10 ms·

This bit from the employee announcement about how they're handling equity vesting [1] is worth highlighting as a pretty classy move, all things considered: > W

This bit from the employee announcement about how they're handling equity vesting [1] is worth highlighting as a pretty classy move, all things considered: > We’re waiving the one-year equity vesting cliff for all departing employees so that everyone has an opportunity to be a shareholder, regardless of your tenure. [...] All departing teammates will qualify for an extended option exercise period of 5 years, and we have extended it to 7 years in regions where we are legally able. It must be jarring to be on the receiving end of a layoff. In the grand scheme of things, a laid-off employee surely has bigger things to worry about... but I still think what they did here with the equity, especially the option exercise period, is a nice touch. Not many companies do this sort of thing, but they should. [1]: https://blog.patreon.com/a-note-from-jack https://blog.patreon.com/a-note-from-jack

unity1001 4y ago
They say there's 3 months of pay, healthcare, mental care until the end of the year too. And they contracted a placement company to hook people up with new jobs.
- toomuchtodo 4y ago
  Decency demonstrated, and hopefully recognized at large regardless of the criticisms of the business strategy and execution.
  - unity1001 4y ago
    I agree. Tech companies should never really break off with former employees. Any former employee is a future potential employee that you can re-recruit when the time comes. Also, talent is difficult to find. Which makes people the center. Whatever you build, you will build it with people. So you need people. Be them new employees, be them former employees.
    - cafed00d 4y ago
      > Any former employee is a future potential employee that you can re-recruit when the time comes Not only that, all former employees are de-facto "background check references" / "evagenlists" / "detractors" of your company. Forever! (well, not exactly forever... but close enough) I can't recall a single year over the last 10 years where younger engineers, cousins, nephews or friends have asked me about the 2 companies I worked at before. And boy, have I been candid. Talked a very good friend of mine from joining Amazon for an offer he got making nearly 3 times much I did. All because of "decency" (or lack thereof) of a company.
      - treis 4y ago
        >friends have asked me Is this supposed to be haven't?
        cafed00d 4y ago
        Whoops! Yes, you're right. Thanks! Wish I could edit it now.
      - smm11 4y ago
        Seems Amazon needs to be careful about this, too. https://retailwire.com/discussion/there-might-soon-be-no-one-left-to-work-at-amazon/ https://retailwire.com/discussion/there-might-soon-be-no-one...
        chihuahua 4y ago
        Amazon has really developed "not giving a shit" into an art form. They even still have the cliff vesting of RSUs, which is their way of telling new hires "we don't expect you to stay for more than 2 years"
      - water-your-self 4y ago
        Would love to hear your take on Amazon.
    - 4y ago
  - iancmceachern 4y ago
    Agreed, its not ideal but there are things a company can do to put their money where there mouth is in this situation. This seems to be the new playback for doing it right. I appreciate that.
  - jzb 4y ago
    I had some unkind feelings about Patreon when it was announced / made public that they laid off their entire security team. I still think that was a poor move and any company responsible for handling payments ought to have an in-house security team. That said - I've held off on any criticisms around their strategy/execution for the moment (aside from that) since it's unclear what happened. I'm wondering if Patreon is getting hit with lots of people backing off support of artists after a big jump due to the pandemic. Given inflation and a lot of feelings of uncertainty around the economy, it wouldn't surprise me to learn that their revenue went way down in a hurry this year. I back four artists on Patreon, down from five a year ago. In all 4 cases I'm either too busy to get full "value" out of sponsoring (e.g., I don't have time to read the updates or listen to all the demos), or there's not really any benefit other than funneling money to support the artist in hopes they'll continue working as an artist. Each month I look at the bill from Patreon and wonder "do I really need to keep spending this money?" So far I've elected to - but I haven't been hit super hard by inflation or a layoff like many folks...
    - unity1001 4y ago
      They didn't lay off their entire security team. What one person among the laid off ones thought to be 'security team' may not overlap with what their company had been doing since a long time. In startups, its not uncommon to have engineers who have been handling various responsibilities, including security (especially early employees).
      - Kalium 4y ago
