6 ms·

> One of the most unnerving aspects of life at Tanium is what's known internally as Orion's List. The CEO allegedly kept a close eye on which employees would so

by pdog 10y ago

> One of the most unnerving aspects of life at Tanium is what's known internally as Orion's List. The CEO allegedly kept a close eye on which employees would soon be eligible to take sizable chunks of stock. For those he could stand to do without, Hindawi ordered the workers to be fired before they were able to acquire the shares, according to current and former employees. Employees at startups generally take a below-market salary in exchange for equity compensation, so imagine the double humiliation of being fired because your first shred of equity is about to vest.

jacquesm 10y ago
It appears that they were fired just before their stock vested. That's why as an employee you should never agree to vest all your stock at the end of a multiple year period but in small chunks over time (annually, usually). That still carries risk but not as much. Assuming you assign value to the stock at all.
- meddlepal 10y ago
  I would run away from any deal with a multi-year all at once vesting period. It's just too clever.
- tptacek 10y ago
  Did I miss the part of this story where they said they had nonstandard vesting? The industry standard is 4 year vesting, month by month, with a 1-year cliff. The traditional horror story is employees being fired just before they cliff.
  - jacquesm 10y ago
    No, I just think GGP is mis-interpreting the situation because of the article's unfortunate wording. Once the stock is vested it stays vested. Whether it is 'worth something' or not doesn't matter, if you've got it it stays unless you sell it. I suspect 'worth something' translates into 'something for which there is an easy market', merely whether or not you can easily sell it. Whether this particular stock will go up or down after the IPO is any-body's guess.
    - tptacek 10y ago
      My sense from the story is that they're being accused of ruthlessly terminating employees just prior to their cliff.
      - jacquesm 10y ago
        Yes, so before the first batch of stock vested.
    - late2part 10y ago
      As you well know, but to clarify for others, once the stock is vested - it stays vested unless you quit and don't buy it. Once you've vested the stock and purchased it - it stays "vested" as you own it - unless it's 83b early election of stock which is restricted, and that restriction retracts over time like vesting.
    - mavelikara 10y ago
      This is true in most cases, but watch out for clawback provisions, as was in the case of Skype: http://www.businessinsider.com/how-employees-get-totally-screwed-in-private-equity-deals-2011-6 http://www.businessinsider.com/how-employees-get-totally-scr...
      - jacquesm 10y ago
        Yes, that was particularly dirty pool. Made me lose a lot of respect for the execs in that story.
  - pcl 10y ago
    I think that's becoming less of a norm. More and more companies seem to be moving to 4-year vesting, distributed annually.
    - tptacek 10y ago
      I'm a vocal defender of vesting and cliffs, but even I think you shouldn't take a job somewhere where you vest in annual chunks after your cliff.
      - jacquesm 10y ago
        It's pretty normal though. What does it cost to transfer stock in the US in a privately held company? Here in Europe it can be up to ~$1K to transfer stock in a GMBH or BV, other countries more or less depending on the local situation regarding notary public roles and rates. In a public company it is dirt cheap but this is prior to IPO. That + accelerated vesting in case of wrongful termination or termination without cause can be reason enough to batch share vesting events.
        CyrusL 10y ago
        There is no stock transfer or fees associated with the typical startup vesting schedule in the US. It's just written as an algorithm in legal documents like "...one fourth of which will vest after twelve months and blah blah blah..." The exercising is more paperwork on top of the vesting.
        deleted 10y ago
        [deleted]
skrebbel 10y ago
Wait, so besides the culture of fear and abuse as detailed in the article, they also can't ship product? Makes you wonder whether there's anything, at all, this company's management is competent at. I guess CEO (the founder's son) didn't go through the usual hiring process.
- skrebbel 10y ago
  TOO LATE TO EDIT: I replied the above to the wrong comment, please ignore. Sorry for the noise. Moderators, feel free to delete.
balladeer 10y ago
My friend worked for startup, here in India, that was doing work with drones and water level measurements or something like that. It was and still is a pre-VC startup. He had left a huge European MNC where did cutting edge research but was bored and needed the bleeding edge rush and excitement as he put it. He's awesome in his field and then excellent at coding too (not a CSE grad) he was paid really grand in that MNC. So he was getting less than half of his MNC salary at this drone startup. He was totally immersed in making and breaking things with weekends stopping to exist for him and evenings and nights blurring. For pretty much 10 months. He was asked to resign a day after demo day where potential investors raved about the product his team (3 people) had finished. Another team mate was also asked to leave within a week. Both of them were given a reason on the lines "excellent engineer but won't be a good fit in the culture and your product was not well appreciated". Only remaining team mate was a confounder who used to pass on requirements. Of course both ex employed didn't get anything. He said he needed at least 2 more months to get some stocks as he would get instalments after every completed year. He took a break of around two months. Relaxing, slowly getting back to rhythm. Him being good and being from IITB meant he had literally hundreds of recruiter mails every week. But he calmly deleted any mail which had startup mentioned anywhere in it. Sometimes back his previous manager recruited him back at the same European MNC with a substantial pay raise. My point of writing isn't sharing a generic burnt by a startup anecdote with you. He tries to remain calm but I, and many other friends, can see that he has been deeply scarred by the deception and (I would call it) betrayal.
- laughingman2 10y ago
  This is direct result of capitalism. Employees who put their heart and soul to build something don't own it in capitalistic model. Only the owner by virtue of being owner of private property/company has right to it. Treating people as means to an end, which capitalism encourages leads to this model. I think economy dependent on human creativity will hit a ceiling, if they continue to remove ownership of content from the creators. The creators can be anything from a humble web developer or someone like your friend.
- jacquesm 10y ago
  I've had something similar to this happen early in my career, it took two years out of my life and cost me what I thought was a good personal relationship but which turned out to be just predatory in retrospect. Those are expensive lessons, your view of humanity will likely never be quite the same afterwards. The fact that the guy crashed and burned gives me no comfort at all. Even so, I do realize I had a part in that, if I had been a little bit smarter I could have educated myself on this stuff before accepting. And that's where the world today is different than in the past: we now have world-wide networks of people in tech that can warn each other. So every story like the one you told here should help to keep other technical people safe from predatory behavior. I wrote about my experience here: https://jacquesmattheij.com/the-start-up-from-hell https://jacquesmattheij.com/the-start-up-from-hell Apologies for the pictures not working, I still need to fix that after the latest domain shuffle.
JonFish85 10y ago
If generally an employee stock option pool is ~5% of the company, then why is it worth spending time optimizing for that by firing people before stock vests? I suppose it'd be possible that management/investors view the employee ownership as getting out of hand, but even if the options pool is 10-15% (which I think would be fairly ridiculously large), it's likely mostly held by early employees who may have already vested. It just seems like a silly thing to spend time doing, monitoring who will be vesting soon to fire them. Sure, maybe for one or two executives who are vesting integer percents of stock, but beyond that, it's not worth the time, and definitely not worth the backlash.
- chrisbennet 10y ago
  Greed isn't always rational. Scott Kupor [managing partner at VC firm Andreessen Horowitz] wrote an article [1] suggesting that a 10 year exercise window for employees who leave: " is really a direct wealth transfer from the employees who choose to remain at the company and build future shareholder value, to former employees who are no longer contributing to building the business/ its ultimate value." This seems to suggest that the "investment" by early employees who leave shouldn't be treated like the early investments from VC's who decline to keep investing at some point. [1] http://a16z.com/2016/06/23/options-timing/ http://a16z.com/2016/06/23/options-timing/
  - gkop 10y ago
    Wow. Remind me never to be an employee at one of Scott's portfolio companies.

