9 ms·

so what i learned from this is that the developers did not actually get 50% but something that sounded like 50%. i know a dev at a startup who was employee num

so what i learned from this is that the developers did not actually get 50% but something that sounded like 50%. i know a dev at a startup who was employee number 2 and wanted a certain % of the company ( like 2 or 5 or something like that ). anyhoo, he was haggling with the founder about this and the founder didnt want to give him what he wanted but finally relented. later, when signing paperwork, he found that the % the founder relented to was actually a % of a newly created employee pool, and not the whole company. needless to say, the dev was pissed and had little trust in the relationship from that point forward.

dmourati 13y ago
Rookie mistake. Read Venture Deals: http://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitalist/dp/1118443616 http://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitalis...
- andyidsinga 13y ago
  no doubt. ...ive been meaning to read venture deals myself. my impression of brad feld and jason mendelson is a very positive. Even better I've heard founder devs speak very highly of them.
- fragsworth 13y ago
  That venture deals book is about founders negotiating with VCs, and probably mentions the "rookie mistake" of the founders getting stuck with paying for the option pool. We're talking about something different here - a potential hire joining a company and asking for "X% of the company". If the company agrees to this, then the legal document better not say you got X% of the employee option pool. That kind of shit is obviously going to ruin your employee's trust, because it's extremely fucking shady. I would immediately get the impression that the company/founders are big scammers.
  - dmourati 13y ago
    The book is about VC period. Authors switch sides in perspective throughout. The rookie mistake, covered at length in the book, was not knowing the difference between the cap table, employee options pool, and fully diluted shares. See, e.g., Appendix A.
- yourapostasy 13y ago
  Only in the business world is this behavior not only acceptable but lauded as commendable, and then some businesspeople wonder why their industry gets such a bad rap. Speaking ss a business owner, this is not how I do business, and my experience is if the stakes are not perceived as extremely high, most business people (especially at the mid-level tiers) do not engage in these "sharp dealings" either. The probabilities of running into this behavior go up very rapidly however, when the value perception goes up. That being said however, I do see this behavior creeping even into settings where I didn't notice it 2-3 decades ago. This tactic only works as long as there is some sink to offload the negative externalities to; that is, everyone else who does not negotiate this way. Developers who are made aware of this "negotiation" style on the other side should make every requirement request an adversarial minimax engagement where they seek to do the least amount of coding for the most profit. Even today, if you pull similar stunts during negotiations where you perform Clintonian-grade-gyrations through the attorneys, or even more minor shady acts, in my small part of the industry people remember that for a long, LONG time. Word gets around. It follows you from employer to employer now, with the better sales tracking we have these days. And where other customers get cut a lot of slack just for being nice, you're going to be fighting for every micrometer of delivered support. Just because once you set a precedent, no one will to want to get caught on the other side of one of your "gotchas". Good on ya if you have the energy for doing that all the time, but I'd rather be using the time more productively myself. Coase's theory of the firm and its subsequent expansions by other researchers would find that when everyone engages in this style of negotiation, transactional costs skyrocket. I've had one customer who was particularly enthusiastic about this style of dealing with vendors. We dumped that account onto a competitor.
micheseco 13y ago
I obviously don't know the details there, but I'd say there's a big difference: Job's developers got the 50% they wanted (and Jobs cut a fair deal with the other company), while the guy you know agreed on something and then got something else. The latter is something that I believe is unethical, as it's changing the cards on the table after making a deal, and not even telling the other party.
- andyidsinga 13y ago
  but that was my point -- It doesn't sound like the developers got the 50% they wanted at all - the post goes through the math of how it was made to look like 50%.
  - micheseco 13y ago
    yeah, but my point was that in this case Jobs didn't change the cards on the table like saying "we agreed on 50% of the revenues, now it is 50% of the profits after tax" (I'm making a random example, hope to make my point), while in the case of the other dev they changed the percentage of the equity to a percentage of the pool of shares for the employees... to me it's kinda different at least ethically

dmourati 13y ago

Rookie mistake. Read Venture Deals: http://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitalist/dp/1118443616 http://www.amazon.com/Venture-Deals-Smarter-Lawyer-Capitalis...

andyidsinga 13y ago
no doubt. ...ive been meaning to read venture deals myself. my impression of brad feld and jason mendelson is a very positive. Even better I've heard founder devs speak very highly of them.
fragsworth 13y ago
That venture deals book is about founders negotiating with VCs, and probably mentions the "rookie mistake" of the founders getting stuck with paying for the option pool. We're talking about something different here - a potential hire joining a company and asking for "X% of the company". If the company agrees to this, then the legal document better not say you got X% of the employee option pool. That kind of shit is obviously going to ruin your employee's trust, because it's extremely fucking shady. I would immediately get the impression that the company/founders are big scammers.
- dmourati 13y ago
  The book is about VC period. Authors switch sides in perspective throughout. The rookie mistake, covered at length in the book, was not knowing the difference between the cap table, employee options pool, and fully diluted shares. See, e.g., Appendix A.
yourapostasy 13y ago
Only in the business world is this behavior not only acceptable but lauded as commendable, and then some businesspeople wonder why their industry gets such a bad rap. Speaking ss a business owner, this is not how I do business, and my experience is if the stakes are not perceived as extremely high, most business people (especially at the mid-level tiers) do not engage in these "sharp dealings" either. The probabilities of running into this behavior go up very rapidly however, when the value perception goes up. That being said however, I do see this behavior creeping even into settings where I didn't notice it 2-3 decades ago. This tactic only works as long as there is some sink to offload the negative externalities to; that is, everyone else who does not negotiate this way. Developers who are made aware of this "negotiation" style on the other side should make every requirement request an adversarial minimax engagement where they seek to do the least amount of coding for the most profit. Even today, if you pull similar stunts during negotiations where you perform Clintonian-grade-gyrations through the attorneys, or even more minor shady acts, in my small part of the industry people remember that for a long, LONG time. Word gets around. It follows you from employer to employer now, with the better sales tracking we have these days. And where other customers get cut a lot of slack just for being nice, you're going to be fighting for every micrometer of delivered support. Just because once you set a precedent, no one will to want to get caught on the other side of one of your "gotchas". Good on ya if you have the energy for doing that all the time, but I'd rather be using the time more productively myself. Coase's theory of the firm and its subsequent expansions by other researchers would find that when everyone engages in this style of negotiation, transactional costs skyrocket. I've had one customer who was particularly enthusiastic about this style of dealing with vendors. We dumped that account onto a competitor.

micheseco 13y ago

I obviously don't know the details there, but I'd say there's a big difference: Job's developers got the 50% they wanted (and Jobs cut a fair deal with the other company), while the guy you know agreed on something and then got something else. The latter is something that I believe is unethical, as it's changing the cards on the table after making a deal, and not even telling the other party.

andyidsinga 13y ago
but that was my point -- It doesn't sound like the developers got the 50% they wanted at all - the post goes through the math of how it was made to look like 50%.
- micheseco 13y ago
  yeah, but my point was that in this case Jobs didn't change the cards on the table like saying "we agreed on 50% of the revenues, now it is 50% of the profits after tax" (I'm making a random example, hope to make my point), while in the case of the other dev they changed the percentage of the equity to a percentage of the pool of shares for the employees... to me it's kinda different at least ethically