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Some tech founders are getting huge pay packages

wsj.com

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Re: Some tech founders are getting huge pay packages

#31

Post by JumpCrisscross »

zd123 wrote: post #27
JumpCrisscross wrote: post #18

Earlier quoted context omitted.

> less power controlled by the investor class, the better Define "better." Because it apparently doesn't include reducing carbon emissions [1] or increasing returns [2]. Nor, for that matter, creating and supporting the forum you're on. [1] https://www.msn.com/en-US/news/topstocks/chevron-plans-big-l... [2] https://corpgov.law.harvard.edu/2016/12/23/a-successful-case...

Activist investors are a small subset of all investors. Most investors are just out there to ride the business cycle to the top. Picking and choosing examples that do not generalize to most investors does not refute his point.

> Activist investors are a small subset of all investors. Most investors are just out there to ride the business cycle to the top.

There is research on dual-class firms. "Excess insider control is associated with decreased overall [corporate social responsibility] ratings," with the "community and employee dimensions...display[ing] the strongest negative association with excess insider control" in firms not in "the top decile or quartile of firms with respect to their cash and cash equivalents, operating cash flow, and free cash flow" [1].

Outside the limited case of technology company founders and family-owned firms, the evidence is strongly in favor of investor-controlled companies over the alternatives in virtually every dimension of "better."

[1] https://www.sciencedirect.com/science/article/abs/pii/S02784...}

Re: Some tech founders are getting huge pay packages

#32

Post by trjordan »

The interesting thing to me is that this indicates that investors largely believe founder-CEOs are the best CEOs for the company, long term. That’s new.

I suspect that part of this is due to extended timelines to go public. Bezos never got another grant after IPO, but he owned 41% of the company at IPO. Today, it’s more typical for even successful founders to end up with 5%-15%. Taking dilution in the C/D/E rounds and going public at $3b is a different beast than going public after the B (with a huge ownership stake) and growing a public company from $60m to $3b. It makes sense that the successful CEOs who gave more away in dilution end up with end power to demand it back post-IPO.

Re: Some tech founders are getting huge pay packages

#33

Post by OJFord »

random_savv wrote: post #30
chrisseaton wrote: post #17

Earlier quoted context omitted.

> The article seems to speak of stock awards and not salary, despite what the title says. Doesn't the title say 'pay package'? Stock awards are part of your pay package. Where did you read 'salary'?

The way it's phrased, it sounded like something that is the opposite of owning the company, which implies salary. You are right that it didn't specifically say salary.

I would object to 'paid' sure, but to me 'package' immediately implies (a focus on) not cash. Even for non-exec employees in sectors where shares would be highly unusual/not happen, it's used to mean the whole deal, benefits, pension, etc.

Re: Some tech founders are getting huge pay packages

#34

Post by 55555 »

cryptica wrote: post #20

What we have now is essentially feudalism except instead of titles (king, queen, prince, duke, earl, knight, bishop, ...) everyone is assigned some numbers (net worth, salary). The numbers of lower ranking people are decided by higher ranking people and can be overruled only by even higher ranking people. Instead of rank being determined based on proximity to the king, it is determined based on proximity to politicia…

I upvoted you for an interesting analogy which certainly does hold significant truth.

But you're actually arguing that the percent of entrepreneurs who are rent-seeking has actually increased over the past 50 years? I really doubt this is true. I especially doubt it over the past few hundred years. At least on that scale, the world seems to be getting more meritocratic, not less. But heck, I don't really know.

You certainly have a point. It's hard to not "make millions" when you're best friends with a top VC, kleptocrat, or even any politician. Read any book about the third world, or any allegations in the first world, and this becomes obvious.

But there does seem to be a lot of meritocracy/business opportunities left for the rest of us. Have you ever started a business?

Perhaps a healthier way to look at this is that, if you really wanted to, you could network your way up there. Because even taking your worldview as truth, you certainly can.

