[HN Gopher] Windsurf employee #2: I was given a payout of only 1...
___________________________________________________________________
Windsurf employee #2: I was given a payout of only 1% what my
shares where worth
Author : rfurmani
Score : 288 points
Date : 2025-07-24 17:15 UTC (1 days ago)
(HTM) web link (twitter.com)
(TXT) w3m dump (twitter.com)
| linotype wrote:
| I'm afraid behavior like this will only get more common and
| really shines a light on what a bad deal startups are for anyone
| but VCs and founders. Windsurf founders should be ashamed of
| themselves, but of course won't be.
| sublinear wrote:
| Buy the ticket, take the ride.
| jen20 wrote:
| But also understand who broke the ride in mid-air, and treat
| them with according levels of scorn in future.
| bachmeier wrote:
| Not much of a story here. The guy got a better offer and he took
| it:
|
| > I was given an offer that would explode same day. I had to
| forfeit all of my vested shares earned over my 3.5+ years at
| Windsurf.
| mitthrowaway2 wrote:
| It's still pretty shocking to have to forfeit shares that have
| vested.
| nocoiner wrote:
| It's like, what does vesting even mean?
|
| Was this a scenario where he lost them because some sort of
| "cause" event occurred, like leaving to work for a
| competitor? I can't imagine that would even be valid under CA
| law?
|
| I'm not even sure who was forcing him to forfeit his
| shares...
| SAI_Peregrinus wrote:
| Vest has two meanings: If it's a stock option, then it
| means you have the ability to purchase a share at a pre-
| determined price, no matter the current public price of the
| stock (or even if there is no public price). If it's a
| Restricted Stock Unit, it means you own that share.
| charcircuit wrote:
| The author refers to them as "my shares" which implies he
| has possession of the shares.
| brutuscat wrote:
| He should come to the UE to work on ... oh wait!
| TrackerFF wrote:
| Financially speaking, is it even worth joining a startup anymore?
| Compared to just going to any of the big companies. The latter
| will likely pay you more, with less risk involved.
|
| Seems like the best shot is to strive toward becoming financially
| independent, and then just go for the startup route and follow
| your passion. If you it doesn't work out, no big deal - if things
| turn out great, you'll just be even better off.
| absoluteunit1 wrote:
| > Seems like the best shot is to strive toward becoming
| financially independent, and then just go for the startup route
| and follow your passion.
|
| This is what I'm trying to do now. Having worked in startups
| and big tech; I think the best thing one can do is to attempt
| to forge their own path. For independence, financial gain and
| sanity
| BrawnyBadger53 wrote:
| It's generally not a good sign to me that this is the case.
| But I think you're right. Something needs to change to make
| startups feel more viable again.
| lovich wrote:
| Has it been worth it in a while? This is a legitimate question
| as I am on the east coast and wonder if it differs from the
| west coast environment.
|
| At least in my anecdotal experience, everytime I've entertained
| a startups offer in the past decade it's been either something
| like engineer #1, 3% equity and no you cannot see the cap table
| or other agreements with investors, or something like 10k units
| at 25 a share when we're on series z, and you lose them if you
| leave, and you can't sell for 6 months if you leave, and the
| investors have priority on payment if we sell for less than our
| valuation and yadda yadda yadda.
|
| I mentally just valued the equity as 0 in the compensation with
| all those limitations on liquidating them and never understood
| why anyone joined a startup
| xkcd-sucks wrote:
| Oh also there is the trick where the startup gets sold a
| little under its strike price and the execs each get signing
| bonuses > book value of company as sold
| marssaxman wrote:
| Was there _ever_ a time when you could reasonably expect to
| make more money by joining a startup? That has never been the
| case so far as I am aware, and I 'm currently on my seventh
| tour through startup-land...
| givemeethekeys wrote:
| It feels like it is worse now than it used to be. Back in
| 2010, you would be giving up a nice salary but not a much
| nicer salary by working at a startup.
|
| So, startup base compensation hasn't kept up, and the career
| and financial risk of working for one has gone up due to
| higher interest rate and higher open-market asset prices.
| antonymoose wrote:
| I did a startup circa 2010, early number employee, given
| our (failed) attempt and my equity I would have
| conservatively walked away with a $500k sum had the
| Founders' plans worked. That would have bought me a fine
| house in the nicest part of town with cash to spare.
|
| Having done two more, the best outcome I've seen is a 50k
| post tax payoff for 5 years of shitty startup conditions.
| Great, I got a down payment on a house now worth 800k.
|
| So that reason the best play, if you're not a founder
| doings cash out early, is to just play it safe in a big job
| and dock money away in equities and real estate.
| klooney wrote:
| Base salaries aren't terrible at startups, it's the RSUs
| and ESPP they can't match. I can deal with a terrible IT
| department preventing progress for double the money, it's
| fine.
| marssaxman wrote:
| I _really_ cannot, so - good for you! It takes all kinds.
|
| There is nothing I could do for pleasure, even with
| double my salary, which would compensate for the misery I
| would feel working a job I hated. But that's who _I_ am,
| and we 're not all the same!
| phendrenad2 wrote:
| It was always a bad deal. It was supported by urban legends
| of janitors and cafeteria workers getting seven-figure
| payouts because they negotiated a few shares of a company
| that went IPO and went "unicorn". But the reality was, most
| startup companies failed, and most shares became worthless.
| In 1995, 2005, 2015, etc. it was the same story.
|
| The only thing that changed recently is the "unicorns"
| stopped happening altogether.
| khuey wrote:
| More? Not really. But before Zuckerberg and the DOJ blew up
| the illegal wage fixing the big valley companies engaged in
| the gap was smaller.
| eweise wrote:
| Maybe way back in the .com days but its a terrible decision
| financially now.
| pjmlp wrote:
| Outside US hardly, unless being one of the founders, because
| stuff like being given shares is not common.
|
| You will get a regular salary, with occasional performance
| bonus, just like any regular company, with all the action a
| startup requires.
