
How Open Should a Startup CEO be with Staff? - _pius
http://www.bothsidesofthetable.com/2013/09/28/how-open-should-a-startup-ceo-be-with-staff/
======
aaronbrethorst

        I personally prefer not to own a home in
        these circumstances but if you really want
        to buy a home I’ll happily help you by
        writing a letter.
    

A couple reactions:

1\. The employee in an early stage startup should know better, but:

2\. You, as their CEO, someone they hopefully trust and respect, shouldn't be
doing anything to encourage them getting into a financially untenable
position.

edit: I want to mention another scenario. Let's say you have six weeks of cash
left, and prospects for a bridge round are shrinking by the day. For whatever
reason you've decided not to tell your employees what's up.

What do you do then? Still tell this poor bastard, "if you really want to buy
a home I’ll happily help you by writing a letter"? That's incredibly risky at
best and morally repugnant at worst. Maybe things work out and you get more
cash. Maybe you don't, but he's able to get another job within days. Maybe you
don't, he can't, and he loses his house.

That's a serious gamble you're taking not with your own life and livelihood
but with someone else who has placed their trust in you. What's your reaction?
'Them's the breaks with working at a startup,' perhaps?

I know Mark lives in L.A., but I've seen similar behavior occur in both
Seattle and SF companies, and I find it abhorrent.

Here's another part that bugs me:

    
    
        If you find employees building spreadsheets
        and spending time on exit scenarios and what
        their take would be then you know your company
        has “optionitis.”
    

Or they're about to figure out that it doesn't matter if the company exits
when they own 0.75% or 0.49%, because their percentage is going to net them
exactly dick either way.

~~~
brudgers
The cultural memory of stock options revolves around the Microsoft IPO, where
in a pre-internet age, secretaries (which indicates how long ago it was)
became millionaires via tiny slices of equity. The Google chef brought the
misconception into the internet age.

Even at a billion dollar exit, 1% is borderline fuck you money after taxes.

~~~
aaronbrethorst
Absolutely right, but, as I'm fond of pointing out to friends who join
startups: you are _not_ joining Google, Facebook, or Microsoft. The odds of
you even joining Zillow or Yelp are so remote as to be a rounding error to a
rounding error.

~~~
sliverstorm
No, but don't you see- that's everybody else who doesn't have a snowball's
chance in hell. _We 're_ different.

------
azov
_> Of course as a founder & CEO you know that your 18% of the company at an
$80 million is worth more than 26% of a $30 million valuation but I promise
you that this is a nuance that even really smart & educated employees struggle
with._

Oh, really?.. Your smart employees suddenly stop comprehending basic math when
it comes to their future compensation?

Or maybe - just a guess - when the CEO was recruiting engineers (who, perhaps,
don't have much experience with the business side of startups) he told them
they would have 0.75% of the company but _forgot_ to mention dilution?.. Could
that be the "nuance" employees struggle with?

~~~
michaelochurch
I think there's a different situation altogether. It's not dilution that
pisses the engineers off; it's the general fact that what they get (equity-
wise and career-wise) is so inferior to what the startup mythology promises.
Dilution itself just becomes a touch-point, because all that other crap they
look back on and realize they "should have expected".

Most startup engineers think the equity is a signing bonus, almost like a
gift-- say, a teaser-- and that they're going to get an order of magnitude
more as long as they perform. The fact that it vests over 4 years (with
cliff!) and that initial employee allotments are _almost never improved_ is
glossed over until they actually join the company.

~~~
timr
_" It's not dilution that pisses the engineers off; it's the general fact that
what they get (equity-wise and career-wise) is so inferior to what the startup
mythology promises."_

Oh, please. You're overselling your hand. Programmers aren't victorian textile
workers -- they have their pick of jobs, all with fantastic perks, great
working conditions and greener grass just around the corner. Nobody is holding
a gun to your head and telling you to work at a startup. If you don't think a
particular job is a fair deal, then go do something else. Unlike most people,
you have lots of great choices.

There are many real problems with software as an industry (e.g. age and gender
discrimination), but if your worst complaint is that you're not getting as
rich as you thought you might from your day job _thinking hard thoughts and
typing_ , then you need a perspective adjustment.

