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Yeah I found that part especially wrong too. His article is all about fairness, and it seems especially unfair to me that someone would work and have a huge ch
by balloot 16y ago
Yeah I found that part especially wrong too. His article is all about fairness, and it seems especially unfair to me that someone would work and have a huge chunk of compensation deferred with a nontrivial chance the company never pays.
If I work for someone, they need to compensate me right away. This may mean I receive an option grant that is eventually worthless, but at least in that case I would have had an upside to my risk. The IOU has no upside but has the same possibility of worthlessness.
- kgo 16y agoHe's talking about founders, not employees. Made up numbers, but say you get 500,000 from investors. And the going rate for engineers is 100,000. Two founders can take a salary and hire two, maybe three, employees. If they can afford not to take a salary, they've doubled their staff size. Since each one of them owns 25% of the company, it may be worth the risk to them. It's obviously not worth the same risk to the first round of employees, who each end up with 2.5% of the company.