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I used to read Fred's blog years ago. Since then, I've realized nothing is less useful in the business world than the thoughts of VCs. At best, the advice is s

by smt88 5y ago

I used to read Fred's blog years ago. Since then, I've realized nothing is less useful in the business world than the thoughts of VCs. At best, the advice is something obvious. More often, it's transparently self-serving and/or based on extremely skewed anecdata.

dasil003 5y ago
Fred Wilson lost my respect recently when he was cheerleading a company’s decision to move to single year stock grants instead of the traditional 4-year grants on the basis that employees should “not stay for the wrong reasons”. Never mind this is yet another way for the investor class to take all the upside from the folks who actually do the work. Funny how no one complains about investors staying a company for the monetary upside Fred.
- vincentmarle 5y ago
  How is 1-year vesting worse than 4-year vesting?
  - deleted 5y ago
    [deleted]
  - dasil003 5y ago
    Because stock grants are sized based on price at the time of grant. With 1-year you get a max of 12months of upside on the valuation. With 4-year you get 48 months. When you hear about FAANG engineers making 7-figures this is why, their total comp offer may only have been $400k, but with stock appreciation and stacked refreshers there is huge upside. Of course management at these companies claims they will give you "more" in the new hire grant and yearly refresher, which may be technically true in terms of the dollar value they are granting, but what they fail to mention is that if the stock doubles one year, the next year your refresher is half the size (because it's based on valuation at the time of grant). It's especially disgusting for a VC to pitch this as the majority of young workers don't even know to think about this. Just another example of how being close to the money lets the investor class pull the wool over the eyes of the rest of us rubes.
    - wins32767 5y ago
      I don't get what you're saying here. If I get granted 40k options and they vest in 12 months, that's a lot better than 40k options that vest in 48 months. I have 10 years to exercise them in either case, so 10 years to get my upside, right?
      - rabidrat 5y ago
        No, they give you 10k options that vest in 12 months, and then next year you get 5k options that vest in 12 months, and then 2.5k, and then 1.25k (if stock price doubles every year). So you get less than half what you would have.
      - toast0 5y ago
        If instead of 40k options vesting over 4 years they plan to give you 10k options vesting over 1 year for the next 4 years, it's not great for you because the strike price in subsequent years may be higher (if it's significantly lower in future years, your company would hopefully cancel and regrant your earlier options at the lower price). Same thing can happen with RSUs, those are usually granted based on price. 4 year vesting of $100k worth of RSUs could be worth significantly more than $25k worth of RSUs granted with a one year vest each year for 4 years.
      - jemfinch 5y ago
        No one's explaining it particularly well, so I'll try to break it down. Let's say one company offers you $400k of equity vesting over four years. On your start date, they'll use the current price of the stock to translate that into a number of stock units (RSUs, typically), and then you'll get those stock units according to your vesting schedule. Let's say, for ease of calculation, that this $400k translates into 480 RSUs. So you'll vest 30 RSUs every quarter (let's ignore a cliff). If the price of the stock is rising, the 30 that vest in those later quarters will be worth more than the 30 that vested in your first quarter. Your last 30 units will be worth _a lot_ more than your first 30 units. Now let's say a company offers you $100k for your first year, and promises to refresh you another $100k each year thereafter. Your first year, they give you 120 units for the $100k. But your second year, the stock price has gone up, so $100k doesn't translate into 120 units anymore; it translates into maybe 100 units, or 80 units. Your second year, the stock price has gone up even further, and $100k translates into even fewer units. Likewise your fourth year. These per-year refreshes "reset" the value back at $100k each year, when a four year refresh would "accrue" more value, year over year, if the stock keeps going up in price, which tech stocks typically do. For a concrete example, at a former employer (GOOG) I was granted $150k of stock in 2019, vesting quarterly over four years. When I left in 2021, the value of the remaining shares of that grant was...$155k! The stock had more than doubled in price from the time of the grant, but it was still vesting according to the _original_translation from value to units. So the unvested value of _half_ the grant units were worth _more_ than the original grant, even after I'd already vested half the units.
  - flashgordon 5y ago
    The "switch" here is in the wording. This is supposed to be 1-year grants vs a 4 year grant We the former you total payout is rebased each year. With the later you get to reap the growth in rsu value.
thesausageking 5y ago
I stopped reading VC blogs when I realized how self-serving they are. Fred is a fantastic writer and really pulls you in. However, he also uses his platform to do things like shill a shady ICO from one of his portfolio companies: https://avc.com/2017/05/kin/ https://avc.com/2017/05/kin/
darksaints 5y ago
My first job out of college was as an analyst for a mid-level VC firm, and it is through that experience that I can whole-heartedly agree with you. Admittedly, I was just doing basic filtering of business plan submissions and validation of market and technology claims...but I had an up close and personal interaction with the partners of the firm as well as partners at other firms. Three things in particular stand out to me: * Most of them have had one success as an entrepreneur, and somehow think that everything that applied to their one success also automatically applies to every other company on the planet. This makes their "advice" almost completely worthless. * Most of them have absolutely monstruous egos. One of our partners would start every meeting with the founders of a potential investment with "Well, you've got two founding partners of a $200M investment fund sitting here with you, let's not waste any time". They literally treat everybody like it is a privilege to just be in their presence. * The incredibly vast majority of them are sheep...they refuse to lead rounds, and only commit to "maybe" decisions just to not lose out in case some other VC decides to jump the gun. They talk a big talk about taking big risks, but almost all of their decisions are "we will if you will", because they don't want to be the only one that investors can point at when something bombs. There are exceptions to each of those points, BTW...but I've never met one that was an exception to all of them. And consequently, I can't help but roll my eyes whenever one of them decides to spread their "wisdom".