        > In startups, its not uncommon to have engineers who have been handling various responsibilities, including security (especially early employees). You're right! That said, by the time a company is large enough that 17% of it is more than 17 people the kind of startup organization you have wisely and correctly nodded to will have ceased to exist. So while you are right in that such scenarios have, do, and will continue to happen there's perhaps cause to wonder if that's really the best way to characterize replacing a security organization with specialists with a bunch of engineers who are likely quarter-time security at best. It's akin to firing all your engineers because the sales people can do a little bit of coding each.
- staunch 4y ago
  This is exactly how to handle a layoff: do it 3-6 months earlier than required and give the laid off employees that money as severance. Waving the equity cliff too is very generous and good of them. Everyone should note the companies that do brutal layoffs with little/no severance. It's a major red flag because it shows incompetence and/or a lack of ethics.
- fckgw 4y ago
  Some of this is because of the WARN Act in California [0], which requires 60-day notice before any mass layoff. Employers can also fulfill the requirements of this mandate by letting employees go now but having their actual termination date 60+ days in advance. I've been survived a few layoffs that work this way. Good for Patreon to go beyond the 60-day mandated period though [0] https://edd.ca.gov/en/Jobs_and_Training/Layoff_Services_WARN https://edd.ca.gov/en/Jobs_and_Training/Layoff_Services_WARN
  - onlyrealcuzzo 4y ago
    > I've been survived a few layoffs that work this way. How many times have you been laid off?!
    - jrockway 4y ago
      There are probably a large number of HN readers that have weathered the dotcom bust, the 2008 financial crisis, and the 2022 financial crisis. If you were born 1980-ish and you haven't been laid off 3 times, congrats!
      - michaelcampbell 4y ago
        I was born mid 1960's-ish and have lucked out; only laid off once. But I well remember all of those crises.
      - gabereiser 4y ago
        This, I've been laid off about 6 times, only once because of my own accord (and I freely admit my fault there). I've left a company 2x that count. I started my career in 1999. What a year to start...
        dahfizz 4y ago
        In 23 years you have worked at 18 companies? Has this hurt you during interviews?
- deleted 4y ago
  [deleted]
- chrisseaton 4y ago
  Isn’t 3 months a pretty standard severance compensation?
  - pessimizer 4y ago
    If not, I've had a lot of incredibly decent employers in the past. They all seem to do two or three months. I know of layoffs where people have gotten significantly more, though.
- viridian 4y ago
  I don't like a lot of their business decisions (I know much of this is driven by credit card/payment processors) but this is the most respectable mass layoff I've ever seen from a company, and should be lauded.
rconti 4y ago
I think how much compensation they end up with from their ex-employer is likely top-of-mind, actually!
preston4tw 4y ago
I always thought it was awesome that a company to support creators was creator lead. I came across Jack Conte in 2010 before Patreon existed. He was a music creator on YouTube that made what he was calling Video Songs, songs with each instrument part video'd and mixed together, and selling his music collection through e-junkie at the time. He was one of the first creators I ever financially supported. Some of the videos are still up on YT: https://youtu.be/D2PwVkQBp5o https://youtu.be/D2PwVkQBp5o Despite not knowing Jack personally pretty much everything I've seen from him over the years has reinforced my generally high opinion of him. In this case as well. As lay-offs go Patreon seems to be trying very hard to do right by their employees.
- KerryJones 4y ago
  As a former Patreon team member, he has done an incredible job of attracting creator-focused team members -- one of the most mission oriented groups I've ever been a part of. Don't mistake that for being a good CEO. He gives deep-felt apologies every time he does layoffs... which he does frequently. Often because he just doesn't like what people are doing. He also frequently communicates with the public in a more heart-felt manner than he does his own employees. He's great at putting out a great face. - 5 days ago - Security Team - https://techcrunch.com/2022/09/09/patreon-security-layoffs/ https://techcrunch.com/2022/09/09/patreon-security-layoffs/ - 2021 - https://www.protocol.com/bulletins/patreon-lays-off-36-employees https://www.protocol.com/bulletins/patreon-lays-off-36-emplo... - 2020 - https://techcrunch.com/2020/04/21/patreon-lays-off-13-of-workforce/ https://techcrunch.com/2020/04/21/patreon-lays-off-13-of-wor... - 2019, September layoffs (can't find the links for these ones) - 2019, June layoffs - 2018, June layoffs Also, to be clear. I was not one of the ones laid off. But I did see my entire team besides my manager vanish one day and then be told I'm expected to do the team's work for the next 6 months.
  - preston4tw 4y ago
    Yeah, I'd imagine in many respects he's unqualified to be a good CEO since he, as far as I can tell, essentially stumbled sideways into the role as co-founder. There's the upside of the CEO being a creator themselves but the downside of not having a background in business or necessarily the other qualities a good leader possesses. Patreon has a great mission though and I can see how it would attract creator-focused team members. There are some impressive Patreon alumni in their own right.
