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Silicon Valley's best kept secret: Founder liquidity

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Re: Silicon Valley's best kept secret: Founder liquidity

#351

Post by sneak »

naravara wrote: post #344
yard2010 wrote: post #337

Earlier quoted context omitted.

This is not a real risk you're talking about, but small inconveniences. A risk is losing your house for example, or losing the ability to rent. Inconveniences are part of life anyway. Being the first engineer means you get all these inconveniences (tell your wife and your kids) plus real risks as above (taking a loan to buy the options and losing it)

“Letting people go” is taking on the risk of all of those people being let go losing the ability to rent or pay their mortgages. That seems like more than an inconvenience to me if you take one of the responsibilities of being an employer at all seriously.

If you are working a tech job and know how to program computers and have no savings slash the loss of a job costs you your house, you have deep and fundamental problems far beyond the loss of one job and it isn’t your former employer’s fault that your life is mismanaged.

Re: Silicon Valley's best kept secret: Founder liquidity

#352

Post by torginus »

throrway12 wrote: post #129

I worked at a preseed company recently. Here's my experience: - Work 9 to 7 everyday. 6 days a week. - People are working 9 am - 5 am in crunch time. Then joining again at 10 am. - Monetary Comp is exactly market average. - Equity Comp is even more paltry since founders raised at a huge valuation. - Founders make unrealistic promises. Eg: It took a competitor with 7 people, 3 months to make a product. The founder tol…

Sorry if founders already raised a huge valuation, why didn't they hire more devs?

I'm sure what can be done with 996 style slave labor with 3 devs can be done with 6 devs working 9 to 5. It's not like they couldn't afford the salaries (and you mentioned they weren't paying that much anyways).

Re: Silicon Valley's best kept secret: Founder liquidity

#353

Post by arolihas »

blitzar wrote: post #269
doodda wrote: post #247

This post has managed to piss off everyone: employees who didn't realize founders were getting liquidity events while they're still sitting on their more-often-than-not valueless equity, and founders who feel they've earned it and don't like the implication they haven't.

You managed to make both parties sound like absolute tools.

How does the employee sound like a tool here?

Re: Silicon Valley's best kept secret: Founder liquidity

#354

Post by hackerlight »

dmurray wrote: post #237
extragood wrote: post #125

Earlier quoted context omitted.

It happens. I was offered the option to liquidate up to 20% of my vested shares at my last company's Series A. It was restricted by tenure though (3 years), so it wasn't available to everyone. In retrospect, I should have liquidated the full amount, but it was a new concept to me at the time and I was more conservative with the amount. I more recently interviewed with a pre-series A company and they said that they'd…

Doing this by tenure seems like a fairer way to distribute the liquidity. The founders still get preferential access to it, but because they really have taken more risk (bigger stake for a longer time period), not just because they have a better individual negotiating position.

> The founders still get preferential access to it, but because they really have taken more risk

It's not related to risk, at least not directly. It's related to the supply of entrepreneurship as a factor of production. Entrepreneurship is scarce, so founders have leverage in any bargaining situation against early employees, who are more numerous and therefore less valuable and less powerful. If 10x the number of people tried to become founders, then founders would hold less leverage and the equity terms would become more "fair" because they'd have no choice but to give generous terms if they wished to hire people.

Re: Silicon Valley's best kept secret: Founder liquidity

#355

Post by patmorgan23 »

toomuchtodo wrote: post #42
jmward01 wrote: post #22

Earlier quoted context omitted.

Having been employee #10 a couple times now, there is a lot of that even when you aren't a founder. It would be nice if the 'de-risk your life' stuff this article describes for founders was also available for early employees.

Work a high salary job and buy lottery tickets or 0DTE options instead. Half joking. Look at the success rate of outlier comp through liquidity as an early startup employee. If professional stock pickers can’t pick better than index funds, what makes you think you can do better picking startups, spending non renewable time, working for years vesting common shares that you might get liquidity for eventually, assuming…

When you work for a start up you can have a material impact on the company's success (or failure).

Re: Silicon Valley's best kept secret: Founder liquidity

#356

Post by owlstuffing »

muzani wrote: post #223
adastra22 wrote: post #77

Earlier quoted context omitted.

At a Series A?!? That's insane to me. We're talking about the first priced funding round for the company, right?

Why is it insane? Some founders take zero salary since the start, and part of the reason for raising funds is that they have to eat too. Anyone who is an "early employee" usually get lower salary than market, and some stock. It's only fair they get to cash out a little early on, or hold on if they're liquid and think it's worth a lot more. It also works well for everyone involved if they're selling their shares to th…

Correct answer

Re: Silicon Valley's best kept secret: Founder liquidity

#357

Post by che_shirecat »

palata wrote: post #340
gafferongames wrote: post #302

Earlier quoted context omitted.

So start your own company then.

Maybe I should, so that I could abuse from the employees and then explain how I deserve to get rich if MY startup succeeds but my employees don't (because it is MY startup, you see? I don't need them).

Good luck with this! Let us know how it goes.

Founders have leverage, because they started the company. If you don't like it, start your own and don't join someone else's.

Re: Silicon Valley's best kept secret: Founder liquidity

#358

Post by CSMastermind »

palata wrote: post #345
throwailearner wrote: post #297

Posting from throwaway so I can be very open. I joined a YC startup as engineer #1 with close to $200k salary and 2% options vesting at the usual 4 years, with a 10 year window. I feel like this was bettern than usual, and for a while felt like I struck an awesome deal, but as time went on I realised I was building everything single-handedly, while getting (at best) 2%, which started to annoy me deep down. Over two y…

$200k? Do you live in a place where this is considered a bad salary?

It's normally considered a bad salary in comparison to what you could be making. I won't speak for the poster but I left a ~$1m / year TC job ($300k base the rest RSUs) to join a startup. I have a good salary compared to the population at large but it's a fraction of what I could be making on the hope that my equity turns into something meaningful that makes up for it.

Re: Silicon Valley's best kept secret: Founder liquidity

#359

Post by largbae »

doodda wrote: post #247

This post has managed to piss off everyone: employees who didn't realize founders were getting liquidity events while they're still sitting on their more-often-than-not valueless equity, and founders who feel they've earned it and don't like the implication they haven't.

If I hadn't found your comment I was going to say this is the best HN I've seen in months.

Re: Silicon Valley's best kept secret: Founder liquidity

#360

Post by throwawaythekey »

segfaltnh wrote: post #232
surfingdino wrote: post #139

This and my own experience with employee stock options led me to reject any work for startups that offer stock options. It is a way to make you work hard and allow to be treated like dirt for less money. The lowest point was having to walk across town to the office to eat energy bars from the office kitchenette, because I could not afford a bus fare or food as my pay was delayed by a week over Christmas. Meanwhile, t…

I don't believe a private sale entitles one to ignore a stock options legal rights. What are the relevant details here I'm missing?

1) The common stock that employees get via options is the last in line for the pot of gold.

2) There's plenty of bullshit that can be used to cheat an employee out of their options. One example here [1].

[1] https://techcrunch.com/2011/06/26/skypes-worthless-employee-...

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