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At Booming Toptal, No Stock for Employees or Investors

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Re: At Booming Toptal, No Stock for Employees or Investors

#161

Post by readams »

jedberg wrote: post #91
zawerf wrote: post #44

Earlier quoted context omitted.

I don't know if it's still true, but Netflix supposedly offers a really high base salary with no equity. I think the logic is that you can just buy the stock yourself with the higher salary if you believed in the company enough to want equity.

That's not exactly how it works. They give you a total comp number, and then you choose the cash/equity ratio yourself, which you can change each year. A lot of people chose the all cash option because they didn't understand there equity option, so they changed it to give everyone a little bit of equity regardless, but you can still opt to get extra equity in lieu of cash, and change that election every year. I think…

Netflix stocks are totally insane, as you're not really getting stock but instead a complex leveraged financial instrument in the form of an call option, that you have to pay for based on a Netflix estimate of the option premium.

Re: At Booming Toptal, No Stock for Employees or Investors

#162

Post by repsilat »

tedsanders wrote: post #111
charlesdm wrote: post #100

Earlier quoted context omitted.

Don't you pay tax when you actually get the equity? How is it different to getting cash and then just buying the stock?

It's different in that at Netflix the equity comes in the form of non-transferrable 10-year options which do not trade on any market. Furthermore, the option premium is estimated by Netflix at fixed at a constant value, rather than being set by a market. If it was straight stock, then yes it would be rather equivalent to getting cash and then buying stock right away.

> If it was straight stock, then yes it would be rather equivalent to getting cash and then buying stock right away.

I guess this is purely academic for Netflix, but one difference in other companies is that the grant is made ahead of time, and the stock price can rise or fall before it vests.

If (say) you expect the stock to rise with the market, and you expect the market to rise at 7% a year, you might also expect your income from vesting stock to also rise at 7% per year over the vesting period (typically four years) regardless of any raises or promotions.

I have heard of some companies adjusting subsequent grants based on changes in value of invested stock, though. I think policies there vary.

Re: At Booming Toptal, No Stock for Employees or Investors

#163

Post by seattle_spring »

m0zg wrote: post #94

"No stock for employees" in a startup actually sounds great to me. The approximate value of that part of the package is about zero, but few people realize that, and a lot of employees get taken advantage of when startups offer lower pay in exchange for minuscule (and dwindling through dilution) equity. Receiving competitive amounts of hard cash would be better for 99.9% of the people.

Is there any evidence that Toptal offered a competitive salary in relation to total compensation packages elsewhere? A good senior engineer can get $300k+ at FB or Google. Most startups would offer $160-$200k plus equity. If Toptal "wasn't playing that game," then surely they were offering $300k salaries?

Re: At Booming Toptal, No Stock for Employees or Investors

#164

Post by seattle_spring »

paggle wrote: post #144

I can’t feel bad for the employees. They signed knowing they weren’t getting any stock. What’s wrong with Netflix style all-cash compensation?

Netflix offers $400k - $600k salaries to engineers to be competitive with total compensation packages of companies that offer part salary and part stock.

Is there evidence that Toptal offered similar salaries? I wouldn't at all be surprised if they were closer to the $150k range, which is not competitive.

Re: At Booming Toptal, No Stock for Employees or Investors

#165

Post by Igelau »

aylmao wrote: post #113

Is striking not an option for Toptal's employees? I imagine, especially at the size the company is operating, it'd probably be a very effective way for employees to make their voice heard and have negotiating leverage. Plus, this seems to apply to all employees. Not even the co-founder had shares— this guy seems to be alone at the top.

Probably not. It sounds like they're scattered all over the place, with only heavily monitored company channels to contact one another (e.g. the Slack channel that shames people for spelling and grammar mistakes). There's no water cooler.

Re: At Booming Toptal, No Stock for Employees or Investors

#166

Post by im3w1l »

staticautomatic wrote: post #20
elsewhen wrote: post #15

Earlier quoted context omitted.

Luring employees with promises of equity and then not delivering sounds like a bait and switch.

But they weren't lured with the promise of equity. The promise was that they'd get equity if there was a subsequent funding round . The investors, especially, have zero right to complain.

I think it relies on people thinking there are only two possibilities. Bankruptcy or another round. They didn't realize success without a round could happen. It's a loophole essentially.

Re: At Booming Toptal, No Stock for Employees or Investors

#167

Post by Igelau »

koolba wrote: post #61
henryfjordan wrote: post #41

Earlier quoted context omitted.

Don't forget throwing yourself a little "shareholders meeting" every year!

Its common to do that right before the company funded annual holiday party.

Where you get recklessly drunk and wake up next to the CEO's spouse!

Re: At Booming Toptal, No Stock for Employees or Investors

#168

Post by im3w1l »

rahuldottech wrote: post #11

I am a teenager, and know nothing of starting or running a company. That said, from what I have read, is it not true that investors who hold equity constantly apply pressure to maximise profits, often leading to companies doing... unethical things? Whenever I've complained about a company being unethical or user-unfriendly, a friend of mine who lives in the US and knows more about this stuff always points out that be…

The investors got screwed. Why would they apply pressure to hurt themselves?

Re: At Booming Toptal, No Stock for Employees or Investors

#169

Post by baoha »

sidlls wrote: post #76
jameslk wrote: post #39

Earlier quoted context omitted.

I've had a few projects from them, one very large with a Bay Area client spanning a year. In the early days they would suggest a lower rate but now they change it to whatever I ask. I'm not sure what your rate is, but mine is competitive with Bay Area agency rates. Definitely better than Upwork (Elance) since I wouldn't be able to find the type of enterprisey clients I find on Toptal.

When I was doing it they claimed that $65 per hour was a "good" rate for the Bay Area, and constantly pressured me to lower my rate to that. There were a few clients with names anyone here would recognize, but they were looking on Toptal specifically to get cheap labor for poorly specified work. Most of the clients were more like the stereotypical E-lance "small business" (read: one-person operation looking for cheap…

> $65 per hour was a "good" rate for the Bay Area

It's like $130k/year, I don't think you can even find an average engineer at this price

Re: At Booming Toptal, No Stock for Employees or Investors

#170

Post by CalChris »

Even if this guy turns benevolent tomorrow morning and issues his options, they're screwed tax-wise. I can't think of anything I like about this, from the utter selfishness of the founder to a16z funding such a company with such bad terms for the employees. I'd like to know who the VC was and read an explanation from him.

I'm reminded of Steve Blank's article Startup Stock Options – Why A Good Deal Has Gone Bad

https://steveblank.com/2019/04/10/startup-stock-options-why-...

Discussion of said same:

https://news.ycombinator.com/item?id=19624164

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