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I feel like this is equivalent to saying that if a founder decides she will buy a house if she exits, that she is denying employees of equity. Have I missed the

I feel like this is equivalent to saying that if a founder decides she will buy a house if she exits, that she is denying employees of equity. Have I missed the point?

zerocrates 10y ago
I suppose the difference is that it's pledged: everybody including the founder knows that they're reducing their share by X amount up-front. A house isn't publicly earmarked in that kind of way, and of course, it's money spent for the founder's direct benefit rather than given away. So there's a temptation for people to say, "well clearly you're OK with reducing your compensation for [purpose X], why not for [arguably superior purpose Y]?" I'm not sure it really makes sense to think of it that way but there is a distinction.
nugga 10y ago
Now, a deal is a deal, and if they are not entitled to equity then so be it, and if you happen to be a little too late to the party then too bad, but employees work hard to create that value. I'd probably feel bummed, envious and left out if a founder with their double digit (or multi million dollar) equities flat out proclaimed to give a portion of that to charity, essentially burning that cash from my point of view, when they could've just as well rewarded the employees. And in the startup world they are probably not even paid proper market value.
- _andromeda_ 10y ago
  Classic case of the socialists' mindset that is rapidly getting prevalent in the valley; take from producers (employees/shareholders) and give to non-producers. That incentive structure is messed up; I know a great deal of people who would rather be on the receiving end of that equation without putting in the sweat equity and guess what? It's never ever going to be enough to appease them.
BinaryIdiot 10y ago
I know others already hit on it but since you replied to me: I would say those are not equivalent. With buying a house on exit you're planning on taking your money and doing something personal with it. When you're giving it to charity it's money you didn't need. If you didn't need the money, why wouldn't it go to the first employees (or even later employees) in the form of equity since they helped build the company? Surely many of them joined possibly at lower salaries to gain equity and now the founder(s) are simply giving it away to others? See the difference? Emotionally this feels awful. I was involved in something roughly sorta similar and the amount of emotion and resentment is awful. I'm now convinced more than ever that EQ (emotional intelligence) is one of the biggest parts of running a business while keeping your best talent. I see the good that can come from Founders Pledge but I also see it putting a company in a disadvantage in finding and retaining talent.
- tptacek 10y ago
  It's kind of disturbing to see (what I presume to be) a member of one of the best compensated demographics in one of the richest countries in the world suggest that while it's OK for a cashed-out founder to buy houses with their money (at least that's personal), before any of that money goes to a worthy charitable cause, other software developers should get dibs on it. I feel like you could not have fully thought this statement through.
  - BinaryIdiot 10y ago
    > It's kind of disturbing to see (what I presume to be) a member of one of the best compensated demographics in one of the richest countries in the world suggest that while it's OK for a cashed-out founder to buy houses with their money (at least that's personal), before any of that money goes to a worthy charitable cause, other software developers should get dibs on it. > I feel like you could not have fully thought this statement through. I'm not sure I follow. Are you referring to myself being white, a male, my industry, the area in which I live? Why would my post, because of my race, gender, industry, area or country, make it disturbing whereas it may not have been otherwise? Where did I say other developers should "get dibs on" another founder's equity? Who mentioned "worthy charitable cause"? There are so few but I get the general impression you chose your words to try to make my comments appear worse than what they are. When you give to charity you give money you do not need, correct? So when you pledge X percentage of your equity to charity while, at the same time, paying less than the average salary for your workers who are hoping to use their equity as another way of compensation should everything go well, you're saying that because it goes to charity and because of their demographics, everyone should feel fine? I only talked about the emotions of such a decision. If someone tells you that they don't need a certain amount of money that they only made because of your and your team's hard work and you're being underpaid, you don't think you deserve to feel slighted? Because that's exactly what happens. Next time, instead of trying to make me look like a monster for talking about feelings, how about we try to understand each other's view point and talk this out?

I feel like this is equivalent to saying that if a founder decides she will buy a house if she exits, that she is denying employees of equity. Have I missed the point?

zerocrates 10y ago

I suppose the difference is that it's pledged: everybody including the founder knows that they're reducing their share by X amount up-front. A house isn't publicly earmarked in that kind of way, and of course, it's money spent for the founder's direct benefit rather than given away. So there's a temptation for people to say, "well clearly you're OK with reducing your compensation for [purpose X], why not for [arguably superior purpose Y]?" I'm not sure it really makes sense to think of it that way but there is a distinction.

nugga 10y ago

Now, a deal is a deal, and if they are not entitled to equity then so be it, and if you happen to be a little too late to the party then too bad, but employees work hard to create that value. I'd probably feel bummed, envious and left out if a founder with their double digit (or multi million dollar) equities flat out proclaimed to give a portion of that to charity, essentially burning that cash from my point of view, when they could've just as well rewarded the employees. And in the startup world they are probably not even paid proper market value.

_andromeda_ 10y ago
Classic case of the socialists' mindset that is rapidly getting prevalent in the valley; take from producers (employees/shareholders) and give to non-producers. That incentive structure is messed up; I know a great deal of people who would rather be on the receiving end of that equation without putting in the sweat equity and guess what? It's never ever going to be enough to appease them.

BinaryIdiot 10y ago

I know others already hit on it but since you replied to me: I would say those are not equivalent. With buying a house on exit you're planning on taking your money and doing something personal with it. When you're giving it to charity it's money you didn't need. If you didn't need the money, why wouldn't it go to the first employees (or even later employees) in the form of equity since they helped build the company? Surely many of them joined possibly at lower salaries to gain equity and now the founder(s) are simply giving it away to others? See the difference? Emotionally this feels awful. I was involved in something roughly sorta similar and the amount of emotion and resentment is awful. I'm now convinced more than ever that EQ (emotional intelligence) is one of the biggest parts of running a business while keeping your best talent. I see the good that can come from Founders Pledge but I also see it putting a company in a disadvantage in finding and retaining talent.

tptacek 10y ago
It's kind of disturbing to see (what I presume to be) a member of one of the best compensated demographics in one of the richest countries in the world suggest that while it's OK for a cashed-out founder to buy houses with their money (at least that's personal), before any of that money goes to a worthy charitable cause, other software developers should get dibs on it. I feel like you could not have fully thought this statement through.
- BinaryIdiot 10y ago
  > It's kind of disturbing to see (what I presume to be) a member of one of the best compensated demographics in one of the richest countries in the world suggest that while it's OK for a cashed-out founder to buy houses with their money (at least that's personal), before any of that money goes to a worthy charitable cause, other software developers should get dibs on it. > I feel like you could not have fully thought this statement through. I'm not sure I follow. Are you referring to myself being white, a male, my industry, the area in which I live? Why would my post, because of my race, gender, industry, area or country, make it disturbing whereas it may not have been otherwise? Where did I say other developers should "get dibs on" another founder's equity? Who mentioned "worthy charitable cause"? There are so few but I get the general impression you chose your words to try to make my comments appear worse than what they are. When you give to charity you give money you do not need, correct? So when you pledge X percentage of your equity to charity while, at the same time, paying less than the average salary for your workers who are hoping to use their equity as another way of compensation should everything go well, you're saying that because it goes to charity and because of their demographics, everyone should feel fine? I only talked about the emotions of such a decision. If someone tells you that they don't need a certain amount of money that they only made because of your and your team's hard work and you're being underpaid, you don't think you deserve to feel slighted? Because that's exactly what happens. Next time, instead of trying to make me look like a monster for talking about feelings, how about we try to understand each other's view point and talk this out?