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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

#121

Post by highfrequency »

CalChris wrote: post #106

This was just a preference cliff, plain+simple. Windsurf got paid maybe $3B for itself. But the investors and senior management got their cut first. How? Well, the preferences they negotiated. No one really knows how the game is played The art of the trade How the sausage gets made We just assume that it happens But no one else is in the room where it happens #2 wasn't in the room when it happened. In a very real sen…

Doesn't seem that simple. They raised a total of ~$250m and acquisition price was almost 10x that. The preference cliff means that employees get nothing before investors get an X% return on their investment (100%, 150%, maybe 200%). After that, the payout should be proportional to common stock ownership. Surely the preference guarantee was not 10x?

Would be curious to see the breakdown of the $2.4b:

1. How much to the founders in Google employment incentives

2. How much in licensing fee to the company itself

3. How of the licensing fee went to immediate payout to VC investors (+ employees)

4. How much got left on the balance sheet of the remaining company

I don't understand how #3 can be so large and common stock holders walk away with almost nothing without breaching fiduciary duty?

Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth

#122

Post by istjohn »

mawadev wrote: post #71

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 dragg…

To state the obvious, software developers are doing just fine.

Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth

#123

Post by toast0 »

ProfessorLayton wrote: post #76
stouset wrote: post #40

Earlier quoted context omitted.

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…

You want to say exercising options. Buying options is paying to have an option; you can easily buy options on publically traded stocks, for example. Exercising options is delivering money that covers the strike price to receive the shares... or delivering the shares to receive the strike price, if it was a sell/put option (which employment related options wouldn't be)

Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth

#124

Post by highfrequency »

Directly contradicts Garry Tan's post saying that all forty founding engineers got seven figure payouts from the Google acquisition: https://x.com/garrytan/status/1947072583092052406

Even if the OP considers the full headline number of $2.4b to be the value of the company, and taking his "1% of fair" number as truth, seven figure payouts would imply all 40 founding engineers had >4% equity which is nonsensical.

Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth

#125

Post by crazygringo »

adgjlsfhk1 wrote: post #78
crazygringo wrote: post #50

Earlier quoted context omitted.

> 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

I've literally never heard of a company demanding you give up shares in another company as a precondition of being hired, for an engineering role.

At the executive level they may not want you holding shares in a direct competitor because it presents a conflict of interest. But even then you generally have a period to divest.

Can nobody explain what the actual demand was here? What did Google offer vs. what did they demand, and why? And why would Google be buying your shares...? None of this makes any sense the way it's been presented.

Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth

#126

Post by churchill »

lokar wrote: post #55
nocoiner wrote: post #35

Earlier quoted context omitted.

Wow. How did the Windsurf investors feel about that?

They got paid out as well. Meta pulled the same thing recently. So, a new trend where big tech “buys out” a startup in a way that only early VCs, founders and top managers get any value.

>Meta pulled the same thing recently.

Do you mean the Scale AI acquihire? I took it at face value that Alex Wang just joined Meta, but come to think of it now, the company's just a husk of itself, customers no longer trust them, etc. So, it seems you're referring to Scale.

Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth

#127

Post by georgemcbay »

gsibble wrote: post #94
stan_kirdey wrote: post #75

Engineers: 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…

I've tried to ask dozens of companies that wanted to hire me just for how many shares were outstanding and/or authorized. They almost always refused to share. You can almost never get any info on equity until it's too late and you realize it's worth nothing.

> I've tried to ask dozens of companies that wanted to hire me just for how many shares were outstanding and/or authorized.

Those questions are certainly worth asking but employees should also keep in mind that even if they do share that information your equity can still later be diluted away to worthlessness.

Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth

#128

Post by ohdeargodno »

highfrequency wrote: post #124

Directly contradicts Garry Tan's post saying that all forty founding engineers got seven figure payouts from the Google acquisition: https://x.com/garrytan/status/1947072583092052406 Even if the OP considers the full headline number of $2.4b to be the value of the company, and taking his "1% of fair" number as truth, seven figure payouts would imply all 40 founding engineers had >4% equity which is nonsensical.

Garry Tan's job is bullshitting. Lying isn't very far from it, and he even covers his ass with "I heard".

Who did you hear it from Garry, the founder that made out with all the money ? Or the other VC that made a few hundred million from the sale and stands to gain even more if the lie of "founding engineers get rewarded" is perpetuated?

Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth

#129

Post by ohdeargodno »

bagels wrote: post #66
KaiserPro wrote: post #60

I 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

Take a million, go live literally anywhere that isn't Silicon Valley, remote work for a company that interests you, or your own project.

There's very few currencies in the world in which 1M isn't enough to retire. USD isn't one of them.

Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth

#130

Post by swyx »

kentonv wrote: post #99
KaiserPro wrote: post #60

I 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…

Yeah, I used to hear all the time that "a startup is worth $1 million per engineer in a pure acquihire", but learned the hard way this is a myth. When we were talking to various companies about acquiring Sandstorm.io (my startup) in 2017, one of the companies told me, essentially: "We aren't interested in your IP, only the employees. We'll give you a set of job offers for them. We will then sum up the salary and equi…

sorry that happened to you. what taxes do you have to pay on a company making 0? just delaware franchise tax?
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