ginger2016 4y ago
I am not a user or an employee of Patreon, still I appreciate Patreon being generous about equity vesting.
- yieldcrv 4y ago
  The progressive thing is 10-year option exercise, and the more progressive thing has been 1-month cliff which some of big tech does now This is "mid", as my friends have started to say
ugh123 4y ago
Indeed classy. The 1-year cliff waiver should standard operating procedure during layoffs.
avg_dev 4y ago
I am sure this says more about me than anything but if a company lays me off there is zero chance of me exercising options in that company. Edit: I read the link and it appears to apply to RSUs as well. What I said about options is true but RSUs, different story. I’d sell those for sure.
- PopAlongKid 4y ago
  Patreon is not publicy traded, so your ability to sell any RSUs is very limited.
- aeyes 4y ago
  Why not? Options are usually "in the money" so if you don't exercise them you are throwing away money which you already earned.
  - avg_dev 4y ago
    Perhaps I’ve had bad luck but I’ve never had options that would have been worth anything.
    - sk5t 4y ago
      That's regular luck, or at least not bad. Options worth > $0 is an occasion of very, very good luck.
      - chrisseaton 4y ago
        > Options worth > $0 is an occasion of very, very good luck. Why do you think that? It doesn’t require ‘very, very good luck’ for most companies shares to not collapse. If you work for a big company like Oracle or IBM your options have cash value no luck needed.
        none_to_remain 4y ago
        Options as tech startup employee compensation vs. Options in general
PopAlongKid 4y ago
> what they did here with the equity, especially the option exercise period, is a nice touch. But it's not all that great. Patreon is not publicly traded, so it seems likely that exercising any options will require cash up front, plus it will immediately trigger taxable compensation (income tax plus FICA). And how will the FMV be determined, if there is no public market trading? (ans.: usually just some number voted on by the board). It may well be that the options are never worth anything even after the extended period. It is clear that these are not ISOs (statutory options), because statutory options by law only allow up to 3 months to exercise after employment ends.
- xhrpost 4y ago
  I believe the 90day limit for ISOs is just the time to get the tax benefits. You can still exercise after 90days, you just pay more.
  - ajg36 4y ago
    This is incorrect. You cannot exercise ISOs after 90 days post-employment. What you pay to the company at exercise isn't time dependent: the strike price is fixed at time of grant. What you may be referring to is the AMT, which does fluctuate depending on FMV at time of exercise, but that doesn't affect the 90-day limit.
    - xhrpost 4y ago
      Yea I wasn't completely clear I the description, not remembering exactly at the moment. Thanks for pointing out. I was referring to the option some employers will offer to convert ISOs to NSOs after 90 days. So yes you're technically not exercising ISOs after 90days. My point more being that there are options with some employers to not completely loose all rights to equity after 90days.
- entangledqubit 4y ago
  To me, this seems a little odd to complain about given that all those factors were true about the equity compensation when people signed on. The company didn't fundamentally do a bait and switch or change the rules. Layoffs suck but I found the extended exercise windows and other benefits to be rather pleasantly responsible given the situation.
deleted 4y ago
[deleted]
mabbo 4y ago
Correct me if I'm wrong, please, but since the equity is all options, doesn't that imply that they're making it easier for people to give them money? Yes, sure, they have to dilute the company a bit by creating more stocks for the people buying it, but if your company is in enough trouble that you're laying off 1 in 6 employees, it seems financially wise to effectively be doing many small rounds of fundraising this way. It extends your runway some small amount.
- ftufek 4y ago
  Only if you exercise the options, you won't exercise the options if it's not profitable to you.
  - mabbo 4y ago
    Ah, that's a good point. It's sort of the opposite: now the option holder can wait longer to decide if this is a worthwhile investment, vs "You have 30 days to exercise this or you get nothing".
  - alecbz 4y ago
    Don't most options expire a handful of months after leaving the company?
    - mepiethree 4y ago
      They extended the option exercise period to 5 years
      - bagels 4y ago
        That is unusual and I wish more companies would just offer that from the start.
      - ajg36 4y ago
        The ability to extend that period isn't always up to the option-granting company; while it is possible for non-qualified stock options (NSOs), incentive stock options (ISOs) must be exercised within 90 days of termination of employment, by law.

