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Mailchimp insiders react to employees getting no equity from Intuit sale (businessinsider.com)
506 points by lemoncucumber 29 days ago | hide | past | favorite | 455 comments

I worked at MailChimp for a few years. I most recently worked at a company that went through an IPO that I had equity in. When deciding to join my recent company, equity was the largest factor in my move.

MC’s benefits are great and at the time were top-tier in Atlanta. They are cash/401k heavy and offer great profit sharing incentives. They also make it abundantly clear that they don’t offer equity and when I negotiated my non-MC offer that I ended up accepting, they were clear that they could not match my equity. They even acknowledged that if I was willing to take a risk with the equity it would likely be the advantageous move to make.

Nonetheless, during my time at MC Ben/Dan repeatedly boasted about turning down offers to sell and repeated they were never intending to go that (or the publicly traded) route. This ultimately factored into my decision to leave, as it never appeared I would have a personal stake in the company. I hope other employees interpreted this in a similar manner and I do believe everyone had abundant opportunities to do so.

In the end and in hindsight, I’m happy with my decision to leave and it did pay out. Nonetheless, I do still believe MC is a great company and despite the founders somewhat selling an incorrect vision, are still acting in good faith. I don’t believe they “withheld equity” as they made it explicitly clear it was never offered, or was ever going to be, but I do see how the boasting of never selling out could be interpreted poorly now in hindsight.

This is perhaps simply a good reminder that everyone has a price and nothing is set in stone. If you’re in a position of leadership, be humble and real. If you’re an employee, don’t be naive. The market has the last word.

And. Things and people can change their minds. Promises, absolutes or forevers should come with some kind of enforcing mechanism to be really, permanently trusted. And even then, beware of the penalty not being 'high enough'.

But it's OK. It was very naive to say 'never' and it was a bit naive to take it at face value. As long as they paid their employees well and treated them with respect, and were clear of their prospects, I fail to see who is hurt here ? Except customers being now under the Intuit umbrella, that must hurt...

I think what changed their mind was that the market changed. Mailchimp was run like a company that wanted to prevail in the market and not just grow and sell. That affected their strategy in a good way since it allowed them to spend time improving their services long term, but most importantly it prevented them from trying to grow aggressively for the sake of growing, which is a very very bad idea when it comes to sending bulk email.

In the end what changed is that e-mail based marketing was on the decline, with other mediums taking over. There's a point where an industry that stops growing fast eventually consolidates and it tends to get absorbed by groups that has other revenue streams.

> In the end what changed is that e-mail based marketing was on the decline, with other mediums taking over.

FWIW this is completely incorrect. Over the past 2 years other marketing channels have skyrocketed in cost (eg FB ads) and most brands/companies are now investing heavily into email marketing. It's a significant growth industry right now, more so than at any time since I've been involved with email marketing (since ~2010).

Interesting. I as a content consumer feel exactly the same way. I don't use FB/Instagram anymore and rely solely on email updates from bands, brands, museums, theatres and so on. I actually get some MC emails and always liked those since they are so easy to unsubscribe.

Same experience for us. While we moved away from Mailchimp recently for Pardot, email marketing is huge growth area for us since the start of the pandemic. I think it's a combination of people seeking new solutions to this new world we live in, and understanding that if each email we send has a genuine value for who we send it to, they are very receptive. It's the opposite of spam, as we're asked more and more to please keep our customers up to date with the latest trends.

Heh, I kinda noticed that. For a while there spam on my older mail accounts suddenly looked a lot more "quality" and was advertising well known brands.

At first I thought it was just phishers trying something new, but when I looked where the mails lead it turned out to be those actual brands.

> I think what changed their mind was that the market changed.

Yeah, the market valuation went from 10x revenue for a early stage company to 30x revenue for a mature company.

I think this is wrong, what changed was the offer price.

Our largest competitor, who had 10x our revenue, got bought about 6 years ago by some huge international behemoth, which of course ran it into the ground over the course of a few years.

Great for us, as we got almost all of their customers.

I recently heard the story of how that happened. The original founders had no intention of selling out, and had signed a deal with the others that unless they were offered a well-defined but ridiculously high price, that the original founders could buy back the shares to take back control.

Well, the multinational company offered the ridiculously high price, and the original founders had no chance to make a higher offer. So they lost "their baby", which is now just a pale shadow of what it once was.

The founders got a lot of money of course, so not a sob story.

Had the same story, I joined a startup as the first sales employee. A week later Twitter acquires our competitor, few months later the team dissolves and we are the only other company doing remotely something similar.

It seems like there is a pattern of companies buying other companies and that essentially helps the competitors.

>The founders got a lot of money of course, so not a sob story.

It must be disheartening though, to see something you created get run into the ground.

Am I the only one that would love that situation to be able to start a new thing on easy mode? You know a lot of the failures, you now have a massive network, you have a big wad of cash.

Bust out the idea bin and make something else!

Having a lot of cash is not a good position to start a new product (your pivots will most likely be delayed due to that)

I would not mind facing the arduous challenges of having a lot of cash.

Ok fair enough I'd also definitely have to pass on dealing with that to an accountant but I more mean being able to work on it full time with no financial concern than chucking a milly after each idea

Also to clarify on the seeming heartless I sort of see things as being diluted when others work on them -- in a good way! -- for each person that adds to your thing it goes from mine to our. Long enough and big enough and it's more other people's creativity than yours. Your baby is all grown up and ready to do it's own thing

In the same vein as "you can't go home again" (you can go back to the physical location, but you have changed, anybody living there has changed, the buildings have changed etc, to the extent that it's no longer the same thing as your internal conception of "home").. "you can't start from scratch again".

As a founder who has made a lot of money, I can tell you that founders nearly never put in the same effort that they did into starting their company into something new. Elon Musk is the exception that proves the rule.

Our finance-based culture is very destructive to good companies. Whenever a founder sells a company and leaves, the company almost always goes steeply downhill.

It's a hell of a lot better than seeing something you created get destroyed and not having the extra zeros in your life. That's the result for most people.

Yeah, they got well compensated as mentioned but if it's something you've put a lot of love and hard work into and you're still burning for, I don't think money can truly compensate.

Obviously it can compensate since they signed something that stipulated it would compensate:

> and had signed a deal with the others that unless they were offered a well-defined but ridiculously high price, that the original founders could buy back the shares to take back control.

