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Former Zoox employees sue, alleging rival offer was better than Amazon's

reuters.com

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Re: Former Zoox employees sue, alleging rival offer was better than Amazon's

#51

Post by eanzenberg »

kelnos wrote: post #43
harikb wrote: post #11

Earlier quoted context omitted.

If they exercised their stock options before they left the company, they receive all details (including executive comp). But they wouldn’t know what the other offer was. Btw this applies to those who are still employees too (if they explicitly bought vested options) My advice to anyone joining a startup - if you have the negotiating power, insists that you must pre-exercise and purchase all options immediately when y…

It's my understanding that early exercise is mainly only useful for tax purposes. You still won't be a shareholder until at least 1 share vests, which for a new employee, likely won't be for a year. Is that incorrect?

Also, you’re prepurchashing common shares. These are only worth money if the sell price is over the valuation of the last raised round

Re: Former Zoox employees sue, alleging rival offer was better than Amazon's

#52

Post by wutbrodo »

supernova87a wrote: post #37

For all the ire on this site about the likes of Google, Apple, etc. screwing over the small company with their 30% app store fee, why isn't there even more outrage over the founders and startups who screw over their even more deserving-of-help employees? You know, the employees who get subjected to unregulated dilution, tyrannical bosses, unreasonable hours and unclear compensation for trading off the prime years of…

Isn't there? I feel like it's an almost-universal consensus here that startup employees get heavily exploited, whenever the topic comes up.

Re: Former Zoox employees sue, alleging rival offer was better than Amazon's

#53

Post by yibg »

bpodgursky wrote: post #9
tedivm wrote: post #6

Earlier quoted context omitted.

On the practical side breaking the law doesn't always work though. Shareholders are owners, and regardless of how they got their shares (vesting, purchase, gift, poker game) there are rights that go along with that.

Sure, the right to get paid out the same as all other common shareholders. But will the company structure an acquisition so more of the payout is golden handcuffs than equity payout, if it's better for retention? Well, yes.

Following this logic, all acquisition should have 0 cash, with what would've been the money for the acquisition going to retention bonuses instead.

This is definitely better for retention, and the share holders that aren't working there anymore? Well they aren't working there anymore so have nothing more to contribute right?

Re: Former Zoox employees sue, alleging rival offer was better than Amazon's

#54

Post by te_chris »

throwearlyeng wrote: post #23
colordrops wrote: post #14

Isn't it pretty common for early employees to be screwed down the line during IPOs and acquisitions? That's been my experience and that of many colleagues, and has been a topic here on HN over the years, driving the idea that working for a startup is usually not in your interests except for particular cases.

I wish YC with all of its power and influence could try to change things for the better here. Early employees' blood, sweat, and tears, not to mention burning the midnight oil, often go into actualizing the founders' vision. Often these key early hires are alongside the founders working equally hard since day 10 or even day 1. I remember Sam Altman posting lamenting that the most talented engineers are more intereste…

Not sure why reading any of PG’s writing - especially his tweets - would give the impression that he’s anything other than firmly parked on the side of capital in the class war.

Re: Former Zoox employees sue, alleging rival offer was better than Amazon's

#55

Post by trytozoom »

colordrops wrote: post #47
0xfaded wrote: post #44

Earlier quoted context omitted.

90% of the time you hear of start-up employees getting "screwed", it's because the investors and founders are trying to recover their investments through an acquihire or IP sell off. Cliffs on investments reduce the risk premium and lower the cost of money which is used to pay for the employees salaries. Founders (excluding previous successes) most likely draw a "survival" salary for many years. It's also a very dema…

So in summary you are saying it makes no sense to be an employee at a startup. There's no upside except for "lottery winners".

I've seen a ton of this on HN for the past couple of years, "Go work for FAANG, startups are worthless." As someone who has started a company, gotten it funded, and would like to hire high quality engineers, this is deeply disheartening. I've tried to hire a few people, offering them market rate or close to it for base salary (_very_ rough ballpark 150-200K for 2-5y experience) and a decent chunk of equity (highly variable, for VP level I've offered up to 2%, there's a salary equity tradeoff though).

These seem like fair offers, but often I'll get, "actually I'm really a cofounder so I should be getting double digit equity." That's fine, except

1.) I have 15% of the company in my option pool, so no I can't do that unless I effectively want to give nothing to everyone after that person.

2.) At the risk of sounding aggrieved: I spent all of my savings to get this off the ground and funded, am taking a far below market salary, and you want to get that sort of equity with none of that risk? When I'm pretty sure you wouldn't be talking to me if I didn't have a nice war chest?

What should someone in my position be doing to entice top notch people to join us? Yes it takes a leap of faith that what we're doing is interesting (please trust me that it is), and that someday stock worth 10s or 100s of K will be worth 100s or 1Ms.

But if nobody is willing to take that leap, then companies like mine and many others will die. If it's all about cash and comfort, then FAANG will have won and innovation will slow.

I'm really willing to listen, what can I do to solve this dilemma of a necessarily limited option pool AND inability to say, "yeah my stock is provably worth $100s a share and I can pay 75-90th percentile of market base."

