
Employees at Practice Fusion got nothing as execs pocketed millions - coloneltcb
https://www.cnbc.com/2018/01/23/practice-fusion-workers-got-nothing-in-deal-as-execs-made-millions.html
======
former_pf_emp
The company played some nasty mind games with their employees regarding
equity. They did a 7 (I think?) for 1 split, and then had the recruiters
telling employees that they had "never seen a company give out so many shares
before." They sent out spreadsheets with calculators that would let you
estimate the value of your shares, and just casually let you know that Apple
was trading at ~$700/share. iirc, they even pre-filled in the line for
potential value with Apple's current share price (so, 5000 shares * 700 Apple-
level share price = 3.5M). At every company meeting, they'd get really pumped
about how they were going to IPO. They would throw parties celebrating their
100 millionth patient life covered, even though it seemed pretty obvious those
numbers weren't real. No 401k match, since you're not going to need it after
we IPO.

There was even a second market offering to let Ryan sell enough shares to pay
his taxes and maybe buy a nice house in South Park.

I don't feel bad for the engineers, since they were generally exposed to
enough information that they should have been able to call bullshit. I feel
bad for the customer success team, who were often given a tenth of the amount
of shares as engineers but would still frequently talk about retiring when we
IPO. Hopefully the exec bonuses will be voted down, and there'll be a class
action lawsuit.

This is a problem that faces a lot of startups. We should all be more wary of
information that's given out, and be more demanding of transparency. Learn a
less from all of us PF employees: the more a company talks about their IPO,
the less likely it's going to happen.

~~~
pf_throwaway
here's the share calculator spreadsheet they sent me:
[https://imgur.com/IR7Boha](https://imgur.com/IR7Boha)

~~~
panabee
thanks for sharing, and sorry for your horrible experience. just want to
confirm you scrubbed numbers like the number of shares so there's no way
someone can deduce your identity.

------
khazhou
Sure, these founders went too far, but the basic problem of Founders >>>
Employees is there at every startup. When even employee #1 at typical SV
startup signs on for 1% and employee #4 already for half that, why do
“employees” still think there’s anything equitable about equity?

Listen up, prospective employee: if your founder makes several million, you’ll
get zilch. If founder makes tens of millions, you might get enough for a
modest car. If your founder makes over $100 million, you might have enough for
a down payment on a house. Then you can go to the next startup and work super
hard all over again to try to mint another mega-millionaire.

~~~
birken
This fatalist attitude is just as bad as the overly naive attitude that I'm
sure left many employees of this company feeling screwed.

Employees have agency. Founders don't have some magical power over you with
which to screw you. You choose to work for them in exchange for money, stock,
whatever. If stock is a sizable part of your compensation, you probably should
be asking a lot of questions about it. How many shares will I get? How many
shares do you have? How is the company doing? What are the future plans? When
am I going to get liquidity? Do your own accounting. If they won't give you
the information you require, don't join! If the company isn't hitting its
benchmarks, leave! There are _lots_ of other companies out there to join,
including many publicly traded ones so you'll always have the full financials
(and liquid stock).

If you do your homework and are serious about continually evaluating the
company at which you work, you will not get screwed. Your time is the
investment, and every 3-6 months you should re-evaluate whether the company is
the best place to work. You don't owe the company anything! They need to keep
proving to you, quarter after quarter, that what compensation they are giving
you is worth you continuing to work there. Are you guaranteed to be
successful? Of course not. Being an employee of a startup is risky, and you
might make the "right" move that ends up not working out. Just from this
article it seemed to me there were many clear warning signs this company
wasn't all it was cracked up to be, and some employees didn't evaluate the
company's trajectory properly and ended up getting screwed. It's a lesson
learned but I'm sure many of them could have pointed out in retrospect where
they went wrong.

And I'll also add that being a founder sucks, and being an employee is
comparably much easier. First, getting companies off the ground is really
really hard and founders have to do that themselves. As an employee you can
look around and join a company that already is showing some traction, saving
yourself a bunch of time and frustration. Additionally, as an employee you can
and should leave if the company starts falling behind its benchmarks and you
think there are better opportunities elsewhere. As a founder you can't really
do this, you basically have to stick it out until the end.

So basically, being a founder isn't any better or worse than being an
employee, they are different paths with different expectations, and each one
of them has to be done with care to get the most out of it.