During the deal, self-rationalization starts to kick-in. The founders probably start believing some of the big-company synergy stories: complementary customer base, already scaled resources, complementary product in the portfolio. "Cross-sale alone will pay for the deal in X months/years." Sometimes they do work out! But all too often, the inertia of the larger business prevents realizing that dream. Yet if the founders weren't good at producing a reality distortion bubble, they quite likely wouldn't have made it to the M&A table in the first place. So such illusions shouldn't be surprising, especially if the price is high.

Regret is a thing

You're talking of course about Bronto and the evil Oracle (well, Netsuite, then Oracle). Everything Oracle touches dies. I lived in Durham, and personally know a lot of the originally employees. They keep pretending like nothing's changed. They absolutely suck now, and we left them.

If I've guessed correctly as to who you are reffering to, that product will go EOL next year.

Is there value in not specifying the company? Unless you have a relationship with the company or the acquiring company, I don't see the reason for the secrecy.

These are small companies in terms of employees, so for me it's a privacy thing.

Yeah some might figure it out, but for me NH isn't Facebook and I'd like to keep it that way.

It's Bronto.

feel compelled to shout out Jean-Baptiste Kempf (VLC) who refused to sell the project for 'several tens of millions' which makes me pretty confident that there's still people out there who will stick to their principles

The difference between 10 million and 10 billion is a factor of 1000. Ask yourself, if a job offered you 100 million instead of the normal 100k for a software engineer would you be prepared to do things you normally wouldn't do?

>Ask yourself, if a job offered you 100 million instead of the normal 100k for a software engineer would you be prepared to do things you normally wouldn't do?

Definitely not. But just to be sure, you should still make me an offer.

gonna be totally honest with you and you can choose to not believe me but nope. For one I like the peace of mind of sticking to my principles more than money secondly I already don't know what to do with my money and I make slightly less than 100k. most of my money is spent on books and the occasional dinner out with the spouse and fishing equipment, I genuinely can't make sense what I'd do differently with a million or quadrillion.

You'd buy long-term financial security with that kind of money.

You'd never have to worry that a significant unplanned expense would ruin your life. You come down with a major medical condition and end up with years of major medical expenses? Some drunk driver T-bones you and totals your car? Lose your job and spend a year or two unemployed? House burns down and you still owe the majority of your mortgage? None of those will ever be a concern again if you hold that $100M job for even a year.

As a German these are securities that basically every working citizen here has.

Medical expenses -> health insurance

Some drunk driver T-bones you and totals your car -> liability insurance is compulsory

Lose your job and spend a year or two unemployed -> unemployment insurance is compulsory, you get 60 percent of what you made for one year

House burns down and you still owe the majority of your mortgage -> uhg, got us here, we can't afford houses but there is private insurance for that

So even though I pay hefty taxes (or because I do), I still end up much richer than a developer in the US. In theory I don't even need to save up money for retirement, as the general pension fund has me covered (though with the current demographic development I don't fully trust that).

So I probably don't have a good reason to give up my morality of more money. Have been never tempted though.

So one thing people forget about serious illnesses is that it's not just about the cost of medical procedures. It's possible that the only doctors who know how to treat your particular condition are in another city, so there are travel expenses involved. Plus, if your health issues mean you can't work for a long period of time, that can also impact your finances.

(for what it's worth, I currently work for a company that makes software offering various kinds of secondary insurance, and I've spent the last few months learning about the kinds of things "cancer insurance" and "accident insurance" are for, and it's been an eye-opener)

And as for your car: yeah, liability insurance is compulsory in the US, but it's really painful to be hit by someone who's illegally uninsured. It actually happened to my mom a few years ago—she got lucky, her insurance was willing to pick up the tab, but she could've been on the hook for a lot of money if her insurance punted instead (to be fair, the damage to her car was entirely cosmetic, and her car was still operable, just with a car-sized dent in it).

> liability insurance is compulsory in the US, but it's really painful to be hit by someone who's illegally uninsured

In Europe this is covered and very rare currently. After the first four years the car need to pass an official exam each six or twelve months. No insurance means that you can't even start the test nor move the car from there except in a tow truck (paid for you). Driving with the test outdated means a fine and after some months your car can be deregistered automatically. It does not worth the trouble.

For what it's worth, the guy who hit my mom was an undocumented immigrant who had neither a driver's license nor a registered car.

I hold no ill will towards undocumented immigrants, but there's not much you can do if someone hits you in an illegal vehicle.

In that case there is an organism that pays you and then reclaim the money to the part without assurance, plus a hefty fine for him/her, by idiot. In Spain is el Consorcio de Compensación de Seguros and it belongs to the Ministry of Economy. Other countries can have their own systems.

Uninsured motorist coverage is a line item on my insurance documents. I know it is not required by every state but I don't know if there are states where it is not offered. I can't imagine choosing not to have that coverage if it were an option.

we have 3 of the 4 things you list here. "developer pay" is pretty broad, so its tough to generalize where you're paid more.

There’s principles and then there’s principles.

Maybe you wouldn’t be willing to sacrifice humans to Kali, but you might still be okay with working in an open-plan office for two years.

Offer other people the opportunity to enjoy the life you have the privilege to live.

I don't think doing that through money is a good thing. I actually thought about that a lot when Tony Hsieh died, which probably a lot of people here are familiar with. He was incredibly generous, had the best intentions, but at the end of the day he created dependency relationships.

'Offering' other people a life well lived as if that should be my task and not theirs, and justifying things you otherwise wouldn't do has very big problems. Because you can always take it one step further, it never ends really.

You could start a business and hire people: offering others a chance is not necessarily about just donating money and letting others live as leeches.

Basically, anyone who's got kids is trying (struggling?) to impart this very life lesson: it's easiest to just get your kids what they want, but that's not the best way to raise them.

Sort of. Most relationships have dependencies of some sort, but Tony Hsieh's money allowed him to take it to the next level, and not in a good/healthy way. But there's money and then there's money. Or rather, there's being poor and there's poverty, and money fixes that. If someone is struggling and living paycheck to paycheck because they don't make enough money to live on (minimum wage hasn't been enough to live on for decades), enough money to dig them out of the hole can be literally lifesaving.

You can't teach a man to fish if he's dead from starvation.

The best way you can do that is by offering as level a playing field as possible, not giving crap away.

You sound like somebody I’d like to hang out with. Props for good life perspective.

>The difference between 10 million and 10 billion is a factor of 1000

Mathematically, yes. Practically, so what? 10M is a number that could provide all I could reasonably want for the rest of my life. 10B puts a target on my back, and for what? What does 10B buy me that 10M wouldn't? A life of isolation and extravagance? I can't say that I would turn down the chance to find out, but I'm FI already, and maybe it's lack of imagination but I already have trouble spending my modest discretionary budget as it is.

