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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

#71

Post by 0xfaded »

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".

This is an extremely rational statement if you want a stable desk job and to maximize expected lifetime earnings.

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

#72

Post by tinco »

0xfaded wrote: post #67
tinco wrote: post #65

Earlier quoted context omitted.

> and that someday stock worth 10s or 100s of K will be worth 100s or 1Ms This sounds a bit dodgy. I don't endorse paying someone with less than 5 years 250k/year but if you're looking at someone then the amount of options you give them should be worth at least the salary cut over the vesting period. So say you're looking at some VP potential that could get 400k per year working at Netflix or something and you're goi…

Unless that employee would like to pay taxes on an illiquid, fungible asset, then you actually want the value of those options to be zero at the time of grant/employment. In my experience, employees place much more emphasis on salary than options during negotiation. And that is find, it is the CEO's job to sell the vision of the business and acquire the resources necessary to execute. Just don't be disappointed if th…

Yeah of course the options should be set at 0 value, but they should represent the same future potential.

I agree that if you can't entice on options then you should raise for salary, whatever makes the most sense. From my personal experience, if the startup feels very promising to me I'll lean more towards options, and if it feels more risky I'll lean towards salary.

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

#73

Post by irjustin »

MacsHeadroom wrote: post #8
gibolt wrote: post #5

Would it matter? When presented options, they aren't required to choose the best on a given metric. They can choose any, as long as the votes align. Perhaps the founders believed their product would go further (not die) under Amazon or that they stood to benefit more from stock rewards long term

The board has a fiduciary duty to act in the interest of shareholders. If the shareholders were not part of a vote, ie. the board voted, then the board is potentially liable for damages.

> The board has a fiduciary duty to act in the interest of shareholders.

The problem is the 'shareholders' is made of multiple groups.

A relatively common setup is Investors, Founders, Other Common Share Holders (Employees, Gifts). If there are 10 seats, Other Common will likely only hold 1 vote.

So the board voted in its best fiduciary duty that represents 90% of the votes. It's quite easy to see how employees can get the raw end of the stick.

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

#74

Post by LoSboccacc »

supernova87a wrote: post #45
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…

I see, so start driving the wagon instead of riding it, and be the one doing the screwing?

it's the investors that drive the wagon, only the tiniest minority of founders in the software space are truly independent.

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

#75

Post by Waterfall »

adrianN wrote: post #40
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…

Because Startups don't have a virtual monopoly on jobs the issue is much less pressing than with app stores. Of course that doesn't mean that programmers shouldn't form a union.

Unions only seem to benefit the union leaders. Union membership have long dropped precipitously for decades for over 50 years at least. Programmer are in no danger of being stuck like McDonald's workers. They're free to work elsewhere and the NDA are as good as toilet paper.

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

#76

Post by [deleted] »

trytozoom wrote: post #57
Hydraulix989 wrote: post #56

Earlier quoted context omitted.

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 pro…

[deleted]

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

#77

Post by tfehring »

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…

Do you and/or your investors have preferred stock/liquidation preferences? If so, that dramatically reduces the value of employees' stock and creates a misalignment of incentives, and my impression is that that misalignment has been the biggest source of horror stories of employees getting screwed.

If a $250M exit will make you rich, your investors happy, and your employees nothing, and you and your investors are the ones who get to decide whether to take that exit, your employees are right to value their equity grants at approximately $0. (That's not a knock on you specifically, of course - it's a claim about the importance of incentives.) Or maybe less than $0 - if you work at an established company with all cash comp you don't have to deal with watching your boss become a multimillionaire based on your hard work.

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

#78

Post by adrianN »

Waterfall wrote: post #75
adrianN wrote: post #40

Earlier quoted context omitted.

Because Startups don't have a virtual monopoly on jobs the issue is much less pressing than with app stores. Of course that doesn't mean that programmers shouldn't form a union.

Unions only seem to benefit the union leaders. Union membership have long dropped precipitously for decades for over 50 years at least. Programmer are in no danger of being stuck like McDonald's workers. They're free to work elsewhere and the NDA are as good as toilet paper.

Unions are democratic entities. They do what their members want them to do.

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

#79

Post by khazhoux »

luckylion wrote: post #42
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…

One is a lottery: invest time in this startup, accept a lower compensation, but if it works out, you'll never have to work another day in your life after 5 years. The other isn't a lottery.

Employee equity is so tiny, only a handful of companies have been able to retire rank-and-file employees, even after big exits. Founders, on the other hand, do quite well in exits usually.

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

#80

Post by bartread »

adrianN wrote: post #40
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…

Because Startups don't have a virtual monopoly on jobs the issue is much less pressing than with app stores. Of course that doesn't mean that programmers shouldn't form a union.

> Of course that doesn't mean that programmers shouldn't form a union.

That's potentially quite an expensive trade-off. You give up your ability to negotiate so that somebody else will collectively negotiate on your behalf.

That can work out well, at least for a while, but it's worth considering the longer-term consequences. E.g., in the longer term it can favour cheaper labour or cheaper competitors elsewhere. (Yes, you can argue that's the case even in the absence of unions, but there are stark examples of unionisation bringing about the premature demise or severe shrinkage of large industries: steel in the UK, the auto industry particularly in the UK (and also, to some extent, the US), coal in the UK, and the list goes on.)

For me outsourcing your negotiating power falls into a similar category to outsourcing your thinking: it simply doesn't feel like a good idea to me.

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