value just has more steps.

IANAL, but MobileVet's situation may have been illegal, running afoul of minority shareholder rights, if the situation was accurately described. I imagine what happened was the CEO divided the company then paid a pittance for the portion without the debt to the portion with the debt. You can't do this, or well, other shareholders have legal recourse if you do. If you play enough shell games, you can somewhat hide what you did. That doesn't make it legal. If this is the case, the CEO just relied on the former employees not doing anything.

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

#365

Post by antt »

empath75 wrote: post #363
antt wrote: post #285

Earlier quoted context omitted.

Given tech workers complete inability to form a union or guild I wouldn't bet on it.

Tech workers now have a lot of power in negotiations and are using it to demand high salaries. If options were ever offered to me in lieu of salary I would simply say no.

Do we?

Having a look at the revenue generated per person in Facebook vs General Electric we seem pretty shit at negotiating. The revenue per employee at GE is 400,000 at Facebook it's ~1,400,000. I'm not hearing FB paying people ~4 times the wages that GE does. Most I've heard is ~1.5 times for similar positions in similar locales, having friends in both.

We have convinced ourselves we're special snowflakes while the lucky and ruthless laugh all the way to the bank.

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

#366

Post by mikekchar »

hvidgaard wrote: post #359
mikekchar wrote: post #337

Earlier quoted context omitted.

On the other hand, I once worked for a large well known company that actually gave me a pension. I can't remember what it was, but I think something like 5-10% of my total compensation went into this pension plan, which was essentially a mutual fund (although you could opt for long stock in the actual company instead). It took 3 years to fully vest. I stayed 5. When I left they sent me a letter literally saying that…

Hindsight is 20/20, but seriously. If you want to save money for pension, it must be something you control. Having your pension funds in the same company that pays your salary, is putting all the eggs in one basket. If they really want to pay you 10% in pension, they can pay to a fund in your name with some terms about when and how they can be used.

I totally agree. I was pretty young at the time. It was one of the experiences that taught me to ask for the salary that I want.

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

#367

Post by a13n »

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…

I don't know if this is illegal, but it definitely should be. It'd be interesting to hear someone with a legal background chime in.

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

#368

Post by rajacombinator »

deanmoriarty wrote: post #264
eanzenberg wrote: post #260

Earlier quoted context omitted.

>>FAANG-equivalent income of 400k LUL dude, I hear this shit being parroted ad-nauseum. The amount of FAANG people that hit this level or more is like, 5-10%. Take a look at the top 5-10% of non-FAANG companies and you'll see those employees are also hitting this mark. There's nothing special about FAANG. I understand lots of FAANG employees parrot this around to make themselves feel better about their life choices.

According to my experience (and again, that's the only thing I know), that's not even remotely true. When I interviewed a couple years ago, I made sure to interview at FAANG (specifically Facebook, Google, Netflix) and I also interviewed at half dozen big public companies in the same couple months (among which Oracle, Salesforce, Cisco, Juniper, Palo Alto Networks). I didn't interview at any private company (Uber, Ai…

Sounds like you were interviewing at the ~L5 equivalent level. Any insights on getting hired (or even interviewed) at L5 vs L4?

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

#369

Post by codingdave »

coderunner wrote: post #290
codingdave wrote: post #29

Earlier quoted context omitted.

Or if you are an older dev, picking up some more modern skills. I joined a startup for just under a year, and while I did not go in intending for it to be short-term, it ended up that way. But I modernized my skill set, got to work with more modern processes, and walked out a stronger dev than when I walked in.

Do you mind saying how old you are? One of my fears is if you're an programmer, you either need to move into management or quit being a programmer because of age bias. I prefer coding over management though.

I'm 46.

I cannot say whether age bias had any impact on my job searches. There have been interview processes that did not result in offers, which did not happen when I was younger. Maybe I was lucky early on. Maybe something has changed.

But I can say that every time I have looked, I have found work.

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

#370

Post by blackflame7000 »

mutagenesis wrote: post #364
blackflame7000 wrote: post #352

Earlier quoted context omitted.

What would you sue for in a startup that doesn't yet have value? Later on, if the company became worth something then yea you could sue but how do you work with the people to build something successful when you know that they are screwing you? It sucks because you sign on to something and change your whole career but once you do that they kind of have you trapped in a way. They can change the deal arbitrarily once yo…

A startup clearly has value even though it isn't a public company yet. Figuring out that value just has more steps. IANAL, but MobileVet's situation may have been illegal, running afoul of minority shareholder rights, if the situation was accurately described. I imagine what happened was the CEO divided the company then paid a pittance for the portion without the debt to the portion with the debt. You can't do this,…

You are totally right with respect to the fact that it isn't aboveboard, but one of the biggest problems with our legal system is that you need money to protect your money. Other wise you'll go bankrupt while their attorneys file delay motions causing you to have to pay your attorney more and more.

I was the CTO of a company and built its entire infrastructure for 4% of the business. One day I came into work and the CEO(and majority owner) tells me to put aside everything and start work on a totally separate project. Oh, yeah and the company name is now different. The new project that I'm assigned is much more intensive in terms of volume and uptime requirements and came with no rewards.

So I start building the company in good faith with no real contract in place with the new company with the expectation that we would negotiate while I developed so as to not cause delays. This was a naive decision. Always get the contract first because as soon as real money starts flowing in everyone starts grabbing theirs. Prior friends or acquaintances also get preferential treatment which is how I ended up with the VP of marketing taking assignments from me and yet somehow being given 9x as much equity.

Eventually, after the system was stable and I felt confident in my work quality I asked to negotiate my contract. I was instead let go. The joke was on them though, I revoked their access to the repository and told them to show me the contract that says the software is theirs.

Post reply on HN