DoorDash removing 1-year cliff for equity grants
blog.doordash.com
blog.doordash.com
Just two months ago I declined an offer from a known and well funded startup because of a one year cliff on equity.
The recruiter didn't seem to be able to discuss this matter and I asked them to make sure to bubble this sort of thing up their food chain. I never heard back afterwards.
As an "old timer" in the industry a one year cliff makes absolutely no sense to me. Its like working for credit, which seems very backwards.
I don't think you are wrong in doing so as the market in tech moves fast while employers move like slugs, it is just such a shift from what I grew up to expect.
Not sure if that's really their concern here. Companies don't just ditch reasonably well performing employees because they want to avoid compensating them. That would already mean that each time RSUs vest the company would have an incentive to fire.
A good example of this is the This American Life story on NUMMI: https://www.thisamericanlife.org/561/nummi-2015
Toyota took one of GM's worst plants and turned it into one of its best by treating workers with respect. Hearing the workers talk about the transformation stunned me.
* not trusting your team to do their work and by extension questioning whether they are working "hard enough" (or dreaming of ways to extract more blood from stones)
* some flavor of impostor syndrome, needing to prove your value by making sweeping changes to the team process even if inheriting a successful team
* not having either the back bone or clout to question status quo, including demoralizing cultural habits such as stack ranking
There is a reason the majority of employers (including managers) are generally bad and the good ones are few and far between - it's human nature.
I'm reminded of Microsoft Japan piloting a 4 day work week and announcing in 2019 that the trial ended up increasing productivity by 40%. They ended up not making the change permanent. One small company in New Zealand - Perpetual Guardian - did the same trial in 2018 and saw the same effect, they made it permanent.
Most companies operate like Microsoft.
Broken systems product broken systems.
Hiring is tough and you waste a lot of time onboarding people and getting them to a productive state, firing them just to save some stock after 50 weeks seems a bad idea, not to mention the morale implications.
Long term retention hinges on long term adequate compensation and long term quality environments. There's no need for cliffs.
An engineer with family is unlikely to take such a risk and rather join Google or even Amazon where compensation is guaranteed.
In my experience, people tend to be either lifers and stay for 10+ years, or bounce between jobs every year or two. Lifers tend to accumulate in companies that cater towards them (good work/life balance and job security) due to low employee turnover, so if you're in the other group, it appears that everyone in the industry only works for a year.
I mean, average tenure is probably the best indication of how good a employeer is (unless there are few companies at a location). I was pretty suprised to hear it was 2 years at Google.
You might as well not bother interviewing at any startups if this is a deal-breaker for you. Whether you think it's fair or not this is an extremely standard term and no company is going to alter their employee stock grants on a one-off basis.
That said, I have seen 5 year vesting (which seemed like a red flag to me), and have heard of Amazon's schedule where you mainly vest in later years. These were bigger red flags for me than a 1 year cliff.
It makes "stay 53 weeks and cash out" less appealing, it makes "stay 6 more months to hit the next cliff" less appealing, and it rewards long-haulers (who are underpaid almost everywhere else in tech).
The rear weighted AMZN approach made sense to me in terms of both optimising retention and some proxy for reward to contribution. I say this also as someone who left after 2 years and as a result left most of their stock unvested. It definitely made the choice to leave much harder so I’d expect it to skew more heavily toward retention benefits than a typical schedule. A typical schedule has a linear growth of what you’ve vested. I’d expect the value of contribution of a person to grow over time though. More context, more experience, more everything. Hopefully that means the you 3 years from now is making a more significant contribution than the you they hired. Typical schedules hope that the increase in valuation accounts for that compounding return. AMZN have shifted it to the vesting schedule.
That said they always talk about “total compensation”. So for the stock you’re not getting in the first two years you typically get as cash via a “hiring bonus” anyway. You could always just use that cash to go buy the equivalent amount in stock, no vesting required.
Also I would curious what you left Amazon before those vested?
- 5% after 1yr
- 15% at 2yrs
- 20% every 6 months for years 3 and 4
The 401k match also has a 3 year cliff.
