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Windsurf employee #2: I was given a payout of only 1% what my shares where worth

672 points by rfurmani 1y ago

deleted 1y ago
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linotype 1y ago
I’m afraid behavior like this will only get more common and really shines a light on what a bad deal startups are for anyone but VCs and founders. Windsurf founders should be ashamed of themselves, but of course won’t be.
- sublinear 1y ago
  Buy the ticket, take the ride.
  - jen20 1y ago
    But also understand who broke the ride in mid-air, and treat them with according levels of scorn in future.
bachmeier 1y ago
Not much of a story here. The guy got a better offer and he took it: > I was given an offer that would explode same day. I had to forfeit all of my vested shares earned over my 3.5+ years at Windsurf.
- mitthrowaway2 1y ago
  It's still pretty shocking to have to forfeit shares that have vested.
  - nocoiner 1y ago
    It’s like, what does vesting even mean? Was this a scenario where he lost them because some sort of “cause” event occurred, like leaving to work for a competitor? I can’t imagine that would even be valid under CA law? I’m not even sure who was forcing him to forfeit his shares…
    - SAI_Peregrinus 1y ago
      Vest has two meanings: If it's a stock option, then it means you have the ability to purchase a share at a pre-determined price, no matter the current public price of the stock (or even if there is no public price). If it's a Restricted Stock Unit, it means you own that share.
      - charcircuit 1y ago
        The author refers to them as "my shares" which implies he has possession of the shares.
- deleted 1y ago
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- deleted 1y ago
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brutuscat 1y ago
He should come to the UE to work on … oh wait!
TrackerFF 1y ago
Financially speaking, is it even worth joining a startup anymore? Compared to just going to any of the big companies. The latter will likely pay you more, with less risk involved. Seems like the best shot is to strive toward becoming financially independent, and then just go for the startup route and follow your passion. If you it doesn't work out, no big deal - if things turn out great, you'll just be even better off.
- absoluteunit1 1y ago
  > Seems like the best shot is to strive toward becoming financially independent, and then just go for the startup route and follow your passion. This is what I’m trying to do now. Having worked in startups and big tech; I think the best thing one can do is to attempt to forge their own path. For independence, financial gain and sanity
  - BrawnyBadger53 1y ago
    It's generally not a good sign to me that this is the case. But I think you're right. Something needs to change to make startups feel more viable again.
- lovich 1y ago
  Has it been worth it in a while? This is a legitimate question as I am on the east coast and wonder if it differs from the west coast environment. At least in my anecdotal experience, everytime I’ve entertained a startups offer in the past decade it’s been either something like engineer #1, 3% equity and no you cannot see the cap table or other agreements with investors, or something like 10k units at 25 a share when we’re on series z, and you lose them if you leave, and you can’t sell for 6 months if you leave, and the investors have priority on payment if we sell for less than our valuation and yadda yadda yadda. I mentally just valued the equity as 0 in the compensation with all those limitations on liquidating them and never understood why anyone joined a startup
  - xkcd-sucks 1y ago
    Oh also there is the trick where the startup gets sold a little under its strike price and the execs each get signing bonuses > book value of company as sold
nevon 1y ago
I must be misunderstanding what he is saying, but I can't figure out what. Once his shares have vested, they are his. What entity forced him to sell his shares for 1% of what they are worth and how could they possibly do that?
- deleted 1y ago
  [deleted]
- fragmede 1y ago
  Whichever entity ended up buying Windsurf, the corporation. They get to declare the exchange rate, and for what. Sometimes it's cash, sometimes it's stock, usually it's some mix of both.
  - nocoiner 1y ago
    Where would the 99% haircut have come into play?
    - wqaatwt 1y ago
      Nobody willing to pay as much as OpenAI was offering initially? Of course that valuation was about as absurd as it gets…
- conartist6 1y ago
  Cognition made him a lightning offer it sounds like, valid one day only. I think if I understand what he is saying he could either stick with the product and team giving up the shares, or keep the shares and try his luck getting money for them another way. I appreciate that his choice shows that he is in it for the product and the team, but also ouch.
  - deleted 1y ago
    [deleted]
- shawabawa3 1y ago
  Google did a weird thing where they poached windsurf employees, licensed their tech and hired the CEO and upper management, leaving a shelled out company behind Looks like employees were given an exploding offer to join Google and sacrifice windsurf shares at a low valuation, or stick with windsurf If you stuck with windsurf you then joined cognition in a later acquisition
ThePowerOfFuet 1y ago
https://xcancel.com/premqnair/status/1948420769945682413 https://xcancel.com/premqnair/status/1948420769945682413
hackermeows 1y ago
why would anyone work in startups as early devs anymore. Tell me what is the upside? There seems to be only downsides. Startup Fails , you loose - Gets acquired - you loose What is the motivation to perform .
- agartner 1y ago
  Working on decently cool things with relatively limited bureaucracy.
  - phkahler 1y ago
    You can do that at established companies. If the cool thing comes to an end you'll often have a boring job you can keep or stay at while you find something else.
- mianos 1y ago
  If you want to write new code and have a lot of influence over the overall implementation instead of fixing bugs on a years old steaming pile of tech debt. Not all places with large existing codebases are that bad, but if you are experienced, it can be very personally satisfying doing something well before it has degraded over time. I have worked in quite a few. One is a household name down here in Australia. I was the first engineer with the two founders. I worked 2 years 24/7 for half the salary I got when I left. I'll never get my money back but that's ok as I loved the time there.
- BoiledCabbage 1y ago
  > There seems to be only downsides. Startup Fails , you loose - Gets acquired - you loose What is the motivation to perform You get to make a nice payout for a VC. And isn't that all of our life goals?
- SirMaster 1y ago
  Because you like the work you are doing and the projects you are working on? Presumably you have a lot more control and freedom to do things how you want than at a large company with a lot of red tape etc. That's the main reason I would do it.
deleted 1y ago
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crazygringo 1y ago
This is one of the most confusing things I've ever read. Cognition acquired Windsurf. So how has he "joined Cognition"? "I had a place at Google DeepMind as part of the deal." What does that mean? DeepMind doesn't have anything to do with Cognition or Windsurf, right? Why would an offer at Google require forfeiting vested shares in Windsurf? Is that Windsurf policy or Cognition policy or Google policy? "I was ultimately given a payout of only 1% of what my shares would have been worth at the time of the deal." So he took the payout and forfeited the shares? "In going to Cognition, I’ve chosen a different direction." Or not, he rejected the payout and kept the shares? I can't even tell what's hypothetical versus what actually happened. I literally don't understand a single thing about this tweet. I've read all the comments here so far and my confusion seems to be shared. Can anyone who has context please help explain what's actually going on? And particularly how any company could force you to forfeit vested shares in a company?
- shawabawa3 1y ago
  You have to know some of the background Google poached windsurf employees and licensed their tech, paying out billions to upper management but apparently offering a fraction of the value of shares This employee chose to stick with windsurf instead of moving to Google Windsurf was then acquired by cognition for an unspecified but probably quite low amount So this employee is now at cognition
  - crazygringo 1y ago
    Thank you, that helps! But so did he keep the shares or take the payout? Is the 1% payout an accurate reflection of Windsurf's value after having lost so many valuable employees? And why didn't he take the Google job? Was the 1% contingent on taking the Google job? But how could it be, since Google doesn't own Windsurf/Cognition? But if it did somehow, did it have a higher paycheck to compensate? Or was it contingent on staying at Windsurf/Cognition? This thing needs an in-depth blog post analysis. The tweet by itself isn't providing even close to the information necessary to understand what's actually going on.
    - 1y ago
mjiang41 1y ago
Some more context from Ali Partovi, founder of Neo accelerator: https://x.com/apartovi/status/1948444826674102732 https://x.com/apartovi/status/1948444826674102732 bad look all around.
SirMaster 1y ago
Why do people care so much about what some random guy did in a company acquisition?
- lokar 1y ago
  A lot of this industry is focused on early stage startups as a path to financial success. The rules and laws around this don’t tend to protect even early employees much at all. People depend on social norms for what to expect. Shifts in the norms are of interest.
- blitzar 1y ago
  Everyone thinks they are the next random person who wins the startup lottery. Dreams of 50 million dollar paydays are brought crashing down when they realise they will be lucky to get 50,000.
- Muromec 1y ago
  Because it sets the expectations and everyone here is (pretending) to play the same game as that random guy. Okay, not everyone, but it's YC forum.
lemax 1y ago
This is a fair cautionary tale but it's worth understanding the specifics of the situation – Windsurf maintained a relatively easy to replicate product with no moat, and employed a bunch of attractive talent. The company got gutted of these employees and lost its valuation because no suitable buyer thought their IP was exceptionally valuable on its own. Just because this was the outcome for Windsurf does not mean there are no longer opportunities to join startups building sticky customer bases with valuable IP and walk away wealthier when they exit – yes there is a liquidity problem[1] but let'a be honest with ourselves about the specifics of the case for Windsurf. [1] https://techcrunch.com/2024/01/11/us-startups-have-a-liquidity-problem/ https://techcrunch.com/2024/01/11/us-startups-have-a-liquidi...
- gsibble 1y ago
  Actually, their recent acquirer is now raising at a $10B valuation from Founder's Fund. They had plenty of value left even after getting gutted.
- sailingparrot 1y ago
