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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

#161

Post by quickthrowman »

andrewmcwatters wrote: post #83
loire280 wrote: post #79

Earlier quoted context omitted.

Sure, but if you're 10+ years into your career and have been financially conservative (i.e. have a positive net worth), a lump sum of $1m could be enough to retire to a lower-cost location.

Hell, roughly $600,000-800,000 is enough to lean FIRE, the last time I checked.

If I retired at 40 I don’t think I’d want to remove more than 2% a year from the principal amount, which is.. $12,000-$16,000 a year.

How is that possible? Even with a fully paid off house, you still have property taxes, utilities, maintenance.

Even 4% a year which is recommended for a 30 year retirement, you’re only taking out $24,000-$36,000 a year.

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

#163

Post by stouset »

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…

I encourage you to put yourself in that person's shoes. It is never a simple decision.

Yes, there is plenty of opportunity to exercise when valuations were low. But that also means you're buying before there's clear evidence that the company will be successful. It also still means you're out the cash to exercise the options before there's a market for those options and before you know that the company will actually go public and not crater for whatever reason. You also have no idea how much your shares will be diluted.

Yes, exercising on day 1 optimizes your outcome in the case of a successful exit. But it is absolutely comically a poor choice for the 95% of cases where your equity ends up being worth next to nothing.

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

#164

Post by dilyevsky »

mgfist wrote: post #136
georgemcbay wrote: post #127

Earlier quoted context omitted.

> 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.

There's other gotchas too. Ratchets, liquidation preferences, restructurings (recapitalizations) etc etc There's many opportunities for VCs and founders to screw you over. And that's assuming things go well enough for that to be an option lol

My 2c is these are almost always a consequence of the company not being a good business. Well, sometimes you get asshole founders/board members too that's not as common as the company just being an absolute money pit. So instead, I'd focus on asking about business fundamentals/strategy - if the company is money printer, everyone is likely going to do well financially

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

#165

Post by gjm11 »

usaar333 wrote: post #142
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…

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…

If I'm understanding your logic correctly, I think it's flawed.

It seems like you're saying: if you choose to work for a startup rather than a bigger company, it must be because you think their equity is valuable, so you should prefer to take more of your pay in the form of equity if you can.

But there are plenty of other reasons for choosing to work at a startup.

You might have chosen to work at that particular startup because the work interests you. You might prefer startups to bigger companies because they have less bureaucracy and can do (some) things faster. You might prefer startups to bigger companies because there are fewer layers of management above you and so you have a better view of why you're doing what you're doing.

Even if you're only in it for the money, I don't think your argument is valid, though this is more of a nitpick: it might happen that a startup particularly wants you or at least your skillset and is willing to pay more for it than any bigger company you've found. You might think the startup is likely to fail, but still prefer being paid twice as much. (This is kinda nitpicky because I don't think this situation is super-common, unlike the other ones I mentioned above.)

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

#166

Post by andy99 »

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…

Yes - equity should be an incentive to contribute the the company's success, and partial compensation for the risk of going to a startup. One should value it at precisely $0 in terms of life planning.

This becomes truer and truer the more of an employee and the less agency over the company's choices you have, but generally if you're not a co-founder (founding engineer doesn't count) equity traded off against salary is someone scamming you.

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

#167

Post by ProfessorLayton »

stouset wrote: post #163
ProfessorLayton wrote: post #76

Earlier quoted context omitted.

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…

I encourage you to put yourself in that person's shoes. It is never a simple decision. Yes, there is plenty of opportunity to exercise when valuations were low. But that also means you're buying before there's clear evidence that the company will be successful. It also still means you're out the cash to exercise the options before there's a market for those options and before you know that the company will actually g…

I'm speaking from experience. Yes, it means buying in before there's clear evidence of success, that's the risk! The lower the risk the lower the reward.

Waiting until the company is worth billions of dollars before buying its stock is one of several options available, and each has its own risk/reward profile.

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

#168

Post by almostgotcaught »

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.

Man what level of weird delusion is this? Windsurf was an app for code completion not interstellar space travel lol.

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

#169

Post by throwawayq3423 »

Scoundreller wrote: post #92
throwawayq3423 wrote: post #77

Earlier quoted context omitted.

Or in any big city tbh.

Cleveland not big enough for you???

Cities like Cleveland have reasonable pricing built into their appeal. Without it, there isn't much left.

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

#170

Post by CPLX »

chambers wrote: post #89

https://x.com/ahmaurya/status/1948491614160122308 Garry Tan posted "sounds like a tweet that cost $20M" which he later deleted. Smells like a strong bias against employees in favor of management and founders.

When you were younger and learned about history did you form a mental image of what kind of people the famous financiers, capitalists, and robber barons were?

These are those people. Oil and railroads were high technology too.

They want you to think they’re Lazlo Hollyfield, but they’re Daniel Plainview.

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