| rexreed wrote:
| I am of the firm belief the solopreneurship is the future,
| especially with the power of AI. I don't believe corporations
| of any type, from startup to tech giant have the interests of
| anyone but the majority shareholders in mind. Employees,
| customers, partners, all get the shaft. When money is involved,
| startups aren't product companies, they're financial
| instruments.
| nevon wrote:
| I must be misunderstanding what he is saying, but I can't figure
| out what. Once his shares have vested, they are his. What entity
| forced him to sell his shares for 1% of what they are worth and
| how could they possibly do that?
| fragmede wrote:
| Whichever entity ended up buying Windsurf, the corporation.
| They get to declare the exchange rate, and for what. Sometimes
| it's cash, sometimes it's stock, usually it's some mix of both.
| nocoiner wrote:
| Where would the 99% haircut have come into play?
| wqaatwt wrote:
| Nobody willing to pay as much as OpenAI was offering
| initially? Of course that valuation was about as absurd as
| it gets...
| conartist6 wrote:
| Cognition made him a lightning offer it sounds like, valid one
| day only.
|
| I think if I understand what he is saying he could either stick
| with the product and team giving up the shares, or keep the
| shares and try his luck getting money for them another way.
|
| I appreciate that his choice shows that he is in it for the
| product and the team, but also ouch.
| shawabawa3 wrote:
| Google did a weird thing where they poached windsurf employees,
| licensed their tech and hired the CEO and upper management,
| leaving a shelled out company behind
|
| Looks like employees were given an exploding offer to join
| Google and sacrifice windsurf shares at a low valuation, or
| stick with windsurf
|
| If you stuck with windsurf you then joined cognition in a later
| acquisition
| nocoiner wrote:
| Wow. How did the Windsurf investors feel about that?
| lokar wrote:
| They got paid out as well. Meta pulled the same thing
| recently.
|
| So, a new trend where big tech "buys out" a startup in a
| way that only early VCs, founders and top managers get any
| value.
| sarchertech wrote:
| Seems like that makes options completely useless. If they
| had actual shares they could at least sue because
| majority shareholders have a duty not to completely screw
| over the minority.
| lokar wrote:
| It has always been possible (and sometimes happens) for
| VCs and mgmt to screw the early employees.
|
| The question is will it become more common now?
|
| Also, people equate these to aquihire deals. But they are
| not really. Most aquihire deals are when the company is
| out of runway, or it seems growth has slowed/stopped and
| there are no good ways out. There is not mucH value left.
|
| Here there is clearly billions in value, it's just not
| being distributed in the normal way.
| sarchertech wrote:
| It feels like it will become more common if Google gets
| away with this with no real backlash.
|
| I mean why would anyone honor employee options when
| buying out a company if you can just poach all the key
| employees and assets.
|
| As you said there was so much money involved. I can't
| think of a similar situation where employees were screwed
| out of billions like this.
| henryfjordan wrote:
| You can, and maybe should, exercise 1 option as soon as
| you get it to turn yourself into a shareholder.
| sundbry wrote:
| Sounds like a breach of fiduciary duty to the common
| shareholders.
| nocoiner wrote:
| Thanks for the response.
|
| It's breaking my brain a little bit that this isn't a
| straightforward breach of fiduciary duties to the
| corporation and its common stockholders. If an acquirer
| can deal with top management and holders of preferred
| shares, and scoop out the crown jewels of the
| corporation, then what's even the point of using a
| Delaware corporation to raise capital? Might as well just
| form a Nevada LLC using an LLC agreement that just says
| "good luck."
| churchill wrote:
| >Meta pulled the same thing recently.
|
| Do you mean the Scale AI acquihire? I took it at face
| value that Alex Wang just joined Meta, but come to think
| of it now, the company's just a husk of itself, customers
| no longer trust them, etc. So, it seems you're referring
| to Scale.
| lokar wrote:
| Yeah, that must be the one. What did other employees get?
| IncreasePosts wrote:
| Why would they give the CEO a bunch of money to join Google,
| but not employee #2? Is it possible the CEO is just worth way
| more for what ever reason?
| bigmadshoe wrote:
| Vested options can be voided when you leave a company, unless
| you want to exercise them.
| wmf wrote:
| It's not entirely clear, but I think Google/DeepMind _offered_
| him 1% of (what he thought) the shares were worth and then he
| refused and then the shares became worth almost nothing because
| Windsurf was just a husk of its former self.
| ThePowerOfFuet wrote:
| https://xcancel.com/premqnair/status/1948420769945682413
| hackermeows wrote:
| why would anyone work in startups as early devs anymore. Tell me
| what is the upside? There seems to be only downsides. Startup
| Fails , you loose - Gets acquired - you loose What is the
| motivation to perform .
| agartner wrote:
| Working on decently cool things with relatively limited
| bureaucracy.
| phkahler wrote:
| You can do that at established companies. If the cool thing
| comes to an end you'll often have a boring job you can keep
| or stay at while you find something else.
| mianos wrote:
| If you want to write new code and have a lot of influence over
| the overall implementation instead of fixing bugs on a years
| old steaming pile of tech debt.
|
| Not all places with large existing codebases are that bad, but
| if you are experienced, it can be very personally satisfying
| doing something well before it has degraded over time.
|
| I have worked in quite a few. One is a household name down here
| in Australia. I was the first engineer with the two founders. I
| worked 2 years 24/7 for half the salary I got when I left. I'll
| never get my money back but that's ok as I loved the time
| there.
| BoiledCabbage wrote:
| > There seems to be only downsides. Startup Fails , you loose -
| Gets acquired - you loose What is the motivation to perform
|
| You get to make a nice payout for a VC. And isn't that all of
| our life goals?
| SirMaster wrote:
| Because you like the work you are doing and the projects you
| are working on?
|
| Presumably you have a lot more control and freedom to do things
| how you want than at a large company with a lot of red tape
| etc.
|
| That's the main reason I would do it.
| lsllc wrote:
| So "heads I win, tails you lose!"
| crazygringo wrote:
| This is one of the most confusing things I've ever read.
|
| Cognition acquired Windsurf. So how has he "joined Cognition"?
|
| "I had a place at Google DeepMind as part of the deal." What does
| that mean? DeepMind doesn't have anything to do with Cognition
| _or_ Windsurf, right?