But as they said, years 1-2 you typically get a signing bonus
The median tenure at AMZN is also 1.5yrs, per linkedin. Their strategy seems to be to work their people extremely hard to earn their RSUs and pay them like plebs with hard caps on earning potential (base comp).
Is this a well-known thing then? More so than other FAANGs?
As for why: a rebalancing of priorities re work/life/travel balance and a better sense of connectedness to my actual work and the success of the company. Not gonna lie though, I look back at what I left on the table and the AMZN share price over the past 2 years and I still wonder if it was the right choice.
It can be a tough sell, and recruiters are trained to just say no, but persistence pays off. Same thing applies to getting jobs in general. If you aren’t persistent in your application process and aggressive in your negotiation process, you simply won’t have the best outcomes. It just becomes easy to turn you down.
It was just strange that the recruiter couldnt discuss this further or at least give an offer with a nice cash compensation that would be paid out monthly (sort of like how Amazon does it) to compensate for cliff.
I've both chosen to exercise and not exercise on a short 30-day window but balancing FOMO vs future regret is hard with the volatility of a typical startup.
Why would you otherwise take the risk?
I'm curious about Microsoft- anyone know if Microsoft has a cliff on RSUs?
I think removing the vesting cliff is great but personally I am not worried as I never sew the cliff as a problem.
After busting my butt, often working 12 hour days for 9 months, they fired me without cause.
Because I hadn't quite worked there for a whole year yet, I didn't get any of my stock options.
I will NEVER make that mistake again.
Next, I'd like to see pre-IPO startups offer longer periods to exercise shares when you leave. 90 days being standard is way too low.
But it's only 1 year?
* Bonuses are usually given annually
* Signing bonuses and sabbaticals usually obligate one year employment
A year seems like a very low bar.
Only worth it if you aren’t early. ISOs provide preferential tax treatment, and early on are usually very very cheap, so many companies (mine included) also offer early exercise with ISOs, which is an unbeatable tax win (afaik).
The issue occurs when options get expensive (aka the company is doing well) and then you have to do the math between ISOs or NSOs. The longer expiration may be better, but certainly not for every employee.
That said, as companies get bigger they stop being able to offer as many ISOs (there is a max cap), so at that point they should extend the timeline for expiration.
One thing companies do have to worry about though: a 10-year expiration means your cap table is in flux for 10 years, potentially, which makes calculations, acquisitions, etc, tougher.
In the current system a lot of options get clawed back to the company's benefit from an inability or unwillingness to take the risk of exercising.
It is no coincidence that this very simple modification is not too widespread.
I don't agree at all. The primary effect of a longer exercise window is in not returning expired options hastily to the pool. Otherwise what's the difference if the employee continues to be an employee and doesn't yet-- ceteris paribus--need to exercise or forfeit.
Why do you suggest unexercised options of any stripe muddy the waters? If the option is worth anything at all it will be exercised at a liquidity event.
It should be at least 365 days so that you can split it between tax years.
I've still got options of a public company I need to "dispose" of, and I don't want to do it all at once.
Perhaps until the options expire (typically 10 years) would be too much to wish for, but that would be ideal.
What's the real advantage of waiting to exercise, to make sure that the stock will be worth something versus wasting your call option costs? How high are these strike prices that people are holding out?
Again, I've some, but limited (but very different) experience here with equity grants and options.
as an example, I joined an early stage startup as an exec (potential good deal!), but I would've had to shore 300k to exercise my stocks, pay taxes on it (minimal, that's the huge advantage here), and more than probably see it fail.
now let's play the opposite scenario: you join as an engineer late stage, each ISO might be valued at 10 dollars each. how do you exercise.
this game is skewed towards founders.
in my example, I had to quit for personal reasons and the company was later acquired. however I wan't able to afford, so I got got of $100ks at the time of acquisition.
removing these 90 days time would have let me gain what I was owed.
no hard feelings, because I knew the game, but it was the moment I decided no more startups that have this 90 days BS.
