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> 1. The valuation you will get from the founders before being hired ("your equity will be worth $X millions when we IPO") is unrealistically optimistic. Even o

> 1. The valuation you will get from the founders before being hired ("your equity will be worth $X millions when we IPO") is unrealistically optimistic. Even on the remote chance your startup becomes a huge success, you'll see a small fraction of that at best. If a founder is selling you on anything but a very sober view of the stock that's a great signal to not join the company. Even so, it is not too difficult to model a few reasonable dilution, acquisition etc. scenarios and get a feel for how you'd do in each. > 2. Unless you have a lot of influence on the board and majority shareholders (you won't), you can't really protect yourself from losing all the value of your stock. Sort of. The reason this doesn't really happen much in practice is that it destroys the company's talent pool and ability to hire in the future. Most companies that are succeeding don't tend to screw employees, it's only when they've entered the "squeezing blood from a stone" phase that these things start happening, and at that point the stock's not worth much anyway.

dunpeal 8y ago
> If a founder is selling you on anything but a very sober view of the stock that's a great signal to not join the company. Have you interviewed in many startups? "Sober view" is not what you'd get from a founder hard-selling you on any role. Try "wildly optimistic, unrealistically so". > Even so, it is not too difficult to model a few reasonable dilution, acquisition etc. scenarios and get a feel for how you'd do in each. Eh. Unless it's a late-stage startups (which is not the typical scenario), it's very hard to know what will happen. You can model some events, but the key question remains unanswered: how successful is this going to be? Absent this crucial detail, any talk of future outcomes represents, at best, some good intentions. Even the most generous founder can't do much for you when his startup fails to make any money and runs out of funding. > Most companies that are succeeding don't tend to screw employees, it's only when they've entered the "squeezing blood from a stone" phase that these things start happening, and at that point the stock's not worth much anyway. It's true that companies tend to be more generous when they are successful, and most of the nastiness and screwing people over happens when things are going south. Still, you overestimate how much damage screwing people will do, and underestimate how greedy various decision makers can get. There are unfortunately many cases in which the startup had a good exit, yet everyone below the top saw little or no money. There are even cases where the startup had an incredible exit, and still went out of its way to suck all potential earnings out of its employees pockets. For example, Skype exited for $8.5bn, yet made sure to claw-back any potential gains from multiple employees, using an obscure small-print clause that essentially made even vested stock worthless: https://techcrunch.com/2011/06/26/skypes-worthless-employee-stock-option-plan-heres-why-they-did-it/ https://techcrunch.com/2011/06/26/skypes-worthless-employee-... Apparently, they weren't too concerned about "poisoning the talent pool", which seems like good judgment, given how nobody seems to even remember this incident anymore.
- wdewind 8y ago
  > Have you interviewed in many startups? "Sober view" is not what you'd get from a founder hard-selling you on any role. Try "wildly optimistic, unrealistically so". Don't join those companies. I've spent over a decade in the startup industry, I've interviewed at a ton of startups. Most startups are not worth working at. > Eh. Unless it's a late-stage startups (which is not the typical scenario), it's very hard to know what will happen. You can model some events, but the key question remains unanswered: how successful is this going to be? Right, that's exactly what I said...in the case that it's not successful it's not like anyone is getting rich, so in that case it's not like employees have been "screwed out" of options. In reference to Skype: they did absolutely poison the talent pool look at you remembering and posting this article. Are you or anyone reading this thread ever going to consider working for Skype? Why else would TechCrunch cover it? Not only that, the agreement that Skype offered did not change, so a bunch of people signed a shitty agreement and are then upset that it didn't work out well. This is not the rug being pulled out from underneath engineers, this is engineers not understanding what they are signing. You're right that most startup options are worthless, but not all are, and that doesn't mean you can't reason about which are worthless and which are not.
  - dunpeal 8y ago
    > Most startups are not worth working at. I agree completely, which is why I stopped working at startups myself. The question was about how startups are in general, so we must acknowledge that wildly optimistic equity value expectations are the norm. "Just don't work at these places" isn't viable advice when the vast majority of startups are like this. Like it or not, most people open to working for a startup will end up working for a startup like this, where the founder tells all candidates their 0.0001% is going to be worth millions because the startup is taking over a $300bn industry. > Right, that's exactly what I said...in the case that it's not successful it's not like anyone is getting rich, so in that case it's not like employees have been "screwed out" of options. Sure, but modelling liquidity events and such is totally worthless if the most important number isn't known. Especially when that most important number dominates the others. How many funding rounds is the startup going to have? Totally depends on its revenue. Same for dilution, and how likely they are to look for ways to screw regular shareholders over. > In reference to Skype: they did absolutely poison the talent pool look at you remembering and posting this article. So one person in a huge thread is evidence Skype paid dearly for that massive shit show? Let's get real. The typical fresh graduate hasn't even heard of the Skype IPO. Skype is now part of MS. Even hearing of this awful story, would anyone refrain from joining MS because of it? I doubt. > You're right that most startup options are worthless, but not all are, and that doesn't mean you can't reason about which are worthless and which are not. This reply was for someone who is the average financially-non-savvy startup employee. It's not for me, maybe also not for you. If I was looking to work for a startup again, I'd know what to look for, and what to avoid.

