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The reason the investor wants to give the founder an early earn-out is that they don't want the founder to be defensive. If you've invested $45M and you're look
by martinkallstrom 14y ago
The reason the investor wants to give the founder an early earn-out is that they don't want the founder to be defensive. If you've invested $45M and you're looking to make ten times that, the site needs to make it really big. And you don't want to have a founder looking for the quick win. You pay him/her an amount in the ballpark of what is often colloquially phrased "fuck you-money", and it increases the chances that he's willing to risk everything to give you that 10x. For the investors, it's a calculated risk.
- earl 14y agoI understand what it is. I understand why investors do it. I reiterate my point: it's unseemly when founders earn millions and everyone else, particularly the employees, goes home with nothing.
- true_religion 14y agoIt's not as if Digg was a fly-by-your-pants startup. They paid their employees competitive salaries.
- meric 14y agoThat's why it is important for employees to demand market salary, startup or no.