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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

#31

Post by mianos »

hackermeows wrote: post #16

why would anyone work in startups as early devs anymore. Tell me what is the upside? There seems to be only downsides. Startup Fails , you loose - Gets acquired - you loose What is the motivation to perform .

If you want to write new code and have a lot of influence over the overall implementation instead of fixing bugs on a years old steaming pile of tech debt.

Not all places with large existing codebases are that bad, but if you are experienced, it can be very personally satisfying doing something well before it has degraded over time.

I have worked in quite a few. One is a household name down here in Australia. I was the first engineer with the two founders. I worked 2 years 24/7 for half the salary I got when I left. I'll never get my money back but that's ok as I loved the time there.

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

#32

Post by xkcd-sucks »

lovich wrote: post #19
TrackerFF wrote: post #7

Financially speaking, is it even worth joining a startup anymore? Compared to just going to any of the big companies. The latter will likely pay you more, with less risk involved. Seems like the best shot is to strive toward becoming financially independent, and then just go for the startup route and follow your passion. If you it doesn't work out, no big deal - if things turn out great, you'll just be even better of…

Has it been worth it in a while? This is a legitimate question as I am on the east coast and wonder if it differs from the west coast environment. At least in my anecdotal experience, everytime I’ve entertained a startups offer in the past decade it’s been either something like engineer #1, 3% equity and no you cannot see the cap table or other agreements with investors, or something like 10k units at 25 a share when…

Oh also there is the trick where the startup gets sold a little under its strike price and the execs each get signing bonuses > book value of company as sold

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

#33

Post by givemeethekeys »

marssaxman wrote: post #20
TrackerFF wrote: post #7

Financially speaking, is it even worth joining a startup anymore? Compared to just going to any of the big companies. The latter will likely pay you more, with less risk involved. Seems like the best shot is to strive toward becoming financially independent, and then just go for the startup route and follow your passion. If you it doesn't work out, no big deal - if things turn out great, you'll just be even better of…

Was there ever a time when you could reasonably expect to make more money by joining a startup? That has never been the case so far as I am aware, and I'm currently on my seventh tour through startup-land...

It feels like it is worse now than it used to be. Back in 2010, you would be giving up a nice salary but not a much nicer salary by working at a startup.

So, startup base compensation hasn't kept up, and the career and financial risk of working for one has gone up due to higher interest rate and higher open-market asset prices.

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

#35

Post by nocoiner »

shawabawa3 wrote: post #29
nevon wrote: post #12

I must be misunderstanding what he is saying, but I can't figure out what. Once his shares have vested, they are his. What entity forced him to sell his shares for 1% of what they are worth and how could they possibly do that?

Google did a weird thing where they poached windsurf employees, licensed their tech and hired the CEO and upper management, leaving a shelled out company behind Looks like employees were given an exploding offer to join Google and sacrifice windsurf shares at a low valuation, or stick with windsurf If you stuck with windsurf you then joined cognition in a later acquisition

Wow. How did the Windsurf investors feel about that?

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

#36

Post by antonymoose »

givemeethekeys wrote: post #33
marssaxman wrote: post #20

Earlier quoted context omitted.

Was there ever a time when you could reasonably expect to make more money by joining a startup? That has never been the case so far as I am aware, and I'm currently on my seventh tour through startup-land...

It feels like it is worse now than it used to be. Back in 2010, you would be giving up a nice salary but not a much nicer salary by working at a startup. So, startup base compensation hasn't kept up, and the career and financial risk of working for one has gone up due to higher interest rate and higher open-market asset prices.

I did a startup circa 2010, early number employee, given our (failed) attempt and my equity I would have conservatively walked away with a $500k sum had the Founders’ plans worked. That would have bought me a fine house in the nicest part of town with cash to spare.

Having done two more, the best outcome I’ve seen is a 50k post tax payoff for 5 years of shitty startup conditions. Great, I got a down payment on a house now worth 800k.

So that reason the best play, if you’re not a founder doings cash out early, is to just play it safe in a big job and dock money away in equities and real estate.

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

#37

Post by cyanydeez »

crazygringo wrote: post #30
shawabawa3 wrote: post #27

Earlier quoted context omitted.

