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How Wizards of the Coast distributed equity as a startup

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Re: How Wizards of the Coast distributed equity as a startup

#81

Post by tanzania »

debacle wrote: post #78
tanzania wrote: post #76

Earlier quoted context omitted.

Thanks for the perspective - this has been really helpful. I think no matter what happens it will have been an amazing experience that I lucked in to.

> it will have been an amazing experience that I lucked in to. I'm not really sure why you feel that way. Are you underskilled? You make it sound as though you're underpaid but then call it an amazing experience.

I'm definitely underpaid at the moment but that's the nature of a bootstrapped startup isn't it. They took a chance on me with no degree or job exp. Also money doesn't equal a better experience. I get to work on something really fucking cool and I love the people I work with. I'd probably kill myself at consultancy.

So regardless of whether or not make tons of money on this startup, I'll have 2+ years of job experience for the next job that I didn't have before.

Re: How Wizards of the Coast distributed equity as a startup

#82

Post by anonymoushn »

DonHopkins wrote: post #43
binarymax wrote: post #21

"We did no mathematical analysis of how the stock should be priced; we didn’t have the skill to do that" Folks may not realize it while doing so, but developing complex gameplay that is perfectly balanced can be considered a feat of linear algebra. So that quote made me smile :)

Sounds like they're on the right side of the Dunning-Kruger effect.

Hi,

The Dunning-Kruger effect doesn't actually cause people who are good at a thing to say they suck at it and people who are awful to say they are good. In the paper, most tests found that estimated ability was positively correlated with ability, but had a lower slope.

Thanks.

Re: How Wizards of the Coast distributed equity as a startup

#83

Post by kjksf »

tanzania wrote: post #81
debacle wrote: post #78

Earlier quoted context omitted.

> it will have been an amazing experience that I lucked in to. I'm not really sure why you feel that way. Are you underskilled? You make it sound as though you're underpaid but then call it an amazing experience.

I'm definitely underpaid at the moment but that's the nature of a bootstrapped startup isn't it. They took a chance on me with no degree or job exp. Also money doesn't equal a better experience. I get to work on something really fucking cool and I love the people I work with. I'd probably kill myself at consultancy. So regardless of whether or not make tons of money on this startup, I'll have 2+ years of job experien…

You're rationalizing your state of being underpaid, which is understandable (you want to feel like you're making good choices in your life) but not very rational.

The tell-tale sign is that you compare your current position with a bad job (consultancy).

The thing is: there are plenty of startups that make cool things and have nice people AND pay well AND offer good equity AND have potential to take off in the future.

So if you really think you're underpaid for your skills (as in: you could find another job that is as good as this one and pays better), you should ask for a raise that would match a market rate for your current skills.

If a raise is not possible, you should start looking for a new job (and if you're in SF/Bay Area, there have never been a better time to do that).

Re: How Wizards of the Coast distributed equity as a startup

#84

Post by aagha »

tptacek wrote: post #47
alexose wrote: post #38

The next generation of startups is going to have to address some employee equity problems, I think. This notion that early hires are going to share a small piece of the 10% employee pool needs to stop. Being employee #1 of a startup can be one of the worst positions a young developer can ask for. Long hours, high stress, low job security, and for what? 0.5% of a company that, if it survives, will most likely dilute i…

Probably not, or that already would have happened. It hasn't. One problem is that a lot of people look at equity grants as a meritorious service award. But that's not at all what they are; they're compensation for risk. Developers look at risk compensation and say, "well, I undertook a lot of risk to work long hours for a lower wage". That's true, but the market prices that kind of risk, and the market cares a lot ab…

> Probably not, or that already would have happened. It hasn't.

There was a time when convertible notes hadn't happened, or become main-stream, until they happened.

Re: How Wizards of the Coast distributed equity as a startup

#85

Post by LanceH »

kenrikm wrote: post #23

I think the most important takeaway is that he did not try and screw over the early shareholders, integrity is important. The story about the $280,000 drafting table is relevant, they needed the drafting table it contributed to the success, If you were to go down that line of thought I wonder how much each can of Soda bought for early Facebook employees "cost".

There were a lot of drafting tables and tons of other stuff purchased totaling some unknown amount. But it was that drafting, in that place, with those cards which made a company.