You stay for three years. The exit hasn't come yet because the VCs want to see a higher valuation, but the company has grown and the 409(a) valuation is now $5 / share. You've now vested 60,000 options that would cost you $60,000 to exercise, plus you will have an AMT adjustment of $240,000 because of the difference between the strike price and the current 409(a) valuation. So, exercising those options will cost you $120,000 (ballpark, IANA accountant) in exercise cost and taxes.
Keep in mind you've accepted a lower salary for the past three years because of this stock, so you might not have that kind of cash lying around. And even if you do - are you willing to throw $120,000 into a bet that the company will one day have an exit? Keep in mind that the company may have debt, preferred stock, liquidation preferences, etc. and most companies won't share all their past financing terms with ordinary employees, so it may be hard to estimate what a realistic exit even looks like for your stock. And if you're leaving, maybe you're a little disillusioned with how things are going in the first place? You have 90 days to make this decision after leaving the company and then you lose the stock forever.
For many people, the answer at this point is that they don't want to take the bet - and they get screwed out of a large part of what was supposed to be their compensation.
It's a shitty and exploitative system. I worked at a startup where this exact thing happened to many people who contributed immense value to the company. We had a bumpy year, some management turmoil, etc. and many people left before the IPO and got nothing out of their years of hard work other than a shitty, uncompetitive salary. I will never work for another startup under these terms.
What gets you with waiting, if you have ISOs, is how much AMT hits you. If you're at a >50% IPO company, it's somewhat common to exercise as many options as you can before the AMT hits you.
It's also worth remembering that your 50% startup could be Wework. It's worth $9B, but was valued at almost $47B.
This reads to me like someone looked at the data and discovered that almost everybody who stays employed for a quarter goes on to stay for a year. So they decided to try to juice some marketing value out of a policy change that makes no functional difference to anyone.
Why else would they choose to have equity vest quarterly instead of with each pay period? Or monthly, which is already typical after the cliff? If you believe equity is part of total compensation why does it need a different schedule at all?
This makes sense for reduced paperwork if the company is buying back 28% of the shares to pay taxes instead of selling it to the market to pay the taxes - the company can reduce the open market sale on vesting days, but keep it as a single event within the quarter (advance tax payment per quarter).
I'll illustrate with a relatively concrete example. A recent graduate joins Google on December 31[1] of this year, and gets a 100K initial grant ('22-'25). They then follow an above-average performance trajectory over the next few years, getting refresh grants of 40K ('23-'26), 60K ('24-'27), 80K ('25-'28) and 100K ('26-39').
So in 2022, they'll vest 25K. In 2023, they'll vest 25+10=35K, in 2024 they'll vest 25 + 10 + 15 = 50K. In 2025 they'll vest 25+10+15+20=70K. In 2026 they'll vest...also 70K. And that's assuming a feasible but above-average performance trajectory[2]. If performance is lower, even modeled stock compensation will actually take a dip in year 5.
If you instead take the same total numbers, but frontload the initial vest, you get something like
33, 43, 47, 57, 70 vs the original 25, 35, 50, 70, 70. Its 250K in stock over 5 years either way, but in the second case you don't ever feel like your compensation has flatlined.
[1]: Ok this isn't precisely true, it's gone down, but it went down a few years ago when Google removed the cliff, not when they changed the vesting schedule. For this example, I'll use the trick of assuming they join in December 31, because this ignores the decrease in comp that came as a result of not getting first-year equity refreshes.
[2]: Also note that take-home pay will be lower in 2026 than in 2025, because the 2025 shares are plurality from 2021's vest, with 4 years of growth, while the 2026 shares are plurality from 2026's vest, so less growth.
100k with frontloaded vesting at (33/33/22/11) is much better than 100k vesting at 25% a year. But 100k frontloaded wouldn't equal 132k vesting at 25%, only the first year would be equal.
So that answer would not be sufficient if I had a competing grant at 132k, and was worried a second year comp drop. It may be true that Google gives really good refreshers and my above average performance will increase my comp. But I think of that like depending on a percent bonus, it's less reliable than base and my initial equity grant. And if I start using refreshers, raises, and stock growth with Google, I should also use it when looking at competing offers.
