zlacker

As I say over and over again: equity compensation from a non-publicly traded company should not be accepted as a surrogate for below market compensation. If a startup wants to provide compensation to employees via equity, then those employees should have first right to convert equity to cash in funding rounds or sale, there shares must be the same class as any other investor, because the idea that an “early employee” is not an investor making a much more significant investment than any VC is BS.

I feel that this particular case is just another reminder of that, and now would make me require a preemptory “no equity clawbacks” clause in any contract.

>>olliej+(OP)
Totally agree. For all this to work there needs to also be transparency. Anyone receiving equity should have access to the cap table and terms covering all equity given to investors. Without this, they can be taken advantage of in so many ways.

>>olliej+(OP)
I always say in that the biggest swindle in the world is that in the great 'labor vs capital' fight, capital has convinced labor that its interests are secondary to capital's. this so much truer in the modern fiat-fractional reserve banking world where any development is rate-limited by either energy or people.

>>DesiLu+W6
why downvote me instead of actually refuting my point?

>>DesiLu+Ht
HN is filled with startup bros (who want to screw the actual employees), VC adjacent brow (who want to screw the startup bros), and people who signed up for massively discounted compensation in the form of “equity” that cannot be converted into cash and can be stolen and/or devalued by the people running the business, and so acknowledging this means acknowledging the folly.

Working for a startup is inherently risky, but it’s not gambling because in gambling you can estimate the odds, and unlike gambling the odds cannot be changed after you win. Any employment contract that does not allow equity cash out at the price from the last funding round, or allows take backs, is worse than gambling, and founders that believe contracts that don’t provide those guarantees are reasonable are likely malicious and intending on doing that in future.

I do not understand a mentality that says “as a founder I should be able to get money out of the business but the people who work for me, who are also taking significant risk and below market compensation should not be permitted to do that”

>>olliej+8n7
I couldn't have said that better. I have seen this exact thing happen multiple times in startups, where you only really have a chance to make money if you are a founder or join really early on & hope that there is a good exit. as a regular or even senior employee you not only are helpless but also have to mentally deal with sunk cost fallacy. the problem is you (non founder) never gets rewarded for the significant risks you took working there. In investing world this is labelled uncompensated risk. which employees mostly take.