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Just a couple of days we all dissected Square's upcoming IPO. Valued at $6 billion, the average employee () stock value is at $294K, or $73.5K per year of vest

by kzhahou 11y ago

Just a couple of days we all dissected Square's upcoming IPO. Valued at $6 billion, the average employee () stock value is at $294K, or $73.5K per year of vesting. Not super awesome. () Not a founder or executive/director, who'll get up to 5000x that.

hkmurakami 11y ago
Average employee seems like a poor metric, considering that employee count increases exponentially. I'd be interested a breakdown based on "joined at funding stage X". From what I understand, if you joined Square in 2011, when it was already super hot, you're doing pretty well and could sell your stock on the secondary markets for a handsome windfall even well before this IPO.
- kzhahou 11y ago
  I agree -- typical pitfall of average. Do you have any sense of what the equity numbers would have been like at year 0, 1, 2, 3... based on your general knowledge of startups (not necessarily Square)?
  - hkmurakami 11y ago
    exponentially decaying.
AndrewKemendo 11y ago
How is that not super awesome? All of those employees had market wages well before the IPO.
- freditup 11y ago
  Agreed, if the employees negotiated fair cash compensation, a bonus equivalent to a $70K bonus/year for four years in a row is solid. If employees were told that the stock options were a significant portion of their compensation and thus salaries would be lower, it's less great, but probably still not unreasonable.
- phamilton 11y ago
  "market wages" is a pretty loaded term. $130K plus 15% bonus plus $70K/yr in stock for a senior engineer isn't that out of the ordinary at big public companies. Total comp ends up around $220k. I don't see too many startups paying over $150k, so the average employee at an exceptional startup like Square makes around the same if not less than at a big company, even with a decent payout.
- kzhahou 11y ago
  "Market wage" doesn't end the discussion. Some people had market wage, some had above, some below, many were millionaires or hundred-millionaires coming in. ~$300K is great cash, but it's peanuts relative to $6B. Everyone worked hard, but only the founders and the very top tier actually get rich. The rest get one-thousandth or many-thousandths of what founders get. People are shitty negotiators, and everyone just accepts that they should get a tiny little slice of the pie. I believe in part it's because they think everyone has a small slice. They don't realize how much the founders kept for themselves (they think it mostly all went to the big VCs), and how huge the drop was from founders to engineer #1, and from #5 to #6, etc. Everyone just accepts that the leadership (and ONLY the leadership) should become ultra-rich at the end, while the rest move on to the next venture and hope to do a bit better next time. "But I took the risk!" says the founder. Sure, buddy, you took the risk and everyone else just enjoyed a walk in the park.
- potatolicious 11y ago
  Opportunity cost - assuming everyone has fair market cash wages, the BigCos are offering more in bonuses and stock - at GOOG/FB it's not uncommon to see $150-200k+ per year in stock, with less uncertainty. You'd expect that for taking on the risk (relatively low as it may be for a unicorn) you'd do better than the extremely low-risk public stock packages being offered by BigCos.
  - AndrewKemendo 11y ago
    So I am clear, you are saying that it's not uncommon for an engineer at GOOG to be given $150-200k in stock every year on top of their salary?
    - potatolicious 11y ago
      Correct, clearly not every engineer at GOOG is getting it but it's also not rare. And not particularly high-level engineers either - I'm talking almost exclusively about level 4/5 SWEs. I also know some people at other BigCos getting similar levels (to be clear: $300-400k/yr total comp of cash + public stock) so it's not just a GOOG/FB thing.
  - pbreit 11y ago
    Not everyone can get employed by Facebook or Google.

by kzhahou 11y ago

hkmurakami 11y ago

Average employee seems like a poor metric, considering that employee count increases exponentially. I'd be interested a breakdown based on "joined at funding stage X". From what I understand, if you joined Square in 2011, when it was already super hot, you're doing pretty well and could sell your stock on the secondary markets for a handsome windfall even well before this IPO.

kzhahou 11y ago
I agree -- typical pitfall of average. Do you have any sense of what the equity numbers would have been like at year 0, 1, 2, 3... based on your general knowledge of startups (not necessarily Square)?
- hkmurakami 11y ago
  exponentially decaying.

AndrewKemendo 11y ago

How is that not super awesome? All of those employees had market wages well before the IPO.

freditup 11y ago
Agreed, if the employees negotiated fair cash compensation, a bonus equivalent to a $70K bonus/year for four years in a row is solid. If employees were told that the stock options were a significant portion of their compensation and thus salaries would be lower, it's less great, but probably still not unreasonable.
phamilton 11y ago
"market wages" is a pretty loaded term. $130K plus 15% bonus plus $70K/yr in stock for a senior engineer isn't that out of the ordinary at big public companies. Total comp ends up around $220k. I don't see too many startups paying over $150k, so the average employee at an exceptional startup like Square makes around the same if not less than at a big company, even with a decent payout.
kzhahou 11y ago
"Market wage" doesn't end the discussion. Some people had market wage, some had above, some below, many were millionaires or hundred-millionaires coming in. ~$300K is great cash, but it's peanuts relative to $6B. Everyone worked hard, but only the founders and the very top tier actually get rich. The rest get one-thousandth or many-thousandths of what founders get. People are shitty negotiators, and everyone just accepts that they should get a tiny little slice of the pie. I believe in part it's because they think everyone has a small slice. They don't realize how much the founders kept for themselves (they think it mostly all went to the big VCs), and how huge the drop was from founders to engineer #1, and from #5 to #6, etc. Everyone just accepts that the leadership (and ONLY the leadership) should become ultra-rich at the end, while the rest move on to the next venture and hope to do a bit better next time. "But I took the risk!" says the founder. Sure, buddy, you took the risk and everyone else just enjoyed a walk in the park.
potatolicious 11y ago
Opportunity cost - assuming everyone has fair market cash wages, the BigCos are offering more in bonuses and stock - at GOOG/FB it's not uncommon to see $150-200k+ per year in stock, with less uncertainty. You'd expect that for taking on the risk (relatively low as it may be for a unicorn) you'd do better than the extremely low-risk public stock packages being offered by BigCos.
- AndrewKemendo 11y ago
  So I am clear, you are saying that it's not uncommon for an engineer at GOOG to be given $150-200k in stock every year on top of their salary?
  - potatolicious 11y ago
    Correct, clearly not every engineer at GOOG is getting it but it's also not rare. And not particularly high-level engineers either - I'm talking almost exclusively about level 4/5 SWEs. I also know some people at other BigCos getting similar levels (to be clear: $300-400k/yr total comp of cash + public stock) so it's not just a GOOG/FB thing.
- pbreit 11y ago
  Not everyone can get employed by Facebook or Google.