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Perhaps I'm alone in this, but when a tech company is solely owned by a small group of execs, that's a huge red flag as a potential employee. In my mind, it say

Perhaps I'm alone in this, but when a tech company is solely owned by a small group of execs, that's a huge red flag as a potential employee. In my mind, it says they truly only care about themselves in a very tangible way.

forgingahead 8y ago
Their employees get a share of the profits (like many regular businesses). They are also quite firm in their goal to stay private, so why would equity be relevant to an employee any way?
- paxys 8y ago
  What share of profits though? The most recent article I can find (https://mailchimp.com/culture/investing-in-people-through-profit-sharing/ https://mailchimp.com/culture/investing-in-people-through-pr...) boasts of contributing "up to 19%" of annual salary to employees' 401k. While obviously not a bad deal, it's a far cry from options/RSUs and other standard annual bonuses offered at other tech companies.
  - manigandham 8y ago
    The other tech companies are vastly outside the norm and have severely affected the entire industry with inflation. And if people cared and wanted to work at those other companies, then they would. Don't assume to know what's best for everyone else.
  - tomschlick 8y ago
    > What share of profits though? The share that goes into your yearly salary, bonuses, raises, and benefits (like the 401k match you disregard). They owe you nothing else, and each employee is free to ask for more or leave for greener pastures if they are unhappy.
    - C1sc0cat 8y ago
      Shares are often a much more tax efficient way of rewarding employees and having an actual share has numerous advantage's in term of morale retention and so on. Also shares keep on producing income after you have left a company.
      - ajcodez 8y ago
        “Also shares keep on producing income after you have left a company.” If I was making $120k per year working at MailChimp the last thing I would want is 30% or more of my net worth tied up in private shares. What employee wants that much exposure? It’s a private tech company with no plans for liquidity potentially ever.
        C1sc0cat 8y ago
        Private company shares can pay dividends though.
        ajcodez 8y ago
        It is severely limiting. You can’t sell private shares on the open market to buy a condo, pay off college debt, invest in your own company, quit and travel the world, etc. It could be decades before you receive the full share value. If hypothetical employee is working full time it’s probably because they don’t have enough assets 2M+ to live off passive income and need to work. Let’s say they are frugal and save $40k per year. If you have comp like a public co and receive $40k+ per year in shares does it really make sense to have 50%+ of your net worth in a single private tech company? It would probably work out great but 10 years is a long time to wait. I’m pretty sure there is issues with tax too but I don’t know the math.
      - manigandham 8y ago
        Shares are worthless unless you can convert them to something. If the company is not public or doesn't have a secondary market, you're just getting paper money that you can never spend. Morale will definitely tank once people figure that out.
  - to_bpr 8y ago
    >While obviously not a bad deal, it's a far cry from options/RSUs and other standard annual bonuses offered at other tech companies. Nobody is forcing people to work there.
onetimemanytime 8y ago
You're not getting married to them. You can leave if what you said is true. And can read former employee exit reviews
- cyborgx7 8y ago
  You can also leave people you are married to.
  - justtopost 8y ago
    Then what was the vow for?
  - onetimemanytime 8y ago
    Yeah, and you can also get an AR-15 and try to shoot your way in getting a raise. The idea was some things are easier than other (changing jobs is likely easier than divorce)
stephenr 8y ago
As a person who works in tech and uses it, when I see a tech company is vc funded that’s a huge red flag as a person who would have an interaction with that company because more often than not their business model will involve whoring out my personal data before closing down after a few years either because no one wanted to keep throwing money at them or because someone threw a lot of money at them, bought the company and closed the service down. In my mind it says the founders truly only care about getting their pay day in a very tangible way. I’m no fan of any X-as-a-Service company, but I trust a bootstrapped and privately owned one a fucking lot more than I trust one built on VC dollars.
Cthulhu_ 8y ago
You're probably not alone, but I'd rather have a company owned by its founder than a mystery group of very rich people whose main goal with the business is getting more money out of it. If my boss works for himself rather than his funding overlords (who are multiplying the money they invested 100x by doing fuck-all) I'd vastly prefer that. (disclaimer: I work for a successful privately owned company)
tekkk 8y ago
I think it's better that the founders have a sizable equity but at the same time it's probably a lot harder to grow a company without other investors. But I don't think it would matter in its actual day-to-day business. Dishing out profits as bonuses instead of equity is just a personal preference to them. Maybe they won't get as dedicated personnel but at the same time if they have kept the company owned by themselves to this point I guess it's a valid choice in continuing doing so. Is it greedy or not, well to me it shows that the founders are shrewd for sure but.. Are they doing this for the benefit of the company or just to maximize their own profits? Hard to tell. I feel giving up equity isn't such a big deal and it would make me more satisfied having my best employees part of the company. Paying only bonuses sounds a bit cheapskate.
- wolco 8y ago
  Really cash bonuses sounds a cheapstake? There are many many companies who will gladly give you a percent of there business provided you are vested for 4 years and they are successful and there is a window opportunity to cash out. Stock options are the cheapskate way to go. Lotto tickets for the newbies.
  - tekkk 8y ago
    Many rapidly growing companies that already generate profits? Even if the price of the stock would stay the same it would still make sense to get the extra profits as stock as you would pay much less taxes. Granted you'd have to have a way to sell them when you want out. And vesting isn't always a bad option, don't you agree? In the case of many successful start-ups like Facebook and Google you'd have earned and probably still will earn a lot more from the stock than from any bonuses they could have given you.
    - wolco 8y ago
      The chances of finding the next google and getting in the ground floor is about 0. Vesting is bad for everyone. The company buying yours gets to keep you around but you are the least motivated employee. You get to waste a few years as they figure out how to replace you. That's the best case. Usually you leave and are given the option to buy the shares within 30 days at some price without a way to cash out. Will these shares go up? perhaps but not really. What happens is new investors money will reduce your percentage. Your shares will be put in a non-protected group while the founders/investors take preferred shares with 10x the voting power. If they gave you cash you buy google shares you sell when you want and you have the choice to put the money anywhere.
koonsolo 8y ago
No, they care about the company. Because if they cared about themselves, they would have sold the company and retired happily ever after. The cool thing about solely owned companies is that they can think long term, as in > 1 year. CEO's of an externally funded company don't have that luxury.
jessaustin 8y ago
Don't just tell us that you are suspicious. It would be more interesting to describe the experiences you've had that have led you to cultivate this suspicion.
shostack 8y ago
There's a camp of people (which I consider myself a part of) that see small group or solo ownership as potentially a very good thing (provided the right people are at the helm). It enables a company to do what's best for the company/employees/customers in the long-term vs. only needing to be focused on the short term or some unreasonable expectation of an overpriced exit. Please consider not painting all such companies with the same brush.

