8 ms·

Unfortunately they tend to bring old-money sensibilities along with them, meaningful employee equity is rare even at executive levels in European startups.

burrows 7y ago
Why is this unfortunate? If good execs prefer equity, they’ll go to where the equity is. And because they’re good, their companies will perform better, which creates a virtuous cycle.
- wjn0 7y ago
  Good for execs, bad for Europe (is perhaps what the grandparent comment meant)?
Barrin92 7y ago
employee equity in particular in startups isn't really as unambiguous as the term suggests. Given how many startups die out you may as well interpret it as a creative way for company owners to shift risk on employees. After all, the failing startup is the norm, by a huge margin. And one step further these days it looks like going public is then the next step to load risk off from employees and founders onto retail investors. to be honest I'm not really too sad that this culture hasn't really taken hold over here. Most 'old money' in Europe isn't old billionaire heirs anyway but the small and middle-sized business who treat their employees quite well, employ them for decades, don't lay them off at the first sign of trouble and so on. If tech in Europe is looking for a business culture I don't mind them going to the old money and family business in the German South rather than Silicon Valley.
- seemslegit 7y ago
  Equity should not be in lieu of competitive salary, its purpose should be to align the employee with the company's success in the long run. > to be honest I'm not really too sad that this culture hasn't really taken hold over here. Most 'old money' in Europe isn't old billionaire heirs anyway but the small and middle-sized business who treat their employees quite well, employ them for decades, don't lay them off at the first sign of trouble and so on. That is increasingly less true for new businesses (although still less arbitrary than the US, although-although some would argue this is a form of agility necessary for startups) and was never due to the kind nature of business owners but due to post-ww2 tradition of worker-friendly politics and regulation backed by strong unions. The "old money" investors do not directly manage the startups any more than silicon valley VCs do theirs.
- chrisco255 7y ago
  A well funded startup in the U.S. is typically going to pay salary plus equity. Given the churn of technology I wouldn't expect European startups to be around any longer than the average U.S. startup.
- walshemj 7y ago
  I think the UK approach with share save would better serve employees and general Also lot of those family firms avoid death duty /inheritance taxes which would raise eyebrows in other cultures.
- 1123581321 7y ago
  Odds of success can be fairly valued in an equity offer despite success odds being low (the expected value of highly speculative equity, vesting on a schedule, equals a certain amount of cash per year.) The conventional wisdom is to just take cash because that comes out ahead most of the time and you have to personally fully value the money from a successful exit to make a salary plus equity offer be worth it to you. But the math on early startup offers certainly can be and sometimes is fair. Certainly agree that the business culture of the sturdy, monied middle class should be preserved.
- lacker 7y ago
  Right now, base salary is typically higher in the US for software engineers than in Europe, plus equity is better.
  - tixocloud 7y ago
    Base salary is higher in the US just because there’s more demand and less supply. Big tech firms + tech startups + majority of engineering depts/HQs in the US means competition is high for software engineering talent. I’ve worked in the U.K. and speaking with many data scientists from other parts of Europe, they say that the real data science work is just non-existent elsewhere and pays less.
    - barrkel 7y ago
      The US has more supply, not less. But the demand is even higher. Supply and demand around industry verticals in geographic hubs like SV doesn't follow simplistic supply & demand laws. More labour means more fuel for starting fires, and lots of fires require more fuel to grow, throwing off more and more heat (profit); meanwhile, if you're in a fuel-scarce region, to pursue the metaphor, it may not be possible to start a fire at all. Salaries are high because the companies have global scale and are competing with other companies with global scale, but they can only be global scale because they have lots of labour supply, and they only have that because they're co-located and can utilize fungibility in the labour market. There's little need for data scientists in small local companies.
      - tixocloud 7y ago
        Sorry. When I mentioned less supply, it was in reference to the US market having high demand but insufficient supply so yes, agreed. The environment in the US is just at a different level compared to everywhere else.
    - raverbashing 7y ago
      For data scientist positions, I wonder how many of those are created and hired for but management still doesn't know what to do with the data they produce. (Or even how good and/or actionable the data is)
- barry-cotter 7y ago
  > employee equity in particular in startups isn't really as unambiguous as the term suggests. Given how many startups die out you may as well interpret it as a creative way for company owners to shift risk on employees. After all, the failing startup is the norm, by a huge margin. The modal startup company fails and any equity grants or options are worth nothing. The modal employee of a company that is extremely liberal with equity because it was a startup before it found product market fit is AppAmaGooBookSoft, Oracle, Stripe or Uber. AppAmaGooBookSoft must hire at least 50,000 software engineers a year between them. YC may have funded that many founders in its entire history. Possibly over YC’s entire history all the startups whose equity went to zero have had 500,000 employees though that seems high. Google alone has over 100,000 employees right now. If AppAmaGooBookSoft don’t have half a million employees who get substantial portions of their compensation in stock right now I’ll be very surprised.
monadic2 7y ago
Are there any companies in the us that offer significant equity? Last I saw early employee offers are still <2% equity.
- ido 7y ago
  Isn't 1-2% significant for an employee that also gets a market-competitive salary & thus takes no risk? How much did early employees who joined amazon in 1994 or google in 1998 get? IIRC the "rule of thumb" is that the first batch of employees share 10% of equity, the next batch get 10%, etc but each batch is much larger than the previous (e.g. from <10 to 10s-100s to 1000s). So as an early employee you'd get a single-digit % but if you come in the next phase you'll get permill(s) & later on even less.
  - monadic2 7y ago
    When I meet a founder that manages to take equity proportional to the risk they bear I’ll let you know.

burrows 7y ago

Why is this unfortunate? If good execs prefer equity, they’ll go to where the equity is. And because they’re good, their companies will perform better, which creates a virtuous cycle.

wjn0 7y ago
Good for execs, bad for Europe (is perhaps what the grandparent comment meant)?