~~~
tks2103
You are arguing more with an imagined opinion and worldview than you are
arguing with the comment that you replied to.

The comment you replied to refers to the perceived difference between what
"the startup mythology" promises and the reality that many software engineers
at startups are given in hard benefits.

Some software engineers at startups work 100-hour weeks because they think
they will receive massive compensation in the form of stock. They perceive the
stock they have already received to provide a much larger amount of raw wealth
than it would if they crunched the numbers. They perceive that their company
might provide them with much larger grants of stock if they perform
exceedingly well in building the product. Sometimes their bosses guarantee
them that they will receive a massive cut of the company, if they just work a
little bit harder for a little bit longer.

I don't know how common situations similar to the above are, but they do
exist. I imagine many folks reading Hacker News have been on one or both sides
of the table in that situation (stock-granting and stock-receiving). I believe
that is what the comment you responded to is criticizing.

Nowhere was there a comparison made to victorian textile workers.

Nowhere was there a claim that '(not) getting as rich as you thought' was the
worst complaint about the software industry.

You made the latter two arguments up, and then knocked them down.

~~~
timr
_" Nowhere was there a comparison made to victorian textile workers."_

Yeah, no kidding. I'm the one who made the comparison, because everything he's
complaining about depends on an assumption of _victimization_ that just
doesn't apply to software engineers. You're exactly right that modern workers
are nothing like victorian textile workers -- and that's my point. You're
empowered to do whatever you like with your career, but the complaint
is...that other people are exploiting you? No. If you're being exploited, it's
because _you made a bad decision_.

Are there naive people who make bad bets and work hard for little gain? Sure.
But as in all things, _caveat emptor_ \-- it's not your employer's job to
second-guess your motivations, and make sure that you're always acting in your
own rational best interest. And while we all make bad bets from time to time,
I've never experienced the sort of Machiavellian scheming from employers that
the rest of you are complaining about.

~~~
rdtsc
> No. If you're being exploited, it's because you made a bad decision.

And of course because they are software engineers they will always act like
perfectly logical proof machines and if they don't know laundry list of
startup terminology and financial details of stocks and options well yeah
sucks to be them. /s

> You're empowered to do whatever you like with your career, but the complaint
> is...that other people are exploiting you?

Yes employers exploit employees. Is this that surprising? This perfect balance
of power between the two exists in simplified models of the world we like to
build in our heads.

Yes they should know better, they should know the financial details. They
don't seem to act rational working 100 hours a week for a %0.01 of equity.
Good, we've got that squared away. Now how come so many of the supposed rather
rational individuals end up in that situation? That's where it is interesting.
Survivorship bias and hanging out on HN might help reinforce it as well. Maybe
there are other factors? Are some idealists and like to believe in a cause?
Ok, now, does the CEO also know that and is exploiting it?

------
jonnathanson
Some of this is really good advice. But there's a fine line between shielding
employees from the emotional burden of the full truth and _creating_ an
emotional burden by hiding some of the truth.

Generally speaking, smart people are pretty good at reading a situation. But
they're also pretty good at inventing narratives to fill in the gaps in
whatever information you've given them. If there's a particularly glaring gap
or inconsistency in your story, you're going to create a culture of
uncertainty and resentment.

Money is the toughest topic of all. Who's getting what, how much of it is
left, how much is considered a good exit, and who gets what in that exit --
all of these things are going to be subject to open and not-so-open
speculation. Accept as much, and avoid inadvertently creating sketchy or
conflicting narratives by telling different things to different employees.
When it comes to the financial direction and health of the company, how much
you've raised is increasingly becoming a matter of public knowledge. How many
employees you have is public knowledge (at least within the company). Your
monthly burn rate is not public knowledge, but a smart person can arrive at a
halfway decent guess. No need to get into the weeds on these topics, but be
honest at the high level.