unity1001 4y ago

They say there's 3 months of pay, healthcare, mental care until the end of the year too. And they contracted a placement company to hook people up with new jobs.

toomuchtodo 4y ago
Decency demonstrated, and hopefully recognized at large regardless of the criticisms of the business strategy and execution.
- unity1001 4y ago
  I agree. Tech companies should never really break off with former employees. Any former employee is a future potential employee that you can re-recruit when the time comes. Also, talent is difficult to find. Which makes people the center. Whatever you build, you will build it with people. So you need people. Be them new employees, be them former employees.
  - cafed00d 4y ago
    > Any former employee is a future potential employee that you can re-recruit when the time comes Not only that, all former employees are de-facto "background check references" / "evagenlists" / "detractors" of your company. Forever! (well, not exactly forever... but close enough) I can't recall a single year over the last 10 years where younger engineers, cousins, nephews or friends have asked me about the 2 companies I worked at before. And boy, have I been candid. Talked a very good friend of mine from joining Amazon for an offer he got making nearly 3 times much I did. All because of "decency" (or lack thereof) of a company.
    - treis 4y ago
      >friends have asked me Is this supposed to be haven't?
      - cafed00d 4y ago
        Whoops! Yes, you're right. Thanks! Wish I could edit it now.
    - smm11 4y ago
      Seems Amazon needs to be careful about this, too. https://retailwire.com/discussion/there-might-soon-be-no-one-left-to-work-at-amazon/ https://retailwire.com/discussion/there-might-soon-be-no-one...
      - chihuahua 4y ago
        Amazon has really developed "not giving a shit" into an art form. They even still have the cliff vesting of RSUs, which is their way of telling new hires "we don't expect you to stay for more than 2 years"
    - water-your-self 4y ago
      Would love to hear your take on Amazon.
  - 4y ago
- iancmceachern 4y ago
  Agreed, its not ideal but there are things a company can do to put their money where there mouth is in this situation. This seems to be the new playback for doing it right. I appreciate that.
- jzb 4y ago
  I had some unkind feelings about Patreon when it was announced / made public that they laid off their entire security team. I still think that was a poor move and any company responsible for handling payments ought to have an in-house security team. That said - I've held off on any criticisms around their strategy/execution for the moment (aside from that) since it's unclear what happened. I'm wondering if Patreon is getting hit with lots of people backing off support of artists after a big jump due to the pandemic. Given inflation and a lot of feelings of uncertainty around the economy, it wouldn't surprise me to learn that their revenue went way down in a hurry this year. I back four artists on Patreon, down from five a year ago. In all 4 cases I'm either too busy to get full "value" out of sponsoring (e.g., I don't have time to read the updates or listen to all the demos), or there's not really any benefit other than funneling money to support the artist in hopes they'll continue working as an artist. Each month I look at the bill from Patreon and wonder "do I really need to keep spending this money?" So far I've elected to - but I haven't been hit super hard by inflation or a layoff like many folks...
  - unity1001 4y ago
    They didn't lay off their entire security team. What one person among the laid off ones thought to be 'security team' may not overlap with what their company had been doing since a long time. In startups, its not uncommon to have engineers who have been handling various responsibilities, including security (especially early employees).
    - Kalium 4y ago
      > In startups, its not uncommon to have engineers who have been handling various responsibilities, including security (especially early employees). You're right! That said, by the time a company is large enough that 17% of it is more than 17 people the kind of startup organization you have wisely and correctly nodded to will have ceased to exist. So while you are right in that such scenarios have, do, and will continue to happen there's perhaps cause to wonder if that's really the best way to characterize replacing a security organization with specialists with a bunch of engineers who are likely quarter-time security at best. It's akin to firing all your engineers because the sales people can do a little bit of coding each.
staunch 4y ago
This is exactly how to handle a layoff: do it 3-6 months earlier than required and give the laid off employees that money as severance. Waving the equity cliff too is very generous and good of them. Everyone should note the companies that do brutal layoffs with little/no severance. It's a major red flag because it shows incompetence and/or a lack of ethics.
fckgw 4y ago
Some of this is because of the WARN Act in California [0], which requires 60-day notice before any mass layoff. Employers can also fulfill the requirements of this mandate by letting employees go now but having their actual termination date 60+ days in advance. I've been survived a few layoffs that work this way. Good for Patreon to go beyond the 60-day mandated period though [0] https://edd.ca.gov/en/Jobs_and_Training/Layoff_Services_WARN https://edd.ca.gov/en/Jobs_and_Training/Layoff_Services_WARN
- onlyrealcuzzo 4y ago
  > I've been survived a few layoffs that work this way. How many times have you been laid off?!
  - jrockway 4y ago
    There are probably a large number of HN readers that have weathered the dotcom bust, the 2008 financial crisis, and the 2022 financial crisis. If you were born 1980-ish and you haven't been laid off 3 times, congrats!
    - michaelcampbell 4y ago
      I was born mid 1960's-ish and have lucked out; only laid off once. But I well remember all of those crises.
    - gabereiser 4y ago
      This, I've been laid off about 6 times, only once because of my own accord (and I freely admit my fault there). I've left a company 2x that count. I started my career in 1999. What a year to start...
      - dahfizz 4y ago
        In 23 years you have worked at 18 companies? Has this hurt you during interviews?
deleted 4y ago
[deleted]
chrisseaton 4y ago
Isn’t 3 months a pretty standard severance compensation?
- pessimizer 4y ago
  If not, I've had a lot of incredibly decent employers in the past. They all seem to do two or three months. I know of layoffs where people have gotten significantly more, though.
viridian 4y ago
I don't like a lot of their business decisions (I know much of this is driven by credit card/payment processors) but this is the most respectable mass layoff I've ever seen from a company, and should be lauded.

