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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

#171

Post by paggle »

seattle_spring wrote: post #164
paggle wrote: post #144

I can’t feel bad for the employees. They signed knowing they weren’t getting any stock. What’s wrong with Netflix style all-cash compensation?

Netflix offers $400k - $600k salaries to engineers to be competitive with total compensation packages of companies that offer part salary and part stock. Is there evidence that Toptal offered similar salaries? I wouldn't at all be surprised if they were closer to the $150k range, which is not competitive.

If it’s not competitive then don’t take the job. An engineer should be able to evaluate the difference between Toptal and the other offers they have, with the caveat that stock is hard to predict (the Silicon Valley mantra that “equity is worthless” might lead one to choose Toptal at $150K over another startup with $140K + stock). I highly doubt that anyone with a Netflix offer chose Toptal instead, if they did it was a blunder.

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

#172

Post by JamesBarney »

xivzgrev wrote: post #155

Rationally, Sounds like he played the game and won. He didn’t make any false promises (but I’m sure didn’t correct anyone either). Values wise, to me sounds like a bit of a dick, esp with the early employees. Good for him, he made a billion dollars. But he knowingly took advantage of people who chose to invest years of their life with him. Not cool. He doesn’t have to keep being a dick either - just give employees a…

I bet he made a lot of false promises just not in writing. I he was trying to mislead people the whole time. And specifically tried to compensate investors and employees in ways that he intended to never pay them in a way they thought they would be compensated.

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

#173

Post by raizinho »

Rainymood wrote: post #147

It's a dick move, but surprisingly legal. If A then B, so ... if not A then not B. He will make bank with this company but I wonder if people still want to work with him in the future, I guess so but who am I to judge?

The logical equivalent of if A then B is its contrapositive, if not B then not A, not its inverse, if not A then not B.

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

#174

Post by jjeaff »

xivzgrev wrote: post #155

Rationally, Sounds like he played the game and won. He didn’t make any false promises (but I’m sure didn’t correct anyone either). Values wise, to me sounds like a bit of a dick, esp with the early employees. Good for him, he made a billion dollars. But he knowingly took advantage of people who chose to invest years of their life with him. Not cool. He doesn’t have to keep being a dick either - just give employees a…

There isn't much difference between directly lying to someone and knowingly leading them on while allowing them to have false ideas of the facts.

Both from a moral and legal perspective.

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

#175

Post by JamesBarney »

staticautomatic wrote: post #45
scarmig wrote: post #22

Earlier quoted context omitted.

Whenever I talk to new grads, I tell them to value their equity compensation at zero for a small startup, for exactly that reason. But, it's similar to a lottery: you should expect to lose, but an organization can't run a lottery and pocket the winnings itself under the pretext everyone should have known they were throwing away their money.

But that's not what happened here. It's not that they were told one thing but should have known to expect another. They were told one thing, and that one thing happened/didn't happen. It's totally cut and dried.

I think most of the employees were under the impression that if the company did as well as it did they would make a significant amount of money. The CEO tried to encourage this view and did nothing to discourage it.

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

#176

Post by m0zg »

seattle_spring wrote: post #163
m0zg wrote: post #94

"No stock for employees" in a startup actually sounds great to me. The approximate value of that part of the package is about zero, but few people realize that, and a lot of employees get taken advantage of when startups offer lower pay in exchange for minuscule (and dwindling through dilution) equity. Receiving competitive amounts of hard cash would be better for 99.9% of the people.

Is there any evidence that Toptal offered a competitive salary in relation to total compensation packages elsewhere? A good senior engineer can get $300k+ at FB or Google. Most startups would offer $160-$200k plus equity. If Toptal "wasn't playing that game," then surely they were offering $300k salaries?

I'm not saying it did. I'm saying that, unlike a typical startup employee, Toptal employees knew exactly what they were getting into, no cap tables, dilutions, liquidation preferences, or other bullshit. That seems fair to me.

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

#177

Post by JamesBarney »

munk-a wrote: post #124
scarmig wrote: post #60

Earlier quoted context omitted.

Yes, but usually the employee sees something if the company is successful. It's like playing Powerball, winning, and then the lottery agency saying "just kidding."

Not really... usually the employee sees nothing. I also don't know if the employee really deserves to see anything - lots of people work dev jobs and see nothing over salary for it, why should you make bank if you did you job just as well but happened to be in a wildly successful company... Concurrently I think that founder compensation is absolute BS at the moment, their contributions to success are far less effecti…

Because devs working for startups that pay heavily in equity are usually not making what they would make if they were paid 100% in cash.

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

#178

Post by lbatx »

mygo wrote: post #121
lbatx wrote: post #108

Earlier quoted context omitted.

>He sounds like an asshole but really being able to work for a privately owned fast growing company without shitty options being paid well is pretty great in the tech world. But not as great as working for a privately owned fast growing company with good options and being paid well, no? (And if not options, strictly speaking, how about profit sharing?) Source: I run a bootstrapped software development company and eve…

Is being paid well not good enough? Companies tend to give out stock as part of a package in lieu of all cash. If you have all you want in cold hard cash, what’s the problem?

>Is being paid well not good enough?

I would say no. Since the employees are one of the keys to the success of the company, why should they not share in the additional profits above and beyond what is planned for the year?

>Companies tend to give out stock as part of a package in lieu of all cash.

Some do. In my experience, it's been about 50/50. Startups obviously tend to lean more toward equity and lower cash, while larger companies pay well and ofter options or RSUs.

I pay market and do profit sharing.

>If you have all you want in cold hard cash, what’s the problem?

I'm not quite sure how to respond to this. If you make a good salary, would you turn down even more money?

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

#179

Post by threezero »

robocat wrote: post #156
Tehchops wrote: post #150

Earlier quoted context omitted.

Do you really want to burn a bridge with a16z/AH in the tech industry? They may say "well played" in so many words, in public. Privately? They may be marshaling their bottomless war chest to unmake you.

He openly states he has no trouble with interest from investors: https://www.toptal.com/investors And I can't see why his existing investors wouldn't be interested - although they would perhaps take more care with the terms. His ethics don't seem to be weird, compared against stories about some other founders. I can't see why you make predictions about how he should act or how VCs would act (what's your expertise?)

That first link about investor interest is entirely his word, which is worthless according to his former employees.

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

#180

Post by goatinaboat »

StriverGuy wrote: post #42
tschwimmer wrote: post #12

A lot of Sillicon Valley startup fundraising ends up resembling an iterated prisoner's dilemma. Most startups fail and it's likely that you might have to work with people a few times before you get it right. The [generally] dominant strategy for Iterated Prisoner's dilemma is tit for tat[0], and consequently you see a lot of people cooperating when when it might be more lucrative to defect is because they know that t…

Certain business models require high amounts of capital in order to create leverage/growth. Think of Uber, WeWork etc. All the founders made out fabulously rich due to the ability to leverage growth on the back of VC money. Organically growing, profitable business may never need to take outside money. It really comes down to the market and growth strategy.

Certain business models require high amounts of capital in order to create leverage/growth. Think of Uber, WeWork etc

The business model of selling $1 for 50c and hoping that later you’ll be able to sell it for $2 because... reasons.

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