|
| Why would an offer at Google require forfeiting vested shares in
| Windsurf? Is that Windsurf policy or Cognition policy or Google
| policy?
|
| "I was ultimately given a payout of only 1% of what my shares
| would have been worth at the time of the deal." So he took the
| payout and forfeited the shares? "In going to Cognition, I've
| chosen a different direction." Or not, he rejected the payout and
| kept the shares? I can't even tell what's hypothetical versus
| what actually happened.
|
| I literally don't understand a single thing about this tweet.
| I've read all the comments here so far and my confusion seems to
| be shared. Can anyone who has context please help explain what's
| actually going on? And particularly how any company could force
| you to forfeit vested shares in a company?
| shawabawa3 wrote:
| You have to know some of the background
|
| Google poached windsurf employees and licensed their tech,
| paying out billions to upper management but apparently offering
| a fraction of the value of shares
|
| This employee chose to stick with windsurf instead of moving to
| Google
|
| Windsurf was then acquired by cognition for an unspecified but
| probably quite low amount
|
| So this employee is now at cognition
| crazygringo wrote:
| Thank you, that helps!
|
| But so did he keep the shares or take the payout? Is the 1%
| payout an accurate reflection of Windsurf's value after
| having lost so many valuable employees? And why didn't he
| take the Google job? Was the 1% contingent on taking the
| Google job? But how could it be, since Google doesn't own
| Windsurf/Cognition? But if it did somehow, did it have a
| higher paycheck to compensate? Or was it contingent on
| staying at Windsurf/Cognition?
|
| This thing needs an in-depth blog post analysis. The tweet by
| itself isn't providing even close to the information
| necessary to understand what's actually going on.
| cyanydeez wrote:
| the board strokes is: Google should have bought the
| company. They didnt. They basically bought the employees.
| They call it a "acquihire". Without these employees, the
| real value of the company fell, allowing cognition to buy
| the company. Had the employee taken employement with
| Google, it's likely their shares in windsurf would have
| been voided, or otherwise not vested. Who knows, these
| private corporations are often doing a bunch of shady
| things to dilute share ownership.
|
| In a private company, there's no "real" public valuation of
| a share, so an employee who has some kind of stake really
| only has two real options to dump their shares, either
| through a company buying it (cognition) or the company
| going public. Without either of these events, it's really
| difficult, even if there's no contract about it, to sell
| the shares.
|
| So the value of the company took a nose dive in the private
| market through the hiring of windsurfs principals, and the
| employee either kept his shares and went with the company,
| or took a job with google. So the two values are:
|
| 1. Stay with Cognition and retain the private market shares
| of Windsurf and salary
|
| 2. Leave cognition, forfeit(?) the shares, get whatever
| salary google offered
|
| So those are the payouts being compared.
| crazygringo wrote:
| Thank you very much! So it seems like the crux of the
| issue still isn't clear, because:
|
| > _Had the employee taken employement with Google, it 's
| likely their shares in windsurf would have been voided,
| or otherwise not vested._
|
| That doesn't make any sense. The shares are _already_
| vested, they legally own them. How could they have been
| voided?
|
| The idea of joining Google resulting in a "1% payout"
| doesn't seem to make any sense? Why would there even be
| any payout at all? And is it mandatory? How could it be?
|
| And then it also doesn't even seem obviously terrible. If
| the valuation of Windsurf tanked, then is keeping the
| shares (now presumably converted to Cognition shares at a
| rate determined by the purchase?) even a better financial
| outcome?
|
| I agree that Google acquiring the talent rather than
| buying the company seems shady. But the "1% payout" still
| isn't making much sense here and needs a lot more
| details. Because it's still not even clear if the payout
| is from Google (huh?) or Cognition (why?), or how it
| could be a mandatory condition of employment at Google.
| stouset wrote:
| Vested is not exercised.
|
| Options vest, but you have to exercise them to purchase
| the underlying shares. This is nominally cheap, but from
| the IRS' perspective you have just spent $1 to purchase a
| share worth $100, so that's $99 of income. Multiply by a
| large number of options and you can easily have a real
| multimillion dollar tax bill even though you have no way
| to sell the shares to recoup their value.
|
| Worse, if the company loses its value before you can
| sell, you're still out those taxes with zero recourse.
| It's an enormous risk.
|
| If you leave a company with vested but unexercised
| shares, you generally forfeit them.
| crazygringo wrote:
| Sure, but I'm not really clear on what that has to do
| with the situation described?
|
| And he calls them vested shares though, not vested
| options, though maybe he's incorrect.
|
| And it's not like you forfeit them instantly after
| leaving anyways. You usually have at least 90 days. And
| the fact that the value of the company is so much lower
| now is favorable, if you think the value will recover.
|
| But again, none of this has anything to do with the "1%
| payout" here that is still totally unexplained.
| masterjack wrote:
| It's possible that in the Google deal you had to agree to
| sell back the shares (at a low value like par or original
| strike price) and the 1% refers to either those proceeds
| or the size of the Google employment package. If you
| didn't agree then you would be left holding your shares
| of a company that is now gutted.
| crazygringo wrote:
| > _It's possible that in the Google deal you had to agree
| to sell back the shares_
|
| But how could Google require that?
|
| > _If you didn't agree then you would be left holding
| your shares of a company that is now gutted._
|
| Which is what is sounds like he wound up doing anyways?
| Which I don't even understand why.
| adgjlsfhk1 wrote:
| Google can just refuse to hire you if you don't
| crazygringo wrote:
| I've literally never heard of a company demanding you
| give up shares in another company as a precondition of
| being hired, for an engineering role.
|
| At the executive level they may not want you holding
| shares in a direct competitor because it presents a
| conflict of interest. But even then you generally have a
| period to divest.
|
| Can nobody explain what the actual demand was here? What
| did Google offer vs. what did they demand, and why? And
| why would _Google_ be buying your shares...? None of this
| makes any sense the way it 's been presented.
| naveen99 wrote:
| Doesn't income happen when you sell the shares ? What is
| the cost basis of the shares you purchase if not the
| strike price of the option ?