  I don’t understand why the specifics of the situation matters here. We know the company got acquihired for $2.4B, the problem is, why did all of it go to investors and founders and nothing for employees? I’m not sure customer churn rate has any impact on liquidation preference.
KaiserPro 1y ago
I was aquihired by a FAANG. The headline "startup bought for x million" is almost always a lie, either direct or by omission. First, when a startup is bought, its generally not bought at the headline rate. So if you see a "bought for $45m" that doesn't mean People who own shares all got a % of 45m. That number is normally bullshit, but also a "total package" which include share offers for joining the new company. This means you will get say 1% of the headline buyout now, and then golden handcuffs to get the rest. Also, it makes no sense to give employees that much money upfront. After all, if I'd been given $1m in one go, I wouldn't be fucking working now.
- bagels 1y ago
  1m isn't enough to really retire in in silicon valley
  - throwawayq3423 1y ago
    Or in any big city tbh.
    - Scoundreller 1y ago
      Cleveland not big enough for you???
      - throwawayq3423 1y ago
        Cities like Cleveland have reasonable pricing built into their appeal. Without it, there isn't much left.
  - loire280 1y ago
    Sure, but if you're 10+ years into your career and have been financially conservative (i.e. have a positive net worth), a lump sum of $1m could be enough to retire to a lower-cost location.
    - andrewmcwatters 1y ago
jschveibinz 1y ago
I am surprised that the employment agreements between execs/founders and Windsurf didn't address this. A cautious investor--or even a cautious key employee joining the team--would have locked the founders and key employees down to prevent them from being hired away without some recourse. This is especially important when all of the value was in the employees. There should be lawsuits forthcoming...
- toomuchtodo 1y ago
  Non competes are illegal in California, there is no legal way investors can lock founders and employees down. This is venture capital investment risk. The employees, who are most of the value (aside from potential IP and customer contracts), can walk at any time.
  - DanHulton 1y ago
    It doesn't have to be a lawsuit preventing them from leaving. Golden handcuffs usually work pretty well for such a situation.
    - toomuchtodo 1y ago
      Unless investors and management are unwilling or unable to counter a superior offer. “Pay them more” works when willing and able. Otherwise, bounce. Comp is king during a gold rush you’re unsure how long will last.
  - jschveibinz 1y ago
    I understand your clarification. You should be able to use vesting schedules, right of first refusal to counter, careful definition of IP and trade secrets with assignment to the company, right of repurchase of shares, etc. This is indeed venture capital risk, but this case lays bare the exorbitant amount of risk for investing in these types of companies--perhaps especially in California?
mawadev 1y ago
I'm waking up personally to the unethical side of Software development as well. You can either do little and get paid pocket change or you can provide a ton of value for pocket change next to some promises lulling you in, where the value of your work exponentially increases, but you will see nothing of it and whatever you do: you are still a replaceable cell in excel to them and there will be ways where you get dragged over the table. If the money isn't directly in your bank account, it might as well not exist or was a lie. Sooner or later you are the horse behind the barn anyway.
- istjohn 1y ago
  To state the obvious, software developers are doing just fine.
- GuinansEyebrows 1y ago
  how much change fits in your pockets?
- Muromec 1y ago
  You do sometimes get the 0.31% of a relatively big number under a promise you tag along for two years and some more pocket change on top. Still better than just pocket change zo
- pembrook 1y ago
  Okay, but how much do you think you deserve as an employee who has invested none of your money in the company and decided to join on a 6-figure salary only after the company is already through YC, is funded by top investors and looks attractive? If you’re instantly replaceable by any dime-a-dozen engineer than can install packages on npm and use react components and add a thumbs up to slack messages…to not get accidentally rich because you just took a high paid tech job a year ago…seems fair? I just fail to see why everyone in the comments here believes they deserve to be compensated at the level of the top 0.01% of all people without starting their own business. Start your own company if you think it’s so easy to be a founder instead of an employee. Nobody is stopping you. I also think it’s some crazy cognitive dissonance to assume you’d be able to walk right into a FAANG sr. eng gig instead. As if most startup employees haven’t tried before joining [insert startup].
stan_kirdey 1y ago
Engineers: always negotiate for higher base salaries. In the vast majority of cases—especially during acquihires—your equity will be worth little or nothing. Founders and VCs still get paid; employees rarely do. Don't just accept promises. Ask for the 409A valuation, liquidation preferences, and pay bands. If a company won’t provide transparency, that’s your signal. Equity is a lottery ticket. Salary is money in the bank.
- gsibble 1y ago
  I tell every engineer always to maximize their cash comp and every founder and investor always says "No, that's such a bad idea! Get more equity!" Yeah, because that is in your interests, not the engineer's.
  - 01HNNWZ0MV43FF 1y ago
    I remember when my old employer was doing another round of funding They offered to sell me more shares I countered that I'd been trying to dump the shares they already gave me and if the shares are truly worth X dollars they should buy them back from me Anyway glad I quit
    - debatem1 1y ago
      > if the shares are truly worth X dollars they should buy them back from me I always offer companies pushing equity hard to trade for cash at 10% of the highest number they try to get me to value it at. Nobody has ever taken me up on it, even when they really should have.
  - usaar333 1y ago
    Not everything is adversarial. More cash pressure on the company itself can be bad for the company which is bad for you too. I always take more equity. I wouldn't work for you in the first place if I didn't believe in your equity.
    - baq 1y ago
skybrian 1y ago
When people give you a percentage (1%), that is a ratio and they are not telling you either number. So, that makes me a little suspicious. I wonder how much he got in the end?
- deleted 1y ago
  [deleted]
- xvector 1y ago
  It doesn't really matter if he got less than what the acquihired founders did proportionately to his percentage.
cleandreams 1y ago
My base salary was fine but the magic was in the stock. I got a payout on acquisition by a FAANG+ (as first employee). It was only 300K but I put 50K of that into Nvidia. Actually I invested all my payout from my startup stock into tech stocks. And I got a terrific golden handcuffs deal. After that I could afford to retire and I did.
- another_twist 1y ago
  Did you also post this recently in Blind ? If it is so you might want to fuzz the numbers a bit.
  - cleandreams 1y ago
    Less than 10 years ago but not recent.
  - deleted 1y ago
    [deleted]
saagarjha 1y ago
What I find amusing is that YC’s Garry Tan is going around explaining to Prem how he actually got a good deal and that the Windsurf founders were very generous to their early employees. Meanwhile from his perspective he joins a company with friends he’s known for years, takes on basically the same risk that the founders did, probably gets some fraction of the equity they did for that work (10%? Less?) and then when payoff time comes he gets cheated out of that too. If I was a venture capitalist dependent on 20-somethings believing in the dream I sold them maybe I wouldn’t write snarky replies on them on Twitter when this happens and actually look into fixing things for early employees (like, maybe, giving them similar terms that the founders get), but that’s just me I guess.
- dragonwriter 1y ago
  He has just as much financial interest in the dream being false as he does in people believing it, which your recommendation seems to overlook.
deleted 1y ago
[deleted]
chambers 1y ago
https://x.com/ahmaurya/status/1948491614160122308 https://x.com/ahmaurya/status/1948491614160122308 Garry Tan posted "sounds like a tweet that cost $20M" which he later deleted. Smells like a strong bias against employees in favor of management and founders.
- gsibble 1y ago
  That was really shady.
- JumpCrisscross 1y ago
  Could you expand what's going on there?
  - chambers 1y ago
    My read was that Garry Tan implied "you sacrificed a lot of money in order to grandstand". I felt that was a knee-jerk dismissal of a founding employee's legitimate concern.
  - WatchDog 1y ago
    I'm not sure, but my interpretation is that Gary is implying that Prem Qu Nair received $20 million from the deal, and that by posting this tweet, he has violated the terms of the agreement, which generally have non disparagement clauses, and Gary will see to it that he won't receive anything.
- Lionga 1y ago
  That is YCombinator & Garry Tan for you. Disrupting the screwing over employees (and founders if they can but its just much harder) as a sport.
- czbond 1y ago
  I believe Tan's words were mis-represented. I believe he is saying that it cost Prim $20M and he then wrote that post. I don't think he is insinuating anything else.
BhavdeepSethi 1y ago
I went through an acquisition very early in my career, and for the longest time I believed it was the best outcome for everyone. Over time, I realized that my naive belief was purely due to the founders going way above and beyond to make sure each and every employee (including folks doing just data entry) got a good outcome (accelerated vesting, significant equity in new company, top of the band pay, etc.). It made me realize that if you ever want to work at a start up, bet on the founder, rather the company. Even with mediocre outcomes, you'll end up ahead in the long run compared to folks who're just looking out for themselves.
- rhyperior 1y ago
  They must have had a strong position from which to negotiate those favorable terms, in addition to the experience to know to do so, and the integrity to actually do it. The type of people you should follow.
  - BhavdeepSethi 1y ago
    I don't believe they did. This acquisition was by Flipkart, the poster child startup in India, who had a very high bar for hiring. They wanted to interview the non-founders to make sure they met the standard. The founders said you get all or you get none. To be fair, it was a small team of 6-8 employees, so I doubt Flipkart cared. :)
    - hiAndrewQuinn 1y ago
      Wait, what are the employee protections like in India that such a deal is enforceable? Why couldn't Flipkart just take them and then fire them a few weeks/months later?
      - Henchman21 1y ago
        I genuinely wonder how people like yourself sleep at night.
whiplash451 1y ago
A lot of bias against startups in the comments. These are missing (1) how terrible the working conditions in bigco have become in the meantime (2) truly good startups (they exist) that pay solid base salaries
- toomuchtodo 1y ago