~~~
JamesBarney
Evaluating the worth of a company and stock options is very hard and usually
requires several skill sets the employee doesn't have, as well as information
the company is reluctant to give out.

If I asked the founder for all of the financial documents the company has
signed so I could know it's obligations, I can't imagine that a majority of
the founders/CEOs would say "sure here you go". And even if they did, the cost
of a lawyer to go over all of that paperwork to make sure you didn't miss
anything would be expensive.

~~~
birken
Learn the skills!

Financial literacy is a very important skill. Yes, startups are complicated.
To be an informed employee you need to deeply understand how stock options
work, you need to deeply understand how startup financing works, and it
wouldn't hurt to have a general understanding of business. And look, if you
just want to be a software engineer, then you don't have to learn these
things, but then you can't complain if you get screwed. Or take a job at a
publicly traded company and use the stock price as a proxy for how the company
is doing.

And as for the availability of the documents and financial information, the
main ones you care about are: revenue, expenses, total burn and cash in the
bank. Any company that will not reveal those is being shady, full stop. These
figures should be so top of mind the CEO or CFO should know them off hand
without even having the look. A good company will share all of these with the
full company every month or quarter, because they are really important
indicators of how the company is doing and what the overall strategy should
be.

You don't need a lawyer. You are not auditing the company, you are just
getting a sense for the company's trajectory. Your job is actually really
easy. If things are going well that is normally obvious. Revenue going up.
Burn going down. Fundraising rounds at higher valuations. If these things
aren't happening or you suspect something shady is going on, leave! You don't
need to break the case, just get a better job at another company that is doing
better.

~~~
JonFish85
"the main ones you care about are: revenue, expenses, total burn and cash in
the bank"

That's part of it, but not all of it. Total number of outstanding shares
(including warrantable shares!) can change the complexion of things a lot. And
then there's the question of preference -- deals that a company made years ago
can make for a big difference in share value.

Unless a company has an incredibly clean cap table, a rank-and-file employee
will never really know how much their shares are worth until they are either
worthless, or have a cash-in-hand buyer. What you're talking about is the
general case of "things are moving in a pretty good direction", and that's
important. But to really gauge value of a stock option is much, much more
complex (and is constantly changing!). Even if an employee were able to come
to a reasonable estimate of common stock value, one bad month can wipe that
away (an emergency $5m round to make payroll? a loan backed by stock? a long-
term lease backed by stock?).

------
bdittmer
Recently happened to me. Founders raid the series c for liquidity. Take out a
predatory note to keep the company afloat. Sell the company in a fire sale and
reap transaction bonuses, RSU grants, etc. Common stock wiped out and those
that built the company left with nothing. Lesson learned? It rarely pays to be
an early employee at a startup.

~~~
jhwang5
Which company, if you don't me asking?

~~~
zenlikethat
Looks like Quri ([https://angel.co/quri-1](https://angel.co/quri-1)). All you
had to do was Google OP's handle and dig into where they worked recently that
had their characteristics

~~~
gaius
If the OP chose not to say, it’s unreasonable to doxx them

~~~
gruez
Posting company names isn't doxxing

------
kabdib
Yeah, as an "investor" and an employee of several startups, I generally wound
up on the losing side of the equation, to the tune of tens of thousands of
dollars.

Stuff that amounted to, "Oh, we extinguished those shares, sorry about that,"
when the corporation was worth several billion.

