Startup CEOs who gave up fortunes to turn employees into millionaires • Hacker News Board

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

#41

Post by johnward » Thu, Sep 04, 2014, 9:10 PM UTC

erobbins wrote: post #3

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

I took a below market salary to work for a startup. When we were acquired I ended up with about 8 grand. I was kind of exciting because I honestly didn't think that the equity in my contract would be worth anything. Founders made something like 24m, 26m, and 8m. I handful of early employee my have made a couple hundred k. I still have all of the paperwork and I believe there were a handful of employee millionaires. I joined late and missed out on a big pay day. Do I wish I got more? YES. Do I think I deserve more? Probably a little bit more than 8k but I didn't put go through the early grind and put in the same work they did. I helped the company grow to acquisition though.

The thing about the startup lottery is that in the small chance your startup wins it, that doesn't mean you'll also win.

Founder did take the whole company on a tropical vacation which was unexpected and even paid partially for spouses.

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

#42

Post by differentView » Thu, Sep 04, 2014, 9:13 PM UTC

erobbins wrote: post #28

vinceguidry wrote: post #4

Earlier quoted context omitted.

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…

I think it's far more entitled to think that because someone had a good idea and either connections, money, or a great pitch that they are entitled to 1000x more money than the people who actually turned the concept from a napkin into reality. During the previous bubble I was employee #20 of a company that ended up having a $900M exit 5 years later.. I got less than 100k out of the deal. Do I think I was entitled to…

What if the company was really worth $9 millions at its peak post-bubble, but its founder's good/lucky timing selling it near the peak of the bubble gave it a 100x multiplier?

Say your contribution to the company is worth 1% of the company's value, would you say you added $90k to the value of the company or $9 million?

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

#43

Post by jlintz » Thu, Sep 04, 2014, 9:14 PM UTC

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?

Sounds like GroupMe, sold for 80 mill and was around a year old at the time

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

#44

Post by soperj » Thu, Sep 04, 2014, 9:18 PM UTC

Arjuna wrote: post #38

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 pa…

I truly hope that Woz is remembered as the guy behind Apple's early greatness and Jobs as just a dickhead who set us all back. Not just developers with his no compete bullshit, but everyone with his stupid no ports aesthetic. How are people supposed to learn to tinker when everything is locked down??

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

#45

Post by nilkn » Thu, Sep 04, 2014, 9:19 PM UTC

johnward wrote: post #41

erobbins wrote: post #3

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

I took a below market salary to work for a startup. When we were acquired I ended up with about 8 grand. I was kind of exciting because I honestly didn't think that the equity in my contract would be worth anything. Founders made something like 24m, 26m, and 8m. I handful of early employee my have made a couple hundred k. I still have all of the paperwork and I believe there were a handful of employee millionaires. I…

At the bare minimum, wouldn't you have deserved whatever the discrepancy was between the below-market salary they offered you and the market salaries you could have gotten elsewhere, aggregated over the years you were at the startup? I'm guessing that would be more than $8k in total.

You also had to deal with the post-acquisition career turmoil of either losing your job or having to work for the acquiring company, neither of which would have happened had you taken a market salary at a larger company.

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

#46

Post by apalmer » Thu, Sep 04, 2014, 9:20 PM UTC

I dont think startup CEOs have any requirement to do this type of thing. On the other hand I think there is a powerful reality distortion field around start ups. Its literally more work than at bigco, for about 70% of the salary, for a lotto ticket that has a 1 in 1000 chance of pay off, and the jackpot payoff is something like 50K-100K.

Really Really doesnt make sense unless you enjoy the atmosphere you are not going to get rich as an employee in a start up, even if the start up sells for 500 million. you are going to get back the 30% a year you lost by not going to bigco unless the founders just feel like making everyone rich.

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

#47

Post by johnward » Thu, Sep 04, 2014, 9:21 PM UTC

nilkn wrote: post #45

johnward wrote: post #41

Earlier quoted context omitted.

I took a below market salary to work for a startup. When we were acquired I ended up with about 8 grand. I was kind of exciting because I honestly didn't think that the equity in my contract would be worth anything. Founders made something like 24m, 26m, and 8m. I handful of early employee my have made a couple hundred k. I still have all of the paperwork and I believe there were a handful of employee millionaires. I…

At the bare minimum, wouldn't you have deserved whatever the discrepancy was between the below-market salary they offered you and the market salaries you could have gotten elsewhere, aggregated over the years you were at the startup? I'm guessing that would be more than $8k in total. You also had to deal with the post-acquisition career turmoil of either losing your job or having to work for the acquiring company, ne…

I wish. I took the position because my previous position was so terrible that I was taking the first offer someone shot my way. Had I not been so desperate and naive I may have negotiated for more salary or equity. I did manage a 43% raise post acquisition (still below market). I wish I would have put the whole 8k into the Tesla IPO too but I can't go back in time.

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

#48

Post by todd8 » Thu, Sep 04, 2014, 9:25 PM UTC

Tivoli Systems, where I worked, went public in 1996. Not long after that it was acquired by IBM (which bought control of the company through a tender offer for the shares). 26 or 27 of the original employees of the company made over one million dollars. Even the administrative assistant, hired in the early years, was able to pay off her house.

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

#49

Post by nilkn » Thu, Sep 04, 2014, 9:26 PM UTC

teej wrote: post #5

kjs3 wrote: post #2

They gave up some money to reward valuable employees. That's not, per se , being magnanimous or generous, it's being smart businessmen. All of these founders made out just fine, financially. When they start their next big thing, they'll be remembered not only as the guys who had a successful exit, they'll be remembered as the guys took care of their people along the way. That's about the smartest way to recruit top t…

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…

I definitely agree with you, but I also like a term from the article: the founders were long-term greedy rather than short-term greedy. They were willing to give millions to their employees in exchange for what I can only assume to be life-long loyalty and an unbeatable reputation. For someone who wants to stay in the industry for the next 10-20 years and found more companies, that could very well end up being worth far more than the money given up in the deal to employees.

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

#50

Post by sharkweek » Thu, Sep 04, 2014, 9:28 PM UTC

apalmer wrote: post #46

I dont think startup CEOs have any requirement to do this type of thing. On the other hand I think there is a powerful reality distortion field around start ups. Its literally more work than at bigco, for about 70% of the salary, for a lotto ticket that has a 1 in 1000 chance of pay off, and the jackpot payoff is something like 50K-100K. Really Really doesnt make sense unless you enjoy the atmosphere you are not goin…

Good points, but one thing to keep in mind - a lot of people just enjoy working at smaller companies.

I did some time at a large financial institution making great money, but absolutely hated how empty it all felt. Nothing got done, nothing changed, nobody listened to me.

I work at a much smaller company now, and almost everything I do on a daily basis has a measurable impact. I can literally watch the things me and my team do increase the bottom line. I derive value from this myself, as it allows me to grow my team, hire new employees, give people responsibility of their own, etc.