[HN Gopher] Mailchimp insiders react to employees getting no equ...
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Mailchimp insiders react to employees getting no equity from Intuit
sale
Author : lemoncucumber
Score : 453 points
Date : 2021-09-17 03:59 UTC (19 hours ago)
(HTM) web link (www.businessinsider.com)
(TXT) w3m dump (www.businessinsider.com)
| endofreach wrote:
| I wouldn't give up on equity if i didn't plan to sell. Because
| that could lead to others wanting to sell their equity and me
| losing control.
|
| I mean when you start a newsletter company, do you really think
| you would sell it for 12B?
|
| Don't forget it means they didn't try to sell at: - 1 million USD
| - 10 million USD - 100 million USD - 1.000 million USD - 5.000
| million USD - 10.000 million USD
|
| How many non-founder equity holders who are ,,just working a job"
| would not have tried to sell their equity at an earlier
| evaluation?
|
| Assuming they really did not want to sell, honestly, 12B for a
| newsletter tool seems worth changing your mind.
| hellisothers wrote:
| Honestly it could be worse, I worked at a company that gave
| equity and years later it came out that the founders never
| intended to sell or take VC money. In that case employees "took
| below market salaries" thinking the stock is worth something but
| in reality it's worthless. At least in this Mailchimp situation
| if you're not getting equity I assume you're happy with your cash
| comp, I'd you're not, that doesn't make sense.
| aero-glide2 wrote:
| Blue Origin does something similar. I haven't seen indications
| it will ever go public.
| nextlevelwizard wrote:
| Yeah, if you don't intend on selling then you should say so and
| not offer equity so the employees can make a better decision.
|
| Things may change and you might sell after all, but that is not
| "withholding" anything, that is just things changing.
|
| I can only imagine this story was spun by employee who saw the
| founders selling and getting bunch of money and now think they
| should have reaped some of the benefits.
|
| Money and greed make people stupid.
| bjourne wrote:
| > I can only imagine this story was spun by employee who saw
| the founders selling and getting bunch of money and now think
| they should have reaped some of the benefits.
|
| Perhaps they should have. After all, without the employees'
| help Mailchimp wouldn't have been worth 12 billion today.
| eru wrote:
| That's what salary is for.
| nextlevelwizard wrote:
| Founders of a company carry the risk. If you want to reap
| the benefits then you need to start a company. That is the
| risk and reward.
|
| It is sad when people see others succeed and get angry.
| nimih wrote:
| _All_ employees at a startup carry substantial risk. If
| you 're working as a customer service rep at a startup
| which folds, you in all likelihood don't have the
| connections or financial stability that the founders and
| software engineers and data scientists and scrum masters
| have to gracefully transition to another job. If you're
| planning on having a kid, losing your job 3 weeks before
| you expected to be able to take paid parental leave is
| going to really throw a wrench in the works. &c &c
| sokoloff wrote:
| That CSR's work is worth a certain amount. The discussion
| is whether that amount best serves the CSR if paid all in
| cash or divided into a mix of cash and equity. In
| Mailchimp's case, they were clear that it was all cash
| and no equity and I suspect that was the preference of
| the CSRs as well.
| rocqua wrote:
| I don't like the argument I am about to make when used to
| attack minimum wage, but I think it applies here.
|
| When you accepted the job, you knew the terms. Those
| included not getting equity, and those included carrying
| some risk with known reward.
|
| I don't see how the owners selling retroactively makes
| the risk-reward balance different. Unless you consider it
| a risk/downside that someone else gets a windfall and you
| don't get to share. That seems silly to me tho. How rich
| someone else is does not affect how much money I need to
| live, with a few exceptions (inflation, friends, power
| dynamics in pre-existing relationships).
| ryandrake wrote:
| > How rich someone else is does not affect how much money
| I need to live, with a few exceptions (inflation,
| friends, power dynamics in pre-existing relationships).
|
| Many people cannot afford to even own a home in the Bay
| Area _because_ everyone else around is so rich. Relative
| wealth is important because "other rich people" drive up
| prices of everything, from housing, to groceries, to
| health care.
|
| If my salary doesn't change, but the people around me get
| a 10% raise, my buying power decreases.
| stagger87 wrote:
| Genuine question, what's the risk? Usually owners aren't
| liable for corporation debt, which I would imagine
| reduces financial risk, are there other types of risk?
| andrewingram wrote:
| From what I recall, the service was spun out of another
| company though, it didn't become its own thing before it
| was profitable. There was some origin risk in the
| original business, but MailChimp itself was arguably a
| low risk endeavour on the part of its founders.
| maxmamis wrote:
| and what risk is that? if the company goes under, they
| need to get a job like everyone else. the only "risk" is
| that they no longer get to be the big boss. cry me a
| river.
|
| meanwhile they get to reap (in this case) 100% of the
| rewards from everyone else's hard work. if that doesn't
| make you angry, perhaps you should reevaluate whose
| interests your ideology serves.
| bobthechef wrote:
| Not responding to the article or the good or bad of it
| (frankly it bores me), but this is a strange view of
| "success". There's this strange malaise where people see
| something like this as their aim in life: to sell to some
| other guy for the big bucks as if this buyout was "the
| success" and as if this inducted then into Valhalla. It's
| the mysticism of money.
|
| Apart from that, if people were serious about not
| selling, they'd make employees meaningful shareholders.
| Salary entails zero loyalty and zero stake in the company
| on the part of the employee. In the latter case, why
| would you believe that they wouldn't sell? That's what
| people do.
| WastingMyTime89 wrote:
| Then again, it seems Mailchimp was always clearly
| communicating to their emplyees that they didn't give
| equity and offered great compensation so no one was
| actually fooled.
| bjourne wrote:
| Regardless, Mailchimp's engineers still sold their labour
| for way below its value, whether they were fooled or
| coerced.
| nextlevelwizard wrote:
| In what way? If they knew they didn't have equity and
| still took low paying job then that is 100% on them.
| bjourne wrote:
| Why would any rational person sell their labour for way
| below its value if they weren't either coerced or fooled?
| CryptoBanker wrote:
| Not everyone acts or is able to act rationally all the
| time
| ampersandy wrote:
| They wouldn't -- and Mailchimp employees didn't. The
| market value of your labour is what you can get a company
| to pay you.
|
| The hypothetical market value of employees in a world
| where Mailchimp did offer equity and employees stuck it
| out to reap that upside doesn't exist, so arguing the
| point makes no sense.
| bjourne wrote:
| The value of one's labour is the value it generates - not
| what anyone is willing to pay for it. The value of the
| cumulative labour of Mailchimp's engineers is $12 billion
| which vastly exceeds the amount it was sold for.
| WastingMyTime89 wrote:
| > The value of the cumulative labour of Mailchimp's
| engineers is $12 billion
|
| No, that's the value of MailChimp as a company. That
| includes the product, the branding, the management and
| the customer base.
|
| > The value of one's labour is the value it generates -
| not what anyone is willing to pay for it.
|
| The market value of anything is exactly the value that
| anyone is willing to pay for it and that's the only value
| that actually matters in this case. No one knows the
| exact value that anyone specifically contributes on a
| large project. How much of MailChimp value is due to its
| engineers and how much is due to its sales team? The only
| thing sure is how much the company agreed to pay its
| emgineers and that didn't include equity.
|
| If you want to own parts of the company you work for, go
| work for a company giving equities. If you work for a
| company which doesn't, you are not entitied to a part of
| the company value when it's sold. That's literally the
| meaning of being an employee.
| bjourne wrote:
| > No, that's the value of MailChimp as a company. That
| includes the product, the branding, the management and
| the customer base.
|
| How did all these valuables come into existence? Through
| the employees labour. Thus the value of this labour must
| be equal to the value of these assets.
|
| > The market value of anything is exactly the value that
| anyone is willing to pay for it
|
| I never used the term "market value". Sorry if that is
| what you thought I meant, despite that I didn't use the
| term. And no, market value is not the only or the best
| way to measure value.
| ampersandy wrote:
| > The value of the cumulative labour of Mailchimp's
| engineers is $12 billion which vastly exceeds the amount
| it was sold for.
|
| Yes, that's how employment works. Companies do not pay
| you exactly the same $$ you generate, that's just common
| sense? Why would they employ you if you cost just as much
| profit as you generate?
|
| The question here is whether Mailchimp _exploited_ its
| employees by not offering equity. Unless an employee was
| lied to and told they might later receive equity, they
| all joined under the assumption that they were making a
| mutually beneficial agreement, and that the compensation
| offered by Mailchimp was worthwhile (as opposed to going
| and starting their own company or working for another
| startup that offered equity).
|
| Every Mailchimp employee was welcome to start their own
| company if they wanted to capture 100% of the profits
| they generated.
| bjourne wrote:
| > The question here is whether Mailchimp _exploited_ its
| employees by not offering equity.
|
| No. The question is whether Mailchimp's employees would
| have worked for Mailchimp had they had a completely free
| choice and good knowledge of the value of their labour
| (e.g. valuation of the company).
| elif wrote:
| MC paid me way above value. My friends moved to SF and
| still rent and live paycheck to paycheck.
|
| MC paid off my house in 4 years, and I retired after
| another 4.
| WastingMyTime89 wrote:
| > for way below its value
|
| I fail to see how. If you are compensated at the market
| value of your work, that seems fair and Mailchimp gave
| generous compensation.
|
| You could argue that the gap between wages and capital
| gain has become too big, a point on which we will be in
| agreement but to be honest with you, I think the
| surprising part is that someone would want to pay 12
| billions for a company with $700 million of revenue.
| Still I have found the market to be surprising for a long
| time so maybe it's time I reassess my expectations.
| Aeolun wrote:
| > I think the surprising part is that someone would want
| to pay 12 billions for a company with $700 million of
| revenue
|
| Since the founders didn't really want to sell, they
| probably had to up their offer into ridiculous range.
| OJFord wrote:
| If they hadn't sold, it'd still have a market value of (at
| least) $12B, and the employees still wouldn't have a claim
| to any of its assets or earnings.
| sangnoir wrote:
| > Yeah, if you don't intend on selling then you should say so
| and not offer equity so the employees can make a better
| decision
|
| What's wrong with offering equity and staying private? I
| don't see any deception there - say if Valve gave equity to
| it's employees, that'd be perfectly fine.
| spoonjim wrote:
| Because the founders likely won't issue any dividend
| distributions, they'll just likely borrow against their
| holdings for decades or even until the end of their lives.
| [deleted]
| nextlevelwizard wrote:
| It would be perfectly fine, but if you join a company A
| because they offered equity instead of company B which
| offered more money BECAUSE you wanted the equity to
| materialize, but the founders never intended to sell, then
| you are taking objectively worse offer because you were
| under the impression equity meant something.
|
| Of course any company can give out equity to their
| employees, but if it never turns into money then who cares?
| IneffablePigeon wrote:
| Equity is always worth _something_ if the company doesn't
| fail. At some point investors want to make some money
| back, whether that's through a sale of some sort or just
| through dividends.
|
| I do agree those are quite different beasts and you want
| to have an idea of the relative likelihoods if you're
| making a decision based on them.
| eru wrote:
| > [...] or just through dividends.
|
| What if the company never pays dividends?
| id5j1ynz wrote:
| Like Google?
| Aeolun wrote:
| Equity in some companies means actual voting power,
| especially when one party doesn't retain 50%+ control.
| LanceH wrote:
| Minority equity in a company means nothing.
|
| Let's vote on the $20mil bonus to the CEO or distribute
| it amongst the owners of the company. Oh, the CEO (and
| majority owner) gets it all.
| 55555 wrote:
| Dividends are taxed at a lower rate than salary and other
| forms of ordinary income. If a company has surplus money,
| it should eventually be remitted to the equity holders as
| dividends. I guess it doesn't need to be, though.
| MichaelZuo wrote:
| Unless the CEO literally owns >50% I don't see how it
| means 'nothing'. Voting blocs come and go I imagine,
| that's definitely something.
| jacobr1 wrote:
| Employee options pools tend to be maintained at 10-15% of
| the company. Unless you are a cofounder, very-early
| employee, or recruited-big-exec in a growth phase, your
| equity, AND importantly, ALL the equity from your
| employee peers sums to less than whatever the
| VCs+Founders want. Ideally your interests are aligned,
| and any gain they get your share-in (albeit in a much
| smaller amount). But things like preferred shares getting
| liquidation preferences screw with this calculous, as to
| differing investment horizons.
| MichaelZuo wrote:
| When any of the above mentioned have disagreements, won't
| they try to recruit support from the remaining
| shareholders?
| ab_testing wrote:
| Almost all equity given to employees is a totally
| different class of shares than held by the founders.
| nextlevelwizard wrote:
| What company gives out >50% of their company to their
| employees?
| cascom wrote:
| I completely disagree. Equity ownership in private companies
| can be a fantastic thing, and create tremendous wealth, even
| with no contemplated liquidity event.
|
| Just ask partners in law firms or consultancies, or ask
| yourself if you'd like to own stock in Cargill, IKEA, Mars,
| Brown Brother Harriman, Bloomberg, Chik-fil-a, fidelity, etc.
| pavlov wrote:
| If the private company is set up with the culture and
| explicit governance that makes sure minority shareholders
| get a cut of profits, then sure.
|
| But the average private tech company isn't like that.
| There's probably 2-4 founders who pay themselves
| extravagant salaries and control all voting shares.
| Minority equity never gets a payday.
| somethingAlex wrote:
| The type of consultancies and firms which actually pay out
| profit based on equity are usually LLP's / partnerships
| (part of the reason why "Partner" is a title in finance,
| law, etc.
|
| Tech companies are usually corporations (often C corps in
| the startup world.) What equity gets you in the two
| scenarios is completely different.
| martincmartin wrote:
| Can you sell the stock on a secondary market?
| istinetz wrote:
| > the stock is worth something but in reality it's worthless
|
| What? How is it worthless? When they distribute profits, you'll
| get your share of them, or you can sell the stock to someone
| else.
| Voloskaya wrote:
| Most startups don't offer dividends, even when they do it
| doesn't amount to much, and if they indeed never
| sell/IPO/raise a new round, then you have basically no way to
| sell your stock, so it's indeed pretty much worthless. Only
| other way to sell would be with approval of the board, but
| even assuming you get it, who would buy that?
| majani wrote:
| Stock and dividends are two separate agreements. One does not
| automatically guarantee the other
| [deleted]
| joshyeager wrote:
| In a privately-held company, you usually can't sell your
| stock without approval (from the board, a shareholder vote,
| or some other mechanism). That generally makes it quite
| difficult to sell.
|
| Dividends are the main source of value from stock in a
| company that doesn't plan to sell. But dividends are also
| determined by the board. In a closely-held company, the
| majority owners may also be the board, and they may prefer to
| leave the profits in the company or take them out a different
| way.
|
| "Worthless" is an extreme characterization, but the value you
| receive from owning a minority amount of private stock is
| much less predictable and controllable than publicly-traded
| stock.
| jrs235 wrote:
| You are correct. I was going to post a similar response.
|
| Regarding worthlessness: I suppose some might place some
| value on access to company financials.
| mcintyre1994 wrote:
| An interesting angle I saw on this is that usually a $12b exit in
| a city mints a bunch of new multimillionaires, many of them
| decide to stay in the area and some of them become angel
| investors in the area and boost the local startup environment. So
| it might suck for other entrepreneurs in the area that there
| aren't a bunch of new angel investors now - just a few new
| billionaires.