Barrin92 7y ago

employee equity in particular in startups isn't really as unambiguous as the term suggests. Given how many startups die out you may as well interpret it as a creative way for company owners to shift risk on employees. After all, the failing startup is the norm, by a huge margin. And one step further these days it looks like going public is then the next step to load risk off from employees and founders onto retail investors. to be honest I'm not really too sad that this culture hasn't really taken hold over here. Most 'old money' in Europe isn't old billionaire heirs anyway but the small and middle-sized business who treat their employees quite well, employ them for decades, don't lay them off at the first sign of trouble and so on. If tech in Europe is looking for a business culture I don't mind them going to the old money and family business in the German South rather than Silicon Valley.

seemslegit 7y ago
Equity should not be in lieu of competitive salary, its purpose should be to align the employee with the company's success in the long run. > to be honest I'm not really too sad that this culture hasn't really taken hold over here. Most 'old money' in Europe isn't old billionaire heirs anyway but the small and middle-sized business who treat their employees quite well, employ them for decades, don't lay them off at the first sign of trouble and so on. That is increasingly less true for new businesses (although still less arbitrary than the US, although-although some would argue this is a form of agility necessary for startups) and was never due to the kind nature of business owners but due to post-ww2 tradition of worker-friendly politics and regulation backed by strong unions. The "old money" investors do not directly manage the startups any more than silicon valley VCs do theirs.
chrisco255 7y ago
A well funded startup in the U.S. is typically going to pay salary plus equity. Given the churn of technology I wouldn't expect European startups to be around any longer than the average U.S. startup.
walshemj 7y ago
I think the UK approach with share save would better serve employees and general Also lot of those family firms avoid death duty /inheritance taxes which would raise eyebrows in other cultures.
1123581321 7y ago
Odds of success can be fairly valued in an equity offer despite success odds being low (the expected value of highly speculative equity, vesting on a schedule, equals a certain amount of cash per year.) The conventional wisdom is to just take cash because that comes out ahead most of the time and you have to personally fully value the money from a successful exit to make a salary plus equity offer be worth it to you. But the math on early startup offers certainly can be and sometimes is fair. Certainly agree that the business culture of the sturdy, monied middle class should be preserved.
lacker 7y ago
Right now, base salary is typically higher in the US for software engineers than in Europe, plus equity is better.
- tixocloud 7y ago
  Base salary is higher in the US just because there’s more demand and less supply. Big tech firms + tech startups + majority of engineering depts/HQs in the US means competition is high for software engineering talent. I’ve worked in the U.K. and speaking with many data scientists from other parts of Europe, they say that the real data science work is just non-existent elsewhere and pays less.
  - barrkel 7y ago
    The US has more supply, not less. But the demand is even higher. Supply and demand around industry verticals in geographic hubs like SV doesn't follow simplistic supply & demand laws. More labour means more fuel for starting fires, and lots of fires require more fuel to grow, throwing off more and more heat (profit); meanwhile, if you're in a fuel-scarce region, to pursue the metaphor, it may not be possible to start a fire at all. Salaries are high because the companies have global scale and are competing with other companies with global scale, but they can only be global scale because they have lots of labour supply, and they only have that because they're co-located and can utilize fungibility in the labour market. There's little need for data scientists in small local companies.
    - tixocloud 7y ago
      Sorry. When I mentioned less supply, it was in reference to the US market having high demand but insufficient supply so yes, agreed. The environment in the US is just at a different level compared to everywhere else.
  - raverbashing 7y ago
    For data scientist positions, I wonder how many of those are created and hired for but management still doesn't know what to do with the data they produce. (Or even how good and/or actionable the data is)
barry-cotter 7y ago
> employee equity in particular in startups isn't really as unambiguous as the term suggests. Given how many startups die out you may as well interpret it as a creative way for company owners to shift risk on employees. After all, the failing startup is the norm, by a huge margin. The modal startup company fails and any equity grants or options are worth nothing. The modal employee of a company that is extremely liberal with equity because it was a startup before it found product market fit is AppAmaGooBookSoft, Oracle, Stripe or Uber. AppAmaGooBookSoft must hire at least 50,000 software engineers a year between them. YC may have funded that many founders in its entire history. Possibly over YC’s entire history all the startups whose equity went to zero have had 500,000 employees though that seems high. Google alone has over 100,000 employees right now. If AppAmaGooBookSoft don’t have half a million employees who get substantial portions of their compensation in stock right now I’ll be very surprised.

monadic2 7y ago

Are there any companies in the us that offer significant equity? Last I saw early employee offers are still <2% equity.

ido 7y ago
Isn't 1-2% significant for an employee that also gets a market-competitive salary & thus takes no risk? How much did early employees who joined amazon in 1994 or google in 1998 get? IIRC the "rule of thumb" is that the first batch of employees share 10% of equity, the next batch get 10%, etc but each batch is much larger than the previous (e.g. from <10 to 10s-100s to 1000s). So as an early employee you'd get a single-digit % but if you come in the next phase you'll get permill(s) & later on even less.
- monadic2 7y ago
  When I meet a founder that manages to take equity proportional to the risk they bear I’ll let you know.