I can't believe a16z allowed this to be published. Part of being "founder friendly" is not developing a reputation of shitting on your portfolio's employees, because then good founders will have to avoid you.
The Lack of Options for Startup Employees’ Options
121–125 of 125 posts
Re: The Lack of Options for Startup Employees’ Options
#122This article states that former employees are "lining their pockets" at the expense of current employees who are "build[ing] future shareholder value" (i.e. creating value for VCs). But it ignores the fact that those former employees already built shareholder value when they were working. And by joining early on they took a much larger risk than employees who sign on during the growth stage - often receiving less sal…
Perhaps what is needed are sunset clauses on investor/non-labor shares? The riders-on should be shed while those who did the actual work get to enjoy their profits, no?
What do you mean? If you tell people upfront that their shares will be worthless eventually, why would anyone invest time or money?
Re: The Lack of Options for Startup Employees’ Options
#123There doesn't seem to be any elegant solutions for equity compensation yet. The main issues seem to arise once an employee leaves or gets fired. While the employee did put in many years of work, its not too fair to have the options disappear after 90 days. At the same time, as mentioned in the article its not 100% fair for the employee to keep the unexercised options for a long period of time. A solution a few people…
Lord, just please take him in his sleep. Besides the obvious stupidity inherent to the argument you could simply accomplish this by having the company buy back the unexercised options at the current FMV.
Re: The Lack of Options for Startup Employees’ Options
#124We were the first startup to use 10 year exercise periods, which started this trend. I wrote a long response to this here: https://dangelo.quora.com/10-Year-Exercise-Periods-Make-Sens...
That is incorrect. My 2000 stock plan from Lime Wire had 10 year exercise period from grant. Completely agree with you about all of it but you weren't the first one not by some margin.
Re: The Lack of Options for Startup Employees’ Options
#125This piece is inane and I'm surprised to see it published by A16Z. Options are a form of compensation, it's not as if the value created by the early employee goes away if they leave before a liquidity event. They created value and got compensated for it. To call the process of making it easier for departed employees to actually get access to this part of their compensation "optimizing for former employees at the expe…
Strongly agree.
I also don't understand why the company acts as if the employee has no cash liquidity once those 90 days start ticking - can't the employee sell their stock on the secondary market? Companies like EquityZen, or 137 Ventures can do this entirely without company involvement in the form of transferring shares, by doing a derivative forward contract, or a loan for instance. That way, the employee wouldn't need to lose all their options, only sell enough to pay for the AMT and legal fees.
Sure, companies have worded in hidden and possibly completely unenforceable share restrictions on transfers, loans, or anything remotely involving equity. But until we have a court case and a TechCrunch headline of Company suing Employee over Secondary Transaction, how does one know if these are enforceable or not?
And practically speaking, how will the company find out if you made a deal with your rich uncle? With an angel investor? With a group of angels? With these companies? What is the practical difference?
https://gist.github.com/jdmaturen/5830b83c1425c4767f7e1bd4c9...