So this thread about stock compensation: the answer is that nobody knows what the value of the stock will be. Anybody who claims they know is a liar.
Hiring mgr: "...and our compensation includes 1,000 shares"
You: "How much is that worth?"
Mgr: "blah blah blah blah (implying a lot)"
You: "I'll sell them to you right now, how much are you willing to pay for them?"
Mgr: "(not very much)"
You: "How much is that worth?"
Mgr: "blah blah blah blah (implying a lot)"
You: "I'll sell them to you right now, how much are you willing to pay for them?"
Mgr: "(not very much)"
Like many things in life, most people work on abstract concepts of "what is it worth" when the only measure of worth is the concrete number "what will somebody pay for it".
"4, for the gourde? But it's worth 10!"
"4, for the gourde? But it's worth 10!"
The situation is worse for modern VC companies: the VCs and founders have different terms for their stock than the rest of the employees. This increases the likelihood that employee stock will be worth zero. In other words, "worth" is not only a fiction, but so is "stock".
I'm amazed at talking to people in startups and the way they get screwed out of their stock options even as the founders and VCs make money. It's not underhanded as such -- the terms sheet spelled out exactly how they were going to get screwed.
I had a mildly successful startup back in the day where the employees didn't get screwed. Part of the reason is that we were successful, but also part of the reason was the employees had the same terms as the founders/investors.
Ethics are hard in companies. One way to measure their ethics is by how much the term sheets say you can get screwed. If you can, find former employees of the company and ask how badly they got screwed on options.
There are two sides to every dispute, and everyone is a hero in their own telling of the story, so it's hard to measure how much a disgruntled former employee accurately reflects a company.
How they got screwed in stock options is a better objective measure.
How they got screwed in stock options is a better objective measure.
By "screwed" I mean "relative to everyone else". When you manager's options are in the black and yours are in the red, or canceled altogether, something is amiss. But when the company goes down in value and everyone gets screwed, that's different.
Yea, I suppose I should qualify this, when there are obvious shenanigans at play.
For example, in the first startup where was a junior employee, they wanted to push a founder out, and there was no good way of doing it, except by the trick of devaluing everyone's shares and issuing 10x more shares to match what everyone had before -- except that one founder.
I get it. Sometimes the founder has to go. But they spent years helping build the company. They should walk away with a significant chunk of the value they helped build, not a token amount.
Everyone thinks they should've gotten more. I'm talking about obvious problems where they got essentially nothing despite everyone else getting something, when some clause or loophole is used against them. Clauses that seem rarely invoked are invoked frequently.
