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Yeah, if you don't intend on selling then you should say so and not offer equity so the employees can make a better decision. Things may change and you might s

Yeah, if you don't intend on selling then you should say so and not offer equity so the employees can make a better decision. Things may change and you might sell after all, but that is not "withholding" anything, that is just things changing. I can only imagine this story was spun by employee who saw the founders selling and getting bunch of money and now think they should have reaped some of the benefits. Money and greed make people stupid.

sangnoir 5y ago
> Yeah, if you don't intend on selling then you should say so and not offer equity so the employees can make a better decision What's wrong with offering equity and staying private? I don't see any deception there - say if Valve gave equity to it's employees, that'd be perfectly fine.
- spoonjim 5y ago
  Because the founders likely won't issue any dividend distributions, they'll just likely borrow against their holdings for decades or even until the end of their lives.
  - deleted 5y ago
    [deleted]
- nextlevelwizard 5y ago
  It would be perfectly fine, but if you join a company A because they offered equity instead of company B which offered more money BECAUSE you wanted the equity to materialize, but the founders never intended to sell, then you are taking objectively worse offer because you were under the impression equity meant something. Of course any company can give out equity to their employees, but if it never turns into money then who cares?
  - IneffablePigeon 5y ago
    Equity is always worth _something_ if the company doesn't fail. At some point investors want to make some money back, whether that's through a sale of some sort or just through dividends. I do agree those are quite different beasts and you want to have an idea of the relative likelihoods if you're making a decision based on them.
    - eru 5y ago
      > [...] or just through dividends. What if the company never pays dividends?
      - id5j1ynz 5y ago
        Like Google?
        eru 5y ago
        Or any company that prefers buybacks over dividends. Economically, they are the same. But they are taxed differently in many jurisdictions. (Though in the case of buybacks, the shares you got as an employee are worth something, if the buyback is done as something like an auction.)
    - Aeolun 5y ago
      Equity in some companies means actual voting power, especially when one party doesn’t retain 50%+ control.
      - LanceH 5y ago
        Minority equity in a company means nothing. Let's vote on the $20mil bonus to the CEO or distribute it amongst the owners of the company. Oh, the CEO (and majority owner) gets it all.
        55555 5y ago
bjourne 5y ago
> I can only imagine this story was spun by employee who saw the founders selling and getting bunch of money and now think they should have reaped some of the benefits. Perhaps they should have. After all, without the employees' help Mailchimp wouldn't have been worth 12 billion today.
- nextlevelwizard 5y ago
  Founders of a company carry the risk. If you want to reap the benefits then you need to start a company. That is the risk and reward. It is sad when people see others succeed and get angry.
  - nimih 5y ago
    All employees at a startup carry substantial risk. If you're working as a customer service rep at a startup which folds, you in all likelihood don't have the connections or financial stability that the founders and software engineers and data scientists and scrum masters have to gracefully transition to another job. If you're planning on having a kid, losing your job 3 weeks before you expected to be able to take paid parental leave is going to really throw a wrench in the works. &c &c
    - rocqua 5y ago
      I don't like the argument I am about to make when used to attack minimum wage, but I think it applies here. When you accepted the job, you knew the terms. Those included not getting equity, and those included carrying some risk with known reward. I don't see how the owners selling retroactively makes the risk-reward balance different. Unless you consider it a risk/downside that someone else gets a windfall and you don't get to share. That seems silly to me tho. How rich someone else is does not affect how much money I need to live, with a few exceptions (inflation, friends, power dynamics in pre-existing relationships).
      - ryandrake 5y ago
        > How rich someone else is does not affect how much money I need to live, with a few exceptions (inflation, friends, power dynamics in pre-existing relationships). Many people cannot afford to even own a home in the Bay Area because everyone else around is so rich. Relative wealth is important because "other rich people" drive up prices of everything, from housing, to groceries, to health care. If my salary doesn't change, but the people around me get a 10% raise, my buying power decreases.
cascom 5y ago
I completely disagree. Equity ownership in private companies can be a fantastic thing, and create tremendous wealth, even with no contemplated liquidity event. Just ask partners in law firms or consultancies, or ask yourself if you’d like to own stock in Cargill, IKEA, Mars, Brown Brother Harriman, Bloomberg, Chik-fil-a, fidelity, etc.
- pavlov 5y ago
  If the private company is set up with the culture and explicit governance that makes sure minority shareholders get a cut of profits, then sure. But the average private tech company isn’t like that. There’s probably 2-4 founders who pay themselves extravagant salaries and control all voting shares. Minority equity never gets a payday.
- somethingAlex 5y ago
  The type of consultancies and firms which actually pay out profit based on equity are usually LLP's / partnerships (part of the reason why "Partner" is a title in finance, law, etc. Tech companies are usually corporations (often C corps in the startup world.) What equity gets you in the two scenarios is completely different.
  - cascom 5y ago
    Sorry, the company type has (LLC, LP, LLP, c-Corp, s-Corp, etc) has literally nothing to do with that. Tech start-ups are typically incorporated as c-corps as their structure makes it easier to grant options, startups don’t want to make tax distributions if they make money, LLCs can’t issue preferred shares, and s-corps can’t have more than 100 shareholders, etc. just to name a few. No one at Cargill or Bloomberg thinks twice about whether the equity is in a c-Corp to LP (all else’s being equal)

sangnoir 5y ago

> Yeah, if you don't intend on selling then you should say so and not offer equity so the employees can make a better decision What's wrong with offering equity and staying private? I don't see any deception there - say if Valve gave equity to it's employees, that'd be perfectly fine.