> you don't ever feel like your compensation has flatlined.
Emotionally that may feel bad, but I think it's caused by employees getting lucky. I don't think it's a problem that needs to be solved.
1) It's objectively bad if I have a cliff because my employer hasn't increased my comp as my market value increases. I should probably look for a new job.
2) It's objectively good if my cliff is because the value of my initial grant exploded. The drop will be bad. But if it's such a noticeable difference I'm probably sitting on hundreds of thousands or even millions of dollars in profit from my initial grant.
I can certainly believe this, lots of companies play games to make first-year comp look higher, I certainly don't put it past my employer.
What I'm describing however, isn't anything to do with external hiring, its a common complaint made by existing google employees about how they feel comp drops in year 5. I agree with you that its not totally rational, but people aren't totally rational, and it wouldn't at all surprise me if doing something like this improved retention past the 4 year mark (but it also wouldn't surprise me if the better year 1 comp makes Google appear more competitive with Facebook. Two birds or something).
And yes, you should absolutely compare stock refreshes (if you can get data) when comparing offers! FWIW, I have no clue if Google's are particularly good or not.
https://www.teamblind.com/post/Lets-Boycott-Interviewing-at-...
This Blind post is saying that Instacart/Stripe says you only get $50k no matter the price of stock? How would you even structure that kind of grant? Why not just make it a bonus?
Your offer states that you will get $X of shares, vesting over 4 years. The $X is converted to a number of shares shortly after joining, based on market price, and is locked in from that point forward.
Your friends are mistaken.
I believe they used to due quarterly vesting for folks who didn't get much equity, but now that you can have vesting of fractional shares, ~everybody should be on a monthly vesting schedule.
This is a bit of a change from e.x. when I was hired and my offer letter said N shares, and so when I joined 6 months later my grant had increased in value significantly. But it's still not the situation in these other companies, where you vest 6.25% of the dollar value each quarter, converted to shares or whatever.
Actually that wouldn't really be compatible with googles vesting schedule, now that I think about it.
When I joined I got a random email that said “your rsu $ to shares conversion was X shares and here’s your schedule” and my schedule is all in # of shares not $
ESPP-like programs, on the other hand, are always dollar denominated and exchanged at a set rate at the end of the offering period.
The first way makes employees lose out on an average of 2 years of stock growth.
VWAP == Volume Weighted Average Price
I finished undergrad last May and had multiple offers to choose from well before I even graduated. Maybe covid has slowed hiring since, though.
Also - I'm talking about last year, not now.
But I am recently out of college and have not even passed resume screen by a few companies despite referral, credentials, etc.
Having said that, there’s a contradiction in claiming that college grads can’t find jobs while suggesting that a company offering six figures can’t find people because of comp.
Never said that - but if you had answered $50k, I probably would have!
I'm surprised you are having trouble hiring people - but perhaps if you are in the Bay and hiring new grads, they might be surprised when it is in the low $100ks.
I don’t believe that given how hot the market is right now. If anyone is having real trouble, then they are either being selective (won’t move to a big city, have high demands, etc), OR something is wrong. Maybe their resume is terrible, maybe they are bad at interviews, etc.
But I have to apply to 20-30 companies to get 1 interview, so there is clearly a problem at the resume-screening stage for new grads.
Have to find a way to get past the HR screen until you have experience. Somethings that work: go to meetups. Often times the hiring manager or a tech team member is there and you can meet them directly. Apply at startups that don’t have a recruiting department yet. Email the tech team directly if you can figure out who they are.
I busted ass to get a single job; how is "only" 4 offers not amazing?
I for example didn't graduate for hs and college, and yet, I managed to get to a place in life which my younger self would have classified as "wild ly successful."
However, everyone (including me) always wants more, and massively takes for granted their current situation. So I get it, but keep your head down and keep on climbing!
Engineering was more rewarding than software, but software pays better.
I do engineering in my personal projects now.