At 10B there are diseases I could fund cures for all on my own.

Heck I'd probably fund a couple tenure positions at a university on the condition that they research certain problems and publish everything to an open access journal. What does a bio lab cost to run, would 10 million a year cover it? That'd be 100 years of funding for 10% of my wealth.

I'd probably follow it up by going to one of my cities troubled youth schools and offering full ride scholarships to everyone who graduates. Figure 100 students a year, 100k scholarship, that's another 10 million a year, so another 10% gone.

Tl;Dr I'm having no problems figuring out how to spend 10 billion!

Full ride scholarship for 100k? You can't even pay 2 years of tuition at many schools with that, but I get your point.

> What does 10B buy me that 10M wouldn't?

Somethings that could interest you:

A private island?

A megayacht?

A mansion/penthouse in a ritzy part of LA/NYC (Bezos's LA mansion alone was 1XX MM)?

A professional sports team?

A private jet?

The ability to call the leader of your country and either get through or get a meeting on the books?

Notice that what's interesting about a lot of those isn't just the initial cost, but many of them have quite high carrying costs.

But those are just interesting generalities. At that wealth you can (really have to) get creative. Paul Allen bought a bunch of rock star's guitars and a bunch of Sci Fi memorabilia, and then built a museum to hold them.

I don't want any of these. 10M is enough for a large estate with privacy and natural beauty. That's enough for me.

> 10M is enough for a large estate with privacy and natural beauty.

Where is that? Are you planning on living in the country? In most large cities, it doesn't seem like 10MM will be enough for you to live in an estate and still not have to work for ongoing regular expenses (food, etc.)

And it's fine you don't want any of those things. Better than fine, that's great. But there are a lot of things that you need more than 10MM for.

estate = big piece of timberland in a rural location, yes. I have no intention of living in the 'big city' in retirement.

A senator

> What does 10B buy me that 10M wouldn't?

A private jet.

Used, you can get a private jet for a couple million (as low as $3mm). You probably don't want to break into your principal like that, but you could.

> What does 10B buy me that 10M wouldn't?

You could start a company that builds rockets to go explore Mars.

In other words, you could do something great.

> What does 10B buy me that 10M wouldn't?

Influence on the global stage

The ability to finance meaningful changes to the world - be they things like disease eradication, political movements, space endeavors. Rather than needing to band together with like-minded individuals and bring a voice to the table, you can outright create or buy a group to enable your vision (within the constraints of physics, and the political overton window)

It brings greater agency in the world than "the little people". Money lets you change the world, in increasingly larger ways, in your own image. Now, you don't have to, nor do you have to want to. Most people don't have the hubris for it, never mind the money. But even without the ego, if your niece is dying from a rare blood disease, you can get her medicine that isn't being made anymore because it wasn't profitable by buying the factory and operating it at a loss.

At 10M, you have, as you say, a modest discretionary budget. Which is to say, it's modest, and not extravagant. The things you can do frivolously while spending $300k/year is different than what you can do while spending $1mm/year, but as you've discovered, unless you get disgustingly ostentatious (I hear the poors only own one car, and drive the same car for longer than a month.), taking care of your creature comforts in a reasonable way isn't that expensive. Eating $400 steak dinner every night for a year is only $150k/yr ("only"). So, other than get ostentatious (what, you don't have multiple houses in multiple states?), what do you do? Change the world.

I mean, congratulations on having joined the two comma club, your little discretionary budget is cute. At 10B, your discretionary budget is probably not actually 1000 times larger, because that's a different game of liquidity, but what you can do without remotely threatening your principal investments is way larger. At 10M, if there was a reason you had to spend $5mm, you'd have to consider it very strongly before doing it. At 10B, you can get $1mm in cash from the bank and light it on fire for the hell of it because you had nothing better to do on a Tuesday night. If there's a movie you want made, you get to ask whomever you want to star in it. You want to have a movie made about your life, starring Nick Cage as you? He's having money problems, so he'll probably say yes.

10B puts you right above Steven Rales, wikipedia article here: https://en.wikipedia.org/wiki/Steven_M._Rales. Which is to say, if you want to be a recluse, be a recluse, but 10b puts you in the club of people who have wikipedia articles written about them, despite not being a household name or noteable. Edward Snowden has a wikipedia article, and he's not a billionaire, but he was forced to do some world changey shit to get that. You'd get that simply for having that kind of money. Poke around the Forbes billionaire list - https://www.forbes.com/real-time-billionaires/. See how many names you recognize as household names. 10b automatically dumps you in those leagues. Marc Benioff's #240 with an estimated $10b. Now, you may not want to be, but if you're familiar with his work, you can do anything like that, on that level. Own a local sports team. It's a bit different rooting for the local sports team when it's your sports team.

Personally, I'd fund science and research and the arts rather than have anything to do with sports. Affordable healthcare. Buy buildings and give buildings to Planned Parenthood so they don't have to keep moving around (something about protestors makes their neighbors nervous). Fix homelessness (which is a big problem, but I'm sure $10m/yr would help lots of aspects of it). Start a chain of coffee shops and over-employ people so that the people that work there have regular weekly schedules and can go to college.

I hate to say it, but that's really a lack of imagination. Instead of $10M principle with a modest discretionary budget, think of the unreasonable shit you could do with $10m every year. Some of it could even be good for other people.

But it's really all about agency. More money in the budget gets you nicer sheets to sleep on, fancier cars to drive, but money is power, and with $100 in your bank account, you desperately need that job. But with $10M in your account, you can tell your shitty boss to go fuck themselves. At $10b, you can buy your shitty boss' company just to fire your shitty boss. You also get to change the world how you want to be changed and guide the future of humanity. Okay you're not god but you get to personally make decisions to influence humanity's future. Edward Snowden gave up the rest of his life in order to do that. For $10b, you'd get to do all of the stuff that Bill Gates the philanthropist talks about. Or MacKenzie Scott after she divorced Jeff Bezos. And still live the rest of your life and not be exiled to Russia.

Knowing myself as I do, I would stop working after the first couple of pay checks.

I would literally murder for 100 million.

Not to remove any praise to JB, would he still have refused if the offer was in the billions rather than millions?

There's a point where it might make sense for him... even if not for bare personal/lifestyle reasons, a billion could be useful to fund plenty new or existing opensource projects in line with his principles.

