It’s also absolutely hilarious that his example of finding undiscovered talent at PayPal was by looking at Stanford students. He’s trying to make a point that you should do out of the box thinking on recruiting and his best example is recruiting from the most prestigious university in Silicon Valley. It’s almost difficult to distinguish from satire.
edit: found it, starts about 16:30 in https://www.youtube.com/watch?v=uVhTvQXfibU
tl;dr: Founder shares >>> ISO > NSO >> RSU in terms of risk and reward.
Whatever it was, thank goodness this guy didn't get the memo: https://news.ycombinator.com/item?id=11583480
I'm so tired of this being repeated as if founders choose ISOs to screw over employees, it's flat wrong. ISOs offer the best tax advantages for employees. The 90-day exercise window is a government-imposed thing. If you want it changed, go talk to them.
I'd much rather give an employee an instrument in which they don't have to worry about any taxes at all until they actually want to exercise than have them sign a document they almost certainly don't understand and receive stock they get immediately taxed for and be confused why the IRS taxed them for stock they can't sell and that might end up being worthless.
I've observed many startup founders who are disdainful of employees who leave, ever, for any reason, and definitely don't want them to receive proceeds from any of the company's future successes.
Also - the weird tone about VC's 'enriching themselves' ... when that is 99% of the objective of most employees? People would not work at FAANGS for 1/4 the salary. The money is a 'big deal'.
The power imbalance is probably not the issue. VC's are comped somewhere in the ballpark of 'correct'.
There are zillions of new VC firms every year, capital is cheap - and most of them fail. It is actually competitive.
If there's a systematic bias, it's the immense power of the FAANGS and their ability to hold on to top talent and not always putting them to very good use.
It’s not the VCs, it’s the founders making these calls.
Most VCs have no problems with their companies paying market rate for top talent. It’s usually the founders who think they can extend their runway and minimize their own equity solution by minimizing compensation.
Its often the founders, not the VCs, who try to negotiate for smaller employee equity pools.
Also have you seen this guy's resume? https://en.wikipedia.org/wiki/Keith_Rabois#Business_career Yeah -- he's in no need to take credit for other people's work.
I love taking advice from people like Keith Rabois because you know (unlike 99% of other VCs) he actually has experience building mega-unicorns himself.
“Don’t waste you’re time trying to convince hesitant investors you have a good idea. Find the investors who already know it’s a good idea, and then convince them you’re the team whose going to do it.”
Have found these links to be helpful in understanding the concepts here:
* https://startupclass.samaltman.com/courses/lec14/
* https://www.youtube.com/watch?v=9HGRap1cJ3k&feature=emb_titl...
