So she did what every HN thread on the matter says, with good reason : focus on your actual job and salary, not on equity that may or may not have some value some day.
Dont get me wrong it appears the reason she ended up with none is not ok, but would that thread have been made if wework had ended up being one of those "failed" startup and those equities never gain any value?
Would she have preferred to get equity but a lower salary (either at that moment, or on further yearly negotiation) if wework had ultimately failed? Or if like here she left long before she could use it?
Don't think about what could have been with such things, equity as a lowly employee at a tech startup is very much like playing the lottery. If you're not directly invested in it such prefer the hard cash of your salary and don't let survivor bias make you regret that one time things could have been.
I think if the options are clear and up front, with the "exchange rate" between equity and salary laid out, what you said holds true. I think the tweeter is generally dissatisfied with how little transparency there was.
But then the fact that it is equity has no weight what so ever in the story, it works the same with regular salary : ask for what you want, evaluate properly your position and worth, negotiate, change job if you genuinely think you're worth more but he won't agree, and don't let your boss be the one in charge alone of deciding what's fair to say you're worth, not when he has vested interest in that being as small as possible and you in it being as big as possible. Your boss is not on your side during your contract negotiation.
Make the story about how they gave automatic raise based on position but she's not in the grid so don't get one and it's even something many have heard. Except maybe she would have reacted and argued more.
It's very common for young people to not understand financial matters like options grants. That doesn't mean it's okay to benefit from their ignorance, especially as the company is now making a large number of people very wealthy.
IMO it's a matter of doing the decent thing over the legal thing. Certainly if I was making a zillion bucks like the boss of WeWork I would find a way to pay the early employees who missed out.
I think it's common for young people to not understand: your employer is not on your side.
You are making a legal contract which your employer is trying to extract a maximum amount of profit from, while passing on risk, and has more experience and understanding of how to negotiate to that effect.
> It's very common for young people to not understand financial matters like options grants
Do you have any recommendations for learning more about that? I recently started working full-time at a tech company and I feel like I also have too little understanding of those things.
I didn't come to it easily myself, and I would have thought my degree would have taught me something, but somehow they gloss over a lot of things in business school.
These days there's a lot more online that you can google. Here's the rough areas of coverage I'd go for:
- Corporate fundamentals. What is limited liability? How do I make a co in my country? What are the different types of co available? (GmbH vs AG, LLP vs Ltd, C-Corp vs S-Corp, Charities?)
- What are the financial and taxation setups? Basically, how are entities related to each other? Can I borrow money from my co? How are dividends treated. This is a thing you want an accountant to tell you, because they know the praxis, not just the headline rules of your jurisdiction.
- Finance. What does capital structure mean? What's the difference between equity and debt? What's the difference between your mortgage and your credit card? What are options and warrants? (I spent years trading vol, still there are differences between listed options and employee ones, esp wrt tax). What do junior and senior mean? What are preferred shares, and what are convertible bonds? Since we're talking here, HN people have written a load of articles about SAFE notes and similar. They are quite good about also explaining what your interest is in these situations, because it's often not obvious to a newbie.
Interesting article from a couple of days ago was about Toptal. Those kinds of articles should be read.
Venture Deals (by Brad Feld) provides a great overview of startup finance matters. It is intended for founders and covers things other than employee equity. It’s an extremely useful read because it provides a holistic overview of the overall fundraising process and enables one to think about equity in a systematic way.
I started getting a “wrong pay” by a shark in Luxembourg, I was unhappy. But then, if you asked compensation for now knowing how to negociate this contract, how do you know how to negociate a contract for nuclear weapons or for the biggest commitment of your company?
You don’t. You never do. The only correct way is to repeat. And thus, if you sell billion dollar contracts, go lower and do it more often, never go for the biggest ever. Or at least, progress step by step, so you know most of the major tricks. But if a major contract is your biggest ever by a multiple, then you’ll always br cheated on tricks you don’t know yet. And on smaller contracts you’ll cheat the weaker person. Don’t abuse it, but it’s part of the contract theory.