It's easy to criticize it for being $280k because we don't know the scenario where they don't have a table. Maybe that scenario is, "fuck it I'm not working on the floor any more" and the whole company is worth zero.

Then there is the economics of it. Hindsight makes it all easy when you only question the costs of the winners.

Re: How Wizards of the Coast distributed equity as a startup

#86

Post by rbcgerard »

kauffj wrote: post #2

I love the idea of small scale stock offerings, but isn't this illegal? My understanding was that selling stock like this is a private equity offering and that private equity offerings are limited to a small number of people unless the investor is sufficiently rich (the government likes to use the term "accredited investor").

There are a lot of exemptions - for example rule 504 of reg d is pretty liberal regarding how you raise funds as long as you raise less than $1m in a given 12 month period...

I recall that if you raise money from people in only one state you may be able to rely on state level rules and registration requirements

Re: How Wizards of the Coast distributed equity as a startup

#87

Post by waterlesscloud »

aagha wrote: post #84
tptacek wrote: post #47

Earlier quoted context omitted.

Probably not, or that already would have happened. It hasn't. One problem is that a lot of people look at equity grants as a meritorious service award. But that's not at all what they are; they're compensation for risk. Developers look at risk compensation and say, "well, I undertook a lot of risk to work long hours for a lower wage". That's true, but the market prices that kind of risk, and the market cares a lot ab…

> Probably not, or that already would have happened. It hasn't. There was a time when convertible notes hadn't happened, or become main-stream, until they happened.

Agreed. That's the worst possible argument against this happening.

I think HN is getting old. Certainly more conservative in how it views future change.

Re: How Wizards of the Coast distributed equity as a startup

#88

Post by technofiend »

ryanburk wrote: post #27
georgeecollins wrote: post #19

Earlier quoted context omitted.

The number of shares should be figured into the estimated price. If they figure the company is valued at $100, and a share at $0.50, then they should be issuing 200 shares. You should be completely mistrustful of anyone who offers you shares and doesn't tell you the # of shares outstanding. Alternately, if they tell you the value of a share, they should tell you the estimated value of the company. The alternative is…

> You should be completely mistrustful of anyone who offers you shares and doesn't tell you the # of shares outstanding. this is an amazingly important point that many people I've seen new to the startup world ignore to their peril. it is too easy to get big eyes when you hear you are getting 50,000 options not realizing that it is only 0.000001% of the company since you don't know # of shares outstanding, across all…

Well that and do they mean 50k options as traded on the open market or options enough to purchase 50k shares?

I had an employer promise one and then try to weasel into giving me the other. I threw a fit and made them fix it. Theynwere bankrupt a year later. :whomp whomp: But my point is when they say "option", ask them to define it One is worth 100 times more shares.

Re: How Wizards of the Coast distributed equity as a startup

#89

Post by waterlesscloud »

Qworg wrote: post #70
tptacek wrote: post #65

Earlier quoted context omitted.

How else would you model companies and their staffing?

For new startups? A cult (of personality or of the religious persuasion)? A warparty? A pirate crew? All are good options.

I'm a firm believer that every filmmaking project is a cult, and that directors with cult leader traits are much more effective at getting the project made the way they want it.

There can be obvious downsides to that, of course, but the same thing likely applies to startups.

I don't know if you can force it if you don't have it, but it's probably learn-able.

Re: How Wizards of the Coast distributed equity as a startup

#90

Post by BatFastard »

kjksf wrote: post #83
tanzania wrote: post #81

Earlier quoted context omitted.

I'm definitely underpaid at the moment but that's the nature of a bootstrapped startup isn't it. They took a chance on me with no degree or job exp. Also money doesn't equal a better experience. I get to work on something really fucking cool and I love the people I work with. I'd probably kill myself at consultancy. So regardless of whether or not make tons of money on this startup, I'll have 2+ years of job experien…

You're rationalizing your state of being underpaid, which is understandable (you want to feel like you're making good choices in your life) but not very rational. The tell-tale sign is that you compare your current position with a bad job (consultancy). The thing is: there are plenty of startups that make cool things and have nice people AND pay well AND offer good equity AND have potential to take off in the future.…

Better to love what you do then make more money. Money != Happiness If this guy loves his job and company, and has earned valuable experience, then he is a lucky man! If he happens to make an extra buck or two, so much the better.
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