I don't think companies should take back stock compensation on a technicality. It'd be silly to even discuss taking back cash compensation when someone leaves a company!
I appreciate Adam starting this trend years ago.
Obviously it's in the founder's financial best interest (at least on the very surface level) for employees to not have the option to leave the company with shares at all. It is just lost money, from their perspective, and probably annoying to have an employee leave (creating a headache in your life) and take a bunch of equity with them. (And it severely limits an employees negotiating power over time, which can be of benefit to the founder...)
What are some strategies an employee can use to make the point that Adam's perspective is a much more employee-friendly one and, thus, better for the company?
Looking for some perspective.
Value the options at zero and take appropriate steps.
It may not be the statistical expected result, but it is the modal outcome anyhow.
"Appropriate steps" isn't just "quit". If you're happy with the cash salary than you don't have a problem, for instance, or the experience, or the lifestyle, or any of the other reasons you may be choosing to work at a startup.
"Obviously it's in the founder's financial best interest (at least on the very surface level) for employees to not have the option to leave the company with shares at all."
Well, yeah, but that's sort of vacuous; it's not in the employer's best interest for employees to be compensated at all. But that makes hiring pretty challenging.
"What are some strategies an employee can use to make the point that Adam's perspective is a much more employee-friendly one and, thus, better for the company?"
There isn't a general answer to that question, because it depends on your status in the company. In some places, even opening that conversation will put you halfway out the door. In others, they'll fall over themselves to fix the problem if you just mention it, because they'll not have heard of this before. You need to judge the situation you're in, and play out the possible scenarios before you step in to something like this. But I'd suggest you're going to need a very solid position to change something this fundamental about a company.
Generic advice: It's always easier to negotiate from a fallback position of strength; unless you're absolutely confident in your position, consider having a job in hand before starting this talk. (You don't have to tell your employers that you have an offer in hand.)
On the other hand, if I were told that the options would be worthless if I left before a liquidity event, then I definitely would value them at exactly $0, and would therefore insist on a market-value salary, period.
If you've already joined such a startup, and taken a below-market salary, that's a different situation. I think the best advice I could give you -- unless you totally love working there -- would be to find another job.
Usually these founders give you the standard 90 day agreement and are not Uber-level aggressive in trying to prevent these kinds of deals.
Later? Don't work for those companies or do the math. If you get RSUs then it's somewhat equivalent to getting those 10 year options anyway.
You also might be told "you are in the same pot as the founders," which is technically true except that the founders can still be never-work-again-rich after a 90% dilution, and the founders will typically have a seat at the table when the question of "how do we re-up people who have been diluted so low but are still capable of spiking the deal if they don't like it?" comes up.
On the that same surface level, it's also in the founder's financial best interest for employees to work for free.
Fundamentally companies offer better terms in compensation to attract better talent. I spent 11 years at Google. I was recently looking around for new places to work, the lack of liquidity even in the face of success was a big deterrent for me to work at any early stage startup.
YC is trying to make things better and fair for employees. For a really long time the odds were always stacked against the employees the most. YC, Adam are hacking it for the better. All good entrepreneurs who believe in "making the world a better place" should endorse this. Unless, the idea gathers enough momemtum, the old-guard, vulture VCs will not change their stance. This includes A16Z.
Hearing from A16Z that they don't support this is a big negative signal to any founder.
Put another way, they have negotiating leverage.
The ones with the leverage (including YC backed companies) have to lead the charge to change the status quo and "the standard". The average startup doesn't have the leverage to do something nonstandard. The fact that YC has come out in support of 10 year vesting periods and is making it a standard is a massive step forward.
Barely any companies even have extended exercise windows, so you can't go around excluding companies from the list because "they don't count". Also your logic is almost circular, because a16z tends to only invest in hot/great companies, by definition.
You can go down the list: https://github.com/holman/extended-exercise-windows. Many other companies have a16z as an investor. Tilt and CodeCombat are two of them.
>I agree with Adam's post
>I don't think companies should take back stock compensation on a technicality.
Isn't a 10-year period a technicality?
Anything that can take back compensation is a technicality.
Heh, can't even get a response without downmods.
your post doesn't add anything to the conversation
it might technically be a technicality but 10 years is long enough in startup life units that it doesn't matter
you're pointing out definitions when it was clear what the author meant and people don't like that because it's very annoying
Maybe you could elucidate sama's "clear" meaning? It was lost on me. As far as I can tell, the post adds nothing but confusion to this conversation (you could counter by pointing out something of value contributed by the post).
Annoying is when people continually post contradictory or unclear things and never respond to their rightful critiques, or even change their future actions.
The sama account rarely makes responses and Sam Altman basically never responds to criticism of his pieces, or even outright proofs of wrongness. Honestly, this is the treatment I expect to receive here.