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But they weren't lured with the promise of equity. The promise was that they'd get equity if there was a subsequent funding round. The investors, especially, h

But they weren't lured with the promise of equity. The promise was that they'd get equity if there was a subsequent funding round. The investors, especially, have zero right to complain.

elsewhen 7y ago
FTA: “I was told the conversion [of Toptal into a corporation] would happen in a number of months,” said Aaron Diek, who is based in central Texas and says he worked for Toptal in 2014 and 2015, when Toptal said it was generating $80 million in revenue per year. “I asked on a number of occasions, and the answer [from Du Val] was always ‘it’s coming, it’s coming.’
- staticautomatic 7y ago
  Maybe that employee has a case for relying on that statement to his detriment if it was a misrepresentation or an outright lie. On the other hand, it's possible that Du Val had a good faith belief that the conversion was going to occur. Who knows? We'll probably never find out unless there's a lawsuit.
- ilikehurdles 7y ago
  This seems to be par for the course for any startup that drinks its own Kool-aid. I've been told many times at every organization I've been at by enthusiastic co-workers believing the exit is right around the corner. It never was and all of those previous orgs have either gone bankrupt or had really unfavorable acqui-hires. I believe in enjoying my work environment, being paid fairly, and doing work that positively impacts society. Beyond that, I treat every share of equity as toilet paper in the negotiation stage -- when it comes to a private company organized as a startup/VC-leech.
  - ThalesX 7y ago
    I also use this approach and I love how little leverage equity brings them to the negotiation table. You want to give me equity, nice, but I'm still working for my preferred salary under my preferred conditions.
- tedivm 7y ago
  This is exactly what Malwarebytes did to me for years- their CEO constantly told me I was going to get stock but it never materialized. It's definitely a live and learn situation, but it does suck that learning the lesson is so expensive (while the people who lied their way into having employees end up making out really well for their dishonesty).
diekhead 7y ago
that is not true. my options have NOTHING to do with additional funding, but with converting the corporate structure of the company - which Taso, CEO, said he would do, multiple times, back then - he's not changing his tune.
- staticautomatic 7y ago
  Thanks for chiming in. It sounds like the article may have conflated the investor and employee deals. To be fair, the conversion to a corporation usually happens at the same time as raising the next round. So, it sounds like the deal with the employees was simply that you'd get the equity if and when the LLC converted to a corporation. Notwithstanding whatever other representations were made, was there anything in the equity offer that would trigger/force the conversion to happen? In other words, was there any kind of guarantee that the conversion would definitely happen?
ymolodtsov 7y ago
1. This is a very unusual structure in the first place. The company do issue new common stock at funding rounds specifically for stock options but they don't make employees wait for it. 2. This is a common practice for venture-backed companies so people might expect that. Lawyers might say nobody lied to them – but Silicon Valley is not about lawyers.
im3w1l 7y ago
I think it relies on people thinking there are only two possibilities. Bankruptcy or another round. They didn't realize success without a round could happen. It's a loophole essentially.

But they weren't lured with the promise of equity. The promise was that they'd get equity if there was a subsequent funding round. The investors, especially, have zero right to complain.

elsewhen 7y ago

FTA: “I was told the conversion [of Toptal into a corporation] would happen in a number of months,” said Aaron Diek, who is based in central Texas and says he worked for Toptal in 2014 and 2015, when Toptal said it was generating $80 million in revenue per year. “I asked on a number of occasions, and the answer [from Du Val] was always ‘it’s coming, it’s coming.’

staticautomatic 7y ago
Maybe that employee has a case for relying on that statement to his detriment if it was a misrepresentation or an outright lie. On the other hand, it's possible that Du Val had a good faith belief that the conversion was going to occur. Who knows? We'll probably never find out unless there's a lawsuit.
ilikehurdles 7y ago
This seems to be par for the course for any startup that drinks its own Kool-aid. I've been told many times at every organization I've been at by enthusiastic co-workers believing the exit is right around the corner. It never was and all of those previous orgs have either gone bankrupt or had really unfavorable acqui-hires. I believe in enjoying my work environment, being paid fairly, and doing work that positively impacts society. Beyond that, I treat every share of equity as toilet paper in the negotiation stage -- when it comes to a private company organized as a startup/VC-leech.
- ThalesX 7y ago
  I also use this approach and I love how little leverage equity brings them to the negotiation table. You want to give me equity, nice, but I'm still working for my preferred salary under my preferred conditions.
tedivm 7y ago
This is exactly what Malwarebytes did to me for years- their CEO constantly told me I was going to get stock but it never materialized. It's definitely a live and learn situation, but it does suck that learning the lesson is so expensive (while the people who lied their way into having employees end up making out really well for their dishonesty).

diekhead 7y ago

that is not true. my options have NOTHING to do with additional funding, but with converting the corporate structure of the company - which Taso, CEO, said he would do, multiple times, back then - he's not changing his tune.

staticautomatic 7y ago
Thanks for chiming in. It sounds like the article may have conflated the investor and employee deals. To be fair, the conversion to a corporation usually happens at the same time as raising the next round. So, it sounds like the deal with the employees was simply that you'd get the equity if and when the LLC converted to a corporation. Notwithstanding whatever other representations were made, was there anything in the equity offer that would trigger/force the conversion to happen? In other words, was there any kind of guarantee that the conversion would definitely happen?

ymolodtsov 7y ago

1. This is a very unusual structure in the first place. The company do issue new common stock at funding rounds specifically for stock options but they don't make employees wait for it. 2. This is a common practice for venture-backed companies so people might expect that. Lawyers might say nobody lied to them – but Silicon Valley is not about lawyers.

im3w1l 7y ago

I think it relies on people thinking there are only two possibilities. Bankruptcy or another round. They didn't realize success without a round could happen. It's a loophole essentially.