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Startup CEOs who gave up fortunes to turn employees into millionaires

businessinsider.com

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Re: Startup CEOs who gave up fortunes to turn employees into millionaires

#31

Post by ahomescu1 »

karmelapple wrote: post #24
ahomescu1 wrote: post #10

Earlier quoted context omitted.

> Startup employees work hard, but the founders still bear most of the risk and responsibility. As much as I am a fan of startups and their founders, this statement seems excessive. In many cases, the financial risks are passed on to either angel investors or VCs (there are some startups funded by the founders' own savings or mortgages, which is a big risk, but there are still many that aren't). I don't see any signi…

How about bootstrapped startups?

Those are what I meant when I mentioned founders' savings, and I agree that they are risky:

> there are some startups funded by the founders' own savings or mortgages, which is a big risk

EDIT: Sorry, I now realize you meant startups that grow from their own income (or am I still misunderstanding?). Those don't seem very risky to me, since there's not much high gains/high losses potential to them.

Re: Startup CEOs who gave up fortunes to turn employees into millionaires

#32

Post by jacquesm »

kjs3 wrote: post #16
teej wrote: post #5

Earlier quoted context omitted.

I don't think you are giving these founders enough credit. Startup acquisitions, not unlike fundraising, can be very emotional. Acquirers can go from hot to cold very quickly if they hear the wrong thing or get the wrong vibe. The founders went to great lengths to structure the deal in a way that compensated their employees like this. It's likely that they put the entire deal at risk to do so. That, in my mind, stron…

per se : by or in itself or themselves; intrinsically. I understand that some (most) of these guys are, in fact, doing this because it's the right thing to do and they are, in fact, that invested. I merely wanted to point out, counter to the tone and implication of the article, that's not the only reason to do this and they were still handsomely rewarded for the risk they took. Conversely, I want to point out to anyo…

Sure they're smart businessmen (and women), they built awesome companies and successfully negotiated substantial exits. If they weren't smart then neither of those would have happened in the first place! But in the article there are some very good examples of situations where most C level teams and founders would have happily made off with the loot without sharing any of it with their co-workers, as one CEO in the article put it 'the ones they went to war with'. And there would be nothing or nobody to stop that from happening, and because this is 'normal' nobody would have likely even said anything about it beyond some grumbling at the watercooler and a maybe slightly higher turnover directly post acquisition.

So I read their generosity as the first driver to do this, and that there maybe is another reason is possible but I've yet to see a repeat successful team which would allow the conclusion to be that the second reason is also a motivator.

They're doing good, and good by their people, and that's about it. No need to search for an ulterior motive.

And there are very few if any negative consequences to not doing 'the right thing' with respect to your team, because that - unfortunately - is business as usual. These are the exceptions, definitely not the rule. I hope it becomes more common though.

Re: Startup CEOs who gave up fortunes to turn employees into millionaires

#33

Post by taylorbuley »

georgemcbay wrote: post #11
clamprecht wrote: post #8

The article says: > There’s a startup in New York everyone talks about, and the things they say aren't very nice. The startup sold for ~ $80 million and the founders got rich. But, as the rumors go, no other employee made more than $50,000. Does anyone know which startup they are referring to? carrentals.com? something else?

Hunch fits the location and approximate acquisition price, but I can't speak to how screwed over the non-founders were (or weren't). Not sure that "everyone talks about" it (though that applies even more so for carrentals.com, IMO). Maybe they meant "everyone in NYC talks about it".

With Chris Dixon being praised in the piece, I have trouble believing the writer had Hunch in mind.

Re: Startup CEOs who gave up fortunes to turn employees into millionaires

#35

Post by ryandrake »

JoshTriplett wrote: post #19
x0x0 wrote: post #6

Earlier quoted context omitted.

And great employees can always go to {google, fb, twitter, microsoft, salesforce, etc} and get paid $250-$300 / year in cash or cash equivalents, instead of $125-$150 plus lottery tickets. In fact, I remember reading that round A is the worse time for an employee to join a startup: the large grants are gone, but the business isn't derisked, so your lottery tickets still have shit ev.

