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Golden Handcuffs

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Re: Golden Handcuffs

#241

Post by KirillPanov »

nonameiguess wrote: post #131
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…

The more amusing (or disturbing thing) is that we have created an environment where, practically speaking, investors have less risk than everyone else. We were just hit with one of the largest global disasters of the past century last year and the immediate reaction was flood equity markets with $3 trillion to prop up financial markets. Owners of capital cannot lose. Even before these last few years of craziness, wha…

The Times 03/Jan/2009 Chancellor on brink of second bailout for banks

Re: Golden Handcuffs

#242

Post by triceratops »

lumost wrote: post #203
triceratops wrote: post #197

Earlier quoted context omitted.

Give out way more stock options, so that the pay is the same risk-adjusted.

Early stage startups should be showering employees with high risk equity and paying less cash compensation. This saves the company money and allows them to hire better talent. Having highly skilled engineers/bizops/designers/sales staff who are incentivized to make the company successful is a huge win.

Not just early stage startups. Any startup that's competing with FAANG for talent should be competitive with FAANG on compensation, on a risk-adjusted basis. Which means if there's a successful exit, everyone makes more than they would have than if they had just worked at FAANG. Early-stage employees should make a lot more, and later-stage employees should make somewhat more.

Re: Golden Handcuffs

#243

Post by alecbz »

bradlys wrote: post #224
alecbz wrote: post #208

Earlier quoted context omitted.

Stripe's last round was at like $100B. There's some growth being missed out on, sure, but I'm not sure for how many people that's gonna net out to be millions.

It could be a lot. 100B makes a lot of millionaires. Even at 10B, lots of millionaires are created unless all hires were made at high valuation. I was getting 1m/yr at 5B and I wasn’t even that early of an employee or high up. Expand that same company to 100B? Everyone would be getting millions out of it - even the lowest ranking employees.

? My point is that $100B is very high and Stripe's unlikely to see insane future growth. For the people who joined at $10B, yes, 10x their equity could be millions for them. But I think it's a lot less likely that Stripe will make it to $1T soon, so people joining now are unlikely to 10x.

Re: Golden Handcuffs

#244

Post by routerl »

heavyset_go wrote: post #89
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…

> 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…

Thanks for this comment. You've clearly outlined something I've been trying to convey for years, especially to people who read too much Taleb: "skin in the game" cannot be a purely financial concept, otherwise it fundamentally misunderstands the notion of "risk".

"Financial risk" is a proper subset of "calculable risk" which is a proper subset of "risk".

Re: Golden Handcuffs

#245

Post by [deleted] »

bradlys wrote: post #223
sombremesa wrote: post #220

Earlier quoted context omitted.

You’re right. The “system” is flawed. The poor knowingly enrich the wealthy and then whine about it. Seems to be happening more and more nowadays.

What is the alternative? Give up on all sports teams? Give up on all goods altogether? I think the point people are making is that the system in general is so rigged and there are so many bad actors that it’s basically impossible to find something else that is more ethically managed while getting a very similar good/service/whatever. Do I support the US giving Israel billions every year that then gets used to kill an…

[deleted]

Re: Golden Handcuffs

#246

Post by ozim »

zuhayeer wrote: post #181
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…

Agreed. Also C-levels get parachutes and a bunch of custom clauses to help ensure they are compensated even in some pretty lopsided scenarios.

Have you tried to look for a job after being terminated as a C-level or when startup you put in many years goes under?

Job market for IC is most of the time quite easy if you are technical, developers are usually spending 2 years at a company. I don't see C-level people switching companies on a whim and work one company for many years (not everyone is Elon Musk).

Once you have C-level on your CV good luck finding job again on lower level or the same level but different company. My boss is in it for life with current company, I can put my notice tomorrow and I walk away like I never worked there.

Re: Golden Handcuffs

#247

Post by lumost »

WJW wrote: post #234
michaelt wrote: post #230

Earlier quoted context omitted.

If you were promised 0.1% of the company and the company ends up worth $0, that's just the risk of taking equity. If you were promised 0.1% of the company then some financial shenanigans with 'dilution' or 'liquidation preferences' mean the company gets acquired for $200,000,000 and you don't see any of it, then you got taken for a fool.

Yes, if you don't know the rules of the game you will often lose because you did not see some (legal) move coming. Investing is the biggest game in the world and big boy rules apply. People who are unable or unwilling to learn how options and startup equity work should not take payment in equity, because they will get cleaned out as predictably as a drunk guy at a poker table.

At the end of the day, any business partner can choose to screw you. VCs/Investors have additional protection by way of retained legal council, clawback clauses and occasionally debt based positions and liquidity preferences.

An employee will simply never have access to that, the fact that it's been normalized for founders/investors to actively attempt to confuse and fool employees will simply drive skilled employees out of startups.

Re: Golden Handcuffs

#248

Post by einpoklum »

> We operate in an open market for talent.

Don't you just love it when you're treated as a commodity in a market?

> we ... expect them to earn their seat at Coinbase.

So, I'm working someplace, I'm always under threat of termination and have to prove, repeatedly, that my seat shouldn't be taken from under me.

Of course, the owners of coinbase don't have to earn their seats every year, or any year, right?

At this point I would make a derisive comment about Capitalism, but to be honest - the company's business is financial speculation with made-up currency, so I guess that's to be expected.

Re: Golden Handcuffs

#249

Post by ozim »

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…

Employees can put in notice and be gone if something they don't like is going on. C-level mostly not. There is a lot less job openings for C-levels...

When you are simple employee it is still better to get your paycheck and invest on your own in other companies. As a IC level employee mostly you can invest your paycheck freely. C-level guy before buying some stocks/investing probably has to go via lawyers/legal so he also is has lot less options for diversification of his investments.

You are also making such statement looking at successful companies, there are loads of companies and C-level people who were invested for life in it and company went under.

If you are IC you should get market rate salary, don't settle for less, invest it in other places. I don't accept equity as a compensation, I want market rate salary and the rest I will handle myself.

Let investors keep their risk, I don't want any of that, because you know not every company is successful.

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