  The odds are clear as day. ~90% of startups fail, and the truly good ones are very rare. Do small pockets of good exist? Yes, absolutely. But most of the startup ecosystem is convincing employees to grind for peanuts until founders and investors (whether that's accelerators or institutional) hit liquidity (if ever). Of course, if you find the unicorn (good comp, target work life balance, meaningful work [to you]), hold on tight and don't mess it up. https://www.marketsentiment.co/p/the-yc-report https://www.marketsentiment.co/p/the-yc-report https://news.ycombinator.com/item?id=42828198 https://news.ycombinator.com/item?id=42828198
- Muromec 1y ago
  Depends on a big co. You can skip all the drama try harding and work in a boring place too.
- xvector 1y ago
  At least you get paid in bigco and you don't have to worry about your equity being snatched from under you.
CalChris 1y ago
This was just a preference cliff, plain+simple. Windsurf got paid maybe $3B for itself. But the investors and senior management got their cut first. How? Well, the preferences they negotiated. No one really knows how the game is played The art of the trade How the sausage gets made We just assume that it happens But no one else is in the room where it happens #2 wasn't in the room when it happened. In a very real sense, he's lucky he got anything. Management owes a fiduciary duty to the shareholders and #2 is a shareholder. But negotiating the $3B covers that duty.
- highfrequency 1y ago
  Doesn't seem that simple. They raised a total of ~$250m and acquisition price was almost 10x that. The preference cliff means that employees get nothing before investors get an X% return on their investment (100%, 150%, maybe 200%). After that, the payout should be proportional to common stock ownership. Surely the preference guarantee was not 10x? Would be curious to see the breakdown of the $2.4b: 1. How much to the founders in Google employment incentives 2. How much in licensing fee to the company itself 3. How of the licensing fee went to immediate payout to VC investors (+ employees) 4. How much got left on the balance sheet of the remaining company I don't understand how #3 can be so large and common stock holders walk away with almost nothing without breaching fiduciary duty?
  - CalChris 1y ago
    The August 2024 Series C round (last of 4 rounds) for $150M could dilute+smoke the preference stack for any earlier investors of which #2 nominally was basically the earliest class member of. C gets preferences+participation. B+A get preferences+participation+anti-dilution. Common gets what's left which apparently wasn't much. Fiduciary duty is very low bar. Management has to act in the best interests of The Company, as in, as a whole. The company != #2. Lawyers are not taking this case. I'm certain the accounting was done properly, maybe even by a Perl script, and this is how it penciled out. The question for us stiffs is what can we learn from it?
- scns 1y ago
  > in the room where it happens Great song from Hamilton. Sorry for being off topic.
blitzar 1y ago
You got zucked.
highfrequency 1y ago
Directly contradicts Garry Tan's post saying that all forty founding engineers got seven figure payouts from the Google acquisition: https://x.com/garrytan/status/1947072583092052406 https://x.com/garrytan/status/1947072583092052406 Even if the OP considers the full headline number of $2.4b to be the value of the company, and taking his "1% of fair" number as truth, seven figure payouts would imply all 40 founding engineers had >4% equity which is nonsensical.
- recursivecaveat 1y ago
  Why would you believe extremely motivated hearsay from Garry Tan? The man is already very untrustworthy before we get into the "I heard" and conflict of interest.
- ohdeargodno 1y ago
  Garry Tan's job is bullshitting. Lying isn't very far from it, and he even covers his ass with "I heard". Who did you hear it from Garry, the founder that made out with all the money ? Or the other VC that made a few hundred million from the sale and stands to gain even more if the lie of "founding engineers get rewarded" is perpetuated?
- b_be_building 1y ago
  No, what Garry is saying DIRECTLY correlates with the outlined opportunity. For his assertion to be right, 40 people need to get paid out at least 1 million. That's 1.67% of the company or 0.04% evenly. Its not hard for me to image that up to 10% of this cap table was distributed among the 40 people.
- reducesuffering 1y ago
  Hilarious that the best case positive spin highlighted is 40 people cleared at least $1m, so $40m out of $2.4 billion and $240m funding. He's praising "look 2% of the payout went to people in the company". Nevermind that $1m over ~4 years is approximately the same as the differential other public tech co's pay. ($150k + equity at YC co, $350k TC at G/Amzn/FB/Uber/etc.) So when they tell everyone they should work at YC co's, they're saying they're proud when in the absolute best case scenario you make just as much as at the public co's they rail against working for. If you want to come across as genuine, directly say how much % of the payout went to employees that weren't the founders. They won't, because it's likely 3%, which correctly sounds horrible
ww520 1y ago
That’s why founding engineers are such a raw deal. They take just as much risk as the founders but much less payout. Also on the hook to do most of the work.
- doctorpangloss 1y ago
  It's complicated. The difference between a founder and founding engineer - I think you mean early employee - is pretty big. The fact that they are getting a "raw deal" in your POV should inform you that the equity grants are not related to risk. This is coming from someone who programs for a living: contrary to what you are saying, the money guys take too little equity. The money guy being, the reason you are raising money at all, and not just dipping into your own savings.
  - achierius 1y ago
    No. The engineers build the product. They do the actual work. Let's flip your 'reason' around: the engineers are the reason the VCs have a job at all, since the entire point of the job is to find people building big things and funding them to get a cut. They are secondary, the actual product -- and the people who build it -- are what matters, morally and economically.
    - thedevilslawyer 1y ago
      An engineer in a non-startup also builds the project and does the actual work. It's not special. Trading money and opportunity cost for sweat is what makes it equity. Also, engineers are not the reason VCs have a job.
      - const_cast 1y ago
        > Also, engineers are not the reason VCs have a job. How are they not? VCs don't actually do any productive work - they don't make anything. In order to invest in something, anything, you need the something. That's a pre-requisite for investing. Engineers build the product. Doesn't even just apply to software, this applies to everything.
jacquesm 1y ago
Always, always think about the downside scenarios if you enter an agreement. If you don't you will end up regretting it for sure.
siliconc0w 1y ago
These stories really kill the golden goose because it means a lot of talent just won't work at a startup. YC isn't particularly great here either, they are pro founder but not pro startup employee. Most YC companies offer pretty paltry equity to even the first few hires - and that is even assuming you aren't going to get screwed down the line.
- Yeul 1y ago
  The people who go to work for start-ups are usually young. There comes a certain time in life when you have a family that relies on you and you get old enough that you start to make plans for retirement. That's when you get a real job at a very boring stable company and stop being delusional.
  - dom96 1y ago
    Not everyone decides to have a family. For some getting that boring and stable job is the only way to get to take some risks later in life.
  - pimeys 1y ago
    Well, that depends. I'm working in a startup and I'm in my 40's. Although it's a bit different than a typical startup, because it pays quite well compared to 95% of other offers in EU to live a very comfortable life in a not too expensive European city. Yeah, the hours can be crazy but not too often. Yes, you're expected to give your best all the time but that's part of the fun. And the best part is the challenges are always interesting. Maybe it makes it easier for me that I'm not at all interested in normal family life and never want to have kids.
- bwfan123 1y ago
  The risk-reward equation for startups vs boring-big-tech has turned completely upside-down. Back in the day, startups were the only lottery ticket to riches, not to mention do interesting work. But now, the tables are turned. For experienced engineers big-tech comps are attractive enough to put up with the office politics, and if you lucky do some interesting work.
- 1y ago
ada1981 1y ago
Can someone help me understand why he would have to take this deal and not just say “no thanks”?
suralind 1y ago
Can someone explain how that worked? How was the CEO allowed to sell license AND talent to another company? Wouldn’t that screw investors? Why would they allow it if their stock becomes worthless after that?
NooneAtAll3 1y ago
were*
rectang 1y ago
I feel like there needs to be the analogue of open source licenses for equity offers. Something standardized, so that both employees and management could negotiate in good faith with high confidence that the terms are as advertised. Because right now, there has been too much innovation in ways to screw over employees and the only reasonable assumption is that equity will vanish.
- Sephr 1y ago
  For some startups (mostly dealing with local and self-hosted software), it may be a better option to offer perpetual license grants to the product being worked on as opposed to equity in the startup itself. This encourages employees to make the best software if they know that they are also going to be the end user as well.
flappyeagle 1y ago
The thing they don’t tell you about joining startups is: the integrity of the founders matters more than anything else. If you’re not a good judge of people you should work somewhere that pays cash
qkhhly 1y ago
i had many startups reaching out over the years but i just could not make the numbers work to make the shift. it's not uncommon that a regular salary from a big tech in the bay area would amount to ~$2M total after 4 years (considering stock appreciation). if you were given 1% of equity of the startup then start up has to worth $200M after 4 years. or more likely you would be given 0.1% of equity of the startup, and then it has to worth more than $2B, in order for it to make sense for you. how likely is that going to happen?
_jab 1y ago
The details here remain unclear to me, and even this tweet is somewhat vague. > I was given an offer that would explode same day. I had to forfeit all of my vested shares earned over my 3.5+ years at Windsurf. I was ultimately given a payout of only 1% of what my shares would have been worth at the time of the deal. Was forfeiting the vested shares conditional on accepting the offer, or did he have no choice over the matter? Was the payout what he was offered as part of accepting the deal, or was that his consolation for not accepting it? The wording is genuinely unclear to me. I literally see 3 interpretations here: 1. Offer was to forfeit shares in exchange for 1% payout, but OP rejected and still has shares 2. Offer was to forfeit shares in exchange for undisclosed payout, but OP rejected and got 1% payout instead and still has shares 3. He had to forfeit shares regardless of accepting offer, got 1% payout (1) and (3) are both shitty offers from Google, but (2) is reasonable. Exploding offers are not uncommon in tech acquisitions. My guess is that (2) is what happened, since that's not in contradiction with prior reporting.
