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Startup CEOs who gave up fortunes to turn employees into millionaires

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

#51

Post by Ricapar »

soperj wrote: post #44
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??

By his logic: Why would you want to tinker with something that's already perfect?

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

#52

Post by cjslep »

soperj wrote: post #44
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??

I believe it was Steve Kent's The Ultimate History of Video Games Atari portion that really fleshes out Steve Jobs. The two anecdotes I remember are:

1. People in Atari generally considering him an oderous hairy hippie who once disappeared from work to go to India for self-enlightenment, but returned with Hepatitis.

2. He (Steve) was once offered $100 per transistor he could eliminate below the 100-transistor mark for an arcade game (I believe it was mid 150 count at the time), so he went to Woz and paid him on the order of $100 to eliminate the transistors (Woz was woefully unaware of the deal between Steve and Atari). Woz got it down in the low 30's or high 20's, Steve got the large sum of money and Atari wound up adding transistors back because while it worked they couldn't figure out how.

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

#53

Post by kijiki »

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.

The grant itself requires board approval, so that isn't a huge roadblock. The bigger issue is how much leverage you have. If you're experienced and they need you, getting double-trigger acceleration shouldn't be an issue, and it can't hurt to at least ask for single-trigger...

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

#54

Post by dsirijus »

Ask HN:

So, I'm the sole founder here with investor. The dude's awesome, but the contract we signed puts me in significant financial risk if the company doesn't turn up profitable.

I have more than several employees (some of them will probably read this) who I pay regular and competitive money though I'm not particulary pleased with their output (but hey, it's improving, and there's not much of a talent pool here). Most work on their hourlies, and if milestones/deadlines are not met, I try to find somebody else and handle all the consequences of that myself. Basically, I handle entire risk and stress.

Now, if what we work on turns profitable, or has a successful exit or whatnot, you know how much of that money do I think it's fair to give to them?

Nada. Zilch. Zero. Go through the shit I'm going through yourself if you want a big payout and then we'll talk.

What do you think?

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

#55

Post by iamraymondc »

abat wrote: post #9

Do employee stock options usually not vest automatically upon acquisition? The SinglePlatform story made it sound like employees get screwed if there's an early exit before their options had fully vested.

Please do yourself a favour and ask your company about this. A lot of my peers just assume that every stock option contract has this clause.

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

#56

Post by nilkn »

throwaway7808 wrote: post #27
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…

Risk of employees is actually a lot higher than that of a founder. Founders have access to crucial financial information, employees do not. Thus higher risk. Founders have all the control, employees do not. Thus higher risk. Founders can make almost arbitrary hiring/firing decisions that can affect a future (!) career of an employee. Last, but not least, employees may need a reference from their former bosses, founde…

You forgot the obvious detail that the founder also stands to make far, far more money from an acquisition than most employees, but (if it's VC funded and not bootstrapped) is mostly insulated from any sort of real catastrophe if it fails.

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

#57

Post by wuliwong »

When I joined a startup a couple years ago as a very early employee. The equity they offered was some tiny percentage, like 0.1%. I did the math and said, "you know, we would need to exit for a billion dollars for me to receive a million?" The founder seemed surprised at that. Nevertheless, I joined the startup.

What I don't understand is if the company does sell, and I only get my 0.1%, I should be upset or call the founder "greedy" if he doesn't give me more money than what was in my contract?

If I'm going to take less than what I believe to be the "market rate" for my services in lieu of some equity and my motivation is to make money, then I'm going to do the math and weigh the probabilities of my equity and the lower-than-market salary being more lucrative than taking a job with no equity and a market rate salary.

I just don't see how founders who honor contracts that employees sign as being greedy. Arguments that the founders take more risk or work harder or whatever seems to me to be beside the point. If the employee doesn't think the percentage of equity is good, then they shouldn't sign the contract. That's how I see it. And maybe if more of us took that stance we wouldn't have to hope that founders would just give us money out of the goodness of their hearts and instead have satisfactory agreements already in writing.

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

#58

Post by walshemj »

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…

You know that the latest employee 5 year share scheme at British telecom a mature FSE 100 company returned well over £60K effectively tax free with zero risk to your capital?

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

#59

Post by dragonglass »

jacquesm wrote: post #39
ryandrake wrote: post #35

Earlier quoted context omitted.

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.

I can confirm this as well. I'm about 1 year out of college and just got a Google offer (salary + bonus + stock) that averages ~$240k per year.

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

#60

Post by nilkn »

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?

In my experience, which may or may not be representative of the general case, bootstrapped and profitable startups with no funding often don't offer equity at all to employees.
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