8 ms·

> Startup employees going home at 5 and fighting unreasonable schedules? Absolutely. First, overwork doesn't lead to more productivity for knowledge workers.

by donw 6y ago

> Startup employees going home at 5 and fighting unreasonable schedules? Absolutely. First, overwork doesn't lead to more productivity for knowledge workers. You get to pay that piper one way or another in the end. Second, back in the day, if your company was acquired for multiple billions, you had a pretty good shot at a life-changing infusion of cash. Nowadays, stock options given to employees often end up being worth nothing, even on a successful exit. Why work hard for a slim chance at bupkis?

zepto 6y ago
> Nowadays, stock options given to employees often end up being worth nothing, even on a successful exit. This seems unlikely. Exits and IPOs have much greater valuations now than they did ‘back in the day’ so far more early employees end up with a significant infusion of cash.
- alasdair_ 6y ago
  Companies are also taking FAR longer to exit/IPO than they did back in the day and most companies still have a 90 day limit on ISOs. How many super early employees are able to hang on for a decade until IPO, or have the cash to exercise their options before they leave?
  - drfuchs 6y ago
    Super-early employee here. Pay for your options your first day of employment. They should be inexpensive; and your employer should be willing to give you a signing bonus to cover it (after all, the money just goes right back to them). Then when you leave, you get to keep all vested shares with no tax consequence, no need to pony up any cash, and no need to sell right away. Worked out great for me.
    - dmarlow 6y ago
      This is the way for companies to do right by the first few employees (and have a longer than 90 exercise window when leaving). I know a super early employee who left and had to take a loan to exercise and pay taxes. It's kind of sad to think about it.
      - alasdair_ 6y ago
        I currently have a six figure tax bill because of exactly this issue. And I can’t sell the shares to anyone because transfer is forbidden.
        maerF0x0 6y ago
        > And I can’t sell the shares to anyone because transfer is forbidden. IMO this should be illegal. It's your property and they should not be allowed to bar it's sale.
        zepto 6y ago
        Shares aren’t really ‘property’. They are a financial / legal instrument created by statutes and contracts.
    - mattm 6y ago
      How does this work when they haven't vested yet?
      - richardxia 6y ago
        If your company allows for it, you can early exercise and file a 83(b) election so that even as your options vest over time, you only pay taxes for the spread between your strike price and the fair market value at the date of the early exercise, rather than the date of vesting. The taxes can be 0 if you early exercise when the fair market value _is_ the same as your strike price. https://www.investopedia.com/terms/e/earlyexercise.asp https://www.investopedia.com/terms/e/earlyexercise.asp https://www.investopedia.com/terms/1/83b-election.asp https://www.investopedia.com/terms/1/83b-election.asp
      - alain94040 6y ago
        It's called election 83(b). For it to work, the company grants you restricted stock instead of options. The restriction is that the company can buy back the stock on a vesting schedule, so it's effectively equivalent to stock-options. The difference is that you can buy all of them on day 1 at fair market value and pay no tax. It's usually done for early employees who join before multiple rounds of funding occur.
    - maerF0x0 6y ago
      > They should be inexpensive; and your employer should be willing to give you a signing bonus to cover it (after all, the money just goes right back to them). The first part of this can be false. If you're 1/2 way to billions IPO then your options can easily be a year or more of salary to exercise. About the second part if the company gives you that as a signing bonus you're still on the hook to the IRS for the bonus so now you're 10s of 10000s deep on an illiquid position.
      - drfuchs 6y ago
        If the company is half way to a big IPO, then any new hire is no longer "super early," and the advice doesn't pertain.
        maerF0x0 6y ago
        >Super-early employee here. The advice giver is super-early, not the target of said advice. But I agree that the advice is best suited for super-early people.
        drfuchs 6y ago
        The target of the advice specifically asked about the super-early case: "How many super early employees are..."
    - NegativeLatency 6y ago