I am sure that MailChimp founders were sincere in their unwillingness to sell company. But 12 billions is 12 billions. I am sure that author of VLC would sell his product for much bigger money, the only problem that there's no one to offer him bigger money.

>I am sure that author of VLC would sell his product for much bigger money, the only problem that there's no one to offer him bigger money.

I don't know, having billions looks like a liability to me.

I don't think that we may classify big money as liability. Usually you cannot quickly get rid of your liability for free.

It is, but it also a liability you can afford to pay others to manage in detail.

I’d be willing to risk that liability.

Ben and Dan (MC) have publically turned down offers that would make them each actual billionaires (cash not stock)

Until now.

> The market has the last word.

I think that's a bias of hindsight, something people say after seeing it happen in a particular situation. In other situations, principles, promises, and other factors have the last word.

The capitalism machine doesn’t care about your humility or integrity even- only that you obey the letter of the law. I learned that the hard way, work isn’t a religion with morals, it’s work and there are rules.

Your second point however, “don’t be naive” agree 100%

> obey the letter of the law.

Oh wait you’re serious. Let me laugh even harder.

Breaking the law for a company is simple a cost of doing business. If that costs too ouch then the lobbying/bribe budget increases to cancel it out m, but most of the time it’s just a line of risk on the balance sheet.

In other words, for companies, the law is a continuous function, where for individuals it's a discrete one. Where you and me have to ask ourselves, "do I break the law or not?", big companies ask themselves, "what is the optimal level of law breakage?".

I think it’s continuous for people too. Do we ever drive faster than the speed limit? Cross a street outside of a defined crosswalk? Do we voluntarily report all our out-of-state purchases on state taxes? If we sell something on Craigslist, do we always report that as income?

I think a lot of people also have an optimal level of law breakage.

I agree there is a spectrum of compliance for your average person with the letter of the law and the reality of everyday life (and the meaningful consequence of breaking them). Jaywalking is very unlikely to have any meaningful impact to anyone, and mostly unlikely to be enforced.

But the big thing that separates your everyday person and companies is that corporations will gladly and willfully break the law, even in cases where they weigh the risk (perhaps they have a legal argument about how it’s not actually breaking the law, but it’s probably paper thin) because it can often be more profitable to commit the crime. and pay whatever fine is imposed than not commit the crime in the first place. It is incredibly rare for anyone to go to jail or be prosecuted individually for corporate crimes, and so the risk to any particular individual is exceedingly low.

I can’t really think of any reasonable example where I could commit a crime as an individual and come out the other side with a net positive, despite being caught/prosecuted.

Corporations aren’t playing with the same deck, and their bad behavior is constantly rewarded. Sure, they can sometimes go over the line and tank the entire operation but that is far and away the exception instead of the rule.

Selling some personal property at a loss (as is typical) is not income. The other examples are good ones.

People make money on Craigslist, selling services for example.

I'd argue it's not even quite that. Common law is not perfectly defined. So there aren't really levels of 'law breakage', but rather something more like, "what's the likelihood the potential legal costs of this outweigh the benefit?"

For some individuals it isn't even that:


Also there are plenty of gray legal areas. Often the questions are, "Is this really breaking the law? What is the risk?"

And even in cases where the managed 100% wants fully comply with existing law, there are still tradeoffs. How much do we fund internal enforcement and will that prevent us from being competitive? Which isn't so much about actively trying to break the law, but willing to risk that breakage will happen, or even naive trust of employees.

Or at least, which laws will someone go to jail for breaking vs us just getting slapped with a fine?

The first point is not about appeasing the machine… it’s about not overselling to your subordinate worker class because if they take the second point to heart they won’t buy it anyway. Just be honest and realistic and you’ll avoid looking like a crook, if you care. Maybe you don’t—you’re right such behavior is allowed in the rules.

People in positions of authority need to be careful with their words. They might not be intentionally misleading, but it is possible that they make a remark without thinking it through and others end up believing.

It happened to me. The CTO of the company I worked for moved to another company and recruited a bunch of us from his previous job. He made tall promises, none of which worked out. We were annoyed at the time, but I now realize he didn't intentionally mislead us - he was just overly optimistic about his abilities and his own faith in the new company he joined. It was a disaster for everyone he recruited from his previous job.

Everybody has a price, everyone has a breaking point.

About 10 years ago I remember visiting a dev company that shared a building with MailChimp (I think it was called High Groove). I just remember them talking about how MC was rolling in money and essentially looking for things to spend on. Said they’d brought in consultants and spent a fortune redesigning their whole office space, etc.

I have no idea what compensation over there looked like, but I can’t imagine that it was anything less than stellar.

I’ve always been of the impression that equity is what you hand out when you can’t afford to compensate people enough otherwise. If they are paying well, not handing out equity seems like a perfectly normal move.

Well, for every MailChimp there are several whose equity is worthless. If the company is not public I barely consider equity at all.

You might as well ignore private companies altogether then, as the total compensation will be much less than public ones without equity factored in.

Well I now work at a big company everybody has heard of so I guess you’re right.

" This ultimately factored into my decision to leave, as it never appeared I would have a personal stake in the company."

You had a 'stake' it was just in terms of other kinds of benefits.

If you join a company after it's well-established, then for the most part, unless it's an 'extremely high growth company' - your stock package isn't going to be worth that much, it's just part of comp.

If you joined MC several years after founding, even if they did give you equity, it would be a bit of a nice bonus, and that is all.

> could be interpreted poorly now

Yes doing the exact opposite of what you have always said tends to do that.

This is a very reasonable and nuanced take. Thanks for sharing.

> When deciding to join my recent company, equity was the largest factor in my move.

Great, it worked out for you. A friend of mine, recently got an offer from a pre-IPO company. He asked for equity, but they are refusing to share any numbers - saying - their lawyers asked them to not do that. Is it normal?

I can't speak to whether it's normal but it's a red flag for me. One of the companies I've worked for was pre-IPO and went IPO while I was there and when they hired me two years before that IPO they laid out the vesting schedule (1 year cliff, then monthly vesting of the remaining 3/4s of options) along with the strike price of the options along with how that strike price/valuation was calculated. Other places have had varying levels of professionalism like that but that was the only place that ended up IPOing and I believe there is a correlation between the professionalism of laying out clear compensation and the actual performance of the rest of the company.