- itake 1y ago
  what are those shares worth with the company gutted? Seems like not much of a choice if leadership and IP are gone...
  - _jab 1y ago
    The company should have been worth at least the cash it had on hand, which has been reported as ~$100M. It's also been reported that all vested equity and VC shares were bought out (although apparently perhaps with a few exceptions for people who declined the offer), which meant that the employee unvested equity stakes were "undiluted" from whatever they were before (hard to judge, but maybe 5-10%), to 100%. So every employee had their stake in the company increase 10x-20x. So if the company had then decided to simply close up and distribute the remaining cash as dividends to the employees, it would be as if each employee had simply been bought out pre-deal at a $1-2B valuation. And that was the absolute worst case scenario - clearly Windsurf found a better deal with Cognition.
- DonsDiscountGas 1y ago
  I assumed it was #1, and his shares were acquired as part of the cognition deal
bravoetch 1y ago
Since others are sharing their doom and gloom stories - Mine is the opposite. I was hired at a startup, and I didn't even know what a startup was. I just liked the industry they were in and applied to join. In negotiations I tried to get more salary, by taking less equity. It kinda worked, but later they doubled my equity to match other hires of the same era (but with a new vesting schedule for the new options). Then at some point I was fired without reason. The company went on to become worth a lot, and I was able to get out with enough to never work again and live pretty luxuriously. AFAIK others that were in my era at this startup did equally well, or many times better. It can happen, but I didn't ever think it was even possible because I didn't understand what 'options' even were when I was hired.
im_down_w_otp 1y ago
That stinks. I'm sorry. The founders could have taken part of the proceeds to at least adjust your upside with a transaction bonus. It's pretty easy to do.
tlogan 1y ago
When joining a startup, the most important factor isn’t the idea, product, or the VCs: it’s the founder(s). Think like an investor. Would you back this person? Are they ethical? Are they resilient? Also stock options should not be high on the list. Most startups fail before founders or VCs even get the chance to screw you over. In 99% of cases, nobody wins.
iblaine 1y ago
Having been aquihired three times by FAANG+, the biggest take away is have accelerated vesting. To do that you got be lucky or in the C-suite. Being bought out usually sounds better then reality for everyone but a few that get that accelerated vesting clause.
anonzzzies 1y ago
Every time... The salary or fee what you trade your life for, shares might multiply that. Might. If your base salary is low 'because you have shares', you will probably never see a return: the idea this is loyalty or something is some weird thing; don't do it unless you love it and want to spend that life blood without a return.
kome 1y ago
this is something that my feeble European brain will never understand: why people in American start-up keeps getting scammed with pseudo "private" equities, stock options, that are not on a market, and therefore cannot be priced? equities surrounded by very obscure (or no) legislation, that if you get fired or decided to leave you cannot keep. it just make no sense but americans loves them.
- tjpnz 1y ago
  If you've convinced yourself that layoffs are a normal (and accepted) part of a career you'll have no issues believing in this crock either.
- dfadsadsf 1y ago
  European salaries are laughably low even compared to low ball offers from US startups. Essentially options for good (but not great) sr engineers are 1. Get 120k salary in Europe (on higher end) 2. 500k at FAANG in US (salary + RSU) 3. ~200k at startup in US + lottery tickets Both option 2 and 3 strictly beat option 1 (especially after taxes) so European should get off the high horse and recognize reality that they are poor and exploited by companies and government.
  - const_cast 1y ago
    It depends on what you value. For example, if you want a high quality of life and acceptable work-life balance, that is very, very hard to find in the US. IMO, 500K a year doesn't matter too much if you're fat, lonely, and want to kill yourself. Not saying that everyone in the US is like that, but certainly it seems to be a much higher degree.
AYBABTME 1y ago
So if one was to start a company today and wanted to enshrine employee-and-founder-friendly terms in their company, how should things be structured? Make the founders' shares be of the same class as the employees? Something special?
- Nemo_bis 1y ago
  Make it a cooperative. https://tech-coops.xyz/ https://tech-coops.xyz/
  - AYBABTME 1y ago
    Kind of a non-starter. No one is going to found and invest in a cooperative.
    - greenie_beans 1y ago
      i started a business that i'm planning to organize as a cooperative. currently looking for funding and it's hard because the structure is foreign to investors, though it's a business structure that is proven to work. maybe if more people organized their enterprises this way then it would be easier to find investment.
      - Nemo_bis 1y ago
        Yes, it takes some education. I've founded a cooperative in Finland and, although the legislation here is very favourable to cooperatives, it took me months to convince PRH (the public register) to certify our bylaws which included an option for investment shares. But we did it! Do seek professional help. It doesn't need to be expensive lawyers, there may be gratis support from the cooperative network. https://ica.coop/en https://ica.coop/en
positron26 1y ago
Holy shit. We need need better early phase governance tools than handshakes and winks. The SAFE was written to streamline things so that everyone can get to work right now with a reasonable basis of trust. How can we have that basis of trust among founders and early hires when stuff like this happens? If no founders can be trusted, sweat equity partnerships will become rare. If the only people who can build companies are VC funded founders who hire employees who treat the whole thing like a game, there will not be a good crop of companies to come out of that environment. Founding is freaking hard. It needs to be reliably and fairly rewarded. Otherwise the people trying to bootstrap and make things happen have nowhere to go if the idea they are completely convinced MUST be built is also a hard hard sell to VC hive minds... because it's too oddly shaped (innovative). We all have an interest to put the instruments and paperwork into place to make stories like this NOT happen so that sweat equity startups founded on personal convictions and strong cooperative incentive alignment will happen. https://positron.solutions/careers https://positron.solutions/careers
catoc 1y ago
He elected to move on before his shares were vested. Many interesting, and probably true, replies about investors cheating out employees, but it seems very few people read the actual post.
- deanmoriarty 1y ago
  Where can I real the actual post you are mentioning? The tweet only mentions "had to forfeit all of my vested shares earned over my 3.5+ years at Windsurf", which seems to conflict with your "before his shares were vested" statement.
tzury 1y ago
AI companies paying $100M+ for a single hire is like Tesla buying oil fields.
Oras 1y ago
The comments here taught me about startup acquisitions more than any article/video I have watched in the last 5 years. Deep appreciation to everyone who shared their story, thank you!
burnt-resistor 1y ago
Most early employee equity has the worst liquidation preference. It's almost always toilet paper.
bravesoul2 1y ago
Title should be changed. Sounds like this was a choice not a fuckover. That said... Don't be a fool for all these AI startups that want you to burn out on 100 hour weeks. Many YC and non-YC startups are using this bravado based hiring strategy trying to get cheap labour to fuel their rockets to the moon. Don't be no fool!
- Dylan16807 1y ago
  The value of the options was destroyed in the deal. He had a choice between getting 1% or getting nothing. It was a fuckover.
Cuesta03 1y ago
[dead]
rml 1y ago
The classic article on this topic is https://steveblank.com/2019/04/10/startup-stock-options-why-a-good-deal-has-gone-bad/ https://steveblank.com/2019/04/10/startup-stock-options-why-... Nothing has substantially improved since the article was written. With “forever private” companies it’s only gotten worse.
_cs2017_ 1y ago
I don't understand the twitter post. - Did he take the offer or not? - Did he forfeit the vested shares because he took the offer or because he didn't? - What was he offered in return for forfeiting the vested shares? - Did he get a payout of 1% because he took the offer or because he didn't? - The 1% comment implies that Google didn't use the $2.4B to buy the shares of Windsurf; if not shares, then what did Google get in return? Original citation: "I was given an offer that would explode same day. I had to forfeit all of my vested shares earned over my 3.5+ years at Windsurf. I was ultimately given a payout of only 1% of what my shares would have been worth at the time of the deal."
gsibble 1y ago
This really breaks the social contract that startups and employees have had together for a very long time and will severely damage the ecosystem in the long term. Shame on the VCs who got paid out allowing this to happen.
up2isomorphism 1y ago
Since a certain point in time, I usually reject most startup offerings, because their term all look fishy.
beavis000 1y ago
Question - why did you have to give up your Windsurf vested shares? Did Cognition want that, or was it a term of the Windsurf equity plan?
mertleee 1y ago
This is an exemplary reason to not work for a startup. Cash is king - never work for free or let some overzealous founder (who has tons of equity and is ok working for poverty wages) try to encourage you to work longer or harder "because equity go up one day". The founders of Windsurf are clearly horrible people and the fact they were DM'ing people on twitter trying to explain being awful people really reflects the current state of the valley. Garry Tan even deleted a comment on this tweet where to Windsurf employee #2 he said "looks like you left $20M on the table". These people see employees as replaceable widgets and to them this is just a game build around the "excitement of building". Legitimately F*CK these people.
kotaKat 1y ago
At what point do these gross overpaid bubbles pop? None of these people are worth this kind of money and it’s time we re-balance tech salaries, tbh. Be thankful you got your million dollars and move the fuck on, ‘cause some of us will never get that kind of money.