      Lots of places have cliffs now, how does that strategy account for not being allowed to buy them because you haven’t worked there long enough?
      - drfuchs 6y ago
        You pay ahead, and if you don't make the cliff, or if you leave after the 1 year cliff but before the full 4 year vest, you get the shares you vested, and a refund of the cash that didn't end up buying the rest.
- deleted 6y ago
  [deleted]
- goatinaboat 6y ago
  far more early employees end up with a significant infusion of cash One word: dilution
  - zepto 6y ago
    Dilution is not new.
- dhosek 6y ago
  In my 30 year career, I have never had a stock option worth a single penny. When I have someone talk up options as part of a compensation package, I tell them that options are nice, but my experience is that they have had no value in my past and that's the value that I'll assign them in the present and the future.
  - zepto 6y ago
    I’m with you on this. I just don’t think it was better in the past.
- icedchai 6y ago
  You need to consider that a very, very small percentage of companies have IPOs. Many "successful" exits are actually acqui-hires, where a larger company acquires a dead or dying company for its talent. Often the product from that company is immediately shutdown, or at least shelved and no longer actively developed. Other "successful" exits pay some percentage back to the recent preferred shareholders. Earlier investors are not made whole. Common shareholders generally get nothing. Founders will still spin these "exits" a positive because they didn't have to shut down. The reality is the venture was a failure. Employees got jobs... that they could've had anyway.
  - zepto 6y ago
    Sure - I’m just suggesting that it wasn’t better in some mythical past.
barry-cotter 6y ago
> First, overwork doesn't lead to more productivity for knowledge workers. You get to pay that piper one way or another in the end. I have never seen any research showing net negative productivity for any job for under 60 hours a week of work. Overwork sucks but if you have evidence that it’s bad for productivity please cite it.
- dmarlow 6y ago
  > Overwork sucks but if you have evidence that it’s bad for productivity please cite it. Seriously? Of all things, something so obvious like this needs needs citation?
  - barry-cotter 6y ago
    Feel free to name any category of professional where working over 40 hours a week isn’t quite normal. Doctors, lawyers, engineers, professors. It sure looks like people who work more than 40 hours a week on average do better than those who don’t. This is not a claim about what I wish was true, but about what actually seems to be true. The actual research on this is scarce to the point of non-existence. It may actually be non-existent for knowledge workers, at least published work.
    - ipaddr 6y ago
      Normal for whom? Specialist doctors are not staying late on a Friday or working the weekend. While a walkin clinic doctor might be pushing 60 hours. An average business owner might spend more than 40 hours a week. The most successful business owners hire people to work for them while they enjoy their lives. 8 hours of tired programming gets less done compared to a well rested 3 hour work session.
      - barry-cotter 6y ago
        As best I can tell the specialty with the lowest annual hours worked is pediatric emergency medicine at around 52 hours a week. Vascular surgery average 66 hours a week. If you want to check my calculations the below paper has annual work hours for different specialties. Annual Work Hours Across Physician Specialties https://jamanetwork.com/journals/jamainternalmedicine/articlepdf/1105820/ilt0711_1211_1213.pdf https://jamanetwork.com/journals/jamainternalmedicine/articl... Pop article in magazine for physicians > 2018 Average Physician Hours Worked Per Week Physician Type Average Physician Workweek Age 45 years or less 54.73 hours Age 46 years or more 49.87 hours Male physicians 51.89 hours Female physicians 50.46 hours Practice owners 51.96 hours Employed physicians 53.73 hours Primary care physicians 50.64 hours Physician specialists 51.76 hours https://www.locumleaders.com/physician-news/the-average-physician-work-week-hours-worked/ https://www.locumleaders.com/physician-news/the-average-phys...
papito 6y ago
Equity is just another way to not give you money in most cases. Unless you are at the founding level, wasting years of your life for just a few extra thousand dollars? Imagine if you were getting paid $150K instead of $100K + options. In three years, do you think your options would yield $150,000 in case of a liquidity event, in the BEST case scenario?