Frustratingly so. Getting an offer of a number of shares, without any context on the total number outstanding or recent valuations, doesn't provide you with the ability to calculate future upsides. Though even if you get those numbers, it is much rarer for things like preferred shares and any liquidity multiple they might have, which can screw over the common holders even is successful exits.

As the owner of a company, I can tell you that any company that will not give you all the financial information necessary to value your shares and know what it's worth is scamming you.

They have to tell you at least the 409a or a similar valuation -- it's the strike on the grant.

No. Under no circumstances should you accept an offer when a company refuses to give you any sort of context for what your grant might be worth.

My friend told me - the recruiter even went on to say - if he shares info about equity grants - then it'd be called "Insider Trading" :-).

$12 billion is a staggering amount of money. I can't imagine blaming someone for shifting their stance on an exit after imagining what they could fund with a $12 billion payout.

If the founders take the cash and build, I dunno, the world's biggest yacht, that's a waste. But I think that's incredibly unlikely.

> If the founders take the cash and build, I dunno, the world's biggest yacht, that's a waste. But I think that's incredibly unlikely.

it's an email service provider for campaigns and other email spam with a recognizable brand, let's not imagine that this is beneficial beyond helping companies market stuff to people. It's like a meta-business enhancement service. Happy for the founders, hope they do some good with the new payout - but I think you are giving them a bit too much credit. Sure, kick back 100M to your old school district, maybe another 250M to BLM or to Math for America to strike off all of your philanthropic efforts in one go, curate some plebeian sympathies and smile for the cameras but at the end of the day, making it easy to bombard people with endless email campaigns isn't exactly solving global problems

EDIT: I reject hero worship vigorously - Mailchimp did a thing, it made money, and another entity that did a thing and made money that makes MORE money decided to absorb it and the cash payout was so good that investors/founders of MC decided to say fuck it, I'm done. Take my chips, gimme the loot. 12 billion dollars is generational wealth, but I mean I just can't/won't/don't respect people that have enabled spam or a business model that encourages bombarding people with BS. Same thing with IAP - I don't respect people who work for Apple because there was a layered hierarchy of priorities that said "we want to generate revenue at the expense of the people that trust us with their consumer electronics"

I just intrinsically cannot respect people that decide to profit off of wasting people's time, the only commodity you can't generate more of. Instead of craftsmanship we have psychopathic operators that try to fine tune all the ways to extract money from others and even develop meta-endeavors where people pay others to execute activities to get end-user observers ('users' in modern web dev parlance, for the JS devs) to waste time/spend money, for net negative expected value to themselves and others. It's super sordid and I just can't endorse it. Whatever.

In 25 years these guys will probably pull a Paul Allen and then start funding brain research or something after realizing that all the money in the world can't buy time and more life.

Am I the only one who genuinely likes newsletters?

I don't use facebook or instagram or anything anymore, and just solely rely on subscribing to the newsletters of the stuff I like: bands, exhibition spaces, museums, even fashion brands.

Giving out my email tells the almost nothing about myself, except the only valuable thing: I am interested in their services. Most newsletter providers let me opt out with two clicks and I never get any more mails from them.

It really baffles me why there are not more people who enjoy emails, but would rather have another company decide which content they get to see.

I enjoy pretty much all mail that I opted into. That constitutes about 80% of everything arriving in my inbox now. There’s some newsletters I’m actually looking forward to.

I believe there's a difference between newsletters that you value (because they provide news and interesting updates, e.g. JetBrains' XYZ Annotated Monthly) and what is typically sent via mailchimp, i.e. drip feed sales emails and click bait offers with lots of small print.

A better description is: Mailchimp enables "marketing mails", since they have the IP addresses which will not be rejected no matter what they send.

This is power, and they market it: Send an email yourself and you may be shut down, send through us and worse case scenario you will have to create a new account to continue.

At the moment their IPs are more bulletproof then their competitors. But that is all they are selling - the ability to push through spam for others.

Not familiar with MailChimp, but we use Mailgun (could be any similar system for the sake of argument) and there is a heck of a lot more than just having clean IPs.

Every time I use one of their screens to look at some issue I think... There's a bunch of stuff we didn't have to build, all for $80 per month.

Oh sure, they have a lot of other stuff.

And all that other stuff would be a nice package that you would probably be able to buy for $99.

It's the market that https://sendy.co/ is in, but we would have plenty of competition there and better options.

The reason it is only Sendy and a few open source proj's are that SES delivery is not even in the same ballpark as Mailchimp's (I have used both).

And if you want the delivery, you need to pay for Mailchimp or Mailjet anyways. Its the reason you don't save much when sending via the Mailchimp API. The product is not the newsletter builder etc.

Any company who can afford to use Mailchimp already has an email channel that works extremely well; you have to, in order to do business. How does someone even sign up for Mailchimp if they can’t already email reliably?

Mailchimp is a SaaS, and the value is in the software, just like any SaaS. Specifically the value of email platforms comes from list management, compliance, integrations, branding, etc., all of which are hard to do with the basic-but-reliable email systems we use every day.

That is not correct. The magic is in IP maintenance. Source: I wrote the software.

Back when sending emails was about 1 cent per email, my company wrote our own campaign email software to save tons of money. Each large email provider has its own rules about sending rates, backing off, soft bounces and hard bounces. Not getting your IP address blocked for breaking a ruleset that you don't know about is the hardest thing. A few year later MailChimp was becoming more popular and their prices where dropping; we switched almost everything over immediately and life was much easier.

This would be true if Mailchimp had a competitive advantage in deliverability, which they don’t. Source: I have evaluated Mailchimp as an ESP several times and selected competitors.

None of the ESPs beat our corporate email system on deliverability BTW. They did make it a lot easier to manage email programs, though.

Edit to add, I’m sure IP reputation management is a challenge if your business model is to allow anyone to sign up for free and start sending. Paying clients don’t care about that, though. Deliverability is something you can buy from lots of people. And for small folks, you’re not going to beat the deliverability of Gmail. It’s table stakes IMO. There’s a reason Mailchimp sells itself as a marketing software platform and not “we deliver emails”.

Their competitive advantage in deliverability is their client list. You can't divine yourself a massive volume of legitimate and engaging traffic. MC had to answer to literally no one, and we got to fire any customer we wanted.

Holy shit, I couldn’t agree more.

> all the money in the world can't buy time and more life.

It can, it's just that biologists aren't the ones that are winning the equities and securities game most frequently.

Given their inexperience, they throw money at things blindly, not realizing there are lower hanging fruit than the brain.

A billionaire biologist could attack the problem from first principles. And probably make measurable headway.