672 points by rfurmani 1y ago

deleted 1y ago

[deleted]

I’m afraid behavior like this will only get more common and really shines a light on what a bad deal startups are for anyone but VCs and founders. Windsurf founders should be ashamed of themselves, but of course won’t be.

sublinear 1y ago
Buy the ticket, take the ride.
- jen20 1y ago
  But also understand who broke the ride in mid-air, and treat them with according levels of scorn in future.

bachmeier 1y ago

Not much of a story here. The guy got a better offer and he took it: > I was given an offer that would explode same day. I had to forfeit all of my vested shares earned over my 3.5+ years at Windsurf.

mitthrowaway2 1y ago
It's still pretty shocking to have to forfeit shares that have vested.
- nocoiner 1y ago
  It’s like, what does vesting even mean? Was this a scenario where he lost them because some sort of “cause” event occurred, like leaving to work for a competitor? I can’t imagine that would even be valid under CA law? I’m not even sure who was forcing him to forfeit his shares…
  - SAI_Peregrinus 1y ago
    Vest has two meanings: If it's a stock option, then it means you have the ability to purchase a share at a pre-determined price, no matter the current public price of the stock (or even if there is no public price). If it's a Restricted Stock Unit, it means you own that share.
    - charcircuit 1y ago
      The author refers to them as "my shares" which implies he has possession of the shares.
deleted 1y ago
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brutuscat 1y ago

He should come to the UE to work on … oh wait!

TrackerFF 1y ago

Financially speaking, is it even worth joining a startup anymore? Compared to just going to any of the big companies. The latter will likely pay you more, with less risk involved. Seems like the best shot is to strive toward becoming financially independent, and then just go for the startup route and follow your passion. If you it doesn't work out, no big deal - if things turn out great, you'll just be even better off.

absoluteunit1 1y ago
> Seems like the best shot is to strive toward becoming financially independent, and then just go for the startup route and follow your passion. This is what I’m trying to do now. Having worked in startups and big tech; I think the best thing one can do is to attempt to forge their own path. For independence, financial gain and sanity
- BrawnyBadger53 1y ago
  It's generally not a good sign to me that this is the case. But I think you're right. Something needs to change to make startups feel more viable again.
lovich 1y ago
Has it been worth it in a while? This is a legitimate question as I am on the east coast and wonder if it differs from the west coast environment. At least in my anecdotal experience, everytime I’ve entertained a startups offer in the past decade it’s been either something like engineer #1, 3% equity and no you cannot see the cap table or other agreements with investors, or something like 10k units at 25 a share when we’re on series z, and you lose them if you leave, and you can’t sell for 6 months if you leave, and the investors have priority on payment if we sell for less than our valuation and yadda yadda yadda. I mentally just valued the equity as 0 in the compensation with all those limitations on liquidating them and never understood why anyone joined a startup
- xkcd-sucks 1y ago
  Oh also there is the trick where the startup gets sold a little under its strike price and the execs each get signing bonuses > book value of company as sold

nevon 1y ago

I must be misunderstanding what he is saying, but I can't figure out what. Once his shares have vested, they are his. What entity forced him to sell his shares for 1% of what they are worth and how could they possibly do that?

deleted 1y ago
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fragmede 1y ago
Whichever entity ended up buying Windsurf, the corporation. They get to declare the exchange rate, and for what. Sometimes it's cash, sometimes it's stock, usually it's some mix of both.
- nocoiner 1y ago
  Where would the 99% haircut have come into play?
  - wqaatwt 1y ago
    Nobody willing to pay as much as OpenAI was offering initially? Of course that valuation was about as absurd as it gets…
conartist6 1y ago
Cognition made him a lightning offer it sounds like, valid one day only. I think if I understand what he is saying he could either stick with the product and team giving up the shares, or keep the shares and try his luck getting money for them another way. I appreciate that his choice shows that he is in it for the product and the team, but also ouch.
- deleted 1y ago
  [deleted]
shawabawa3 1y ago
Google did a weird thing where they poached windsurf employees, licensed their tech and hired the CEO and upper management, leaving a shelled out company behind Looks like employees were given an exploding offer to join Google and sacrifice windsurf shares at a low valuation, or stick with windsurf If you stuck with windsurf you then joined cognition in a later acquisition

ThePowerOfFuet 1y ago

https://xcancel.com/premqnair/status/1948420769945682413 https://xcancel.com/premqnair/status/1948420769945682413

hackermeows 1y ago

why would anyone work in startups as early devs anymore. Tell me what is the upside? There seems to be only downsides. Startup Fails , you loose - Gets acquired - you loose What is the motivation to perform .

agartner 1y ago
Working on decently cool things with relatively limited bureaucracy.
- phkahler 1y ago
  You can do that at established companies. If the cool thing comes to an end you'll often have a boring job you can keep or stay at while you find something else.
mianos 1y ago
If you want to write new code and have a lot of influence over the overall implementation instead of fixing bugs on a years old steaming pile of tech debt. Not all places with large existing codebases are that bad, but if you are experienced, it can be very personally satisfying doing something well before it has degraded over time. I have worked in quite a few. One is a household name down here in Australia. I was the first engineer with the two founders. I worked 2 years 24/7 for half the salary I got when I left. I'll never get my money back but that's ok as I loved the time there.
BoiledCabbage 1y ago
> There seems to be only downsides. Startup Fails , you loose - Gets acquired - you loose What is the motivation to perform You get to make a nice payout for a VC. And isn't that all of our life goals?
SirMaster 1y ago
Because you like the work you are doing and the projects you are working on? Presumably you have a lot more control and freedom to do things how you want than at a large company with a lot of red tape etc. That's the main reason I would do it.

deleted 1y ago

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crazygringo 1y ago

This is one of the most confusing things I've ever read. Cognition acquired Windsurf. So how has he "joined Cognition"? "I had a place at Google DeepMind as part of the deal." What does that mean? DeepMind doesn't have anything to do with Cognition or Windsurf, right? Why would an offer at Google require forfeiting vested shares in Windsurf? Is that Windsurf policy or Cognition policy or Google policy? "I was ultimately given a payout of only 1% of what my shares would have been worth at the time of the deal." So he took the payout and forfeited the shares? "In going to Cognition, I’ve chosen a different direction." Or not, he rejected the payout and kept the shares? I can't even tell what's hypothetical versus what actually happened. I literally don't understand a single thing about this tweet. I've read all the comments here so far and my confusion seems to be shared. Can anyone who has context please help explain what's actually going on? And particularly how any company could force you to forfeit vested shares in a company?

shawabawa3 1y ago
You have to know some of the background Google poached windsurf employees and licensed their tech, paying out billions to upper management but apparently offering a fraction of the value of shares This employee chose to stick with windsurf instead of moving to Google Windsurf was then acquired by cognition for an unspecified but probably quite low amount So this employee is now at cognition
- crazygringo 1y ago
  Thank you, that helps! But so did he keep the shares or take the payout? Is the 1% payout an accurate reflection of Windsurf's value after having lost so many valuable employees? And why didn't he take the Google job? Was the 1% contingent on taking the Google job? But how could it be, since Google doesn't own Windsurf/Cognition? But if it did somehow, did it have a higher paycheck to compensate? Or was it contingent on staying at Windsurf/Cognition? This thing needs an in-depth blog post analysis. The tweet by itself isn't providing even close to the information necessary to understand what's actually going on.
  - 1y ago

mjiang41 1y ago

Some more context from Ali Partovi, founder of Neo accelerator: https://x.com/apartovi/status/1948444826674102732 https://x.com/apartovi/status/1948444826674102732 bad look all around.

SirMaster 1y ago

Why do people care so much about what some random guy did in a company acquisition?

lokar 1y ago
A lot of this industry is focused on early stage startups as a path to financial success. The rules and laws around this don’t tend to protect even early employees much at all. People depend on social norms for what to expect. Shifts in the norms are of interest.
blitzar 1y ago
Everyone thinks they are the next random person who wins the startup lottery. Dreams of 50 million dollar paydays are brought crashing down when they realise they will be lucky to get 50,000.
Muromec 1y ago
Because it sets the expectations and everyone here is (pretending) to play the same game as that random guy. Okay, not everyone, but it's YC forum.

lemax 1y ago

This is a fair cautionary tale but it's worth understanding the specifics of the situation – Windsurf maintained a relatively easy to replicate product with no moat, and employed a bunch of attractive talent. The company got gutted of these employees and lost its valuation because no suitable buyer thought their IP was exceptionally valuable on its own. Just because this was the outcome for Windsurf does not mean there are no longer opportunities to join startups building sticky customer bases with valuable IP and walk away wealthier when they exit – yes there is a liquidity problem[1] but let'a be honest with ourselves about the specifics of the case for Windsurf. [1] https://techcrunch.com/2024/01/11/us-startups-have-a-liquidity-problem/ https://techcrunch.com/2024/01/11/us-startups-have-a-liquidi...

gsibble 1y ago
Actually, their recent acquirer is now raising at a $10B valuation from Founder's Fund. They had plenty of value left even after getting gutted.
sailingparrot 1y ago
I don’t understand why the specifics of the situation matters here. We know the company got acquihired for $2.4B, the problem is, why did all of it go to investors and founders and nothing for employees? I’m not sure customer churn rate has any impact on liquidation preference.

