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Engineers don't really care about equity anymore because they've been burned so many times. The big payouts from a successful company are not necessarily guaran

Engineers don't really care about equity anymore because they've been burned so many times. The big payouts from a successful company are not necessarily guaranteed the way they were pre-2015 or so. It has become too common for there to be behind-closed-doors dlilutions and investor-only exit opportunities. It has become very unwise to trust anything beyond real cash wired to your bank account.

rachofsunshine 1y ago
Author of the OP here - to put some more empirical backing to this, virtually every single engineer in our candidate pool values illiquid equity at 20% or less of face value, and about one in three give it no weight at all. Totally off the topic of the thread, but it's why I do things differently with the people who work for me. I'm the sole owner of Otherbranch, but I pay out a percentage of profits over certain thresholds (between 25 and 75%, rising at higher levels of profit) to the team. Keeps things concrete and aligns incentives with building something that works today rather than obsessing over a hypothetical exit.
- eszed 1y ago
  Love that compensation plan. I wish my (and every) company did that.
  - rachofsunshine 1y ago
    Yeah, so did I. Being both a ride-or-die leftist and the owner of a company is a weird place to be sometimes, and it's basically the way I figured I could best implement the world I want to see inside the world we have.
jcalvinowens 1y ago
Every single solitary person I've personally known who worked at a successful startup got screwed out of their equity somehow. Literally every single one.
- indoordin0saur 1y ago
  Yup. The stories of old, where an engineer would grind for a decade then have a nice seven-figure payout to buy a home seem a remote memory. I'm not sure what happened because successful start-ups still exist and it seems like somebody is profiting off of acquisitions and IPOs.
  - SpicyLemonZest 1y ago
    It still happens all the time. It's just in an awkward in-between, where it's neither so uncommon that it's worth comment in news stories nor so common that most people in tech know someone who's gotten it. The Figma IPO surely minted dozens of millionaires, although I guess their lockup wouldn't be expired yet.
  - BrandonM 1y ago
    Just to add a counterpoint, I was hired as employee #3 in 2011. In 2020, I was able to sell 5.8% of my stake for $200K (as part of Series C). In 2021, I sold another 4.4% for $500K (Series D on terms too good to refuse). I still hold equity or options in nearly 0.5% of the company (which is still private). My wife and I used about half the proceeds of those sales to buy a house (cash offer) in late 2021. I don’t know what proportion of early employees get screwed, but people who do well are usually smart to avoid posting publicly about it (and I am apparently an idiot).
    - indoordin0saur 1y ago
      > employee #3 in 2011 Maybe I'm bitter from getting burned but I don't think this is really counterpoint. Employee #3 you're just shy of being a co-founder and 2011 was an era where equity grants were real and companies weren't yet so clever about handing out Leprechaun gold. EDIT: Random aside, but I looked up "leprechaun gold" and I guess the trope of a gold-like substance that disappears from your pocket when you're not looking is actually from Harry Potter and not a part of the traditional folklore.
- cmrdporcupine 1y ago
  I worked at one in the 2010/2011 time frame where I did not, ironically one where I made no effort at all on negotiation on options and assumed the options would be worth zero. A year later Google bought us. I didn't get "I'm retiring now" money, not even close. But consider I expected nothing, was only a senior-level IC there for a year, and remained an IC after, it made appreciable change in my life and got me a good paying job at Google after. But I think in that case it had more to do with the parties involved (our management were great people, and Google was motivated to treat us well). I'd love to replicate this experience, but it ain't gonna happen.

rachofsunshine 1y ago

Author of the OP here - to put some more empirical backing to this, virtually every single engineer in our candidate pool values illiquid equity at 20% or less of face value, and about one in three give it no weight at all. Totally off the topic of the thread, but it's why I do things differently with the people who work for me. I'm the sole owner of Otherbranch, but I pay out a percentage of profits over certain thresholds (between 25 and 75%, rising at higher levels of profit) to the team. Keeps things concrete and aligns incentives with building something that works today rather than obsessing over a hypothetical exit.

eszed 1y ago
Love that compensation plan. I wish my (and every) company did that.
- rachofsunshine 1y ago
  Yeah, so did I. Being both a ride-or-die leftist and the owner of a company is a weird place to be sometimes, and it's basically the way I figured I could best implement the world I want to see inside the world we have.

jcalvinowens 1y ago

Every single solitary person I've personally known who worked at a successful startup got screwed out of their equity somehow. Literally every single one.

indoordin0saur 1y ago
Yup. The stories of old, where an engineer would grind for a decade then have a nice seven-figure payout to buy a home seem a remote memory. I'm not sure what happened because successful start-ups still exist and it seems like somebody is profiting off of acquisitions and IPOs.
- SpicyLemonZest 1y ago
  It still happens all the time. It's just in an awkward in-between, where it's neither so uncommon that it's worth comment in news stories nor so common that most people in tech know someone who's gotten it. The Figma IPO surely minted dozens of millionaires, although I guess their lockup wouldn't be expired yet.
- BrandonM 1y ago
  Just to add a counterpoint, I was hired as employee #3 in 2011. In 2020, I was able to sell 5.8% of my stake for $200K (as part of Series C). In 2021, I sold another 4.4% for $500K (Series D on terms too good to refuse). I still hold equity or options in nearly 0.5% of the company (which is still private). My wife and I used about half the proceeds of those sales to buy a house (cash offer) in late 2021. I don’t know what proportion of early employees get screwed, but people who do well are usually smart to avoid posting publicly about it (and I am apparently an idiot).
  - indoordin0saur 1y ago
    > employee #3 in 2011 Maybe I'm bitter from getting burned but I don't think this is really counterpoint. Employee #3 you're just shy of being a co-founder and 2011 was an era where equity grants were real and companies weren't yet so clever about handing out Leprechaun gold. EDIT: Random aside, but I looked up "leprechaun gold" and I guess the trope of a gold-like substance that disappears from your pocket when you're not looking is actually from Harry Potter and not a part of the traditional folklore.
cmrdporcupine 1y ago
I worked at one in the 2010/2011 time frame where I did not, ironically one where I made no effort at all on negotiation on options and assumed the options would be worth zero. A year later Google bought us. I didn't get "I'm retiring now" money, not even close. But consider I expected nothing, was only a senior-level IC there for a year, and remained an IC after, it made appreciable change in my life and got me a good paying job at Google after. But I think in that case it had more to do with the parties involved (our management were great people, and Google was motivated to treat us well). I'd love to replicate this experience, but it ain't gonna happen.