Startup Stock Options – Why A Good Deal Has Gone Bad (2019) • Hacker News Board

Re: Startup Stock Options – Why A Good Deal Has Gone Bad (2019)

#341

Post by jariel » Tue, Dec 22, 2020, 1:10 AM UTC

mlthoughts2018 wrote: post #222

jariel wrote: post #135

Earlier quoted context omitted.

Totally the opposite. Most startups are dynamic, most big corporations are not. They are 'big' because they are sitting on a value chain monopoly. The same chocolate bars have been in my grocery aisle for 20 years. Variations on the same soap. Some startups are very poorly run, but most are not led by 'unrestrained jerks'.

No, it’s not like this. Most startups promise to be dynamic as a tactic to pay people less and swindle them on poor options deals, then they bait and switch you, the work experience is not as advertised.

Startups are by definition 'dynamic'.

If you are going to a startup and doing a very rote, repetitive thing, then you're not very lucky, but most startup jobs are definitely not that.

The risk is that there is 'too much dynamism' and people and up spinning their wheels, over pivoting, crashing. But that's definitely 'dynamic'.

Re: Startup Stock Options – Why A Good Deal Has Gone Bad (2019)

#342

Post by an_opabinia » Tue, Dec 22, 2020, 1:10 AM UTC

robertlagrant wrote: post #287

an_opabinia wrote: post #230

Earlier quoted context omitted.

You could just punch income inequality into Google Scholar or Google Books and learn at least 100 ways capital concentration or poverty is perpetuated, via the natural experiments of many rich western countries and US states.

Don't read too much into this analogy, but if I search for Flat Earth I'll get a load of stuff that talks about how the Earth is flat, and not much else. For example, you may not get the following explanation much, even though it requires no conspiracies and explains the outcomes: income is disproportionate because risk and capital are more important to a business' success than any particular individual's labour, and…

Okay, but the way governments perpetuate income inequality isn't at all fake like Flat Earth conspiracies.

Re: Startup Stock Options – Why A Good Deal Has Gone Bad (2019)

#343

Post by weeksie » Tue, Dec 22, 2020, 1:15 AM UTC

aaronblohowiak wrote: post #340

weeksie wrote: post #321

Earlier quoted context omitted.

Nope [1] Lord grant me the confidence of a HN commentor talking about economics :/ [1] https://fred.stlouisfed.org/graph/?id=WTISPLC ,

Is this graph in nominal price or inflation-adjusted price? It is not obvious from the source.

Jesus fucking Christ

Re: Startup Stock Options – Why A Good Deal Has Gone Bad (2019)

#344

Post by jayd16 » Tue, Dec 22, 2020, 1:31 AM UTC

s1artibartfast wrote: post #294

jayd16 wrote: post #182

Earlier quoted context omitted.

Isn't that still like $7b[1] at the average 15m? Compare that to $45k[2] * for the 76k[3] women in the workforce, that's only ~$3.5b. Its US women vs the global S&P list, but it is interesting to compare, now that you mention it. [1] https://aflcio.org/paywatch [2] https://www.catalyst.org/research/womens-earnings-the-pay-ga... . [3] https://www.catalyst.org/research/women-in-the-workforce-uni... .

your math is of by a factor of 1000X. Per your link, there are 76 million women in the workforce, not 76k. That is $7 billion to CEOs vs $3.5 Trillion for women.

derp. Of course.

Re: Startup Stock Options – Why A Good Deal Has Gone Bad (2019)

#345

Post by URSpider94 » Tue, Dec 22, 2020, 1:44 AM UTC

throwaway09223 wrote: post #336

lisper wrote: post #259

Earlier quoted context omitted.

> Wealth is increasing for everyone, generally speaking That depends a lot on how you count. See: https://fred.stlouisfed.org/series/WFRBLB50107 The average net worth of the bottom 50% over the last 30 years is about the same as it was 30 years ago. Compare to: https://fred.stlouisfed.org/series/WFRBLT01026 and note that the net worth of the top 1% has been increasing more or less monotonically for the last 30 years,…

"That depends a lot on how you count." No, I don't think that it does. The bottom 50% generally do not have savings and investments - they invest their wealth in tangibles: Housing, food, belongings. It is not meaningful to look at investments or savings as a measure of wealth when most people near the bottom do not and have never had those things. It's necessary to look at what does signify wealth in this class: Con…

I think we're seeing two conflicting trends at work. People have better and better consumables in their lives: always-connected pocket computers, cars with amazing safety systems that last much longer than before, and bigger rental apartments with amenities like air conditioning, cable TV and WiFi. At the same time, they are more and more likely to be living paycheck to paycheck with no savings, and no hope of owning their residence. The working class is simultaneously wealthier than ever before (pocket computers !) and poorer than ever before (can't afford to see a doctor !). What's undoubtedly true is that income inequality has grown dramatically in the US.