| cyanydeez wrote:
| https://taxsharkinc.com/when-are-vested-shares-taxable/
|
| Its different for vesting. Othrrwise even more toxic
| greed and tax avoidance would occur.
| toast0 wrote:
| AMT income happens when the option is exercised (vests
| and paid for), the difference between the value and the
| strike price is income at that time. The AMT cost basis
| is the value at that time ... or you can think of it as
| the strike price plus the amount of income.
|
| At the same time, if it's an ISO option, there is no
| assessment of ordinary tax until the stock is disposed.
| If there's a merger and the proper forms are followed,
| you can be issued stock from the acquirer that retains
| the basis (the strike price) of the original shares. If
| the forms are not followed, the acquisition is a taxable
| disposition.
|
| There's a credit for the difference between AMT tax and
| ordinary tax on ISOs, but it can take many years for that
| to fully work out, and you have to have paid the AMT in
| the meantime.
|
| Early exercise with 83(b) at time of grant (or while the
| value hasn't changed) or exercise-and-sell make the taxes
| make the taxes simplest, but tax simplicity isn't always
| the best strategy.
| ProfessorLayton wrote:
| While you're right that exercising options can be very
| expensive and are a risky tax bet, we're talking about
| _employee #2_ in this case. They should 've been able to
| buy in early at a low price and tax bill if they really
| believed in the company:
|
| - Jan 2021: 3M seed round
|
| - Jan 2024: Series B valuing the company at 500M
|
| That's 3 years of vesting below a 1B company valuation,
| and 75% of a typical vesting schedule. There was plenty
| of opportunity to buy when valuations were low.
|
| There's also 83(b) election that allows one to prepay tax
| liabilities on stock options before they vest.
|
| _Not_ buying stock options or doing a 83(b) election is
| also a bet that can place a cap on losses if the company
| goes downhill, but the risk flips if everything goes
| right.
| toast0 wrote:
| You want to say _exercising_ options. Buying options is
| paying to have an option; you can easily buy options on
| publically traded stocks, for example. Exercising options
| is delivering money that covers the strike price to
| receive the shares... or delivering the shares to receive
| the strike price, if it was a sell /put option (which
| employment related options wouldn't be)
| stouset wrote:
| I encourage you to put yourself in that person's shoes.
| It is _never_ a simple decision.
|
| Yes, there is plenty of opportunity to exercise when
| valuations were low. But that _also_ means you 're buying
| before there's clear evidence that the company will be
| successful. It also still means you're out the cash to
| exercise the options before there's a market for those
| options and before you know that the company will
| actually go public and not crater for whatever reason.
| You also have no idea how much your shares will be
| diluted.
|
| Yes, exercising on day 1 optimizes your outcome in the
| case of a successful exit. But it is absolutely comically
| a poor choice for the 95% of cases where your equity ends
| up being worth next to nothing.
| ProfessorLayton wrote:
| I'm speaking from experience. Yes, it means buying in
| before there's clear evidence of success, that's the
| risk! The lower the risk the lower the reward.
|
| Waiting until the company is worth billions of dollars
| before buying its stock is one of several options
| available, and each has its own risk/reward profile.
| bigmadshoe wrote:
| Vested options haven't been exercised and are typically
| voided when leaving a company. Just because you vested
| the options doesn't mean they are permanently yours,
| unless you choose to exercise them before leaving.
| dboreham wrote:
| > They call it a "acquihire"
|
| Surely it needs to be called something else, because
| acquihire means "hire some employees by means of
| acquiring the company they currently work for" (it's in
| the name). Since Google did not acquire the company, it
| can't be an acquihire event. "bribehire" or something?
| mikestew wrote:
| _Google should have bought the company. They didnt. They
| basically bought the employees. They call it a
| "acquihire"._
|
| That's just called "hiring". In order to "acquire-hire"
| employees of the target company, one must first "acquire"
| the company and the "hiring" part just comes along with
| the deal. In this case, Google skipped the "acquire"
| part.
| gsibble wrote:
| The VCs all got paid their multiples.
|
| Google put a ton of money into the company which then
| repurchased select people's stock while leaving everyone
| else high and dry.
| bryanrasmussen wrote:
| Writing for LinkedIn metrics means never having to make an
| understandable statement that someone could take exception to.
| mjiang41 wrote:
| Some more context from Ali Partovi, founder of Neo accelerator:
|
| https://x.com/apartovi/status/1948444826674102732
|
| bad look all around.
| SirMaster wrote:
| Why do people care so much about what some random guy did in a
| company acquisition?
| lokar wrote:
| A lot of this industry is focused on early stage startups as a
| path to financial success. The rules and laws around this don't
| tend to protect even early employees much at all. People depend
| on social norms for what to expect. Shifts in the norms are of
| interest.
| blitzar wrote:
| Everyone thinks they are the next random person who wins the
| startup lottery. Dreams of 50 million dollar paydays are
| brought crashing down when they realise they will be lucky to
| get 50,000.
| Muromec wrote:
| Because it sets the expectations and everyone here is
| (pretending) to play the same game as that random guy. Okay,
| not everyone, but it's YC forum.
| lemax wrote:
| This is a fair cautionary tale but it's worth understanding the
| specifics of the situation - Windsurf maintained a relatively
| easy to replicate product with no moat, and employed a bunch of
| attractive talent. The company got gutted of these employees and
| lost its valuation because no suitable buyer thought their IP was
| exceptionally valuable on its own. Just because this was the
| outcome for Windsurf does not mean there are no longer
| opportunities to join startups building sticky customer bases
| with valuable IP and walk away wealthier when they exit - yes
| there is a liquidity problem[1] but let'a be honest with
| ourselves about the specifics of the case for Windsurf.
|
| [1] https://techcrunch.com/2024/01/11/us-startups-have-a-
| liquidi...
| gsibble wrote:
| Actually, their recent acquirer is now raising at a $10B
| valuation from Founder's Fund.
|
| They had plenty of value left even after getting gutted.
| KaiserPro wrote:
| I was aquihired by a FAANG.
|
| The headline "startup bought for x million" is almost always a
| lie, either direct or by omission.
