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In what world do we want employee to have stock options ? I mean, for me this is where the problem is, there is no reason to promise a lot of equity to an empl
by polote 6y ago
In what world do we want employee to have stock options ?
I mean, for me this is where the problem is, there is no reason to promise a lot of equity to an employee. Pay them well. Now any (private growing) company is well funded, you can afford market salaries.
- konschubert 6y agoStock options may motivate some people to think more about the interests of the company rather than their own.
- the-dude 6y agoStock options may motivate some people to inflate the stock price.
- andi999 6y agoI am nitpicking here, I know... They still think about their own interest, but the value of the company is now part of their own interest.
- srtjstjsj 6y agoThe question was more why employees should agree to it.
- Fordec 6y agoVery few startups are FAANG level funded. Why work for a startup and commit your soul to the effort for half what the big boys are paying? And far, far less risk of the company going bust in the next two years.
- polote 6y agoThis is the most common error people on HN make. This is not startup VS FAANG. A small percentage of people make FAANG salary. A startup is mostly paying as much as any other company
- glitchc 6y agoIn terms of total compensation, startups seem to be paying less than average.
- ryandrake 6y ago> A small percentage of people make FAANG salary. Also, keep in mind that only a small percentage of FAANG employees have the nosebleed-high comps people frequently quote here. So, we are talking about a small percentage of a small percentage.
- Mauricebranagh 6y agoNot if you compare like for like in say London FANG's pay very well even at the base salary.
- logicslave 6y ago300k a year is very standard for five years of experience.
- Out_of_Characte 6y agoIt lowers employee salary in a time a company is supposedly the least profitable (Starting up and having no products or customers) You're essentially loaning from your employees untill you become profitable and their stock options become something of worth. No matter how big or small your company, everyone has a limited budget. or at least seeks to not overspend on trivialities. Though the real world often doesn't reflect the theory due to unforeseen complexities. It also makes sense from a game theory perspective, If your below market rate employees do not believe in your company or are agnostic to the companies success then the chance that their stock options become worth something will be less. It should also attract more people who understand the value or direction of your company yielding better decisions and hopefully increase their stock option worth. Again, just theory. but its solid nonetheless
- mysterydip 6y agoBut we gave them a ping pong table and the illusion of flexible hours!
- Mauricebranagh 6y agoYour seriously asking this question? Its to reward taking a riskier job and also for the sweat equity you put in.
- 6gvONxR4sf7o 6y agoIt’s often a bad deal for employees, but I think it’s a good deal for the industry’s competitive wages for folks to be paid in equity. You have companies A and B with workers getting $100k in cash and $50k in equity. Company A goes under and B doubles, becoming known as an elite company worth hiring from. Employees from A demand their old wage ($150k) in their new jobs, and if you want to hire folks away from B, you have to match their new wage ($200k). It ratchets its way up as enough people see net wage growth to drag the industry’s competitive comp up.