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> Why is it that we find it appropriate to shame her and not a founder/ceo who does effectively the same thing? In the case of Halloween candy, the owner of th

> Why is it that we find it appropriate to shame her and not a founder/ceo who does effectively the same thing? In the case of Halloween candy, the owner of the candy is offering each person up to a few pieces of candy for free. If you take more than a few pieces, you are stealing from the candy owner. Stealing is bad because we believe in the right to private property. Stealing is, in fact, illegal. Of course, our legal system isn't set up to enforce punishment for small actions, so shame is a useful alternative form of punishment. > Why can we not apply these same rules of decency to business? In the case of employment, each employee is offering the business owner his/her time in exchange for a salary and equity. The expectations are crystal clear to both parties. When the business owner sells the company, taking his fair share of the purchase price (as determined by his equity stake) is NOT stealing. Nor, is it breaking any norms or expectations. > By spreading the fruits of successful innovation more broadly you put the people who enabled that innovation in a position to use that experience to innovate further I actually agree with this specific point for an isolated case. That is, in isolation, spreading the purchase price for a huge acquisition evenly across the employee base would probably lead to greater innovation. However, this only makes sense in isolation. If you make it common practice to share acquisition price more evenly among employees, you destroy the financial incentive that drives much of entrepreneurship. Startups are very risky, and without a huge payout for success at the end, the expected values just don't work out anymore. Smart engineers will be much better off applying for a traditional FANG job. In fact, this is already the case! What you're proposing would just make the math even worse. Remember, for every success case like this, there are 4 or more founders who failed. There better be a sweet reward at the end of the tunnel to keep them motivated to keep trying! Furthermore, for small acquisitions like this, even if you were to split his 3.7M payday across his 20 employees, each person gets $18.5K. Hardly an amount that would spur innovation.

Jochim 6y ago
I'm not suggesting that acquisitions should necessarily be shared precisely evenly. I don't even think Josh necessarily earned an outsized return in this case. I do think that the current disparity in compensation that we're seeing is potentially dangerous to a healthy society. We're already seeing a move towards a rentier approach to the economy, where individuals can't afford to own property or other essentials. A major force driving this is inequality, those with the means have so much capital under their control that they can afford to outbid those that have a need for those resources. > In the case of employment, each employee is offering the business owner his/her time in exchange for a salary and equity. The expectations are crystal clear to both parties. When the business owner sells the company, taking his fair share of the purchase price (as determined by his equity stake) is NOT stealing. Nor, is it breaking any norms or expectations. I don't think it necessarily is crystal clear. A big part of the sales pitch to employees for many startups is that your.5% will be worth X when they reach Y valuation. This isn't too bad in itself, but when it turns out that the founders can issue new/preferred stock the incentives from an employees point of view become severely misaligned. > Furthermore, for small acquisitions like this, even if you were to split his 3.7M payday across his 20 employees, each person gets $18.5K. Hardly an amount that would spur innovation. I agree it that it doesn't look great for smaller acquisitions. Although there are some interesting (in my opinion) alternatives to selling to private equity. In my city for example, the founders of a print shop sold the company to the existing workers. The money was paid out over a few years from the company's revenue and they sat on the board to offer some advice on the transition. It seems like a more ethical alternative in that the workers are rewarded for their part in building the company, and the new owners are less likely to asset strip and gouge existing customers to recoup their investment. It has the added bonus of not adding to the concentration of capital in a small number of holders.
- fairity 6y ago
  We're broaching many new ideas now, many of which I agree with. I agree that employers have an obligation to communicate in crystal clear terms what equity in the company means. I also agree wealth inequality endangers the stability of our society, and some form of wealth re-distribution makes sense. I also agree that worker cooperatives can make sense in some situations, though rarely. I don't agree that employees deserve to be rewarded for their part in building the company above and beyond their cash and equity compensation. > Personally I'd like to see it move towards a point where taking everything just because you can isn't viewed as acceptable. I still am unsure what you're actually proposing we do. I initially thought you were proposing we shame Josh for taking more than he needs. I strongly disagree with this principle for aforementioned reasons. To put it another way, Josh isn't taking "everything just because he can". He's taking what he owns, rightfully deserves, and worked and risked 7 long, hard years for.

Jochim 6y ago

I'm not suggesting that acquisitions should necessarily be shared precisely evenly. I don't even think Josh necessarily earned an outsized return in this case. I do think that the current disparity in compensation that we're seeing is potentially dangerous to a healthy society. We're already seeing a move towards a rentier approach to the economy, where individuals can't afford to own property or other essentials. A major force driving this is inequality, those with the means have so much capital under their control that they can afford to outbid those that have a need for those resources. > In the case of employment, each employee is offering the business owner his/her time in exchange for a salary and equity. The expectations are crystal clear to both parties. When the business owner sells the company, taking his fair share of the purchase price (as determined by his equity stake) is NOT stealing. Nor, is it breaking any norms or expectations. I don't think it necessarily is crystal clear. A big part of the sales pitch to employees for many startups is that your.5% will be worth X when they reach Y valuation. This isn't too bad in itself, but when it turns out that the founders can issue new/preferred stock the incentives from an employees point of view become severely misaligned. > Furthermore, for small acquisitions like this, even if you were to split his 3.7M payday across his 20 employees, each person gets $18.5K. Hardly an amount that would spur innovation. I agree it that it doesn't look great for smaller acquisitions. Although there are some interesting (in my opinion) alternatives to selling to private equity. In my city for example, the founders of a print shop sold the company to the existing workers. The money was paid out over a few years from the company's revenue and they sat on the board to offer some advice on the transition. It seems like a more ethical alternative in that the workers are rewarded for their part in building the company, and the new owners are less likely to asset strip and gouge existing customers to recoup their investment. It has the added bonus of not adding to the concentration of capital in a small number of holders.

fairity 6y ago
We're broaching many new ideas now, many of which I agree with. I agree that employers have an obligation to communicate in crystal clear terms what equity in the company means. I also agree wealth inequality endangers the stability of our society, and some form of wealth re-distribution makes sense. I also agree that worker cooperatives can make sense in some situations, though rarely. I don't agree that employees deserve to be rewarded for their part in building the company above and beyond their cash and equity compensation. > Personally I'd like to see it move towards a point where taking everything just because you can isn't viewed as acceptable. I still am unsure what you're actually proposing we do. I initially thought you were proposing we shame Josh for taking more than he needs. I strongly disagree with this principle for aforementioned reasons. To put it another way, Josh isn't taking "everything just because he can". He's taking what he owns, rightfully deserves, and worked and risked 7 long, hard years for.