|
| First, when a startup is bought, its generally not bought at the
| headline rate. So if you see a "bought for $45m" that doesn't
| mean People who own shares all got a % of 45m.
|
| That number is normally bullshit, but also a "total package"
| which include share offers for joining the new company.
|
| This means you will get say 1% of the headline buyout now, and
| then golden handcuffs to get the rest.
|
| Also, it makes no sense to give employees that much money
| upfront. After all, if I'd been given $1m in one go, I wouldn't
| be fucking working now.
| bagels wrote:
| 1m isn't enough to really retire in in silicon valley
| throwawayq3423 wrote:
| Or in any big city tbh.
| Scoundreller wrote:
| Cleveland not big enough for you???
| throwawayq3423 wrote:
| Cities like Cleveland have reasonable pricing built into
| their appeal. Without it, there isn't much left.
| loire280 wrote:
| Sure, but if you're 10+ years into your career and have been
| financially conservative (i.e. have a positive net worth), a
| lump sum of $1m could be enough to retire to a lower-cost
| location.
| andrewmcwatters wrote:
| Hell, roughly $600,000-800,000 is enough to lean FIRE, the
| last time I checked.
| usaar333 wrote:
| Sure, if you are single with no family and wiling to live
| outside California.
| quickthrowman wrote:
| If I retired at 40 I don't think I'd want to remove more
| than 2% a year from the principal amount, which is..
| $12,000-$16,000 a year.
|
| How is that possible? Even with a fully paid off house,
| you still have property taxes, utilities, maintenance.
|
| Even 4% a year which is recommended for a 30 year
| retirement, you're only taking out $24,000-$36,000 a
| year.
| KaiserPro wrote:
| probably right, but I'm not in SV. So its enough to pay off
| the mortgage and provide enough monthly income to not care
| what job I'm doing
| ohdeargodno wrote:
| Take a million, go live literally anywhere that isn't Silicon
| Valley, remote work for a company that interests you, or your
| own project.
|
| There's very few currencies in the world in which 1M isn't
| enough to retire. USD isn't one of them.
| occz wrote:
| >There's very few currencies in the world in which 1M isn't
| enough to retire. USD isn't one of them.
|
| Unless you're planning on retiring as cheaply as humanly
| possible, 1M is not enough to retire for the large majority
| of the currencies in the world.
| kentonv wrote:
| Yeah, I used to hear all the time that "a startup is worth $1
| million per engineer in a pure acquihire", but learned the hard
| way this is a myth.
|
| When we were talking to various companies about acquiring
| Sandstorm.io (my startup) in 2017, one of the companies told
| me, essentially: "We aren't interested in your IP, only the
| employees. We'll give you a set of job offers for them. We will
| then sum up the salary and equity grants from these offers, and
| call that the acquisition price. If you want to take some of
| that money and redirect it to your investors instead, that is
| up to you."
|
| I was a bit taken aback. Obviously I wasn't about to take a cut
| of my employees' future comp and give it to investors.
|
| Instead we ended up going to Cloudflare, but not as an
| acquisition. Cloudflare told us very honestly that they
| couldn't justify buying the IP, but they would be willing to
| acquire the company for $0 to wind it down for us. I decided to
| just take the job offers but keep the company independent as an
| open source side project, thinking maybe I'd revive it
| eventually. Turned out to be a mistake as some guy who was mad
| we didn't hire him sued Sandstorm six months later, and that
| was then my problem instead of Cloudflare's, oops. Should have
| sold for $0.
|
| (Once it became clear to the plaintiff('s lawyer) that we
| weren't going to settle, they stopped pushing the case forward,
| but didn't drop it, so it just sat in limbo for 5 years before
| the judge finally threw it out it 2022. Meanwhile I couldn't
| dissolve the company and had to keep filing taxes for it.
| Ugh... lessons learned.)
| kingforaday wrote:
| Whoa, bummer but interesting. It can be hard to let go.
| Thanks for sharing.
| swyx wrote:
| sorry that happened to you. what taxes do you have to pay on
| a company making 0? just delaware franchise tax?
| kentonv wrote:
| That and $800 CA franchise tax. But the money wasn't really
| significant. It was just annoying to have to prepare the
| returns every year.
| sokoloff wrote:
| $1M in one shot leaves you with around $600K after taxes in
| most states. That's enough to pay you around $24-30k/yr.
|
| Unless you already had several other million saved already, I
| bet you'd be working again.
| _DeadFred_ wrote:
| When I was a kid (early 80s) the receptionist at my mom's
| company drove a Porsche and didn't need to work anymore because
| of a past company hitting it big. This woman wasn't a financial
| genius and didn't hardball negotiate with the previous company
| for her receptionist job, it was just Silicon Valley didn't
| used to be so gross and actually paid out to people.
| jschveibinz wrote:
| I am surprised that the employment agreements between
| execs/founders and Windsurf didn't address this. A cautious
| investor--or even a cautious key employee joining the team--would
| have locked the founders and key employees down to prevent them
| from being hired away without some recourse. This is especially
| important when all of the value was in the employees. There
| should be lawsuits forthcoming...
| toomuchtodo wrote:
| Non competes are illegal in California, there is no legal way
| investors can lock founders and employees down. This is venture
| capital investment risk. The employees, who are most of the
| value (aside from potential IP and customer contracts), can
| walk at any time.
| DanHulton wrote:
| It doesn't have to be a lawsuit preventing them from leaving.
| Golden handcuffs usually work pretty well for such a
| situation.
| toomuchtodo wrote:
| Unless investors and management are unwilling or unable to
| counter a superior offer. "Pay them more" works when
| willing and able. Otherwise, bounce. Comp is king during a
| gold rush you're unsure how long will last.
| jschveibinz wrote:
| I understand your clarification. You should be able to use
| vesting schedules, right of first refusal to counter, careful
| definition of IP and trade secrets with assignment to the
| company, right of repurchase of shares, etc.
|
| This is indeed venture capital risk, but this case lays bare
| the exorbitant amount of risk for investing in these types of
| companies--perhaps especially in California?