|
| On this story though, as long as it's clear to both parties what
| the deal is, I think it's fine to either offer or not offer
| equity. And a promise not to sell is obviously meaningless unless
| the corporate structure somehow enforces it.
| xwdv wrote:
| I don't understand why people don't see the outrage here for what
| it is: pure greed.
|
| If you aren't offered equity, the company's decision on whether
| to sell or remain private is completely irrelevant to you.
| Whatever happens, you're not going to benefit anyway. Why even
| give a shit? Do your job and collect your paycheck, don't catch
| feelings thinking you're part owner. You knew the deal going in,
| now you want to alter it after the fact for your own benefit?
| Just another case of people seeing a pile of money and wanting to
| grab a piece.
|
| If you wanted equity and chose to work there anyway hoping that
| someday the founders might throw you a bone in case they changed
| their minds and decided to sell, you're a fool.
| Mikeb85 wrote:
| > for current employees the bonuses account for only about 2.5%
| of the total deal's value and work out to just $83,000 per
| employee per year.
|
| "Just" $83k per year in bonuses. Sounds like a pretty good deal
| to me, considering other posters who said MC paid pretty well and
| had good benefits.
|
| Tons of startups use equity as an excuse to under-pay and most go
| under, leaving the employees with useless stock and having earned
| less in their prime years than they could have.
| itsdrewmiller wrote:
| I don't understand the math here either - 2.5% of 12 billion =
| 300 million, which would be 250k per person. And that's
| ignoring the 200mm in RSUs being issued to employees as well.
| martin1975 wrote:
| any way to get past the BusinessInsider.com paywall?
| antattack wrote:
| I am old enough to know how cool it was to be a millionaire.
| Where is all that money (billions) coming from? Who had it
| before, governments?
| rexreed wrote:
| In this case, public markets. Public companies are flush with
| cash and finding few places to park it to gain a positive
| return. Acquisitions, stock buy-backs, and similar are ways to
| juice overall return. Intuit gains a recurring revenue stream
| and access to hundreds of thousands of small businesses, which
| is their bread and butter.
| anonuser123456 wrote:
| Scale. There are 7 billion people on the planet.
|
| Get 1/100 of them to pay you 10$/month and you have 7 billion
| dollars / year.
| NibsNiven wrote:
| Banks can create money by typing numbers into a computer. The
| Fed has recently created trillions.
| bigiain wrote:
| Hands up everybody here who wouldn't go back on their word for $6
| billion?
|
| You lot are all liars.
|
| If you don't think your best friend, your parents, your
| wife/husband, or your children - would not sell you out for
| $6billion, I reckon you're deluding yourself.
| tonyedgecombe wrote:
| Perhaps you are projecting your own values onto everybody else?
| joncampbelldev wrote:
| NOT OP but there's very little I would not sell or change my
| mind for $5bn.
|
| That much money just to go back on a promise to not sell
| would be a very easy decision (bear in mind that no material
| harm is done to the employees, no equity was promised, no
| equity was given, they never had a chance to share in the
| sale regardless of the founders' promise)
| rightbyte wrote:
| So it was 0 USD or 6 billion USD? They are just shifting their
| assets from the company to dollars.
| HumblyTossed wrote:
| Never going to sell. Then sell to Intuit! Feel for those
| employees.
| scumcity wrote:
| The Fed strikes back. The most disturbing thing about this
| article is that Mailchimp is worth 12b and that Intuit had 12b to
| spend on it. Couldn't have happened 2 years ago, regardless of
| demand/supply, product market fit, business strategy, etc.
| Animats wrote:
| They're spammers, after all. What would you expect from a
| spammer.
|
| (Spam definition, per Spamhaus: "All email sent unsolicited and
| in bulk is Spam.")
| drumhead wrote:
| "Paris is well worth a mass" as Henry IV of France supposedly
| said after gaining the crown. People can drop their deepest
| beliefs sometimes when the prize is big enough.
| stevehind wrote:
| A problem with making declarative statements about the future is
| you may change your mind and then be criticised. A problem with
| accepting below market pay is you may later regret it. There's a
| clear fix to both and I don't see any villains here.
| xbar wrote:
| What's the fix for the victims here?
| Nition wrote:
| Owners pay a small percentage of the sale to the employees as
| a gesture of goodwill.
| enjo wrote:
| Who are the victims?
| chii wrote:
| i assume they are labeling the employees that did not get a
| big payout as a victim because of the lack of equity in the
| compensation.
|
| But presumably, the employees are told that they won't get
| equity, and their cash compensation is high enough to make
| up for it.
| BoorishBears wrote:
| If you tell me you won't give me equity it's one thing.
|
| If you tell me not to worry my little noggin about it
| because we're never selling :) and then you turn around
| sell for $12B, I'm going to feel a little shafted...
|
| -
|
| But looks like they accounted for this with the 500m
| pool, so in this case they ended up "fixing" the problem.
|
| I think in the end this will just be a cautionary tale on
| the other side of the "equity is worth TP" stories. I've
| always felt equity is a lottery ticket, but a lottery
| ticket isn't completely worthless...
|
| ps: It is a little funny watching all the people rush to
| defend this, like Mailchimp's founders obviously saw the
| issue here and negotiated that pool into the deal, but
| random HNs are so quick to defend it with "that's
| business folks!" like human emotion is something to throw
| in the garbage when talking about $$$.
|
| Mailchimp wouldn't have worked out with that mentality,
| it shows reading their story.
| bryanrasmussen wrote:
| >If you tell me not to worry my little noggin about it
| because we're never selling :) and then you turn around
| sell for $12B, I'm going to feel a little shafted...
|
| The thing I don't understand - why would someone 'never
| selling' influence someone else to work for less than
| market rate?
|
| OK maybe I can think of some reason for a company
| producing something that saves peoples lives that you're
| afraid a big company wants to buy to shut down and push
| their inferior product but this ain't that scenario - so
| why?!?
| chii wrote:
| > The thing I don't understand - why would someone 'never
| selling' influence someone else to work for less than
| market rate?
|
| sour-grapes. They see the equity payout, and imagined
| that they'd get a piece of it had they been compensated
| with equity.
|
| What they don't see is the loss if the company went bust
| - like most startups do - because hindsight is 20/20
|
| so realistically, it makes little difference if a company
| paid in equity or cash - as long as you calculate the
| discount for the equity compensation appropriately.
| BoorishBears wrote:
| This is a very uncharitable view of how most people would
| feel in this situation.
|
| -
|
| Imagine a lottery/raffle/etc. where the state says "we're
| _probably_ not going to be drawing the results for this,
| so instead of giving you a ticket with an expected value
| of $0.05 we 'll give you a guaranteed $10 right now"
|
| Mathematically that's a very generous offer!
|
| But then the state turns around and runs the lottery
| after everyone takes them up on that offer with the
| understanding the ticket would be worth $0 if there's no
| draw.
|
| The state paid you _more_ than the expected value of your
| ticket, by the math you got compensated more than a fair
| amount and the odds are you would have made a lot less
| than $10... but do you think most people will be upset?
|
| More upset than if they had just lost a normal drawing?
| wccrawford wrote:
| I'm not in this situation, but I see it this way:
|
| If I'm told the company will never sell, and they're
| doing well, I'll feel that I have job security and a team
| that I will enjoy being part of for a long time. I've got
| _stability_.
|
| I'm willing to trade some money for stability. The
| opposite of stability is "risk".
|
| However, I'm a realist and realize that _everyone has a
| price_. MC 's price was $12b, which is an incredible
| amount of money.
|
| The loss of that stability would certainly shake me,
| though, even knowing that it was possible. And in that
| case, I'd probably be griping, too, hoping to get
| _something_ for my pain. But again, I 'm a realist, so I
| know it's unlikely I'd get anything.
| BoorishBears wrote:
| Where was it implied that never selling made someone work
| for less than market rate...
|
| Do you not see how someone can feel mislead if told X
| will not happen and X thing happens?
|
| -
|
| The rebuttal everyone in this thread is parroting is a
| tautology. Saying "things change". Yes by the very act of
| existing over a period of time a company will indeed have
| changed even if it's just age.
|
| It's not a helpful response to how people feel, and
| again, you're always free to throw feelings in the trash
| in business... but at the very least have the courage to
| admit you're doing it. There's no reason to pretend you
| don't see why people don't like it
|
| (And again Mailchimp's founders seemed to have that
| courage, hence the fund)
| bryanrasmussen wrote:
| I've been seeing the implication around in this post -
| including here
| https://news.ycombinator.com/item?id=28561255 to quote:
|
| I assume GP's fix is, "Don't accept below-market pay."
|
| which implies to me that people were accepting below
| market pay because - reasons?
|
| on edit:
|
| >Do you not see how someone can feel mislead if told X
| will not happen and X thing happens?
|
| sure, but in the case of someone having accepted below
| market pay I can see how being misled would have meant an
| actual hurt suffered.
|
| Let's say I like to bake cakes and the school announces
| this year because of Corona there will not be a bake sale
| but then 4 days before they announce guess what there
| will be anyway! Then I would be upset because I had
| changed my behavior based on what they said and now I
| couldn't undo it. I guess anyone who stayed at the
| company because it wouldn't be sold would feel mislead
| but why I guess I have a hard time considering to stay at
| a company because it wouldn't be sold as a decision I
| would make - I would want other reasons to stay at a
| company that would not matter whether it was sold or not.
|
| It's obviously a failure of imagination on my part, so it
| would be good to have an actual scenario as to how
| someone would feel hurt not just if someone says X and
| its not X you are mislead, because you still need the
| part about how X made you do Y instead of Z.
| BoorishBears wrote:
| This is like everyone gets the problem but saying they
| don't.
|
| You didn't get cheated, but you feel cheated.
|
| And for the umpteenth time, you're always say to say
| "fuck your feelings, you knew the deal", but that works
| both ways, you know the deal on why people are going to
| feel cheated...
|
| If Mailchimp's founders had never mentioned not selling
| (or were just ruthless) I'm sure that 500m fund would
| look a lot different...
|
| -
|
| Also you wanted an example, here's one:
| https://news.ycombinator.com/item?id=28561963
| bryanrasmussen wrote:
| >This is like everyone gets the problem but saying they
| don't.
|
| no, this more like me thinking huh I guess there might be
| a problem here but I have a hard time conceiving of how
| there actually would be one.
|
| Also I guess I would like an example in the actual
| scenario - people owning company saying they never sell
| but then they do many years down the road, people have
| changed their behavior on this promise how? Are you
| saying that there were people who would have said no I
| don't want to work at market rate for you if you're going
| to sell in the future, I will only work for you for
| equity if you intend to sell. That's what that example
| implies to me? Maybe my imagination is failing again here
| but that sounds crazy, although I have to admit playing
| the lottery sounds crazy to me anyway so...
| BoorishBears wrote:
| Maybe it's just over your head, and that's ok.
|
| And to be clear, I'm not saying that to be mean, but for
| example, if you get hung up because a lottery is used as
| an analogy for startup equity (which might as well be a
| lottery), then it really might be a little past you.
| bryanrasmussen wrote:
| or again, as a lottery is generally described as a tax on
| stupidity, I would wonder why anyone complains about
| getting money instead of a chance to participate in a
| lottery.
| BoorishBears wrote:
| I really shouldn't have to teach the concept of an
| analogy from first principles to what I assume is a grown
| adult, yet here we are...
|
| They're leaky abstractions.
|
| Here the part that doesn't map perfectly is it's not
| either/or, it's a sliding scale.
|
| People at other startups make a market rate and get a
| little equity, some get below market rate and a lot of
| equity. Even at the same company people can negotiate
| their position on that scale, trading one for the other.
|
| But you were told essentially "the equity will never have
| value so don't worry about that scale".
|
| But it turns out the equity could have value.
|
| The analogy works to convey why people are feeling a
| certain way, it's not a 1:1 mapping to how startup equity
| is. That disconnect is what the words "might as well be"
| convey: https://english.stackexchange.com/a/171622
|
| -
|
| Additionally unlike a true lottery there is some form of
| control and information on outcomes, it might _feel_
| random because companies can and do fail for unforeseen
| reasons, but it 's not like someone is throwing darts at
| a board to choose which tech startup closes its doors
| today...
|
| -
|
| Really I don't understand your deep lack of understanding
| if you're in this industry, have you never been given
| large amounts of equity before?
|
| I personally chose a company that gave me solid cash
| compensation, but not as much as a competing offer,
| because they offered a lot of equity. I believed in their
| fundamentals and their position in the market.
|
| Unsurprisingly the company continued to execute well and
| the equity ended up being worth more than quadruple my
| cash compensation.
|
| I understand not relying on equity returns to plan out
| your financial future, but I really don't get a blanket
| mentality of only taking money upfront and not
| diversifying.
|
| Do you not invest in the stock market either? Because
| that's also pretty similar to this situation... if your
| holdings crater to near nothing the fact you have
| liquidity from being on the public market doesn't really
| help...
| esyir wrote:
| I'm having a hard time seeing said employees as victims
| here. They knew they were getting pay and no equity.
| There was a "we don't intend to sell", but c'mon, 12B is
| a ludicrous amount, and I'd be amazingly surprised if
| they didn't sell for at that point.
|
| Now, if it ended here, I'd fully understand feeling
| stiffed and lied to. But mailchimp has about ~800
| employees. a 500m pool is more than half a million per
| employee. That's a hell of a payout, considering the
| previously accepted stability and derisking.
| ISL wrote:
| I assume GP's fix is, "Don't accept below-market pay."
| pempem wrote:
| I would go further and say "don't believe that your below
| market-pay is due to true commitment to a mission. more
| than likely your leadership isn't taking that same below-
| market approach for themselves."
|
| I'm not sure why, in most comments not just this one, the
| idea that you need to be cynical and not trust someone's
| stated good intentions isn't included.
| yunohn wrote:
| Most humans prefer to exhibit trust towards other's
| stated intentions. Cynicism is perfectly valid, but not a
| solution to the breaking of trust.
|
| The idea of a world where I must be cynical about
| everything and trust nothing, is dystopian. And quite
| simply, would fail incredibly quickly.
| goodpoint wrote:
| It's not a good solution. Cynicism hurts.
| [deleted]
| yunohn wrote:
| > you may change your mind and then be criticised
|
| Yes, that's exactly what is happening here - and the criticism
| is from the employees who were lied to.
|
| > accepting below market pay is you may later regret it
|
| While they might've been paid market value, it is still quite
| disingenuous to deny equity and preach an independent vision.
| And then using the work done by employees to sellout for a
| massive payday.
| curiousgal wrote:
| Today I learned that billionaires can be disingenuous lol
|
| Backstabbing and lying are the cornerstone of the startup
| system. People shouldn't be shocked when there's money on the
| line. Sad but true.
| adwn wrote:
| > _Today I learned that billionaires can be disingenuous
| lol_
|
| In what way does that make them different from non-
| billionaires?
| hkt wrote:
| Impact
| yunohn wrote:
| > People shouldn't be shocked when there's money on the
| line.
|
| Well, I guess that's that then. We might as well get rid of
| human ethics and morals, trust based systems, and justice.
|
| Apparently, capitalism and the love of money is all we
| need!
