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I prefer Wall Street's model of annual profit sharing. VC-istan: you can get dicked out of your bonus for reasons you don't understand (liquidation preferences

I prefer Wall Street's model of annual profit sharing. VC-istan: you can get dicked out of your bonus for reasons you don't understand (liquidation preferences, vesting resets and cliffing) or that are purely political and lose 6 years' worth of expected bonus. Wall Street: you can get dicked out of your bonus for reasons you don't understand or that are purely political and lose 11.9 months' worth of expected bonus. I'd rather have the losses be limited, and have more opportunities for negotiation and revision. Wall Street's system is just better. We may not like that industry, but the facts are clear.

S4M 11y ago
> I prefer Wall Street's model of annual profit sharing. The difference is that Wall Street has profits to share. A standard company has much less profits than Wall Street, and a startup loses money. Find a way to create a company that creates a positive value for the society while having Wall Street like profits, and I can guarantee you will become rich.
- erobbins 11y ago
  > has profits a crazy concept in silicon valley
jalonso510 11y ago
It's perhaps even more clear if you just work in sales rather than engineering for a tech company. Then you have predefined, measurable performance goals and are paid for meeting or exceeding for them each quarter.
- bkeroack 11y ago
  Be careful what you wish for. You might end up with "Scrum" and a de facto "story point" weekly/daily quota.
  - ConfuciusSay 11y ago
    Lines of code. >_<
tptacek 11y ago
You're the second person on this thread to bring vesting (and "cliffing") into the same sentence as liquidation preferences. They seem like totally unrelated concepts. Preferences are a trap (for everyone in the company, founders included): if the company takes money at an ambitious valuation, their investors probably have terms that claw back their money if the company sells for an unspectacular number. Vesting and cliffs are pretty straightforward. You get no equity unless you last a year. You get get your equity in pieces over 4 years. That's pretty much the only sane way for a company to operate, and it's how every well-managed company runs. I'm not sure what you mean by "vesting resets". How do you reset someone's vesting schedule?
- michaelochurch 11y ago
  Vesting resets wouldn't apply to an IPO, but they'd apply to an acquisition where the bought company is paid-for in stock and vesting applies to the new stock. Let's say that the employee has 0.4% (after dilution) of BuzzFlop with a 4-year vesting cycle. After 2.5 years, BuzzFlop is bought by Hooli for $100M in Hooli stock. The employee doesn't get $250k in walk-away cash, but $250k in Hooli stock, subject itself to a vesting schedule (and possibly a "refresher"). If that employee gets cliffed (which can happen in a merger) then none of that stock ever vests.
  - tptacek 11y ago
    I'm confused how that could work. Let's take the same employee but have them leave the company, executing their options, just before Hooli acquires them. How do they end up vesting at all? Are you saying: the vesting schedule on your as-yet unvested stock might reset when the company is acquired? How often does that happen? How often does the exact opposite thing happen --- accelerated vesting on change of control? Because that other thing also happens.
    - guimarin 11y ago
      It happens all the time. More often than not the C-level will get a bonus on employee retention and tie the new stock vesting schedule up with that retention period. They in the meantime are able to immediately get bought out. I think Michael has a very legitimate position here, and one that is not well understood at all. As a side note, I think Netflix' strategy of paying people a lot of money with no stock/rsu's/options is the right one.

S4M 11y ago

> I prefer Wall Street's model of annual profit sharing. The difference is that Wall Street has profits to share. A standard company has much less profits than Wall Street, and a startup loses money. Find a way to create a company that creates a positive value for the society while having Wall Street like profits, and I can guarantee you will become rich.

erobbins 11y ago
> has profits a crazy concept in silicon valley

jalonso510 11y ago

It's perhaps even more clear if you just work in sales rather than engineering for a tech company. Then you have predefined, measurable performance goals and are paid for meeting or exceeding for them each quarter.

bkeroack 11y ago
Be careful what you wish for. You might end up with "Scrum" and a de facto "story point" weekly/daily quota.
- ConfuciusSay 11y ago
  Lines of code. >_<

tptacek 11y ago

You're the second person on this thread to bring vesting (and "cliffing") into the same sentence as liquidation preferences. They seem like totally unrelated concepts. Preferences are a trap (for everyone in the company, founders included): if the company takes money at an ambitious valuation, their investors probably have terms that claw back their money if the company sells for an unspectacular number. Vesting and cliffs are pretty straightforward. You get no equity unless you last a year. You get get your equity in pieces over 4 years. That's pretty much the only sane way for a company to operate, and it's how every well-managed company runs. I'm not sure what you mean by "vesting resets". How do you reset someone's vesting schedule?

michaelochurch 11y ago
Vesting resets wouldn't apply to an IPO, but they'd apply to an acquisition where the bought company is paid-for in stock and vesting applies to the new stock. Let's say that the employee has 0.4% (after dilution) of BuzzFlop with a 4-year vesting cycle. After 2.5 years, BuzzFlop is bought by Hooli for $100M in Hooli stock. The employee doesn't get $250k in walk-away cash, but $250k in Hooli stock, subject itself to a vesting schedule (and possibly a "refresher"). If that employee gets cliffed (which can happen in a merger) then none of that stock ever vests.
- tptacek 11y ago
  I'm confused how that could work. Let's take the same employee but have them leave the company, executing their options, just before Hooli acquires them. How do they end up vesting at all? Are you saying: the vesting schedule on your as-yet unvested stock might reset when the company is acquired? How often does that happen? How often does the exact opposite thing happen --- accelerated vesting on change of control? Because that other thing also happens.
  - guimarin 11y ago
    It happens all the time. More often than not the C-level will get a bonus on employee retention and tie the new stock vesting schedule up with that retention period. They in the meantime are able to immediately get bought out. I think Michael has a very legitimate position here, and one that is not well understood at all. As a side note, I think Netflix' strategy of paying people a lot of money with no stock/rsu's/options is the right one.