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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

#151

Post by doctorpangloss »

almostgotcaught wrote: post #147
usaar333 wrote: post #142

Earlier quoted context omitted.

Under any normal circumstance I've ever seen, you should be taking the higher equity/lower salary combination and should focus on equity rather than salary. The only time it ever makes sense to push for more salary instead is if you literally cannot get a job at a public company (or even a near IPO unicorn). Plenty of startup employees can, so clearly they believe their startup equity is worth something. Financially…

> Yah, over 50% it's going nowhere but expectation needs to consider how huge the win is even if it is lower probability. yes that's literally the definition of expectation value...... so ev = 1 bagillion * 0.0000000000000001 = ~0 hence you should absolutely not be taking higher equity/lower salary ever. hell i wouldn't even take that at a publically traded company if given the option.

The interesting thing going on is, stars align. The kind of person who has to think about this problem should take equity. The kind of person who would choose to take cash isn't going to be hired at the kind of VC backed business that will end up being worth something.

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

#152

Post by tensor »

gsibble wrote: post #93
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 tell every engineer always to maximize their cash comp and every founder and investor always says "No, that's such a bad idea! Get more equity!" Yeah, because that is in your interests, not the engineer's.

There are more than enough stories about employees complaining that they didn't get a big enough payout on an acquisition or IPO to know that this isn't true. It all comes down to your risk reward preference.

Sure, if you don't want to take a risk then look for a higher salary, and probably at a more established company because even if you have mostly salary and little equity a startup is still risky (and you're making it even more so by putting cash pressure on the company at that stage).

On the other hand, if you want a chance at a bigger payout, you'll want more equity. And yes, you may well not get that payout.

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

#153

Post by doctorpangloss »

ww520 wrote: post #150

That’s why founding engineers are such a raw deal. They take just as much risk as the founders but much less payout. Also on the hook to do most of the work.

It's complicated. The difference between a founder and founding engineer - I think you mean early employee - is pretty big. The fact that they are getting a "raw deal" in your POV should inform you that the equity grants are not related to risk.

This is coming from someone who programs for a living: contrary to what you are saying, the money guys take too little equity. The money guy being, the reason you are raising money at all, and not just dipping into your own savings.

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

#154

Post by sokoloff »

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 in one shot leaves you with around $600K after taxes in most states. That’s enough to pay you around $24-30k/yr.

Unless you already had several other million saved already, I bet you’d be working again.

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

#155

Post by tedivm »

tensor wrote: post #152
gsibble wrote: post #93

Earlier quoted context omitted.

I tell every engineer always to maximize their cash comp and every founder and investor always says "No, that's such a bad idea! Get more equity!" Yeah, because that is in your interests, not the engineer's.

There are more than enough stories about employees complaining that they didn't get a big enough payout on an acquisition or IPO to know that this isn't true. It all comes down to your risk reward preference. Sure, if you don't want to take a risk then look for a higher salary, and probably at a more established company because even if you have mostly salary and little equity a startup is still risky (and you're maki…

> There are more than enough stories about employees complaining that they didn't get a big enough payout on an acquisition or IPO to know that this isn't true.

That's exactly why it is true. If every person who held early stage stock walked out of those events happy then no one would recommend they focus on salary.

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

#156

Post by CalChris »

highfrequency wrote: post #121
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 th…

The August 2024 Series C round (last of 4 rounds) for $150M could dilute+smoke the preference stack for any earlier investors of which #2 nominally was basically the earliest class member of. C gets preferences+participation. B+A get preferences+participation+anti-dilution. Common gets what's left which apparently wasn't much.

Fiduciary duty is very low bar. Management has to act in the best interests of The Company, as in, as a whole. The company != #2. Lawyers are not taking this case.

I'm certain the accounting was done properly, maybe even by a Perl script, and this is how it penciled out. The question for us stiffs is what can we learn from it?

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

#157

Post by b_be_building »

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.

No, what Garry is saying DIRECTLY correlates with the outlined opportunity.

For his assertion to be right, 40 people need to get paid out at least 1 million. That's 1.67% of the company or 0.04% evenly. Its not hard for me to image that up to 10% of this cap table was distributed among the 40 people.

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

#158

Post by Dayshine »

doctorpangloss wrote: post #151
almostgotcaught wrote: post #147

Earlier quoted context omitted.

> Yah, over 50% it's going nowhere but expectation needs to consider how huge the win is even if it is lower probability. yes that's literally the definition of expectation value...... so ev = 1 bagillion * 0.0000000000000001 = ~0 hence you should absolutely not be taking higher equity/lower salary ever. hell i wouldn't even take that at a publically traded company if given the option.

The interesting thing going on is, stars align. The kind of person who has to think about this problem should take equity. The kind of person who would choose to take cash isn't going to be hired at the kind of VC backed business that will end up being worth something.

Yes, a company will do very well if it fills itself with naive employees who think that if they work insane hours and sacrifice their life for equity (which they'll never get an exit event for) will do very well.

But you don't want to be that employee...

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

#159

Post by reducesuffering »

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.

Hilarious that the best case positive spin highlighted is 40 people cleared at least $1m, so $40m out of $2.4 billion and $240m funding. He's praising "look 2% of the payout went to people in the company".

Nevermind that $1m over ~4 years is approximately the same as the differential other public tech co's pay. ($150k + equity at YC co, $350k TC at G/Amzn/FB/Uber/etc.) So when they tell everyone they should work at YC co's, they're saying they're proud when in the absolute best case scenario you make just as much as at the public co's they rail against working for.

If you want to come across as genuine, directly say how much % of the payout went to employees that weren't the founders. They won't, because it's likely 3%, which correctly sounds horrible

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

#160

Post by CalChris »

gsibble wrote: post #93
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 tell every engineer always to maximize their cash comp and every founder and investor always says "No, that's such a bad idea! Get more equity!" Yeah, because that is in your interests, not the engineer's.

There is another variable. Find better companies to work for. If you don't think this is a unicorn, don't work for them. If this is another stablecoin startup leveraging quantum AI then you deserve what you get, cash comp or no.
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