| mawadev wrote:
| I'm waking up personally to the unethical side of Software
| development as well. You can either do little and get paid pocket
| change or you can provide a ton of value for pocket change next
| to some promises lulling you in, where the value of your work
| exponentially increases, but you will see nothing of it and
| whatever you do: you are still a replaceable cell in excel to
| them and there will be ways where you get dragged over the table.
| If the money isn't directly in your bank account, it might as
| well not exist or was a lie. Sooner or later you are the horse
| behind the barn anyway.
| istjohn wrote:
| To state the obvious, software developers are doing just fine.
| GuinansEyebrows wrote:
| how much change fits in your pockets?
| Muromec wrote:
| You do sometimes get the 0.31% of a relatively big number under
| a promise you tag along for two years and some more pocket
| change on top. Still better than just pocket change zo
| stan_kirdey wrote:
| Engineers: always negotiate for higher base salaries. In the vast
| majority of cases--especially during acquihires--your equity will
| be worth little or nothing. Founders and VCs still get paid;
| employees rarely do.
|
| Don't just accept promises. Ask for the 409A valuation,
| liquidation preferences, and pay bands. If a company won't
| provide transparency, that's your signal.
|
| Equity is a lottery ticket. Salary is money in the bank.
| gsibble wrote:
| I tell every engineer always to maximize their cash comp and
| every founder and investor always says "No, that's such a bad
| idea! Get more equity!"
|
| Yeah, because that is in your interests, not the engineer's.
| 01HNNWZ0MV43FF wrote:
| I remember when my old employer was doing another round of
| funding
|
| They offered to sell me more shares
|
| I countered that I'd been trying to dump the shares they
| already gave me and if the shares are truly worth X dollars
| they should buy them back from me
|
| Anyway glad I quit
| usaar333 wrote:
| Not everything is adversarial. More cash pressure on the
| company itself can be bad for the company which is bad for
| you too.
|
| I always take more equity. I wouldn't work for you in the
| first place if I didn't believe in your equity.
| tensor wrote:
| There are more than enough stories about employees
| complaining that they didn't get a big enough payout on an
| acquisition or IPO to know that this isn't true. It all comes
| down to your risk reward preference.
|
| Sure, if you don't want to take a risk then look for a higher
| salary, and probably at a more established company because
| even if you have mostly salary and little equity a startup is
| still risky (and you're making it even more so by putting
| cash pressure on the company at that stage).
|
| On the other hand, if you want a chance at a bigger payout,
| you'll want more equity. And yes, you may well not get that
| payout.
| tedivm wrote:
| > There are more than enough stories about employees
| complaining that they didn't get a big enough payout on an
| acquisition or IPO to know that this isn't true.
|
| That's exactly why it _is_ true. If every person who held
| early stage stock walked out of those events happy then no
| one would recommend they focus on salary.
| CalChris wrote:
| There is another variable. Find better companies to work for.
| If you don't think this is a unicorn, don't work for them. If
| this is another stablecoin startup leveraging quantum AI then
| you deserve what you get, cash comp or no.
| gsibble wrote:
| I've tried to ask dozens of companies that wanted to hire me
| just for how many shares were outstanding and/or authorized.
| They almost always refused to share.
|
| You can almost never get any info on equity until it's too late
| and you realize it's worth nothing.
| georgemcbay wrote:
| > I've tried to ask dozens of companies that wanted to hire
| me just for how many shares were outstanding and/or
| authorized.
|
| Those questions are certainly worth asking but employees
| should also keep in mind that even if they _do_ share that
| information your equity can still later be diluted away to
| worthlessness.
| mgfist wrote:
| There's other gotchas too. Ratchets, liquidation
| preferences, restructurings (recapitalizations) etc etc
|
| There's many opportunities for VCs and founders to screw
| you over. And that's assuming things go well enough for
| that to be an option lol
| dilyevsky wrote:
| My 2c is these are almost always a consequence of the
| company not being a good business. Well, sometimes you
| get asshole founders/board members too that's not as
| common as the company just being an absolute money pit.
| So instead, I'd focus on asking about business
| fundamentals/strategy - if the company is money printer,
| everyone is likely going to do well financially
| toomuchtodo wrote:
| Additional resource:
|
| _Ask HN: How to negotiate stock options?_ -
| https://news.ycombinator.com/item?id=28401655 - September 2021
| djoldman wrote:
| Indeed. Likewise with non-guaranteed bonuses (gotta love the
| "plus a discretionary bonus!" commentary during offer
| discussions).
|
| It's always worth offering to take equity as long as they agree
| in writing to not ever dilute your shares and vest them
| immediately. However, it's unlikely that any company will
| agree.
|
| It's best to imagine compensation as exactly one's salary. Then
| (virtually) all surprises are good.
| usaar333 wrote:
| Under any normal circumstance I've ever seen, you should be
| taking the higher equity/lower salary combination and should
| focus on equity rather than salary.
|
| The only time it ever makes sense to push for more salary
| instead is if you literally cannot get a job at a public
| company (or even a near IPO unicorn). Plenty of startup
| employees can, so clearly they believe their startup equity is
| worth something.
|
| Financially speaking, startup equity is actually worth a lot as
| an employee (https://www.amafinance.org/startup_comp/). Yah,
| over 50% it's going nowhere but expectation needs to consider
| how huge the win is even if it is lower probability.
| almostgotcaught wrote:
| > Yah, over 50% it's going nowhere but expectation needs to
| consider how huge the win is even if it is lower probability.
|
| yes that's literally the definition of expectation
| value...... so ev = 1 bagillion *
| 0.0000000000000001 = ~0
|
| hence you should absolutely not be taking higher equity/lower
| salary ever. hell i wouldn't even take that at a publically
| traded company if given the option.
| doctorpangloss wrote:
| The interesting thing going on is, stars align. The kind of
| person who has to think about this problem should take
| equity. The kind of person who would choose to take cash
| isn't going to be hired at the kind of VC backed business
| that will end up being worth something.
| Dayshine wrote:
| Yes, a company will do very well if it fills itself with
| naive employees who think that if they work insane hours
| and sacrifice their life for equity (which they'll never
| get an exit event for) will do very well.