It can't, full stop.

What do you think aging is from a mechanistic standpoint?

Define it and tell me how you can't make a measurable impact upon it.

Tell it to Norm MacDonald, or Chadwick Boseman.

What are you on about?

Yes, people die. But we can stop it by continuing to invest in biotech.

Alright, calm down Ray Kurzweil

If the founders take the cash and build, I dunno, the world's biggest yacht, that's a waste.

No, that would pay a lot of skilled workers a damn good wage for a couple of years. Yachts employ a lot of highly paid people.

So what? If instead of building the world's biggest yacht, they paid them to dig and refill holes, from the perspective of someone 100 years from now, both would be pretty much equally wasteful. Otoh, investing that into research, wouldn't be.

No. Humans need accomplishments and doing pointless work (dig and refill holes) is a drag on the soul no matter how much you pay. Look at all the programmers that get mad when doing dumb work.

The yacht is a tangible item that will last and can be pointed to with pride by the workers. Pointless work damages us.

No, because there would be a yacht at the end of it. That has value.

Thank you! People act like the uber-rich buying expensive things is a waste of money. We want them to spend their money. Get it into the hands of people who really need it.

And rich people buy stuff that requires skilled labor. Those craftspeople jobs are well paid. Reducing friction for rich people to buy locally made items is a good thing.

Do that through taxation. I thought trickle down economics had been broadly repudiated.

Probably because rich people do not spend enough of their money, not because they spend too much of it.

Seriously, reading comments like those you replied to hurts my head.

In fact all that's been happening is trickle up, since the wealthiest keep siphoning more and more money, such that we essentially have no middle class left.

I like how we use the word class and then deny having a class/caste system.

Plenty of billionaires invest cash in capital expenditures which aren't totally frivolous. Build a global satellite broadband network or something.

I just want to see this incredible yacht.

The fact they didn't give equity to employees is totally OK. It's their company, they don't have to share it with nobody. It can still be a great place to work with great benefits. I worked for a place like that early in my career.

But when you sell for $12B and didn't take investment so all goes directly to you, how can you not allocate at least a million for each employee and change their life? With 1200 employees that's only $1.2B. They can easily give everyone even $2M and have zero impact of their life. What two people can do with $12B which they cannot do with $9B? (Yes I know, the final amount is much less after taxes, fees, etc)

Obv they don't need to allocate money equally, it makes more sense to do it based on tenure.

You're right. Jeff Bezos could give >$100k to every Amazon employee and only be giving away the money he's gained during the pandemic[0]. How can he not allocate at least 100k for each employee and change a lot of lives? He could easily give everyone this and have zero impact on this life. What can he do with $200B that he could not do with $100B?

I could easily give away $10k to charity and save multiple lives[1] without impacting my quality of life, and given that you are on HN, you likely have $10k you could live without as well. We are literally choosing to have money in some retirement account over saving lives - why would you expect founders to give away money just to make rich tech workers more rich?

[0]: https://the.ink/p/billionaire-wealth-just-got-wealthier [1]: https://www.businessinsider.com/the-worlds-best-charity-can-...

You're unironically right and thank you for giving a powerful argument in favor of philanthropy using simple arithmetic.

There's a big difference between I will be just fine giving away $10K and I don't need the money. Any money that helps me retire early is money I'm not going to give away. With some exceptions of course. I might give money away to help a family member or friend. Above a certain amount of money I will be happy to give some money away. That's what most wealthy people do, including Besoz.

Amazon's tech employees are awarded shares. They are getting life changing money already. But it's not that relevant because here we're talking about a one time event that happened and the employees who were part of that success story should be compensated. It's the right thing to do.

The only argument you can make that I may partially agree with is that why giving the money to the employees. They can donate it for better causes than helping tech employees being more rich. I think in this particular case there's plenty of money to do both and the founders still be left with billions. Allocating $2B to the employees and the rest $10B to be split by the two founders and whatever donations they would like to make sounds like a win-win for everyone and a pretty rational thing to do. I'm not expecting them to give most of the money to the employees. Someone mentioned they have allocated $500M; that's really great but I still think it's too low given the amount of money. I think 10 - 15% is more reasonable.

The employees were fairly compensated. If the founders were going to randomly choose to share their windfall, why not with the customers? Just refund every dollar their customers paid over the past 12 months. Or, find all customers who have been continually active for 5+ years and refund all their fees. I mean, it's the customers who grew the company, who stayed loyal, they are the ones who chose MailChimp over a variety of alternatives, etc. Kind of weird that you think employees are somehow sacrosanct and should just get all this money.

sounds like they allocated 500 million between RSUs and cash bonuses, which is about 400k per employee.

RSUs are *never* distributed equally. That’s not their point because they are entirely separate from the purchase of the acquired companies equity.

The point of RSUs is to retain talent that is deemed critical to making the acquisition successful. Your VP of finance isn’t getting any RSUs. The acquiring company probably doesn’t need her, and she possesses no critical knowledge that any other senior financial person doesn’t also possess.

Individual developers often get higher RSUs than managers. Why? More experience with the code and domain knowledge, especially if the engineering manager wasn’t an IC who grew into the role.

That's great! I still think it's too low.

Honestly it could be worse, I worked at a company that gave equity and years later it came out that the founders never intended to sell or take VC money. In that case employees “took below market salaries” thinking the stock is worth something but in reality it’s worthless. At least in this Mailchimp situation if you’re not getting equity I assume you’re happy with your cash comp, I’d you’re not, that doesn’t make sense.

Yeah, if you don't intend on selling then you should say so and not offer equity so the employees can make a better decision.

Things may change and you might sell after all, but that is not "withholding" anything, that is just things changing.

I can only imagine this story was spun by employee who saw the founders selling and getting bunch of money and now think they should have reaped some of the benefits.

Money and greed make people stupid.

> Yeah, if you don't intend on selling then you should say so and not offer equity so the employees can make a better decision

What's wrong with offering equity and staying private? I don't see any deception there - say if Valve gave equity to it's employees, that'd be perfectly fine.

It would be perfectly fine, but if you join a company A because they offered equity instead of company B which offered more money BECAUSE you wanted the equity to materialize, but the founders never intended to sell, then you are taking objectively worse offer because you were under the impression equity meant something.

Of course any company can give out equity to their employees, but if it never turns into money then who cares?

Equity is always worth _something_ if the company doesn't fail. At some point investors want to make some money back, whether that's through a sale of some sort or just through dividends.

