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Came to the comments to say the exact same thing: this is basically just a vote of no confidence in management. I can't imagine any employee joining this compa

by dsl 8y ago

Came to the comments to say the exact same thing: this is basically just a vote of no confidence in management. I can't imagine any employee joining this company from this point forward without demanding all-cash compensation. Management and the investors have effectively set the value of restricted shares at zero.

imbusy111 8y ago
Personally, I think you should treat all stock options/common stock as a lottery ticket with near zero value anyway when joining a startup. In 99% of situations, cash is all you're going to get.
- dweekly 8y ago
  This is practically reasonable but at most companies everyone's in the same boat (including founders / management) that the big upside is going to be a potential future large liquidity event. In this case, the company seems to have transitioned to being content to operate with low growth and high margins. The right thing for an employee to ask for would actually be profit-sharing. I've heard, for instance, this is how The Mathworks (which makes MATLAB) works; employees get no equity but they don't care because the company is quite profitable and the employee profit sharing is generous.
  - jjeaff 8y ago
    While founders and investors may seem to be in the same boat, they rarely are. Investors are coming from a position of boom or bust to maximize that liquidity event because their success does not hinge solely on your company. If you are a founder, you are all in on it, and unless you are already independently wealthy, or come from money, you would/should most likely optimize for less risk with a healthy upside. For most founders, making 5-10 million on a liquidity event is a life changing event. For most series a and beyond VCs, that's chump change and they will push to put it all on black and let it ride.
    - StudentStuff 8y ago
      Buffer is apparently generating $300k in profit monthly (and growing), they can likely offer future stock buybacks using their yearly profits.
ant6n 8y ago
Well, if they actually start paying dividends, that could be interesting, I guess.
sergiotapia 8y ago
Always ask for cash compensation. Stock options vest super slow, you can get fired before they vest, and if you're super lucky and stay there for years and years, you have to be DOUBLE lucky for them to be worth anything. Buy this lottery ticket and you'll know if it's a winner in 6 years. ??? Just ask for cash!
tptacek 8y ago
How did you get there from here? This appears to be an A-round startup that just paid $3MM to gain the flexibility to award liquid equity to (among other people) it's employees. Doesn't that make it better than the average equity-issuing startup?
- sushid 8y ago
  How are you going to cash that out? Do you want to hold onto a lifestyle company shares when there's no potential liquidity event in discussion? I'm not going to exercise my options in that situation and you'd be crazy to pay taxes on this year after year.
  - tptacek 8y ago
    Close-held profitable companies make their shares liquid by buying them back or by distributing dividends (as "profit sharing"). Remember: to a first approximation virtually all startup equity from all startups is illiquid.
    - mcny 8y ago
      How do stock buybacks work (especially in a private company)? Do I as a shareholder access to all the information that the company does? Not trying to sound smart but wouldn't a market with only one buyer mean they will pay the least possible amount? I'm not trying to trash talk buffer. Just wanted to see if there's another angle to this.
      - tptacek 8y ago
        You should talk to someone who works at Bloomberg. Bloomberg is a gigantic private tech company with an internal exchange where vested equity can be bought and sold among employees and the company.
      - icelancer 8y ago
        One way it can be done: We issue equity internally, not options. We hold right of first refusal and have independent appraisals of value of the business done, so when you leave, we have the right to purchase the equity back at the last appraised value of the company. Additionally, we also pay dividends (impacted by equity) and profit sharing (not impacted by equity but rather a percentage of salary) to our employees. These things are what "lifestyle businesses" do, or what basically everyone outside of SV and indoctrinated MBA programs call... businesses.
paulie_a 8y ago
I honestly can't understand why an employee would insist on anything other than straight cash. Stock options are a joke. I'll take the cash.
icelancer 8y ago
What? This is a vote of no-confidence in chasing unicorn-type results. That's fine. Lots of people want to work for a company that produces slow and steady gains.
scarface74 8y ago
From looking at the salary spreadsheet, it looks like they are paid about average. To think that anyone should accept a much lower salary than thier market value on the tiny hope of striking it rich is crazy. Every employee of a non public company should always consider only the cash compensation.