dunpeal 8y ago

> If a founder is selling you on anything but a very sober view of the stock that's a great signal to not join the company. Have you interviewed in many startups? "Sober view" is not what you'd get from a founder hard-selling you on any role. Try "wildly optimistic, unrealistically so". > Even so, it is not too difficult to model a few reasonable dilution, acquisition etc. scenarios and get a feel for how you'd do in each. Eh. Unless it's a late-stage startups (which is not the typical scenario), it's very hard to know what will happen. You can model some events, but the key question remains unanswered: how successful is this going to be? Absent this crucial detail, any talk of future outcomes represents, at best, some good intentions. Even the most generous founder can't do much for you when his startup fails to make any money and runs out of funding. > Most companies that are succeeding don't tend to screw employees, it's only when they've entered the "squeezing blood from a stone" phase that these things start happening, and at that point the stock's not worth much anyway. It's true that companies tend to be more generous when they are successful, and most of the nastiness and screwing people over happens when things are going south. Still, you overestimate how much damage screwing people will do, and underestimate how greedy various decision makers can get. There are unfortunately many cases in which the startup had a good exit, yet everyone below the top saw little or no money. There are even cases where the startup had an incredible exit, and still went out of its way to suck all potential earnings out of its employees pockets. For example, Skype exited for $8.5bn, yet made sure to claw-back any potential gains from multiple employees, using an obscure small-print clause that essentially made even vested stock worthless: https://techcrunch.com/2011/06/26/skypes-worthless-employee-stock-option-plan-heres-why-they-did-it/ https://techcrunch.com/2011/06/26/skypes-worthless-employee-... Apparently, they weren't too concerned about "poisoning the talent pool", which seems like good judgment, given how nobody seems to even remember this incident anymore.

wdewind 8y ago
> Have you interviewed in many startups? "Sober view" is not what you'd get from a founder hard-selling you on any role. Try "wildly optimistic, unrealistically so". Don't join those companies. I've spent over a decade in the startup industry, I've interviewed at a ton of startups. Most startups are not worth working at. > Eh. Unless it's a late-stage startups (which is not the typical scenario), it's very hard to know what will happen. You can model some events, but the key question remains unanswered: how successful is this going to be? Right, that's exactly what I said...in the case that it's not successful it's not like anyone is getting rich, so in that case it's not like employees have been "screwed out" of options. In reference to Skype: they did absolutely poison the talent pool look at you remembering and posting this article. Are you or anyone reading this thread ever going to consider working for Skype? Why else would TechCrunch cover it? Not only that, the agreement that Skype offered did not change, so a bunch of people signed a shitty agreement and are then upset that it didn't work out well. This is not the rug being pulled out from underneath engineers, this is engineers not understanding what they are signing. You're right that most startup options are worthless, but not all are, and that doesn't mean you can't reason about which are worthless and which are not.
- dunpeal 8y ago
  > Most startups are not worth working at. I agree completely, which is why I stopped working at startups myself. The question was about how startups are in general, so we must acknowledge that wildly optimistic equity value expectations are the norm. "Just don't work at these places" isn't viable advice when the vast majority of startups are like this. Like it or not, most people open to working for a startup will end up working for a startup like this, where the founder tells all candidates their 0.0001% is going to be worth millions because the startup is taking over a $300bn industry. > Right, that's exactly what I said...in the case that it's not successful it's not like anyone is getting rich, so in that case it's not like employees have been "screwed out" of options. Sure, but modelling liquidity events and such is totally worthless if the most important number isn't known. Especially when that most important number dominates the others. How many funding rounds is the startup going to have? Totally depends on its revenue. Same for dilution, and how likely they are to look for ways to screw regular shareholders over. > In reference to Skype: they did absolutely poison the talent pool look at you remembering and posting this article. So one person in a huge thread is evidence Skype paid dearly for that massive shit show? Let's get real. The typical fresh graduate hasn't even heard of the Skype IPO. Skype is now part of MS. Even hearing of this awful story, would anyone refrain from joining MS because of it? I doubt. > You're right that most startup options are worthless, but not all are, and that doesn't mean you can't reason about which are worthless and which are not. This reply was for someone who is the average financially-non-savvy startup employee. It's not for me, maybe also not for you. If I was looking to work for a startup again, I'd know what to look for, and what to avoid.