| vishnugupta wrote:
| > We might as well get rid of human ethics and morals,
| trust based systems, and justice.
|
| In my experience these values are invoked when sums
| involved are not life altering.
|
| As the saying goes if you owe $5000 to a bank then the
| bank owns you but if you owe $500MM then you own the
| bank.
| dcow wrote:
| Welcome to 21st century globalism. When you build an
| entire society around fundamental economic power, what do
| you think you'll get? Not that?
| yunohn wrote:
| We can always ask/demand more of others. And in cases of
| ethical or moral uncertainty, we can introduce
| rules/laws, as society has done for millennia.
|
| The answer is not always to give up and support unethical
| behavior.
| jollybean wrote:
| This is way overblown. It's not backstabbing or lying to
| change your mind.
|
| The founders probably had the intent to stay independent,
| they changed their minds.
|
| The employees got a salary to work on a mass email product.
| Now they are continuing to do the same.
|
| This is just normal business, not a shift in principles.
|
| If they were working at a public green energy foundation
| dedicated to open source science, and then were bought by
| Exxon and everything privatized, then this would be a
| different story.
|
| I'll bet most employees don't really care that much as long
| as they keep their jobs and working conditions.
| ericb wrote:
| Changing your mind isn't lying. And to be honest, the owners
| decisions about _a company you don 't own_ are not really
| _your business_.
| dcow wrote:
| Did anyone even accept below market pay in this case? The comp
| packages included profit sharing...
| mrgordon wrote:
| Sounds like they were talked into profit sharing instead of
| equity and now the profit sharing won't apply at Intuit so
| they likely got almost nothing from it
| hef19898 wrote:
| If you cannot live on base pay alone, take different job.
| Everything above that is just a bet on the future, one that
| can go well or not.
| john_yaya wrote:
| At least they were honest about withholding equity. Lots of
| startups do effectively the same thing by granting RSUs that
| become worthless via an assortment of underhanded mechanisms.
| __lazybyte wrote:
| Seems there is a price for everything.
| Seattle3503 wrote:
| Businesses can't make promises, they can only make contracts.
| thomasahle wrote:
| What do you think would be good wording for a "no sales"
| contract?
| napolux wrote:
| When I was in eBay some years ago I clearly remember the CEO
| saying during a company all hands: "we're one company, we'll
| never separate from PayPal".
|
| After 15 days the split was announced. :D
|
| So don't believe any single word from any CEO/Founder.
| toyg wrote:
| Happened to me with the Hyperion CEO - "we're not selling, we
| are a billion-dollar company!", and the next month Oracle
| announced the acquisition.
|
| Not that I was surprised. When it comes to strategies and
| mission, I just don't believe anyone in any position of
| authority in a company, from the CEO all the way to line
| managers. The only strategy is to make money, and if anyone at
| any time thinks they'll make more money doing the opposite of
| what they promised, they'll flip in a minute.
| hef19898 wrote:
| Why would anyone believe Handsome Jack to begin with?
| tonyedgecombe wrote:
| I remember hearing something similar from one of the e-commerce
| companies when Digital River was hoovering them all up. They
| did hold out for longer than 15 days though.
| kodah wrote:
| When I was in the south it was _very_ common to only get paid
| salary and insurance. The one company that did give me equity
| gave me $10k. There 's nothing wrong with what the founders did.
|
| That said, I came from Texas. When we started seeing a flood of
| people from high income regions moving to Texas and driving up
| home (and other area costs) I realized high inflation states had
| beat the system. People that lived decently there were royalty
| when they moved to Texas. I eventually moved to California, and
| my RSU plan is what made my savings go from $0 to on track within
| 3 years.
|
| If I can say anything to founders in the Midwest and South: pay
| RSUs. It's the difference between retirement and spending your
| entire life working.
| rbro112 wrote:
| I worked at MailChimp for a few years. I most recently worked at
| a company that went through an IPO that I had equity in. When
| deciding to join my recent company, equity was the largest factor
| in my move.
|
| MC's benefits are great and at the time were top-tier in Atlanta.
| They are cash/401k heavy and offer great profit sharing
| incentives. They also make it abundantly clear that they don't
| offer equity and when I negotiated my non-MC offer that I ended
| up accepting, they were clear that they could not match my
| equity. They even acknowledged that if I was willing to take a
| risk with the equity it would likely be the advantageous move to
| make.
|
| Nonetheless, during my time at MC Ben/Dan repeatedly boasted
| about turning down offers to sell and repeated they were never
| intending to go that (or the publicly traded) route. This
| ultimately factored into my decision to leave, as it never
| appeared I would have a personal stake in the company. I hope
| other employees interpreted this in a similar manner and I do
| believe everyone had abundant opportunities to do so.
|
| In the end and in hindsight, I'm happy with my decision to leave
| and it did pay out. Nonetheless, I do still believe MC is a great
| company and despite the founders somewhat selling an incorrect
| vision, are still acting in good faith. I don't believe they
| "withheld equity" as they made it explicitly clear it was never
| offered, or was ever going to be, but I do see how the boasting
| of never selling out could be interpreted poorly now in
| hindsight.
| akudha wrote:
| People in positions of authority need to be careful with their
| words. They might not be intentionally misleading, but it is
| possible that they make a remark without thinking it through
| and others end up believing.
|
| It happened to me. The CTO of the company I worked for moved to
| another company and recruited a bunch of us from his previous
| job. He made tall promises, none of which worked out. We were
| annoyed at the time, but I now realize he didn't intentionally
| mislead us - he was just overly optimistic about his abilities
| and his own faith in the new company he joined. It was a
| disaster for everyone he recruited from his previous job.
|
| Everybody has a price, everyone has a breaking point.
| bpodgursky wrote:
| $12 billion is a staggering amount of money. I can't imagine
| blaming someone for shifting their stance on an exit after
| imagining what they could fund with a $12 billion payout.
|
| If the founders take the cash and build, I dunno, the world's
| biggest yacht, that's a waste. But I think that's incredibly
| unlikely.
| arthurcolle wrote:
| > If the founders take the cash and build, I dunno, the
| world's biggest yacht, that's a waste. But I think that's
| incredibly unlikely.
|
| it's an email service provider for campaigns and other email
| spam with a recognizable brand, let's not imagine that this
| is beneficial beyond helping companies market stuff to
| people. It's like a meta-business enhancement service. Happy
| for the founders, hope they do some good with the new payout
| - but I think you are giving them a bit too much credit.
| Sure, kick back 100M to your old school district, maybe
| another 250M to BLM or to Math for America to strike off all
| of your philanthropic efforts in one go, curate some plebeian
| sympathies and smile for the cameras but at the end of the
| day, making it easy to bombard people with endless email
| campaigns isn't exactly solving global problems
|
| EDIT: I reject hero worship vigorously - Mailchimp did a
| thing, it made money, and another entity that did a thing and
| made money that makes MORE money decided to absorb it and the
| cash payout was so good that investors/founders of MC decided
| to say fuck it, I'm done. Take my chips, gimme the loot. 12
| billion dollars is generational wealth, but I mean I just
| can't/won't/don't respect people that have enabled spam or a
| business model that encourages bombarding people with BS.
| Same thing with IAP - I don't respect people who work for
| Apple because there was a layered hierarchy of priorities
| that said "we want to generate revenue at the expense of the
| people that trust us with their consumer electronics"
|
| I just intrinsically cannot respect people that decide to
| profit off of wasting people's time, the only commodity you
| can't generate more of. Instead of craftsmanship we have
| psychopathic operators that try to fine tune all the ways to
| extract money from others and even develop meta-endeavors
| where people pay others to execute activities to get end-user
| observers ('users' in modern web dev parlance, for the JS
| devs) to waste time/spend money, for net negative expected
| value to themselves and others. It's super sordid and I just
| can't endorse it. Whatever.
|
| In 25 years these guys will probably pull a Paul Allen and
| then start funding brain research or something after
| realizing that all the money in the world can't buy time and
| more life.
| modeopfer wrote:
| Am I the only one who genuinely likes newsletters?
|
| I don't use facebook or instagram or anything anymore, and
| just solely rely on subscribing to the newsletters of the
| stuff I like: bands, exhibition spaces, museums, even
| fashion brands.
|
| Giving out my email tells the almost nothing about myself,
| except the only valuable thing: I am interested in their
| services. Most newsletter providers let me opt out with two
| clicks and I never get any more mails from them.
|
| It really baffles me why there are not more people who
| enjoy emails, but would rather have another company decide
| which content they get to see.
| Aeolun wrote:
| I enjoy pretty much all mail that I opted into. That
| constitutes about 80% of everything arriving in my inbox
| now. There's some newsletters I'm actually looking
| forward to.
| luckylion wrote:
| I believe there's a difference between newsletters that
| you value (because they provide news and interesting
| updates, e.g. JetBrains' XYZ Annotated Monthly) and what
| is typically sent via mailchimp, i.e. drip feed sales
| emails and click bait offers with lots of small print.
| sam_goody wrote:
| A better description is: Mailchimp enables "marketing
| mails", since they have the IP addresses which will not be
| rejected no matter what they send.
|
| This is power, and they market it: Send an email yourself
| and you may be shut down, send through us and worse case
| scenario you will have to create a new account to continue.
|
| At the moment their IPs are more bulletproof then their
| competitors. But that is all they are selling - the ability
| to push through spam for others.
| snowwrestler wrote:
| Any company who can afford to use Mailchimp already has
| an email channel that works extremely well; you have to,
| in order to do business. How does someone even sign up
| for Mailchimp if they can't already email reliably?
|
| Mailchimp is a SaaS, and the value is in the software,
| just like any SaaS. Specifically the value of email
| platforms comes from list management, compliance,
| integrations, branding, etc., all of which are hard to do
| with the basic-but-reliable email systems we use every
| day.
| elif wrote:
| That is not correct. The magic is in IP maintenance.
| Source: I wrote the software.
| snowwrestler wrote:
| This would be true if Mailchimp had a competitive
| advantage in deliverability, which they don't. Source: I
| have evaluated Mailchimp as an ESP several times and
| selected competitors.
|
| None of the ESPs beat our corporate email system on
| deliverability BTW. They did make it a lot easier to
| manage email programs, though.
|
| Edit to add, I'm sure IP reputation management is a
| challenge if your business model is to allow anyone to
| sign up for free and start sending. Paying clients don't
| care about that, though. Deliverability is something you
| can buy from lots of people. And for small folks, you're
| not going to beat the deliverability of Gmail. It's table
| stakes IMO. There's a reason Mailchimp sells itself as a
| marketing software platform and not "we deliver emails".
| megaman821 wrote:
| Back when sending emails was about 1 cent per email, my
| company wrote our own campaign email software to save
| tons of money. Each large email provider has its own
| rules about sending rates, backing off, soft bounces and
| hard bounces. Not getting your IP address blocked for
| breaking a ruleset that you don't know about is the
| hardest thing. A few year later MailChimp was becoming
| more popular and their prices where dropping; we switched
| almost everything over immediately and life was much
| easier.
| abraae wrote:
| Not familiar with MailChimp, but we use Mailgun (could be
| any similar system for the sake of argument) and there is
| a heck of a lot more than just having clean IPs.
|
| Every time I use one of their screens to look at some
| issue I think... There's a bunch of stuff we didn't have
| to build, all for $80 per month.
| sam_goody wrote:
| Oh sure, they have a lot of other stuff.
|
| And all that other stuff would be a nice package that you
| would probably be able to buy for $99.
|
| It's the market that https://sendy.co/ is in, but we
| would have plenty of competition there and better
| options.
|
| The reason it is only Sendy and a few open source proj's
| are that SES delivery is not even in the same ballpark as
| Mailchimp's (I have used both).
|
| And if you want the delivery, you need to pay for
| Mailchimp or Mailjet anyways. Its the reason you don't
| save much when sending via the Mailchimp API. The product
| is not the newsletter builder etc.
| echelon wrote:
| > all the money in the world can't buy time and more life.
|
| It can, it's just that biologists aren't the ones that are
| winning the equities and securities game most frequently.
|
| Given their inexperience, they throw money at things
| blindly, not realizing there are lower hanging fruit than
| the brain.
|
| A billionaire biologist could attack the problem from first
| principles. And probably make measurable headway.
| goldforever wrote:
| It can't, full stop.
| echelon wrote:
| What do you think aging is from a mechanistic standpoint?
|
| Define it and tell me how you can't make a measurable
| impact upon it.
| Apocryphon wrote:
| Tell it to Norm MacDonald, or Chadwick Boseman.
| [deleted]
| echelon wrote:
| What are you on about?
|
| Yes, people die. But we can stop it by continuing to
| invest in biotech.
| Apocryphon wrote:
| Alright, calm down Ray Kurzweil
| NetOpWibby wrote:
| Holy shit, I couldn't agree more.
| protomyth wrote:
| _If the founders take the cash and build, I dunno, the world
| 's biggest yacht, that's a waste._
|
| No, that would pay a lot of skilled workers a damn good wage
| for a couple of years. Yachts employ a lot of highly paid
| people.
| bluedevil2k wrote:
| Thank you! People act like the uber-rich buying expensive
| things is a waste of money. We _want_ them to spend their
| money. Get it into the hands of people who really need it.
| protomyth wrote:
| And rich people buy stuff that requires skilled labor.
| Those craftspeople jobs are well paid. Reducing friction
| for rich people to buy locally made items is a good
| thing.
| ThemalSpan wrote:
| Do that through taxation. I thought trickle down
| economics had been broadly repudiated.
| effingwewt wrote:
| Seriously, reading comments like those you replied to
| hurts my head.
|
| In fact all that's been happening is trickle up, since
| the wealthiest keep siphoning more and more money, such
| that we essentially have no middle class left.
|
| I like how we use the word class and then deny having a
| class/caste system.
| ubercow13 wrote:
| Probably because rich people do not spend enough of their
| money, not because they spend too much of it.
| bpodgursky wrote:
| Plenty of billionaires invest cash in capital expenditures
| which aren't totally frivolous. Build a global satellite
| broadband network or something.
| Igelau wrote:
| I just want to see this incredible yacht.
| kaibee wrote:
| So what? If instead of building the world's biggest yacht,
| they paid them to dig and refill holes, from the
| perspective of someone 100 years from now, both would be
| pretty much equally wasteful. Otoh, investing that into
| research, wouldn't be.
| mandeepj wrote:
| > When deciding to join my recent company, equity was the
| largest factor in my move.
|
| Great, it worked out for you. A friend of mine, recently got an
| offer from a pre-IPO company. He asked for equity, but they are
| refusing to share any numbers - saying - their lawyers asked
| them to not do that. Is it normal?
| wavefunction wrote:
| I can't speak to whether it's normal but it's a red flag for
| me. One of the companies I've worked for was pre-IPO and went
| IPO while I was there and when they hired me two years before
| that IPO they laid out the vesting schedule (1 year cliff,
| then monthly vesting of the remaining 3/4s of options) along
| with the strike price of the options along with how that
| strike price/valuation was calculated. Other places have had
| varying levels of professionalism like that but that was the
| only place that ended up IPOing and I believe there is a
| correlation between the professionalism of laying out clear
| compensation and the actual performance of the rest of the
| company.
| mandeepj wrote:
| My friend told me - the recruiter even went on to say - if he
| shares info about equity grants - then it'd be called
| "Insider Trading" :-).
