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YC and Founders Pledge

blog.ycombinator.com

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Re: YC and Founders Pledge

#41

Post by BinaryIdiot »

imbenclifford wrote: post #33
BinaryIdiot wrote: post #8

I understand giving to charity is great and all but what about employees 10, 35, 97? So someone works hard at a start-up but they weren't among the first dozen or so to join then they likely get next to nothing from an exit. So how about, instead of a pledge to give to charity, founders pledge to give more equity to later employees so only a small handful are not the only ones to profit. Everyone takes a risk joining…

Ben from FP here. To be clear, founders aren't giving away equity - they are pledging a percentage of what they personally receive on exit. This doesn't reduce the equity that is available for other shareholders.

> To be clear, founders aren't giving away equity - they are pledging a percentage of what they personally receive on exit. This doesn't reduce the equity that is available for other shareholders.

I never said they were giving away equity. A founder is taking a percentage of their money and, instead of giving it to their employees (like they should especially if you follow many of the YC essays and blog posts about giving more to your employees) they are pledging it to a charity.

Charity is important but this is just the wrong advice. Why would an employee join Company A over Company B when they know Company A's founders are donating some of their money to charity versus investing it back into the company in the form of, say, more generous employee equity package (because you can't have both).

Re: YC and Founders Pledge

#42

Post by imbenclifford »

BinaryIdiot wrote: post #41
imbenclifford wrote: post #33

Earlier quoted context omitted.

Ben from FP here. To be clear, founders aren't giving away equity - they are pledging a percentage of what they personally receive on exit. This doesn't reduce the equity that is available for other shareholders.

> To be clear, founders aren't giving away equity - they are pledging a percentage of what they personally receive on exit. This doesn't reduce the equity that is available for other shareholders. I never said they were giving away equity. A founder is taking a percentage of their money and, instead of giving it to their employees (like they should especially if you follow many of the YC essays and blog posts about g…

I feel like this is equivalent to saying that if a founder decides she will buy a house if she exits, that she is denying employees of equity. Have I missed the point?

Re: YC and Founders Pledge

#43

Post by imbenclifford »

avivo wrote: post #28

I haven't figured out a way to find the actual text of the agreement(s). Does anyone have it? When I explored doing something like this in the past (a binding pledge via 3rd party under US law), one issue brought up by lawyers was that there needs to be some "consideration" http://www.nolo.com/legal-encyclopedia/consideration-every-c... ; I'm curious how they worked around that.

Once you click "I'm ready to make this official" in the signing flow, you'll see the full legal document pre-filled with your information before you sign anything. The consideration is access to our post-deployment resources, recognition on our website and invitations to our events.

Re: YC and Founders Pledge

#45

Post by zerocrates »

imbenclifford wrote: post #42
BinaryIdiot wrote: post #41

Earlier quoted context omitted.

> To be clear, founders aren't giving away equity - they are pledging a percentage of what they personally receive on exit. This doesn't reduce the equity that is available for other shareholders. I never said they were giving away equity. A founder is taking a percentage of their money and, instead of giving it to their employees (like they should especially if you follow many of the YC essays and blog posts about g…

I feel like this is equivalent to saying that if a founder decides she will buy a house if she exits, that she is denying employees of equity. Have I missed the point?

I suppose the difference is that it's pledged: everybody including the founder knows that they're reducing their share by X amount up-front. A house isn't publicly earmarked in that kind of way, and of course, it's money spent for the founder's direct benefit rather than given away.

So there's a temptation for people to say, "well clearly you're OK with reducing your compensation for [purpose X], why not for [arguably superior purpose Y]?"

I'm not sure it really makes sense to think of it that way but there is a distinction.

Re: YC and Founders Pledge

#46

Post by nugga »

imbenclifford wrote: post #42
BinaryIdiot wrote: post #41

Earlier quoted context omitted.

> To be clear, founders aren't giving away equity - they are pledging a percentage of what they personally receive on exit. This doesn't reduce the equity that is available for other shareholders. I never said they were giving away equity. A founder is taking a percentage of their money and, instead of giving it to their employees (like they should especially if you follow many of the YC essays and blog posts about g…

I feel like this is equivalent to saying that if a founder decides she will buy a house if she exits, that she is denying employees of equity. Have I missed the point?

Now, a deal is a deal, and if they are not entitled to equity then so be it, and if you happen to be a little too late to the party then too bad, but employees work hard to create that value.

I'd probably feel bummed, envious and left out if a founder with their double digit (or multi million dollar) equities flat out proclaimed to give a portion of that to charity, essentially burning that cash from my point of view, when they could've just as well rewarded the employees. And in the startup world they are probably not even paid proper market value.

Re: YC and Founders Pledge

#48

Post by cperciva »

I'd like to encourage founders who are participating in this to consider directing at least some of their pledges to support open source software. I don't think there are any YC companies which would have existed if it hadn't been for a large amount of open source software; if you want to maximize the impact of your donations, helping the projects which build tools the next generation of startups will rely on is a pretty good way to go.

(At Tarsnap, I mostly fund the FreeBSD Foundation and other BSD-related organizations, but that's primarily because those are the groups whose work I am most familiar with and can judge most effectively. There are plenty of other organizations doing great work with open source software which can benefit from funding; but of course I'd love to see everybody here supporting the FreeBSD Foundation too.)

Re: YC and Founders Pledge

#49

Post by [deleted] »

MicroBerto wrote: post #29
hamhamed wrote: post #14

This is a good initiative. Muslims like me have to already give out a fifth (%20) of their earnings every year called Khums https://en.wikipedia.org/wiki/Khums We also believe from numerous Hadith's that the money comes back in double for those that give. As they say, you can't take with your palms closed.

> "have to" What happens if you don't or can't?

[deleted]

Re: YC and Founders Pledge

#50

Post by pb »

BinaryIdiot wrote: post #8

I understand giving to charity is great and all but what about employees 10, 35, 97? So someone works hard at a start-up but they weren't among the first dozen or so to join then they likely get next to nothing from an exit. So how about, instead of a pledge to give to charity, founders pledge to give more equity to later employees so only a small handful are not the only ones to profit. Everyone takes a risk joining…

I know that "employees get screwed" is the hn conventional wisdom, but it's generally false. If a startup is huge success, there will be many wealthy employees. Companies like Google and Facebook created thousands of millionaires. Uber and Airbnb will likely do the same. Of course if the company exits for less than money raised, then yes, common will likely not be worth much, but that's the risk of startup equity.
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