This stuff is broken. You are _far_ better off working for a mature company
with decent management; if you are any good, you won't necessarily have "fuck
you" money at the end of ten years, but you'll probably be ahead by several
million dollars, and the value of "several" might be pleasantly surprising.

~~~
DenisM
“Surprising several” is at least 3 million over ten years. Which companies pay
to “any good” engineers enough to pocket $300k per year, after tax and living
expenses?

~~~
mlevental
there are plenty of senior devs at FANG making that. not just machine
learning/data scientist magician but just good devs that have been there for
10 years

~~~
CaveTech
You'd have to be making 700k+ a year to be banking 300k after tax. Perhaps the
valley slipped away from me but I find it hard to believe that there would be
average employees in that range.

~~~
loeg
Your tax math is bad. The pre-tax figure, even with California income tax, is
closer to 500k than 700k.

And some of that 300k/year difference is coming from growth of invested
savings, not just W-2 income.

~~~
DenisM
So “any good” engineers are making $500k now?

I haven’t been on the market in a while, seems like I fell behind the times.

~~~
loeg
I never made that claim, and you're ignoring investment gains.

------
sitkack
I worked for a company that offered me 2000 shares when I was hired. I asked
two questions,

How much is the company worth? What is the number of shares outstanding.

Both of which they wouldn't give me. I told them the stock was worthless, that
I wanted a 25k pay bump, which they granted.

Years later they ended up getting acquired for a hefty sum (950+ million) and
people who were in the employee 5-50 range and worked there for 8+ years
literally only received enough for a good used honda civic. Only two people in
eng made over a million, 1.5 and 6, but that was only because they were
managers that kept the cattle inline.

~~~
conanbatt
The game is pretty rigged in this regard, and investors are sophisticated
enough to know how to maximize what they get at the cost of the common shares.

------
mattschmulen
If I had a dollar for every time an XO, Sales VP, or board investor (I’m
looking at you Todd Rulon-Miller) said we were expecting an IPO filing in two
years (bless thier optimistic little hearts) and sold for executive bonuses
and a common stock price for the parts then I would have 3$. Best exit I ever
had was an XO who’s singular prediction statement was “I think we have a
chance at building and contributing to this technology and I think that might
be valuable to this software enterprise segment, do you want to go find out?”.
Buyer beware, contributor beware; it’s just how the game goes. Look for the
humble introspective and you increase your odds, there is no guarantee, you
only control your investment. That’s a tough break for those that were over
exposed you have to cap your liability to your comfort level. bummer for those
that caught the bill.

~~~
seattle_spring
How does an engineer protect themselves against this sort of outcome? Just
never work for startups?

I currently find myself in a similar situation, where the books look dire but
the executives keep saying that we're so close to profitability. I'm 85%
certain that my stocks will be worth nothing, but I stick around because I
still see an ounce of promise. Am I just a sucker?

~~~
nshelly
I think for early stage companies you should see the startup as a 1) learning
opportunity first and chance to work with a great team driven by a passion
outside of pure money, and 2) an out-of-the-money call option / favorable
lottery ticket. Also, the new tax bill got rid of AMT for incomes under
$500,000 for individuals ($1m for couples). It's difficult to go over that
amount with ISO's as the FMV of your shares is valued at around 10-30% of
preferred. You could exercise your options once every year for example to stay
under that limit.

If you've already exercised and paid AMT, try to invest your other savings and
if you need to take a loss you can offset it against those capital gains.

While it might not be something you're passionate about, I would also add that
reading about startup law, discussing with your peers, and knowing your
rights, and even asking (getting in writing) the terms of the investment
rounds, is invaluable and certainly something you should do if you want to
understand your full package.

~~~
shostack
Can you elaborate or point to any references on how this works? Does this
essentially mean if I have some amount of options I want to exercise, and the
combined total of that + my income is <$500k, I don't need to pay taxes on the
options at all?

~~~
dpiers
I believe they're mistaken - 500k/1MM are the new exemption phaseout points.