I like your idea of minimizing the into-the-weeds discussions about options.
Employees should be there because they believe in the company, and they should
hope for the best when the company succeeds. To whatever extent possible,
don't hire mercenaries -- people who are just there for the payout. Hire
people who want to be there, can handle the risk, and will be more than happy
when the company wins big and everyone benefits. But give them enough options
so that they _will_ win when the company wins, and so that their incentives
are aligned with yours.

I don't believe it's the startup CEO's job to educate her employees on the
finer points of dilution, financing, liquidation preferences, etc. Any
employee joining an early-stage startup should be doing that sort of homework
in the first place. But it _is_ the CEO's job to give her employees a
reasonably fair deal, and to explain her long-term goals and expectations. And
the CEO should not use her superior financial knowledge or position to take
unfair advantage of employees who might not have as much information or
financial savvy.

~~~
jacquesm
> I don't believe it's the startup CEO's job to educate her employees on the
> finer points of dilution, financing, liquidation preferences, etc.

Of course it is. Explaining the rules and terms of the game makes _everybody_
better players. It's not you against your employees, it is all of you against
the world and your competitors are part of the world.

If you're not even willing to explain the rules of the game to your own team
how do you expect to win the game?

~~~
walshemj
I agree

Jonnathan needs to be careful saying stuff like that can make people think
your going to rip them off good luck recruiting with that perception hanging
round your neck.

~~~
jonnathanson
I have to say, I'm really baffled by this comment. I have no idea how you got
to here from what I wrote. Jacques's comment I understand and respect, but
yours feels like a pretty big mischaracterization of my post.

I felt I argued pretty strongly _against_ "ripping off" employees. Here are a
few lines from my post:

 _" give them enough options so that they will win when the company wins, and
so that their incentives are aligned with yours."_

 _" And the CEO should not use her superior financial knowledge or position to
take unfair advantage of employees who might not have as much information or
financial savvy."_

It is never okay to rip off employees, or to take advantage of informational
asymmetry to give them a raw deal.

~~~
walshemj
I wasn't saying that you thought it was ok to rip off employees.

But I was talking about the how people will perceive your comment - you came a
cross as taking a hardline "Caveat emptor" line.

How you "present" to your employees and the public (to use a some HR jargon)
is key - and if your misunderstood it can can have serious consequences -
Quiet how Eric Schmidt still has a job I dont know given his propensity for
gaffes that makes Prince Phillip seem diplomatic.

I have worked for a boss who was a FSTE 100 director and he was very good at
explaining that he couldn't always tell us every thing that he knew.

~~~
jonnathanson
_" But I was talking about the how people will perceive your comment - you
came a cross as taking a hardline "Caveat emptor" line."_

I'm sorry you got that from my post. It was certainly not the intent. But if I
was unclear, I'll accept responsibility for any misinterpretation that has
resulted.

I tend to use overly elaborate sentences. Speaking more plainly and clearly
would do me a lot of good. That's a consistent problem I have on HN, and it's
my fault.

If I had to sum up my OP in three sentences, it would be as follows: "People
are smart, and they'll figure out if you're keeping things from them. So don't
hide things from them that affect them. That being said, it's not necessarily
your responsibility to get too far into the weeds on every last detail of how
startup financing works."

In general, I'm in favor of transparency. I'm in favor of giving employees an
honest deal. I'm in favor of treating employees as partners, not as "human
resources." I _don 't_, however, believe the CEO's job is to be the parent
figure of everyone in the company. And accordingly, I believe startup
employees should educate themselves as much as possible about the risks
involved before joining a startup. Some of those risks are outside of the
CEO's total control, in fact (e.g., Series A investors, the Board of
Directors, M&A processes, etc.).

That's not meant to be a cold, _caveat emptor_ sort of statement. It's just
meant to be realistic. Ideally, a good CEO is transparent and honest. He or
she should keep employees up to date on the company's finances, and on how
things may change if major turning points arise. A good CEO always does the
right thing by his or her employees. But the employees should still do their
homework. The CEO should be transparent, but the employees should still be
capable of self reliance and diligence. It's a two-way street.

(The article, for instance, brings up the case of an employee who's thinking
about buying a house. It's not the CEO's job to manage that employee's
personal finances. While she should share any pertinent facts with the
employee, and perhaps offer solid advice, she's not responsible the employee's
personal-life decisions).

I hope this clarifies what I was trying to say. And again, I'm very sorry if I
was not clearer.

------
alrs
I have some knowledge of the startup that angled for the $75M exit.

Transparency is why the engineers stuck around as long as they did. Options
for the engineers were 0.05%, but the CEO managed to get them doubled to
0.10%, a tenth of a percent.

The engineers stayed in the hope that an aqui-hire would keep the team
together. No one thought that an exit had any monetary value to anyone except
the VCs and the founders.

