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Zach's advocacy of GitHub was one of the reasons I became such a fan over the years. Ever since they fired him, things haven't quite felt the same... I don't kn

by Smudge 10y ago

Zach's advocacy of GitHub was one of the reasons I became such a fan over the years. Ever since they fired him, things haven't quite felt the same... I don't know the exact circumstances around his departure, but I do know that GitHub lost someone who, for me, had become one of the leading faces of the company. Of course, maybe that's exactly why the let him go. Regardless, I'm looking forward to seeing him do the same for GitLab. (Minus the firing.)

muglug 10y ago
He discussed the firing here: https://zachholman.com/talk/firing-people https://zachholman.com/talk/firing-people
- x0x0 10y ago
  Wow. That really tanked my opinion of github. I had been talking to various officials in leadership for a few months hammering out the details and had been under the impression that we had reached an agreement, but I was surprised to find out that wasn’t the case. I was informed 28 hours before my 90 day window closed that the agreement I had thought I had didn’t exist; it was then that I realized I had 28 hours to either come up with hundreds of thousands of dollars that I didn’t have to save half of my stock, or I could sign the agreement as-is and avoid losing half of my already-diminished stake. I opted to sign. [...] But I still haven’t found the next thing I’m really interested in, which just feeds into the whole cycle some more. For better or worse, that’ll be changing pretty quickly, since I’m pretty broke after working part-time and living in San Francisco for so long. Even though I helped move a company’s valuation almost two billion dollars, I haven’t made a dime from the company outside of making a pretty below-to-average salary. That’s after six years. Think on that, kids, when you’re busting your ass day and night to strike it rich with your startup dreams. I've read on here about Etsy similarly fucking employees who left. Those options are worth a lot less than you think they are. One of the wonders of cash is it's very hard for companies to retroactively steal it back. If you're going to a company that gives options, demand either an 83b or iso to nso flip / 10 year exercise window.
  - deleted 10y ago
    [deleted]
  - hkmurakami 10y ago
    >demand either an 83b What you actually need to ask for in this case is RSUs (vs options). The 83b election is something you independently file with the IRS. (you may need a letter from the company for proof, but they'll have drafts of those already that they've used for the founders -- speaking from experience as the person who set this up for our company) However, RSUs only make sense in the seed stage. Past A round, the 10 year exercise window or an early exercise clause of ISOs into RSUs might make sense depending on the numbers, but likely not.
    - abalone 10y ago
      Can you explain why RSUs are better than ISOs that convert to NSOs on departure?
      - hkmurakami 10y ago
        long term capital gains. "Which one is better" depends on many factors including stage of company, risk tolerance of individual, legal precedence, marginal tax rates, outside wealth, etc.
        x0x0 10y ago
        The benefit of iso->nso flips is, afaik, it's way cheaper than rsus for the employer and it gives the employee the ability to wait until you're in the money before exercising
        hkmurakami 10y ago
        Yes it is definitely a tradeoff for the employee. For the employer, the cost of issuing RSUs I believe is tied with the fact that there would be no chance that the employee let go of their shares via not exercising their options (I do not believe RSUs are subject to employment tax). But if you have 10 year exercise periods, that accomplishes the same thing for the employer's perspective. The difference them becomes the tradeoff for the employee between optionality and a possibly lower tax rate.
- educar 10y ago
  This was a great read. More than him getting fired, I was more upset about the below: Even though I helped move a company’s valuation almost two billion dollars, I haven’t made a dime from the company outside of making a pretty below-to-average salary. That’s after six years. I guess the thing was, I was reading the whole article with a 'Shit happens to millionaires' mindset. That totally changed everything in my head.
- abalone 10y ago
  "I had 28 hours to either come up with hundreds of thousands of dollars that I didn’t have to save half of my stock, or I could sign the agreement as-is and avoid losing half of my already-diminished stake" Can anyone unpack this statement a bit more? What is "already diminished stake" in reference to? Is this saying that Github made some kind of offer that would let him keep half his vested options without putting any money up, like converting them to NSOs or something? I'd really like to understand how companies handle exits like this. Certainly it's a valid perspective that employees are entitled to 100% of their vested options. But, devil's advocate: There is also the counterpoint that pre-IPO valuations are very high and based on special terms given to private investors, so maybe there is a rationale to negotiating a discount on pre-IPO exits. I would like to understand if Github acted out of good faith here to any degree, i.e. where they were not contractually obligated to. I also understand Holman noted he hasn't "made a dime" from the company outside his salary, which would be completely f'd up. But it's unclear to me whether that's merely in reference to liquidity or if he actually walked away with no stock. It sounds like he did walk away with some stock as a result of a negotiated agreement with Github.

