3 ms·

Doesn't it seem like kind of a dick move to give no equity to any of the 75 employees?

• cperciva 10y ago
  They joined the company knowing that they weren't getting any equity. Also, it sounds like most of the value of the company existed before he hired his first employee.
  • jchendy 10y ago
    > They joined the company knowing that they weren't getting any equity. Lots of people join companies on bad terms either because they don't realize the terms are bad or because they're desperate for any kind of income. That doesn't absolve the company of any blame for mistreating its workers. (I'm not necessarily suggesting that PoF was actually giving bad terms, it's possible they were paying amazing salaries)
    • vacri 10y ago
      What a strange bubble we reside in, where not getting equity in the company you're employed by is considered 'mistreatment'...
  • SatvikBeri 10y ago
    To corroborate this, I joined one fintech startup when it had 7 people, with no equity, based on salary. The founder's rationale for paying higher salaries and not offering equity was that equity is worth substantially more to founders/investors than employees, due to factors like risk preferences and the fact that they could diversify, so it made more sense for him to just raise more money and pay purely in cash. This made sense to me and I actually wonder why it isn't more common.
    • cperciva 10y ago
      I think there are some strong arguments in favour of equity grants: 1. Startups face high frictional costs when selling their equity; providing equity grants along with lower salaries may help to avoid cash-flow problems arising from the inefficiency in the market. 2. In a early-stage startup with inexperienced employees, providing equity grants can remove much of the valuation risk from employees' wages; if they do exceptionally good work, they'll automatically be compensated more by virtue of the increased value of their equity. (This also provides an argument for vesting cliffs: If an employee does exceptionally poor work, they can be fired before the cliff and their compensation is effectively reduced to match the quality of the work they performed.) 3. Psychological biases result in people working irrationally hard for companies which they feel that they "own", even if their ownership share is extremely small. 4. In some cases there may be income tax arbitrage advantages.
• koolba 10y ago
  > Doesn't it seem like kind of a dick move to give no equity to any of the 75 employees? It's more of dick move to hang worthless equity as a carrot in front of people who don't know any better. Salaries have no vesting periods, no dilution[1], and are presented in cash. [1]: Outside of inflation :)
  • jchendy 10y ago
    Definitely a good salary is more important than equity, but there's nothing stopping you from having both. :)
    • wlievens 10y ago
      It's true, and it happens, not just in Big Companies.
• cl42 10y ago
  This assumes he had a clear exit strategy. If you read his interviews, it doesn't sound like he was gunning for a major exit -- it just sort of happened. I'd say giving equity to employees when you have no clear interest in exiting, is a dick move.