Re: Startup Stock Options – Why A Good Deal Has Gone Bad (2019)

#346

Post by Groxx » Tue, Dec 22, 2020, 1:48 AM UTC

ska wrote: post #339

joshuamorton wrote: post #338

Earlier quoted context omitted.

The incentives are precisely the same as they are today. And the argument, by the way, isn't that "you should sell 172 of your shares", its that "you should donate 172 of your shares back to the company, otherwise the value of the rest of your shares may go to $0". I expect that the major differences you'd see are that you would need some kind of large pool of stock in reserve to save for future investments (or yes,…

The incentives aren't the same because in previous system I can't try and hold out for a personal advantage,in yours I can. I agree with your basic premise of some of the problems, I just don't see this as a practical way of addressing them. I can imagine explicit buybacks etc., as you suggest, but all those mechanisms will probably the funding side in similar ways to getting rid of liquidation preference. Keeping a…

Probably worth pointing out that both stock buybacks and holding reserve stock occur in practice. Especially reserve stock - that seems to be fairly common, as otherwise every new offering of stock to employees means a fresh round of dilution. Which it sorta means regardless (it's less reserve for future investment to use without dilution), but I'd be willing to bet that explicit ~annual dilution along with your bonus is probably less palatable on an emotional level.

(whether or not that equals "founder-only dilution", I dunno. kinda? it's earmarking, it's at least mentally/structurally different)

Buybacks... I haven't personally seen them occur except to take more control back from investors or employees (e.g. to pay off the one(s) that won't agree to dilution), but either way that's the opposite of receiving funds / dilution as it costs the company money.

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I agree entirely that the argument for non-dilutable stocks is "... otherwise the value of the rest of your shares may go to $0". But unless they get voting power proportionate to their stock (like normal) or can be forced to accept buyouts, one person can decide to risk everything for everyone. Or do nothing, and benefit from non-dilution while everyone else gets diluted. Again: it's possible to do this! Founders often have exactly this kind of power! But I don't see that working in most cases for larger groups.

Re: Startup Stock Options – Why A Good Deal Has Gone Bad (2019)

#347

Post by dang » Tue, Dec 22, 2020, 1:57 AM UTC

Discussed at the time: https://news.ycombinator.com/item?id=19624164

Re: Startup Stock Options – Why A Good Deal Has Gone Bad (2019)

#348

Post by conanbatt » Tue, Dec 22, 2020, 2:18 AM UTC

snowmaker wrote: post #242

chubot wrote: post #201

Earlier quoted context omitted.

Blog post from 2014: https://blog.samaltman.com/employee-equity That's more of an admonishment, but at least they recognized the problem ...

(I work at YC) Yes, we care a lot about making employee equity more generous and more fair. Part of our YC curriculum now is teaching founders about these issues and encouraging them to follow best practices around being generous and transparent with employees about equity compensation like Sam discussed in his blog post. I think there is still a lot more we can do, though.

What do you think are the next steps in improving this?

My impression is that the one thing that will make a significant change in this is that private shares are liquid in secondary markets like Forge or Sharespost. It would be revolutionary to also valuate companies from the perspective of employees, being able to pick winners and negotiate more stock from the not-so-winners, where stock is worth less.

Re: Startup Stock Options – Why A Good Deal Has Gone Bad (2019)

#349

Post by ClumsyPilot » Tue, Dec 22, 2020, 3:57 AM UTC

Ygg2 wrote: post #37

ClumsyPilot wrote: post #23

Earlier quoted context omitted.

So if people enjoy there work we don't have to compensate them competitively?

See gaming industry.

Abusive work practices, regular crunch time and underpays for talent?

Re: Startup Stock Options – Why A Good Deal Has Gone Bad (2019)

#350

Post by ska » Tue, Dec 22, 2020, 4:07 AM UTC

Groxx wrote: post #346

ska wrote: post #339

Earlier quoted context omitted.

The incentives aren't the same because in previous system I can't try and hold out for a personal advantage,in yours I can. I agree with your basic premise of some of the problems, I just don't see this as a practical way of addressing them. I can imagine explicit buybacks etc., as you suggest, but all those mechanisms will probably the funding side in similar ways to getting rid of liquidation preference. Keeping a…

Probably worth pointing out that both stock buybacks and holding reserve stock occur in practice. Especially reserve stock - that seems to be fairly common, as otherwise every new offering of stock to employees means a fresh round of dilution. Which it sorta means regardless (it's less reserve for future investment to use without dilution), but I'd be willing to bet that explicit ~annual dilution along with your bonu…

Both points true; I find it hard to imagine reserve stock suitable for all future investment though. Regardless, mostly these schemes end up in a similar place, so how you get there probably doesn’t matter. If employees were the largest voting block it would probably look different...