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0 pointsIftheshoefits11y ago0 comments

That may be standard, but it's entirely not in the interests of any employee to play the game. The founders' and investors' beliefs regarding "skin in the game" are missing one key component: the reduced salary one takes at a startup. That reduced salary is skin in the game, as is the acceptance of risk by agreeing be compensated in equity in the first place.

I don't object to 4-year vesting. I don't object to cliffs, either, per se. But I wouldn't consider being treated that way for such a tiny stake as 1%.

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aetherson11y ago

I think that people talk past each other a lot, and part of it is understanding that 1% is not 1%.

Like, if I'm joining a company that has started to get traction, is well-funded and pays me say 80-90% what Google would pay me, and is likely to either fail or experience a monetization event in the next 3-5 years, and I get 1% of that company, holy shit guys that's amazing. Maybe still overall less compensation than Google would've given me, but more likely to change my life.

If I'm part of the founding team of a company with no product out right now, that's paying me 20-50% of what Google would pay me, and any monetization event is clearly 7+ years off, 1% is a lot less exciting for four different reasons: 1. Obviously I'm giving up more salary. 2. Payout is less likely. 3. Payout even if it happens is farther away. 4. (Crucially) My stake is very likely to be much further diluted before any monetization events.

If you ACTUALLY get 1% of the monetization of any reasonably successful company, you're probably doing pretty damn well. A medium-sized acquisition at $300 million, 1% of that is $3 million. 1% of WhatsApp would've been around $200 million. 1% of Facebook would've made you a billionaire.

Trying to get more than a genuine 1% isn't very important. Trying to figure out what the percentage that they quote you in your job hire process will turn out to be during a monetization is very important.

harryh11y ago

This is the best comment in this entire thread. People see 1% and immediately think small when that is not, in fact, the case.

They have almost never thought through the fact that it generally takes a lot of people to build a successful company so that 100% needs to get divided up into a lot of little pieces.

IftheshoefitsOP11y ago

It's pretty tiny when the expectation is that one will be treated like a regular employee with respect to compensation and benefits but expected to behave like a 20% (or more)-equity founder with respect to passion and (especially) effort.

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