At Booming Toptal, No Stock for Employees or Investors • Hacker News Board

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

#191

Post by pflugerc » Mon, Aug 19, 2019, 12:47 PM UTC

tvladeck wrote: post #66

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.

Same guess. The investors either 1) got there principal back with no interest or 2) they still have there money in and it only get a value upon raising money or a sale. Likely it’s #1. Investors didn’t get screwed. They just didn’t win.

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

#192

Post by mygo » Mon, Aug 19, 2019, 2:25 PM UTC

lbatx wrote: post #184

ThrowawayR2 wrote: post #182

Earlier quoted context omitted.

> 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? That's a pretty peculiar viewpoint. If you went to a restaurant, ordered and paid for a burger, received your order with a bite taken out of it, and the cook said " Well, I worked really hard to make the hamburger that you ordered and it turned out…

Your analogy falls apart. Re-read what I wrote: "share in the additional profits above and beyond". Let's say we expect to make $1MM for the year. We need to keep a reserve to pay people when we are between contracts, rent, taxes, SAAS, etc. I then work out I can pay 5 people $100K each (this is an example, not actual). If we then make $1.2MM per year (for any number of reasons) how is it peculiar that the employees…

As far as financial accounting obligations go, shareholders should certainly share in the extra $200K. Profits are part of owner’s equity.

So the simple question is, if an employee does not own any part of the company, are they entitled to a share of the extra profits?

If the employees want to be entitled to a share of the extra profits then one obvious solution is that they need to become shareholders. Normally a share of owner’s equity is given in exchange for money. Instead of buying those shares with money, that’s what startup employees are doing when they take a lower cash pay in exchange for shares in a company that is unable to pay them full price.

I see your argument, but we’re describing a situation where a full-priced if not handsomely paid employee takes zero risk with a steady “what they want in cold hard cash” salary and then when the company does extra well they are entitled to a share of the upside.

I can recognize that giving employees a share of profits may very well be what businesses need to do in 2019 to recruit and retain the best talent. But their salary is what was agreed upon for the work to be done. So let’s call it for what it is — it’s something nice to do. It may even be a talent-recruiting and talent-retention tool that gives your business a competitive edge. But it’s not a financial obligation.

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

#193

Post by sidlls » Mon, Aug 19, 2019, 6:20 PM UTC

aianus wrote: post #188

sidlls wrote: post #187

Earlier quoted context omitted.

My location wasn't the issue: I meant that Toptal was insisting companies located in the Bay Area would not want to pay more than about $65/hr (plus Toptal's surcharge). It was laughable, considering I was at that very moment working full-time at a company with a base salary with an hourly rate equivalent that was more than $65/hr, plus I got bonus, stock, and perks/benefits. As far as I was concerned, Toptal wanted…

> "top talent" isn't going to charge bargain-bin prices for their labor Purchasing power differences in the world are insane: $65/h in Vietnam can represent a much more luxurious life than $200/h in San Francisco. In fact, the global top 1% starts at US$35k/year! At $65/h ($130k/year) you'd be able to buy a home outright in about a year, send your kids to snooty private schools, hire a maid and a private driver, etc.…

That doesn't mean much: a top-flight developer in Vietnam isn't going to underprice his or herself to that degree just because it costs a little less. If one can live that good on $65/hr, then $80 or $100 is that much better.

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

#194

Post by munk-a » Mon, Aug 19, 2019, 7:11 PM UTC

JamesBarney wrote: post #177

munk-a wrote: post #124

Earlier quoted context omitted.

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.

Sometimes. Sometimes they are given equity (or options on the equity) - other times there is an "understanding"[1] about equity as happened in Toptal. Once you have equity... it's worthless, or near to - it only becomes valuable if the company does well... and if your effective equity isn't diluted in successive rounds - which it quite often is. You've surrendered a portion of your salary for a potential to get paid if the company does well (maybe) - and it's doing well is, in a large part, out of your hands. There is far too much good-faith being required from employees in these sorts of setups and, if everything goes as planned, why should you get a payday while the person who went to work for a perfectly good company that failed gets nothing? That could have been you!

1. So, some deceptively worded stuff that ends up being worthless.

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

#195

Post by jiveturkey » Thu, Aug 22, 2019, 12:37 AM UTC

chao- wrote: post #126

jiveturkey wrote: post #105

Earlier quoted context omitted.

The content is fine. It's obviously spurred by experience or by an influx of offers. The presentation is shite. Just have an autoresponder. It reeks of Netflix' culture deck.

The term "reek" is normally negative in connotation. I have seen (at least on HN) the famous Netflix culture documents praised as straightforward method to assist in defining culture. Not that it "solves" culture in some magical, systemic way (i.e. naive founders saying "Look we have a culture deck, culture done!"), but still have only heard it referenced as a useful communication tool. So having never seen it spoken…

Yes, I did mean to invoke the negative connotation of "reek".

The netflix culture deck isn't a bad ideal, not at all. It may not suit some, but that's ok. I think it has some real problems but I won't go into that here. Anyway, let's not let perfect get in the way of good. If it were the reality, it would be better than the way most companies operate, by a long shot.

But just like with Valve, the theory is different than the practice.

So just as we (HN) hate the person with the fancy car, fancy watch, designer clothes, who are "obviously" just doing this to signal virtue, I loathe the type of org that engineers by blog and cultures by pushy slide deck. It's fine to desire that culture (even if it's impossible), but you look like a buffoon by insisting on being so pushy about it. And that's what Toptal is doing.

I am not a netflix employee, but I know a few former and one current employee.