Re: Some tech founders are getting huge pay packages

#35

Post by refurb »

random_savv wrote: post #4

The article seems to speak of stock awards and not salary, despite what the title says. "Today’s Tech Founders Don’t Just Own the Company. They’re Also Getting Huge Pay Packages." How are these stock awards different to owning the company? If anything, those stock awards sound less attractive as they should be options at a very high valuation? In effect, isn't this the same as later VCs reallocating the cap table in…

I found this confusing too.

It’s not pay, it’s a stock grant or options grant. They are also selecting for amazingly successful companies AND likely companies that didn’t have to raise a ton of money (this dilute founder equity).

It shouldn’t be surprising the founders end up with a big % of equity and massive payouts.

If the companies had failed and the 20% equity was worth $0 and the founder wasn’t getting paid, not sure WSJ would do an article called “Tech founders are left with almost nothing to show for years of work”

This seems similar to a headline that says “Winners of lottery jackpot walk away with huge payouts”. I mean yeah, you only focused on the biggest winners.

Re: Some tech founders are getting huge pay packages

#36

Post by lr4444lr »

iamstupidsimple wrote: post #14
batty_alex wrote: post #9

So… Tech founders are now following the Facebook model: non-voting shares, enriching themselves, keeping most of the power Everyone is done pretending to be the “good founder,” that ship seems to have sailed

The less power controlled by the investor class, the better.

Honestly. Some people are just impossible to please short of every company becoming a completely worker owned cooperative.

Re: Some tech founders are getting huge pay packages

#38

Post by lngnmn2 »

Why not. My favourite example is Jane Street, of course, especially when they realised that the language is high-level and pragmatic.

On the other side there is over-complicated and bullshit-infested IOHK projects which failed to deliver for years.

Tech could matter a lot.

Re: Some tech founders are getting huge pay packages

#39

Post by cryptica »

55555 wrote: post #34
cryptica wrote: post #20

What we have now is essentially feudalism except instead of titles (king, queen, prince, duke, earl, knight, bishop, ...) everyone is assigned some numbers (net worth, salary). The numbers of lower ranking people are decided by higher ranking people and can be overruled only by even higher ranking people. Instead of rank being determined based on proximity to the king, it is determined based on proximity to politicia…

I upvoted you for an interesting analogy which certainly does hold significant truth. But you're actually arguing that the percent of entrepreneurs who are rent-seeking has actually increased over the past 50 years? I really doubt this is true. I especially doubt it over the past few hundred years. At least on that scale, the world seems to be getting more meritocratic, not less. But heck, I don't really know. You ce…

Yes I started many businesses. My personal experience matches my comment exactly.

All the ventures where I created value didn't earn me anything, even though one of these ventures was very popular. I only started to earn passive income after I became laser-focused on making money and playing internal politics (I got involved in cryptocurrency). But even then, I could see people who were truly 'crony' succeed by producing even less value. Some people in my cryptocurrency community earn twice as much as I do and they produced absolutely nothing. On the other hand me and my team produced a lot of useful tools which would make waves if people knew about them but the project founders don't promote them. They pretend that me and my team don't exist. Not only did we get 0 funding from project founders in spite of constantly delivering quality products, the founders gave funding to blatant scam projects instead of us; almost as if to rub it in my face. The whole story is long and disturbing. Those people in my crypto community who have been following us closely are quite surprised about how we're being treated. Someone from community was so disillusioned by the situation, they donated $20k of crypto to me before quitting the project (yes someone felt so bad about my situation that they gave me $20k for free). At least it's all playing out in a very public way so I don't feel so alone. It's just very awkward.

We also tried applying to various incubators and reaching out to investors (some outside of cryptocurrency space). Sometimes they seem excited about our project but they alway seem to back out at the last minute for seemingly no reason. It feels as if I'm blacklisted and the tech elite all talk among themselves to decide who to give funding to. Our team has a great track record in spite of never receiving any funding from any major investor so it doesn't make sense why investors are treating us so badly and it feels so coordinated. I used to get more opportunities in the past even though I was far less talented and than I am now and had very little track record. I think the problem is my online activism.

I suspect all my online comments are liked back to my real identity somehow.

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