Dear Gusto, Mission Is More Than Marketing

In the email that was posted, the "Legal Eagle" says:

"This approach is standard practice. During my time at Fenwick, virtually every startup I helped incorporate decided to structure themselves in this way. Other startups that restrict shares include: Airbnb, Dropbox and Tanium. Many Y Combinator startups do this as well and Sam Altman, President of Y Combinator, explains why in this http://blog.samaltman.com/employee-equity."

I read the Sam Altman blog. Direct quote:

"I think it’s fair that if founders sell stock, they should offer an opportunity to employees that have been at the company for more than a certain number of years to sell some portion of their shares."

Sooooo I dunno I can't really read good so maybe someone else who can read good should tell me if she just sent the whole company an email citing a source that explicitly disagrees with Gusto's approach? I dunno. I don't read good.

Very well-written piece! I was at Gusto for over 2 years and was shocked when my sale to a respected third party institution got blocked. Thanks Gusto... "ownership mentality" to you must mean that you own me.

The honest answer to this is to unite... the introduction of transfer restrictions is new waters in the legal space and were only recently introduced (past 5 years) and mostly limited to Silicon Valley. There are many disgruntled former-employees at these types of companies. Band together enough people with multi-million dollar stock options and you will have a big enough pie that a high profile attorney might be willing to push and potentially redefine the boundaries of what is lawful and what is not from a case law perspective (and get a piece of the pie for him/herself). Ethically I think these clauses should be made super transparent and they aren't -- and I agree that that is wrong. Just because 5 large startups do something doesn't mean it is right or fair in the long run legally. Sue strategically, band together and do it with force before they run out of money.

Great article. Even if startup equity is a gamble, everyone should benefit equally if it pays off.

Who's going to invest the energy to build something world-changing if they can't trust that their ownership means anything?

Very well written article. Brings to light a less publicized reality of being an Gusto employee. Thanks

This is ridiculous. It's a major problem that companies are allowed to do this. Does this mean equity doesn't really matter because you don't actually own anything? What a horrible way to treat your employees that you claim are "family."