KaiserPro 1y ago

I was aquihired by a FAANG. The headline "startup bought for x million" is almost always a lie, either direct or by omission. First, when a startup is bought, its generally not bought at the headline rate. So if you see a "bought for $45m" that doesn't mean People who own shares all got a % of 45m. That number is normally bullshit, but also a "total package" which include share offers for joining the new company. This means you will get say 1% of the headline buyout now, and then golden handcuffs to get the rest. Also, it makes no sense to give employees that much money upfront. After all, if I'd been given $1m in one go, I wouldn't be fucking working now.

bagels 1y ago
1m isn't enough to really retire in in silicon valley
- throwawayq3423 1y ago
  Or in any big city tbh.
  - Scoundreller 1y ago
    Cleveland not big enough for you???
    - throwawayq3423 1y ago
      Cities like Cleveland have reasonable pricing built into their appeal. Without it, there isn't much left.
- loire280 1y ago
  Sure, but if you're 10+ years into your career and have been financially conservative (i.e. have a positive net worth), a lump sum of $1m could be enough to retire to a lower-cost location.
  - andrewmcwatters 1y ago

jschveibinz 1y ago

I am surprised that the employment agreements between execs/founders and Windsurf didn't address this. A cautious investor--or even a cautious key employee joining the team--would have locked the founders and key employees down to prevent them from being hired away without some recourse. This is especially important when all of the value was in the employees. There should be lawsuits forthcoming...

toomuchtodo 1y ago
Non competes are illegal in California, there is no legal way investors can lock founders and employees down. This is venture capital investment risk. The employees, who are most of the value (aside from potential IP and customer contracts), can walk at any time.
- DanHulton 1y ago
  It doesn't have to be a lawsuit preventing them from leaving. Golden handcuffs usually work pretty well for such a situation.
  - toomuchtodo 1y ago
    Unless investors and management are unwilling or unable to counter a superior offer. “Pay them more” works when willing and able. Otherwise, bounce. Comp is king during a gold rush you’re unsure how long will last.
- jschveibinz 1y ago
  I understand your clarification. You should be able to use vesting schedules, right of first refusal to counter, careful definition of IP and trade secrets with assignment to the company, right of repurchase of shares, etc. This is indeed venture capital risk, but this case lays bare the exorbitant amount of risk for investing in these types of companies--perhaps especially in California?

mawadev 1y ago

I'm waking up personally to the unethical side of Software development as well. You can either do little and get paid pocket change or you can provide a ton of value for pocket change next to some promises lulling you in, where the value of your work exponentially increases, but you will see nothing of it and whatever you do: you are still a replaceable cell in excel to them and there will be ways where you get dragged over the table. If the money isn't directly in your bank account, it might as well not exist or was a lie. Sooner or later you are the horse behind the barn anyway.

istjohn 1y ago
To state the obvious, software developers are doing just fine.
GuinansEyebrows 1y ago
how much change fits in your pockets?
Muromec 1y ago
You do sometimes get the 0.31% of a relatively big number under a promise you tag along for two years and some more pocket change on top. Still better than just pocket change zo
pembrook 1y ago
Okay, but how much do you think you deserve as an employee who has invested none of your money in the company and decided to join on a 6-figure salary only after the company is already through YC, is funded by top investors and looks attractive? If you’re instantly replaceable by any dime-a-dozen engineer than can install packages on npm and use react components and add a thumbs up to slack messages…to not get accidentally rich because you just took a high paid tech job a year ago…seems fair? I just fail to see why everyone in the comments here believes they deserve to be compensated at the level of the top 0.01% of all people without starting their own business. Start your own company if you think it’s so easy to be a founder instead of an employee. Nobody is stopping you. I also think it’s some crazy cognitive dissonance to assume you’d be able to walk right into a FAANG sr. eng gig instead. As if most startup employees haven’t tried before joining [insert startup].

stan_kirdey 1y ago

Engineers: always negotiate for higher base salaries. In the vast majority of cases—especially during acquihires—your equity will be worth little or nothing. Founders and VCs still get paid; employees rarely do. Don't just accept promises. Ask for the 409A valuation, liquidation preferences, and pay bands. If a company won’t provide transparency, that’s your signal. Equity is a lottery ticket. Salary is money in the bank.

gsibble 1y ago
I tell every engineer always to maximize their cash comp and every founder and investor always says "No, that's such a bad idea! Get more equity!" Yeah, because that is in your interests, not the engineer's.
- 01HNNWZ0MV43FF 1y ago
  I remember when my old employer was doing another round of funding They offered to sell me more shares I countered that I'd been trying to dump the shares they already gave me and if the shares are truly worth X dollars they should buy them back from me Anyway glad I quit
  - debatem1 1y ago
    > if the shares are truly worth X dollars they should buy them back from me I always offer companies pushing equity hard to trade for cash at 10% of the highest number they try to get me to value it at. Nobody has ever taken me up on it, even when they really should have.
- usaar333 1y ago
  Not everything is adversarial. More cash pressure on the company itself can be bad for the company which is bad for you too. I always take more equity. I wouldn't work for you in the first place if I didn't believe in your equity.
  - baq 1y ago

skybrian 1y ago

When people give you a percentage (1%), that is a ratio and they are not telling you either number. So, that makes me a little suspicious. I wonder how much he got in the end?

deleted 1y ago
[deleted]
xvector 1y ago
It doesn't really matter if he got less than what the acquihired founders did proportionately to his percentage.

cleandreams 1y ago

My base salary was fine but the magic was in the stock. I got a payout on acquisition by a FAANG+ (as first employee). It was only 300K but I put 50K of that into Nvidia. Actually I invested all my payout from my startup stock into tech stocks. And I got a terrific golden handcuffs deal. After that I could afford to retire and I did.

another_twist 1y ago
Did you also post this recently in Blind ? If it is so you might want to fuzz the numbers a bit.
- cleandreams 1y ago
  Less than 10 years ago but not recent.
- deleted 1y ago
  [deleted]

saagarjha 1y ago

What I find amusing is that YC’s Garry Tan is going around explaining to Prem how he actually got a good deal and that the Windsurf founders were very generous to their early employees. Meanwhile from his perspective he joins a company with friends he’s known for years, takes on basically the same risk that the founders did, probably gets some fraction of the equity they did for that work (10%? Less?) and then when payoff time comes he gets cheated out of that too. If I was a venture capitalist dependent on 20-somethings believing in the dream I sold them maybe I wouldn’t write snarky replies on them on Twitter when this happens and actually look into fixing things for early employees (like, maybe, giving them similar terms that the founders get), but that’s just me I guess.

dragonwriter 1y ago
He has just as much financial interest in the dream being false as he does in people believing it, which your recommendation seems to overlook.

deleted 1y ago

[deleted]

chambers 1y ago

https://x.com/ahmaurya/status/1948491614160122308 https://x.com/ahmaurya/status/1948491614160122308 Garry Tan posted "sounds like a tweet that cost $20M" which he later deleted. Smells like a strong bias against employees in favor of management and founders.

gsibble 1y ago
That was really shady.
JumpCrisscross 1y ago
Could you expand what's going on there?
- chambers 1y ago
  My read was that Garry Tan implied "you sacrificed a lot of money in order to grandstand". I felt that was a knee-jerk dismissal of a founding employee's legitimate concern.
- WatchDog 1y ago
  I'm not sure, but my interpretation is that Gary is implying that Prem Qu Nair received $20 million from the deal, and that by posting this tweet, he has violated the terms of the agreement, which generally have non disparagement clauses, and Gary will see to it that he won't receive anything.
Lionga 1y ago
That is YCombinator & Garry Tan for you. Disrupting the screwing over employees (and founders if they can but its just much harder) as a sport.
czbond 1y ago
I believe Tan's words were mis-represented. I believe he is saying that it cost Prim $20M and he then wrote that post. I don't think he is insinuating anything else.

BhavdeepSethi 1y ago

I went through an acquisition very early in my career, and for the longest time I believed it was the best outcome for everyone. Over time, I realized that my naive belief was purely due to the founders going way above and beyond to make sure each and every employee (including folks doing just data entry) got a good outcome (accelerated vesting, significant equity in new company, top of the band pay, etc.). It made me realize that if you ever want to work at a start up, bet on the founder, rather the company. Even with mediocre outcomes, you'll end up ahead in the long run compared to folks who're just looking out for themselves.

rhyperior 1y ago
They must have had a strong position from which to negotiate those favorable terms, in addition to the experience to know to do so, and the integrity to actually do it. The type of people you should follow.
- BhavdeepSethi 1y ago
  I don't believe they did. This acquisition was by Flipkart, the poster child startup in India, who had a very high bar for hiring. They wanted to interview the non-founders to make sure they met the standard. The founders said you get all or you get none. To be fair, it was a small team of 6-8 employees, so I doubt Flipkart cared. :)
  - hiAndrewQuinn 1y ago
    Wait, what are the employee protections like in India that such a deal is enforceable? Why couldn't Flipkart just take them and then fire them a few weeks/months later?
    - Henchman21 1y ago
      I genuinely wonder how people like yourself sleep at night.

whiplash451 1y ago

A lot of bias against startups in the comments. These are missing (1) how terrible the working conditions in bigco have become in the meantime (2) truly good startups (they exist) that pay solid base salaries

toomuchtodo 1y ago
The odds are clear as day. ~90% of startups fail, and the truly good ones are very rare. Do small pockets of good exist? Yes, absolutely. But most of the startup ecosystem is convincing employees to grind for peanuts until founders and investors (whether that's accelerators or institutional) hit liquidity (if ever). Of course, if you find the unicorn (good comp, target work life balance, meaningful work [to you]), hold on tight and don't mess it up. https://www.marketsentiment.co/p/the-yc-report https://www.marketsentiment.co/p/the-yc-report https://news.ycombinator.com/item?id=42828198 https://news.ycombinator.com/item?id=42828198
Muromec 1y ago
Depends on a big co. You can skip all the drama try harding and work in a boring place too.
xvector 1y ago
At least you get paid in bigco and you don't have to worry about your equity being snatched from under you.

