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I worked for a startup founder and personally watched him screw advisers out of stock agreements using different tactics, from technicalities in the agreements
by daenz 7y ago
I worked for a startup founder and personally watched him screw advisers out of stock agreements using different tactics, from technicalities in the agreements to outright not honoring the agreements when he knew it was disadvantageous for them to pursue him legally. He gloated about it and would speak very highly of all the ways he could manipulate situations.
In the end, I left and the startup went under, and I told him directly that I didn't trust him (to his surprise). The lesson that I learned was that I'd be a fool to take equity in a startup, given all the ways I could be screwed, and my lack of resources to pursue any legal recourse. Cash only, from now on.
- fossuser 7y agoI think this is the wrong lesson and people are generally too extreme when valuing this. Are there risks with ISOs? Yes. Should you value them 1:1 with cash? Probably not. Should you value them at $0? Probably not. People should make decisions based on the company, what they're doing, and how much they trust the board/founders. It'd be a mistake to categorically dismiss equity since that's the best way to leverage your human capital into wealth. It's also a mistake to think that equity is valued exactly at what the company is advertising it as when trying to hire you. There's some risk, but engineers should consider their options.
- cbhl 7y agoI think the first thing someone should consider when looking at jobs is their risk tolerance. If you don't have two parents who are alive and healthy and own their home mortgage-free, you probably have a low risk tolerance. Go work at a FAANG; ISOs have an effective value of $0 to you. If your grandpa can afford to give you $10000 to start a startup, or if you can always move into your parents' basement when you become broke, then I would think about a startup. You can tolerate owing hundreds of thousands in taxes in the worst case, and the higher expected value (and higher personal growth, in the early years) is worthwhile.
- jldugger 7y ago> In the end, I left and the startup went under, and I told him directly that I didn't trust him (to his surprise). A classic example of an individual who would be 10x richer if they were 10 percent less greedy.
- rhizome 7y agoThat example seems not to be grounded in reality?
- sub7 7y agoYour problem wasn't the structure of your comp, it was the payer of your comp.
- formercoder 7y agoRemember whenever you sign a contract that breach is always an option. There’s just potential litigation and reputation as downside along that road