Her personal story aside, which I can imagine must feel a bit bitter, I am of the opinion that equity should only ever be given to employees who have a crucial and direct impact on the success of a business. If I join as a COO into an early startup then I take risks, play a crucial role in it's evolution and therefore deserve some equity to incentivise the best performance I can do. However, if I'm an account, even if I'm employee no 2 I would never expect equity. Doing accounts is not crucial and has nothing to do with the actual startup itself. If they pay a normal salary for an accountant then any accountant could just take that job and replace me. Why should the business owners who must have taken huge risks themselves ever give a piece of their hard earned cake to an accountant? Doesn't make sense, they get a fair salary for their work and that is all they deserve.
So there's always two sides to everything. Not everyone always deserves what others have. That's a common misconception today where everyone looks for reasons to claim how they've been treated unfairly.
This comment is so horribly wrong that it's hard to know where to start.
1. "Doing accounts is not crucial". Um, yes it is. Doing accounts is very, very important. They are a way of understanding the truth of your business, keeping your cash under control, satisfying legal obligations.
2. "If they pay a normal salary for an accountant then any accountant could just take that job and replace me". People are not interchangeable. A good accountant (one who is competent at their job) is your table stakes, after that you have to consider how well that person works with others and how they contribute to the culture of the company. A start up is not about the visionaries or engineers it's about an entire team that makes a company grow and work well together. Viewing an accountant is not contributing to the company culture is not just plain dumb.
3. Also, accounting is way more than just filling in a spreadsheet. When you look at the effect of AR and AP on the business you quickly realize that this stuff matters.
4. Everyone in a startup could go somewhere else. And everyone is taking some level of risk (e.g. they could have gone to a more stable company that provided better long term job prospects). Everyone deserves to participate in the risk/reward.
So, reward people that you want to stick around at the company. Give everyone some equity, given everyone some upside. A business owner who sees someone like an accountant as a drone doing a job for pay is missing out on the larger picture of building a healthy company for the staff and getting the best from that person.
A startup is a huge risk regardless, so if I take a job at at a startup I want to be compensated for the risk. Even if I’m cleaning it fetching coffee. That doesn’t have to be equity but pay needs to be better than if I took the same job at the megacorp across the street, because the risk of suddenly being without a job when the company goes bankrupt is much smaller.
If its true that everyone else at the company got options but her thats pretty upsetting. If she was reporting directly to the COO and they had a good working relationship then that person should have fought for an exercise grant or eliminated the position.
I fail to see her point. There’s always lack of transparency in equity allocation. If there exist a startup with a transparent cap table, that’s surely exceptional.
Equity is like a superpower in negotiation with employees. Because it is zero sum among them, it neutralizes collective bargaining—the most effective form of negotiation they have.
So it’s not as black and white as, she should have done this or that differently, or someone should have made this or that disclosure or even helped her out. Equity is pretty magical in how it makes people misbehave and turn on each other.
And feeling mad that she got a raw deal is the right emotion here.
I think she does come off as entitled. I also think she has every right to feel that way. #17 is really early. I'd go so far as to say she deserved it.
It feels like ops people are generally under-appreciated in tech.
I understand this person is upset and likely bitter, but claiming that she remained "naive" about options after 4 years in a startup, when they started granting them (tweet #15), looks rather odd to me. There's gotta be more to the story than written.
Dont get me wrong it appears the reason she ended up with none is not ok, but would that thread have been made if wework had ended up being one of those "failed" startup and those equities never gain any value?
Would she have preferred to get equity but a lower salary (either at that moment, or on further yearly negotiation) if wework had ultimately failed? Or if like here she left long before she could use it?
Don't think about what could have been with such things, equity as a lowly employee at a tech startup is very much like playing the lottery. If you're not directly invested in it such prefer the hard cash of your salary and don't let survivor bias make you regret that one time things could have been.
reply