CalChris 1y ago

This was just a preference cliff, plain+simple. Windsurf got paid maybe $3B for itself. But the investors and senior management got their cut first. How? Well, the preferences they negotiated. No one really knows how the game is played The art of the trade How the sausage gets made We just assume that it happens But no one else is in the room where it happens #2 wasn't in the room when it happened. In a very real sense, he's lucky he got anything. Management owes a fiduciary duty to the shareholders and #2 is a shareholder. But negotiating the $3B covers that duty.

highfrequency 1y ago
Doesn't seem that simple. They raised a total of ~$250m and acquisition price was almost 10x that. The preference cliff means that employees get nothing before investors get an X% return on their investment (100%, 150%, maybe 200%). After that, the payout should be proportional to common stock ownership. Surely the preference guarantee was not 10x? Would be curious to see the breakdown of the $2.4b: 1. How much to the founders in Google employment incentives 2. How much in licensing fee to the company itself 3. How of the licensing fee went to immediate payout to VC investors (+ employees) 4. How much got left on the balance sheet of the remaining company I don't understand how #3 can be so large and common stock holders walk away with almost nothing without breaching fiduciary duty?
- CalChris 1y ago
  The August 2024 Series C round (last of 4 rounds) for $150M could dilute+smoke the preference stack for any earlier investors of which #2 nominally was basically the earliest class member of. C gets preferences+participation. B+A get preferences+participation+anti-dilution. Common gets what's left which apparently wasn't much. Fiduciary duty is very low bar. Management has to act in the best interests of The Company, as in, as a whole. The company != #2. Lawyers are not taking this case. I'm certain the accounting was done properly, maybe even by a Perl script, and this is how it penciled out. The question for us stiffs is what can we learn from it?
scns 1y ago
> in the room where it happens Great song from Hamilton. Sorry for being off topic.

blitzar 1y ago

You got zucked.

highfrequency 1y ago

Directly contradicts Garry Tan's post saying that all forty founding engineers got seven figure payouts from the Google acquisition: https://x.com/garrytan/status/1947072583092052406 https://x.com/garrytan/status/1947072583092052406 Even if the OP considers the full headline number of $2.4b to be the value of the company, and taking his "1% of fair" number as truth, seven figure payouts would imply all 40 founding engineers had >4% equity which is nonsensical.

recursivecaveat 1y ago
Why would you believe extremely motivated hearsay from Garry Tan? The man is already very untrustworthy before we get into the "I heard" and conflict of interest.
ohdeargodno 1y ago
Garry Tan's job is bullshitting. Lying isn't very far from it, and he even covers his ass with "I heard". Who did you hear it from Garry, the founder that made out with all the money ? Or the other VC that made a few hundred million from the sale and stands to gain even more if the lie of "founding engineers get rewarded" is perpetuated?
b_be_building 1y ago
No, what Garry is saying DIRECTLY correlates with the outlined opportunity. For his assertion to be right, 40 people need to get paid out at least 1 million. That's 1.67% of the company or 0.04% evenly. Its not hard for me to image that up to 10% of this cap table was distributed among the 40 people.
reducesuffering 1y ago
Hilarious that the best case positive spin highlighted is 40 people cleared at least $1m, so $40m out of $2.4 billion and $240m funding. He's praising "look 2% of the payout went to people in the company". Nevermind that $1m over ~4 years is approximately the same as the differential other public tech co's pay. ($150k + equity at YC co, $350k TC at G/Amzn/FB/Uber/etc.) So when they tell everyone they should work at YC co's, they're saying they're proud when in the absolute best case scenario you make just as much as at the public co's they rail against working for. If you want to come across as genuine, directly say how much % of the payout went to employees that weren't the founders. They won't, because it's likely 3%, which correctly sounds horrible

ww520 1y ago

That’s why founding engineers are such a raw deal. They take just as much risk as the founders but much less payout. Also on the hook to do most of the work.

doctorpangloss 1y ago
It's complicated. The difference between a founder and founding engineer - I think you mean early employee - is pretty big. The fact that they are getting a "raw deal" in your POV should inform you that the equity grants are not related to risk. This is coming from someone who programs for a living: contrary to what you are saying, the money guys take too little equity. The money guy being, the reason you are raising money at all, and not just dipping into your own savings.
- achierius 1y ago
  No. The engineers build the product. They do the actual work. Let's flip your 'reason' around: the engineers are the reason the VCs have a job at all, since the entire point of the job is to find people building big things and funding them to get a cut. They are secondary, the actual product -- and the people who build it -- are what matters, morally and economically.
  - thedevilslawyer 1y ago
    An engineer in a non-startup also builds the project and does the actual work. It's not special. Trading money and opportunity cost for sweat is what makes it equity. Also, engineers are not the reason VCs have a job.
    - const_cast 1y ago
      > Also, engineers are not the reason VCs have a job. How are they not? VCs don't actually do any productive work - they don't make anything. In order to invest in something, anything, you need the something. That's a pre-requisite for investing. Engineers build the product. Doesn't even just apply to software, this applies to everything.

jacquesm 1y ago

Always, always think about the downside scenarios if you enter an agreement. If you don't you will end up regretting it for sure.

siliconc0w 1y ago

These stories really kill the golden goose because it means a lot of talent just won't work at a startup. YC isn't particularly great here either, they are pro founder but not pro startup employee. Most YC companies offer pretty paltry equity to even the first few hires - and that is even assuming you aren't going to get screwed down the line.

Yeul 1y ago
The people who go to work for start-ups are usually young. There comes a certain time in life when you have a family that relies on you and you get old enough that you start to make plans for retirement. That's when you get a real job at a very boring stable company and stop being delusional.
- dom96 1y ago
  Not everyone decides to have a family. For some getting that boring and stable job is the only way to get to take some risks later in life.
- pimeys 1y ago
  Well, that depends. I'm working in a startup and I'm in my 40's. Although it's a bit different than a typical startup, because it pays quite well compared to 95% of other offers in EU to live a very comfortable life in a not too expensive European city. Yeah, the hours can be crazy but not too often. Yes, you're expected to give your best all the time but that's part of the fun. And the best part is the challenges are always interesting. Maybe it makes it easier for me that I'm not at all interested in normal family life and never want to have kids.
bwfan123 1y ago
The risk-reward equation for startups vs boring-big-tech has turned completely upside-down. Back in the day, startups were the only lottery ticket to riches, not to mention do interesting work. But now, the tables are turned. For experienced engineers big-tech comps are attractive enough to put up with the office politics, and if you lucky do some interesting work.
1y ago

ada1981 1y ago

Can someone help me understand why he would have to take this deal and not just say “no thanks”?

suralind 1y ago

Can someone explain how that worked? How was the CEO allowed to sell license AND talent to another company? Wouldn’t that screw investors? Why would they allow it if their stock becomes worthless after that?

NooneAtAll3 1y ago

were*

rectang 1y ago

I feel like there needs to be the analogue of open source licenses for equity offers. Something standardized, so that both employees and management could negotiate in good faith with high confidence that the terms are as advertised. Because right now, there has been too much innovation in ways to screw over employees and the only reasonable assumption is that equity will vanish.

Sephr 1y ago
For some startups (mostly dealing with local and self-hosted software), it may be a better option to offer perpetual license grants to the product being worked on as opposed to equity in the startup itself. This encourages employees to make the best software if they know that they are also going to be the end user as well.

flappyeagle 1y ago

The thing they don’t tell you about joining startups is: the integrity of the founders matters more than anything else. If you’re not a good judge of people you should work somewhere that pays cash

qkhhly 1y ago

i had many startups reaching out over the years but i just could not make the numbers work to make the shift. it's not uncommon that a regular salary from a big tech in the bay area would amount to ~$2M total after 4 years (considering stock appreciation). if you were given 1% of equity of the startup then start up has to worth $200M after 4 years. or more likely you would be given 0.1% of equity of the startup, and then it has to worth more than $2B, in order for it to make sense for you. how likely is that going to happen?