|
| But you don't want to be that employee...
| almostgotcaught wrote:
| Man what level of weird delusion is this? Windsurf was an
| app for code completion not interstellar space travel
| lol.
| gjm11 wrote:
| If I'm understanding your logic correctly, I think it's
| flawed.
|
| It seems like you're saying: if you choose to work for a
| startup rather than a bigger company, it must be because you
| think their equity is valuable, so you should prefer to take
| more of your pay in the form of equity if you can.
|
| But there are plenty of other reasons for choosing to work at
| a startup.
|
| You might have chosen to work _at that particular startup_
| because the work interests you. You might prefer startups to
| bigger companies because they have less bureaucracy and can
| do (some) things faster. You might prefer startups to bigger
| companies because there are fewer layers of management above
| you and so you have a better view of why you 're doing what
| you're doing.
|
| Even if you're only in it for the money, I don't think your
| argument is valid, though this is more of a nitpick: it might
| happen that a startup particularly wants _you_ or at least
| _your skillset_ and is willing to pay more for it than any
| bigger company you 've found. You might think the startup is
| likely to fail, but still prefer being paid twice as much.
| (This is kinda nitpicky because I don't think this situation
| is super-common, unlike the other ones I mentioned above.)
| makk wrote:
| Yes, maximize cash and use it to acquire a diversified
| portfolio.
| andy99 wrote:
| Yes - equity should be an incentive to contribute the the
| company's success, and partial compensation for the risk of
| going to a startup. One should value it at precisely $0 in
| terms of life planning.
|
| This becomes truer and truer the more of an employee and the
| less agency over the company's choices you have, but generally
| if you're not a co-founder (founding engineer doesn't count)
| equity traded off against salary is someone scamming you.
| skybrian wrote:
| When people give you a percentage (1%), that is a ratio and they
| are not telling you either number. So, that makes me a little
| suspicious. I wonder how much he got in the end?
| cleandreams wrote:
| My base salary was fine but the magic was in the stock.
|
| I got a payout on acquisition by a FAANG+ (as first employee). It
| was only 300K but I put 50K of that into Nvidia. Actually I
| invested all my payout from my startup stock into tech stocks.
| And I got a terrific golden handcuffs deal.
|
| After that I could afford to retire and I did.
| another_twist wrote:
| Did you also post this recently in Blind ? If it is so you
| might want to fuzz the numbers a bit.
| cleandreams wrote:
| Less than 10 years ago but not recent.
| saagarjha wrote:
| What I find amusing is that YC's Garry Tan is going around
| explaining to Prem how he actually got a good deal and that the
| Windsurf founders were very generous to their early employees.
| Meanwhile from his perspective he joins a company with friends
| he's known for years, takes on basically the same risk that the
| founders did, probably gets some fraction of the equity they did
| for that work (10%? Less?) and then when payoff time comes he
| gets cheated out of that too.
|
| If I was a venture capitalist dependent on 20-somethings
| believing in the dream I sold them maybe I wouldn't write snarky
| replies on them on Twitter when this happens and actually look
| into fixing things for early employees (like, maybe, giving them
| similar terms that the founders get), but that's just me I guess.
| dragonwriter wrote:
| He has just as much financial interest in the dream being false
| as he does in people believing it, which your recommendation
| seems to overlook.
| chambers wrote:
| https://x.com/ahmaurya/status/1948491614160122308 Garry Tan
| posted "sounds like a tweet that cost $20M" which he later
| deleted.
|
| Smells like a strong bias against employees in favor of
| management and founders.
| gsibble wrote:
| That was really shady.
| JumpCrisscross wrote:
| Could you expand what's going on there?
| chambers wrote:
| My read was that Garry Tan implied "you sacrificed a lot of
| money in order to grandstand". I felt that was a knee-jerk
| dismissal of a founding employee's legitimate concern.
| Lionga wrote:
| That is YCombinator & Garry Tan for you. Disrupting the
| screwing over employees (and founders if they can but its just
| much harder) as a sport.
| czbond wrote:
| I believe Tan's words were mis-represented. I believe he is
| saying that it cost Prim $20M and he then wrote that post. I
| don't think he is insinuating anything else.
| Invictus0 wrote:
| He's misrepresenting his own words when he writes a vague
| tweet like that. Tan is a serial shitposter and is known for
| blocking thousands of people that even slightly disagree with
| him.
| CPLX wrote:
| When you were younger and learned about history did you form a
| mental image of what kind of people the famous financiers,
| capitalists, and robber barons were?
|
| These are those people. Oil and railroads were high technology
| too.
|
| They want you to think they're Lazlo Hollyfield, but they're
| Daniel Plainview.
| BhavdeepSethi wrote:
| I went through an acquisition very early in my career, and for
| the longest time I believed it was the best outcome for everyone.
| Over time, I realized that my naive belief was purely due to the
| founders going way above and beyond to make sure each and every
| employee (including folks doing just data entry) got a good
| outcome (accelerated vesting, significant equity in new company,
| top of the band pay, etc.). It made me realize that if you ever
| want to work at a start up, bet on the founder, rather the
| company. Even with mediocre outcomes, you'll end up ahead in the
| long run compared to folks who're just looking out for
| themselves.
| rhyperior wrote:
| They must have had a strong position from which to negotiate
| those favorable terms, in addition to the experience to know to
| do so, and the integrity to actually do it. The type of people
| you should follow.
| BhavdeepSethi wrote:
| I don't believe they did. This acquisition was by Flipkart,
| the poster child startup in India, who had a very high bar
| for hiring. They wanted to interview the non-founders to make
| sure they met the standard. The founders said you get all or
| you get none. To be fair, it was a small team of 6-8
| employees, so I doubt Flipkart cared. :)
| whiplash451 wrote:
| A lot of bias against startups in the comments. These are missing
| (1) how terrible the working conditions in bigco have become in
| the meantime (2) truly good startups (they exist) that pay solid
| base salaries
| toomuchtodo wrote:
| The odds are clear as day. ~90% of startups fail, and the truly
| good ones are very rare. Do small pockets of good exist? Yes,
| absolutely. But most of the startup ecosystem is convincing
| employees to grind for peanuts until founders and investors
| (whether that's accelerators or institutional) hit liquidity
| (if ever). Of course, if you find the unicorn (good comp,
| target work life balance, meaningful work [to you]), hold on
| tight and don't mess it up.