I do agree those are quite different beasts and you want to have an idea of the relative likelihoods if you're making a decision based on them.

Equity in some companies means actual voting power, especially when one party doesn’t retain 50%+ control.

Minority equity in a company means nothing.

Let's vote on the $20mil bonus to the CEO or distribute it amongst the owners of the company. Oh, the CEO (and majority owner) gets it all.

Dividends are taxed at a lower rate than salary and other forms of ordinary income. If a company has surplus money, it should eventually be remitted to the equity holders as dividends. I guess it doesn't need to be, though.

Unless the CEO literally owns >50% I don’t see how it means ‘nothing’. Voting blocs come and go I imagine, that’s definitely something.

Employee options pools tend to be maintained at 10-15% of the company. Unless you are a cofounder, very-early employee, or recruited-big-exec in a growth phase, your equity, AND importantly, ALL the equity from your employee peers sums to less than whatever the VCs+Founders want. Ideally your interests are aligned, and any gain they get your share-in (albeit in a much smaller amount). But things like preferred shares getting liquidation preferences screw with this calculous, as to differing investment horizons.

When any of the above mentioned have disagreements, won’t they try to recruit support from the remaining shareholders?

Almost all equity given to employees is a totally different class of shares than held by the founders.

What company gives out >50% of their company to their employees?

> [...] or just through dividends.

What if the company never pays dividends?

Like Google?

Or any company that prefers buybacks over dividends.

Economically, they are the same. But they are taxed differently in many jurisdictions.

(Though in the case of buybacks, the shares you got as an employee are worth something, if the buyback is done as something like an auction.)

Because the founders likely won't issue any dividend distributions, they'll just likely borrow against their holdings for decades or even until the end of their lives.

I completely disagree. Equity ownership in private companies can be a fantastic thing, and create tremendous wealth, even with no contemplated liquidity event.

Just ask partners in law firms or consultancies, or ask yourself if you’d like to own stock in Cargill, IKEA, Mars, Brown Brother Harriman, Bloomberg, Chik-fil-a, fidelity, etc.

If the private company is set up with the culture and explicit governance that makes sure minority shareholders get a cut of profits, then sure.

But the average private tech company isn’t like that. There’s probably 2-4 founders who pay themselves extravagant salaries and control all voting shares. Minority equity never gets a payday.

The type of consultancies and firms which actually pay out profit based on equity are usually LLP's / partnerships (part of the reason why "Partner" is a title in finance, law, etc.

Tech companies are usually corporations (often C corps in the startup world.) What equity gets you in the two scenarios is completely different.

Sorry, the company type has (LLC, LP, LLP, c-Corp, s-Corp, etc) has literally nothing to do with that.

Tech start-ups are typically incorporated as c-corps as their structure makes it easier to grant options, startups don’t want to make tax distributions if they make money, LLCs can’t issue preferred shares, and s-corps can’t have more than 100 shareholders, etc. just to name a few.

No one at Cargill or Bloomberg thinks twice about whether the equity is in a c-Corp to LP (all else’s being equal)

> I can only imagine this story was spun by employee who saw the founders selling and getting bunch of money and now think they should have reaped some of the benefits.

Perhaps they should have. After all, without the employees' help Mailchimp wouldn't have been worth 12 billion today.

Founders of a company carry the risk. If you want to reap the benefits then you need to start a company. That is the risk and reward.

It is sad when people see others succeed and get angry.

All employees at a startup carry substantial risk. If you're working as a customer service rep at a startup which folds, you in all likelihood don't have the connections or financial stability that the founders and software engineers and data scientists and scrum masters have to gracefully transition to another job. If you're planning on having a kid, losing your job 3 weeks before you expected to be able to take paid parental leave is going to really throw a wrench in the works. &c &c

I don't like the argument I am about to make when used to attack minimum wage, but I think it applies here.

When you accepted the job, you knew the terms. Those included not getting equity, and those included carrying some risk with known reward.

I don't see how the owners selling retroactively makes the risk-reward balance different. Unless you consider it a risk/downside that someone else gets a windfall and you don't get to share. That seems silly to me tho. How rich someone else is does not affect how much money I need to live, with a few exceptions (inflation, friends, power dynamics in pre-existing relationships).

> How rich someone else is does not affect how much money I need to live, with a few exceptions (inflation, friends, power dynamics in pre-existing relationships).

Many people cannot afford to even own a home in the Bay Area because everyone else around is so rich. Relative wealth is important because "other rich people" drive up prices of everything, from housing, to groceries, to health care.

If my salary doesn't change, but the people around me get a 10% raise, my buying power decreases.

That holds if everyone else gets richer. It does not hold if 2 founders get richer. You barely compete with them for the same items, so it shouldn't affect your buying power at all that your founders got a windfall.

That CSR’s work is worth a certain amount. The discussion is whether that amount best serves the CSR if paid all in cash or divided into a mix of cash and equity. In Mailchimp’s case, they were clear that it was all cash and no equity and I suspect that was the preference of the CSRs as well.

Not responding to the article or the good or bad of it (frankly it bores me), but this is a strange view of “success”. There’s this strange malaise where people see something like this as their aim in life: to sell to some other guy for the big bucks as if this buyout was “the success” and as if this inducted then into Valhalla. It’s the mysticism of money.

Apart from that, if people were serious about not selling, they’d make employees meaningful shareholders. Salary entails zero loyalty and zero stake in the company on the part of the employee. In the latter case, why would you believe that they wouldn’t sell? That’s what people do.

Genuine question, what's the risk? Usually owners aren't liable for corporation debt, which I would imagine reduces financial risk, are there other types of risk?

From what I recall, the service was spun out of another company though, it didn't become its own thing before it was profitable. There was some origin risk in the original business, but MailChimp itself was arguably a low risk endeavour on the part of its founders.

and what risk is that? if the company goes under, they need to get a job like everyone else. the only “risk” is that they no longer get to be the big boss. cry me a river.

meanwhile they get to reap (in this case) 100% of the rewards from everyone else’s hard work. if that doesn’t make you angry, perhaps you should reevaluate whose interests your ideology serves.

Then again, it seems Mailchimp was always clearly communicating to their emplyees that they didn't give equity and offered great compensation so no one was actually fooled.

Regardless, Mailchimp's engineers still sold their labour for way below its value, whether they were fooled or coerced.

> for way below its value

I fail to see how. If you are compensated at the market value of your work, that seems fair and Mailchimp gave generous compensation.