~~~
omegant
How large was the team?

~~~
alrs
Engineering was six before the unpopular e-commerce pivot. Two left soon after
pivot, one left a bit after. Three remaining stuck around through the period
where the CEO was shopping the company hoping that they could keep working
together and with the well-regarded product manager.

It was a high functioning team. Heartbreaking to see it cast to the wind.

~~~
PeterisP
.. so, even after the increase the total whole engineering team equity was
0.6% ? Disregarding everything else, this fact alone doesn't seem particularly
ok.

~~~
jacquesm
That depends on a lot of factors, for instance how much money the tech team
invested and how much money the other shareholders invested as well as on the
moment when they joined and what what other compensation there was. Hard to
make a judgment about any of this without knowing _all_ the particulars. It is
very well possible those guys were being exploited but it is also very well
possible that this was done by the book.

~~~
UK-AL
By the book, is exploiting the engineering team. The by book goal is to
maximise value for yourself/company.

~~~
jacquesm
That's not my book.

~~~
UK-AL
No, but its in most vcs/angels/founders books.

~~~
jacquesm
I keep hearing this. And you'd think with my exposure to start-ups that I'd
see a lot of evidence of this. And while it _does_ happen it seems to be the
exception rather than the rule. Founders are quite often engineers, angels and
VCs are not usually blood sucking vampires (though I'm sure those exist as
well).

The rule is simple: if you are either late to the party, not aware of your
value or compensated as an employee (rather than taking no money off the table
in the first couple of years or so) then you will end up with a very small
part of the equity.

If you are (a) a (co-)founder, (b) aware of what you contribute or (c) willing
to be paid mostly or wholly in equity then you will end up with a substantial
portion of the equity. You will then _still_ have to make sure about how the
rules around dilution and vesting work to make sure that you get what's yours.
But that can be learned in an evening or two. (as opposed to being learned in
3 years with a lot of headaches as a final result and not much else to show
for your hard work). This is not nearly as hard as learning how to program or
engineer stuff so any tech guy worth their pay will be able to do this. If you
can't find anybody to help you out on this front and you need answers feel
free to mail me.

------
jrkelly
This author's posts on marketing and PR are great. For some reason his
management posts always rub me the wrong way. Agree that it's tough to share
everything and avoid confusion/distraction (his M&A point) -- but the real
footing of this post is that you shouldn't share certain things (runway &
valuation) b/c employees can't handle them. CEO as superhuman grosses me out.

~~~
judk
marketing advice is how to manipulate the customer.

PR advice is how to manipulate the public.

Management advice is how to manipulate the staff.

Maybe you should revisit your reaction to these three cases. What is the
difference? Answer: only in the third case are you on the other side of the
table.

------
justin66
Another reason why a startup employee shouldn't take stock options and their
value seriously at all when considering a job:

> I hate when companies publish too much information about the total stock
> option allocations, the company valuations, the dilution faced in every
> round, etc.

The startup employee cannot take their options seriously at all in a situation
where this attitude prevails. To her credit the author seems to understand
this:

> if money comes through options at the end of our journey that’s icing on the
> cake

A perfectly reasonable attitude for people to take, although it means the
startup is going to have to compete for employees with cold, hard cash.

------
bri3d
Follow these easy steps to get a company full of naive people (probably new to
startups) and pull the wool over their eyes so you can exploit them to work
for below-market compensation!