Senior has all but lost its meaning too... It describes how long you've been in the industry, not if you have the skills to be a technical leader, etc.
At larger corps when a senior leaves, you're often given budget to re-hire a senior, so there is no incentive to hire a junior/entry level. A lot of companies don't even have pathways from internships to entry-level positions. They just let them finish their internship and say "good luck"
This is a problem for diversity as well. Look at the makeup of the seniors in the industry. Now look at the junior/entry level folks coming out of master programs, colleges and boot camps.
Most non giant companies don’t have good processes for on boarding engineers so it’s mostly yolo. They want engineers to be productive very quickly. Someone just out of college will likely not have the skills required to drive projects on their own to completion without help/supervision.
Bigger companies have pretty great onboarding tools and processes and dev tools that abstract most complex things away, allowing developers to become productive rapidly. I think of them as factories that can extract the most value out of new grads.
I say this as someone who was a junior not that long ago, but of course my experience is anecdotal so take it with a pinch of salt.
But it's not always that easy. If you're a small company still looking for product-market fit or doing a fair bit of greenfield development, there's just not much work for a junior dev to do. These companies aren't all stupid or lazy or discriminating against new grads for some reason.
It's the same reason estimates are hard - we're building brand new things that we've never built before and a lot of the work is in the design. Junior devs need to be told what to do. The architects/senior devs become a huge bottleneck because they can only design so much stuff at once, so until you can find more of them you can't hire more junior devs because there's not going to be anything for them to do. Until you get to a point where you're doing repeatable work or your design/architecture is solidified enough to keep people on the guard rails, there's just not a ton of work for a junior dev to do.
Finally, you also have the issue that a lot of devs don't want to get into any kind of management but they want to be managed by technical people. You end up with a shortage of decent managers (where "decent" means both someone who's ok at the job of management and is acceptable to the team).
If we had more work to give to junior devs we'd happily hire them - they are so much cheaper!
And one other contributing factor is a lack of unions. Say what you will about seniority-based comp/perks, they do make people stay in one job for longer, which makes it more worthwhile to invest in a junior dev.
This is so crazy to me. IME if you break even on an intern, not including pay, you’re very lucky. In other words if the code or whatever you get out of an intern equals in value the amount of time your regular staff invests in the intern. In most cases it’s negative and you have to pay them on top of that—-plus events and so on.
If you aren’t using internships as a recruiting tool I have no idea why you’d bother.
Because no one is going to hire a junior developer to work remote. The job market isn't especially hot, it's just temporarily distorted in a way that favors more experienced developers.
I think it’s that if you have zero experience, you are a huge unknown. Anything more and work abounds.
Not to say that everyone can simply walk in to these jobs (and they shouldn't!), but if a graduating CS major cannot find any decent software job today I'd be more inclined to suspect their skills than the industry itself.
I'm profiting 100k/yr in the Midwest, and it's a junior-ish position.
Could be worse, could be Tesla 90k/yr revenue.
If you can get a mortgage, I imagine it's even better.
I’d argue the $200k compensation in Texas is on par with the $300k compensation in SV after everything is said and done.
To me a decent junior should be able to build a basic Hacker News.
There are a lot out there who have never done so much as make a web page with more than copy/pasted Jquery and expect to get jobs.
On the flip side, self taught coders can do pretty much anything with bad form. Although even at my job I find myself doing things with bad form unless the task requires it to be written well.
I have never really had the opportunity to work with experienced developers for a long period of time (at least not experienced with the work I was doing) so for all I knew I am doing all sorts of things with bad form.
In what time period? With what features? With what non functional requirements? Show me a senior who can!
I have a better test for evaluating anyone's skills:
Write a function that puts Strings in an array. Then write another function that goes searching for a string in an array.
Write a unit test to confirm your code is working. Explain what happens to the performance of our code if we can guarantee our array is sorted.
If they can past this test, you're already better than most candidates in my eyes, and it takes about 10 mins to find out.
If you know enough about a web framework to get it going, use it to complete a specific set of tasks, and get it deployed with a database, it would put you ahead of a heck of a lot of grads that I know.