|
| https://www.marketsentiment.co/p/the-yc-report
|
| https://news.ycombinator.com/item?id=42828198
| Muromec wrote:
| Depends on a big co. You can skip all the drama try harding and
| work in a boring place too.
| CalChris wrote:
| This was just a preference cliff, plain+simple. Windsurf got paid
| maybe $3B for itself. But the investors and senior management got
| their cut first. How? Well, the preferences they negotiated.
| No one really knows how the game is played The art of the
| trade How the sausage gets made We just assume that
| it happens But no one else is in the room where it happens
|
| #2 wasn't in the room when it happened. In a very real sense,
| he's lucky he got anything. Management owes a fiduciary duty to
| the shareholders and #2 is a shareholder. But negotiating the $3B
| covers that duty.
| highfrequency wrote:
| Doesn't seem that simple. They raised a total of ~$250m and
| acquisition price was almost 10x that. The preference cliff
| means that employees get nothing before investors get an X%
| return on their investment (100%, 150%, maybe 200%). After
| that, the payout should be proportional to common stock
| ownership. Surely the preference guarantee was not 10x?
|
| Would be curious to see the breakdown of the $2.4b:
|
| 1. How much to the founders in Google employment incentives
|
| 2. How much in licensing fee to the company itself
|
| 3. How of the licensing fee went to immediate payout to VC
| investors (+ employees)
|
| 4. How much got left on the balance sheet of the remaining
| company
|
| I don't understand how #3 can be so large _and_ common stock
| holders walk away with almost nothing without breaching
| fiduciary duty?
| CalChris wrote:
| The August 2024 Series C round (last of 4 rounds) for $150M
| could dilute+smoke the preference stack for any earlier
| investors of which #2 nominally was basically the earliest
| class member of. C gets preferences+participation. B+A get
| preferences+participation+anti-dilution. Common gets what's
| left which apparently wasn't much.
|
| Fiduciary duty is very low bar. Management has to act in the
| best interests of The Company, as in, as a whole. The company
| != #2. Lawyers are not taking this case.
|
| I'm certain the accounting was done properly, maybe even by a
| Perl script, and this is how it penciled out. The question
| for us stiffs is _what can we learn from it?_
| scns wrote:
| > in the room where it happens
|
| Great song from Hamilton. Sorry for being off topic.
| blitzar wrote:
| You got zucked.
| highfrequency wrote:
| Directly contradicts Garry Tan's post saying that all _forty_
| founding engineers got seven figure payouts from the Google
| acquisition: https://x.com/garrytan/status/1947072583092052406
|
| Even if the OP considers the full headline number of $2.4b to be
| the value of the company, and taking his "1% of fair" number as
| truth, seven figure payouts would imply all 40 founding engineers
| had >4% equity which is nonsensical.
| ohdeargodno wrote:
| Garry Tan's job is bullshitting. Lying isn't very far from it,
| and he even covers his ass with "I heard".
|
| Who did you hear it from Garry, the founder that made out with
| all the money ? Or the other VC that made a few hundred million
| from the sale and stands to gain even more if the lie of
| "founding engineers get rewarded" is perpetuated?
| b_be_building wrote:
| No, what Garry is saying DIRECTLY correlates with the outlined
| opportunity.
|
| For his assertion to be right, 40 people need to get paid out
| at least 1 million. That's 1.67% of the company or 0.04%
| evenly. Its not hard for me to image that up to 10% of this cap
| table was distributed among the 40 people.
| reducesuffering wrote:
| Hilarious that the best case positive spin highlighted is 40
| people cleared at least $1m, so $40m out of $2.4 billion and
| $240m funding. He's praising "look 2% of the payout went to
| people in the company".
|
| Nevermind that $1m over ~4 years is approximately the same as
| the differential other public tech co's pay. ($150k + equity at
| YC co, $350k TC at G/Amzn/FB/Uber/etc.) So when they tell
| everyone they should work at YC co's, they're saying they're
| proud when in the absolute best case scenario you make just as
| much as at the public co's they rail against working for.
|
| If you want to come across as genuine, directly say how much %
| of the payout went to employees that weren't the founders. They
| won't, because it's likely 3%, which correctly sounds horrible
| umeshunni wrote:
| > the absolute best case scenario you make just as much as at
| the public co's they rail against working for
|
| that matches my experience working at 2 non-public venture
| funded companies.
| karmasimida wrote:
| Not contracting.
|
| Let's do a simple math. Assume this employee gets 5% of the
| company (which is super unlikely, but let's go with it), that
| is 150m for what could be worth if OpenAI deal went through. 1%
| of that would be 1.5m.
|
| That is still 7 figure. But this person spent 3 years in a
| startup, which turned out to be a unicorn and super highly
| successful, and he bagged a FAANG salary man pay at the end of
| the deal.
|
| Basically this just proved startup model for normies are
| completely broken, if your goal is money, don't join a startup
| michaelt wrote:
| _> 40 founding engineers_
|
| _Forty_ founding engineers? Seriously?
|
| They must have a very expansive definition of founder.
| ww520 wrote:
| That's why founding engineers are such a raw deal. They take just
| as much risk as the founders but much less payout. Also on the
| hook to do most of the work.
| doctorpangloss wrote:
| It's complicated. The difference between a founder and founding
| engineer - I think you mean early employee - is pretty big. The
| fact that they are getting a "raw deal" in your POV should
| inform you that the equity grants are not related to risk.
|
| This is coming from someone who programs for a living: contrary
| to what you are saying, the money guys take too little equity.
| The money guy being, the reason you are raising money at all,
| and not just dipping into your own savings.
| jacquesm wrote:
| Always, always think about the downside scenarios if you enter an
| agreement. If you don't you will end up regretting it for sure.
___________________________________________________________________
(page generated 2025-07-25 23:00 UTC)