3 ms·
Startups hiring early employees and asking them to have the commitment and work ethic of a founder but a tiny fraction of a founder's equity, playing up the exc
by babyshake 4y ago
Startups hiring early employees and asking them to have the commitment and work ethic of a founder but a tiny fraction of a founder's equity, playing up the exciting possibility of a billion dollar valuation while never mentioning the liquidation preferences and possibility of many years of illiquidity -- this is essentially an MLM and it's incredibly common among Y Combinator companies.
- fxtentacle 4y agoIt's only an MLM if they hire you as HR where you recruit the next wave of exploitation participants.
- Andrew_nenakhov 4y agoEmployees have a better overall risk / reward ratio, as they usually do receive salary, unlike founders, who often invest their own money and have negative effective salary. So them having a higher equity is fair.
- somsak2 4y agoby a factor of 100-10000x? maybe a 2 or even a 10x multiple would be reasonable but that's not how it works.
- Andrew_nenakhov 4y agoI'd love to see your calculations how you arrived to a factor 10000x number. Anyway, employees are always free to start their own company and potentially receive all the reward they can get.
- erur 4y agoFor Joe average, the expected value of working at a random startup is positive - compared to not working. It's just the employee's gamble to figure out whether the expected value is high enough and the risk ratio is aligned with their preference. The expected return for an average MLM joiner is deep in the reds. From an individual perspective that's a huge difference.
- sshine 4y agoYes, for Joe it's a gamble. But it isn't multi-level marketing (MLM) until he starts pushing some product onto his peers, or unless the employer starts hiring aggressively with equity as the main salary.
- epgui 4y agoThat's only very tangentially related to what the issue with MLMs is. This comment misses the point IMO.