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At Booming Toptal, No Stock for Employees or Investors

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Re: At Booming Toptal, No Stock for Employees or Investors

#61

Post by koolba »

henryfjordan wrote: post #41
nostrademons wrote: post #28

Earlier quoted context omitted.

You can have a one-person corporation where the founder is the sole shareholder, officer, and employee and still be protected from legal liability. A very large proportion of LLCs are in exactly this category, as well as a decent number of S- and C-corps. You just have to file the appropriate articles of incorporation, continue paying your taxes, and make sure that company business is done in the company name out of…

Don't forget throwing yourself a little "shareholders meeting" every year!

Its common to do that right before the company funded annual holiday party.

Re: At Booming Toptal, No Stock for Employees or Investors

#62

Post by marcinzm »

derefr wrote: post #50
marcinzm wrote: post #10

Earlier quoted context omitted.

>I think the article misses the point: are we now in an era where you actually expect to get stock when you join a company? If you join with the expectation of stock or are sold on stock as part of your package then yes. Based on the article, people were offered stock contingent on another funding round. That round never happened. If they were sold on promises of getting that stock and a round happening then they're…

> If they were sold on promises of getting that stock and a round happening then they're right to be pissed. Does a statement of the form "you'll get X if condition Y" imply "we will seek condition Y so that you can get your X"? I don't think that it does. For example: companies offer dividends if they make a profit. But that doesn't imply that the company will seek to make a profit in order to confer dividends. It's…

That depends on what exactly the company said to candidates and how upfront they were about the terms.

In my experience companies do far more selling than just sending out an offer. Furthermore, the offer in my experience doesn't include the paperwork for equity unless you request to review it.

Re: At Booming Toptal, No Stock for Employees or Investors

#63

Post by marcinzm »

ravitation wrote: post #40
bnt wrote: post #8

I think the article misses the point: are we now in an era where you actually expect to get stock when you join a company? As a former Toptal employee: IMHO the co-founder in question was widely regarded as a horrible manager, often pushing people to burnout and generally imposing a culture of secrecy and mistrust. The VPs they ousted were nothing better. I personally went through several burnouts while there, but al…

Compensated quite generously in an absolute sense, but relative to other early employees, who worked just as hard, at companies with similar current valuations and who did get equity? That seems unlikely. Also, if I were an early employee at a startup, yes, I would expect equity.

Most startups, by a large margin, fail either outright or equity wise (ie: sell for less than was put in). Many more sell for only a moderate amount which gives a relatively small equity payout (after dilution, etc.).

The average compensation of employees at other similar companies was probably lower once you account for all that.

You can't judge the outcome of buying lottery tickets by only looking at the winners.

Re: At Booming Toptal, No Stock for Employees or Investors

#64

Post by kirubakaran »

jameslk wrote: post #39
sidlls wrote: post #37

Earlier quoted context omitted.

I briefly freelanced with them in 2014/2015 and I found it to be no better than E-lance or the like. They definitely didn't (at that time) do have any better clients, and they constantly pressured me to lower my rate (which I considered already to be low).

I've had a few projects from them, one very large with a Bay Area client spanning a year. In the early days they would suggest a lower rate but now they change it to whatever I ask. I'm not sure what your rate is, but mine is competitive with Bay Area agency rates. Definitely better than Upwork (Elance) since I wouldn't be able to find the type of enterprisey clients I find on Toptal.

I'm curious what their percentage cut is.

Re: At Booming Toptal, No Stock for Employees or Investors

#65

Post by hmahncke »

How is "all of Toptal’s stock [is] in the hands of one person" when Toptal "attracted funding from well-known investors including Andreessen Horowitz." Doesn't funding from a16z typically end up with a16z owning stock?

[unfortunately can't read the whole article behind the paywall]

Re: At Booming Toptal, No Stock for Employees or Investors

#66

Post by tvladeck »

hmahncke wrote: post #65

How is "all of Toptal’s stock [is] in the hands of one person" when Toptal "attracted funding from well-known investors including Andreessen Horowitz." Doesn't funding from a16z typically end up with a16z owning stock? [unfortunately can't read the whole article behind the paywall]

My guess (and this is just a guess, as I too can't read the article), is that the investment was a convertible note, and they actually paid back the debt instead of allowing it to convert into equity. But I am no expert and I don't know the facts — I was just wondering the same thing and this was the scenario I landed on as a plausible hypothesis.

Re: At Booming Toptal, No Stock for Employees or Investors

#67

Post by baron816 »

I don’t feel that bad for the investors, or really even the employees. A lot of startup equity is worthless anyway.

But screwing over your cofounder and COO—your partner who’s been on the frontlines with you effectively running the company for eight years—that’s incredibly scummy. That’s a real psychopath move. How can someone be so greedy?

Re: At Booming Toptal, No Stock for Employees or Investors

#68

Post by bwoj »

hmahncke wrote: post #65

How is "all of Toptal’s stock [is] in the hands of one person" when Toptal "attracted funding from well-known investors including Andreessen Horowitz." Doesn't funding from a16z typically end up with a16z owning stock? [unfortunately can't read the whole article behind the paywall]

The funding was in convertible notes which convert to equity in the next funding round. Presumably these agreements don't have any provisions for other exits.

Re: At Booming Toptal, No Stock for Employees or Investors

#69

Post by tmarman »

marcinzm wrote: post #62
derefr wrote: post #50

Earlier quoted context omitted.

> If they were sold on promises of getting that stock and a round happening then they're right to be pissed. Does a statement of the form "you'll get X if condition Y" imply "we will seek condition Y so that you can get your X"? I don't think that it does. For example: companies offer dividends if they make a profit. But that doesn't imply that the company will seek to make a profit in order to confer dividends. It's…

That depends on what exactly the company said to candidates and how upfront they were about the terms. In my experience companies do far more selling than just sending out an offer. Furthermore, the offer in my experience doesn't include the paperwork for equity unless you request to review it.

Every single employment offer I've sent or received that included equity stated so in the offer letter, expressed either as a % or an absolute number of shares.

Re: At Booming Toptal, No Stock for Employees or Investors

#70

Post by emilsedgh »

rahuldottech wrote: post #26
emilsedgh wrote: post #17

Earlier quoted context omitted.

It really depends on the company culture, sector, etc. There's a lot of dynamics in here. Public companies are generally more prone to this issue, as all the ethics become abstract to shareholders. They are not involved in the dirty work. A lot of times, companies do the right thing not because of morality, but because doing the wrong thing has a risk (from a PR disaster to a regulatory issue). If the culture of the…

> A lot of times, companies do the right thing not because of morality, but because doing the wrong thing has a risk (from a PR disaster to a regulatory issue). I think we've all seen that at this point in time public outcry and PR disasters matter very little in the larger scope of things for such companies (Equifax, Google, Facebook, et al.)

Yeah. That's right. The pr disaster cost is getting cheaper and cheaper, allowing companies to get away with more and more.
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