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Golden Handcuffs

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Re: Golden Handcuffs

#151

Post by chris11 »

dahart wrote: post #148
ska wrote: post #130

Earlier quoted context omitted.

> based on today’s valuation of the stock. This is the tricky part, especially if you are very early. Really what you want is the (statistical sense) expected value of the equity be something like the opportunity cost, for it to make sense for you. But until the company has been around for a while and through a few rounds, valuation is mostly a fantasy...

It’s not that tricky, because the investors are getting a valuation. The money I risk/invest/forego now because it’s a startup maybe ought to get the same valuation the investors are getting, that’s all.

I really agree with your point. I don't see how most startups could make competitive offers with unicorns/FAANG, unless it was for non-monetary reasons like a promotion.

Re: Golden Handcuffs

#152

Post by chris11 »

om2 wrote: post #133
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…

What specifically is wrong with a comp model of one-year vesting (instead of 4-year) and no cliff? Whether it's better or worse for employees depends on how they size the grant and in general is very situational. If the company goes up in value a lot over 4 years, then yeah, the employee may lose out, even if grants are comparable in dollar terms at time of grant. If the company has more volatility than growth, or on…

> If the company goes up in value a lot over 4 years, then yeah, the employee may lose out

This is horrible at pre-IPO unicorns like Stripe. One year vesting could cost normal employees millions if the company blows up.

Sure, the stock might not move much, or it can go down. A temporary dip means good performers are more likely to get larger refreshers to get tc up to market rate. And if pay is your driving motivation you can switch to a new job.

Re: Golden Handcuffs

#153

Post by URSpider94 »

908B64B197 wrote: post #65
nineplay wrote: post #23

I've talked to two FAANG-level recruiters recently about remote openings, which are all the rage now. One was willing to give a base-salary range but absolutely refused to provide any comp information beyond that. Signing bonus? Equity? "We are still working out those numbers for remote employees, we'll negotiate when we give you an offer" The other - everyone at the same level at the same location gets the same comp…

Anything other than the rate at the main campus is not a serious offer.

You can say that for yourself, but it's just not realistic. Lots of people are about to learn this the hard way as SV companies start to roll out their remote-work plans. Companies are going to pay you less money if you choose to live somewhere other than Silicon Valley, or perhaps NYC. Odds are, you'll still come out way ahead.

Re: Golden Handcuffs

#154

Post by URSpider94 »

908B64B197 wrote: post #106
kelnos wrote: post #70

Earlier quoted context omitted.

> Why should a remote employee in Atlanta make more than an onsite one? Not more, but why shouldn't they be paid the same if they're doing the same work?

Two reasons to open a satellite office. First is to cut costs, second is to grow the business and recruit from an untapped talent pool. I'm not a cost cutting person, so I'm not interested by the former. Trying to play games with CoL signals that instead of putting money in growing the product, they would rather try to squeeze as much as they can.

By that logic, why don't they just pay everyone five million dollars a year? Doing anything less is just squeezing employees. I learned from my first startup CEO, the number one cost for almost any company is payroll. If you can't manage it, you won't survive as a company. There's a difference between compensating people fairly, or even generously, for a job well done, and just leaving money on the table.

Re: Golden Handcuffs

#155

Post by whoisjuan »

gkoberger wrote: post #41

This sounds employee-friendly, but it's total BS. You'll just be getting less equity at a higher strike price every year, so it's just a sneaky way for these companies to give employees less. They can still say "we're giving you $100k in stock this year", but it's a lot less stock since you're not locked into a strike price. If you want to leave after 1 year (post-cliff), you can leave under either scheme and get 1 y…

Do you realize that Coinbase is now a public company? There’s no such a thing as strike price because their stock compensation is likely done through RSUs. Not stock options.

Public companies issue an RSU grant at the beginning of employment and at no cost for the employee. Also if the share price goes below the grant date price, you’re likely recalibrated through rolling refreshers.