by pdog 10y ago

jacquesm 10y ago

It appears that they were fired just before their stock vested. That's why as an employee you should never agree to vest all your stock at the end of a multiple year period but in small chunks over time (annually, usually). That still carries risk but not as much. Assuming you assign value to the stock at all.

meddlepal 10y ago
I would run away from any deal with a multi-year all at once vesting period. It's just too clever.
tptacek 10y ago
Did I miss the part of this story where they said they had nonstandard vesting? The industry standard is 4 year vesting, month by month, with a 1-year cliff. The traditional horror story is employees being fired just before they cliff.
- jacquesm 10y ago
  No, I just think GGP is mis-interpreting the situation because of the article's unfortunate wording. Once the stock is vested it stays vested. Whether it is 'worth something' or not doesn't matter, if you've got it it stays unless you sell it. I suspect 'worth something' translates into 'something for which there is an easy market', merely whether or not you can easily sell it. Whether this particular stock will go up or down after the IPO is any-body's guess.
  - tptacek 10y ago
    My sense from the story is that they're being accused of ruthlessly terminating employees just prior to their cliff.
    - jacquesm 10y ago
      Yes, so before the first batch of stock vested.
  - late2part 10y ago
    As you well know, but to clarify for others, once the stock is vested - it stays vested unless you quit and don't buy it. Once you've vested the stock and purchased it - it stays "vested" as you own it - unless it's 83b early election of stock which is restricted, and that restriction retracts over time like vesting.
  - mavelikara 10y ago
    This is true in most cases, but watch out for clawback provisions, as was in the case of Skype: http://www.businessinsider.com/how-employees-get-totally-screwed-in-private-equity-deals-2011-6 http://www.businessinsider.com/how-employees-get-totally-scr...
    - jacquesm 10y ago
      Yes, that was particularly dirty pool. Made me lose a lot of respect for the execs in that story.
- pcl 10y ago
  I think that's becoming less of a norm. More and more companies seem to be moving to 4-year vesting, distributed annually.
  - tptacek 10y ago
    I'm a vocal defender of vesting and cliffs, but even I think you shouldn't take a job somewhere where you vest in annual chunks after your cliff.
    - jacquesm 10y ago
      It's pretty normal though. What does it cost to transfer stock in the US in a privately held company? Here in Europe it can be up to ~$1K to transfer stock in a GMBH or BV, other countries more or less depending on the local situation regarding notary public roles and rates. In a public company it is dirt cheap but this is prior to IPO. That + accelerated vesting in case of wrongful termination or termination without cause can be reason enough to batch share vesting events.
      - CyrusL 10y ago
        There is no stock transfer or fees associated with the typical startup vesting schedule in the US. It's just written as an algorithm in legal documents like "...one fourth of which will vest after twelve months and blah blah blah..." The exercising is more paperwork on top of the vesting.
      - deleted 10y ago
        [deleted]