Re: Former Zoox employees sue, alleging rival offer was better than Amazon's

#56

Post by Hydraulix989 »

trytozoom wrote: post #55
colordrops wrote: post #47

Earlier quoted context omitted.

So in summary you are saying it makes no sense to be an employee at a startup. There's no upside except for "lottery winners".

I've seen a ton of this on HN for the past couple of years, "Go work for FAANG, startups are worthless." As someone who has started a company, gotten it funded, and would like to hire high quality engineers, this is deeply disheartening. I've tried to hire a few people, offering them market rate or close to it for base salary (_very_ rough ballpark 150-200K for 2-5y experience) and a decent chunk of equity (highly va…

In the Zoox case, the founders allegedly subverted the rightful 1Ms payout of the early employees. You sound like a trusthworthy person, but there are so many other cases of this happening besides Zoox, and it's very difficult to predict peoples' moral reactions to life-changing amounts of money ahead-of-time. At the end of the day, it's up to the CEO to make sure everyone gets treated fairly.

Re: Former Zoox employees sue, alleging rival offer was better than Amazon's

#57

Post by trytozoom »

Hydraulix989 wrote: post #56
trytozoom wrote: post #55

Earlier quoted context omitted.

I've seen a ton of this on HN for the past couple of years, "Go work for FAANG, startups are worthless." As someone who has started a company, gotten it funded, and would like to hire high quality engineers, this is deeply disheartening. I've tried to hire a few people, offering them market rate or close to it for base salary (_very_ rough ballpark 150-200K for 2-5y experience) and a decent chunk of equity (highly va…

In the Zoox case, the founders allegedly subverted the rightful 1Ms payout of the early employees. You sound like a trusthworthy person, but there are so many other cases of this happening besides Zoox, and it's very difficult to predict peoples' moral reactions to life-changing amounts of money ahead-of-time. At the end of the day, it's up to the CEO to make sure everyone gets treated fairly.

Good point. I hope I get the opportunity to test this hypothesis, but right now I can't imagine that mattering to me. I've made decisions recently where my thought process literally was, "Ok so if we win big, I'll have a slightly smaller yacht." It's not that hard to treat your people well.

I fully recognize it's easy to say now, and I hope I stick to it when given the chance.

More interesting than currently easy promises is: how do you interview the founders to maximize the chance that they're not greedy assholes?

Re: Former Zoox employees sue, alleging rival offer was better than Amazon's

#58

Post by tome »

trytozoom wrote: post #55
colordrops wrote: post #47

Earlier quoted context omitted.

So in summary you are saying it makes no sense to be an employee at a startup. There's no upside except for "lottery winners".

I've seen a ton of this on HN for the past couple of years, "Go work for FAANG, startups are worthless." As someone who has started a company, gotten it funded, and would like to hire high quality engineers, this is deeply disheartening. I've tried to hire a few people, offering them market rate or close to it for base salary (_very_ rough ballpark 150-200K for 2-5y experience) and a decent chunk of equity (highly va…

> 1.) I have 15% of the company in my option pool, so no I can't do that unless I effectively want to give nothing to everyone after that person.

Just out of interest, why couldn't you increase the size of the options pool?

Re: Former Zoox employees sue, alleging rival offer was better than Amazon's

#59

Post by AmericanChopper »

colordrops wrote: post #47
0xfaded wrote: post #44

Earlier quoted context omitted.

90% of the time you hear of start-up employees getting "screwed", it's because the investors and founders are trying to recover their investments through an acquihire or IP sell off. Cliffs on investments reduce the risk premium and lower the cost of money which is used to pay for the employees salaries. Founders (excluding previous successes) most likely draw a "survival" salary for many years. It's also a very dema…

So in summary you are saying it makes no sense to be an employee at a startup. There's no upside except for "lottery winners".

There’s nothing wrong with working in a startup, if the salary is decent. The only risk you’re taking is that it might go under, but then again, a well established company might lay you off too.

You’re only really taking a risk if you’re working for equity, with compensation that you wouldn’t have accepted if not for that equity.

Re: Former Zoox employees sue, alleging rival offer was better than Amazon's

#60

Post by trytozoom »

alextheparrot wrote: post #16
traek wrote: post #13

Earlier quoted context omitted.

It is absolutely true that the board has a fiduciary duty to shareholders, and many states have statutes specifically protecting minority shareholder rights. Delaware is fairly unfavorable to minority shareholders though.

If you’re hired by a Delaware Corp as a California resident holding shares in that company, wouldn’t the California rights be the ones the individual suing would have? Otherwise one state would have a monopoly based on it being business friendl... oh wait, maybe that is the case.

In contracts that our lawyers gave us (and that we use) the state whose law will govern the contract is specified. It's always Delaware.

The corporate charter, and the bylaws of the corporation are all explicitly governed by Delaware law. These documents control what powers different share classes have regarding corporate ownership and operation.

TLDR: Delaware law is almost certainly the controlling law regardless of where the shareholder lives.

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