Why Startup Wealth Never Trickles Down to Employees
hackernoon.com
hackernoon.com
Eventually, the startup got acquihired. Common stock was worthless, deep underwater compared to strike price for those who exercised (and some who exercised early had to pay tons of taxes on a low basis and overinflated valuation). Investors got their money back. Execs got between $1MM and $10MM in cash.
What's the mechanism for this? Were there dual class shares for executives? A bonus for the acquisition?
1 million over 4 years is not crazy depending on position.
The engineers were largely Chinese, so I suppose they didn’t have much choice getting shafted on their common stock, and from what I’ve heard from other engineers, the offers weren’t extraordinary compared to similar positions at peer companies.
The "Rules for Rulers" CGP Grey video[1] dug a fair bit into the difference between being a resource vs being a key player and how key players are not exactly the biggest contributors in a system.
This is unfortunately a rational result, so you cannot apply a moral or ideological argument to it & attempt to sway smart people enough.
"Take the throne to act, and the throne acts upon you. Accept that or turn back now before we discuss, The Rules for Rulers."
1. For them.
2. As I have written before.
This happens to a lot of people at non-profits also. They consider the "mission" part of the paycheck and pay accordingly in Feel Good Bucks.
1. The startup makes it. (Acquisition by Big Co or IPO.)
2. They are sufficiently early employees to benefit from that.
Most startups don't make it. People trying to get wealthy from being employed by startups hop from one failing one to another, hoping this time the luck will turn around.
Anyway, at that point in 1994, the first 30-50 employees all made $$$. That included the secretaries and receptionists. They were all millionaires.
Something has changed and that is the terms that VCs and Executives have negotiated for themselves. I have not heard of any secretaries getting $$$ in a long time. There is a lot less sharing in the spoils than there used to be.
A quick litmus test is to see whether they workers are called employees or resources
The problem is that the people on the top make more money if they pillage the vast majority of a less profitable company versus sharing more equally the profits of a more profitable company.
Who wants to run a successful company when you can make as much money making a golden parachute payout to shut the company down or sell it for scraps? Running a successful company sounds like actual work, that’s not something the upper crust signed up for.
what do mckinsey and thumbtack have to do with startup wealth?