Yep. And maybe a few hundred devs will struggle to pay their mortgage.
Yes, Zynga has many issues. But before we get all cold-hearted and rejoice at the wonderful invisible hand that will correct all, can we for a moment remember that it's going to affect mostly the people in the trenches? Who often had little to no say in the outcome?
The idea of getting into a mortgage based on non-vested or non-lockup-expired stock options reminds me of Japanese professionals getting into mortgages based on their salary + overtime pay (overtime was effectively eliminated during and after the financial crisis, which left these people unable to meet their monthly mortgage payments).
Your comment is so isolated from the real world, and the very fundamentals of humanity, that I have to wonder how old you are and if you even have a girlfriend. Let alone kids.
The comment you wrote is something I would have written 17 years ago on a Prodigy bulletin board forum after I just finished reading some selected essays of Ayn Rand.
Wait so you think it's reasonable to bank on some uncertain future benefit to pan out, and expect people to be 'heartbroken' when it doesn't go through? Come on, you don't mean that, do you?
When I worked for a startup, I only considered my salary in my financial decisions. This also meant that I could switch jobs and be reasonably certain that my standard of living wouldn't change. We were offered equity as well, and the agreement we had to sign had several provisions that I could only describe as being pro-founder/anti-employee. For example:
1. Upon termination of employment (for any reason), the company can buy back your shares at book price, whether you like it or not. In other words: You'll never see a big payout from your work if you go.
2. There should be no expectation of a market for the shares in the company, and there may never be one. Again, good luck selling those shares.
3. The founder has the right to sell his shares, but employees have no tag-along right. So even if the company is sold, you will probably not be able to cash in at that point, since your labor/skill are part of the sale.
4. The employees' shares are subject to dilution. How much dilution? Who knows, maybe 1%, maybe 99%, whatever's good in the view of the founders.
This stuff is pretty standard, too. What I don't get though is how people will make multi-decade (i.e. mortgage, kids) financial decisions on a benefit that's this uncertain. Instead of actual equity, they could just say "we'll give you more money later if we get rich and feel like it". At least it would be more honest.
I can't believe people are actually willing to sign those kinds of agreements. If you can't sell you shares and the company can basically buy them back at will, the ownership is just theoretical. It's like getting monopoly money with the added clause that you may exchange it for real money if the owners get rich and want let you perform the exchange.
Please tell me that at least some companies have reasonable agreements with their employees/shareholders. Otherwise it's like someone else said a few months ago, Silicon Valley is just overrun with sleazy leadership types who do their best to screw over their employees.
I couldn't believe it either, and left that place pretty quickly. I still talk to a lot of people that work there, and I get the feeling that they live in this bubble where they assume everything will work out for the best. To them, I'm just cynical.
I hope that this isn't the rule in most places, but I wouldn't know :/
A players get to negotiate stock option agreements. The average employee is given options as part of their compensation package, and there usually isn't much flexibility on management's part. At least that's my experience in the four dotcoms I've worked for.
hyperbole much? all s/he said was that one situation reminded her/him of another. based on her/his comment you can't even tell how he feels about either!
Hopefully the parent just replied to the wrong comment, since I read over my comment a few more times and couldn't see how I potentially stepped out of bounds egregiously :(.
But anyways, the similarity I see is that in both cases, the individuals would have exercised poor financial decision making by assuming that non-realized or potentially temporary increases in income streams were real/permanent. I'd guess that financial professionals have experienced something similar, by assuming that the year end bonus would be size X when they actually only ended up getting X/2, or making purchases assuming job security until the end of the year but getting laid off.
If the devs were using unvested stock options to back a mortgage … well, they all make enough money for a single hour long consultation with a tax accountant who would have told them what a stupid idea that is. If they're paying out their mortgage from salary, well then, there's nothing particularly notable about their situation, is there?
devs? struggle? in the valley, for the gods sake? In what exact moment they're going to struggle with their mortgages, in these precise six minutes twenty four seconds that would pass between they get their notices from HR and they land the next job in the company next door?
And maybe a few hundred devs will struggle to pay their mortgage.
It sucks to lose your job, but there's a simple and time-honored solution to this problem: savings. It's amazing how much less you're pushed around by life when you have a year's living expenses in the bank. (It's also amazing how fast you can accumulate such a cash hoard when you consistently live below your means.)
While I applaud your financial ethic, in this day and age of our "rentership society" it's not exactly easy for everyone to do all that.
All it takes, for example, is a medical tragedy to befall you or your close family - medical costs are one of the biggest reasons for bankruptcy as now insurance companies play fast and loose with who, what and how much they cover.
It's not easy for everyone, but I'm pretty sure most professional software developers can pull it off if they try. And renting probably makes it easier, not harder. (I rent.)
A side-effect of having a year's living expenses saved up is that you have a measure of self-insurance against medical or legal misfortune. Combined with catastrophic health coverage, this makes it possible to weather even a fairly bad storm.
Beware of believing the party line on medical bills and bankruptcy, by the way. As far as I can tell, surveys showing that medical bills "contribute" to a large fraction of bankruptcies fail to establish causation. What they do show is that people who declare bankruptcy also often have significant medical bills. But of course many people do. I bet lots of people who declare bankruptcy also have car payments, maintenance, and repair bills, but it would be misleading to conclude that car costs are one of the biggest contributors to bankruptcy. Since no one is (yet) advocating for "national car coverage", the political motives are different.
I know we've heard over and over about medical bankruptcies, I don't think that's the issue in most filings.
It's typical for a family of 4 to have 2 new car payments, tens (if not hundreds) of thousands in student loan debt, a $300K mortgage, $20K or more in credit card debt, and all the costs of kids (soccer dues, etc). How long can a family like that do without income or at best lose half? Probably 2-3 months, tops. That's what causes bankruptcy.
I'm a modest Web Developer with a few years experience at a good agency in the UK. If I were to leave my company I know I'd be able to land a job somewhere fairly easily for similar pay.
Zynga is a well-known name and I'd be shocked if their developers struggle to find work when they are forced to leave.
I wonder if some people would cheer at the sinking of the Titanic because all the rich people lost their stuff that they couldn't take with them in the lifeboats.
Yes, Zynga has many issues. But before we get all cold-hearted and rejoice at the wonderful invisible hand that will correct all, can we for a moment remember that it's going to affect mostly the people in the trenches? Who often had little to no say in the outcome?