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Heidi Roizen, VC, most definitely does not feel Former Millionaire's pain. Yes, liquidation preference overhang is the mechanism. However, the company got sold

Heidi Roizen, VC, most definitely does not feel Former Millionaire's pain. Yes, liquidation preference overhang is the mechanism. However, the company got sold for $100M. Who sold the company? The founders + the VCs and they got theirs. They could have structured the deal to give the employees something. They didn't. The advice here is simple. Walk. Former Millionaire owes absolutely nothing to the new company. Staying rewards this screwjob. If the founders + VCs want this Engineering VP to stay then they have to pay the VP to stay. This could have been handled better if the founders and VCs had left something on the table for the workers. That was a choice they made.

jariel 7y ago
Better yet: get everyone to walk. Forget unions - just say: "We get a payout or we're all leaving and your $100M investment is immediately worthless". If it fails and they call your bluff, of course you're going to have a hard time getting a job elsewhere unfortunately. I wonder the best way to mitigate such situations without simply having to rely on VC/Founder goodwill. YC was a leader in their 'clean terms SAFE' which really helped set a 'good standard' for all parties that was a win-win all around, I wonder if there's such a policy framework that could facilitate the same in these situations. YC's concerns in their 'SAFE' situation was balancing VC<->Founder, not employees, that said, Sam Altman has always talked about sharing more equity with other team members.
nostrademons 7y ago
She mentions this in the article - most deals are structured with carve-outs so that specifically those employees you want to stay get multi-million payouts (over multiple years) as long as they stay with the employer. If there was no such carve-out for the VP, it means the acquirer doesn't want them. The answer is still "walk", but the acquirer is not going to care. The reason to walk is that there's no sense staying in a job where your employer doesn't want you and isn't going to reward you. It's for your own self-respect, not to stick it to the man.
- CalChris 7y ago
  I'm going to plead guilty to giving up after I saw the preference overhang thrust of the article. She in fact gives a good outline of the issues involved. Maybe I had Travis Kalanick and Adam Neumann in the back of my mind. Still the element of unfairness about is that Certain key employees were incentivized with a “ carve-out “ in order to stay through the transaction and make sure it would happen. Using the example, four years is a long time to be rewarded with squat. However, Roizen also points out that common stock is priced lower than preferred. Usually someone like an engineering VP or a senior contributor will figure things out well before that and bail. The idea that this was somehow a surprise is difficult to accept. Yes, it is definitely for your own self respect.
driverdan 7y ago
Not only walk but name and shame the founders for allowing this to happen. No one should want to work for someone who screws their employees like that.
perl4ever 7y ago
I thought that name sounded familiar... "From 1996 to 1997, Roizen was Vice President of World Wide Developer Relations for [Apple Computer]" Also, I find it very weird that people project the current name of a company back in time anachronistically.

jariel 7y ago

Better yet: get everyone to walk. Forget unions - just say: "We get a payout or we're all leaving and your $100M investment is immediately worthless". If it fails and they call your bluff, of course you're going to have a hard time getting a job elsewhere unfortunately. I wonder the best way to mitigate such situations without simply having to rely on VC/Founder goodwill. YC was a leader in their 'clean terms SAFE' which really helped set a 'good standard' for all parties that was a win-win all around, I wonder if there's such a policy framework that could facilitate the same in these situations. YC's concerns in their 'SAFE' situation was balancing VC<->Founder, not employees, that said, Sam Altman has always talked about sharing more equity with other team members.

nostrademons 7y ago

She mentions this in the article - most deals are structured with carve-outs so that specifically those employees you want to stay get multi-million payouts (over multiple years) as long as they stay with the employer. If there was no such carve-out for the VP, it means the acquirer doesn't want them. The answer is still "walk", but the acquirer is not going to care. The reason to walk is that there's no sense staying in a job where your employer doesn't want you and isn't going to reward you. It's for your own self-respect, not to stick it to the man.

CalChris 7y ago
I'm going to plead guilty to giving up after I saw the preference overhang thrust of the article. She in fact gives a good outline of the issues involved. Maybe I had Travis Kalanick and Adam Neumann in the back of my mind. Still the element of unfairness about is that Certain key employees were incentivized with a “ carve-out “ in order to stay through the transaction and make sure it would happen. Using the example, four years is a long time to be rewarded with squat. However, Roizen also points out that common stock is priced lower than preferred. Usually someone like an engineering VP or a senior contributor will figure things out well before that and bail. The idea that this was somehow a surprise is difficult to accept. Yes, it is definitely for your own self respect.

driverdan 7y ago

Not only walk but name and shame the founders for allowing this to happen. No one should want to work for someone who screws their employees like that.

perl4ever 7y ago

I thought that name sounded familiar... "From 1996 to 1997, Roizen was Vice President of World Wide Developer Relations for [Apple Computer]" Also, I find it very weird that people project the current name of a company back in time anachronistically.