The closing speech even confirms it. I thought work-for-resume went out of
style in the tech world along with unpaid internships. I guess not.

~~~
michaelochurch
_I thought work-for-resume went out of style in the tech world along with
unpaid internships._

American-style corporate capitalism is an original sin culture. You're
worthless until validated ("saved") by an abstract phallic symbol called a
corporation. The work-for-resume culture isn't going to fade out for a long
time.

~~~
judk
That isn't what "phallic" means.

~~~
akjetma
I don't know--in my experience, corporations can be pretty dick-shaped.

------
jacquesm
I've always been extremely open about everything. External relations,
financials, shareholder affairs, issues cropping up in the product and so on.

This had one huge benefit: no matter how smart you are when there are 10
brains working on the same problem you get a lot more input and this will lead
to making better decisions. You're going to have to adopt a clear mechanism
for soliciting that input and for publishing the decisions so people don't get
stuck in the past.

One additional benefit: there is no rumour mill.

This has worked wonders for me, I'm not sure how well it would adapt to non
media b2c start-ups.

~~~
shrikant
Anecdotally, when I worked at a 'startup' and we were about 50 people, the CEO
and other founders were always very open and forthcoming about all the details
of the organisation.

Once we grew to over a 100, IMHO, a combination of factors inhibited their
ability to be that open:

1\. we moved to a larger office with multiple stories, which put a little
extra cost into simply walking across and asking questions.

2\. it was a different sort of challenge communicating a common message across
to that many people and they couldn't figure out how to 'scale' the openness.

Eventually I noticed that rumours about salaries and customer nonpayments and
layoffs and revenues and profits started up. It was still entirely possible to
simply _ask_ the founders about a rumour, but not everyone believed/knew this
was possible (especially newer hires) and so untruths would circulate for
longer than was healthy.

~~~
jacquesm
I never got over the 25 employees mark and probably that is one of the reasons
why this problem never occurred but I can see your point and I think that once
you reach a certain threshold (50 employees or so?) that it could be very hard
to maintain such a culture. I'd also argue at the same time that once you do
reach that level the moniker 'start-up' no longer applies to you. By that time
you should have a solid business, the biggest risks should be behind you and
you're transforming into a 'normal' company.

This line of thinking leads to yet another way to delineate what a start-up
is: a start-up is a company where everybody knows everybody else.

------
judk
"Optionitis" is like "salaryitis". Is the author offended when employees make
a spreadsheet to see if they can afford a house?

Is the author offended when VCs or CEOs make spreadsheets to understand their
equity stakes?

Of the author was honest, the message would be "options are a Market for
Lemons", so just pay a cash to people who you can't bear to share the risk AND
responsibility AND rights of an equity stake.

~~~
namenotrequired
That's very different. Salary is one's daily bread, options are a gamble with
a very tiny chance at making one rich.

------
crygin
As a minor counterpoint, if I'm helping someone build a company and I ever
find out that they lied to me, I'm walking away. I suppose that's why I'm not
in the startup scene anymore, though...

------
aosmith
I've worked as a handful of [very] startups in roles ranging from developer to
CTO/Cofounder. My main reason for leaving has generally been a total lack of
transparency. If times are tough the team needs to know and understand that;
it will ultimately help motivate them. If there's a chance pay could be late
people should be warned well in advance. Honesty and the value of a persons
word are very important is small/tight knit environments.

------
dfraser992
I was hired to build a website for someone, as a contractor, and somehow it
turned into building --all-- the systems for a enterprise B2B company handling
schedule processing for the shipping industry. It was my fault for getting
caught up in the work, but I finally left when the realities hit me in the
face:

\- the CEO negotiated in bad faith with a customer, lying about the nature of
the product they were sold. The customer finally got around to suing.

\- I was constantly told there were cash flow problems, and thus my invoices
were always being paid late, why more contractors couldn't be hired, etc. Like
I said, I was caught up in the work and trying to keep things running. I
finally demanded some of my invoices be paid, and the client breached my
contract, point blank telling me to ^& _$_ ($ off

It turns out the founders were paying off the loans their other companies had
"made" to the startup before paying any of the salesguys, IT staff, etc which
is why all the contractors hired to help me kept disappearing and not
answering my emails. All the while, the CEO's wife was whining how he hadn't
been making any salary...