by dsl 8y ago

imbusy111 8y ago

Personally, I think you should treat all stock options/common stock as a lottery ticket with near zero value anyway when joining a startup. In 99% of situations, cash is all you're going to get.

dweekly 8y ago
This is practically reasonable but at most companies everyone's in the same boat (including founders / management) that the big upside is going to be a potential future large liquidity event. In this case, the company seems to have transitioned to being content to operate with low growth and high margins. The right thing for an employee to ask for would actually be profit-sharing. I've heard, for instance, this is how The Mathworks (which makes MATLAB) works; employees get no equity but they don't care because the company is quite profitable and the employee profit sharing is generous.
- jjeaff 8y ago
  While founders and investors may seem to be in the same boat, they rarely are. Investors are coming from a position of boom or bust to maximize that liquidity event because their success does not hinge solely on your company. If you are a founder, you are all in on it, and unless you are already independently wealthy, or come from money, you would/should most likely optimize for less risk with a healthy upside. For most founders, making 5-10 million on a liquidity event is a life changing event. For most series a and beyond VCs, that's chump change and they will push to put it all on black and let it ride.
  - StudentStuff 8y ago
    Buffer is apparently generating $300k in profit monthly (and growing), they can likely offer future stock buybacks using their yearly profits.

ant6n 8y ago

Well, if they actually start paying dividends, that could be interesting, I guess.

sergiotapia 8y ago

Always ask for cash compensation. Stock options vest super slow, you can get fired before they vest, and if you're super lucky and stay there for years and years, you have to be DOUBLE lucky for them to be worth anything. Buy this lottery ticket and you'll know if it's a winner in 6 years. ??? Just ask for cash!

tptacek 8y ago

How did you get there from here? This appears to be an A-round startup that just paid $3MM to gain the flexibility to award liquid equity to (among other people) it's employees. Doesn't that make it better than the average equity-issuing startup?

sushid 8y ago
How are you going to cash that out? Do you want to hold onto a lifestyle company shares when there's no potential liquidity event in discussion? I'm not going to exercise my options in that situation and you'd be crazy to pay taxes on this year after year.
- tptacek 8y ago
  Close-held profitable companies make their shares liquid by buying them back or by distributing dividends (as "profit sharing"). Remember: to a first approximation virtually all startup equity from all startups is illiquid.
  - mcny 8y ago
    How do stock buybacks work (especially in a private company)? Do I as a shareholder access to all the information that the company does? Not trying to sound smart but wouldn't a market with only one buyer mean they will pay the least possible amount? I'm not trying to trash talk buffer. Just wanted to see if there's another angle to this.
    - tptacek 8y ago
      You should talk to someone who works at Bloomberg. Bloomberg is a gigantic private tech company with an internal exchange where vested equity can be bought and sold among employees and the company.
    - icelancer 8y ago
      One way it can be done: We issue equity internally, not options. We hold right of first refusal and have independent appraisals of value of the business done, so when you leave, we have the right to purchase the equity back at the last appraised value of the company. Additionally, we also pay dividends (impacted by equity) and profit sharing (not impacted by equity but rather a percentage of salary) to our employees. These things are what "lifestyle businesses" do, or what basically everyone outside of SV and indoctrinated MBA programs call... businesses.

paulie_a 8y ago

I honestly can't understand why an employee would insist on anything other than straight cash. Stock options are a joke. I'll take the cash.

icelancer 8y ago

What? This is a vote of no-confidence in chasing unicorn-type results. That's fine. Lots of people want to work for a company that produces slow and steady gains.

scarface74 8y ago

From looking at the salary spreadsheet, it looks like they are paid about average. To think that anyone should accept a much lower salary than thier market value on the tiny hope of striking it rich is crazy. Every employee of a non public company should always consider only the cash compensation.