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Really liquid stocks/options/etc can really destroy an early-stage startup. The focus of the stakeholders goes too easily from building the business towards spe

Really liquid stocks/options/etc can really destroy an early-stage startup. The focus of the stakeholders goes too easily from building the business towards speculating with the stock. Also see: ICO-tokens (shittokens), where there are countless of cool business ideas, lots of trading and speculation but no actual businesses built.

eddz 8y ago
"No actual businesses built" is completely not the case. At least not for all ICOs. Take PundiX, for example – they have a fully-functional product with a growing base of B2B customers which are starting to use the device in the wild. While nothing has come from many (probably most) ICOs, there are certainly some great examples of "cool business ideas" which are being realised thanks to the ICO.
- jerguismi 8y ago
  > "No actual businesses built" is completely not the case. At least not for all ICOs. Take PundiX, for example – they have a fully-functional product with a growing base of B2B customers which are starting to use the device in the wild. Also lots of ICO's present false claims when it comes to adoption of their products. Do you have any factual figures how widely this certain product is deployed and in which state the development is? For example on Pundixes web page their payment terminal is just a 3D model. The more I hear about ICO products and their businesses, the more sceptical I grow that this funding model is able to actually grow viable businesses.
charlesdm 8y ago
Really liquid stock options are likely the only reason why one should value said options above $0 and (potentially) take a lower salary. It seems to be beneficial to be able to sell your options to an established investor.
- jerguismi 8y ago
  If the stock/option is liquid, then why not just take hard cash instead? Also shouldn't be a problem for the company, they could just sell directly to the investor and compensate the employees with cash.
netcan 8y ago
Two-sided coin... pardon the pun. On one hand, liquidity means price volatility, employee-shareholder obsession with share price and erm... employee liquidity. IE employees aren't locked after vesting. On the other hand, liquidity makes value real. Employees will trade salary for liquid options, even on 1-year vesting terms. For illiquid options, it's too risky for most employees to really treat options as salary alternative. Also, share price obsession can sometimes worse in a no liquidity situation than it is in a liquid "price-ticker" scenario. Imagine being an early employee @ uber. You "own" 0.x% of $50bn, but no have other assets. If uber doesn't IPO, you don't get anything. You are way too invested in a very risky stock. Scary, especially in bad times. A rising and falling price ticker would be bad for obsession. But, selling some shares would be good. You'd be less exposed.
- jerguismi 8y ago
  > Also, share price obsession can sometimes worse in a no liquidity situation than it is in a liquid "price-ticker" scenario. Imagine being an early employee @ uber. You "own" 0.x% of $50bn, but no have other assets. If uber doesn't IPO, you don't get anything. You are way too invested in a very risky stock. Scary, especially in bad times. Usually employees get salary as main compensation, then after that some options or other incentives. I have never heard of a compensation scheme where there wouldn't be any salary at all (for normal employees). I think it makes sense for employee to evaluate some valuation for the company stock, and decide for which valuation to accept the options/stocks as substitute for cash. Often the problem is that the employee lets the company do the valuation and takes that for granted. Very commonly employees are very risk-averse so it might make sense to valuate the options/stocks near zero. In that case it makes sense to just prefer salary and only take stock/options that would be granted in any case.
  - deleted 8y ago
    [deleted]

eddz 8y ago

"No actual businesses built" is completely not the case. At least not for all ICOs. Take PundiX, for example – they have a fully-functional product with a growing base of B2B customers which are starting to use the device in the wild. While nothing has come from many (probably most) ICOs, there are certainly some great examples of "cool business ideas" which are being realised thanks to the ICO.

jerguismi 8y ago
> "No actual businesses built" is completely not the case. At least not for all ICOs. Take PundiX, for example – they have a fully-functional product with a growing base of B2B customers which are starting to use the device in the wild. Also lots of ICO's present false claims when it comes to adoption of their products. Do you have any factual figures how widely this certain product is deployed and in which state the development is? For example on Pundixes web page their payment terminal is just a 3D model. The more I hear about ICO products and their businesses, the more sceptical I grow that this funding model is able to actually grow viable businesses.

charlesdm 8y ago

Really liquid stock options are likely the only reason why one should value said options above $0 and (potentially) take a lower salary. It seems to be beneficial to be able to sell your options to an established investor.

jerguismi 8y ago
If the stock/option is liquid, then why not just take hard cash instead? Also shouldn't be a problem for the company, they could just sell directly to the investor and compensate the employees with cash.

netcan 8y ago

Two-sided coin... pardon the pun. On one hand, liquidity means price volatility, employee-shareholder obsession with share price and erm... employee liquidity. IE employees aren't locked after vesting. On the other hand, liquidity makes value real. Employees will trade salary for liquid options, even on 1-year vesting terms. For illiquid options, it's too risky for most employees to really treat options as salary alternative. Also, share price obsession can sometimes worse in a no liquidity situation than it is in a liquid "price-ticker" scenario. Imagine being an early employee @ uber. You "own" 0.x% of $50bn, but no have other assets. If uber doesn't IPO, you don't get anything. You are way too invested in a very risky stock. Scary, especially in bad times. A rising and falling price ticker would be bad for obsession. But, selling some shares would be good. You'd be less exposed.

jerguismi 8y ago
> Also, share price obsession can sometimes worse in a no liquidity situation than it is in a liquid "price-ticker" scenario. Imagine being an early employee @ uber. You "own" 0.x% of $50bn, but no have other assets. If uber doesn't IPO, you don't get anything. You are way too invested in a very risky stock. Scary, especially in bad times. Usually employees get salary as main compensation, then after that some options or other incentives. I have never heard of a compensation scheme where there wouldn't be any salary at all (for normal employees). I think it makes sense for employee to evaluate some valuation for the company stock, and decide for which valuation to accept the options/stocks as substitute for cash. Often the problem is that the employee lets the company do the valuation and takes that for granted. Very commonly employees are very risk-averse so it might make sense to valuate the options/stocks near zero. In that case it makes sense to just prefer salary and only take stock/options that would be granted in any case.
- deleted 8y ago
  [deleted]