Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Golden Handcuffs

avc.com

Post reply on HN
Print view View original

161–170 of 274 posts

Re: Golden Handcuffs

#161

Post by alisonkisk »

daveidol wrote: post #123
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…

> When a business goes under, the employees have just lost their abilities to feed themselves, keep a roof over their heads, see doctors, buy medicine and provide for their families. Yes, but that's always the risk of working at any company (and it's a risk the investor may also have if the company goes under). You can typically just get a new job and get these things back. I think an even more compelling argument he…

Only of they are paid partly in equity. If they are getting a lower comp package than FAANG because of intangibles they value highly (perhaps developing skills FAANG will pay more for later) that's their choice.

Re: Golden Handcuffs

#162

Post by alecbz »

hinkley wrote: post #25
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…

I feel like we should have PSAs on LinkedIn that tell you this every time you mark yourself as 'looking': If the Board and/or the VCs ever get uncomfortable with the % of the company that is owned by ICs, they will just print more shares of stock. And don't get me started on preferred shares. Has any IC ever gotten those?

Preferred shares were explained to me once this way:

Imagine I give you $1M for 10% of your business. You now own 90% of a business that has $1M in assets. You easily sell the whole business for $900k (giving away $100k to the buyer, basically), give me back my 10% * $900k = $90k, and keep the remaining $810k for yourself.

Preferred shares are a mechanism for preventing you from immediately liquidating my capital. An investment of time can't be liquidated as easily, so preferred shares are generally only for those making liquid investments.

---

It seems there are probably other mechanisms for dealing with this problem, but this explanation makes _some_ sense.

Re: Golden Handcuffs

#163

Post by alisonkisk »

alecbz wrote: post #159
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.

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.

This is a Marxist labor theory of value argument, disregarding market forces. For a different supply-demand function, labor could get paid far more than investors (imagine a 0 interest rate environment while inflation is happening.)

Re: Golden Handcuffs

#164

Post by alecbz »

I feel like you only need to read into this a _tiny_ bit to see how weird it sounds:

> It sucks that people might want to leave a company but won't because of how well they pay, so we decided to stop paying so well! Problem solved!

It'd be one thing if the comp was adjusted somehow to make up for the loss of extra upside. (Some companies switching to 1-year grants seem to be saying they're going down this route). But just cutting the grant length is literally just a comp decrease. (Which, of course, makes it easier to leave).

Re: Golden Handcuffs

#166

Post by alecbz »

alisonkisk wrote: post #163
alecbz wrote: post #159

Earlier quoted context omitted.

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.

This is a Marxist labor theory of value argument, disregarding market forces. For a different supply-demand function, labor could get paid far more than investors (imagine a 0 interest rate environment while inflation is happening.)

Well, sort of. There's an argument to be made that people should realize how much better a deal VCs are getting and stop settling for worse ROI. Part of the problem is exactly that supply is high, possibly because of a lack of knowledge/negotiation leverage.

Re: Golden Handcuffs

#167

Post by [deleted] »

whoisjuan wrote: post #155
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.

[deleted]

Re: Golden Handcuffs

#168

Post by patrickmn »

valdiorn wrote: post #137
analyst74 wrote: post #122

Earlier quoted context omitted.

This is no different from how Amazon does targeted compensation, where rising stock price means you get less/no refresher and raises, or all-cash comp at Netflix. It's catering to more risk-averse candidate pool.

Having worked somewhere where I had a large deferred bonus, which I had to walk away from after the company turned hostile very quickly, I'd much, MUCH prefer to get my bonus paid out at the end of each year, vs. having it deferred, even if I have to take a hit on overall comp instead. You just can't estimate how compatible you and your employer will be 4 years in the future.

never even heard of that kind of bonus. it sounds like it's designed to work exactly this way.

Re: Golden Handcuffs

#169

Post by alecbz »

smilekzs wrote: post #87

From the linked article on Coinbase's compensation ( https://blog.coinbase.com/how-coinbase-is-rethinking-its-app... ): > Because our standard offers are world-class, we are officially eliminating negotiations on salary and equity from our recruiting process. > We are OK if we lose some candidates due to this decision — the best candidates for Coinbase are those who are looking for a highly competitive package and ar…

On the one hand I want to agree, having to trust that a company will Definitely For Sure pay you more once you've earned it is a really hard pill to swallow.

But on the other hand, it does seem off for so much of your compensation to be based on how well you perform in a five hour interview or how well negotiate it as opposed to your actual work.

Re: Golden Handcuffs

#170

Post by tomnipotent »

chris11 wrote: post #151
dahart wrote: post #148

Earlier quoted context omitted.

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.

Because there are considerably more jobs outside of FAANG then within it.
Post reply on HN