_jab 1y ago

The details here remain unclear to me, and even this tweet is somewhat vague. > I was given an offer that would explode same day. I had to forfeit all of my vested shares earned over my 3.5+ years at Windsurf. I was ultimately given a payout of only 1% of what my shares would have been worth at the time of the deal. Was forfeiting the vested shares conditional on accepting the offer, or did he have no choice over the matter? Was the payout what he was offered as part of accepting the deal, or was that his consolation for not accepting it? The wording is genuinely unclear to me. I literally see 3 interpretations here: 1. Offer was to forfeit shares in exchange for 1% payout, but OP rejected and still has shares 2. Offer was to forfeit shares in exchange for undisclosed payout, but OP rejected and got 1% payout instead and still has shares 3. He had to forfeit shares regardless of accepting offer, got 1% payout (1) and (3) are both shitty offers from Google, but (2) is reasonable. Exploding offers are not uncommon in tech acquisitions. My guess is that (2) is what happened, since that's not in contradiction with prior reporting.

itake 1y ago
what are those shares worth with the company gutted? Seems like not much of a choice if leadership and IP are gone...
- _jab 1y ago
  The company should have been worth at least the cash it had on hand, which has been reported as ~$100M. It's also been reported that all vested equity and VC shares were bought out (although apparently perhaps with a few exceptions for people who declined the offer), which meant that the employee unvested equity stakes were "undiluted" from whatever they were before (hard to judge, but maybe 5-10%), to 100%. So every employee had their stake in the company increase 10x-20x. So if the company had then decided to simply close up and distribute the remaining cash as dividends to the employees, it would be as if each employee had simply been bought out pre-deal at a $1-2B valuation. And that was the absolute worst case scenario - clearly Windsurf found a better deal with Cognition.
DonsDiscountGas 1y ago
I assumed it was #1, and his shares were acquired as part of the cognition deal

bravoetch 1y ago

Since others are sharing their doom and gloom stories - Mine is the opposite. I was hired at a startup, and I didn't even know what a startup was. I just liked the industry they were in and applied to join. In negotiations I tried to get more salary, by taking less equity. It kinda worked, but later they doubled my equity to match other hires of the same era (but with a new vesting schedule for the new options). Then at some point I was fired without reason. The company went on to become worth a lot, and I was able to get out with enough to never work again and live pretty luxuriously. AFAIK others that were in my era at this startup did equally well, or many times better. It can happen, but I didn't ever think it was even possible because I didn't understand what 'options' even were when I was hired.

im_down_w_otp 1y ago

That stinks. I'm sorry. The founders could have taken part of the proceeds to at least adjust your upside with a transaction bonus. It's pretty easy to do.

tlogan 1y ago

When joining a startup, the most important factor isn’t the idea, product, or the VCs: it’s the founder(s). Think like an investor. Would you back this person? Are they ethical? Are they resilient? Also stock options should not be high on the list. Most startups fail before founders or VCs even get the chance to screw you over. In 99% of cases, nobody wins.

iblaine 1y ago

Having been aquihired three times by FAANG+, the biggest take away is have accelerated vesting. To do that you got be lucky or in the C-suite. Being bought out usually sounds better then reality for everyone but a few that get that accelerated vesting clause.

anonzzzies 1y ago

Every time... The salary or fee what you trade your life for, shares might multiply that. Might. If your base salary is low 'because you have shares', you will probably never see a return: the idea this is loyalty or something is some weird thing; don't do it unless you love it and want to spend that life blood without a return.

kome 1y ago

this is something that my feeble European brain will never understand: why people in American start-up keeps getting scammed with pseudo "private" equities, stock options, that are not on a market, and therefore cannot be priced? equities surrounded by very obscure (or no) legislation, that if you get fired or decided to leave you cannot keep. it just make no sense but americans loves them.

tjpnz 1y ago
If you've convinced yourself that layoffs are a normal (and accepted) part of a career you'll have no issues believing in this crock either.
dfadsadsf 1y ago
European salaries are laughably low even compared to low ball offers from US startups. Essentially options for good (but not great) sr engineers are 1. Get 120k salary in Europe (on higher end) 2. 500k at FAANG in US (salary + RSU) 3. ~200k at startup in US + lottery tickets Both option 2 and 3 strictly beat option 1 (especially after taxes) so European should get off the high horse and recognize reality that they are poor and exploited by companies and government.
- const_cast 1y ago
  It depends on what you value. For example, if you want a high quality of life and acceptable work-life balance, that is very, very hard to find in the US. IMO, 500K a year doesn't matter too much if you're fat, lonely, and want to kill yourself. Not saying that everyone in the US is like that, but certainly it seems to be a much higher degree.

AYBABTME 1y ago

So if one was to start a company today and wanted to enshrine employee-and-founder-friendly terms in their company, how should things be structured? Make the founders' shares be of the same class as the employees? Something special?

Nemo_bis 1y ago
Make it a cooperative. https://tech-coops.xyz/ https://tech-coops.xyz/
- AYBABTME 1y ago
  Kind of a non-starter. No one is going to found and invest in a cooperative.
  - greenie_beans 1y ago
    i started a business that i'm planning to organize as a cooperative. currently looking for funding and it's hard because the structure is foreign to investors, though it's a business structure that is proven to work. maybe if more people organized their enterprises this way then it would be easier to find investment.
    - Nemo_bis 1y ago
      Yes, it takes some education. I've founded a cooperative in Finland and, although the legislation here is very favourable to cooperatives, it took me months to convince PRH (the public register) to certify our bylaws which included an option for investment shares. But we did it! Do seek professional help. It doesn't need to be expensive lawyers, there may be gratis support from the cooperative network. https://ica.coop/en https://ica.coop/en

positron26 1y ago

Holy shit. We need need better early phase governance tools than handshakes and winks. The SAFE was written to streamline things so that everyone can get to work right now with a reasonable basis of trust. How can we have that basis of trust among founders and early hires when stuff like this happens? If no founders can be trusted, sweat equity partnerships will become rare. If the only people who can build companies are VC funded founders who hire employees who treat the whole thing like a game, there will not be a good crop of companies to come out of that environment. Founding is freaking hard. It needs to be reliably and fairly rewarded. Otherwise the people trying to bootstrap and make things happen have nowhere to go if the idea they are completely convinced MUST be built is also a hard hard sell to VC hive minds... because it's too oddly shaped (innovative). We all have an interest to put the instruments and paperwork into place to make stories like this NOT happen so that sweat equity startups founded on personal convictions and strong cooperative incentive alignment will happen. https://positron.solutions/careers https://positron.solutions/careers

catoc 1y ago

He elected to move on before his shares were vested. Many interesting, and probably true, replies about investors cheating out employees, but it seems very few people read the actual post.

deanmoriarty 1y ago
Where can I real the actual post you are mentioning? The tweet only mentions "had to forfeit all of my vested shares earned over my 3.5+ years at Windsurf", which seems to conflict with your "before his shares were vested" statement.

tzury 1y ago

AI companies paying $100M+ for a single hire is like Tesla buying oil fields.

Oras 1y ago

The comments here taught me about startup acquisitions more than any article/video I have watched in the last 5 years. Deep appreciation to everyone who shared their story, thank you!

burnt-resistor 1y ago

Most early employee equity has the worst liquidation preference. It's almost always toilet paper.

bravesoul2 1y ago

Title should be changed. Sounds like this was a choice not a fuckover. That said... Don't be a fool for all these AI startups that want you to burn out on 100 hour weeks. Many YC and non-YC startups are using this bravado based hiring strategy trying to get cheap labour to fuel their rockets to the moon. Don't be no fool!

Dylan16807 1y ago
The value of the options was destroyed in the deal. He had a choice between getting 1% or getting nothing. It was a fuckover.

Cuesta03 1y ago

[dead]

rml 1y ago

The classic article on this topic is https://steveblank.com/2019/04/10/startup-stock-options-why-a-good-deal-has-gone-bad/ https://steveblank.com/2019/04/10/startup-stock-options-why-... Nothing has substantially improved since the article was written. With “forever private” companies it’s only gotten worse.

_cs2017_ 1y ago

I don't understand the twitter post. - Did he take the offer or not? - Did he forfeit the vested shares because he took the offer or because he didn't? - What was he offered in return for forfeiting the vested shares? - Did he get a payout of 1% because he took the offer or because he didn't? - The 1% comment implies that Google didn't use the $2.4B to buy the shares of Windsurf; if not shares, then what did Google get in return? Original citation: "I was given an offer that would explode same day. I had to forfeit all of my vested shares earned over my 3.5+ years at Windsurf. I was ultimately given a payout of only 1% of what my shares would have been worth at the time of the deal."

gsibble 1y ago

This really breaks the social contract that startups and employees have had together for a very long time and will severely damage the ecosystem in the long term. Shame on the VCs who got paid out allowing this to happen.

up2isomorphism 1y ago

Since a certain point in time, I usually reject most startup offerings, because their term all look fishy.

beavis000 1y ago

Question - why did you have to give up your Windsurf vested shares? Did Cognition want that, or was it a term of the Windsurf equity plan?

mertleee 1y ago

This is an exemplary reason to not work for a startup. Cash is king - never work for free or let some overzealous founder (who has tons of equity and is ok working for poverty wages) try to encourage you to work longer or harder "because equity go up one day". The founders of Windsurf are clearly horrible people and the fact they were DM'ing people on twitter trying to explain being awful people really reflects the current state of the valley. Garry Tan even deleted a comment on this tweet where to Windsurf employee #2 he said "looks like you left $20M on the table". These people see employees as replaceable widgets and to them this is just a game build around the "excitement of building". Legitimately F*CK these people.

kotaKat 1y ago

At what point do these gross overpaid bubbles pop? None of these people are worth this kind of money and it’s time we re-balance tech salaries, tbh. Be thankful you got your million dollars and move the fuck on, ‘cause some of us will never get that kind of money.