I wasn't suggesting this as an interview question, but more a self check for juniors. Can you actually bring something end to end? Yours works better in an interview setting, although it seems fairly trivial.
fn put_string(array: &mut Vec<String>, input: String) {
array.push(input)
}
fn find_string(array: &[String], input: &str) -> Option<usize> {
for i in 0..array.len() {
if &array[i] == input {
return Some(i);
}
}
None
// or perhaps more idiomatically:
// array.iter().position(|s| s.as_str() == input)
}
#[test]
fn test_find_string() {
let mut array = vec![];
put_string(&mut array, “foo”.to_string());
put_string(&mut array, “bar”.to_string());
assert_eq!(find_string(&array, “foo”), Some(0));
assert_eq!(find_string(&array, “bar”), Some(1));
assert_eq!(find_string(&array, “quux”), None);
}
What kind of salary are you offering?
Clearly this is anecdotal, but what types of things lead you to this conclusion?
- tons of remote offers, even with technologies like Java where in the past very few offers were remote
- salaries significantly up compared to 1-2y ago (getting 90-100k eur for a remote position in EU was rare, now it's not surprising to see such numbers)
- companies shorten interview processes, both in terms of numbers of rounds but also the time the whole process takes. In the past companies could reply to your application after a week, now I saw a few cases where a week after applying they send an offer
I have some LinkedIn job searches saved for Amsterdam, NL and I started noticing jobs from companies like Twitter, Github or Stripe where now they allow working remotely from EU countries. It's different than it was 2y ago.
It effectively gave the company a discount on employees who stayed only 364 days - or to look at it another way, a 'trial period' of 1 year where the pay was substantially less.
A buddy of mine who worked at a giant company (not strictly tech but you'd recognize it) said he heard from his boss that the company effectively considers the first year of a software engineer's employment a wash as far as cost/benefit. I can't imagine they're the only ones. In that case, why would you reward people who jump ship before your break-even point?
Smaller firms may have smaller codebase and less complex infrastructure and processes to get familiar with. Learning all of that wouldn’t take more than a week or a month, tops.
Larger, public companies like FAANGS will often have completely custom stacks, specialized developer tools and a ton of checks before anything you write hits production. Learning to navigate this will take a lot longer. IIRC Facebook has a bootcamp of several weeks (months?) just to get new engineers familiar with their shit.
In either case, I personally don’t think it’s a “wash” since even at the bigger company it’s not like you’re not doing anything and once you get familiar with the stack you can be productive af.
I've always found the one year cliff funny, since investors don't have a cliff.
I've been hoping startups would start doing this for a while, and think DD is really a pioneer here and think this will become a trend. I know personally I turned down a few opportunities at promising startups simply because I was young, in my twenties, and a year felt like a long time. I found the probability of a life changing event that would require me to move and leave a company too high, and didn't want to bust my butt for 10 months with a salary cut, then have to leave and get no equity. So I said "no" to a few opportunities that otherwise would have been great.
Currently incentives first your first year are to focus on not getting fired. Now it can be on making an impact.
I'm curious: Did you try to negotiate? I have had luck negotiating the terms of equity in the past, but I'm not sure if my experience generalizes.
> Currently incentives first your first year are to focus on not getting fired. Now it can be on making an impact.
If someone is so unmotivated at a job that they're not making an impact, I don't know if removing the cliff would help; they likely shouldn't have taken the job in the first place. If you join a new place and realize that it's a poor fit, it's usually best to cut your losses and move elsewhere immediately, even if your equity hasn't vested. The presence of a cliff doesn't significantly change that math.
I agree about missing out on hires because of the cliff, I just don't think it's that unreasonable to have one.
Not back then. Was not bright enough. That would have been smart. I think if I had phrased it as "I'm very excited about your potential, but I'm young and black swan events may happen and I might have to leave early, how about a 6 month cliff?". Probably would have worked.