forgingahead 8y ago

Their employees get a share of the profits (like many regular businesses). They are also quite firm in their goal to stay private, so why would equity be relevant to an employee any way?

paxys 8y ago
What share of profits though? The most recent article I can find (https://mailchimp.com/culture/investing-in-people-through-profit-sharing/ https://mailchimp.com/culture/investing-in-people-through-pr...) boasts of contributing "up to 19%" of annual salary to employees' 401k. While obviously not a bad deal, it's a far cry from options/RSUs and other standard annual bonuses offered at other tech companies.
- manigandham 8y ago
  The other tech companies are vastly outside the norm and have severely affected the entire industry with inflation. And if people cared and wanted to work at those other companies, then they would. Don't assume to know what's best for everyone else.
- tomschlick 8y ago
  > What share of profits though? The share that goes into your yearly salary, bonuses, raises, and benefits (like the 401k match you disregard). They owe you nothing else, and each employee is free to ask for more or leave for greener pastures if they are unhappy.
  - C1sc0cat 8y ago
    Shares are often a much more tax efficient way of rewarding employees and having an actual share has numerous advantage's in term of morale retention and so on. Also shares keep on producing income after you have left a company.
    - ajcodez 8y ago
      “Also shares keep on producing income after you have left a company.” If I was making $120k per year working at MailChimp the last thing I would want is 30% or more of my net worth tied up in private shares. What employee wants that much exposure? It’s a private tech company with no plans for liquidity potentially ever.
      - C1sc0cat 8y ago
        Private company shares can pay dividends though.
        ajcodez 8y ago
        It is severely limiting. You can’t sell private shares on the open market to buy a condo, pay off college debt, invest in your own company, quit and travel the world, etc. It could be decades before you receive the full share value. If hypothetical employee is working full time it’s probably because they don’t have enough assets 2M+ to live off passive income and need to work. Let’s say they are frugal and save $40k per year. If you have comp like a public co and receive $40k+ per year in shares does it really make sense to have 50%+ of your net worth in a single private tech company? It would probably work out great but 10 years is a long time to wait. I’m pretty sure there is issues with tax too but I don’t know the math.
    - manigandham 8y ago
      Shares are worthless unless you can convert them to something. If the company is not public or doesn't have a secondary market, you're just getting paper money that you can never spend. Morale will definitely tank once people figure that out.
- to_bpr 8y ago
  >While obviously not a bad deal, it's a far cry from options/RSUs and other standard annual bonuses offered at other tech companies. Nobody is forcing people to work there.

