Scott's post genuinely makes me angry. It uses subtle language to imply that employees are inferior individuals who are lucky that the owners of capital deign to share anything with them.
In Scott's worldview, choosing to leave a company before it has exited is inherently disloyal. Even if they're paying you under market. Even if you could contribute more value elsewhere.
I wonder if he would accept similar terms:
1. Reduce his salary at a16z to something minimal. (<$100k)
2. He only gets his carry in a company if he invests in every subsequent round. If they ever decline to follow-on, it's clearly a sign of "disloyalty" and they should forfeit all equity.
I agree with Adam that it's at least nice to see the owners of capital so nakedly betraying their worldview (diversification is all well and good for them, but employees owe infinite loyalty).
I will think long and hard before ever working for a company where Scott is on the board.
This part is particularly troubling:
> One existing solution to the “dead equity” problem has been — and still can be — to make exceptions where appropriate for certain exiting employees.
It's essentially an argument for cronyism. The people who most need equity extensions are those unlikely to have the connections and political savvy to get them. I strongly suspect such systems would work to further disadvantaged already disadvantaged groups.
Couldn't agree more. If part of my compensation is equity, then I should get to keep it when I depart. If I don't, you're basically telling me I wasn't worth the compensation I was getting.
Taking back shares is akin to a temper tantrum, and Scott's post really, really shows no respect for the engineers that make his companies worth any money at all. It also hyper-values people who can flog a Power Point presentation, whether or not those people end up contributing the lion's share of the engineering.
It's a rather bald-faced admission of how employees are actually valued, and how distasteful compensating them is.
And Ben Horowitz has publicly supported Scott Kupor's blog post on Twitter.
Given that he and Marc Andreesen run the show there, we can reasonably extrapolate that this is the firm's preferred stance. In fact, if either of them was against Scott Kupor's position, then the blog post likely would not have seen the light of day in the first place.
10 years is the life of a VC fund, because that's the largest horizon that a wealthy investor is willing to part with his money even if it's not a large fraction of his wealth.
To ask almost the same (6-8 yr vesting period) to a worker that has a large fraction of his net worth in the startup seems utterly insane.
Firstly, while I think Scott is wrong, I don't see much that's disrespectful or implying disloyalty about his tone. Not even the stuff about "dead equity."
I'll extend some comments I made downthread:
a16z is a major investor (growth round resulting in a board seat for a16z) in many of the companies that have extended vesting periods, such as Coinbase, Pinterest, Asana, and Tilt (list here: https://github.com/holman/extended-exercise-windows). They also invested in CodeCombat and I'm sure some other startups on that list (I didn't check them all). So I seriously doubt they block companies from doing extended exercise windows.
And claiming that those companies were/are hot and therefore had leverage is a bit circular because hot companies are the kinds of companies a16z often funds in growth rounds (and often it is because a16z funded you that makes you hot).
> So I seriously doubt they block companies from doing extended exercise windows.
You're right that they don't veto companies from doing extended exercise windows.
That doesn't mean they don't oppose them and argue against them. This post makes their viewpoint quite clear, and it means that any founder wanting to do right by employees will have to argue strongly for that position.
Even beyond the specific issue, the tone of this article makes it very clear that they are not employee-friendly.
Contrast that with Sam and YC, who indicate both through the policies and their tone that they recognize that employees also make sacrifices to join companies and invest in their success even if they don't stay through IPO.
And your argument degenerated to stupidity. Do you think there's no difference in effort it takes to do well for your employees when you have to argue with an employee unfriendly person on your board, rather than having employee neutral or employee friendly people on your board? What you said is not grounded in reality, and this topic is super important for people considering different employers.
Your argument is the one that has degenerated into name-calling. Mine hasn't.
Founders routinely ignore the advice of board members. In fact it's almost a meme in the startup community for founders to politely listen to, and then ignore, their VC's advice. This is no different.
Yes. We use options for equity comp b/c the grant is not a taxable event (if properly organized). It's not supposed to be a way to deprive terminated employees of their equity comp, which potentially is a large portion of the compensation of a venture-backed startup employee.
Don't hate the player hate the game :) The human genome is what's screwed up. Things well covered in recent years: Power increases hypocrisy and cognitive bias over-values our own contribution to our success (it is my capital and my idea that made all this wealth, not your work). Also capitalism is explicitly about extracting surplus value from employees. I think this type of behavior from people like Scott is, on the whole, to be expected. But... anyway our genetic predisposition towards fairness makes a rage reaction to this behaviour expected too so hate away. :)
In Scott's worldview, choosing to leave a company before it has exited is inherently disloyal. Even if they're paying you under market. Even if you could contribute more value elsewhere.
I wonder if he would accept similar terms:
1. Reduce his salary at a16z to something minimal. (<$100k)
2. He only gets his carry in a company if he invests in every subsequent round. If they ever decline to follow-on, it's clearly a sign of "disloyalty" and they should forfeit all equity.
I agree with Adam that it's at least nice to see the owners of capital so nakedly betraying their worldview (diversification is all well and good for them, but employees owe infinite loyalty).
I will think long and hard before ever working for a company where Scott is on the board.
This part is particularly troubling:
> One existing solution to the “dead equity” problem has been — and still can be — to make exceptions where appropriate for certain exiting employees.
It's essentially an argument for cronyism. The people who most need equity extensions are those unlikely to have the connections and political savvy to get them. I strongly suspect such systems would work to further disadvantaged already disadvantaged groups.