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Sell for half a billion and get nothing (2021)

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Re: Sell for half a billion and get nothing (2021)

#311

Post by riehwvfbk »

Dayshine wrote: post #302
petsfed wrote: post #279

Earlier quoted context omitted.

Isn't that the broadly accepted value proposition for working at a startup? You accept greater job insecurity than more established companies, and lower salary than more established companies, but in return you get the opportunity to receive a larger slice of the proceeds from a "good" exit. It's like buying a lottery ticket. You don't sign on with Meta expecting a great exit, but you gamble that you might see a grea…

Uh, I'm working for a startup because it pays more then more established companies and provides better benefits. I'm not sure why I would work for less unless I was founder, or it was a charity or other public good.

This is definitely uncommon. Startup cash compensation for engineers in SV is about 1/2 of a large tech company's.

Re: Sell for half a billion and get nothing (2021)

#312

Post by technick »

I hate advocating for new laws but we need something to fix this imbalance that really screws over the worker more than anyone else. I recently left a company due to investors wanting to sell the company and a statement in the original RSU documents stating that I forfeit my shares upon leaving at the price the CEO sets really screwed me. The CEO decided my 4 years of shares were worth 2 cents a piece.

Re: Sell for half a billion and get nothing (2021)

#313

Post by chihuahua »

jackcosgrove wrote: post #137
jmward01 wrote: post #14

I have a friend that has given up on options. Even if he were to be #10 somewhere he would take any extra pay over any options. Stories like this show the wisdom of that. Are there really that many success stories for people other than for VCs and (maybe) founders out there anymore? Even if your options (eventually) get you 200k, how much did they cost you in years of lower pay. Even with a payout, considering intere…

I don't think startup compensation has yet to account for the wage gains in big tech since Facebook started bidding up comp. They are still operating as if it's 2009. We'd also need a new technology as big as the PC and the Internet to open up lanes for new entrants. As it is the incumbents have locked up most of the market so that's where the money is.

If startups are able the hire the quantity and quality of employees they want, then it appears that they are paying enough. If it's not a good deal for employees, then it's the employees that are making a mistake.

Re: Sell for half a billion and get nothing (2021)

#314

Post by mavelikara »

riehwvfbk wrote: post #311
Dayshine wrote: post #302

Earlier quoted context omitted.

Uh, I'm working for a startup because it pays more then more established companies and provides better benefits. I'm not sure why I would work for less unless I was founder, or it was a charity or other public good.

This is definitely uncommon. Startup cash compensation for engineers in SV is about 1/2 of a large tech company's.

Base or TC?

Re: Sell for half a billion and get nothing (2021)

#315

Post by molsongolden »

koliber wrote: post #163
rimeice wrote: post #122

Earlier quoted context omitted.

Wow, do not understand this approach some founders take. Being “radically” transparent by showing your cap table and talking through liquidation prefs/exit scenarios with every single employee is an absolute prerequisite for me. For me this has driven loyalty and paid dividends in culture and retention. I would not work for a startup where the founder wouldn’t share that info.

How many times has a startup shown you the full cap table? Was this at the very early stage, before raising money, or even after funding rounds? The cap table contains names of individuals. Most founders I know were reluctant to share the exact details. At the same time it's impossible to value option or equity grants without knowing valuation estimates, shares outstanding, round sizes, and liquidation preferences. T…

Lump the individuals into “Angels” or “F&F” or “Employees” then you can still disclose and discuss the terms that each group of investors received.

Re: Sell for half a billion and get nothing (2021)

#316

Post by VirusNewbie »

scarface_74 wrote: post #299
VirusNewbie wrote: post #272

Earlier quoted context omitted.

I didn't say hang on for ten years, I said people joining late stage series D companies like Stripe, Databricks, SpaceX etc. Those are very likely to have multiple liquidity events before they even go public, and are known to pay more than FAANG. You're trading some liquidity and some security for a higher upside. Those are the companies that have the best luck luring away FAANG engineers with higher comp (if things…

And at a late stage, you’re not likely to see any more from your equity than working at a public BigTech company, your equity is not only locked up pre-IPO it’s also locked up post IPO. When you work for a public company, you know exactly when your RSUs are going to vest, they appear in your brokerage account and you can (and should) sell the same day and diversify.

