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It's amazing to me what companies will stick in these contracts, and how deep down the rabbit hole they'll stick it. It's their stock to do it with, of cours

It's amazing to me what companies will stick in these contracts, and how deep down the rabbit hole they'll stick it. It's their stock to do it with, of course, but it's just annoying that seemingly employee-centric companies will do such seemingly abusive things. For example, I've seen instances of sale restrictions being four contracts deep (e.g., "shall be governed by (x) agreement", and that agreement says "shall be bound by terms in (y)", and so on) in an agreement that employees were only ever officially given a draft version of but apparently still held as effective. It should have never been signed of course, but the obtuse nature and comforting language these things are couched in can be confusing. At the same time, it's also unfortunate that people don't do research to look at other instruments for liquidity (like pre-paid forward transactions) that the restraining company has zero control over. In Uber's case though, it seems like they're actually paying on the up-and-up. Many companies intentionally deflate the fair market value of shares far, far below the actual valuation (like 1/25th the value paid by investors in the last round, for example), so offering to sell at what the investors paid in at is pretty decent. Private equity is confusing and usually doesn't work in your favor. My general advice is to always appreciate it, but never depend on it as part of your compensation in any way (and Good Lord, don't bank your retirement on it!).

pjc50 12y ago
never depend on it as part of your compensation in any way This is very true. I've been in the position of having worthless share options before. It's something everyone who's tempted to work 80 hour weeks because they have share options should remember. You should also remember the Google cook, who had $200m in options that the company tried to do him out of because he wasn't a developer.
- simulate 12y ago
  Are we talking about Charlie Ayers, the Google Cook? He earned $26 million from his options, not $200 million. He also had over 150 employees and 5 executive chefs reporting to him. He did well and was fortunate but he also wasn't just some guy in a lunch room preparing cafeteria food. EDIT: There is a nice description of Ayers in wikipedia: http://en.wikipedia.org/wiki/Charlie_Ayers http://en.wikipedia.org/wiki/Charlie_Ayers
  - malandrew 12y ago
    Exactly. Bean counters and penny pinchers will never fully realize the value of someone like that. He kept people well fed, with healthy options that let them spend more time socializing with their peers and getting back to their desks to code. The alternative is having people waste time in traffic commuting to the dearth of eating options (many of which are far less healthy. many engineers left to their own devices don't choose the healthiest options) near the Google campus. There is no doubt that Google got their $26 million worth in the productivity he accreted to his fellow employees in those early days.
    - deleted 12y ago
      [deleted]
- georgemcbay 12y ago
  "the company tried to do him out of because he wasn't a developer" Is this true? Serious question because I've never heard that before (quite the opposite, I've only heard other early Google employees defend him from external sources as being, if anything, (relatively) undercompensated). Anyway, the point stands, being a lowly common stock holding employee is a lottery that you can lose on in an infinite number of ways even if the company is wildly successful, which is already a huge longshot. If you get a bunch of money from it, great; but you certainly shouldn't rely on it to pay off anything.
- paul 12y ago
  That is totally false -- Google did not rip off Charlie. You're confused by the idiots at zynga who thought that a chef making money was a bad thing.
- oh_sigh 12y ago
  You're probably thinking of the Zynga execs forcing stock buybacks because they didn't want any "Google Chef" millionaires.
  - tptacek 12y ago
    Not wanting to turn your secretaries, groundskeepers, cooks, and security guards into millionaires is a mindset I have a hard time understanding. Isn't that the very measure of a breakout success?
- danielweber 12y ago
  If you don't have a seat in the board room, assume your options -- or even the stock you outright own -- is worth zero. They'll dilute you in a heartbeat. I once asked the CEO about how the current dilution round was going to affect people who had exercised and left the previous year, and was told that they were no longer moving the company forward.
mikeryan 12y ago
My general advice is to always appreciate it, but never depend on it as part of your compensation in any way (and Good Lord, don't bank your retirement on it!). If thats the case why would talented folks work for a startup? Go work for Facebook or Google...
- Iftheshoefits 12y ago
  People who work for startups under conditions like these do it for a variety of reasons that have little to do with compensation in the near or medium term (even if they mistakenly believe they are being compensated fairly).
  - mikeryan 12y ago
    Yes but that long term compensation is pretty much entirely based around equity grants which the Parent poster is recommending never to depend on.
    - jeremymcanally 12y ago
      IMO, if you're savvy with your opportunity costs in your life (i.e., your time and whatever money you receive for it), you should never, ever accept ethereal long-term "gains" in lieu of immediate compensation. Your time investment is very real and concrete and spending it is irrevocable, and no matter how it's a "sure thing," equity in anything never is. There are far too many variables at play that you have zero control over. The founders could screw you over. You could get acqui-hired except you aren't part of the new team. The market conditions for your startup could turn out to be less than favorable. When it comes time to exercise your options, your shares could be heavily restricted and never be able to be sold or transferred. Investors could dilute the crap out of your shares to the point that you've actually lost money on the deal (which happens VERY often). Why waste a non-renewable resource like your life on something that very, very, very likely will yield you nothing? More concretely, I would never accept a below market salary in exchange for equity in anything. I don't understand this practice. I will take equity as bonuses, perks, and so on, but I never factor it into my compensation considerations. Perhaps I'm at the place in life where risk doesn't attract me, but to me it's a foolish move even at 20 or whatever age it's apparently appropriate. Take the real money and go buy lottery tickets. Your chance of success to become fabulously wealthy is about the same. Better yet, put it in a well-performing retirement account and guarantee yourself a bundle of money a little later in life. Why make yourself an underpaid, overworked slave for someone to make a few bucks when you could live a healthy, more comfortable life and have the same end game more reliably? (And yes I know some people crave that sort of work environment, but I think those people are mentally ill ;)) I'm not saying you're a bad person if you prefer this situation or whatever. I just don't understand it, very likely never will understand, and at this point in life, have no interest in trying. :) I think there are a lot of people like me, though, who arrived at that conclusion the hard way by working their tails off for years and getting nothing in return, and then when it's over, looking back and seeing their mistakes in "taking the deal" so to speak.