by Smudge 10y ago

muglug 10y ago

He discussed the firing here: https://zachholman.com/talk/firing-people https://zachholman.com/talk/firing-people

x0x0 10y ago
Wow. That really tanked my opinion of github. I had been talking to various officials in leadership for a few months hammering out the details and had been under the impression that we had reached an agreement, but I was surprised to find out that wasn’t the case. I was informed 28 hours before my 90 day window closed that the agreement I had thought I had didn’t exist; it was then that I realized I had 28 hours to either come up with hundreds of thousands of dollars that I didn’t have to save half of my stock, or I could sign the agreement as-is and avoid losing half of my already-diminished stake. I opted to sign. [...] But I still haven’t found the next thing I’m really interested in, which just feeds into the whole cycle some more. For better or worse, that’ll be changing pretty quickly, since I’m pretty broke after working part-time and living in San Francisco for so long. Even though I helped move a company’s valuation almost two billion dollars, I haven’t made a dime from the company outside of making a pretty below-to-average salary. That’s after six years. Think on that, kids, when you’re busting your ass day and night to strike it rich with your startup dreams. I've read on here about Etsy similarly fucking employees who left. Those options are worth a lot less than you think they are. One of the wonders of cash is it's very hard for companies to retroactively steal it back. If you're going to a company that gives options, demand either an 83b or iso to nso flip / 10 year exercise window.
- deleted 10y ago
  [deleted]
- hkmurakami 10y ago
  >demand either an 83b What you actually need to ask for in this case is RSUs (vs options). The 83b election is something you independently file with the IRS. (you may need a letter from the company for proof, but they'll have drafts of those already that they've used for the founders -- speaking from experience as the person who set this up for our company) However, RSUs only make sense in the seed stage. Past A round, the 10 year exercise window or an early exercise clause of ISOs into RSUs might make sense depending on the numbers, but likely not.
  - abalone 10y ago
    Can you explain why RSUs are better than ISOs that convert to NSOs on departure?
    - hkmurakami 10y ago
      long term capital gains. "Which one is better" depends on many factors including stage of company, risk tolerance of individual, legal precedence, marginal tax rates, outside wealth, etc.
      - x0x0 10y ago
        The benefit of iso->nso flips is, afaik, it's way cheaper than rsus for the employer and it gives the employee the ability to wait until you're in the money before exercising
        hkmurakami 10y ago
        Yes it is definitely a tradeoff for the employee. For the employer, the cost of issuing RSUs I believe is tied with the fact that there would be no chance that the employee let go of their shares via not exercising their options (I do not believe RSUs are subject to employment tax). But if you have 10 year exercise periods, that accomplishes the same thing for the employer's perspective. The difference them becomes the tradeoff for the employee between optionality and a possibly lower tax rate.
educar 10y ago
This was a great read. More than him getting fired, I was more upset about the below: Even though I helped move a company’s valuation almost two billion dollars, I haven’t made a dime from the company outside of making a pretty below-to-average salary. That’s after six years. I guess the thing was, I was reading the whole article with a 'Shit happens to millionaires' mindset. That totally changed everything in my head.
abalone 10y ago
"I had 28 hours to either come up with hundreds of thousands of dollars that I didn’t have to save half of my stock, or I could sign the agreement as-is and avoid losing half of my already-diminished stake" Can anyone unpack this statement a bit more? What is "already diminished stake" in reference to? Is this saying that Github made some kind of offer that would let him keep half his vested options without putting any money up, like converting them to NSOs or something? I'd really like to understand how companies handle exits like this. Certainly it's a valid perspective that employees are entitled to 100% of their vested options. But, devil's advocate: There is also the counterpoint that pre-IPO valuations are very high and based on special terms given to private investors, so maybe there is a rationale to negotiating a discount on pre-IPO exits. I would like to understand if Github acted out of good faith here to any degree, i.e. where they were not contractually obligated to. I also understand Holman noted he hasn't "made a dime" from the company outside his salary, which would be completely f'd up. But it's unclear to me whether that's merely in reference to liquidity or if he actually walked away with no stock. It sounds like he did walk away with some stock as a result of a negotiated agreement with Github.