Re: Golden Handcuffs

#156

Post by mattpratt »

Reminds me of a16z's "dead equity" blogpost, largely revolving around employees with lingering options who no longer contributed their "fair share".

https://a16z.com/2016/06/23/options-timing/

> Well, not exactly. There is a more fundamental issue at the > heart of this seemingly good solution: A 10-year exercise > window is really a direct wealth transfer from the employees > who choose to remain at the company and build future > shareholder value, to former employees who are no longer > contributing to building the business/ its ultimate value.

But not mentioned in either is that these long running exercise windows "hurt" _all_ shareholders, especially investors. Nice of both to make this about the little man/woman.

I only wish their worth and value to the company was met with the same scrutiny they seem to give employees.

Re: Golden Handcuffs

#157

Post by URSpider94 »

988747 wrote: post #107
cddotdotslash wrote: post #36

Can we just link directly to the Coinbase post [1] instead of this 8-sentence blog spam? [1] https://blog.coinbase.com/how-coinbase-is-rethinking-its-app...

Maybe I'm too cynical, but this "Eliminating negotiations from the hiring process" feels like they are saying "we are going to underpay you, severely" Negotiations are normal part of the process, if they try to eliminate it, they will simply not receive applications from the top candidates. Blaming it all on "women and minorities would end up underpaid" is a brilliant excuse.

Presumably, "the top candidates" will be assessed as being higher-level employees, and will get better offers commensurate with their level? They aren't saying that everyone will get the same offer, just that the offer you receive will be best and final.

The fact that different socioeconomic groups approach negotiation differently has been shown to be a strong contributor to pervasive, long-standing differences in pay. This is a good step to start to address that inequity.

Re: Golden Handcuffs

#158

Post by mattpratt »

HWR_14 wrote: post #102
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…

Dumb question time: What's "IC". As you can imagine, the term is kind of overloaded in internet searches. Also, does anyone know of a good primer on equity founders/early employees/later employees should expect/require so they don't get totally taken advantage of? It turns out experience is an expensive teacher.

The Holloway Guide has some goodies --

https://www.holloway.com/g/equity-compensation

It's complicated and there's a lot of gotchas I wish I had known. You can read up but if you are considering any of these I would find someone who has navigated the space (and has likely been burned).

Re: Golden Handcuffs

#159

Post by alecbz »

lukevp wrote: post #115
heavyset_go wrote: post #89

Earlier quoted context omitted.

> Employees deserve high-quality equity on par with investors. There is no reason that labor and time couldn't build equity, it's just that our current system favors those who use capital to build wealth over those who need to sell their time and labor to build wealth. A common reason I hear for the fact that investors get more equity is because of the "risk" they take on, as if losing some money is the only risk on…

I think you’re hand waving away that money is a store of value, and indirectly of time spent. The money investors have also came from them creating value by doing some activity. It doesn’t materialize independently. And it is still a risk to lose that money that they earned by trading their own time in the past.

The more relevant factor IMO is not time vs. money but the proportional risk. A year of my time is a much larger fraction of my net worth than the typical VC's investment is a fraction of their net worth.

Re: Golden Handcuffs

#160

Post by alisonkisk »

B4CKlash wrote: post #127
lukevp wrote: post #115

Earlier quoted context omitted.

I think you’re hand waving away that money is a store of value, and indirectly of time spent. The money investors have also came from them creating value by doing some activity. It doesn’t materialize independently. And it is still a risk to lose that money that they earned by trading their own time in the past.

Another term for VC is risk capital. A diligent investor will only put what they can safely risk into the market. While your correct that money indirectly represents time, you’re overlooking the incremental utility of money. An investor logically values each incremental dollar less, purely evidenced by the fact they were willing to risk it. An employee on the other hand will turn those funds directly into shelter/foo…

You're saying that rich people should be paid less, a smaller multiple of what low paid workers get. You can make that debate, but it's not "equity vs wages".

Someone getting paid $100M but no "equity" isn't worse off than someone getting paid $100M of valuated equity (ignoring liquidity discount blah blah)

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