| bradstewart wrote:
| No. Under no circumstances should you accept an offer when a
| company refuses to give you any sort of context for what your
| grant might be worth.
| jacobr1 wrote:
| Frustratingly so. Getting an offer of a number of shares,
| without any context on the total number outstanding or recent
| valuations, doesn't provide you with the ability to calculate
| future upsides. Though even if you get those numbers, it is
| much rarer for things like preferred shares and any liquidity
| multiple they might have, which can screw over the common
| holders even is successful exits.
| x0x0 wrote:
| They have to tell you at least the 409a or a similar
| valuation -- it's the strike on the grant.
| silexia wrote:
| As the owner of a company, I can tell you that any company
| that will not give you all the financial information
| necessary to value your shares and know what it's worth is
| scamming you.
| jollybean wrote:
| " This ultimately factored into my decision to leave, as it
| never appeared I would have a personal stake in the company."
|
| You had a 'stake' it was just in terms of other kinds of
| benefits.
|
| If you join a company after it's well-established, then for the
| most part, unless it's an 'extremely high growth company' -
| your stock package isn't going to be worth that much, it's just
| part of comp.
|
| If you joined MC several years after founding, even if they did
| give you equity, it would be a bit of a nice bonus, and that is
| all.
| tinyhouse wrote:
| The fact they didn't give equity to employees is totally OK.
| It's their company, they don't have to share it with nobody. It
| can still be a great place to work with great benefits. I
| worked for a place like that early in my career.
|
| But when you sell for $12B and didn't take investment so all
| goes directly to you, how can you not allocate at least a
| million for each employee and change their life? With 1200
| employees that's only $1.2B. They can easily give everyone even
| $2M and have zero impact of their life. What two people can do
| with $12B which they cannot do with $9B? (Yes I know, the final
| amount is much less after taxes, fees, etc)
|
| Obv they don't need to allocate money equally, it makes more
| sense to do it based on tenure.
| itsdrewmiller wrote:
| sounds like they allocated 500 million between RSUs and cash
| bonuses, which is about 400k per employee.
| tinyhouse wrote:
| That's great! I still think it's too low.
| billyhoffman wrote:
| RSUs are *never* distributed equally. That's not their
| point because they are entirely separate from the purchase
| of the acquired companies equity.
|
| The point of RSUs is to retain talent that is deemed
| critical to making the acquisition successful. Your VP of
| finance isn't getting any RSUs. The acquiring company
| probably doesn't need her, and she possesses no critical
| knowledge that any other senior financial person doesn't
| also possess.
|
| Individual developers often get higher RSUs than managers.
| Why? More experience with the code and domain knowledge,
| especially if the engineering manager wasn't an IC who grew
| into the role.
| the_jeremy wrote:
| You're right. Jeff Bezos could give >$100k to every Amazon
| employee and only be giving away the money he's gained during
| the pandemic[0]. How can he not allocate at least 100k for
| each employee and change a lot of lives? He could easily give
| everyone this and have zero impact on this life. What can he
| do with $200B that he could not do with $100B?
|
| I could easily give away $10k to charity and save multiple
| lives[1] without impacting my quality of life, and given that
| you are on HN, you likely have $10k you could live without as
| well. We are literally choosing to have money in some
| retirement account over saving lives - why would you expect
| founders to give away money just to make rich tech workers
| more rich?
|
| [0]: https://the.ink/p/billionaire-wealth-just-got-wealthier
| [1]: https://www.businessinsider.com/the-worlds-best-charity-
| can-...
| Apocryphon wrote:
| You're unironically right and thank you for giving a
| powerful argument in favor of philanthropy using simple
| arithmetic.
| tinyhouse wrote:
| There's a big difference between I will be just fine giving
| away $10K and I don't need the money. Any money that helps
| me retire early is money I'm not going to give away. With
| some exceptions of course. I might give money away to help
| a family member or friend. Above a certain amount of money
| I will be happy to give some money away. That's what most
| wealthy people do, including Besoz.
|
| Amazon's tech employees are awarded shares. They are
| getting life changing money already. But it's not that
| relevant because here we're talking about a one time event
| that happened and the employees who were part of that
| success story should be compensated. It's the right thing
| to do.
|
| The only argument you can make that I may partially agree
| with is that why giving the money to the employees. They
| can donate it for better causes than helping tech employees
| being more rich. I think in this particular case there's
| plenty of money to do both and the founders still be left
| with billions. Allocating $2B to the employees and the rest
| $10B to be split by the two founders and whatever donations
| they would like to make sounds like a win-win for everyone
| and a pretty rational thing to do. I'm not expecting them
| to give most of the money to the employees. Someone
| mentioned they have allocated $500M; that's really great
| but I still think it's too low given the amount of money. I
| think 10 - 15% is more reasonable.
| statictype wrote:
| This is a very reasonable and nuanced take. Thanks for sharing.
| dcow wrote:
| This is perhaps simply a good reminder that everyone has a
| price and nothing is set in stone. If you're in a position of
| leadership, be humble and real. If you're an employee, don't be
| naive. The market has the last word.
| touisteur wrote:
| And. Things and people can change their minds. Promises,
| absolutes or forevers should come with some kind of enforcing
| mechanism to be really, permanently trusted. And even then,
| beware of the penalty not being 'high enough'.
|
| But it's OK. It was very naive to say 'never' and it was a
| bit naive to take it at face value. As long as they paid
| their employees well and treated them with respect, and were
| clear of their prospects, I fail to see who is hurt here ?
| Except customers being now under the Intuit umbrella, _that_
| must hurt...
| kokey wrote:
| I think what changed their mind was that the market
| changed. Mailchimp was run like a company that wanted to
| prevail in the market and not just grow and sell. That
| affected their strategy in a good way since it allowed them
| to spend time improving their services long term, but most
| importantly it prevented them from trying to grow
| aggressively for the sake of growing, which is a very very
| bad idea when it comes to sending bulk email.
|
| In the end what changed is that e-mail based marketing was
| on the decline, with other mediums taking over. There's a
| point where an industry that stops growing fast eventually
| consolidates and it tends to get absorbed by groups that
| has other revenue streams.
| ykevinator3 wrote:
| I think this is wrong, what changed was the offer price.
| louisswiss wrote:
| > In the end what changed is that e-mail based marketing
| was on the decline, with other mediums taking over.
|
| FWIW this is completely incorrect. Over the past 2 years
| other marketing channels have skyrocketed in cost (eg FB
| ads) and most brands/companies are now investing heavily
| into email marketing. It's a significant growth industry
| right now, more so than at any time since I've been
| involved with email marketing (since ~2010).
| modeopfer wrote:
| Interesting. I as a content consumer feel exactly the
| same way. I don't use FB/Instagram anymore and rely
| solely on email updates from bands, brands, museums,
| theatres and so on. I actually get some MC emails and
| always liked those since they are so easy to unsubscribe.
| freeflight wrote:
| Heh, I kinda noticed that. For a while there spam on my
| older mail accounts suddenly looked a lot more "quality"
| and was advertising well known brands.
|
| At first I thought it was just phishers trying something
| new, but when I looked where the mails lead it turned out
| to be those actual brands.
| telesilla wrote:
| Same experience for us. While we moved away from
| Mailchimp recently for Pardot, email marketing is huge
| growth area for us since the start of the pandemic. I
| think it's a combination of people seeking new solutions
| to this new world we live in, and understanding that if
| each email we send has a genuine value for who we send it
| to, they are very receptive. It's the opposite of spam,
| as we're asked more and more to please keep our customers
| up to date with the latest trends.
| blitzar wrote:
| > I think what changed their mind was that the market
| changed.
|
| Yeah, the market valuation went from 10x revenue for a
| early stage company to 30x revenue for a mature company.
| magicalhippo wrote:
| Our largest competitor, who had 10x our revenue, got bought
| about 6 years ago by some huge international behemoth, which
| of course ran it into the ground over the course of a few
| years.
|
| Great for us, as we got almost all of their customers.
|
| I recently heard the story of how that happened. The original
| founders had no intention of selling out, and had signed a
| deal with the others that unless they were offered a well-
| defined but ridiculously high price, that the original
| founders could buy back the shares to take back control.
|
| Well, the multinational company offered the ridiculously high
| price, and the original founders had no chance to make a
| higher offer. So they lost "their baby", which is now just a
| pale shadow of what it once was.
|
| The founders got a lot of money of course, so not a sob
| story.
| tonyedgecombe wrote:
| >The founders got a lot of money of course, so not a sob
| story.
|
| It must be disheartening though, to see something you
| created get run into the ground.
| mcguire wrote:
| It's a hell of a lot better than seeing something you
| created get destroyed and _not_ having the extra zeros in
| your life. That 's the result for most people.
| corobo wrote:
| Am I the only one that would love that situation to be
| able to start a new thing on easy mode? You know a lot of
| the failures, you now have a massive network, you have a
| big wad of cash.
|
| Bust out the idea bin and make something else!
| philsnow wrote:
| In the same vein as "you can't go home again" (you can go
| back to the physical location, but you have changed,
| anybody living there has changed, the buildings have
| changed etc, to the extent that it's no longer the same
| thing as your internal conception of "home").. "you can't
| start from scratch again".
| silexia wrote:
| As a founder who has made a lot of money, I can tell you
| that founders nearly never put in the same effort that
| they did into starting their company into something new.
| Elon Musk is the exception that proves the rule.
|
| Our finance-based culture is very destructive to good
| companies. Whenever a founder sells a company and leaves,
| the company almost always goes steeply downhill.
| andi999 wrote:
| Having a lot of cash is not a good position to start a
| new product (your pivots will most likely be delayed due
| to that)
| lotsofpulp wrote:
| I would not mind facing the arduous challenges of having
| a lot of cash.
| corobo wrote:
| Ok fair enough I'd also definitely have to pass on
| dealing with that to an accountant but I more mean being
| able to work on it full time with no financial concern
| than chucking a milly after each idea
|
| Also to clarify on the seeming heartless I sort of see
| things as being diluted when others work on them -- in a
| good way! -- for each person that adds to your thing it
| goes from mine to our. Long enough and big enough and
| it's more other people's creativity than yours. Your baby
| is all grown up and ready to do it's own thing
| lupire wrote:
| Parent is saying that of you aren't starving you'll lack
| the motivation to make good, efficient choices. Corporso
| lifestyle inflation.
| magicalhippo wrote:
| Yeah, they got well compensated as mentioned but if it's
| something you've put a lot of love and hard work into and
| you're still burning for, I don't think money can truly
| compensate.
| lotsofpulp wrote:
| Obviously it can compensate since they signed something
| that stipulated it would compensate:
|
| > and had signed a deal with the others that unless they
| were offered a well-defined but ridiculously high price,
| that the original founders could buy back the shares to
| take back control.
| jacobr1 wrote:
| During the deal, self-rationalization starts to kick-in.
| The founders probably start believing some of the big-
| company synergy stories: complementary customer base,
| already scaled resources, complementary product in the
| portfolio. "Cross-sale alone will pay for the deal in X
| months/years." Sometimes they do work out! But all too
| often, the inertia of the larger business prevents
| realizing that dream. Yet if the founders weren't good at
| producing a reality distortion bubble, they quite likely
| wouldn't have made it to the M&A table in the first
| place. So such illusions shouldn't be surprising,
| especially if the price is high.
| id5j1ynz wrote:
| Regret is a thing
| not1ofU wrote:
| If I've guessed correctly as to who you are reffering to,
| that product will go EOL next year.
| HWR_14 wrote:
| Is there value in not specifying the company? Unless you
| have a relationship with the company or the acquiring
| company, I don't see the reason for the secrecy.
| amznbyebyebye wrote:
| The capitalism machine doesn't care about your humility or
| integrity even- only that you obey the letter of the law. I
| learned that the hard way, work isn't a religion with morals,
| it's work and there are rules.
|
| Your second point however, "don't be naive" agree 100%
| dcow wrote:
| The first point is not about appeasing the machine... it's
| about not overselling to your subordinate worker class
| because if they take the second point to heart they won't
| buy it anyway. Just be honest and realistic and you'll
| avoid looking like a crook, if you care. Maybe you don't--
| you're right such behavior is allowed in the rules.
| midasuni wrote:
| > obey the letter of the law.
|
| Oh wait you're serious. Let me laugh even harder.
|
| Breaking the law for a company is simple a cost of doing
| business. If that costs too ouch then the lobbying/bribe
| budget increases to cancel it out m, but most of the time
| it's just a line of risk on the balance sheet.
| TeMPOraL wrote:
| In other words, for companies, the law is a continuous
| function, where for individuals it's a discrete one.
| Where you and me have to ask ourselves, "do I break the
| law or not?", big companies ask themselves, "what is the
| optimal level of law breakage?".
| jacquesm wrote:
| For some individuals it isn't even that:
|
| https://news.ycombinator.com/item?id=28543096
| andrewingram wrote:
| Or at least, which laws will someone go to jail for
| breaking vs us just getting slapped with a fine?
| jacobr1 wrote:
| Also there are plenty of gray legal areas. Often the
| questions are, "Is this really breaking the law? What is
| the risk?"
|
| And even in cases where the managed 100% wants fully
| comply with existing law, there are still tradeoffs. How
| much do we fund internal enforcement and will that
| prevent us from being competitive? Which isn't so much
| about actively trying to break the law, but willing to
| risk that breakage will happen, or even naive trust of
| employees.
| tempestn wrote:
| I'd argue it's not even quite that. Common law is not
| perfectly defined. So there aren't really levels of 'law
| breakage', but rather something more like, "what's the
| likelihood the potential legal costs of this outweigh the
| benefit?"
| snowwrestler wrote:
| I think it's continuous for people too. Do we ever drive
| faster than the speed limit? Cross a street outside of a
| defined crosswalk? Do we voluntarily report all our out-
| of-state purchases on state taxes? If we sell something
| on Craigslist, do we always report that as income?
|
| I think a lot of people also have an optimal level of law
| breakage.
| sokoloff wrote:
| Selling some personal property at a loss (as is typical)
| is not income. The other examples are good ones.
| snowwrestler wrote:
| People make money on Craigslist, selling services for
| example.
| Barrin92 wrote:
| feel compelled to shout out Jean-Baptiste Kempf (VLC) who
| refused to sell the project for 'several tens of millions'
| which makes me pretty confident that there's still people out
| there who will stick to their principles
| SergeAx wrote:
| I am sure that MailChimp founders were sincere in their
| unwillingness to sell company. But 12 billions is 12
| billions. I am sure that author of VLC would sell his
| product for much bigger money, the only problem that
| there's no one to offer him bigger money.
| tonyedgecombe wrote:
| >I am sure that author of VLC would sell his product for
| much bigger money, the only problem that there's no one
| to offer him bigger money.
|
| I don't know, having billions looks like a liability to
| me.
| jacobr1 wrote:
| It is, but it also a liability you can afford to pay
| others to manage in detail.
| SergeAx wrote:
| I don't think that we may classify big money as
| liability. Usually you cannot quickly get rid of your
| liability for free.
| sokoloff wrote:
| I'd be willing to risk that liability.
| nnx wrote:
| Not to remove any praise to JB, would he still have refused
| if the offer was in the billions rather than millions?
|
| There's a point where it might make sense for him... even
| if not for bare personal/lifestyle reasons, a billion could
| be useful to fund plenty new or existing opensource
| projects in line with his principles.
