Amazon bought Eero for $97M and employees still got screwed

This isn't just theoretical: my current job is at a place who's known to be cash-heavy (ie equity-light) with their offers, relative to competitors. This suits me just fine, since I'm not sure enough about the company's ultimate success, or rather, not willing to deal with the risk and illiquidity to a much higher degree than I already do. As you can imagine, for a given level of compensation, equity and cash play against each other, and I'm getting much more in cash than my friend with equity-heavy comp packages do.

Equity and salary as forms of compensation each have advantages and disadvantages, and it really doesn't make any more sense to look only at the advantages of equity-heavy packages (priority during liquidation) than it would to complain that employees getting a salary was unfair to investors.

> Hardware startups require a lot of cash, and technological progress can render a product obsolete before it has a chance to take off. Nearly all (97 percent) of the 400 hardware startups tracked in a 2017 report from CB Insights either died or became "zombies," companies that survive for awhile with VC money, but eventually fizzle out.

Amazon purchased this company for its technology and people. Having the entire executive team leave immediately would make the transition exceedingly difficult. They want to incentivize these people to stay to assist in the transition, hence the payout.

Why? Because the players themselves are world class even though their team is loosing. One player on their own is never enough to secure victory for the entire team. So you can’t inversly put the fault of a loose entirely on every individual player.

Of course, if they worked for equity rather than cash, that was their call and one would expect them to bear the outcome.

Treat your salary as your total income and equity as a lottery ticket?

For most startups that raise a series A or beyond, founders win no matter what, even if not financially: they build connections with funders and founders, develop experience with management, extend their networks, and get a broader view of their sector. This is true even for companies that just straight go bankrupt.

Emoloyees usually get none of these things (but often get even less of those things at a big company).

So anything that reduces the priority of employee equity vs that of the original employees and investors implicitly increases the risk in addition to the explicit reduction in face value.

The real problem to me has been the absurd notion that someone explicitly investing cash is somehow investing more on a dollar for dollar basis than regular employees.

* VC or whatever invests a dollar amount: they write a cheque.

* Employee invests a dollar amount: Employees at startups are expected to work 80 hours a week, so if we're assuming a regular job is 40 hours a week, then their salary should be twice their regular market rate salary. So in that case, an employee is making an annually recurring investment of (2 * market rate salary - actual salary).

In spite of this a VC or whatever gets priority on getting that money back, gets a say in the running of the company, ownership/dollar lower than "equity" grants to employees. The employee gets no voting rights, has a reduced payout priority, and on top of all of that even if the equity grants were equal, the employee is still taking more risk than the cash investors because the company is also their source of employment: if the company fails every one loses their investment, but employees have also lost their jobs.

So if anyone should get higher priority for divestment opportunities it should be employees - think of it this way: if you have 10 developers working for 100k, vs. a market rate of 150k, and they're working 80 hours a week, you are looking at a per-employee annual investment of 200k. If you have 10 employees, they are collectively investing $2million a year. That's getting super close to the "big" funding rounds (and for many cases more than) from various startups.

In response to the claim that they're not providing cash flow: if you were paying market rates, you would need to find a separate investor to raise cash for twice as many employees, all being paid more. That sounds like they're providing cashflow.