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Nothing in this article describes the additional layer of anti-startup thinking: the idea you the employee can make a ton of money off of the equity issued to y

Nothing in this article describes the additional layer of anti-startup thinking: the idea you the employee can make a ton of money off of the equity issued to you is slowly being less and less true. Your equity is diluted, deferred, or otherwise rendered functionally worthless such that it’s no longer worth joining an early startup with a compensation package involving equity. More and more employees just demand cash.

hprotagonist 4y ago
slowly? It’s ever been thus except in very rare anomalous situations. My default position has been that equity is monopoly money, and it’s been that position since the Simpsons mocked the dot com crash. “Oh, Bart: it’s not about how much stock you have, it’s about how much copper wire you can rip out of the wall before they catch you!”
nowherebeen 4y ago
I think employees treat startups more and more like a jumping pad to get to their ultimate goal of work for Fang. There's no point staying at startups when working at a big tech will yield more money in the long term. I don't blame them though. Look at how startups are run nowadays, all the potential upside has been sucked dry by VCs.
- whstl 4y ago
  Yeah, that's something I noticed as well. Smaller companies have become a mere rite of passage. I now see a lot of young candidates intending to only stay one or two years on a small startup to get experience before quitting, some of them confiding that right after signing the contract. And older developers historically already prefer jumping ship rather than negotiating salaries or facing situations they can't win.
- bgribble 4y ago
  That’s true for some people but not everybody. I like little companies and am willing to take less salary for the enjoyment of building the product from the beginning, knowing every single person you work with, and playing different roles in the team. I have worked for mega-companies via acqui-hire and I feel like my preference is based in solid experience. I’ve never hired into a company with more than 30 employees in my 30+ years as a developer and probably never will. My current gig is now grown well into the size range where I frequently am reminded why I don’t like bigger companies :(
  - grugagag 4y ago
    Good learning experience but not likely good for your bank account. May be worth the price when a youngling but not sustainable afterwards
    - moomoo11 4y ago
      It’s not all about the money tbh.
    - bgribble 4y ago
      For me, personally, my goal is not just to maximize lifetime income. It's much more important to me to have a workplace with good collaborators and meaningful work where I feel like I am contributing something unique and valuable. I have tried to follow that throughout my career (not that I haven't ended up in some bad workplaces from time to time!) and overall I have no complaints with where I am financially. If you told me you would double my salary to work for Amazon I would say no without hesitation.
      - zeroonetwothree 4y ago
        To be fair, some people like their Big N jobs. It’s not like they are guaranteed to be worse.
    - eropple 4y ago
      This is pretty overblown, I think. I have with intention avoided working for very large companies for most of my career and have a nice house in a major urban area. I save plenty of money and am reasonably likely to retire (defined as "do work I want to, when I want to, for play money etc.") before I'm 55. If $200K/year at senior/principal isn't "sustainable"--well, move out of the SFBA, I guess.
      - grugagag 4y ago
        There are startups and startups. Your compensation is not bad at all. I was talking about startups that do this scammy thing mentioned in the thread.
deleted 4y ago
[deleted]
b112 4y ago
More and more employees just demand cash. There's an easy fix to that, and the only way I'd accept equity. Having my equity tied to founder equity value. Thus, I will accept dilution, as long as a founders do, and this of course includes clauses for enrichment in any other form. So a big new salary, or cash on the side, or any other method to take alternative comp, while dilution happens, lets me get mine. Which is, of course, fair for me. No games, no tricks.
- Analemma_ 4y ago
  Don’t do this. No matter what specific terms you get, lawyers with much more experience in this game than you will write their way around it. Cash is the only way which can’t be circumvented.
  - b112 4y ago
    lawyers with much more experience in this game than you So what you're saying, is the next lawyer in the chain, can always fool the prior? If that is the case, then is an employment contract not the same? Suddenly, your contract now has you working for minimum wage? Because 'next lawyer in chain' can always destroy all prior contracts? So it is all pointless? Or are these lawyers only able to negate all equity claims? Thus, the founders always get nothing? Or is it the VCs which get their equity diluted to 0, all the time, because no one can make a solid equity contract? Note: if this happened to you, more info may aid us all.
    - grugagag 4y ago
      They could extract value in other ways while on the paper you’re both not taking much home
    - ip26 4y ago
      If they lower your wage you will notice immediately. Also, the games they can play with wages are more limited due to tight regulation. One of the “features” of equity is lower regulation.
jihadjihad 4y ago
I don't know if it's slowly happening--seems to have always been the case as far as I can tell. Unless you're founder level or a single-digit employee number, it's remarkably rare to make bank from a startup equity package. I consider them to be a shoebox full of scratch-off lottery tickets, and kindly ask for as much cash as possible, keeping the shoebox in the closet.