| Jensson wrote:
| The difference between 10 million and 10 billion is a
| factor of 1000. Ask yourself, if a job offered you 100
| million instead of the normal 100k for a software engineer
| would you be prepared to do things you normally wouldn't
| do?
| Barrin92 wrote:
| gonna be totally honest with you and you can choose to
| not believe me but nope. For one I like the peace of mind
| of sticking to my principles more than money secondly I
| already don't know what to do with my money and I make
| slightly less than 100k. most of my money is spent on
| books and the occasional dinner out with the spouse and
| fishing equipment, I genuinely can't make sense what I'd
| do differently with a million or quadrillion.
| marvin wrote:
| There's principles and then there's principles.
|
| Maybe you wouldn't be willing to sacrifice humans to
| Kali, but you might still be okay with working in an
| open-plan office for two years.
| brightball wrote:
| You sound like somebody I'd like to hang out with. Props
| for good life perspective.
| amyjess wrote:
| You'd buy long-term financial security with that kind of
| money.
|
| You'd never have to worry that a significant unplanned
| expense would ruin your life. You come down with a major
| medical condition and end up with years of major medical
| expenses? Some drunk driver T-bones you and totals your
| car? Lose your job and spend a year or two unemployed?
| House burns down and you still owe the majority of your
| mortgage? None of those will ever be a concern again if
| you hold that $100M job for even a year.
| cardanome wrote:
| As a German these are securities that basically every
| working citizen here has.
|
| Medical expenses -> health insurance
|
| Some drunk driver T-bones you and totals your car ->
| liability insurance is compulsory
|
| Lose your job and spend a year or two unemployed ->
| unemployment insurance is compulsory, you get 60 percent
| of what you made for one year
|
| House burns down and you still owe the majority of your
| mortgage -> uhg, got us here, we can't afford houses but
| there is private insurance for that
|
| So even though I pay hefty taxes (or because I do), I
| still end up much richer than a developer in the US. In
| theory I don't even need to save up money for retirement,
| as the general pension fund has me covered (though with
| the current demographic development I don't fully trust
| that).
|
| So I probably don't have a good reason to give up my
| morality of more money. Have been never tempted though.
| abfan1127 wrote:
| we have 3 of the 4 things you list here. "developer pay"
| is pretty broad, so its tough to generalize where you're
| paid more.
| telesilla wrote:
| Offer other people the opportunity to enjoy the life you
| have the privilege to live.
| Barrin92 wrote:
| I don't think doing that through money is a good thing. I
| actually thought about that a lot when Tony Hsieh died,
| which probably a lot of people here are familiar with. He
| was incredibly generous, had the best intentions, but at
| the end of the day he created dependency relationships.
|
| 'Offering' other people a life well lived as if that
| should be my task and not theirs, and justifying things
| you otherwise wouldn't do has very big problems. Because
| you can always take it one step further, it never ends
| really.
| necovek wrote:
| You could start a business and hire people: offering
| others a chance is not necessarily about just donating
| money and letting others live as leeches.
|
| Basically, anyone who's got kids is trying (struggling?)
| to impart this very life lesson: it's easiest to just get
| your kids what they want, but that's not the best way to
| raise them.
| hardlianotion wrote:
| Knowing myself as I do, I would stop working after the
| first couple of pay checks.
| geoduck14 wrote:
| >Ask yourself, if a job offered you 100 million instead
| of the normal 100k for a software engineer would you be
| prepared to do things you normally wouldn't do?
|
| Definitely not. But just to be sure, you should still
| make me an offer.
| serverholic wrote:
| I would literally murder for 100 million.
| wing-_-nuts wrote:
| >The difference between 10 million and 10 billion is a
| factor of 1000
|
| Mathematically, yes. Practically, so what? 10M is a
| number that could provide all I could reasonably want for
| the rest of my life. 10B puts a target on my back, and
| for what? What does 10B buy me that 10M wouldn't? A life
| of isolation and extravagance? I can't say that I would
| turn down the chance to find out, but I'm FI already, and
| maybe it's lack of imagination but I already have trouble
| spending my modest discretionary budget as it is.
| jacobr1 wrote:
| > What does 10B buy me that 10M wouldn't?
|
| Influence on the global stage
|
| The ability to finance meaningful changes to the world -
| be they things like disease eradication, political
| movements, space endeavors. Rather than needing to band
| together with like-minded individuals and bring a voice
| to the table, you can outright create or buy a group to
| enable your vision (within the constraints of physics,
| and the political overton window)
| HWR_14 wrote:
| > What does 10B buy me that 10M wouldn't?
|
| Somethings that could interest you:
|
| A private island?
|
| A megayacht?
|
| A mansion/penthouse in a ritzy part of LA/NYC (Bezos's LA
| mansion alone was 1XX MM)?
|
| A professional sports team?
|
| A private jet?
|
| The ability to call the leader of your country and either
| get through or get a meeting on the books?
|
| Notice that what's interesting about a lot of those isn't
| just the initial cost, but many of them have quite high
| carrying costs.
|
| But those are just interesting generalities. At that
| wealth you can (really have to) get creative. Paul Allen
| bought a bunch of rock star's guitars and a bunch of Sci
| Fi memorabilia, and then built a museum to hold them.
| wing-_-nuts wrote:
| I don't want any of these. 10M is enough for a large
| estate with privacy and natural beauty. That's enough for
| me.
| HWR_14 wrote:
| > 10M is enough for a large estate with privacy and
| natural beauty.
|
| Where is that? Are you planning on living in the country?
| In most large cities, it doesn't seem like 10MM will be
| enough for you to live in an estate and still not have to
| work for ongoing regular expenses (food, etc.)
|
| And it's fine you don't want any of those things. Better
| than fine, that's great. But there _are_ a lot of things
| that you need more than 10MM for.
| wing-_-nuts wrote:
| estate = big piece of timberland in a rural location,
| yes. I have no intention of living in the 'big city' in
| retirement.
| com2kid wrote:
| At 10B there are diseases I could fund cures for all on
| my own.
|
| Heck I'd probably fund a couple tenure positions at a
| university on the condition that they research certain
| problems and publish everything to an open access
| journal. What does a bio lab cost to run, would 10
| million a year cover it? That'd be 100 years of funding
| for 10% of my wealth.
|
| I'd probably follow it up by going to one of my cities
| troubled youth schools and offering full ride
| scholarships to everyone who graduates. Figure 100
| students a year, 100k scholarship, that's another 10
| million a year, so another 10% gone.
|
| Tl;Dr I'm having no problems figuring out how to spend 10
| billion!
| JCharante wrote:
| Full ride scholarship for 100k? You can't even pay 2
| years of tuition at many schools with that, but I get
| your point.
| WalterBright wrote:
| > What does 10B buy me that 10M wouldn't?
|
| You could start a company that builds rockets to go
| explore Mars.
|
| In other words, you could do something great.
| throwaway210222 wrote:
| > What does 10B buy me that 10M wouldn't?
|
| A private jet.
| elif wrote:
| Ben and Dan (MC) have publically turned down offers that
| would make them each actual billionaires (cash not stock)
| pc86 wrote:
| Until now.
| emodendroket wrote:
| Well, for every MailChimp there are several whose equity is
| worthless. If the company is not public I barely consider
| equity at all.
| Vadoff wrote:
| You might as well ignore private companies altogether then,
| as the total compensation will be much less than public ones
| without equity factored in.
| emodendroket wrote:
| Well I now work at a big company everybody has heard of so
| I guess you're right.
| brightball wrote:
| About 10 years ago I remember visiting a dev company that
| shared a building with MailChimp (I think it was called High
| Groove). I just remember them talking about how MC was rolling
| in money and essentially looking for things to spend on. Said
| they'd brought in consultants and spent a fortune redesigning
| their whole office space, etc.
|
| I have no idea what compensation over there looked like, but I
| can't imagine that it was anything less than stellar.
|
| I've always been of the impression that equity is what you hand
| out when you can't afford to compensate people enough
| otherwise. If they are paying well, not handing out equity
| seems like a perfectly normal move.
| JohnJamesRambo wrote:
| > could be interpreted poorly now
|
| Yes doing the exact opposite of what you have always said tends
| to do that.
| bfrog wrote:
| Lack of equity at this point is a red flag to me. Points at
| either internal greed or external greed (investors) deciding
| hiring talent and offering skin the game isn't needed. Talent
| goes where the money is. I learned the hard way, don't be me.
| vmception wrote:
| The most interesting thing about this being that people care.
|
| Very little discussion about how Mailchimp services will perform
| under Intuit, here.
|
| So the lesson is don't make zero equity and zero exits your
| personality trait, but probably do the same things either way.
| WalterBright wrote:
| > But the many employees who have left Mailchimp in recent years
| are excluded
|
| When one voluntarily terminates a relationship with a company,
| and agrees to a settlement as part of that, that's it.
| basisword wrote:
| 1. Nobody can promise to never sell. If you believe that you're a
| fool. They held out longer than most.
|
| 2. Nobody is entitled to equity. You chose to take the job
| knowing you weren't getting any. Complaining about it now is
| idiotic. I see similar stories on HN from time to time about
| employees not getting equity or anything out of an acquisition. I
| get the feeling it's the "we're a team/family" vibe that causes
| this. People need to wake up and remember they're simply being
| paid to do a job for somebody else. You're not all best friends.
| If you want to be rich, take the risk and start your own company.
| Aeolun wrote:
| I am willing to take less money and comp to work for a person
| and mission I consider to be idealistic.
|
| If this person then turns their back on that for a huge
| immediate payout, I can sort of understand it, but it still
| pisses me off.
| someguydave wrote:
| spamming email hardly seems like a purely altruistic mission
| thomasahle wrote:
| > 1. Nobody can promise to never sell.
|
| It could be enforced by the contract.
|
| You could also write a contract that says that in the event of
| a sale, every previous employee is given equity retrospectively
| in proportion to how many years they were employed.
|
| Lots of ways.
| basisword wrote:
| Yeah that was my point, unless it's contractual you can't
| rely on it.
| SCLeo wrote:
| > 1. Nobody can promise to never sell. If you believe that
| you're a fool. They held out longer than most.
|
| I don't think this "nihilism-ish" view is healthy. Otherwise,
| you might as well just argue nobody can promise anything, and
| anyone who believes any promise is a fool.
| notJim wrote:
| > nobody can promise anything, and anyone who believes any
| promise is a fool.
|
| IDK, _can_ people ever really promise something in
| perpetuity? People and circumstances change over a lifetime.
| To me it is healthier and more realistic to understand this.
|
| I wouldn't say anyone who believes a promise is a fool,
| though. I would say to believe a promise is to believe it
| that the person is sincere in their intent, and that they
| will make a strong effort to continue that intent going
| forward. But to believe that person can actually stop time
| and guarantee to never change is not realistic to me.
|
| Note that I'm speaking cosmically here. In the world of
| business, I would say it _always_ eventually comes down to
| contracts and money. Those are what business is about at its
| core, and to expect otherwise is madness.
| rocqua wrote:
| Best I can figure out is that people feel like they had a moral
| right to sharing in the founders windfall / feel harmed by the
| founders having a windfall, and feel they were promised this
| harm would not come to them.
|
| I understand it feels shitty, but I don't think they have a
| valid complaint. I certainly don't think we should make a
| universal law "all companies should offer equity compensation".
| OJFord wrote:
| In most sectors it wouldn't even cross (low-level) employees'
| minds!
| windowsworkstoo wrote:
| bang on - I assume these people collected a monthly pay packet?
| If so, what is the best problem? Such naive entitlement.
| samstave wrote:
| Sometimes, though, companies outright lie to you.
|
| I have been through several acquisitions, as well as working at
| a firm promising significant profit sharing, then getting
| fucked over after they actively lie to you.
|
| FFS when Lockheed acquired us, the c-suite got awesome money,
| but every other employee was fucked over.
|
| People are douchebags during acquisitions.
| basisword wrote:
| Why would you rely on a promise in the scenario? If it's not
| contractual it's not real.
| thomasahle wrote:
| Maybe you don't have the money for a lawyer to go over the
| contract looking for loopholes.
| blunte wrote:
| This is just another example of why working (and getting
| educated) to be an employee is usually a poor decision compared
| to putting your energy into becoming the employer.
|
| Nobody explained this to me, and I spent over two decades running
| the employee rat race.
|
| Most races take your time and energy, leaving you with far less
| reward than they promised (no matter how much you excel).
|
| Young ones, let this be a lesson. Struggle and be poor for a
| decade if necessary, but build your own business. After 15-20
| years you will probably be way ahead of your same age employee
| people.
| bb123 wrote:
| Is this really good advice? Most businesses fail.
| wing-_-nuts wrote:
| It's not. The expected value of starting a business is well
| below that of being an employee at a large company
| mkl95 wrote:
| Equity is an optional, rare thing to be offered. And you should
| never trust a founder's / C-level's promises.
| rado wrote:
| Strange. They were free to move to a company that offers equity,
| but stayed?
| murbard2 wrote:
| Headline: "Mailchimp founders promised to never sell"
|
| Content: "It was part of the company lore that they would never
| sell"
|
| Maybe such promises were made, but the article is pretty scant on
| evidence.
| CodeWriter23 wrote:
| Just witnessing firsthand what Intuit has done to TradeGecko in
| transforming it into "QuickBooks Commerce". Really great API for
| interacting with, like, everything, deprecated and EOL'd in just
| under a year from now. Say your goodbyes to Mailchimp. They've
| probably got about a year before the Intuit business folks
| complete the assimilation.
|
| Turns out though, I end up being a NetSuite Expert due to their
| move.
| imgabe wrote:
| A lot of people who say they'll never do something would probably
| change their mind for $12 billion.
| alistairSH wrote:
| "Withheld"? Lol, no. That sounds nefarious. It wasn't. The
| founders wanted to retain ownership. That's their right. It
| appears employees were paid fair market wages for work.
|
| The inverse would actually be evil. Imagine being granted equity
| and a below market wage in a company that the founder never sold.
| kyleee wrote:
| Everyone has a price, old saying but it's basically true
| especially for life changing, generational wealth level money and
| all they had to do is sign on the dotted lines
| esyir wrote:
| 5-100 million is life changing generational wealth money.
|
| 12 billion is "ascend to the highest rungs of of wealth" level
| money. 12 billion puts you into the top 3000 list, looking at
| wikipedia's billionaire count.
| joncampbelldev wrote:
| I believe they're getting $5bn each. Though of course your
| point still stands.
| mywittyname wrote:
| Yes, the aren't walking away with $[?], more like $[?]/2!
| vishnugupta wrote:
| In a business world "never" should be interpreted as "next 3
| years". Even if the one making a claim/promise genuinely mean
| literally never, the circumstances change. And when they do it is
| naive to expect them to not react. Don't be dogmatic about
| attaching literal meaning to what's said.
| jfrunyon wrote:
| Or perhaps it's naive (and misleading and fraudulent) for
| business leaders to say "never" when they know it's not true
| and/or that they can't guarantee it.
|
| If you say something, you should mean it, and you should be
| held to it. Please stop making excuses for liars.
| approxim8ion wrote:
| Why shift the onus onto the person interpreting it instead of
| letting people be accountable for the things they say?
| IkmoIkmo wrote:
| Whether they promised to sell, or not sell, either way, they
| never promised equity.