~~~
shostack
So how does it actually work though? I'm not really familiar with this stuff,
so any basic info or good links to learn more would be much appreciated.

------
jVinc
"Planning for potential acquisition exits also includes having bonus pools for
key employees (which include founders and current executives) that align their
incentives with company stakeholders to achieve value upon an exit."

That has too be a joke right? They are arguing that the terms that will lead
to only the executives and founders getting a cash out are necessary in order
to align their incentives to achieve value for stakeholders.... who will
receive nothing in the sale?

Seems like the only thing this bonus structure is incentivising is their
orchestration of a quick and dirty last minute exist so they can get their
bonuses while the rest of the company burns down. Hopefully it will get voted
to hell, and a new structure will be put in place where the key employees
don't make a dime until the ensure that all stakeholders make money.

~~~
bdittmer
See my previous comment. This is exactly what happens.

The sale doesn’t get voted to hell because the voting shares (i.e. preferred
stock) have liquidation preference and get paid _back_ first, in some
instances multiple their initial investment, before the rest of the pie is
sliced.

------
btown
> CNBC talked to three former employees who lost between $40,000 and over
> $100,000 each because they exercised their options in previous years and had
> to pay tax based on their heightened value at the time.

Interestingly, the recently passed tax reform bill seems to make this type of
loss less likely - though it would seem to be too late for these employees.

[https://www.towerswatson.com/en/Insights/Newsletters/Global/...](https://www.towerswatson.com/en/Insights/Newsletters/Global/executive-
pay-matters/2017/12/What-the-final-tax-reform-bill-approved-by-House-Senate-
means-for-compensation) (see section Private Company Equity Grants)

~~~
kapauldo
How is this a loss? They paid taxes on gains? Not sure what the badness is
here. They cashed out and paid taxes.

~~~
btown
If this is an honest question... an employee who left the firm after 2013 and
wanted to exercise their stock options needed to pay taxes up front on shares
they received, based on the company's then $700mm+ valuation. But now the
price of those shares is significantly less, based on the $100mm sale price.
So they ended up paying more in taxes on their stock than they can receive now
from the sale of their stock.

This article explains the dynamics well:
[https://www.recode.net/2016/1/19/11588918/gilt-groupe-is-
a-c...](https://www.recode.net/2016/1/19/11588918/gilt-groupe-is-a-cautionary-
tale-for-startup-employees-banking-on)

In this case, one of the controversies is that company leadership may not have
taken such a low sale price (given that they initially had offers of more than
twice that) had they not been compensated with personal payoffs outside of the
equity structure.

~~~
nshelly
Right, but the $700m valuation was preferred, and the employees likely paid
AMT tax on the FMV (about 10-30% of that value). It's certainly sad but at
least they can write off the AMT loss against capital gains if they have any
and wish to, or take the $3,000 credit every year.

~~~
caseysoftware
But that is the nasty part. The taxes were paid up front while the credit will
be applied over years. Odds are they had to liquidate something else, borrow
money, etc so it's not just the lost equity but the opportunity cost.

There's always the "they knew they could lose it!" line but if the leadership
was lying internally and externally, I hope they get sued into oblivion.

------
markbnj
This is a pretty common scenario when a venture funded company doesn't reach a
valuation that exceeds the various preferences accumulated in investment
rounds. The company is ultimately sold, all of the sales proceeds are taken by
the preferred shareholders, who carve out set-asides for founders and senior
management to keep them onboard and not scare the acquirer off with internal
strife.

------
conanbatt
Sometimes people see this and start thinking that options or stocks should be
regulated harder by the sec so employees dont get shady deals and screwed like
this.

But there is a much simpler way to prevent this from happening altogether: let
employees trade the shares they got from openly in the market. That way, you
would get a market signal on stocks on startups and shady deals like this
would get whistleblowed on the market long before they are signed.

------
49erfanboy415
This is pretty crazy. I'm surprised no other news outlets are picking this up.
The company says it is normal to pay management fat payouts to drive the
company into the ground? Why should they get paid for selling for $100M when
they took over and it was worth $700M?