pjc50 12y ago

never depend on it as part of your compensation in any way This is very true. I've been in the position of having worthless share options before. It's something everyone who's tempted to work 80 hour weeks because they have share options should remember. You should also remember the Google cook, who had $200m in options that the company tried to do him out of because he wasn't a developer.

simulate 12y ago
Are we talking about Charlie Ayers, the Google Cook? He earned $26 million from his options, not $200 million. He also had over 150 employees and 5 executive chefs reporting to him. He did well and was fortunate but he also wasn't just some guy in a lunch room preparing cafeteria food. EDIT: There is a nice description of Ayers in wikipedia: http://en.wikipedia.org/wiki/Charlie_Ayers http://en.wikipedia.org/wiki/Charlie_Ayers
- malandrew 12y ago
  Exactly. Bean counters and penny pinchers will never fully realize the value of someone like that. He kept people well fed, with healthy options that let them spend more time socializing with their peers and getting back to their desks to code. The alternative is having people waste time in traffic commuting to the dearth of eating options (many of which are far less healthy. many engineers left to their own devices don't choose the healthiest options) near the Google campus. There is no doubt that Google got their $26 million worth in the productivity he accreted to his fellow employees in those early days.
  - deleted 12y ago
    [deleted]
georgemcbay 12y ago
"the company tried to do him out of because he wasn't a developer" Is this true? Serious question because I've never heard that before (quite the opposite, I've only heard other early Google employees defend him from external sources as being, if anything, (relatively) undercompensated). Anyway, the point stands, being a lowly common stock holding employee is a lottery that you can lose on in an infinite number of ways even if the company is wildly successful, which is already a huge longshot. If you get a bunch of money from it, great; but you certainly shouldn't rely on it to pay off anything.
paul 12y ago
That is totally false -- Google did not rip off Charlie. You're confused by the idiots at zynga who thought that a chef making money was a bad thing.
oh_sigh 12y ago
You're probably thinking of the Zynga execs forcing stock buybacks because they didn't want any "Google Chef" millionaires.
- tptacek 12y ago
  Not wanting to turn your secretaries, groundskeepers, cooks, and security guards into millionaires is a mindset I have a hard time understanding. Isn't that the very measure of a breakout success?
danielweber 12y ago
If you don't have a seat in the board room, assume your options -- or even the stock you outright own -- is worth zero. They'll dilute you in a heartbeat. I once asked the CEO about how the current dilution round was going to affect people who had exercised and left the previous year, and was told that they were no longer moving the company forward.

mikeryan 12y ago

My general advice is to always appreciate it, but never depend on it as part of your compensation in any way (and Good Lord, don't bank your retirement on it!). If thats the case why would talented folks work for a startup? Go work for Facebook or Google...

Iftheshoefits 12y ago
People who work for startups under conditions like these do it for a variety of reasons that have little to do with compensation in the near or medium term (even if they mistakenly believe they are being compensated fairly).
- mikeryan 12y ago
  Yes but that long term compensation is pretty much entirely based around equity grants which the Parent poster is recommending never to depend on.
  - jeremymcanally 12y ago
    IMO, if you're savvy with your opportunity costs in your life (i.e., your time and whatever money you receive for it), you should never, ever accept ethereal long-term "gains" in lieu of immediate compensation. Your time investment is very real and concrete and spending it is irrevocable, and no matter how it's a "sure thing," equity in anything never is. There are far too many variables at play that you have zero control over. The founders could screw you over. You could get acqui-hired except you aren't part of the new team. The market conditions for your startup could turn out to be less than favorable. When it comes time to exercise your options, your shares could be heavily restricted and never be able to be sold or transferred. Investors could dilute the crap out of your shares to the point that you've actually lost money on the deal (which happens VERY often). Why waste a non-renewable resource like your life on something that very, very, very likely will yield you nothing? More concretely, I would never accept a below market salary in exchange for equity in anything. I don't understand this practice. I will take equity as bonuses, perks, and so on, but I never factor it into my compensation considerations. Perhaps I'm at the place in life where risk doesn't attract me, but to me it's a foolish move even at 20 or whatever age it's apparently appropriate. Take the real money and go buy lottery tickets. Your chance of success to become fabulously wealthy is about the same. Better yet, put it in a well-performing retirement account and guarantee yourself a bundle of money a little later in life. Why make yourself an underpaid, overworked slave for someone to make a few bucks when you could live a healthy, more comfortable life and have the same end game more reliably? (And yes I know some people crave that sort of work environment, but I think those people are mentally ill ;)) I'm not saying you're a bad person if you prefer this situation or whatever. I just don't understand it, very likely never will understand, and at this point in life, have no interest in trying. :) I think there are a lot of people like me, though, who arrived at that conclusion the hard way by working their tails off for years and getting nothing in return, and then when it's over, looking back and seeing their mistakes in "taking the deal" so to speak.