|
| Not promising equity if you never sell can be a sensible
| decision, because otherwise you create expectations of a cash-out
| that never comes.
|
| Not promising equity if you do sell can be a sensible decision,
| because you keep more of the money to yourself. As long as you're
| transparant about not selling, employees can evaluate your
| remaining value proposition (salary, profit-sharing, perks) and
| decide whether it's worth it.
|
| All 12k employees evaluated that value proposition and said it's
| worth it.
|
| At some point the founders changed their mind. And that's okay,
| people change their minds. Unless they lied about it from the
| beginning and tricked people into a company vision they knew was
| bs, but the evidence doesn't clearly point to that.
| mrgordon wrote:
| > Not promising equity if you do sell can be a sensible
| decision, because you keep more of the money to yourself. As
| long as you're transparant about not selling
|
| Yes it's always sensible to take more money for yourself lol.
| But they weren't transparent about not selling (they said they
| wouldn't and then they did so they lied). Hence why the
| employees feel screwed
| smiths1999 wrote:
| Or they changed their mind (which they are entitled to do).
| qeternity wrote:
| Why do employees feel screwed? They didn't have equity. Why
| does it matter?
| Aeolun wrote:
| Have you ever been part of a company that was acquired (by
| a hideous corporate behemoth no less)? It's fucking
| horrible. Suddenly you find that requesting a new pen is a
| 3 day process and the previously free coffee in the cantina
| now costs 20 cents.
| qeternity wrote:
| Fair enough.
| goodpoint wrote:
| It does not matter if the founders changed their mind or lied
| from the beginning: the result is that they denied the
| employees what was promised.
|
| > All 12k employees evaluated that value proposition and said
| it's worth it.
|
| No, the value proposition included the promise that was later
| broken.
| joncampbelldev wrote:
| I don't see the promise impacting an employee's decision at
| all:
|
| 1) Founders promise not to sell. Employee is offered salary
| without equity.
|
| 2) Founders say nothing about selling. Employee is offered
| salary without equity.
|
| In both cases the employee has lost nothing of value. Someone
| made the founders a pretty ridiculous offer ($12bn for $700mn
| revenue company). Why should they refuse? No one is being
| harmed by the sale apart from some employees incorrectly
| assuming a broken promise means they deserve a chunk of the
| sale .... a sale that they would NEVER have benefitted from
| regardless of the original promise.
|
| Compare this to the usual startup "promise" of low salary but
| equity and fingers crossed we'll sell. Presumbly mailchimp
| had to offer higher salaries to compensate for the lack of
| equity offered. And if they didn't then that was a silly
| choice by the employee (low salary and no equity).
| annoyingnoob wrote:
| I've worked at a number of startups. I've had equity work out for
| me exactly once.
| KaiserPro wrote:
| The one thing that is missing from this discussion is the actual
| value of any stock that the employee might have received.
|
| The headline figure of $12B, of which maybe $1B is split between
| 1200 employees is almost always a fantasy.
|
| Having been bought out by a large company, the reality is far
| less rosy.
|
| If you're buying a company for both its assets, and its
| employees, giving all the employees "fuck you" money is a very
| bad play. they are going to leave and do things other than work
| for the new company. which means on day one you have a huge brain
| drain, culture shift and a hiring headache.
|
| Therefore you need golden handcuffs. Sometimes its a year, most
| of the time its a lot longer.
|
| Then we have the "headline" figures. Most of them are bollocks.
| Ctrl-labs supposedly was sold for $500m. It wasn't, it was
| significantly less than that. most peoples assumptions of what a
| stock option is valued at during a buyout it as much as 10x out
| from the actual value you'll receive. This is before we factor in
| the whole debt swap/priority stakes/other VC semi fraudulent
| share systems.
|
| unless its an IPO, and you are given actual shares in your hands,
| most of the money that's talked about during buyouts is illusion.
| nemo44x wrote:
| Many employees have no idea how a cap table works or even what
| it is. They don't understand that a buyout for $X dollars
| doesn't mean that all the shares are divided equally. VC's have
| a good deal with liquidation preferences.
|
| Sometimes an acquisition works out great but this generally
| when a company was going to go public anyways.
|
| We hear about all the IPO's that made 200 overnight
| millionaires. But we don't hear about the vast majority that
| either fail, have a poor exit, or just sort flag in the wind.
| defnmacro wrote:
| > We hear about all the IPO's that made 200 overnight
| millionaires. But we don't hear about the vast majority that
| either fail, have a poor exit, or just sort flag in the wind.
|
| To play devils advocate, most people who intentionally
| optimize their career focusing on equity rather than TC know
| this fairly well and have had their fair share of duds. You
| can also make the argument that overall the EV of optimizing
| your career for equity is probably lower than just getting a
| high paying FAANG job.
|
| However, with all that being said, the only way to be the
| "overnight millionaire" is to play the game. Also, there
| really isn't any overnight millionaires, those people
| probably worked for years for sub-par comp compared to
| alternatives and took a large risk whether knowingly or not
| to get that payout which may or may not have existed.
|
| There really is no free-lunch if your employee #5 at Uber you
| made tens of millions of dollars, however you took the risk
| of being employee #5 at Uber. Look at Snapchat though they
| paid huge amounts of equity when they were trading in the
| 10's even after they IPO'd if you were employee #10002 and
| joined Snap at 100k-250k in equity that netted you anywhere
| between 600k-1.5m if you held the shares, that's not
| including cash comp. However, you took the risk of joining a
| tech company that at the time nobody really wanted to join
| and may very well have closed the doors.
|
| That being said there very much is an alternative risk of
| going the safe route of just optimizing total TC. That risk
| is generally that path is well defined, the salary bands are
| well published, and overall despite whatever amount of effort
| you put in that will be around the amount you make. You'll be
| flogged into a corporate grind if you really want to make
| more either by job hopping or trying to get promoted. The
| risk with the defined path is well, its just that linear and
| well defined, not saying it's a great path and maybe even a
| better one overall but it means you'll be working for
| Facebook when the next company that is going to disrupt
| Facebook is potentially out there today.
|
| Equity stakes for employees means the tails on the right side
| of the distribution are rich. Assuming you get a cash comp
| that makes you happy that equity stake my very well be the
| thing that puts you in the 1-10m+ range if your extremely
| lucky. If not even if its mildly successful a 50-500k payout
| with a decent salary of say 150k a year over 5 years netted
| you 160-250k comp a year while putting you in the run to make
| potentially millions.
|
| If you work for a "startup" that is a decent place to work
| and respects WLB etc then taking those "risks" over your
| career might make a-lot of sense. You'll probably learn way
| more too, have more autonomy, and frankly they can just be
| alot of fun.
| nemo44x wrote:
| Indeed, equity can pay off in major ways. I've been
| fortunate to be involved in 2 startups that would
| eventually IPO and the bags of money at the end of those
| rainbows were life changing. I've been involved on the
| failed side too, ironically from a company that was
| extremely stingy with equity due to some very early success
| that was not able to scale and eventually got crushed -
| poor management.
|
| My only point is to be careful joining a company mainly
| because of ISO stock options, as are the most popular in
| our industry. It's more important that you believe strongly
| in the product and business, and have reason to believe the
| management is strong. You won't be given access to the cap
| table or equity structure and should seriously consider
| what you're sacrificing and what your title really means
| within the context of the size of the company.
|
| Startups are fun. They have less structure, you get to wear
| many hats, early successes seem easy and the cult of joy is
| contagious. However a series D 5 years later while the
| company is still feeling a bit too startup like and on
| their 3rd CEO is the more likely outcome.
| disiplus wrote:
| How long have you worked for those companies before the
| IPO ?
| nemo44x wrote:
| One was 6 years (8 year old company at ipo time) and the
| other was 4 years (6 years old I think). I think the
| typical time for an IPO is about 7 or 8 years from series
| a if it's going to happen. Most of those companies
| competitors that aren't already public companies either
| crashed out, were acquired for parts, or are still around
| but probably won't IPO as their growth got stuck
| somewhere along the line. Was a good 10 year run.
| Aeolun wrote:
| Given that MailChimp has zero outside investment though, none
| of that applies, and 50% of the buyout price does actually go
| directly to the founders.
|
| If employees had options/stock, it would be worth exactly as
| much, since there's no preferred shares or outside investment
| to make good on first.
| rk06 wrote:
| If employees had options/stock, then there would be preferred
| shares in the picture too. They usually go hand in hand with
| stock options.
|
| I still believe MC is somewhat better than the more common
| scenarios where employee pay more in taxes on stock than what
| they get from stock
| manquer wrote:
| In a sale or a IPO you are not allowed to sell immediately.
|
| Even founders will always have vesting schedules for stock
| granted.
|
| I would say it probably A lot of people stick around way longer
| than otherwise because of equity grants making it financially
| sensible to do so.
|
| There are plenty of ways to retain talent in public or private
| companies while granting stock options.
| lostcolony wrote:
| This is why I largely stopped looking at company mission and
| values and such to determine where I want to work (beyond just
| immediately saying "nope" to even considering a few). I look at
| comp, culture, and assume my stay will be temporary since the
| former of those is likely to not change at the rate the market
| does, and the latter of those is likely to change in ways I
| object to given time.
|
| The only reason to join a company based on mission or whathaveyou
| is if it's a non-profit. Maybe, -maybe- if it has done things
| that hurt the bottom line, to the betterment of employees, that
| have no precedent in industry (i.e., Gravity Payments), but even
| then, you benefit from that, so it still counts as comp to my
| eyes.
| sam0x17 wrote:
| I think it's fairly obvious that using "we will never sell" as a
| justification for not giving other people equity over the years
| was just that -- a justification for not giving other people
| equity over the years. It seems that paid off.
| locallost wrote:
| So the lesson is: never believe in promises where you have no
| control over those that do the promising.
|
| I do wonder. MailChimp employees are probably respected, and
| could find something else quick. Why don't they threaten to walk
| out? Without employees, what is the company actually?
| kolla wrote:
| I'd break any promise I'd ever made for that ammount of cash.
| thiscatis wrote:
| So funny seeing all these LinkedIn posts show up by pseudo
| entrepreneurs and startup gurus copy pasting the same shit about
| how awesome they did by not giving equity.
|
| Only to see the balloon popped with the other side info on HN a
| couple of days later.
| jdorfman wrote:
| As the article says, equity rarely pays off, that has been my
| experience. If you are joining a company in hopes you'll be a
| millionaire once the company exits then you're setting
| unrealistic expectations and will be disappointed.
| mywittyname wrote:
| Most late-entry employees get pretty modest equity grants IMHO.
| Unless you're a serious domain expert or a Carmack-level
| developer, you're probably looking at a few thousand shares a
| year, which isn't going to be million territory in a company
| for decades. Think about how long it would take to turn 1000
| shares in Amazon into a million.
| DisjointedHunt wrote:
| Circumstances changed. They promised to never sell based on their
| perception of how circumstances would evolve even in the most
| ambitious scenario at the time, I'd imagine.
| quantified wrote:
| Naive employees. Companies will break their promises
| eventually. C'mon, Google no longer promises not to do evil.
| onion2k wrote:
| Not true. https://abc.xyz/investor/other/google-code-of-
| conduct/ The last line is "And remember... don't be evil, and
| if you see something that you think isn't right - speak up!"
|
| The stories about Google removing the line were wrong. They
| just moved it from the start to the end of the document.
| 10729287 wrote:
| They're just asking their employee to not be evil there,
| not saying they won't as a company. You'be been (evil)
| tricked.
| h_anna_h wrote:
| > and if you see something that you think isn't right -
| speak up!
|
| ...and get fired
| john_yaya wrote:
| Thanks for this. Like so many people, I've long believed
| the myth that they removed it - though I can hardly be
| blamed, since A-list tech media have reported it as true.
| quantified wrote:
| Thank you.
| anothernewdude wrote:
| Sure. But they'd be more honest removing it.
| Proven wrote:
| He said, she said...
|
| Customers and employees who wanted to rely on those "statements
| of direction" should have asked for a hard contractual
| commitment...
| metadata wrote:
| The problem is not that the MC founders never intended to sell,
| then changed their mind after they reached an interesting sum.
| The problem is just that they were so certain they will never
| sell and talked about it so many times, that (some of) their
| employees now feel betrayed.
|
| I am certain they never wanted to screw anyone and they
| identified with their "bootstrapping, never sell" culture. I am
| guilty of the raising bootstrapping to pedestal for many years
| and understand their values.
|
| Learning from this, it may be good not to a) identify with
| current beliefs as we might change priorities and learn new
| things in the future, and b) talk in length about our current
| beliefs. Perhaps "we don't think we will ever sell and have
| optimized our business for that, but who knows what future will
| bring" might have worked better.
| smokey_circles wrote:
| I don't understand some of the points here.
|
| You as an employee are not entitled to equity at all. That's
| incentive, not required.
|
| And equity isn't a great offer either. How many startups
| REGULARLY fail before they even get out the door?
|
| For everyone talking about how much money they made off of equity
| options, we can find plenty more that lost out on a chunk of
| their monthly salary.
|
| I'm not saying don't take equity, but let's be honest:
| Identifying if a company has the potential for their equity share
| to outweigh the lost salary requires skills and knowledge most of
| us don't have.
| specialist wrote:
| What about profit sharing? Fairness?
|
| When execs get a visit from the gold faerie, it's just good
| manners to spread around some of the manna.
| MAGZine wrote:
| I think in this case its pretty clear that equity would have
| been a great offer.
| Aloha wrote:
| This appears to be a thread with a better explanation of their
| story.
|
| https://twitter.com/michaelmartocci/status/14379982016599203...
| Semaphor wrote:
| https://threadreaderapp.com/thread/1437998201659920389.html
| curiousgal wrote:
| I can't for the life of me take anything posted as a Twitter
| thread seriously. It is just so stupid having to write/read
| something in so many little chunks.
| bryceacc wrote:
| and there are entire sites dedicated to unraveling a twitter
| "thread" so it's actually readable. so backwards
| caslon wrote:
| _Please don 't complain about website formatting, back-button
| breakage, and similar annoyances. They're too common to be
| interesting._
|
| https://news.ycombinator.com/newsguidelines.html
| entropicgravity wrote:
| The long con strikes again.
| rmason wrote:
| It's the culture. In a lot of places equity isn't understood or
| valued. Pretty common outside the Valley and maybe New York and
| Boston. In Michigan startups the top five people might have
| equity and that's it.
|
| The exception is Ann Arbor where they understand and value
| equity. It's also where they have the strongest startup culture.
| But things are starting to change in Detroit.
| pm90 wrote:
| I feel like equity is a very important reason for the success
| of SV companies. Equity holding employees have an intrinsic
| motivation to work towards the success of their workplace. When
| equity granting companies succeed they make a lot of people
| wealthy (rather than just the founders/investors) creating a
| new class of investors.
| ykevinator3 wrote:
| Good for them. I think it was a super overvalued buy because
| there isn't much defensible IP but smart to get out when you can,
| and moral analysis of legal business is futile and meaningless.
| You can aacrive meaning for your own self esteem but money
| doesn't care.
| cascom wrote:
| I'm pretty sure for every mail chimp employee that wishes they
| had pushed for stock compensation, that are scores of other
| startup employees that wish they had not taken stock in lieu of
| cash in now worthless start-ups.
|
| People just need to own the choices they make.
