3 ms·

> Nobody ever promises you any specific valuation or fraction of the company Would you mind asking before saying what I have been promised? Also it feels like

by palata 1mo ago

> Nobody ever promises you any specific valuation or fraction of the company Would you mind asking before saying what I have been promised? Also it feels like you have never been in a startup. The whole language of growth everywhere, the "billion-dollar startup", the "becoming a unicorn", this is all suggesting that "you're part of it and it matters to you if it becomes a unicorn". But it doesn't, really. Because you get diluted.

BeetleB 1mo ago
> But it doesn't, really. Because you get diluted. At this day and age, if you don't understand dilution before you join, it's entirely on you. This isn't a new concept - it was the case decades ago. Even when I left school over 15 years ago, the standard advice when trying to get a job with a startup was "Get a good salary and value the equity at zero." And class A vs class B isn't even a rich vs everyone else thing. I have class A shares in an LLC, where even the (richer) founders are class B. The operating agreement is that we class A folks are "guaranteed" a fixed rate of return on our investment, and the class B folks don't get anything unless we get at least that rate of return. This is very normal in that industry.
- palata 1mo ago
  > At this day and age, if you don't understand dilution before you join, it's entirely on you. I don't know what to tell you. Young graduates get an offer to work at a startup, nobody tells them how it works. They are just excited, as I was. And they don't think about "what happens if the startup is successful" because they do know it probably won't be. And when the startup is successful (happened to me) is when they realise that they got scammed. But all they can do is see their founders become rich and tell everyone why THEY deserve it because it was THEIR idea and THEY are the best. > the standard advice when trying to get a job with a startup was "Get a good salary and value the equity at zero." That does not say AT ALL that the founder gets rich when you get nothing. It says "be careful, most startups fail, so make sure you get a salary". Usually that salary is subpar.
  - lotsofpulp 1mo ago
    >That does not say AT ALL that the founder gets rich when you get nothing. It says "be careful, most startups fail, so make sure you get a salary". That one is covered under the standard advice of "comparison is the thief of joy". >Usually that salary is subpar. If it was subpar, then the salary would not have been accepted.
    - palata 1mo ago
      > If it was subpar, then the salary would not have been accepted. Turns out it was. Young graduate excited with the mission, and all that bullshit.
sershe 1mo ago
I was given a very large number of very low value shares. The company was about 60 people iirc and I think the hr guy said well we won't IPO soon but when we do, these shares might be worth a lot! Companies often aim for shares to be worth 10, 20, 50 dollars at IPO! Something like that. But it's obviously just vague pep talk. They also sometimes say everyone is there to make the world a better place... It would be a scam if they promised you 0.2% of the company but then it was diluted to 0.1%. and nobody prevents you from asking i think. Otherwise it's no more a scam than a lottery ticket commercial showing the guy who won a Ferrari.
- barchar 1mo ago
  It’s strange, every startup offer either is obviously a horrible scam or comes from a place of fairness and is sold like a total scam. I guess being honest brings about too many opportunities for people who don’t understand the finances to make (or be perceived to make ) promises they can’t keep. So you might as well just get into a race to present the most ridiculous stuff possible.
- palata 1mo ago
  It is a scam to me because they imply "if the founders get rich, we all get rich" because "we're on the same boat". And it's not the same boat at all: the founders may get rich, the employees most likely not.

by palata 1mo ago

BeetleB 1mo ago

> But it doesn't, really. Because you get diluted. At this day and age, if you don't understand dilution before you join, it's entirely on you. This isn't a new concept - it was the case decades ago. Even when I left school over 15 years ago, the standard advice when trying to get a job with a startup was "Get a good salary and value the equity at zero." And class A vs class B isn't even a rich vs everyone else thing. I have class A shares in an LLC, where even the (richer) founders are class B. The operating agreement is that we class A folks are "guaranteed" a fixed rate of return on our investment, and the class B folks don't get anything unless we get at least that rate of return. This is very normal in that industry.

palata 1mo ago
> At this day and age, if you don't understand dilution before you join, it's entirely on you. I don't know what to tell you. Young graduates get an offer to work at a startup, nobody tells them how it works. They are just excited, as I was. And they don't think about "what happens if the startup is successful" because they do know it probably won't be. And when the startup is successful (happened to me) is when they realise that they got scammed. But all they can do is see their founders become rich and tell everyone why THEY deserve it because it was THEIR idea and THEY are the best. > the standard advice when trying to get a job with a startup was "Get a good salary and value the equity at zero." That does not say AT ALL that the founder gets rich when you get nothing. It says "be careful, most startups fail, so make sure you get a salary". Usually that salary is subpar.
- lotsofpulp 1mo ago
  >That does not say AT ALL that the founder gets rich when you get nothing. It says "be careful, most startups fail, so make sure you get a salary". That one is covered under the standard advice of "comparison is the thief of joy". >Usually that salary is subpar. If it was subpar, then the salary would not have been accepted.
  - palata 1mo ago
    > If it was subpar, then the salary would not have been accepted. Turns out it was. Young graduate excited with the mission, and all that bullshit.

sershe 1mo ago

I was given a very large number of very low value shares. The company was about 60 people iirc and I think the hr guy said well we won't IPO soon but when we do, these shares might be worth a lot! Companies often aim for shares to be worth 10, 20, 50 dollars at IPO! Something like that. But it's obviously just vague pep talk. They also sometimes say everyone is there to make the world a better place... It would be a scam if they promised you 0.2% of the company but then it was diluted to 0.1%. and nobody prevents you from asking i think. Otherwise it's no more a scam than a lottery ticket commercial showing the guy who won a Ferrari.

barchar 1mo ago
It’s strange, every startup offer either is obviously a horrible scam or comes from a place of fairness and is sold like a total scam. I guess being honest brings about too many opportunities for people who don’t understand the finances to make (or be perceived to make ) promises they can’t keep. So you might as well just get into a race to present the most ridiculous stuff possible.
palata 1mo ago
It is a scam to me because they imply "if the founders get rich, we all get rich" because "we're on the same boat". And it's not the same boat at all: the founders may get rich, the employees most likely not.