4 ms·

Companies should be required to open the books to employees if they are offering equity. Without good data, employees are forced to believe the founders BS.

by eweise 4y ago

babyshake 4y ago
Not only open the books, but be forthcoming about answering those questions in a way that is very easy for employees to reference without needing to look through detailed cap table info.
- neilv 4y ago
  Maybe a mandated standard-format one-pager periodic/occasional statement with all the pertinent information in a form understandable to the layperson, so that employees don't have to ask, nor try to interpret on their own.
phphphphp 4y ago
Most people don’t know how to interpret financial information, nor do they know how to value equity (with or without the financial context). You can look at equity crowdfunding to see how completely underprepared most people are for assessing company financials: pretty much every normal person defers to business leaders narratives to assess a business, and if you trust a business enough to join it, then you probably trust the leaders enough to buy their narrative — with or without financials.
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quickthrower2 4y ago
Yes to value the options you need to do the same DD as if you are buying the company. In addition DD on the clauses about those options and the many ways you can lose out.
diob 4y ago
Yes! It's absolutely unbelievable we allow this charade. It's usually akin to the crypto scams in that your equity is worthless.
scarface74 4y ago
The investors have “good data”. But even they know that only 10% of startups succeed. But HN and Reddit are full of wanna be analysts who think they can predict which startups will succeed if they have enough information. Trying to value equity as employee or will it ever be worth anything might as well be buying books from the supermarket with winning lottery numbers.

Companies should be required to open the books to employees if they are offering equity. Without good data, employees are forced to believe the founders BS.

by eweise 4y ago

Companies should be required to open the books to employees if they are offering equity. Without good data, employees are forced to believe the founders BS.

babyshake 4y ago

Not only open the books, but be forthcoming about answering those questions in a way that is very easy for employees to reference without needing to look through detailed cap table info.

neilv 4y ago
Maybe a mandated standard-format one-pager periodic/occasional statement with all the pertinent information in a form understandable to the layperson, so that employees don't have to ask, nor try to interpret on their own.

phphphphp 4y ago

Most people don’t know how to interpret financial information, nor do they know how to value equity (with or without the financial context). You can look at equity crowdfunding to see how completely underprepared most people are for assessing company financials: pretty much every normal person defers to business leaders narratives to assess a business, and if you trust a business enough to join it, then you probably trust the leaders enough to buy their narrative — with or without financials.

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quickthrower2 4y ago

Yes to value the options you need to do the same DD as if you are buying the company. In addition DD on the clauses about those options and the many ways you can lose out.

diob 4y ago

Yes! It's absolutely unbelievable we allow this charade. It's usually akin to the crypto scams in that your equity is worthless.

scarface74 4y ago

The investors have “good data”. But even they know that only 10% of startups succeed. But HN and Reddit are full of wanna be analysts who think they can predict which startups will succeed if they have enough information. Trying to value equity as employee or will it ever be worth anything might as well be buying books from the supermarket with winning lottery numbers.