| gjvc wrote:
| First rule of business. Never trust anybody.
| rocqua wrote:
| I see how it hurts to be lied to.
|
| I don't see how "we weren't given equity but now they sold" is an
| issue. It doesn't change anything about your past payout. Yes,
| you would have been better of had you gotten equity, but you
| probably would have given up salary for that. Apparently you
| found the "no equity" deal acceptable.
|
| Why does being sold make the old compensation scheme unfair all
| of a sudden. Its not like employees have a right to equity. It is
| somewhat standard, but here it was clear enough ahead of time
| that there would be no equity. The given reason for why they do
| not offer equity turned out to be wrong. But why does the reason
| you did not get equity matters? Would a different reason for not
| giving equity have changed whether you had accepted the job?
| fnimick wrote:
| But the "no equity" deal was valued as acceptable because the
| equity was positioned as worthless in the "never sell" world.
| If employees had known there would be a sale and they'd never
| see a cent from it, they may have valued the offer differently.
| 1vuio0pswjnm7 wrote:
| Does anyone else think this price Intuit is paying is a bit high.
| tonyedgecombe wrote:
| Especially after all the key staff leave which has been the
| pattern in the all takeovers I've seen at first hand.
| junon wrote:
| I don't see how more employees aren't absolutely enraged. The
| announcement tweet[0] is filled with congratulations and only a
| handful of "why intuit?" tweets. Nobody mentioning lying to
| employees.
|
| I'd be furious, personally.
|
| E: It appears employees _are_ getting stock and /or payouts after
| the deal closes. This article is either outdated or misinformed,
| or both. [1]
|
| [0] https://twitter.com/benchestnut/status/1437514331059630089
|
| [1] https://twitter.com/benchestnut/status/1437869751091535875
| stadium wrote:
| Are any company charters setup to let employees participate in
| funding raises or acquisitions at the same terms as the 3rd
| parties? And what would that do to the marketability of the
| company to those 3rd parties?
|
| Sort of a poison pill that benefits employees during an exit.
| sergiomattei wrote:
| Yawn. Why is this news?
|
| People and circumstances change.
| cirkut wrote:
| Remember interview at Swissborg... Equity sucks, best are
| tokens... Well easy to say when you have majority of voting
| rights...
| marsdepinski wrote:
| All things people and companies tell you have an implicit "at
| this time" attached to them.
| backoncemore wrote:
| Mailchimp is very clear about not offering equity. I turned down
| continuing to interview when I found out.
| itzprime wrote:
| The majority of companies don't give equity in the world. And
| those who do only give it to certain employees. As they don't
| violate RSU or stock compensation plans they didn't withheld
| equities. If I created a successful company, I would also say
| that I would never sell. However $12B is multi-generational
| wealth and with it you can do anything you want. So that sum
| would also pursuade me.
| smt88 wrote:
| Well, let's compare apples and apples. The majority of US-based
| software companies give equity, especially in earlier stages.
| markmark wrote:
| And mailchimp's employees could have chosen to work for any
| one of those if equity was important to them. No one was
| tricked here.
| smt88 wrote:
| I agree, but it's notable that MailChimp was unusual in
| this regard.
|
| It's also easier to convince people they'd rather have cash
| than equity if you tell them the equity will never be
| liquid.
| MAGZine wrote:
| "We're not giving you equity; we're never going to sell."
|
| If the explanation the company gives you for not giving
| equity is that they're never going to sell, but they end up
| selling, how is that _not_ being tricked?
|
| Seems like a pretty cut and dry case of bait and switch.
| Why even tell people you're never going to sell? How about,
| "equity is not a part of the compensation package we
| offer," with no false justification?
|
| Acquisitions suck. Depending on the $ amounts/growth
| trajectories/timelines/etc I'd potentially take less TC up
| front to avoid one.
| fastball wrote:
| $12B is all your descendants forever if you manage it well.
|
| I mean treating it as a lump sum you only ever pull from
| without any appreciation in value and you can bankroll your
| descendants to the tune of $10,000,000 per year for 1200 years.
| [deleted]
| jl6 wrote:
| Put your hand up if you would lie for $12B.
|
| Now you know how the world works.
| xcambar wrote:
| This resonates interestingly with the recent post about Mullvad,
| yesterday on HN: https://news.ycombinator.com/item?id=28551960
| acjohnson55 wrote:
| My thing is that the founders changed their mind about being
| acquired, so they could have changed their mind about employee
| equity at the same time. It's their right to do it how they did,
| but I also think the blowback is fair.
| ihusasmiiu wrote:
| I'm not sure what's the news here.
| lionkor wrote:
| Say you work at a small company, 15-20 employees. Your boos tells
| you he will never sell, but you and your 14-19 colleaques want
| that on paper.
|
| Is this possible? How would you go about this? I'm currently in a
| situation where I'd love to know if "surprise sale" can be
| avoided.
| movedx wrote:
| "I'm not selling, I'm just moving ownership into this here
| trust."
|
| <20 minutes later>
|
| "I'm not selling the company, the trust is. I said *I* would
| never sell, but the other trustees are selling it, not me. I
| can't prevent this"
|
| <20 minutes later>
|
| "OK everyone listen, good luck, I've got my $5B so yeah, lol?
| Laters!"
| HatchedLake721 wrote:
| I don't think it's possible, but why does it matter?
|
| You either join with lower salary + equity, or higher salary
| and no equity. (and equity is always a lottery ticket)
|
| You shouldn't trust anyone saying "they would never",
| especially in business. Situations change, people change their
| mind, opportunities change, lives change, regulations change
| and so on.
| zild3d wrote:
| > How would you go about this?
|
| Realize that "they would never sell" means they don't plan to
| sell, but there is a number that would change that decision. So
| ask what that number is. 100M? 1B? 10B?
| extr wrote:
| I don't really understand why it's framed as withholding equity.
| It just wasn't offered, totally fair choice by the founders. If
| you didn't like it, why work there?
| echelon wrote:
| It's in Atlanta. There wasn't much else at the time, unless you
| counted Pindrop and AirWatch.
|
| Nowadays there are plenty of alternatives in Atlanta and no
| excuse for subpar comp. There are giant regional Microsoft [1],
| Google [2], and Facebook [3] offices, and a ton of good
| startups that offer equity at ATDC [4] and beyond.
|
| After it was obvious Mailchimp wasn't the best place to work, I
| tried to get my Atlanta mailchimp friends to join the then-pre-
| IPO unicorn I worked at. My equity is now worth eight figures
| (well, high seven, but I sold some along the way).
|
| I worked with someone even luckier who wound up as high C-suite
| of Greenlight, pre-unicorn status. Again, by not drinking the
| kool aid and taking charge of their career.
|
| Mailchimp underpaid these folks. And all for a shitty PHP stack
| that spams people. It's a job that's one notch above working at
| Home Depot or The Weather Channel.
|
| Unless you're really happy with what you do (and even if you
| are), shop around. You owe it to yourself. Microsoft is
| literally a mile away and will pay so much more.
|
| Mailchimp is going to be scraping the bottom of the barrel for
| talent after these offices come online. There are $300-400k
| jobs in the city if you look.
|
| A good lesson for the Atlanta tech scene.
|
| [1] https://www.fox5atlanta.com/news/microsoft-announces-
| major-e...
|
| [2]
| https://www.bizjournals.com/atlanta/news/2021/03/23/google-c...
|
| [3] https://atlanta.curbed.com/2020/3/19/21186363/facebook-
| atlan...
|
| [4] https://atdc.org/
| elif wrote:
| Wow 7-9 million dollars worth of unsellable Pokemon cards.
|
| And to keep them you just have to keep working?
|
| Maybe I should work as a unicorn as well!! Oh wait I'd rather
| rest on my actual cashm
| bigiain wrote:
| I think that's missing the point?
|
| Coca Cola weren't and still aren't offering equity. Nobody
| describes that as "withholding equity".
|
| Most places in the world, most jobs do not offer equity as
| part of compensation. And everybody understands that and
| chooses too apply or not based on what they are offering for
| compensation.
|
| "pre-IPO unicorns" are very much the exception, very rarely
| actually pay off, and people who have the opportunity to shop
| around in that lottery should be grateful but aware that for
| every guy with an eight figure success story, they're are
| tens of thousands with some worthless option paperwork that
| never even made enough money to buy them a meal, let alone a
| house...
| caslon wrote:
| The Coca-Cola Company actually _does_ offer RSUs to
| employees.
| akhosravian wrote:
| I would be surprised if any large publicly traded
| corporation doesn't offer some form of equity
| compensation to basically all employees with a six figure
| or higher salary.
|
| The only lesson here is it is another data point in being
| very skeptical of someone claiming "we'll never sell" in
| a compensation negotiation -- if the founder(s) never
| plan to raise outside money or sell the company there's
| very little downside to establishing an employee stock
| pool and awarding options to folks that may never be
| exercised.
| patio11 wrote:
| It is in fact not the practice of most publicly traded
| companies to award equity outside the tech company, even
| to highly-compensated employees.
| ledbettj wrote:
| When I worked at Cisco years ago fresh out of college,
| they offered an Employee Stock Purchase Program -- you
| could put up to X$ towards purchasing Cisco stock over
| the quarter, and the stock was issued at the end of the
| quarter at min(start_price, end_price) * 0.85.
|
| I haven't worked at another large corporation since then
| but I thought that was fairly generous and I still have
| quite a bit of CSCO from that program.
| e1g wrote:
| It's fairly common for execs (both in the US and EU),
| it's just framed as LTIs via phantom shares. Comparable
| to RSUs in philosophy, outcomes, and vesting schedules.
| Source: we sell software to run these programs.
| midasuni wrote:
| I don't get a desire for stock - why would I want all my
| eggs in one basket. If my savings and my income are from
| the same company, and it does well, that's great and I
| make a fortune
|
| But if it doesn't do well, I lose my job and have nothing
| to fall back on.
|
| Surely it's better to have a diverse portfolio?
| kevinventullo wrote:
| One benefit is that stock is typically awarded in the
| form of a multi-year grant, where the number of shares is
| priced _at the time the grant starts_. So if the original
| grant says you get $X worth of stock per year for the
| next 4 years, and then the stock price goes up 40% in
| Year 1, you're now effectively getting $1.4X worth of
| stock per year for the remaining 3 years.
| notJim wrote:
| To illustrate this, imagine at offer time, you're given
| $150k + $80k worth of stock over 4 years. That works out
| to $170k per year. Nice, but not even doctor money. The
| stock is currently $100/share, so that's 800 shares. Now
| imagine the stock 4xes (not unusual in tech). By year 4,
| you're making $230k, without having had to beg for a
| raise or anything. This is how people end up with
| ludicrous total comp in tech.
| jdavis703 wrote:
| The taxes on equity are substantially lower than on
| salary. Also equity compensation can be an order of
| magnitude higher than any market-based salary would ever
| be.
| mercutio2 wrote:
| The taxes on RSUs at vesting are identical to taxes on
| other income.
|
| RSUs are equity.
|
| If you get stock options, there are (very limited)
| circumstances where those options have favorable taxation
| relative to income, but it's a gamble, if you follow the
| strategies that might yield tax advantages.
| RC_ITR wrote:
| I mean, they give out <$300mn a year vs. Market Cap of
| $240bn[0]. Assume most of that flows to the top and it's
| basically 0.
|
| [0]https://www.macrotrends.net/stocks/charts/KO/cocacola/
| stock-...
| cutthegrass2 wrote:
| Slight tangent, but RSU's are "sudo equity" IMO. I'm not
| sure how the tax liability of RSU's works in the US, but
| in the UK they are treated as "income" and taxed as
| income, not taxed as "capital" as most other types of
| equity are.
|
| As a result, I loose just over 50% of my RSU value to
| income tax when they vest.
| [deleted]
| pnut wrote:
| pseudo.
|
| "sudo" means "super-user do", is pronounced "soodoo"
|
| https://en.wikipedia.org/wiki/Sudo
| cutthegrass2 wrote:
| Yep, gotcha. I actually meant "pseudo", but I spend a lot
| of my day typing sudo so...
|
| and whilst we're nitpicking, I also meant "lose" and not
| "loose" in the sentence below.
| mywittyname wrote:
| I thought it was pronounced pseudo, thinking it's a joke.
| You're not actually the super user, you're a "pseudo"
| super user.
| someguydave wrote:
| Typically in the US public companies sell RSUs to
| employees with a discount to the market price, so there
| is compensation for income tax.
| mercutio2 wrote:
| No. That is ESPP. RSUs are, indeed, just taxable income
| linked to share price.
|
| The fact that RSUs are taxed as income in no way means
| "they aren't equity", though, so this whole thread is
| just filled with bizarre inaccuracies.
| someguydave wrote:
| Yeah I'm wrong, I was thinking of ESPP, not RSUs.
| cutthegrass2 wrote:
| I don't disagree with this. They are indeed a form of
| equity.
|
| My issue relates to how they're treated with respect to
| taxation by the various revenue authorities. In the UK,
| the tax paid on RSU's vesting is related to the personal
| income tax bracket the individual falls into. Which means
| for anyone in the UK's higher tax bracket, you end up
| losing ~50% of the amount vesting as tax.
|
| If these behaved like other forms of equity, ordinary
| shares, preference shares for instance, they'd be taxed
| as capital, the gains of which would be taxed 'when you
| sell them' and at a much lower rate of tax - ~50% lower
| for a UK higher rate tax payer.
|
| I'd rather a company just pay me a higher basic salary
| than award RSU's. At least then it's both pensionable and
| often used as a multiplier at bonus/salary raise
| calculation time.
| mercutio2 wrote:
| Agreed! If you can guarantee that you're going to get the
| same total compensation, compensation-as-salary is always
| better than compensation-as-RSUs.
|
| Of course there's upside to exposing yourself to your
| company's stock performance, but there's also downside
| risk, which people looking at equity compensation tend to
| downplay.
|
| Turns out its worked out well for big tech employees, as
| big tech has gone up 10x over not very many years.
|
| But that's not a reliable state of affairs into the
| indefinite future for big tech, and it was never reliable
| for smaller companies.
|
| Nitpick: "If these behaved like other forms of equity" I
| don't know what "behaved like" means in this context. You
| start out without equity. Then your company _pays you_
| equity. That 's always going to be taxed as income,
| because it's transparently just income, just paid in a
| different liquid market.
| someguydave wrote:
| Presumably the advantage of equity is also the ability to
| exercise some control over the business (the degree to
| which depends on the shareholder's agreements)
| kevinventullo wrote:
| It is the same in the US.
| cascom wrote:
| No idea what KO's employee comp plans look like, but since
| it's public wouldn't you rather get your comp in cash, and
| then decide whether to buy stock on the open market? Rather
| than the company make that decision for you?
| sam0x17 wrote:
| I think the issue here though is the MC founders repeatedly
| used "we will never sell" as their justification for not
| offering equity.
| cascom wrote:
| Sure it was the justification, but it makes zero sense as
| a justification. I'm not saying they should have offered
| equity, but I think logic is completely flawed and am
| surprised people bought into that logic.
| invalidname wrote:
| People are allowed to change their minds. They did
| negotiate a pretty big employee compensation package as
| part of the deal. So I think OP was just trying to get a
| clickbait title and ride on the backs of those founders.
| Igelau wrote:
| > People are allowed to change their minds.