spoonjim 5y ago
Because the founders likely won't issue any dividend distributions, they'll just likely borrow against their holdings for decades or even until the end of their lives.
- deleted 5y ago
  [deleted]
nextlevelwizard 5y ago
It would be perfectly fine, but if you join a company A because they offered equity instead of company B which offered more money BECAUSE you wanted the equity to materialize, but the founders never intended to sell, then you are taking objectively worse offer because you were under the impression equity meant something. Of course any company can give out equity to their employees, but if it never turns into money then who cares?
- IneffablePigeon 5y ago
  Equity is always worth _something_ if the company doesn't fail. At some point investors want to make some money back, whether that's through a sale of some sort or just through dividends. I do agree those are quite different beasts and you want to have an idea of the relative likelihoods if you're making a decision based on them.
  - eru 5y ago
    > [...] or just through dividends. What if the company never pays dividends?
    - id5j1ynz 5y ago
      Like Google?
      - eru 5y ago
        Or any company that prefers buybacks over dividends. Economically, they are the same. But they are taxed differently in many jurisdictions. (Though in the case of buybacks, the shares you got as an employee are worth something, if the buyback is done as something like an auction.)
  - Aeolun 5y ago
    Equity in some companies means actual voting power, especially when one party doesn’t retain 50%+ control.
    - LanceH 5y ago
      Minority equity in a company means nothing. Let's vote on the $20mil bonus to the CEO or distribute it amongst the owners of the company. Oh, the CEO (and majority owner) gets it all.
      - 55555 5y ago

bjourne 5y ago

> I can only imagine this story was spun by employee who saw the founders selling and getting bunch of money and now think they should have reaped some of the benefits. Perhaps they should have. After all, without the employees' help Mailchimp wouldn't have been worth 12 billion today.

nextlevelwizard 5y ago
Founders of a company carry the risk. If you want to reap the benefits then you need to start a company. That is the risk and reward. It is sad when people see others succeed and get angry.
- nimih 5y ago
  All employees at a startup carry substantial risk. If you're working as a customer service rep at a startup which folds, you in all likelihood don't have the connections or financial stability that the founders and software engineers and data scientists and scrum masters have to gracefully transition to another job. If you're planning on having a kid, losing your job 3 weeks before you expected to be able to take paid parental leave is going to really throw a wrench in the works. &c &c
  - rocqua 5y ago
    I don't like the argument I am about to make when used to attack minimum wage, but I think it applies here. When you accepted the job, you knew the terms. Those included not getting equity, and those included carrying some risk with known reward. I don't see how the owners selling retroactively makes the risk-reward balance different. Unless you consider it a risk/downside that someone else gets a windfall and you don't get to share. That seems silly to me tho. How rich someone else is does not affect how much money I need to live, with a few exceptions (inflation, friends, power dynamics in pre-existing relationships).
    - ryandrake 5y ago
      > How rich someone else is does not affect how much money I need to live, with a few exceptions (inflation, friends, power dynamics in pre-existing relationships). Many people cannot afford to even own a home in the Bay Area because everyone else around is so rich. Relative wealth is important because "other rich people" drive up prices of everything, from housing, to groceries, to health care. If my salary doesn't change, but the people around me get a 10% raise, my buying power decreases.

cascom 5y ago

I completely disagree. Equity ownership in private companies can be a fantastic thing, and create tremendous wealth, even with no contemplated liquidity event. Just ask partners in law firms or consultancies, or ask yourself if you’d like to own stock in Cargill, IKEA, Mars, Brown Brother Harriman, Bloomberg, Chik-fil-a, fidelity, etc.

pavlov 5y ago
If the private company is set up with the culture and explicit governance that makes sure minority shareholders get a cut of profits, then sure. But the average private tech company isn’t like that. There’s probably 2-4 founders who pay themselves extravagant salaries and control all voting shares. Minority equity never gets a payday.
somethingAlex 5y ago
The type of consultancies and firms which actually pay out profit based on equity are usually LLP's / partnerships (part of the reason why "Partner" is a title in finance, law, etc. Tech companies are usually corporations (often C corps in the startup world.) What equity gets you in the two scenarios is completely different.
- cascom 5y ago
  Sorry, the company type has (LLC, LP, LLP, c-Corp, s-Corp, etc) has literally nothing to do with that. Tech start-ups are typically incorporated as c-corps as their structure makes it easier to grant options, startups don’t want to make tax distributions if they make money, LLCs can’t issue preferred shares, and s-corps can’t have more than 100 shareholders, etc. just to name a few. No one at Cargill or Bloomberg thinks twice about whether the equity is in a c-Corp to LP (all else’s being equal)