by donw 6y ago

zepto 6y ago

> Nowadays, stock options given to employees often end up being worth nothing, even on a successful exit. This seems unlikely. Exits and IPOs have much greater valuations now than they did ‘back in the day’ so far more early employees end up with a significant infusion of cash.

alasdair_ 6y ago
Companies are also taking FAR longer to exit/IPO than they did back in the day and most companies still have a 90 day limit on ISOs. How many super early employees are able to hang on for a decade until IPO, or have the cash to exercise their options before they leave?
- drfuchs 6y ago
  Super-early employee here. Pay for your options your first day of employment. They should be inexpensive; and your employer should be willing to give you a signing bonus to cover it (after all, the money just goes right back to them). Then when you leave, you get to keep all vested shares with no tax consequence, no need to pony up any cash, and no need to sell right away. Worked out great for me.
  - dmarlow 6y ago
    This is the way for companies to do right by the first few employees (and have a longer than 90 exercise window when leaving). I know a super early employee who left and had to take a loan to exercise and pay taxes. It's kind of sad to think about it.
    - alasdair_ 6y ago
      I currently have a six figure tax bill because of exactly this issue. And I can’t sell the shares to anyone because transfer is forbidden.
      - maerF0x0 6y ago
        > And I can’t sell the shares to anyone because transfer is forbidden. IMO this should be illegal. It's your property and they should not be allowed to bar it's sale.
        zepto 6y ago
        Shares aren’t really ‘property’. They are a financial / legal instrument created by statutes and contracts.
  - mattm 6y ago
    How does this work when they haven't vested yet?
    - richardxia 6y ago
      If your company allows for it, you can early exercise and file a 83(b) election so that even as your options vest over time, you only pay taxes for the spread between your strike price and the fair market value at the date of the early exercise, rather than the date of vesting. The taxes can be 0 if you early exercise when the fair market value _is_ the same as your strike price. https://www.investopedia.com/terms/e/earlyexercise.asp https://www.investopedia.com/terms/e/earlyexercise.asp https://www.investopedia.com/terms/1/83b-election.asp https://www.investopedia.com/terms/1/83b-election.asp
    - alain94040 6y ago
      It's called election 83(b). For it to work, the company grants you restricted stock instead of options. The restriction is that the company can buy back the stock on a vesting schedule, so it's effectively equivalent to stock-options. The difference is that you can buy all of them on day 1 at fair market value and pay no tax. It's usually done for early employees who join before multiple rounds of funding occur.
  - maerF0x0 6y ago
    > They should be inexpensive; and your employer should be willing to give you a signing bonus to cover it (after all, the money just goes right back to them). The first part of this can be false. If you're 1/2 way to billions IPO then your options can easily be a year or more of salary to exercise. About the second part if the company gives you that as a signing bonus you're still on the hook to the IRS for the bonus so now you're 10s of 10000s deep on an illiquid position.
    - drfuchs 6y ago
      If the company is half way to a big IPO, then any new hire is no longer "super early," and the advice doesn't pertain.
      - maerF0x0 6y ago
        >Super-early employee here. The advice giver is super-early, not the target of said advice. But I agree that the advice is best suited for super-early people.
        drfuchs 6y ago
        The target of the advice specifically asked about the super-early case: "How many super early employees are..."
  - NegativeLatency 6y ago
    Lots of places have cliffs now, how does that strategy account for not being allowed to buy them because you haven’t worked there long enough?
    - drfuchs 6y ago
      You pay ahead, and if you don't make the cliff, or if you leave after the 1 year cliff but before the full 4 year vest, you get the shares you vested, and a refund of the cash that didn't end up buying the rest.
deleted 6y ago
[deleted]
goatinaboat 6y ago
far more early employees end up with a significant infusion of cash One word: dilution
- zepto 6y ago
  Dilution is not new.
dhosek 6y ago
In my 30 year career, I have never had a stock option worth a single penny. When I have someone talk up options as part of a compensation package, I tell them that options are nice, but my experience is that they have had no value in my past and that's the value that I'll assign them in the present and the future.
- zepto 6y ago
  I’m with you on this. I just don’t think it was better in the past.
icedchai 6y ago
You need to consider that a very, very small percentage of companies have IPOs. Many "successful" exits are actually acqui-hires, where a larger company acquires a dead or dying company for its talent. Often the product from that company is immediately shutdown, or at least shelved and no longer actively developed. Other "successful" exits pay some percentage back to the recent preferred shareholders. Earlier investors are not made whole. Common shareholders generally get nothing. Founders will still spin these "exits" a positive because they didn't have to shut down. The reality is the venture was a failure. Employees got jobs... that they could've had anyway.
- zepto 6y ago
  Sure - I’m just suggesting that it wasn’t better in some mythical past.

barry-cotter 6y ago

> First, overwork doesn't lead to more productivity for knowledge workers. You get to pay that piper one way or another in the end. I have never seen any research showing net negative productivity for any job for under 60 hours a week of work. Overwork sucks but if you have evidence that it’s bad for productivity please cite it.

dmarlow 6y ago
> Overwork sucks but if you have evidence that it’s bad for productivity please cite it. Seriously? Of all things, something so obvious like this needs needs citation?
- barry-cotter 6y ago
  Feel free to name any category of professional where working over 40 hours a week isn’t quite normal. Doctors, lawyers, engineers, professors. It sure looks like people who work more than 40 hours a week on average do better than those who don’t. This is not a claim about what I wish was true, but about what actually seems to be true. The actual research on this is scarce to the point of non-existence. It may actually be non-existent for knowledge workers, at least published work.
  - ipaddr 6y ago
    Normal for whom? Specialist doctors are not staying late on a Friday or working the weekend. While a walkin clinic doctor might be pushing 60 hours. An average business owner might spend more than 40 hours a week. The most successful business owners hire people to work for them while they enjoy their lives. 8 hours of tired programming gets less done compared to a well rested 3 hour work session.
    - barry-cotter 6y ago
      As best I can tell the specialty with the lowest annual hours worked is pediatric emergency medicine at around 52 hours a week. Vascular surgery average 66 hours a week. If you want to check my calculations the below paper has annual work hours for different specialties. Annual Work Hours Across Physician Specialties https://jamanetwork.com/journals/jamainternalmedicine/articlepdf/1105820/ilt0711_1211_1213.pdf https://jamanetwork.com/journals/jamainternalmedicine/articl... Pop article in magazine for physicians > 2018 Average Physician Hours Worked Per Week Physician Type Average Physician Workweek Age 45 years or less 54.73 hours Age 46 years or more 49.87 hours Male physicians 51.89 hours Female physicians 50.46 hours Practice owners 51.96 hours Employed physicians 53.73 hours Primary care physicians 50.64 hours Physician specialists 51.76 hours https://www.locumleaders.com/physician-news/the-average-physician-work-week-hours-worked/ https://www.locumleaders.com/physician-news/the-average-phys...

papito 6y ago

Equity is just another way to not give you money in most cases. Unless you are at the founding level, wasting years of your life for just a few extra thousand dollars? Imagine if you were getting paid $150K instead of $100K + options. In three years, do you think your options would yield $150,000 in case of a liquidity event, in the BEST case scenario?