~~~
aetherson
I have no particular knowledge of this specific company, and it's quite
possible that their manager payouts are overly high.

But: Somebody's paying $100M for this company. That's much less than the
company was hoped to be worth, but it's still a huge chunk of change. The
buyer is trying to get something for that investment. That means they need the
company to perform in some way. Maybe just shut down in an orderly fashion
while they monetize the client list in some manner, but for $100M, I'd guess
that they want to operate the company somehow.

For that, they need the cooperation of the senior managers. So they pay them
to cooperate. It kind of sucks, but you have to give the managers of the
company some incentive to stick around and help you do whatever it is you want
to do with the company instead of saying "Fuck you we're out of here."

If it helps, I'm certain that $750k - $7M was much smaller than the payout
those execs were hoping/expecting to get from a more successful outcome.

~~~
mgkimsal
> ...but for $100M, I'd guess that they want to operate the company
> somehow....For that, they need the cooperation of the senior managers. So
> they pay them to cooperate...

I'm not sure how much cooperation I'd want from "senior managers" who managed
to manage a company in to 1/7th of what it was valued at. If it was
intentionally fraudulent... you want those people around and making decisions
still? If it was incomptence... you want those people around and making
decisions still?

Yes, I'm oversimplifying, and no doubt there's always other factors to
consider, but this thinking bothers me along the same lines as "we needed to
pay those large bonuses to keep the CEO around - we couldn't get anyone else
as capable and experienced!" while the company is simultanesouly tanking.

~~~
Maro
I don't know anything about this company.

But, just because the valuation went down, doesn't mean it's the management's
fault. Maybe the old valuation was based on wishful thinking, and over time it
sunk in [to everybody] that there are core problems with the
product/biz.model/etc that they can't solve. This I've seen multiple times are
startups. There's some fundamental problem which is masked by growth.
Management keeps hiring people and hopes somebody eventually magically fixes
the problem. After ~5 years the company accepts the problem. OR a new
competitor emerged, etc.

Even a shitty management team is a management team that keeps the company
running.

~~~
s73ver_
"But, just because the valuation went down, doesn't mean it's the management's
fault."

Yes, it does. The justification for the extremely high salaries and bonuses
that execs get is because they are the ones who are "taking risks" and "are
responsible for the company." Here, they are literally being rewarded for
failure, and at the expense of people who were actually doing work.

~~~
mgkimsal
> Here, they are literally being rewarded for failure,

Because who else would 'risk' so much - like only getting a $400k bonus
instead of an $1m bonus? It takes special character and fortitude to steel
yourself for such challenges!

------
tzhenghao
For those who want to gain some context on how such a thing could happen, I
recommend the book Venture Deals by Brad Feld and Jason Mendelson [1]. There's
a good section in the book that talk about share preferences and the order in
which the pile of money is cashed out.

