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Investors lost money on the deal overall, right? While employees got paid a salary for however many years they were there? By your framing, employees get "prefe

Investors lost money on the deal overall, right? While employees got paid a salary for however many years they were there? By your framing, employees get "preferential treatment" with respect to salary. This isn't just theoretical: my current job is at a place who's known to be cash-heavy (ie equity-light) with their offers, relative to competitors. This suits me just fine, since I'm not sure enough about the company's ultimate success, or rather, not willing to deal with the risk and illiquidity to a much higher degree than I already do. As you can imagine, for a given level of compensation, equity and cash play against each other, and I'm getting much more in cash than my friend with equity-heavy comp packages do. Equity and salary as forms of compensation each have advantages and disadvantages, and it really doesn't make any more sense to look only at the advantages of equity-heavy packages (priority during liquidation) than it would to complain that employees getting a salary was unfair to investors.

tracker1 8y ago
The salary is often in leiu of equity which is effectively worthless, while those responsible for that failure (management) make out like bandits. Frankly, I will never take a position at a startup with a base pay lower than market. It doesn't make any sense IMHO.
bb88 8y ago
> By your framing, employees get "preferential treatment" with respect to salary. Right because most people can't live on a 4 or 5 year option wait alone. And the likelihood of a company getting only rich employees to work for them seems small. If that were true, then you'd be right.
- wutbrodo 8y ago
  What? How does what you're saying contradict my point at all, or make me "not right" in the case of not-all-rich employees? You're just explaining the reason that investors choose equity and employees choose salary, which has nothing to do with my point. Employees get cash flow heavy comp over equity, which is better during the company's existence and worse during its liquidation. Investors get equity heavy comp packages, which is worse during the company's existence (no cash flow) and better during its existence. My complaint about the GP comment was that looking at one half of a tradeoff is obviously going to make it look better, just like saying that I'm ripping off Amazon at the time of delivery because I don't pay anything at that moment, while ignoring the fact that I paid them earlier. Your comment is a complete non sequitur

tracker1 8y ago

The salary is often in leiu of equity which is effectively worthless, while those responsible for that failure (management) make out like bandits. Frankly, I will never take a position at a startup with a base pay lower than market. It doesn't make any sense IMHO.

bb88 8y ago

> By your framing, employees get "preferential treatment" with respect to salary. Right because most people can't live on a 4 or 5 year option wait alone. And the likelihood of a company getting only rich employees to work for them seems small. If that were true, then you'd be right.

wutbrodo 8y ago
What? How does what you're saying contradict my point at all, or make me "not right" in the case of not-all-rich employees? You're just explaining the reason that investors choose equity and employees choose salary, which has nothing to do with my point. Employees get cash flow heavy comp over equity, which is better during the company's existence and worse during its liquidation. Investors get equity heavy comp packages, which is worse during the company's existence (no cash flow) and better during its existence. My complaint about the GP comment was that looking at one half of a tradeoff is obviously going to make it look better, just like saying that I'm ripping off Amazon at the time of delivery because I don't pay anything at that moment, while ignoring the fact that I paid them earlier. Your comment is a complete non sequitur