> If someone is so unmotivated at a job that they're not making an impact
I didn't phrase it well. What I'm getting at is that risk taking is disincentivized your first year. You might have an idea that could have an upside of 100, but might also lead to a loss of -10, and in year one it's best to sit on that idea because if it were to fail you'd take a big personal loss. I think you have misaligned incentives that first year where the number one goal is not to risk rocking the boat, and number two goal is impact.
Ah yeah, that makes sense and I didn't think of it that way. I guess I personally don't look at it like that, but I can definitely see and appreciate the thought process.
Investors don’t have a cliff because they give their money upfront. How would a cliff work in that situation?
Sometimes, companies include in their annual reports the conditions of employee shareholding plans. In Europe, for management, plans with 1 year vesting and 1-3 years blocking period is a practice. This means that you cannot exercise the options until 2-4 years in. Further, all unexercised options are forfeited if the employee moves to the competition within a defined timeframe.
(In actual fact I was then a pretty underperforming employee who misunderstood the situation, but the apparent trigger for me getting fired was my own request for help addressing the situation since I realized something was wrong. The startup founders were as early-career as me and didn't really know how to give me the feedback I needed. My next employer did give me the necessary constructive criticism, after which I made the necessary changes, got subsequent positive feedback from that same employer, and have been a decent to good employee everywhere I've been since then.)
Usually signing bonuses have a 1 year paypack period. So sure, you may get stock even if you leave before a year, but you still have to pay back the signon bonus you received (and you don't get the taxes you paid on the sign-on bonus back either)
Allows bad-fits to leave asap rather than hanging around till 366 days
and if you don't like the statutory result, you can incorporate in at least one of 55+ other sovereign jurisdictions within the United States
People that really think they need a state-level business court system for their multinational unicorn, in a place they never physically will be, can just keep using Delaware for no reason, and their employees will subsequently have better earned securities laws.
Are you implying doordash delivery guys actually work 39 hours/week to skirt full-time employment? (that would be fucked up I agree)
Only equity-eligible roles classified as employees get equity. For everyone else employed by DoorDash, and on whose backs DoorDash is built, let them eat cake.
If you ban DoorDash someone else will pop up to exploit the system. Or someone like Kiwibot or Serve Robotics will come along and automate the whole thing and remove the jobs from the market entirely.
Legislators should stop fixating on minimum wage and fix the root causes behind low pay rather than trying to legislate band aids.
I switched a few months ago from a company that did. It was a farce how my old company, at the end of the year, would say your compensation for next year is $X but part of X was paid out over the next 4 years with a 1 year cliff each year. Just one of many reasons why I left.
My current company pays out equity every 3 months and it's incredible.
The only good thing my old company did was pay every week instead of every 2 weeks. I know most companies do every 2 weeks; I was surprised at how large a difference getting paid every week vs every 2 weeks makes. Not sure why the extra week between is so impactful but it really is.
In what way?
Or, tl;dr, it makes it easier to automate money without leaving a large buffer of cash in a checking account.
This seems like a silly thing.
Overall, this is not bad for a company that has already IPOed. I hope the startups that are on the verge of the IPO dont use this as a way to cap out giving RSUs to employees.
That's quite surprising. Generally RSU comp is based on a particular monetary amount, but converted to no. of units upon issuance based on market prices (usually at/close to start date). Is this not the case with DoorDash?
If that's the case that seems... awful? That's a cash bonus with a downside.
I think here they are mentioning value based, which means that instead of being given X amount of shares/rsu over 4 years, you're given "the equivalent of $X" at the begining of each years. So after 1 year, of the stock doubled in price, you will effectively receive half the amount of stocks (still the same $ value tho).
The entire point is to encourage people to stay by letting their wealth grow with the company? A scheme like that seems wildly counterproductive.
I can see the importance of this from the company end - with tech company shares skyrocketing, a fixed share amount gives them potentially unlimited stock compensation liabilities which could drag on earnings. But from an employee perspective, it sucks. You get none of the upside of company stock appreciation but all of the downside of being forced to purchase company stock with a portion of your compensation. You're much better off taking higher cash compensation and using that to purchase the stock of hot tech companies on the open market.