[1] - [http://a.co/aeI2gqq](http://a.co/aeI2gqq)

~~~
prepend
I second this recommendation. This article reminded me of the Venture Deals
section where they break down the different kinds of capitalization and
payouts in different scenarios. While the examples are written for founders,
it’s also useful for any employee with shares trying to figure out their
value. Most importantly for employees joining a company to get the info to
make the decision whether to join. Or for employees thinking about how to
treat their options or limited shares.

I’ll add that for a few companies, when I asked the necessary questions then
hiring manager or founder either couldn’t or wouldn’t answer. So, like another
commenter’s advice, I valued the shares at zero. This meant sometimes I didn’t
join, but sometimes I did. Almost always my zero valuation was accurate, but
once I got a pleasant surprise.

------
tw1010
Part of me wonders why this is even surprising. Aren't the execs the ones with
all the control over the power-levers? Why do employees expect to ever get
something in situations like this? (I'm trying to look at this from an
outsiders perspective.) What levers can employees even affect to shift the
balance of influence in their favour? Coalitions and complaints I guess is the
only thing that comes to mind. So in a sense, this article is not really a
neutral reporting of the facts. In a sense, the article is one of a fairly
limited set of tools that underdogs can use to shift the balance of power more
in their favour.

------
throwaway52112
Is this really that news-worthy? My impression was that this happened all the
time.

Something similar happened at the last startup I worked at. Employees were
compensated with stock options over larger salaries. When the company got
acquired, I along with every other employee walked away with nothing while the
founders became multi millionaires. This pretty much killed my friendship with
one of the founders, who later tweeted a picture of himself in a Ferrari and
another toasting to his new status as a self-made millionaire. I'm not sure
you can get much more obnoxious than that.

The least employers can do is hide it when they throw employees under the bus
for obscene amounts of personal profits. Maybe even act a little benevolent
about it by saying you plan on donating a portion of it to charity?

------
dawhizkid
Pretty much the only reason why you should join a startup as an employee vs
working at an established company is learning and opportunity for more
responsibility. The thing is that working at a startup doesn't at all
guarantee you'll learn more than at a larger company and your learning is
going to be much more self-directed since there will be a smaller focus on
professional development.

If you're not learning then leave.

------
davesque
I was thinking about this the other day. As I see it, American companies and
probably many companies in the world have a really f'ed up attitude about how
employees fit into the mix. I don't see how the cost of entrepreneurship could
be nearly as high as it is. Sure, from the point of view of an _average_
person, starting a business is risky and should lead to potentially high
reward. But how many average people are able or willing to start a business at
all nowadays? In reality, the sorts of people who end up starting businesses
are those for whom starting a business is _not_ as risky e.g. people who are
wealthy or whose families are wealthy or who are just burning VC money. The
risk is lower and so the cost of entrepreneurship should be lower. Also, it
seems there's a lot of talk in tech about wanting to use the great wealth
accumulated to help the world or whatever. So then why not just start with the
actual people in tech and not just the founders? Why act so uncharitable to
the people directly working for you?

------
mbesto
_Founded in 2005, Practice Fusion competes in the crowded electronic medical
records market and discovered a niche by offering free software that was
popular among small and solo physician practices.

Instead of charging for its software, Practice Fusion generates the bulk of
its revenues through advertising to doctors._

Oh what could go wrong....

~~~
Bucephalus355
Silly.

Doctors could just use OpenEMR, free and meets most of the regulatory
standards.

[http://www.open-emr.org](http://www.open-emr.org)

~~~
ch4s3
I've met exactly 2 doctors who have actually used OpenEMR and they were both
researchers. It is quite nice, but the last time I looked it wasn't trivial to
set up and run. I think it one of those "it's free if you time is worth
nothing" kind of things. And, there are some other EHRs out there that are
nice and won't break the bank.

~~~
JshWright
> there are some other EHRs out there that are nice and won't break the bank.

In fact, due to the various "pay for performance" models out there, a good EHR
will make you money (making it easier to prove you are meeting various
thresholds for the quality measures in question).

~~~
ch4s3
Yeah, quality measure reporting is key, the good ones do that well for sure.
However I think they're missing the ability to monitor quality on a day to day
and week to week basis for the most part. It's also really hard to track
quality trends.

