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New Standard Deal

blog.ycombinator.com

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Re: New Standard Deal

#32

Post by jasode »

stephenhuey wrote: post #30

I'd love to see YC or someone release a definitive recommendation on fair equity distribution among the employees of the company. Maybe there'd be a few variations on it to handle differing scenarios, and even if it's really hard to have a one-size-fits-all I think it'd be similar to their SAFE note which tries to offer a pretty good deal to all involved.

One of your favorited links is "Holloway Guide Equity Compensation"[1] and it has a section of typical percentages. It also mentions some higher percentages for employees which are not typical.

As for "fairness", it's going to ultimately be in the eye of the beholder. You could give employee #12 a 5% stake (which is CEO level at other startups) and yet that employee still feels it's "unfair" even it's explained that he's getting more than anybody else in SV. It's human nature for the employee to think he's worth more, and for the employer to think he's worth less -- and therefore, they negotiate.

[1] deep link to the employee ownership percentages: https://www.holloway.com/g/equity-compensation#_there_are_no...

Re: New Standard Deal

#34

Post by snowmaker »

adamzerner wrote: post #29

> But startup costs have undeniably increased over the past few years. We thought a $30K increase was necessary to help companies stay focused on building their product without worrying about fundraising too soon. I didn't realize that this was true. I'm interested in hearing more about what has caused the increase in startup costs.

Primarily cost of living increases for the founders. Things like hosting and other services have gone down.

Re: New Standard Deal

#36

Post by stephenhuey »

jasode wrote: post #32
stephenhuey wrote: post #30

I'd love to see YC or someone release a definitive recommendation on fair equity distribution among the employees of the company. Maybe there'd be a few variations on it to handle differing scenarios, and even if it's really hard to have a one-size-fits-all I think it'd be similar to their SAFE note which tries to offer a pretty good deal to all involved.

One of your favorited links is "Holloway Guide Equity Compensation"[1] and it has a section of typical percentages. It also mentions some higher percentages for employees which are not typical. As for "fairness", it's going to ultimately be in the eye of the beholder. You could give employee #12 a 5% stake (which is CEO level at other startups) and yet that employee still feels it's "unfair" even it's explained that…

Thanks for reminding me! I've thought about this a lot from time to time, and I realize I forgot to mention something else besides just the equity distribution.

I've heard plenty of stories of nasty ways companies wrangle hard-earned equity out of employees. I think it'd be great for YC or someone of similar stature to encourage companies to use very standard terms to avoid a lot of the unkind ways employees get screwed. One example would be terribly short windows for exercising options.

Re: New Standard Deal

#37

Post by parhamn »

adamzerner wrote: post #29

> But startup costs have undeniably increased over the past few years. We thought a $30K increase was necessary to help companies stay focused on building their product without worrying about fundraising too soon. I didn't realize that this was true. I'm interested in hearing more about what has caused the increase in startup costs.

Well as far as I can tell the $120k was set in 2014. So accounting for inflation alone you're looking at a $7k increase.

Extract the more pertinent components of that which matter more to typical SV startups (like cost of employment, rent in expensive metropolitan areas, etc) and you end up with at least 30k.

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