121–130 of 379 posts
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Only in the sense that you can't harvest losses by selling.
Don't you have to pay tax on the notional value of the shares, which leaves you in a difficult position because you cannot realise those gains.
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I don't buy this explanation. Very few employees are paid in any financially complex way. Wages dropping overall must have a different explanation, which I suspect is an increase in labor supply due to women entering the labor force and illegal immigration combined with a decrease in demand due to automation.
The population has grown from 205 million in 1970 to 330 million today. If you think 50% of the people join the workforce that is an increase of 65 million more people working.
The recent HN article on meritocracy comes to mind. I had never considered it this way in the past, but in the 70’s, productivity started decoupling massively from productivity gains. I.e. the best people at finance (meritocracy) figured out how to capture all the new earnings relative to the workers (who didn’t know this game was going on). This has snowballed into a situation where the financial meritocracy is comp…
I think you meant "wages started decoupling ...", right?
> “For later employees make sure the company offers “refresh” option grants to longer-tenured employees. Better yet, offer restricted stock units (RSUs). Restricted Stock Units are a company’s promise to give you shares of the company’s stock. Unlike a stock option, which always has a strike (purchase) price higher than $0, an RSU is an option with a $0 purchase price. The lower the strike price, the less you have to…
Usually, some portion of the vested RSUs are sold to cover the tax liability, and the rest go into your investment account. The tax rate is the same as regular income.
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I don't buy this explanation. Very few employees are paid in any financially complex way. Wages dropping overall must have a different explanation, which I suspect is an increase in labor supply due to women entering the labor force and illegal immigration combined with a decrease in demand due to automation.
>> I don't buy this explanation. Very few employees are paid in any financially complex way. It depends on the class of workers. I'd agree with you w/r/t most wage earners being paid in transparent manner. But I think the GP comment was referring to technology workers (given the context of HN.) In the case of tech workers, many are paid in very complex ways. If you have illiquid stock options in a private company, an…
I've never heard it adequately explained why employees should accept this state of affairs. Not only is the cap table invisible, but the fully-diluted cap table and terms of dilution and many other terms and conditions are also hidden from non-founders/investors at most startups I've read about. I've heard so many stories of shares getting diluted right out from under employees immediately before a liquidity event that it has become a trope. IMHO that's not investing into a startup; that's buying a lottery ticket.
What am I missing here about typical startup stock options where the same terms and conditions founders and investors see are not accessible to employees?
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Rev share is a tricky incentive. It can incentivize people to waste money chasing revenue. Revenue isn’t always in line with the success of the business. As a business owner and VC I’d be extremely reluctant to offer that to employees.
Most sales jobs offer some kind of revenue share. Sometimes revenue share is the only compensation. When cosco buys apples from a farmer for $1 and resells them for $2, they are effectively taking a 50% revenue share. A referral bonus for bringing in a new customer is also a kind of revenue share for the existing customer, and plenty of startups do those. I think the key is to compensate based on a revenue share of w…
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> Why would anyone want to work for your startup when they can get much higher salaries working for larger companies? As much as I agree with the "lottery ticket" mentality, this line of thinking has been popular to parrot on HN for at least 5-10 years. And as far as I'm aware, startups don't have much trouble attracting senior talent. So until that changes significantly, they are going to continue offering lower sal…
> And as far as I'm aware, startups don't have much trouble attracting senior talent That seems like a pretty broad assessment to make on a hunch.
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Not if they just issue themselves more shares
> Not if they just issue themselves more shares This doesn't happen in the real world. When more shares are issued, it's because you've raised another capital round and the new shares go directly to the new shareholders (new VCs) and future employees who haven't yet been hired. New shares wouldn't go to the founders. Yes, it's hypothetically possible, but it doesn't happen in the real world.
Usually in conjunction with a new round, but not always.
The company will do a massive 'down round' - even lower than what they really want, bring on new investors. Then issue shares to current staff founders.
That is de-facto like handing over equity from previous staff to new investors - you could almost do the math for how much 'old employees' stock was sold to new investors wherein said old employees didn't get a dime.
It's generally going to happen in negative situations, but that happens a lot.
Edit: and it's not something your ever going to hear about, it's obviously not something leadership wants anyone to know about. Even 'former employees' who were washed out may not find out - how would they? They're not entitled to be notified upon new issuance of shares.
What makes options a rough deal is the part of the contract: "We can change anything at anytime for any reason". What kills your options is dilution. You have no control over this AND as time progresses you get more and more diluted with new hires and rounds. You could be the second employee - however, if the founders & VC decide to make 20 million more shares [which they will] - you effectively have toilet paper --…
This isn't new, either - this happened to me a couple times in the late 90's/early 2000's and I've since made a point of not even taking "stock options" into consideration when evaluating job offers. Yet my most downvoted comment on reddit ever was on /r/cscareerquestions when somebody was asking how to weigh stock options when considering job options and I said "not at all" and shared my own experiences.
What makes options a rough deal is the part of the contract: "We can change anything at anytime for any reason". What kills your options is dilution. You have no control over this AND as time progresses you get more and more diluted with new hires and rounds. You could be the second employee - however, if the founders & VC decide to make 20 million more shares [which they will] - you effectively have toilet paper --…
This isn't new, either - this happened to me a couple times in the late 90's/early 2000's and I've since made a point of not even taking "stock options" into consideration when evaluating job offers. Yet my most downvoted comment on reddit ever was on /r/cscareerquestions when somebody was asking how to weigh stock options when considering job options and I said "not at all" and shared my own experiences.
It’s a cliched observation but it really does remind me of the kids hoping to make it big in pro sports – there are way more who peak at the minor league level at best but the owners make a ton of money by encouraging everyone to think of the exceptions as the rule. Humans are prone to misjudging statistics in general and that’s really bad when one party has the best data and a strong incentive for other people to misjudge it.