Which I suppose you can just immediately sell and get back the cash - which begs the question of why not just model this as cash bonus compensation entirely?
The entire attraction of equity is that it can appreciate as it vests - that your (presumed) contribution to the company's market cap during your tenure is rewarded.
AFAIK that is not how stock works in this context. The company issues the shares ex nihilo. That dilutes existing shareholders (if not offset with buybacks) but otherwise doesn't cost the company anything. The shares are not vested so if you leave they return to the comp pool. The company doesn't magically issue new shares on your vesting date so any rise in share price doesn't affect the company anyway. The whole point from a company POV is they can pay you in paper (shares) they manufactured out of nothing rather than cash.
They are doing it this way to reduce the total number of shares they need to issue (aka cut compensation). There is basically no upside for an employee, the changes to vesting schedules or cliff are a sop to avoid having to tell their employees that they're cutting compensation. Employees can already borrow against those RSUs if they need money.
The idea that missing out on a 10%-200% rise in the share price over the next four years in exchange for a bit more flexibility in vesting is a joke. If the company actually cared about the flexibility they could just switch to 6 month vesting or monthly vesting without removing the upside. There is no benefit to removing the upside beyond reducing dilution. They sure as hell aren't going to apply that same policy to their executives.
Is that necessarily true?
Is there generally also a separate cliff for those additional option grants?
I ask because I interviewed with a startup recently and the recruiter told me that the company had just awarded everyone in the company additional options. I asked them if there was a cliff attached to those but they couldn't answer that.
An equity grant is an allocation of shares/options offered to you when you start. eg: join our company and get 40K shares. Vesting just controls how long it takes you to get those shares. In a 4 year vesting you get 10K each year. In a 1-year you'd get them all at once in 12 months.
This is independent of the share price, it's your equity that's the whole point. So in no universe is it better to get 40K after 4 years than it is to get 40k in one year.
My cynical read of this is that they are changing the vesting schedule to quarterly (instead of monthly, which is more typical), and burying the lede on that by painting this as a benefit to employees (when it really only impacts new employees).
Does anyone know if this is true or not?
So you get nothing the first three quarters, but after quarter 4 (your first year at the company), 25% of your 4-year grant is immediately vested. Every quarter after that is another 6.25% of your initial grant.
I believe the point they were trying to make in the article is that, instead of quarterly grants following the pattern of:
[0%, 0%, 0%, 25%, 6.25%, 6.25%, ...]
[6.25%, 6.25%, 6.25%, 6.25%, 6.25%, ...]
Is it? Almost all my and my friends' RSUs have been quarterly, with a typically 1 year cliff as described in the article.
Maybe I'm on the wrong coast?
What's the endgame?
Standard vesting schedule with 1-year cliff... but you would be prevented from selling any stock grant for the first year after it vests. Love it, thank you but no!
Who joins Oracle/IBM...etc' these days ?
What is the mission here? Is Doordash at all sustainable without continually funneling VC money into subsidizing services that no one would pay for at their breakeven cost?
Wouldn't this move incentivize employees seeking short term employment thus diluting stocks given out to existing long term employees?
It takes a lot to fire someone legally - oftentimes you have to document ~6 months of poor performance, put them on a PIP, give them a chance to remediate, etc. Combine that with normal long ramp-up times in a tech company, and by the time you know it's not working out and can fire them, they're pretty close or past the 1 year vesting point anyway. It's much more efficient if the employee decides to leave on the their own, if they know it's a mutual bad fit.
This removes the incentive to stick around for the windfall - if you're not enjoying your workplace, go leave and find a better one, and you get paid fully for time served. It's a lot like the buyout offers at places like Zappos or Coinbase, designed to make sure that everyone is on-board with the existing company culture.
They get weeded out relatively quickly and usually run out of desirable employers, though. That's why employers are skeptical of employees with multiple short-duration stints or gaps on their resume.
This is simply increasing the risk of hiring short term employees in addition to existing risks including the high cost of ramp-up times.
But they also don't give you units of RSUs as stock comp, just cash equivalents, so that is another major downside working there.