11 ms·

Bravo. More companies that support this trend the better for the rest of us* (the non founders cohort that is). This movement only makes me appreciate the mana

by bobsky 12y ago

Bravo. More companies that support this trend the better for the rest of us* (the non founders cohort that is). This movement only makes me appreciate the management and culture of Pinterest; quite the opposite of the Zynga fiasco [1][2] [1] http://www.cnet.com/news/zynga-to-employees-give-back-our-stock-or-youll-be-fired/ http://www.cnet.com/news/zynga-to-employees-give-back-our-st... [2] http://www.cnet.com/news/zynga-uses-stock-options-to-keep-employees-put-report-says/ http://www.cnet.com/news/zynga-uses-stock-options-to-keep-em...

brandonmenc 12y ago
Zynga clawed back shares from underperforming founding executives, not rank-and-file employees, right? Not that you were, but that episode always seems to be painted as though Pincus were yanking options away from sub-$100k/yr employees in the trenches. disclaimer: I'm not defending Zynga in general, nor am I trying to take the shine off of Pinterest's policy.
- ekanes 12y ago
  Sure, but if an executive is under-performing, you fire them. You don't go back and change their deal.
- skunkworks 12y ago
  Correct. Their lesson was that you shouldn't claw back equity from underperforming executives, you should just let them go.
  - fsk 12y ago
    How do you know they were underperforming? Maybe the board just realized they could get a lot of extra money by looking for an excuse to get rid of them?
    - skunkworks 12y ago
      Your speculative conspiracy theory is plausible, but I work with one of the people who made this decision.
- fsk 12y ago
  I think they clawed back unvested options from many employees, who had unvested options with substantial value. That breaks the implied social contract of a startup. If the company is wildly successful, they'll try to claw back your unvested options, which makes startup equity even less attractive than it would otherwise be. Zygna isn't the only one that did this. Didn't Facebook also do this? (So in a startup, you can be screwed with options in three ways. If the startup fails, your equity is worth zero. If there's a low-value buyout, the common shareholders can get nothing. If the startup is wildly successful, the company will claw back your unvested options. Why join a startup for equity if you're going to get cheated when you hit the 100x home run?) Zygna got what they deserved. With changes to the way Facebook promotes their feeds and the switch to mobile, they lost most of their market. http://blog.sfgate.com/techchron/2013/06/04/why-zynga-is-failing-in-basic-napkin-math/ http://blog.sfgate.com/techchron/2013/06/04/why-zynga-is-fai...
  - rmc 12y ago
    This is the problem with the US's "at will" employment. It affects white collar tech employees too. If you could only be fired for stated misbehaviour (like in the EU), this wouldn't have been possible.
    - eru 12y ago
      But that's why they don't hire in Europe.
      - kbart 12y ago
        Who "they"? As far as I'm aware, all mentioned companies have EU offices too.
        eru 12y ago
        I mean, companies in Europe hire less. If you can't fire people easily, you think thrice about anyone you hire.
  - 12y ago
- jacquesm 12y ago
  Define 'underperforming'. That's about as subjective as it gets.
- deleted 12y ago
  [deleted]
- walshemj 12y ago
  "An injury to one is an injury to all" and if you can do this to board members who will have the wealth to fight this - what would they do to the rank and file.
prostoalex 12y ago
In Zynga case there's no material difference between * asking an employee to give up a certain number of options * firing the employee, making further option vesting impossible By not firing immediately and by not requesting 100% of options be cancelled out, Zynga was actually playing nice. If you were among people affected by that offer, the writing as far as future career prospects at Zynga was on the wall.
- fsk 12y ago
  Firing people to weasel out of paying their unvested options is definitely shady. When those employees were hired, did they tell them "Oh, by the way, if your unvested options wind up being worth a lot more than your fair salary, we're going to threaten to fire you to avoid paying."? If someone had $1M in unvested options, and you ask them to renegotiate for $200k and keep them there as an employee, that's really tone deaf. Do you really think that employee is going to give their best efforts after you just cheated them out of $800k?
  - rmc 12y ago
    Do you really think that employee is going to give their best efforts after you just cheated them out of $800k? Probably not. But you've just saved enough for ~3->5 person years of work. Hire new employees!
    - Turing_Machine 12y ago
      You're assuming that the new employees won't have heard about it. Word gets around, dude. I wouldn't work for such a company unless the alternative were starvation.
      - walshemj 12y ago
        Yep I have passed on even bothering to go to an interview because one of the people on the board was "dodgy"
  - prostoalex 12y ago
dustingetz 12y ago
It's better for founders too if the employees don't get screwed because a portion of the talent is silently passing over equity opportunities for fear of the complexity, and a founder can't even see or measure the talent that silently passes
- woah 12y ago
  Like me! Why can't there be a simpler subset of corporate law? A startup using corporate law that was easy to reason about (like a programming language) would have a huge recruiting advantage.
  - pjc50 12y ago
    So a while ago I read all of the UK Companies Act 1985 with someone when we were trying to work out how to set up a non-profit. It's actually not too complicated and looks remarkably like a programming language for company operations. For example, here's some input validation from the more recent version: http://www.legislation.gov.uk/ukpga/2006/46/section/57 http://www.legislation.gov.uk/ukpga/2006/46/section/57 But the vast bulk of it was clearly exploit prevention "code". You can quite clearly work out what the scam was that caused each of the overly specific rules. This makes it somewhat irreducibly complicated.
    - dustingetz 12y ago
      I wouldn't say its "irreducibly" complicated. Production C code has a lot of exploit prevention code that production code in a higher level language doesn't need.
- ubershmekel 12y ago
  Your comment sounds interesting though I'm not sure I'm following. What can't a founder see or measure? Why would the founder care? For rehire potential?
  - rmc 12y ago
    The founders can't see the talented people who didn't even bother applying for a job at the company, and the talented people who instinctivly ignore "start-ups".