|
| This is absolutely right, though sometimes it pisses
| people off when you do it.
| sam0x17 wrote:
| > People are allowed to change their minds.
|
| But that doesn't make it ok when you specifically say you
| won't and use that as a justification for your actions
| many, many times in public. Title doesn't seem
| sensationalist at all.
| majani wrote:
| I'm sure when they were coming up with that statement,
| they had never in their wildest dreams imagined that a 12
| billion dollar offer would ever be on the table. There is
| not a single human being on earth who can turn down that
| kind of money.
| sam0x17 wrote:
| > There is not a single human being on earth who can turn
| down that kind of money
|
| Unfortunately for all of us there are a handful of people
| who, due to their own wealth, certainly can.
| 908B64B197 wrote:
| > Most places in the world, most jobs do not offer equity
| as part of compensation.
|
| That's not the issue. Most jobs at companies that matter
| do.
| wing-_-nuts wrote:
| What resources do you use to better understand the lay of the
| land in the Atlanta job market? I've been somewhat relying on
| levels.fyi and blind. I knew about companies like MS, VMware,
| square, etc. I thought the google office was just for
| networking stuff. I didn't even know FB had an office here.
|
| I'm at that awkward level where I'm paid enough that I'm at
| the high end of 'normal' comp for local companies. I didn't
| think there were jobs at the $300k level for ICs in this city
| though. It appears the market has changed while I wasn't
| looking.
| rocqua wrote:
| Whilst this is totally fair as an assessment, it would still
| be just as true if mailchimp founders had not sold at all.
|
| The current new, at best, puts a fine point on this argument,
| but it doesn't change anything.
| LurkingPenguin wrote:
| If you offered your friends an opportunity at your company,
| which based on your comment ostensibly would have paid them
| more and granted them equity, why did they stay at Mailchimp?
| echelon wrote:
| I don't think my friends thought my job was better, despite
| my regularly selling it. I failed to get them over for a
| happy hour or tech talk, which would have been a better
| sell than just talking about comp.
|
| Mailchimp was also super "artsy" (they hire artists to do
| murals), and my friends talked about how cool the founders
| were. This played the biggest role, I think. They had a
| mythos.
| nextlevelwizard wrote:
| > despite my regularly selling it.
|
| This usually is a huge red flag. If one of my friends
| would try to regularly recruit me into their startup I
| would be very suspicious if the company was on solid
| ground or if my friend is just desperate and trying to
| get someone else into the bad deal they found themselves
| in so they don't have to deal with it alone.
| _0ffh wrote:
| I regularly wonder what definition of "friend" some
| people operate with. If I found myself in a losing
| position, I'd do my best to keep my friends _out_ of it,
| not to drag them in.
| rocqua wrote:
| There are 'tiers' of people I would consider a 'friend',
| who'se pitches to me I would also be skeptical off, for
| suspicion they are self-interested.
|
| Now, this tier of friend is very close to 'acquaintance'
| but I think there are plenty of people for whom the
| boundary of 'being a friend' includes these kinds of
| acquaintance.
| disgruntledphd2 wrote:
| Yeah, I've been at a few companies in the last few years,
| and would never try to recruit anyone unless I was sure
| that they'd enjoy the new company.
| LurkingPenguin wrote:
| Well it sounds like comp wasn't as important to your
| friends at that time. If that's changed following
| Mailchimp's acquisition, that's on them, not Mailchimp.
| filoleg wrote:
| Agreed. While the comp situation at MailChimp was subpar
| due to no-equity component, it isn't fair to blame them
| for the outcome of this story here.
|
| There were no lies. The employees werent offered equity
| that ended up being worth nothing. They got job offers
| that stipulated X cash with no equity, and they willingly
| and knowingly accepted those offers, and they got
| compensated as promised. I fail to see how MailChimp is
| at fault here.
|
| The fact that there is Microsoft/Google/etc. and tons of
| other companies in the vicinity that pay way more, and
| grandparent poster's friends still were staying there
| despite the poster's urging and advertising, tells more
| about those friends than Mailchimp.
| esyir wrote:
| I don't get it. One of the biggest memes around the
| startup scene is that equity is essentially a lottery
| ticket, and most lottery tickets don't win.
|
| Taking a known cash component with no equity, especially
| since this is already known and in the open is well
| established as the safe, "smart" move.
|
| Then you see this hullaballoo about not winning the
| lottery.
| mrgordon wrote:
| Well you're not distinguishing between two situations:
|
| 1. Someone chooses not to have equity because they want
| more cash now, don't want to risk part of their
| compensation on equity, etc.
|
| 2. The company says their equity will never be liquid so
| you definitely don't want it. You accept a cash offer
| with profit sharing instead. Then they sell the shares
| for $12 billion leaving you unknown job security and low
| expected future compensation while they profit off their
| lies
| imgabe wrote:
| It's framed like that because it gets lots of clicks and
| generates lots of angry discussion. It has nothing to do with
| presenting an honest assessment of what happened.
| MichaelZuo wrote:
| I wish in these cases @dang or another moderator could change
| the title to be less click-baity.
| Jenk wrote:
| I'm confused.. it fits the literal definition of withholding:
|
| > To refrain from giving or granting: synonym: keep.
| imgabe wrote:
| Words have both _con_ notations and _de_ notations.
|
| The denotation is the literal dictionary definition. The
| connotation is the associated meaning that comes to people's
| minds.
|
| The connotation of "withholding" is to prevent someone from
| getting something they are owed. Business Insider wants to
| imply that MC employees were owed equity, despite MC being
| clear and upfront about the fact this was not offered.
|
| This way, many thousands of aggrieved employees who are
| unsatisfied with their career decisions and seeking someone
| to blame will click on the article and feel like they are
| victims of an unjust system. This will generate many
| pageviews and therefore revenue for Business Insider.
| Cthulhu_ wrote:
| I don't think the withholding equity was a problem per se, it's
| just that the employees were lied to all this time. Not just a
| white lie, but a lie on a company's founding principles, its
| building blocks, a core aspect of their personnel's mindset
| when working for the company. It feels like betrayal. Like
| Google silently withdrawing their "don't be evil" principle
| when it turned out they couldn't keep that up with a straight
| face. And it has cost Google some good employees.
| giarc wrote:
| I don't think they lied necessarily, they said they had no
| intent on selling and they actually proved that a few times
| by turning down offers. A giant offer came and their decision
| to sell changed.
|
| I think lying in this case would be to say to employees, "We
| will never sell" while negotiating a sale in the background.
| Timing is everything.
| GiorgioG wrote:
| People change, their priorities & interests change. They
| owned the company, they paid their employees salaries -
| beyond that they owed them nothing unless otherwise
| negotiated. It just sounds like sour grapes.
| gsibble wrote:
| They lied to their employees and stole from them income
| that would have otherwise belonged to them.
| asdfasgasdgasdg wrote:
| Any time you pay someone an amount, you could be said to
| be "stealing" income from them by not paying them more.
| But the fact is that these MailChimp employees were not
| owed more than they were paid, and were not entitled to
| it under any widely accepted economic or legal theory in
| the United States, where they are employed. They agreed
| to work for a certain amount, which by all accounts was
| compliant with minimum wage and other laws, and nobody
| has alleged that they were paid less than that.
|
| As far as being lied to goes, people would be better off
| if they replaced "never" with "not in the foreseeable
| future" any time they hear it. Who knows whether the
| founders genuinely believed their statements about never
| selling when they said them. Probably so, but if not,
| well, it's unfortunate. That being said, I doubt that
| anyone worked at MailChimp mainly because they believed
| it would always be privately held.
| ecf wrote:
| > They owned the company, they paid their employees
| salaries - beyond that they owed them nothing unless
| otherwise negotiated.
|
| I'm sad to hear that is your experience. Perhaps find an
| employer who wouldn't treat you like a slave if legally
| allowed?
| GiorgioG wrote:
| > Perhaps find an employer who wouldn't treat you like a
| slave if legally allowed?
|
| Are you wealthy enough to stop working entirely? If not,
| you (and most of us) are a slave to the system. Yes you
| can choose to change employers, but you cannot choose to
| stop working if you want to eat, have a home,
| electricity, etc.
|
| Employers are not your friend. They don't pay you because
| they're "nice people".
| ecf wrote:
| What I'm trying to say is that it doesn't have to be this
| way. There are plenty of companies out there which ARE
| NOT like this, no matter how much you try to say that
| employers are not your friend.
|
| I feel you've been involved in some exploitative
| workplaces in the past that have pessimistically shaped
| your view of business.
|
| With that being said, I'm still youngish and I'm probably
| naive. Maybe I'll become a jaded capitalist too when I'm
| older.
| GiorgioG wrote:
| > I feel you've been involved in some exploitative
| workplaces in the past that have pessimistically shaped
| your view of business.
|
| I don't think it's a pessimistic view of business. I've
| always felt this way.
|
| Businesses view people as resources. When resources are
| in high demand, companies compete for you and thus must
| try to make/keep you happy. When supply is high and
| demand is low they can and will make lowball offers and
| make unreasonable demands like working long
| hours/weekends/etc.
|
| I've worked for good companies and bad. The bad ones
| always tried to make you feel guilty for not putting in
| the extra effort. The good ones make you feel like
| family. But they're still companies with one core
| mission: grow and make someone more money.
| GiorgioG wrote:
| > There are plenty of companies out there which ARE NOT
| like this, no matter how much you try to say that
| employers are not your friend.
|
| You misunderstand. These employers/managers/etc can be
| decent human beings, but at the end of the day you are a
| resource to be utilized to further their goals in
| exchange for an agreed-up sum of money. As long as things
| are going well, everything's great for everyone involved.
| However, if/when things start going sideways - for
| example a round of layoffs are needed, they're going to
| make hard business decisions based on what's best for the
| company - your personal situation/needs will not be taken
| into account.
|
| Don't mistake professional behavior and cooperation at
| work for friendship. They're not your friends.
| WalterBright wrote:
| > Don't mistake professional behavior and cooperation at
| work for friendship. They're not your friends.
|
| Paying someone to be your friend always makes for an
| awkward relationship.
| gsibble wrote:
| This. I'd feel furious if I was not offered equity (even with
| a good comp package) at a company that eventually sold for
| this much after being told equity is not an effective form of
| compensation because they're never going to sell. Well, they
| broke that promise and the hundreds of millions of dollars
| that would be going to employees is not. This is a great
| example of why we have no middle class and why upward
| mobility in the US is so difficult. These employees were lied
| to that equity would never be worth anything so that their
| slimey bosses can keep it all for themselves.
| top_sigrid wrote:
| Yeah, this. You work for a company and agree to do this for
| amount X in whatever form. If equity is important to you and a
| company does not offer it, I don't know why the company should
| be to blame. Of course it's a pity that they could not hold up
| to their ideals, but I guess no one should be surprised that
| everybody might have a price tag when talking billions.
| khazhoux wrote:
| Because while you're strictly right, in a legal and facts-on-
| the-ground sense, there's an element of trust in these
| decisions. And the (not-legally-binding) concept of "we're in
| this together" is part of the startup story, and part of the
| pitch that company owners use to attract employees away from
| other high-compensation opportunities.
|
| Employees regularly (as in, basically always) join startups for
| peanuts in equity compared to the equity held by founders. And
| they're told "we're in this together, we'll win or lose
| together"... without realizing that the stock they received was
| so tiny, that the founders' Win means a private island and
| trust-fund grandchildren, while their own Win will be one fifth
| of a down payment on a house, even in the best outcome.
|
| The cap table isn't revealed to job candidates, but they still
| get vague reassurances that they're being offered a "great
| package." If they saw how their package compared to the
| founders' holdings, I think employees would demand a hell of a
| lot more equity, for the risk they take.
| WalterBright wrote:
| > without realizing that the stock they received was so tiny,
| that the founders' Win means a private island and trust-fund
| grandchildren, while their own Win will be one fifth of a
| down payment on a house, even in the best outcome.
|
| With 1200 employees, your share will inevitably be a tiny
| fraction.
| khazhoux wrote:
| At that scale, of course. But what I observe is that the
| inequity (through lack of information) starts at day one:
| the first employee (often for a startup with zero code
| written yet) signs up for 1% because this is "industry
| standard" and because they believe that the investors and
| option pool is the bulk of the remaining 99% -- not
| realizing that the two founders might hold 80% of stock.
| And the inequity keeps propagating: the fifth employee
| agrees to 1/20th of what the first employee had, and so
| forth.
|
| I really think non-founding employees (especially early
| ones) would be shocked if they saw what the cap table
| really looked like when they signed up.
| WalterBright wrote:
| But this only makes sense. If you're the first employee,
| then there's zero "social proof" that the startup is
| going anywhere. If you're the _nth_ employee, the greater
| _n_ is, the more social proof there is that the company
| is going places. Hence, the less equity you 're going to
| get.
|
| If one wants founder equity, found a company!
| khazhoux wrote:
| I'm not arguing against decreasing equity as a startup
| matures, though. I'm saying that equity decreases at a
| much faster rate (by an order of magnitude, sometimes
| two) than the risk. Again, the common real-world example
| (in SF) of founders having 50-80x versus Employee #1, in
| the case when there's zero code and zero product, just a
| napkin sketch and founders who convinced investors of a
| vision (which will anyway change once development
| starts). Or employee #8 who is an order of magnitude
| lower than emp #1, when the product hasn't launched yet.
|
| It is my opinion that one reason people sign up for such
| low equity, is because they lack information about how
| equity is divided overall. Employee #1 is OK with 1%
| because he mistakenly believes that investors hold 40%,
| founders have 10%, and the option pool is the remaining
| 49% -- when really the option pool was 8% total until the
| next round of funding, and the lion's share overall sits
| with the founders.
| WalterBright wrote:
| Regardless of one's knowledge or feelings, the math
| doesn't work to keep giving out 1% shares to new
| employees. You've got to drop it by an order of
| magnitude, quickly followed by 2 orders, etc.
| chrisgd wrote:
| It is a lot easier to say you will never sell when you aren't
| looking at a multi-billion dollar offer
| approxim8ion wrote:
| Note to reader: when you see the "circumstances change" comments
| here, read as "I too would love nothing more than to fuck over my
| employees if it means more money for me, and I'd greatly
| appreciate if this behavior became more acceptable."
| tinyhouse wrote:
| I didn't read the article yet. It's insane to me that founders
| who didn't take any investment and sell their company for $12B
| wouldn't allocate a few billions to their 1200 employees,
| regardless if those employees had equity or not. If that happens
| then f** these bastards. Nothing I agree more than working for
| people with shitty morales, no integrity or compassion to others.
|
| Don't work for such people. Regardless if they give you equity or
| not.
| U1F984 wrote:
| https://archive.is/U7KvJ
| wonnage wrote:
| > "Knowing that this is literally our co-founders' (Ben and Dan)
| money, and that they share it so generously, is remarkable."
|
| We've been trying to placate the working class for decades now by
| convincing they should feel ownership in their work and careers.
| And now you go and say the quiet part out loud that it's actually
| all a lie and labor is just enriching capital. 10% of the profits
| may be generously trickled back down to you by your gilded
| overlords.
|
| It would be refreshingly honest if these founders could just come
| out and be proud of the fact that they managed to keep the
| company entirely out of employee hands, and are each probably
| ~$2b richer because of it. Have some dignity.
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