> instead of $125-$150 plus lottery tickets. If you're working at a startup and getting $125-150k, you're lucky. Many people work at startups for half of that or less, plus those lottery tickets.

And, if you're working at a non-startup and getting $250-$300K, you are very, very lucky. That's far, far outside the realm of what I would consider believable, even in Silicon Valley. I may be a grossly underpaid sucker, but in my 15+ years of experience I've never seen even close to that. Jeez!

Re: Startup CEOs who gave up fortunes to turn employees into millionaires

#36

Post by vladimirralev »

vinceguidry wrote: post #4
erobbins wrote: post #3

It's sad that this behavior is unusual enough to be noteworthy.

This comment reads as entitled to me. Startup founders have an insane number of things on their plate, and that list just keeps growing and growing. Startup employees work hard, but the founders still bear most of the risk and responsibility. What really needs to happen is for new ways to organize startups to distribute the risks and responsibilities better, so that it's not up to the goodness of the founder's heart…

What do you mean by founders bear most of the risk and responsibility? Most founders are not personally liable and haven't put significant amount of their own money in the company. At most they get some rough talk from the investors/customers, just like an under-performing employee would. They just stand to lose some of their time that could have been spent in more profitable employment.

Re: Startup CEOs who gave up fortunes to turn employees into millionaires

#37

Post by jacquesm »

ashbrahma wrote: post #26
jacquesm wrote: post #12

Earlier quoted context omitted.

That very much depends on the contract. I have said this before and I'll repeat it on the off chance that it will save someone's bacon one day: insist on accelerated vesting clauses in change of control situations.

Is it easy to negotiate a change or add an acceleration clause in the options grant? Seems like those docs are set in stone and very hard to change without board approvals etc.

Then you go somewhere else. Nobody forces you to take a job with extra risks and a contractual situation that allows others to pull the rug out from under you when the pay-off materializes.

Really, the only potentially bad contracts are the ones that you've signed. So as long as you haven't signed you have negotiation room and if your choice is between being paid 'market rates' versus being paid 'half of market rate + options' and those options are subject to change without notice then you're just setting yourself up for being hurt if you chose the second.

Nothing is set in stone, that's more a matter of self-confidence and knowing when to walk away.

Re: Startup CEOs who gave up fortunes to turn employees into millionaires

#38

Post by Arjuna »

Although Woz wasn't a CEO... for those that don't know about this, I thought you would find it interesting [1]:

"And when Jobs (in the movie, but really a board does this) denied stock to the early garage team (some not even shown) I'm surprised that they chose not to show me giving about $10M of my own stock to them because it was the right thing. And $10M was a lot in that time."

[1] Woz's entire post is on this page:

https://plus.google.com/+CarmsPerez/posts/GnVTvQNgvpf

Re: Startup CEOs who gave up fortunes to turn employees into millionaires

#39

Post by jacquesm »

ryandrake wrote: post #35
JoshTriplett wrote: post #19

Earlier quoted context omitted.

> instead of $125-$150 plus lottery tickets. If you're working at a startup and getting $125-150k, you're lucky. Many people work at startups for half of that or less, plus those lottery tickets.

And, if you're working at a non-startup and getting $250-$300K, you are very, very lucky. That's far, far outside the realm of what I would consider believable, even in Silicon Valley. I may be a grossly underpaid sucker, but in my 15+ years of experience I've never seen even close to that. Jeez!

I have some first hand proof that google pays not-all-that-senior engineers that kind of money and more.

So if you're good then you may consider moving to one of the bigger players for a substantial increase in pay.

Re: Startup CEOs who gave up fortunes to turn employees into millionaires

#40

Post by discardorama »

Beyond a certain amount of money (I'll throw out a number and say, $10M), the incremental gain is not much. The change in your lifestyle in going from $0M to $5M is huge; but from $10M to $15M? Not much. So these CEOs are doing the smart thing (in addition to the nice thing). They know that when they get the inevitable itch to do the next startup, they can count on a stellar reputation and recruit some great talent.
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