There was a talk that's been shared on here from Ben Horowitz where he explicitly pitches the 90-day window as a way to screw employees. That's probably where the perception comes from:
> The second way to handle it - no companies do this, which is why I actually really like this post that he wrote - is you can say up front, " Look you are guaranteed to get your salary but for your stock to be meaningful, these are the things that have to happened. You have to have vested. Two, you have to stay until we get to an exit. Untile the company makes it. You've got other money." Finally, the company actually has to be worth something. Because 10 percent of nothing is nothing. The reason we set the policy this way is we really value people who stay. So don't join this company if you are going to join another one in 18 months because you're going to get screwed. Our policy guarantees you're going to get screwed.
At this point, I'm surprised when other people are surprised that founders and investors work together to screw employees. "Work", in the corporate sense, is the same sort of exploitative, morally vacuous, might-makes-right dominance hierarchy that humans have been forming for thousands of years. We haven't evolved beyond that garbage yet.
No, a16z is very explicit about their views. This is not from Ben but from the current managing partner:
> A 10-year exercise window 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.
I hate that article. It's not a direct wealth transfer. Using that logic you could argue _anything_ is a direct wealth transfer. Why not claw back bonuses and even salaries too while you're at it?
I'm a founder. If someone works with me for three years then has to move on, they've earned their equity. I want them to keep it and root for us from the sidelines. It's sweat equity, not "stay until a liquidity event" equity. Especially with founders themselves starting to more aggressively take money off the table using secondaries (which aren't always offered to their employees).
Also, if you're a founder, note that your lawyers will almost certainly towards 90-day windows (and your investors might too). It might take some work to get something more employee-favorable.
I read that as you're supposed to loyal right up to the point the company decides to lay you off and you better not think that you have any freedom once you sign on because we will retroactively screw you. The percentages in the typical option pool are not going to move the needle anyway and those employees that served the company early on took far greater risks than those that did so later and probably were paid much less too. So as far as I'm concerned they are well entitled to their stock.
Totally. It’s really fantastic that a16z is transparent about their values. It’s safe to assume other VCs share these beliefs but choose not to disclose them.
What will never cease to amaze me is that the likes of a16z while reaping billions on hardly any work at all will go to extreme ends to deny others what they simply earned through usually very hard work.
When we were raising our series C, a potential investor (which we did not go with) wanted a requirement to cancel/claw back all _vested_ and _early exercised_ options that employees who had worked for us had and to put in place a buy-back-at-exercise-cost-or-cancel for current employees.
That is absolutely ridiculous. I'd love to know which investor that was so I can avoid working with them, if you could let me know I'd be very grateful (mail in profile). If not, I understand. Kudos for making the right call anyway, and that VC deserves to lose each and every deal they look at.
Out of curiosity, what did the cap table look like when they suggested that? Was there a good chunk of equity floating around your current/former employees?
I know some VCs have dilution/ownership thresholds and they might have been trying to find a way to get in on your raise without bending their own rules. But it is really offensive to your employees, I know if my company did that I would walk.
Ok, I will say this: this was a former entrepreneur at a very high profile perceived-brand-as-tier-1 guy running the independent capital investment arm of a very high profile company.
As some sibling comments: We are raising, and I would be interested in knowing who that investor was so as to avoid them. Please email me/dm me if you feel comfortable (see profile). Regardless, I am glad you did not go with them.
Yes if there was a clawback clause that could be triggered for some excuse, and presumably there was. For instance: you left the company. Depending on the clause you could be forced to sell back to the company at the issuing price or the fair market price on the day that you left.
It was NOT in our boilerplate. The discussion around this was his “secret sauce” concept. It was ridiculous and we turned it down.
They were big investors in a few very high flying super flops in the 2010s. It has always made me wonder if the employees at those companies would have been screwed had the companies been everything the tech press ckaimed they were.
(I know you're not arguing for this view, but) I just don't understand this perspective. The whole point about compensation is that it is explicitly a transfer of wealth, and through any transfer some people are going to "lose" money (on gross, but perhaps not lose money on net).
That is, can't I make the same argument about being paid at all above the legal minimum? "Taking a higher-than-minimum salary is really a direct wealth transfer from the employees who choose to remain at the company to former employees who are no longer contributing to building the business/its ultimate value."
The logic being that if a current employee takes a higher salary, then that reduces the valuation of the current (and future) company, which is a wealth transfer from future employees (who own some small share) to the current employee who may leave? From this argument a16z's position seems absurd...
Except those employees have already earned those options.
So it's a direct wealth transfer from people who have earned something, to institutional shareholders, most of whom are investors.
It's odd because Ben seems like a nice guy.
This reminds me of a kind of Thiel/Musk/Bezos ego thing, where otherwise rational and reasonable people do these couple of things where they delude themselves into the rationality of their decisions. But that 'character flaw' is actually a competitive advantage for an otherwise reasonable person.
Yeah, because fuck those workers who try to make a free market work for them once in a while. Don't they realize that market talk is only a way for their social class superiors to justify doing whatever they want, and that it isn't for them?
That's what always seemed like bullshit to me. If you want to have a 4 year cliff to discourage job hopping, then give people a 4 year cliff. Why try to weasel them into it?
I see no reason to screw employees who job hop. It seems like if 1/10 as much effort was put into making your workplace pleasant, you'd have fewer people leave.
> The second way to handle it - no companies do this, which is why I actually really like this post that he wrote - is you can say up front, " Look you are guaranteed to get your salary but for your stock to be meaningful, these are the things that have to happened. You have to have vested. Two, you have to stay until we get to an exit. Untile the company makes it. You've got other money." Finally, the company actually has to be worth something. Because 10 percent of nothing is nothing. The reason we set the policy this way is we really value people who stay. So don't join this company if you are going to join another one in 18 months because you're going to get screwed. Our policy guarantees you're going to get screwed.
https://genius.com/B-horowitz-lecture-15-how-to-manage-annot...