onetimemanytime 8y ago

You're not getting married to them. You can leave if what you said is true. And can read former employee exit reviews

cyborgx7 8y ago
You can also leave people you are married to.
- justtopost 8y ago
  Then what was the vow for?
- onetimemanytime 8y ago
  Yeah, and you can also get an AR-15 and try to shoot your way in getting a raise. The idea was some things are easier than other (changing jobs is likely easier than divorce)

stephenr 8y ago

As a person who works in tech and uses it, when I see a tech company is vc funded that’s a huge red flag as a person who would have an interaction with that company because more often than not their business model will involve whoring out my personal data before closing down after a few years either because no one wanted to keep throwing money at them or because someone threw a lot of money at them, bought the company and closed the service down. In my mind it says the founders truly only care about getting their pay day in a very tangible way. I’m no fan of any X-as-a-Service company, but I trust a bootstrapped and privately owned one a fucking lot more than I trust one built on VC dollars.

Cthulhu_ 8y ago

You're probably not alone, but I'd rather have a company owned by its founder than a mystery group of very rich people whose main goal with the business is getting more money out of it. If my boss works for himself rather than his funding overlords (who are multiplying the money they invested 100x by doing fuck-all) I'd vastly prefer that. (disclaimer: I work for a successful privately owned company)

tekkk 8y ago

I think it's better that the founders have a sizable equity but at the same time it's probably a lot harder to grow a company without other investors. But I don't think it would matter in its actual day-to-day business. Dishing out profits as bonuses instead of equity is just a personal preference to them. Maybe they won't get as dedicated personnel but at the same time if they have kept the company owned by themselves to this point I guess it's a valid choice in continuing doing so. Is it greedy or not, well to me it shows that the founders are shrewd for sure but.. Are they doing this for the benefit of the company or just to maximize their own profits? Hard to tell. I feel giving up equity isn't such a big deal and it would make me more satisfied having my best employees part of the company. Paying only bonuses sounds a bit cheapskate.

wolco 8y ago
Really cash bonuses sounds a cheapstake? There are many many companies who will gladly give you a percent of there business provided you are vested for 4 years and they are successful and there is a window opportunity to cash out. Stock options are the cheapskate way to go. Lotto tickets for the newbies.
- tekkk 8y ago
  Many rapidly growing companies that already generate profits? Even if the price of the stock would stay the same it would still make sense to get the extra profits as stock as you would pay much less taxes. Granted you'd have to have a way to sell them when you want out. And vesting isn't always a bad option, don't you agree? In the case of many successful start-ups like Facebook and Google you'd have earned and probably still will earn a lot more from the stock than from any bonuses they could have given you.
  - wolco 8y ago
    The chances of finding the next google and getting in the ground floor is about 0. Vesting is bad for everyone. The company buying yours gets to keep you around but you are the least motivated employee. You get to waste a few years as they figure out how to replace you. That's the best case. Usually you leave and are given the option to buy the shares within 30 days at some price without a way to cash out. Will these shares go up? perhaps but not really. What happens is new investors money will reduce your percentage. Your shares will be put in a non-protected group while the founders/investors take preferred shares with 10x the voting power. If they gave you cash you buy google shares you sell when you want and you have the choice to put the money anywhere.

koonsolo 8y ago

No, they care about the company. Because if they cared about themselves, they would have sold the company and retired happily ever after. The cool thing about solely owned companies is that they can think long term, as in > 1 year. CEO's of an externally funded company don't have that luxury.

jessaustin 8y ago

Don't just tell us that you are suspicious. It would be more interesting to describe the experiences you've had that have led you to cultivate this suspicion.

shostack 8y ago

There's a camp of people (which I consider myself a part of) that see small group or solo ownership as potentially a very good thing (provided the right people are at the helm). It enables a company to do what's best for the company/employees/customers in the long-term vs. only needing to be focused on the short term or some unreasonable expectation of an overpriced exit. Please consider not painting all such companies with the same brush.