You have to know some of the background Google poached windsurf employees and licensed their tech, paying out billions to upper management but apparently offering a fraction of the value of shares This employee chose to stick with windsurf instead of moving to Google Windsurf was then acquired by cognition for an unspecified but probably quite low amount So this employee is now at cognition

Thank you, that helps! But so did he keep the shares or take the payout? Is the 1% payout an accurate reflection of Windsurf's value after having lost so many valuable employees? And why didn't he take the Google job? Was the 1% contingent on taking the Google job? But how could it be, since Google doesn't own Windsurf/Cognition? But if it did somehow, did it have a higher paycheck to compensate? Or was it contingent…

the board strokes is: Google should have bought the company. They didnt. They basically bought the employees. They call it a "acquihire". Without these employees, the real value of the company fell, allowing cognition to buy the company. Had the employee taken employement with Google, it's likely their shares in windsurf would have been voided, or otherwise not vested. Who knows, these private corporations are often doing a bunch of shady things to dilute share ownership.

In a private company, there's no "real" public valuation of a share, so an employee who has some kind of stake really only has two real options to dump their shares, either through a company buying it (cognition) or the company going public. Without either of these events, it's really difficult, even if there's no contract about it, to sell the shares.

So the value of the company took a nose dive in the private market through the hiring of windsurfs principals, and the employee either kept his shares and went with the company, or took a job with google. So the two values are:

1. Stay with Cognition and retain the private market shares of Windsurf and salary

2. Leave cognition, forfeit(?) the shares, get whatever salary google offered

So those are the payouts being compared.

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

#38

Post by BoiledCabbage »

hackermeows wrote: post #16

why would anyone work in startups as early devs anymore. Tell me what is the upside? There seems to be only downsides. Startup Fails , you loose - Gets acquired - you loose What is the motivation to perform .

> There seems to be only downsides. Startup Fails , you loose - Gets acquired - you loose What is the motivation to perform

You get to make a nice payout for a VC. And isn't that all of our life goals?

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

#39

Post by crazygringo »

cyanydeez wrote: post #37
crazygringo wrote: post #30

Earlier quoted context omitted.

Thank you, that helps! But so did he keep the shares or take the payout? Is the 1% payout an accurate reflection of Windsurf's value after having lost so many valuable employees? And why didn't he take the Google job? Was the 1% contingent on taking the Google job? But how could it be, since Google doesn't own Windsurf/Cognition? But if it did somehow, did it have a higher paycheck to compensate? Or was it contingent…

the board strokes is: Google should have bought the company. They didnt. They basically bought the employees. They call it a "acquihire". Without these employees, the real value of the company fell, allowing cognition to buy the company. Had the employee taken employement with Google, it's likely their shares in windsurf would have been voided, or otherwise not vested. Who knows, these private corporations are often…

Thank you very much! So it seems like the crux of the issue still isn't clear, because:

> Had the employee taken employement with Google, it's likely their shares in windsurf would have been voided, or otherwise not vested.

That doesn't make any sense. The shares are already vested, they legally own them. How could they have been voided?

The idea of joining Google resulting in a "1% payout" doesn't seem to make any sense? Why would there even be any payout at all? And is it mandatory? How could it be?

And then it also doesn't even seem obviously terrible. If the valuation of Windsurf tanked, then is keeping the shares (now presumably converted to Cognition shares at a rate determined by the purchase?) even a better financial outcome?

I agree that Google acquiring the talent rather than buying the company seems shady. But the "1% payout" still isn't making much sense here and needs a lot more details. Because it's still not even clear if the payout is from Google (huh?) or Cognition (why?), or how it could be a mandatory condition of employment at Google.

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

#40

Post by stouset »

crazygringo wrote: post #39
cyanydeez wrote: post #37

Earlier quoted context omitted.

the board strokes is: Google should have bought the company. They didnt. They basically bought the employees. They call it a "acquihire". Without these employees, the real value of the company fell, allowing cognition to buy the company. Had the employee taken employement with Google, it's likely their shares in windsurf would have been voided, or otherwise not vested. Who knows, these private corporations are often…

Thank you very much! So it seems like the crux of the issue still isn't clear, because: > Had the employee taken employement with Google, it's likely their shares in windsurf would have been voided, or otherwise not vested. That doesn't make any sense. The shares are already vested, they legally own them. How could they have been voided? The idea of joining Google resulting in a "1% payout" doesn't seem to make any s…

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 company loses its value before you can sell, you’re still out those taxes with zero recourse. It’s an enormous risk.

If you leave a company with vested but unexercised shares, you generally forfeit them.

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