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Golden Handcuffs

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Re: Golden Handcuffs

#11

Post by namelessoracle »

trompetenaccoun wrote: post #2

Coinbase is an interesting company. They're grossly underrated and laughed off as an online casino, but they invest all that money they make very wisely and strategically to grow the business. I find another paragraph from that press release interesting: > Traditionally people expect they need to negotiate for the best package after being hired in a new job. Those that do this well tend to be rewarded, and those that…

Aggressive negotiating types will fight for position rather than salary at that point. I wonder how flat Coinbases structure is.

I feel like if you had a skill they REALLY wanted, they would create a new position for you to get around this rule.

Re: Golden Handcuffs

#12

Post by gtaylor »

trompetenaccoun wrote: post #2

Coinbase is an interesting company. They're grossly underrated and laughed off as an online casino, but they invest all that money they make very wisely and strategically to grow the business. I find another paragraph from that press release interesting: > Traditionally people expect they need to negotiate for the best package after being hired in a new job. Those that do this well tend to be rewarded, and those that…

The companies that I've been a part of that employed this non-negotiation strategy ended up only shifting the negotiations from compensation to title. The same negotiators still come out on top, since they'll request higher titles in order to meet their comp expectations (since they can't negotiate for comp directly). As a result, the eng org can end up topheavy in leveling.

This is a tough problem, but these non-negotiation policies aren't the solution. They make the inequity even worse since it becomes harder to negotiate (for title) than for incremental comp increases.

Re: Golden Handcuffs

#13

Post by sokoloff »

choppaface wrote: post #4

The C-level to IC comp ratio is still way too astronomical. If a VC is telling you he feels there’s a better way to comp, he has a financial interest in ensuring your loss. Do not support investor-focused comp models like backweighted vesting (Amazon) or outright fraud like a start-up giving you a stock offer with no percentage or no 409A. Employees deserve high-quality equity on par with investors. The OP’s suggesti…

If CxO and founder compensation is unreasonably too high, why not go become one of them (presumably founder is easier to self-select into)?

Re: Golden Handcuffs

#14

Post by akarma »

PLenz wrote: post #3
trompetenaccoun wrote: post #2

Coinbase is an interesting company. They're grossly underrated and laughed off as an online casino, but they invest all that money they make very wisely and strategically to grow the business. I find another paragraph from that press release interesting: > Traditionally people expect they need to negotiate for the best package after being hired in a new job. Those that do this well tend to be rewarded, and those that…

This is just reinventing unions but without the employee's ability to input via collective bargaining.

If you're ambitious, this doesn't hurt your ability to join Coinbase and grow quickly, which is an important factor in the tech industry and its appeal of opportunity. A union would.

This offers a more level playing field for employees to begin their time at the company without stringent rules around who can get promoted and when and other red tape. Seems like a great decision.

Re: Golden Handcuffs

#15

Post by sokoloff »

ProAm wrote: post #6
aledalgrande wrote: post #5

Earlier quoted context omitted.

The options offer with no percentage ("we're giving you a very generous 80,000 options"), always blows my mind!!! And often even without a strike price!

Always ask for a non-diluatable percentage early on.

It’s reasonable to ask “what percentage does this represent on a fully-diluted basis?”

It is entirely unreasonable to ask for a percentage of the company which can never be diluted by a future fund-raising round. Doing so just telegraphs that you don’t know how venture funding/corporate finance works.

Re: Golden Handcuffs

#16

Post by throwaway-44373 »

What it seems to me this is saying is the following: - before we'd give you X options (say, 40,000) vesting over 4 years - now you get 1/4 of that, 10,000 vesting annually

The strike price of both grants is the same (say, $1/option)

Now the question is, what happens year 2?

If the company is a lot more valuable, two things will change: - strike price will be higher (say, $3/option) which makes the options slightly less attractive. But that's not the big deal - # of options will go down, because the more companies grow the more options are valuable and the less they give out to employees. So year 2 options will be 5K.

If this continues, over 4 years the end the employee will have something like 10K + 5K + 3K + 2K = 20K options vs 40K. Not only that, but the 20K options will have a much higher blended rate.

On the positive side, there will be no reason for the employee to stay if they don't want the new grant. But the reason they don't have to stay is that they were not comp'ed as much in the beginning.

So me reading between the lines, this will mean a lot less compensation for early employees of successful startups vs the traditional model.

There is a reason why the handcuffs are called golden. At the end of the day employees decide to stay because it's worth it for them.

Re: Golden Handcuffs

#17

Post by akarma »

the_jeremy wrote: post #10
trompetenaccoun wrote: post #2

Coinbase is an interesting company. They're grossly underrated and laughed off as an online casino, but they invest all that money they make very wisely and strategically to grow the business. I find another paragraph from that press release interesting: > Traditionally people expect they need to negotiate for the best package after being hired in a new job. Those that do this well tend to be rewarded, and those that…

This seems like it will just result in those who can be underpaid being hired at lower levels. If a hiring manager really wants someone and they can't pay them more, they can hire them at a higher level. If decisions are made by the higher-leveled ICs, then it seems like even more decisions will be made by white men under this culture.

> If a hiring manager really wants someone and they can't pay them more, they can hire them at a higher level.

Yes, this is how it should work! Their role will then involve a higher level of responsibility and expected output that they better be prepared for, and they'll be compensated more for that.

It makes much more sense than people getting higher/lower compensation for the same level of responsibility and expected output based on their competing offers at the time of signing, doesn't it?

Re: Golden Handcuffs

#18

Post by sokoloff »

gtaylor wrote: post #12
trompetenaccoun wrote: post #2

Coinbase is an interesting company. They're grossly underrated and laughed off as an online casino, but they invest all that money they make very wisely and strategically to grow the business. I find another paragraph from that press release interesting: > Traditionally people expect they need to negotiate for the best package after being hired in a new job. Those that do this well tend to be rewarded, and those that…

The companies that I've been a part of that employed this non-negotiation strategy ended up only shifting the negotiations from compensation to title. The same negotiators still come out on top, since they'll request higher titles in order to meet their comp expectations (since they can't negotiate for comp directly). As a result, the eng org can end up topheavy in leveling. This is a tough problem, but these non-neg…

I don’t think these make it worse overall. It definitely makes it works for some but better for many.

I suspect this policy and the 1-year grants makes it quite a bit harder for Coinbase to poach employees from FAANGs.

Re: Golden Handcuffs

#19

Post by kritiko »

This reminds me of restaurants adopting (and then mostly abandoning) no tipping policies. You're trying to change an entire culture, good luck!

"Letting that market operate efficiently and not trying to game it makes a lot of sense to me."

This is not obvious to me. In many ways, the job market is not like other markets. Onboarding employees is a money-losing proposition. Turnover is disruptive. Recruiters cost money. Benefits operate on a calendar-year basis or have waiting periods.... I could go on, but there are all sorts of reasons for companies to pursue retention over an "efficient market."

Re: Golden Handcuffs

#20

Post by bps4484 »

seasoup wrote: post #9

This is a plan that is much worse for employees, being presented as if it were better. At least be honest about feeling like you are paying employees too much equity up front and want to pay them less.

To me this all depends on how it's implemented but you're right to be suspicious.

If all they do is give you 1/4 of the equity they were going to give you previously, then yes it drastically reduces employee upside to the benefit of others (execs, investors).

But they probably can't do that because it would be harder for them to attract talent against a 4 year vest company. Instead they'll probably have to bump up that initial grant so that when employees do the math there is still the big upside if the company improves.

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