skrebbel 10y ago

Wait, so besides the culture of fear and abuse as detailed in the article, they also can't ship product? Makes you wonder whether there's anything, at all, this company's management is competent at. I guess CEO (the founder's son) didn't go through the usual hiring process.

skrebbel 10y ago
TOO LATE TO EDIT: I replied the above to the wrong comment, please ignore. Sorry for the noise. Moderators, feel free to delete.

balladeer 10y ago

My friend worked for startup, here in India, that was doing work with drones and water level measurements or something like that. It was and still is a pre-VC startup. He had left a huge European MNC where did cutting edge research but was bored and needed the bleeding edge rush and excitement as he put it. He's awesome in his field and then excellent at coding too (not a CSE grad) he was paid really grand in that MNC. So he was getting less than half of his MNC salary at this drone startup. He was totally immersed in making and breaking things with weekends stopping to exist for him and evenings and nights blurring. For pretty much 10 months. He was asked to resign a day after demo day where potential investors raved about the product his team (3 people) had finished. Another team mate was also asked to leave within a week. Both of them were given a reason on the lines "excellent engineer but won't be a good fit in the culture and your product was not well appreciated". Only remaining team mate was a confounder who used to pass on requirements. Of course both ex employed didn't get anything. He said he needed at least 2 more months to get some stocks as he would get instalments after every completed year. He took a break of around two months. Relaxing, slowly getting back to rhythm. Him being good and being from IITB meant he had literally hundreds of recruiter mails every week. But he calmly deleted any mail which had startup mentioned anywhere in it. Sometimes back his previous manager recruited him back at the same European MNC with a substantial pay raise. My point of writing isn't sharing a generic burnt by a startup anecdote with you. He tries to remain calm but I, and many other friends, can see that he has been deeply scarred by the deception and (I would call it) betrayal.

laughingman2 10y ago
This is direct result of capitalism. Employees who put their heart and soul to build something don't own it in capitalistic model. Only the owner by virtue of being owner of private property/company has right to it. Treating people as means to an end, which capitalism encourages leads to this model. I think economy dependent on human creativity will hit a ceiling, if they continue to remove ownership of content from the creators. The creators can be anything from a humble web developer or someone like your friend.
jacquesm 10y ago
I've had something similar to this happen early in my career, it took two years out of my life and cost me what I thought was a good personal relationship but which turned out to be just predatory in retrospect. Those are expensive lessons, your view of humanity will likely never be quite the same afterwards. The fact that the guy crashed and burned gives me no comfort at all. Even so, I do realize I had a part in that, if I had been a little bit smarter I could have educated myself on this stuff before accepting. And that's where the world today is different than in the past: we now have world-wide networks of people in tech that can warn each other. So every story like the one you told here should help to keep other technical people safe from predatory behavior. I wrote about my experience here: https://jacquesmattheij.com/the-start-up-from-hell https://jacquesmattheij.com/the-start-up-from-hell Apologies for the pictures not working, I still need to fix that after the latest domain shuffle.

JonFish85 10y ago

If generally an employee stock option pool is ~5% of the company, then why is it worth spending time optimizing for that by firing people before stock vests? I suppose it'd be possible that management/investors view the employee ownership as getting out of hand, but even if the options pool is 10-15% (which I think would be fairly ridiculously large), it's likely mostly held by early employees who may have already vested. It just seems like a silly thing to spend time doing, monitoring who will be vesting soon to fire them. Sure, maybe for one or two executives who are vesting integer percents of stock, but beyond that, it's not worth the time, and definitely not worth the backlash.

chrisbennet 10y ago
Greed isn't always rational. Scott Kupor [managing partner at VC firm Andreessen Horowitz] wrote an article [1] suggesting that a 10 year exercise window for employees who leave: " is really a direct wealth transfer from the employees who choose to remain at the company and build future shareholder value, to former employees who are no longer contributing to building the business/ its ultimate value." This seems to suggest that the "investment" by early employees who leave shouldn't be treated like the early investments from VC's who decline to keep investing at some point. [1] http://a16z.com/2016/06/23/options-timing/ http://a16z.com/2016/06/23/options-timing/
- gkop 10y ago
  Wow. Remind me never to be an employee at one of Scott's portfolio companies.