All of the above mentioned companies have liquidity events that are not related to IPO, so your comment about lockup is not accurate. They also pay quite a bit more equity than FAANG companies, because it is overall less liquid. I'm not saying it's guaranteed to pay more than FAANG, but it's likely to work out that way.

Re: Sell for half a billion and get nothing (2021)

#317

Post by yieldcrv »

dheera wrote: post #39
gumby wrote: post #6

Liq prefs vanished during the ZIRP and I haven’t seen them return…yet. But the founders do have some leverage. If there is no incentive to do the deal they can just… not cause the deal to happen (different from blocking it, just not working on it). This is the same reasons you see big pay packets for the execs when a company is doing poorly or is bankrupt: otherwise they could just go do something else (get a differe…

If you're on really shitty acquisition terms like this, to the point where you are getting no payout for your hard work, one way you can get a small payout is to negotiate your employment contract with the new parent company to be very, very good. Make sure they give you and all employees a nice big sign on bonus and salary. They can deduct that from the proposed acquisition price. Is it ethical? I say yes, you shoul…

from what I can tell, founders are often really inept in this regard

they “have a guy” for this stuff and it’s completely random luck if something beneficial financially occurs to them

employees are simultaneously inept and believing the founder about anything, while also having a lack of transparency even if they aren’t inept

Re: Sell for half a billion and get nothing (2021)

#318

Post by vitus »

ComputerGuru wrote: post #284
vitus wrote: post #177

Earlier quoted context omitted.

He bought 1.7 million founders' shares of Paypal (then Confinity, which he cofounded and was CEO of at the time) for under $2000. These are terms you would never offer to an investor, that you'd never offer to an employee. For comparison, the SEC filing for Paypal's IPO has Thiel Capital investing a bridge loan of $100k in 1998 which was then converted into 500 thousand shares (100x higher valuation than his individu…

So which loophole let him get away with it?

Longstanding underfunding of the IRS, if I had to guess? It's much more expensive and time-consuming to go after wealthy tax cheats than, say, people incorrectly claiming the earned income tax credit. The ProPublica article states that Thiel was indeed audited in 2011, but the audit was eventually closed with no known outcome.

Re: Sell for half a billion and get nothing (2021)

#319

Post by riehwvfbk »

mavelikara wrote: post #314
riehwvfbk wrote: post #311

Earlier quoted context omitted.

This is definitely uncommon. Startup cash compensation for engineers in SV is about 1/2 of a large tech company's.

Base or TC?

Depends on how you value your lottery tickets. The value I assign to them is 0 until proven otherwise.

Re: Sell for half a billion and get nothing (2021)

#320

Post by rdslw »

vidarh wrote: post #222
codegeek wrote: post #209

Earlier quoted context omitted.

The summary is "When the FanDuel founders raised funds, two key investors received a liquidation preference that entitled them to the first $559M in an acquisition. Founders and employees would be paid only if the acquisition exceeded $559M. Because the Paddy Power Betfair was for just $465M, the founders received nothing" Also they raised over 400M in funding. If you exit with 465M with 400 million raised in funding…

Yeah. I've not had an exit that high, but I've had an exit where my 25% initially was whittled down to 10k, and frankly I was surprised I got anything at all - in the end I was diluted to hell and back, but none of the later rounds had any liquidation preference that got triggered. It's easy to see a large exit number and assume it means it's a success, but in the case in question the (significantly more modest than…

> Taking VC cash is very often a game of deciding whether you want to gamble it all on faster growth or take less risk for less cash, but with the additional caveat that the investors you take on often will cheer for the "gamble it all" option as they have many parallel bets while you as the founder has one.

This shall be printed in block letters in a red frame ahead of most Paul Graham essays about milk, honey and richies in startup land.

He and VCs push theirs agenda because he has hundreds of bets, while founder has one.

They play different game and are quite quiet about it.

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