rconti 4y ago

I think how much compensation they end up with from their ex-employer is likely top-of-mind, actually!

preston4tw 4y ago

I always thought it was awesome that a company to support creators was creator lead. I came across Jack Conte in 2010 before Patreon existed. He was a music creator on YouTube that made what he was calling Video Songs, songs with each instrument part video'd and mixed together, and selling his music collection through e-junkie at the time. He was one of the first creators I ever financially supported. Some of the videos are still up on YT: https://youtu.be/D2PwVkQBp5o https://youtu.be/D2PwVkQBp5o Despite not knowing Jack personally pretty much everything I've seen from him over the years has reinforced my generally high opinion of him. In this case as well. As lay-offs go Patreon seems to be trying very hard to do right by their employees.

KerryJones 4y ago
As a former Patreon team member, he has done an incredible job of attracting creator-focused team members -- one of the most mission oriented groups I've ever been a part of. Don't mistake that for being a good CEO. He gives deep-felt apologies every time he does layoffs... which he does frequently. Often because he just doesn't like what people are doing. He also frequently communicates with the public in a more heart-felt manner than he does his own employees. He's great at putting out a great face. - 5 days ago - Security Team - https://techcrunch.com/2022/09/09/patreon-security-layoffs/ https://techcrunch.com/2022/09/09/patreon-security-layoffs/ - 2021 - https://www.protocol.com/bulletins/patreon-lays-off-36-employees https://www.protocol.com/bulletins/patreon-lays-off-36-emplo... - 2020 - https://techcrunch.com/2020/04/21/patreon-lays-off-13-of-workforce/ https://techcrunch.com/2020/04/21/patreon-lays-off-13-of-wor... - 2019, September layoffs (can't find the links for these ones) - 2019, June layoffs - 2018, June layoffs Also, to be clear. I was not one of the ones laid off. But I did see my entire team besides my manager vanish one day and then be told I'm expected to do the team's work for the next 6 months.
- preston4tw 4y ago
  Yeah, I'd imagine in many respects he's unqualified to be a good CEO since he, as far as I can tell, essentially stumbled sideways into the role as co-founder. There's the upside of the CEO being a creator themselves but the downside of not having a background in business or necessarily the other qualities a good leader possesses. Patreon has a great mission though and I can see how it would attract creator-focused team members. There are some impressive Patreon alumni in their own right.