Startups are not part time hobbies. That's the moral of the story, I guess,
along with "don't work with sociopaths". People who play "chicken" with their
entire IT staff are idiots. I didn't have a problem with having no equity, as
that hardly ever pans out, but being manipulated like that was intolerable. So
any engineer with a startup should be familiar with the sales process, the
basic cash flow, the contracts being signed, etc. Keeping the blinders on like
I did is a fatal mistake - there is too much money involved in IT nowadays and
all the less than honest people are being drawn to it like flies.

As that famous idiot once said "trust, but verify".

~~~
MaysonL
Reminds me of my first job, when my paycheck bounced [after which the owner
kept paying me _from his wife 's checking account_]. Only reason I kept
working (as the last programmer standing) was a feeling of some responsiblilty
to the client, and a need to finish the job. I believe he ended up with about
a million dollar overdraft from City Bank (this was back in the late '60s, so
I'm not quite sure what the name of the entity that has metastasized into
Citigroup was back then).

------
stretchwithme
However open an CEO decides to be, he should be consistently open.

There's nothing more disturbing than openness about finances and runway than a
CEO that suddenly clams up. Or maybe that is actually very informative.

~~~
seanmcdirmid
What is not said is often more important than what is said. A good employee
will learn how to read their CEO that way even if they aren't very
transparent.

------
droopyEyelids
Without getting into the utility or truth of this post, it's this kind of
mealy, on the edge of misleading double-talk that makes me feel cynical and
burned-out at a company. It's paternalistic, and a way of talking down to
people who can't handle the truth. But damn it, looking at this from the
author's perspective, if you're going to build a large company, everyone won't
be realistic, and many people probably do need paternal looking-after. It
strikes me as probably-necessary if you don't really _know_ everyonen you're
working with, or in cultures like the bay area where people have weird
expectations.

------
TimothyE
One of the important points here is right at the start, around the inner
circle. I've operated in a very similar way to what Mark has suggested, a team
of senior leader who act as a proxy for the group overall.

When you join up, if you're clear about stating what this group does and give
employees a way to approach and resolve problems through these people then, at
least in my experience, it's worked.

When a newstart comes onboard they're hired for cultural and role fit but
other roles in the organization need to be explained so that communications
channels are introduced: we have a regular Friday at 5 meeting where everyone
sits down with beers and we recap and talk through issues) or; members of that
inner circle integrate themselves with each of the teams

It requires permission and empathy to execute but that's what you need in a
leadership role. What people want to hear is: we'll take care of the 80%
behind the scenes because we're the ones with domain knowledge in that area,
if there's something that you feel storngly about, speak up and we'll listen.
If it's big and everyone deserves a say then we'll lay it out for you and you
can tell us what you think.

Ultimately the people with the most at stake, be those the founders or the
VC's or the other capital partners, they're the ones who get the say because
they're the ones with their money at risk.

I agree with Mark that a lot of this stuff is just a distraction. You've come
to work for us because you are good at what you do and you fit our culture,
the company needs to open upfront about what they want to do (are we aiming
for an aquihire or for leveraged growth). If that goal changes then the
company needs to have had that discussion with employees so they cna reconfirm
in or out but if you sign up then you've got to trust the people making
decisions to be working towards what you've all agreed on.

------
velik_m
Honesty is far more important than openness. Workers don't need to know every
gritty little details, but they should trust in what they do know.

------
gedrap
A bit off-topic, I posted the same link 4 hours before the OP and it got only
1 upvote. Oh the unpredictability of HN!

------
dm8
Why just "CEO"? Why not startup founder? Isn't it applicable to all the
founders too?

