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Comment by Swizec | Hacker News Reader

> to make sure early employees don't get rich before the IPO

But why? What's wrong with early people getting wealthy?

The concern could be a brain drain. If lots of your early employees cash out and leave, you are potentially losing a lot of historical knowledge and expertise at a time when you are trying to build up to a successful IPO. Early employees often leave after an IPO. At that time, it is still disruptive but the company's priorities have changed.

It's difficult to sympathize with Stripe when these options coming up on the ten-year mark, especially because we all know the reason it has been taking so long is that they would really like to just raise private capital forever instead of giving these employees their due.

The employees can always exercise and quit even if they cannot sell it, this doesn’t do a lot for the brain drain. Instead, the main reason is that company wants to control who its shareholders are. They don’t want just any entity to be able to become a shareholder and by this virtue, acquire extra privileges and access.

> Instead, the main reason is that company wants to control who its shareholders are.

Why?

> They don’t want just any entity to be able to become a shareholder and by this virtue, acquire extra privileges and access.

They're early employees, why wouldn't they be rewarded? What makes a random person that just walked in with a wad of cash more deserving?

For the same reason why you might want to borrow money from one person, but not from another: people typically want to choose to whom they are responsible. You don’t want to suddenly acquire an activist minority shareholder, who’ll sue you for alleged breaking of your fiduciary duty to him, and distract you or force you to change your plans.

> They're early employees, why wouldn't they be rewarded? What makes a random person that just walked in with a wad of cash more deserving?

Not sure what you mean. The entire point is that people who run private companies often do not want random people/organizations to come in with a wad of cash and become shareholders, without people running the company having any say in it.

Getting wealthy before VCs isn't good.

Gotta keep those workers hungry!

Will somebody please think of the poor workers with 500k salaries?

Many employees leave the moment they can sell millions of dollars of stock.

Probably a combo of wanting theme to stay instead of retiring and investors wanting to be able to offload their shares first in an IPO.

They're the wrong sort of people.

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