Employees at startups generally take a below-market salary in exchange for equity compensation, so imagine the double humiliation of being fired because your first shred of equity is about to vest.
Employees at startups generally take a below-market salary in exchange for equity compensation, so imagine the double humiliation of being fired because your first shred of equity is about to vest.
That still carries risk but not as much. Assuming you assign value to the stock at all.
Whether this particular stock will go up or down after the IPO is any-body's guess.
What does it cost to transfer stock in the US in a privately held company? Here in Europe it can be up to ~$1K to transfer stock in a GMBH or BV, other countries more or less depending on the local situation regarding notary public roles and rates. In a public company it is dirt cheap but this is prior to IPO.
That + accelerated vesting in case of wrongful termination or termination without cause can be reason enough to batch share vesting events.
So he was getting less than half of his MNC salary at this drone startup. He was totally immersed in making and breaking things with weekends stopping to exist for him and evenings and nights blurring. For pretty much 10 months.
He was asked to resign a day after demo day where potential investors raved about the product his team (3 people) had finished. Another team mate was also asked to leave within a week. Both of them were given a reason on the lines "excellent engineer but won't be a good fit in the culture and your product was not well appreciated". Only remaining team mate was a confounder who used to pass on requirements. Of course both ex employed didn't get anything. He said he needed at least 2 more months to get some stocks as he would get instalments after every completed year.
He took a break of around two months. Relaxing, slowly getting back to rhythm. Him being good and being from IITB meant he had literally hundreds of recruiter mails every week. But he calmly deleted any mail which had startup mentioned anywhere in it.
Sometimes back his previous manager recruited him back at the same European MNC with a substantial pay raise.
My point of writing isn't sharing a generic burnt by a startup anecdote with you. He tries to remain calm but I, and many other friends, can see that he has been deeply scarred by the deception and (I would call it) betrayal.
Employees who put their heart and soul to build something don't own it in capitalistic model. Only the owner by virtue of being owner of private property/company has right to it.
Treating people as means to an end, which capitalism encourages leads to this model.
I think economy dependent on human creativity will hit a ceiling, if they continue to remove ownership of content from the creators. The creators can be anything from a humble web developer or someone like your friend.
Those are expensive lessons, your view of humanity will likely never be quite the same afterwards. The fact that the guy crashed and burned gives me no comfort at all.
Even so, I do realize I had a part in that, if I had been a little bit smarter I could have educated myself on this stuff before accepting. And that's where the world today is different than in the past: we now have world-wide networks of people in tech that can warn each other. So every story like the one you told here should help to keep other technical people safe from predatory behavior.
I wrote about my experience here:
https://jacquesmattheij.com/the-start-up-from-hell
Apologies for the pictures not working, I still need to fix that after the latest domain shuffle.
"(6) beware of people that use your love of your work to take advantage of you"
I run into this problem again and again, although I am getting a little better as I get older.
That is so damn close to me that it was eerie reading it.
I think quite often programmers who are good but early in their careers don't value themselves enough and the relationship ends up been exploitative.
I worked 80hr weeks for just slightly under 2 years for someone I thought was a both a friend and a boss for it all to go sideways.
The lesson was learnt on the spot and while I'm still gregarious these days I operate by the maxim "trust but verify".
> I worked 80hr weeks for just slightly under 2 years for someone I thought was a both a friend and a boss for it all to go sideways.
That is really very familiar.
> The lesson was learnt on the spot and while I'm still gregarious these days I operate by the maxim "trust but verify".
Good for you. And make sure you pass the lesson on to others so they don't have to learn it the hard way.
Already did that, I worked at a place where I was the 5th programmer on the team but the most experienced and the lead, the boss was not a nice guy and worked the two youngest programmers like dogs, I soon put a stop to that with the "If you don't turn your computers off, I'm going to go flip the breaker, it's 6pm on a Friday go home".
The thing I've learnt with bosses like that is most of the time if you stand up to them they either back down, respect you for it or fire you at some point in the future (assuming you haven't already left) but in any case your life improves.
The last job I had for someone I came in at 8:30am, left at 5:30pm and outside of work I didn't answer calls, emails or issues unless I was on call, this was despite the pressure to do so that many of the other programmers succumbed to.
Team pressure is a hard thing to fight against but I've seen enough to know that a team working (actually working, not screwing around on a computer all day) 12 hour days 6 days a week can do that for a month at most and then the damage sets in and each day is less productive till you end up getting less done in 12 hours than your team would normally get done in 6.
Tired people don't do good work.
Is "confounder" a typo for "cofounder"? Too perfect. :) I've known some confounders responsible for product requirements!
It just seems like a silly thing to spend time doing, monitoring who will be vesting soon to fire them. Sure, maybe for one or two executives who are vesting integer percents of stock, but beyond that, it's not worth the time, and definitely not worth the backlash.
Scott Kupor [managing partner at VC firm Andreessen Horowitz] wrote an article [1] suggesting that a 10 year exercise window for employees who leave:
" is really a direct wealth transfer from the employees who choose to remain at the company and build future shareholder value, to former employees who are no longer contributing to building the business/ its ultimate value."
This seems to suggest that the "investment" by early employees who leave shouldn't be treated like the early investments from VC's who decline to keep investing at some point.
Makes you wonder whether there's anything, at all, this company's management is competent at. I guess CEO (the founder's son) didn't go through the usual hiring process.