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In my opinion, the current situation, and lack of golden standards with the employee equity, especially early employee equity poisons the atmosphere in the Sili

In my opinion, the current situation, and lack of golden standards with the employee equity, especially early employee equity poisons the atmosphere in the Silicon Valley like nothing else. Early employees often take most of the risk that the founders take, plus they have no control, plus no access to information that founders have, plus they have the risk of negative impact on their careers even after leaving the startup (think no-compete agreements, arbitrary feedback from immature founders, etc). I think incubators like YC should understand that in the long term it would harm their business and should act and fix it. And formalize the contracts with early employees. Personally, I think that the golden rule should be that the equity in the startup should be determined by risk / value that every investor (including founders, employees) takes / brings in during the life time of the company. To evaluate what founders / employees bring in - just take inflation adjusted average yearly income, over previous five years. Adjust to the hours they are working, add any investments they are bringing in. Adjust, based on the risk profile of the company and their position in the company. What we have right now, with cliffs/vesting/dilutions/option expiration is a kludge, this kludge is ridiculous. And the result is that professionals just avoid joining startups as employees.

x0x0 10y ago
afaik (talk to your lawyer when changing jobs! they're really not that expensive!) non-competes are unenforceable in the vast majority of cases in CA. There may be limited exceptions for executives. There is even a question if asking for it invalidates the entire employee agreement.
- dchichkov 10y ago
  Yes. That is true. Over-complicated contracts, that can not be enforced. And required step of talking to a lawyer, before accepting an engineering contract in a startup. This is exactly why forward looking entities, like YC should look at it, and standardize it in a reasonable way. Rewarding risk of employees, founders and investors alike. Non-competes, as far as I understand, are not enforcible, in the job contract. The area is pretty gray, if it is in the conditions are on the equity/options ownership. And obviously that's what the companies are doing - moving non-competes and IP grabs into the equity ownership, because, it is non-enforcible in the work contract.

x0x0 10y ago

afaik (talk to your lawyer when changing jobs! they're really not that expensive!) non-competes are unenforceable in the vast majority of cases in CA. There may be limited exceptions for executives. There is even a question if asking for it invalidates the entire employee agreement.

dchichkov 10y ago
Yes. That is true. Over-complicated contracts, that can not be enforced. And required step of talking to a lawyer, before accepting an engineering contract in a startup. This is exactly why forward looking entities, like YC should look at it, and standardize it in a reasonable way. Rewarding risk of employees, founders and investors alike. Non-competes, as far as I understand, are not enforcible, in the job contract. The area is pretty gray, if it is in the conditions are on the equity/options ownership. And obviously that's what the companies are doing - moving non-competes and IP grabs into the equity ownership, because, it is non-enforcible in the work contract.