by bobsky 12y ago

brandonmenc 12y ago

Zynga clawed back shares from underperforming founding executives, not rank-and-file employees, right? Not that you were, but that episode always seems to be painted as though Pincus were yanking options away from sub-$100k/yr employees in the trenches. disclaimer: I'm not defending Zynga in general, nor am I trying to take the shine off of Pinterest's policy.

ekanes 12y ago
Sure, but if an executive is under-performing, you fire them. You don't go back and change their deal.
skunkworks 12y ago
Correct. Their lesson was that you shouldn't claw back equity from underperforming executives, you should just let them go.
- fsk 12y ago
  How do you know they were underperforming? Maybe the board just realized they could get a lot of extra money by looking for an excuse to get rid of them?
  - skunkworks 12y ago
    Your speculative conspiracy theory is plausible, but I work with one of the people who made this decision.
fsk 12y ago
I think they clawed back unvested options from many employees, who had unvested options with substantial value. That breaks the implied social contract of a startup. If the company is wildly successful, they'll try to claw back your unvested options, which makes startup equity even less attractive than it would otherwise be. Zygna isn't the only one that did this. Didn't Facebook also do this? (So in a startup, you can be screwed with options in three ways. If the startup fails, your equity is worth zero. If there's a low-value buyout, the common shareholders can get nothing. If the startup is wildly successful, the company will claw back your unvested options. Why join a startup for equity if you're going to get cheated when you hit the 100x home run?) Zygna got what they deserved. With changes to the way Facebook promotes their feeds and the switch to mobile, they lost most of their market. http://blog.sfgate.com/techchron/2013/06/04/why-zynga-is-failing-in-basic-napkin-math/ http://blog.sfgate.com/techchron/2013/06/04/why-zynga-is-fai...
- rmc 12y ago
  This is the problem with the US's "at will" employment. It affects white collar tech employees too. If you could only be fired for stated misbehaviour (like in the EU), this wouldn't have been possible.
  - eru 12y ago
    But that's why they don't hire in Europe.
    - kbart 12y ago
      Who "they"? As far as I'm aware, all mentioned companies have EU offices too.
      - eru 12y ago
        I mean, companies in Europe hire less. If you can't fire people easily, you think thrice about anyone you hire.
- 12y ago
jacquesm 12y ago
Define 'underperforming'. That's about as subjective as it gets.
deleted 12y ago
[deleted]
walshemj 12y ago
"An injury to one is an injury to all" and if you can do this to board members who will have the wealth to fight this - what would they do to the rank and file.

prostoalex 12y ago

In Zynga case there's no material difference between * asking an employee to give up a certain number of options * firing the employee, making further option vesting impossible By not firing immediately and by not requesting 100% of options be cancelled out, Zynga was actually playing nice. If you were among people affected by that offer, the writing as far as future career prospects at Zynga was on the wall.

fsk 12y ago
Firing people to weasel out of paying their unvested options is definitely shady. When those employees were hired, did they tell them "Oh, by the way, if your unvested options wind up being worth a lot more than your fair salary, we're going to threaten to fire you to avoid paying."? If someone had $1M in unvested options, and you ask them to renegotiate for $200k and keep them there as an employee, that's really tone deaf. Do you really think that employee is going to give their best efforts after you just cheated them out of $800k?
- rmc 12y ago
  Do you really think that employee is going to give their best efforts after you just cheated them out of $800k? Probably not. But you've just saved enough for ~3->5 person years of work. Hire new employees!
  - Turing_Machine 12y ago
    You're assuming that the new employees won't have heard about it. Word gets around, dude. I wouldn't work for such a company unless the alternative were starvation.
    - walshemj 12y ago
      Yep I have passed on even bothering to go to an interview because one of the people on the board was "dodgy"
- prostoalex 12y ago

dustingetz 12y ago

It's better for founders too if the employees don't get screwed because a portion of the talent is silently passing over equity opportunities for fear of the complexity, and a founder can't even see or measure the talent that silently passes

woah 12y ago
Like me! Why can't there be a simpler subset of corporate law? A startup using corporate law that was easy to reason about (like a programming language) would have a huge recruiting advantage.
- pjc50 12y ago
  So a while ago I read all of the UK Companies Act 1985 with someone when we were trying to work out how to set up a non-profit. It's actually not too complicated and looks remarkably like a programming language for company operations. For example, here's some input validation from the more recent version: http://www.legislation.gov.uk/ukpga/2006/46/section/57 http://www.legislation.gov.uk/ukpga/2006/46/section/57 But the vast bulk of it was clearly exploit prevention "code". You can quite clearly work out what the scam was that caused each of the overly specific rules. This makes it somewhat irreducibly complicated.
  - dustingetz 12y ago
    I wouldn't say its "irreducibly" complicated. Production C code has a lot of exploit prevention code that production code in a higher level language doesn't need.
ubershmekel 12y ago
Your comment sounds interesting though I'm not sure I'm following. What can't a founder see or measure? Why would the founder care? For rehire potential?
- rmc 12y ago
  The founders can't see the talented people who didn't even bother applying for a job at the company, and the talented people who instinctivly ignore "start-ups".