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Viewed from an employers' point of view, the cliff means you've got to put in some real sweat into it before the shares become worth anything. How long do you
by ohashi 15y ago
Viewed from an employers' point of view, the cliff means you've got to put in some real sweat into it before the shares become worth anything. How long do you think it takes for a new employee to be truly adding value? Perhaps it's not a year, but I suspect many eat a lot of time and slow things down for a while until they get comfortable. I think the cliff is just a balancing of those interests.
The last round+dollar per share seems silly. First because shares are somewhat arbitrary, it's the % of the company that matters. Also if there is a down round, why should the employee benefit? The whole company is struggling, why should there be a bonus for leaving/getting fired?
It seems to me that if you want to work for a startup and are taking equity compensation you should understand the RISK involved. You should be prepared to accept the pay and be comfortable knowing that your equity, real or imagined, could be worth nothing.
That said, the cliff issue could probably be negotiated more favorably for employees and screwing over your employees seems like a horrible policy in a world where every tiny detail of your life could possibly be published and forever archived publicly.
- ootachi 15y agoFounders only need to exit once. There is surprisingly little incentive for a founder to avoid screwing over employees.
- gm 15y agoSpoken like a true non-founder... Reputation is everything. If a founder ever wants to start a company again, screwing over employees will haunt him in the long term much worse than any legal repercussion that can be fixed with money. So I wager there is a lot preventing founders from screwing employees, specially in startups, where people are hyper connected. The comments in this story are running rampant with hearsay and people who have no involvement making up facts and jumping to uninformed conclusions. Zynga employees cannot comment on anything anywhere because of the quiet period.
- Silhouette 15y ago> Reputation is everything. Not if you, as founder, really are in it for the money and your first exit sets you up for life. Can anyone think of a company that might be relevant to this discussion where such a description might apply? > Zynga employees cannot comment on anything anywhere because of the quiet period. I can't believe no-one is going to sue over this, given the amounts of money presumably involved, and I doubt a judge is going to seal the records in such a case. I'm sure we'll find out the details soon enough.
- Daniel_Newby 15y ago> There is surprisingly little incentive for a founder to avoid screwing over employees. Other than being treated like toxic waste by every prospective VC and business partner until the end of time.
- jiggy2011 15y agoI think there are certain business cultures that might celebrate this kind of approach as an innovative scheme for maximizing profits, where there is a philosophy that anything that makes one rich must be a good thing. If nothing else this sort of approach might get one a well paid consulting gig in maximizing the throughput of a child labour force or something similar?