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It is only a good signal currently, because in order to voluntarily leave the employee would have to give up their options. That means they're really unhappy an

by abalone 11y ago

It is only a good signal currently, because in order to voluntarily leave the employee would have to give up their options. That means they're really unhappy and don't believe in the company. However if you change it so that early stage employees can take their options with them, then it becomes a question of "do I triple down on this one company or do I spread myself out over three." And most investment advisors will tell you to diversify your portfolio. So there is a real risk that this will lead to high turnover, even among happy employees.

deleted 11y ago
[deleted]
x0x0 11y ago
That investment advice is for when you don't have inside information. Presumably for teams of fewer than 30 employees most employees should have a good idea of the financials and a lot of knowledge about company performance.
st3v3r 11y ago
I don't buy that. Maybe one or two people will, but the vast majority of people won't. If they're happy, they're not going to want to risk that by going to a new company where they might be miserable, unless they're severely underpaid and are getting a huge pay bump.
- abalone 11y ago
  There is a huge financial incentive in the form of diversification. You'll own stock in 3 potential unicorns instead of 1, tripling your chances of getting rich. Because it's early stage, even just one year's vesting is enough to get you rich if the company makes it. So do you stay and triple down on one stock or spread it out? Especially when equity is such a large component of your compensation at that stage of company? Investment diversification is a rational economic decision that a lot of smart people will make. The current system forces teams to stick together until IPO/acquisition, maximizing the chances of the options ever being worth something. It should be made more explicit, but it's not necessarily a bad thing (for employee options holders who want them to be worth something).
  - mahyarm 11y ago
    There are (few) people who do this today. They find angel-level companies as a contractor, get paid in stock + a little bit of cash upfront and do about 10 companies a year. It's the employee equivalent of angel investing. SV law firms do a form of this too. I can't do something like that due to immigration, but I envy the flexibility.
  - st3v3r 11y ago
    No. You are vastly overestimating this "diversification" thing. We're not talking about a portfolio here, we're talking about someone's day job. Most people are not going to want to job hop that often unless they hit upon a string of really crappy companies. And quite frankly, you're basically saying that the company should not have to compete for employees. Which is such an absolute shit of an opinion that I can't even begin to tell you why.
    - abalone 11y ago
      When 20-50% of your compensation is stock then absolutely diversification becomes a consideration. While you may consider it a "day job" separate from "a portfolio", smarter economic actors may see otherwise. (Your latter comment makes no sense.)

by abalone 11y ago

deleted 11y ago

[deleted]

x0x0 11y ago

That investment advice is for when you don't have inside information. Presumably for teams of fewer than 30 employees most employees should have a good idea of the financials and a lot of knowledge about company performance.

st3v3r 11y ago

I don't buy that. Maybe one or two people will, but the vast majority of people won't. If they're happy, they're not going to want to risk that by going to a new company where they might be miserable, unless they're severely underpaid and are getting a huge pay bump.

abalone 11y ago
There is a huge financial incentive in the form of diversification. You'll own stock in 3 potential unicorns instead of 1, tripling your chances of getting rich. Because it's early stage, even just one year's vesting is enough to get you rich if the company makes it. So do you stay and triple down on one stock or spread it out? Especially when equity is such a large component of your compensation at that stage of company? Investment diversification is a rational economic decision that a lot of smart people will make. The current system forces teams to stick together until IPO/acquisition, maximizing the chances of the options ever being worth something. It should be made more explicit, but it's not necessarily a bad thing (for employee options holders who want them to be worth something).
- mahyarm 11y ago
  There are (few) people who do this today. They find angel-level companies as a contractor, get paid in stock + a little bit of cash upfront and do about 10 companies a year. It's the employee equivalent of angel investing. SV law firms do a form of this too. I can't do something like that due to immigration, but I envy the flexibility.
- st3v3r 11y ago
  No. You are vastly overestimating this "diversification" thing. We're not talking about a portfolio here, we're talking about someone's day job. Most people are not going to want to job hop that often unless they hit upon a string of really crappy companies. And quite frankly, you're basically saying that the company should not have to compete for employees. Which is such an absolute shit of an opinion that I can't even begin to tell you why.
  - abalone 11y ago
    When 20-50% of your compensation is stock then absolutely diversification becomes a consideration. While you may consider it a "day job" separate from "a portfolio", smarter economic actors may see otherwise. (Your latter comment makes no sense.)