~~~
JshWright
I'd be interested to hear more about what you think could be improved. In the
vast majority of cases, new data points only occur during a patient visit.
"Day to day" or "week to week" tracking aren't really useful in those cases,
"visit to visit" is as good as you're going to get.

~~~
ch4s3
Shoot me an email, and I'll happily share my thoughts. My email address is in
my profile.

------
coldcode
The year before the dot com collapse in March 2001 the new CFO at my company
told us we'd all be millionaires in the next year. We didn't believe him
though despite the market as it sounded stupid, and 10 months later we went
Chapter 7. Never ever trust execs when they promise the moon.

------
code4tee
This is an extreme case but the issues are not that uncommon in tech. Most
employees with “equity” are not in a good place to know what that equity might
actually be worth... and it’s very common for it to be worth far less than one
thinks. All the covenants with founders, early investors, debitors and others
are often not known by the common minion employee options/share holder. Yet
those details typically determine if said employee will make a lot, a little
or nothing at all at a liquidity event.

------
golergka
If I understand the situation correctly, the important term here isn't
"employees", but "shareholders".

It seems that management acted in it's own interest, disregarding the interest
of company's shareholders. Is my understanding correct?

If so, doesn't US have laws against such behaviour?

------
sjg007
It seems simple to have a 1x payback clause for all shareholders. Investors
get this, so if you are a common stock holder you should too. Maybe the
solution is that investors can have 10x voting rights but the share value is
otherwise the same. So the preferred price = the common price. Or just some
clause saying pay all shares out at 1x first and then distribute some other
way if you want. At least you're not being a jerk then.

------
fnbr
This is the reason that I plan to either work at Big N companies, where my
equity is given to me in RSUs, or start my own company. Working at a startup
in any role that's not a founder or an exec seems like a total scam, unless
you have an incredible amount of confidence in the founders, and their
integrity.

------
spiderPig
I wouldn't join any start-up involving Peter Thiel at this point. Palantir is
another prime example. Biggest grifters in the valley, the paypal mafia

------
josh_fyi
I have the opposite question.

As long as deals are legal and meet generally accepted ethical standards, it
seems that founders and investors have no interest in favoring employees in
negotiations that restructure cap tables.

So why do employees make money in a good fraction of successful exits?

~~~
vageli
Do you have any sources for your "good fraction" comment? I was under the
impression that a "good fraction" of startups outright fail before IPO.

~~~
josh_fyi
I don't know what percentage that is. It is more than 0, however.

So my question is, "So why do employees make money in X% of successful exits,
where X is more than 0?"

------
s73ver_
Stories like this are extremely common nowadays. Startups are going to have to
come up with some other way to attract talented workers, as most people know
that equity is a joke, the hours are extremely long, and the pay is crap.

~~~
yborg
During the dotcom bubble I knew that VCs were kicking themselves every time
some 'secretary becomes a millionaire' story came out because this meant they
left money in other people's pockets. Over the last 20 years investors have
refined their game and this never happens now, indeed, it's the opposite.

I think the only reason to go in other than as a founder in a startup is as
someone right out of school for experience. Otherwise they have to be treated
like any position, on a straight cash comp/benefits basis, ignoring the likely
worthless equity scrip. In my experience, the best play is to go in on a
contract basis once a startup is in the "burn baby burn" phase and you can
bill market rate for all of those hours.

~~~
DoofusOfDeath
My experience with startups has actually been quite positive.

I negotiate compensation on the assumption that anything stock-related has
zero value.

Then I just enjoy the other great perks of a startup I care about: influence
over technical issues, and camaraderie.

~~~
stevenwoo
So do you try to get a fair market salary + enough to cover equivalent
benefits at a mature company - if the stock-related stuff has zero value?

~~~
DoofusOfDeath
I'd say total compensation has worked out roughly the same.

It's a little hard to compare since I've sometimes worked remotely, and with
companies headquartered in Silicon Valley, Cambridge (MA), and in less techy
regions.

The non-startups were actually located outside of Silicon Valley and
Cambridge. If I adjust for the different regions' cost of living, the
(salary+benefits) dollar value were about the same across the board.

One caveat: The non-startups in SV and Cambridge gave me stock grants that
vested over a number of years. If I'd stayed long enough for them to vest, the
total compensation for those non-startups would have been about $7k-10k/year
higher (pre-tax) that the compensation I got from startups.

------
eip
Equity in a startup is worth roughly as much as a jar of farts. Plan your
career accordingly.