ginger2016 4y ago

I am not a user or an employee of Patreon, still I appreciate Patreon being generous about equity vesting.

yieldcrv 4y ago
The progressive thing is 10-year option exercise, and the more progressive thing has been 1-month cliff which some of big tech does now This is "mid", as my friends have started to say

ugh123 4y ago

Indeed classy. The 1-year cliff waiver should standard operating procedure during layoffs.

avg_dev 4y ago

I am sure this says more about me than anything but if a company lays me off there is zero chance of me exercising options in that company. Edit: I read the link and it appears to apply to RSUs as well. What I said about options is true but RSUs, different story. I’d sell those for sure.

PopAlongKid 4y ago
Patreon is not publicy traded, so your ability to sell any RSUs is very limited.
aeyes 4y ago
Why not? Options are usually "in the money" so if you don't exercise them you are throwing away money which you already earned.
- avg_dev 4y ago
  Perhaps I’ve had bad luck but I’ve never had options that would have been worth anything.
  - sk5t 4y ago
    That's regular luck, or at least not bad. Options worth > $0 is an occasion of very, very good luck.
    - chrisseaton 4y ago
      > Options worth > $0 is an occasion of very, very good luck. Why do you think that? It doesn’t require ‘very, very good luck’ for most companies shares to not collapse. If you work for a big company like Oracle or IBM your options have cash value no luck needed.
      - none_to_remain 4y ago
        Options as tech startup employee compensation vs. Options in general

PopAlongKid 4y ago

> what they did here with the equity, especially the option exercise period, is a nice touch. But it's not all that great. Patreon is not publicly traded, so it seems likely that exercising any options will require cash up front, plus it will immediately trigger taxable compensation (income tax plus FICA). And how will the FMV be determined, if there is no public market trading? (ans.: usually just some number voted on by the board). It may well be that the options are never worth anything even after the extended period. It is clear that these are not ISOs (statutory options), because statutory options by law only allow up to 3 months to exercise after employment ends.

xhrpost 4y ago
I believe the 90day limit for ISOs is just the time to get the tax benefits. You can still exercise after 90days, you just pay more.
- ajg36 4y ago
  This is incorrect. You cannot exercise ISOs after 90 days post-employment. What you pay to the company at exercise isn't time dependent: the strike price is fixed at time of grant. What you may be referring to is the AMT, which does fluctuate depending on FMV at time of exercise, but that doesn't affect the 90-day limit.
  - xhrpost 4y ago
    Yea I wasn't completely clear I the description, not remembering exactly at the moment. Thanks for pointing out. I was referring to the option some employers will offer to convert ISOs to NSOs after 90 days. So yes you're technically not exercising ISOs after 90days. My point more being that there are options with some employers to not completely loose all rights to equity after 90days.
entangledqubit 4y ago
To me, this seems a little odd to complain about given that all those factors were true about the equity compensation when people signed on. The company didn't fundamentally do a bait and switch or change the rules. Layoffs suck but I found the extended exercise windows and other benefits to be rather pleasantly responsible given the situation.

deleted 4y ago

[deleted]

mabbo 4y ago

Correct me if I'm wrong, please, but since the equity is all options, doesn't that imply that they're making it easier for people to give them money? Yes, sure, they have to dilute the company a bit by creating more stocks for the people buying it, but if your company is in enough trouble that you're laying off 1 in 6 employees, it seems financially wise to effectively be doing many small rounds of fundraising this way. It extends your runway some small amount.

ftufek 4y ago
Only if you exercise the options, you won't exercise the options if it's not profitable to you.
- mabbo 4y ago
  Ah, that's a good point. It's sort of the opposite: now the option holder can wait longer to decide if this is a worthwhile investment, vs "You have 30 days to exercise this or you get nothing".
- alecbz 4y ago
  Don't most options expire a handful of months after leaving the company?
  - mepiethree 4y ago
    They extended the option exercise period to 5 years
    - bagels 4y ago
      That is unusual and I wish more companies would just offer that from the start.
    - ajg36 4y ago
      The ability to extend that period isn't always up to the option-granting company; while it is possible for non-qualified stock options (NSOs), incentive stock options (ISOs) must be exercised within 90 days of termination of employment, by law.