by smt88 5y ago

dasil003 5y ago

Fred Wilson lost my respect recently when he was cheerleading a company’s decision to move to single year stock grants instead of the traditional 4-year grants on the basis that employees should “not stay for the wrong reasons”. Never mind this is yet another way for the investor class to take all the upside from the folks who actually do the work. Funny how no one complains about investors staying a company for the monetary upside Fred.

vincentmarle 5y ago
How is 1-year vesting worse than 4-year vesting?
- deleted 5y ago
  [deleted]
- dasil003 5y ago
  Because stock grants are sized based on price at the time of grant. With 1-year you get a max of 12months of upside on the valuation. With 4-year you get 48 months. When you hear about FAANG engineers making 7-figures this is why, their total comp offer may only have been $400k, but with stock appreciation and stacked refreshers there is huge upside. Of course management at these companies claims they will give you "more" in the new hire grant and yearly refresher, which may be technically true in terms of the dollar value they are granting, but what they fail to mention is that if the stock doubles one year, the next year your refresher is half the size (because it's based on valuation at the time of grant). It's especially disgusting for a VC to pitch this as the majority of young workers don't even know to think about this. Just another example of how being close to the money lets the investor class pull the wool over the eyes of the rest of us rubes.
  - wins32767 5y ago
    I don't get what you're saying here. If I get granted 40k options and they vest in 12 months, that's a lot better than 40k options that vest in 48 months. I have 10 years to exercise them in either case, so 10 years to get my upside, right?
    - rabidrat 5y ago
      No, they give you 10k options that vest in 12 months, and then next year you get 5k options that vest in 12 months, and then 2.5k, and then 1.25k (if stock price doubles every year). So you get less than half what you would have.
    - toast0 5y ago
      If instead of 40k options vesting over 4 years they plan to give you 10k options vesting over 1 year for the next 4 years, it's not great for you because the strike price in subsequent years may be higher (if it's significantly lower in future years, your company would hopefully cancel and regrant your earlier options at the lower price). Same thing can happen with RSUs, those are usually granted based on price. 4 year vesting of $100k worth of RSUs could be worth significantly more than $25k worth of RSUs granted with a one year vest each year for 4 years.
    - jemfinch 5y ago
      No one's explaining it particularly well, so I'll try to break it down. Let's say one company offers you $400k of equity vesting over four years. On your start date, they'll use the current price of the stock to translate that into a number of stock units (RSUs, typically), and then you'll get those stock units according to your vesting schedule. Let's say, for ease of calculation, that this $400k translates into 480 RSUs. So you'll vest 30 RSUs every quarter (let's ignore a cliff). If the price of the stock is rising, the 30 that vest in those later quarters will be worth more than the 30 that vested in your first quarter. Your last 30 units will be worth _a lot_ more than your first 30 units. Now let's say a company offers you $100k for your first year, and promises to refresh you another $100k each year thereafter. Your first year, they give you 120 units for the $100k. But your second year, the stock price has gone up, so $100k doesn't translate into 120 units anymore; it translates into maybe 100 units, or 80 units. Your second year, the stock price has gone up even further, and $100k translates into even fewer units. Likewise your fourth year. These per-year refreshes "reset" the value back at $100k each year, when a four year refresh would "accrue" more value, year over year, if the stock keeps going up in price, which tech stocks typically do. For a concrete example, at a former employer (GOOG) I was granted $150k of stock in 2019, vesting quarterly over four years. When I left in 2021, the value of the remaining shares of that grant was...$155k! The stock had more than doubled in price from the time of the grant, but it was still vesting according to the _original_translation from value to units. So the unvested value of _half_ the grant units were worth _more_ than the original grant, even after I'd already vested half the units.
- flashgordon 5y ago
  The "switch" here is in the wording. This is supposed to be 1-year grants vs a 4 year grant We the former you total payout is rebased each year. With the later you get to reap the growth in rsu value.

thesausageking 5y ago

I stopped reading VC blogs when I realized how self-serving they are. Fred is a fantastic writer and really pulls you in. However, he also uses his platform to do things like shill a shady ICO from one of his portfolio companies: https://avc.com/2017/05/kin/ https://avc.com/2017/05/kin/

darksaints 5y ago

My first job out of college was as an analyst for a mid-level VC firm, and it is through that experience that I can whole-heartedly agree with you. Admittedly, I was just doing basic filtering of business plan submissions and validation of market and technology claims...but I had an up close and personal interaction with the partners of the firm as well as partners at other firms. Three things in particular stand out to me: * Most of them have had one success as an entrepreneur, and somehow think that everything that applied to their one success also automatically applies to every other company on the planet. This makes their "advice" almost completely worthless. * Most of them have absolutely monstruous egos. One of our partners would start every meeting with the founders of a potential investment with "Well, you've got two founding partners of a $200M investment fund sitting here with you, let's not waste any time". They literally treat everybody like it is a privilege to just be in their presence. * The incredibly vast majority of them are sheep...they refuse to lead rounds, and only commit to "maybe" decisions just to not lose out in case some other VC decides to jump the gun. They talk a big talk about taking big risks, but almost all of their decisions are "we will if you will", because they don't want to be the only one that investors can point at when something bombs. There are exceptions to each of those points, BTW...but I've never met one that was an exception to all of them. And consequently, I can't help but roll my eyes whenever one of them decides to spread their "wisdom".