I'm waking up personally to the unethical side of Software development as well. You can either do little and get paid pocket change or you can provide a ton of value for pocket change next to some promises lulling you in, where the value of your work exponentially increases, but you will see nothing of it and whatever you do: you are still a replaceable cell in excel to them and there will be ways where you get dragged over the table. If the money isn't directly in your bank account, it might as well not exist or was a lie.
Sooner or later you are the horse behind the barn anyway.
Windsurf employee #2: I was given a payout of only 1% what my shares where worth
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Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth
#72I am surprised that the employment agreements between execs/founders and Windsurf didn't address this. A cautious investor--or even a cautious key employee joining the team--would have locked the founders and key employees down to prevent them from being hired away without some recourse. This is especially important when all of the value was in the employees. There should be lawsuits forthcoming...
Non competes are illegal in California, there is no legal way investors can lock founders and employees down. This is venture capital investment risk. The employees, who are most of the value (aside from potential IP and customer contracts), can walk at any time.
It doesn't have to be a lawsuit preventing them from leaving. Golden handcuffs usually work pretty well for such a situation.
Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth
#73Earlier quoted context omitted.
Seems like that makes options completely useless. If they had actual shares they could at least sue because majority shareholders have a duty not to completely screw over the minority.
It has always been possible (and sometimes happens) for VCs and mgmt to screw the early employees. The question is will it become more common now? Also, people equate these to aquihire deals. But they are not really. Most aquihire deals are when the company is out of runway, or it seems growth has slowed/stopped and there are no good ways out. There is not mucH value left. Here there is clearly billions in value, it’…
It feels like it will become more common if Google gets away with this with no real backlash.
I mean why would anyone honor employee options when buying out a company if you can just poach all the key employees and assets.
As you said there was so much money involved. I can’t think of a similar situation where employees were screwed out of billions like this.
Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth
#74Earlier quoted context omitted.
Non competes are illegal in California, there is no legal way investors can lock founders and employees down. This is venture capital investment risk. The employees, who are most of the value (aside from potential IP and customer contracts), can walk at any time.
It doesn't have to be a lawsuit preventing them from leaving. Golden handcuffs usually work pretty well for such a situation.
Unless investors and management are unwilling or unable to counter a superior offer. “Pay them more” works when willing and able. Otherwise, bounce. Comp is king during a gold rush you’re unsure how long will last.
Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth
#75Engineers: always negotiate for higher base salaries. In the vast majority of cases—especially during acquihires—your equity will be worth little or nothing. Founders and VCs still get paid; employees rarely do.
Don't just accept promises. Ask for the 409A valuation, liquidation preferences, and pay bands. If a company won’t provide transparency, that’s your signal.
Equity is a lottery ticket. Salary is money in the bank.
Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth
#76Earlier quoted context omitted.
Thank you very much! So it seems like the crux of the issue still isn't clear, because: > Had the employee taken employement with Google, it's likely their shares in windsurf would have been voided, or otherwise not vested. That doesn't make any sense. The shares are already vested, they legally own them. How could they have been voided? The idea of joining Google resulting in a "1% payout" doesn't seem to make any s…
Vested is not exercised. Options vest, but you have to exercise them to purchase the underlying shares. This is nominally cheap, but from the IRS’ perspective you have just spent $1 to purchase a share worth $100, so that’s $99 of income. Multiply by a large number of options and you can easily have a real multimillion dollar tax bill even though you have no way to sell the shares to recoup their value. Worse, if the…
While you're right that exercising options can be very expensive and are a risky tax bet, we're talking about employee #2 in this case. They should've been able to buy in early at a low price and tax bill if they really believed in the company:
- Jan 2021: 3M seed round
- Jan 2024: Series B valuing the company at 500M
That's 3 years of vesting below a 1B company valuation, and 75% of a typical vesting schedule. There was plenty of opportunity to buy when valuations were low.
There's also 83(b) election that allows one to prepay tax liabilities on stock options before they vest.
Not buying stock options or doing a 83(b) election is also a bet that can place a cap on losses if the company goes downhill, but the risk flips if everything goes right.
Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth
#77I was aquihired by a FAANG. The headline "startup bought for x million" is almost always a lie, either direct or by omission. First, when a startup is bought, its generally not bought at the headline rate. So if you see a "bought for $45m" that doesn't mean People who own shares all got a % of 45m. That number is normally bullshit, but also a "total package" which include share offers for joining the new company. Thi…
1m isn't enough to really retire in in silicon valley
Or in any big city tbh.
Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth
#78Earlier quoted context omitted.
It’s possible that in the Google deal you had to agree to sell back the shares (at a low value like par or original strike price) and the 1% refers to either those proceeds or the size of the Google employment package. If you didn’t agree then you would be left holding your shares of a company that is now gutted.
> It’s possible that in the Google deal you had to agree to sell back the shares But how could Google require that? > If you didn’t agree then you would be left holding your shares of a company that is now gutted. Which is what is sounds like he wound up doing anyways? Which I don't even understand why.
Google can just refuse to hire you if you don't
Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth
#79I was aquihired by a FAANG. The headline "startup bought for x million" is almost always a lie, either direct or by omission. First, when a startup is bought, its generally not bought at the headline rate. So if you see a "bought for $45m" that doesn't mean People who own shares all got a % of 45m. That number is normally bullshit, but also a "total package" which include share offers for joining the new company. Thi…
1m isn't enough to really retire in in silicon valley
Sure, but if you're 10+ years into your career and have been financially conservative (i.e. have a positive net worth), a lump sum of $1m could be enough to retire to a lower-cost location.
Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth
#80When people give you a percentage (1%), that is a ratio and they are not telling you either number. So, that makes me a little suspicious. I wonder how much he got in the end?