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Comment by Gibbon1 | Hacker News Reader

If they told you that the number of outstanding shares was privileged and confidential they are crooks in nice suits.

Also at this point in time there is so much shady stuff going on with options that you should always always value options at zero. Frankly if all you are offering is your labor in return for options you don't have the pull to get a particularly good deal. (Example: Friend worked three years at a startup. Friend is smart. Friend got ~$50,000... whoop dee doo dah day)

Only other advice I have is, if you are considering exercising any stock options you need to talk with a tax accountant before you pull the trigger. No exceptions.

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In addition to the # of outstanding shares, you want the valuation, the # of preferred shares, their liquidation preferences and multiples, and a couple more things I'm probably forgetting.

You can never get this information even as an employee. You ask directly, and nothing. They don't want to give it to you.

Your company could be sold for 100's of millions, paying off the investors at 2x investment, and the common stock holders get nothing.

> If they told you that the number of outstanding shares was privileged and confidential they are crooks in nice suits.

Never attribute to malice that which is adequately explained by stupidity.

Getting a seed round doesn't magically confer the founders/C*Os with an comprehensive understanding of how company equity works. Or common sense.

If they were that dumb they would have just coughed up a number. So let's trade aphorisms:

"A witty saying proves nothing." - Voltaire

In all fairness, anyone who doesn't get that the expression c/x where c is known and x is unknown can match any given rational number - or the implication that this makes c convey zero information - is pretty much definitionally unfit for running a tech company. So malice might actually be the charitable explanation here.

I mean, imagine if someone followed the same practice for the salary part of compensation: "We will pay you money!" "Eh... how much?" "Some. The actual number is privileged and confidential."

^^ At least in that case you would see in 2 weeks what your actual salary is ;)

Oh but this company pays annually and you got hired in January. Sorry ;)

There's a vesting cliff so you only get 25% of your salary the first year.

Crooks, or dumber than a baked potato. Either way, run fast and far.

> Never attribute to malice that which is adequately explained by stupidity.

So what is the lesson here? I hear this saying over and over, always with the implication of "Give them a pass". Who cares if they are being crooked, or are too dumb to do division. Either way, the employee loses.

There's no lesson. I'm just pointing out that many founders are more focused on tech or product than they are in options and cap tables. And many startups employ staff who are also unfamiliar with such things.

Given my experience of advising early stage startup founders on equity investment, dilution, cap tables, etc., I believe that ignorance is at least as likely as malice in situations where they seem unwilling to disclose all the information the potential employee needs to fully evaluate the potential value of any equity options being offered.

Stupidity is very dangerous in this situation because the CEO may completely believe that he's doing the best for the employees, but then get hoodwinked by institutional investors who will make the deal sweet enough for the CEO so he can be the one to tell you your options are worthless when the liquidation preferences come home to roost.

I would never join a startup where the founder wasn't razor sharp and forthcoming on all these details.

That's fine. I don't care if the Cxo is lying or stupid. The conclusion is the same: I don't trust them to deliver value on my shares.

It's like a doctor who opens up your gut to remove your appendix, but it turns out he doesn't know what an appendix looks like and has never performed surgery before. The distinction between stupidity and malice has kind of disappeared.

It is also a signal -- "Can this person be persuaded to work for magic-big-number options but half the salary without too many question? If yes, then he's a believer and want him to work for us. He'll probably stay up on weekends and work for the cause." If he's asking too many questions, he'll probably question our decision making down the road as well, and will be hard to fool.

This can be seen in recruiting stagee as well, it is usually presented as the take home question. Give them a take home interview problem that takes two days to solve. Those that go for it, will be dedicated and desperate enough to be good workers.

>Never attribute to malice that which is adequately explained by stupidity.

I honestly strongly dislike this quote, because at the end of they day just about every malicious activity could be wrongly attributed to stupidity.

Exactly! Plausible deniability is a very low hurdle to jump over. If it's your only hurdle, you're in big trouble.

> Never attribute to malice that which is adequately explained by stupidity.

Does that really change anything, if your C-suite is too stupid to understand how companies work?

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