hprotagonist 4y ago

slowly? It’s ever been thus except in very rare anomalous situations. My default position has been that equity is monopoly money, and it’s been that position since the Simpsons mocked the dot com crash. “Oh, Bart: it’s not about how much stock you have, it’s about how much copper wire you can rip out of the wall before they catch you!”

nowherebeen 4y ago

I think employees treat startups more and more like a jumping pad to get to their ultimate goal of work for Fang. There's no point staying at startups when working at a big tech will yield more money in the long term. I don't blame them though. Look at how startups are run nowadays, all the potential upside has been sucked dry by VCs.

whstl 4y ago
Yeah, that's something I noticed as well. Smaller companies have become a mere rite of passage. I now see a lot of young candidates intending to only stay one or two years on a small startup to get experience before quitting, some of them confiding that right after signing the contract. And older developers historically already prefer jumping ship rather than negotiating salaries or facing situations they can't win.
bgribble 4y ago
That’s true for some people but not everybody. I like little companies and am willing to take less salary for the enjoyment of building the product from the beginning, knowing every single person you work with, and playing different roles in the team. I have worked for mega-companies via acqui-hire and I feel like my preference is based in solid experience. I’ve never hired into a company with more than 30 employees in my 30+ years as a developer and probably never will. My current gig is now grown well into the size range where I frequently am reminded why I don’t like bigger companies :(
- grugagag 4y ago
  Good learning experience but not likely good for your bank account. May be worth the price when a youngling but not sustainable afterwards
  - moomoo11 4y ago
    It’s not all about the money tbh.
  - bgribble 4y ago
    For me, personally, my goal is not just to maximize lifetime income. It's much more important to me to have a workplace with good collaborators and meaningful work where I feel like I am contributing something unique and valuable. I have tried to follow that throughout my career (not that I haven't ended up in some bad workplaces from time to time!) and overall I have no complaints with where I am financially. If you told me you would double my salary to work for Amazon I would say no without hesitation.
    - zeroonetwothree 4y ago
      To be fair, some people like their Big N jobs. It’s not like they are guaranteed to be worse.
  - eropple 4y ago
    This is pretty overblown, I think. I have with intention avoided working for very large companies for most of my career and have a nice house in a major urban area. I save plenty of money and am reasonably likely to retire (defined as "do work I want to, when I want to, for play money etc.") before I'm 55. If $200K/year at senior/principal isn't "sustainable"--well, move out of the SFBA, I guess.
    - grugagag 4y ago
      There are startups and startups. Your compensation is not bad at all. I was talking about startups that do this scammy thing mentioned in the thread.

deleted 4y ago

[deleted]

b112 4y ago

More and more employees just demand cash. There's an easy fix to that, and the only way I'd accept equity. Having my equity tied to founder equity value. Thus, I will accept dilution, as long as a founders do, and this of course includes clauses for enrichment in any other form. So a big new salary, or cash on the side, or any other method to take alternative comp, while dilution happens, lets me get mine. Which is, of course, fair for me. No games, no tricks.

Analemma_ 4y ago
Don’t do this. No matter what specific terms you get, lawyers with much more experience in this game than you will write their way around it. Cash is the only way which can’t be circumvented.
- b112 4y ago
  lawyers with much more experience in this game than you So what you're saying, is the next lawyer in the chain, can always fool the prior? If that is the case, then is an employment contract not the same? Suddenly, your contract now has you working for minimum wage? Because 'next lawyer in chain' can always destroy all prior contracts? So it is all pointless? Or are these lawyers only able to negate all equity claims? Thus, the founders always get nothing? Or is it the VCs which get their equity diluted to 0, all the time, because no one can make a solid equity contract? Note: if this happened to you, more info may aid us all.
  - grugagag 4y ago
    They could extract value in other ways while on the paper you’re both not taking much home
  - ip26 4y ago
    If they lower your wage you will notice immediately. Also, the games they can play with wages are more limited due to tight regulation. One of the “features” of equity is lower regulation.

jihadjihad 4y ago

I don't know if it's slowly happening--seems to have always been the case as far as I can tell. Unless you're founder level or a single-digit employee number, it's remarkably rare to make bank from a startup equity package. I consider them to be a shoebox full of scratch-off lottery tickets, and kindly ask for as much cash as possible, keeping the shoebox in the closet.