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I don't understand where you're saying that employees aren't also going for a home run or bust outcome. That's exactly what they signed up for when they took th

by Trundle 11y ago

I don't understand where you're saying that employees aren't also going for a home run or bust outcome. That's exactly what they signed up for when they took that job instead of with a more established company. "Bust" is the most likely outcome when you sign up to work for a startup, so unless their goals/wants have changed I don't see why they'd want to jump ship now.

jacquesm 11y ago
The Spotify that raised it's initial round has a completely different risk profile than the Spotify that exists today. Employees as a rule are not looking at the company in the same way that investors and founders do. If you have evidence that employees as a rule understand the amount of risk involved and that they understand fully that the most likely value of their stock options is zero then I'm definitely all ears. But that's usually not how it's being sold. In fact, it is sold along the lines of 'we're not going to pay you your market rate but you have quite a bit of stock (in reality .000001% (or some other rounding error)) if you work really hard for the next 4 years YOU TOO WILL BE RICH. But the number of employees that actually do end up like this is small. Still larger than the number of founders but the founders really will be rich, the employees are lucky if they make up for their lost income. Of course some employees will be more savvy than others and will negotiate a wage that reflects the reality of start-up life but more often than not the employees accept (substantially) below market wages in return for a bunch of empty promise. Feel free to blame them for not being informed, but to claim they have 'the same incentives' is definitely not the case in my experience.
- Trundle 11y ago
  I don't think blame is relevant, they haven't done anything wrong, just potentially not ideal for themselves. If you're coming from the point of thinking that you know better than the employees on how to achieve their goals, and that they shouldn't be gambling their time hoping for a hugely successful company, then your argument does make sense. However if that's the case, it looks like you've just used a lot of words to effectively say "Accepting equity as payment for working at a startup is a poor decision so therefore employee interests were never aligned with those of the founders".
  - jacquesm 11y ago
    > If you're coming from the point of thinking that you know better than the employees on how to achieve their goals, and that they shouldn't be gambling their time hoping for a hugely successful company, then your argument does make sense. I'm perfectly ok with it if employees were actually given all the relevant bits of information and if they actually were aware of all the potential outcomes. There is a lot of selling going on here that I'm not ok with. And yes, I've used a lot of words to say exactly that. Thank you for putting it more concisely, the risk:reward ratio for employees and founders is vastly different. Founders 'risk everything' but looked at in a different way founders risk just as much - their time, and the potential upside for a founder is much, much larger than for an early employee. Oldest game in town.

by Trundle 11y ago

jacquesm 11y ago

The Spotify that raised it's initial round has a completely different risk profile than the Spotify that exists today. Employees as a rule are not looking at the company in the same way that investors and founders do. If you have evidence that employees as a rule understand the amount of risk involved and that they understand fully that the most likely value of their stock options is zero then I'm definitely all ears. But that's usually not how it's being sold. In fact, it is sold along the lines of 'we're not going to pay you your market rate but you have quite a bit of stock (in reality .000001% (or some other rounding error)) if you work really hard for the next 4 years YOU TOO WILL BE RICH. But the number of employees that actually do end up like this is small. Still larger than the number of founders but the founders really will be rich, the employees are lucky if they make up for their lost income. Of course some employees will be more savvy than others and will negotiate a wage that reflects the reality of start-up life but more often than not the employees accept (substantially) below market wages in return for a bunch of empty promise. Feel free to blame them for not being informed, but to claim they have 'the same incentives' is definitely not the case in my experience.

Trundle 11y ago
I don't think blame is relevant, they haven't done anything wrong, just potentially not ideal for themselves. If you're coming from the point of thinking that you know better than the employees on how to achieve their goals, and that they shouldn't be gambling their time hoping for a hugely successful company, then your argument does make sense. However if that's the case, it looks like you've just used a lot of words to effectively say "Accepting equity as payment for working at a startup is a poor decision so therefore employee interests were never aligned with those of the founders".
- jacquesm 11y ago
  > If you're coming from the point of thinking that you know better than the employees on how to achieve their goals, and that they shouldn't be gambling their time hoping for a hugely successful company, then your argument does make sense. I'm perfectly ok with it if employees were actually given all the relevant bits of information and if they actually were aware of all the potential outcomes. There is a lot of selling going on here that I'm not ok with. And yes, I've used a lot of words to say exactly that. Thank you for putting it more concisely, the risk:reward ratio for employees and founders is vastly different. Founders 'risk everything' but looked at in a different way founders risk just as much - their time, and the potential upside for a founder is much, much larger than for an early employee. Oldest game in town.