------
andyl
I've heard many startup CEO's lie and evade. None of their companies
succeeded. Lying CEO is like a klaxon going off, not a confidence builder.
Yes, absorb stress and be positive. But don't lie and don't withhold the
truth. IMHO this article gives bad advice.

~~~
judk
Zynga and Groupon, the quintessential examples of startups with deceptive and
borderline sociopathic CEOs, suuceeded quite well _for the CEOs_ , if not the
employees.

------
michaelochurch
First, let me hit this:

 _It is because when you share too much of this information with staff you
develop an “options culture” the I find unhealthy. If you find employees
building spreadsheets and spending time on exit scenarios and what their take
would be then you know your company has “optionitis.”_

Well, that's largely because employee equity offerings are pathetic. People
who make these calculations do one of two things:

(1) realize that even at-valuation-- and it's an open question whether their
personal valuation should be equal to that, or several times lower, than the
VC's-- they are getting shafted. Most often, the startup equity grant for an
engineer is an insult. I think there's an uncanny valley effect: low equity,
from a startup, pisses me off more than zero.

(2) realize that they'll need to become executives to get real slices, and
start playing the same political games for which startups are "supposed" to be
an antidote. Often, the founders will stoke this competitive culture but shaft
everyone; even the winner gets a pathetic prize-- maybe twice that shitty
equity slice but in a high-burnout-risk role.

 _Join our company because we’re doing exciting things.

Join because you’re going to get more responsibility at a young age than you
would a bigger company. Join because we’re a meritocracy and promote success
not tenure.

Join because every year at the end of the year you can say that your resume is
significantly better than it was the year before. Join because as we continue
our successes we will have more resources to reward you with and reward we
will._

Most startups are not doing exciting things, are not meritocracies, and while
they may inflate titles, don't have the leeway or slack in the schedule for
anyone to do anything interesting, so there's actually a lot _more_ grunt work
than in a typical BigCo job. Also, most of them don't do shit for a person's
resume; the exceptions are also the few where the options end up worth more
than toilet paper. If the startup ends up being good for your resume, that's
because you rolled a natural 18/00 and have no need of a resume from here on
out.

Now, onto the meat of the matter... I tend to agree with Mark that full
transparency will terrify and upset the employees. VC-funded startups are
disgustingly secretive about things that matter (e.g. cap table) but there are
a lot of things that companies, as abstractions, provide a service by hiding.

To get to why most people can't handle the miseries (esp. fundraising) that
startup CEOs have to deal with, read into the Gervais Principle. Venkatesh
Rao's series on it starts here: [http://www.ribbonfarm.com/2009/10/07/the-
gervais-principle-o...](http://www.ribbonfarm.com/2009/10/07/the-gervais-
principle-or-the-office-according-to-the-office/) . Mine starts here:
[http://michaelochurch.wordpress.com/2013/02/19/gervais-
princ...](http://michaelochurch.wordpress.com/2013/02/19/gervais-principle-
questioned-macleods-hierarchy-the-technocrat-and-vc-startups/)

Here's a summary (of a much bigger topic): the MacLeod pyramid of an
organization has a Sociopath tier at the top, a Clueless middle, and a Loser
base. Losers are subordinate and strategic (they know what's worth working on)
but not dedicated; they know they're getting a raw deal in a zero-sum game but
accept it for the risk reduction and easy life. Clueless (typically, destined
for middle management but unable to rise above it) are subordinate and
dedicated but not strategic; they have no insight into _what_ is worth working
on. Sociopaths tend to be dedicated and strategic, but not subordinate.

The Sociopath-Loser trade is a risk transfer. Losers get easy jobs that are
hard to lose, and steady paychecks worth less than their average value to the
company. (Loser is non-pejorative; it doesn't mean you're bad at what you do
or socially unsuccessful. It just refers to the losing bargain of lifelong
non-owning employment.) Sociopaths are the risk-seekers who tend to be
founders. Most people, if they could handle all the risks of entrepreneurship,
would want to be founders themselves.

One way in which VC-istan goes rotten is that it attempts to prevent the
healthy and inevitable slide of the put-upon, unappreciated Clueless into
(rationally disengaged, more healthful) Loser patterns. "Lean startup" is code
for "no Losers"; everyone must work 70 hours per week. VC-istan startups are
all-Clueless enterprises; the Sociopaths are the real executives, the VCs and
king-making press factors.

However, Mark is fundamentally right on the insight that full transparency
would fly in the face of the Loser/Sociopath risk transfer on which companies
are typically founded.

------
avty
Depends on how open the staffs want the CEO to be.