You could argue that the gap between wages and capital gain has become too big, a point on which we will be in agreement but to be honest with you, I think the surprising part is that someone would want to pay 12 billions for a company with $700 million of revenue. Still I have found the market to be surprising for a long time so maybe it's time I reassess my expectations.

> I think the surprising part is that someone would want to pay 12 billions for a company with $700 million of revenue

Since the founders didn’t really want to sell, they probably had to up their offer into ridiculous range.

MC paid me way above value. My friends moved to SF and still rent and live paycheck to paycheck.

MC paid off my house in 4 years, and I retired after another 4.

Is this because of how different col is between SF and Atlanta? Because I'm looking at https://www.levels.fyi/company/Mailchimp/salaries/Software-E... and the compensation doesn't seem outrageous.

In what way? If they knew they didn't have equity and still took low paying job then that is 100% on them.

Why would any rational person sell their labour for way below its value if they weren't either coerced or fooled?

They wouldn't — and Mailchimp employees didn't. The market value of your labour is what you can get a company to pay you.

The hypothetical market value of employees in a world where Mailchimp did offer equity and employees stuck it out to reap that upside doesn't exist, so arguing the point makes no sense.

The value of one's labour is the value it generates - not what anyone is willing to pay for it. The value of the cumulative labour of Mailchimp's engineers is $12 billion which vastly exceeds the amount it was sold for.

> The value of the cumulative labour of Mailchimp's engineers is $12 billion

No, that's the value of MailChimp as a company. That includes the product, the branding, the management and the customer base.

> The value of one's labour is the value it generates - not what anyone is willing to pay for it.

The market value of anything is exactly the value that anyone is willing to pay for it and that's the only value that actually matters in this case. No one knows the exact value that anyone specifically contributes on a large project. How much of MailChimp value is due to its engineers and how much is due to its sales team? The only thing sure is how much the company agreed to pay its emgineers and that didn't include equity.

If you want to own parts of the company you work for, go work for a company giving equities. If you work for a company which doesn't, you are not entitied to a part of the company value when it's sold. That's literally the meaning of being an employee.

> No, that's the value of MailChimp as a company. That includes the product, the branding, the management and the customer base.

How did all these valuables come into existence? Through the employees labour. Thus the value of this labour must be equal to the value of these assets.

> The market value of anything is exactly the value that anyone is willing to pay for it

I never used the term "market value". Sorry if that is what you thought I meant, despite that I didn't use the term. And no, market value is not the only or the best way to measure value.

> The value of the cumulative labour of Mailchimp's engineers is $12 billion which vastly exceeds the amount it was sold for.

Yes, that's how employment works. Companies do not pay you exactly the same $$ you generate, that's just common sense? Why would they employ you if you cost just as much profit as you generate?

The question here is whether Mailchimp _exploited_ its employees by not offering equity. Unless an employee was lied to and told they might later receive equity, they all joined under the assumption that they were making a mutually beneficial agreement, and that the compensation offered by Mailchimp was worthwhile (as opposed to going and starting their own company or working for another startup that offered equity).

Every Mailchimp employee was welcome to start their own company if they wanted to capture 100% of the profits they generated.

> The question here is whether Mailchimp _exploited_ its employees by not offering equity.

No. The question is whether Mailchimp's employees would have worked for Mailchimp had they had a completely free choice and good knowledge of the value of their labour (e.g. valuation of the company).

Not everyone acts or is able to act rationally all the time

That is hindsight value.

If they hadn't sold, it'd still have a market value of (at least) $12B, and the employees still wouldn't have a claim to any of its assets or earnings.

That's what salary is for.

> the stock is worth something but in reality it’s worthless

What? How is it worthless? When they distribute profits, you'll get your share of them, or you can sell the stock to someone else.

In a privately-held company, you usually can't sell your stock without approval (from the board, a shareholder vote, or some other mechanism). That generally makes it quite difficult to sell.

Dividends are the main source of value from stock in a company that doesn't plan to sell. But dividends are also determined by the board. In a closely-held company, the majority owners may also be the board, and they may prefer to leave the profits in the company or take them out a different way.

"Worthless" is an extreme characterization, but the value you receive from owning a minority amount of private stock is much less predictable and controllable than publicly-traded stock.

Exactly this, there is no liquidity available for this stock ie it has no monetary value because you’re not allowed to sell it and it will never be sold. I think at one point a tiny dividend was paid, once, but it became clear the profits are intended for the principal owners. Which really is conceptually fine as long as that is clear up front.

You are correct. I was going to post a similar response.

Regarding worthlessness: I suppose some might place some value on access to company financials.

Most startups don't offer dividends, even when they do it doesn't amount to much, and if they indeed never sell/IPO/raise a new round, then you have basically no way to sell your stock, so it's indeed pretty much worthless. Only other way to sell would be with approval of the board, but even assuming you get it, who would buy that?

Stock and dividends are two separate agreements. One does not automatically guarantee the other

Blue Origin does something similar. I haven't seen indications it will ever go public.

Can you sell the stock on a secondary market?

I don't really understand why it's framed as withholding equity. It just wasn't offered, totally fair choice by the founders. If you didn't like it, why work there?

Yeah, this. You work for a company and agree to do this for amount X in whatever form. If equity is important to you and a company does not offer it, I don't know why the company should be to blame. Of course it's a pity that they could not hold up to their ideals, but I guess no one should be surprised that everybody might have a price tag when talking billions.

I don't think the withholding equity was a problem per se, it's just that the employees were lied to all this time. Not just a white lie, but a lie on a company's founding principles, its building blocks, a core aspect of their personnel's mindset when working for the company. It feels like betrayal. Like Google silently withdrawing their "don't be evil" principle when it turned out they couldn't keep that up with a straight face. And it has cost Google some good employees.

People change, their priorities & interests change. They owned the company, they paid their employees salaries - beyond that they owed them nothing unless otherwise negotiated. It just sounds like sour grapes.

They lied to their employees and stole from them income that would have otherwise belonged to them.

Any time you pay someone an amount, you could be said to be "stealing" income from them by not paying them more. But the fact is that these MailChimp employees were not owed more than they were paid, and were not entitled to it under any widely accepted economic or legal theory in the United States, where they are employed. They agreed to work for a certain amount, which by all accounts was compliant with minimum wage and other laws, and nobody has alleged that they were paid less than that.

As far as being lied to goes, people would be better off if they replaced "never" with "not in the foreseeable future" any time they hear it. Who knows whether the founders genuinely believed their statements about never selling when they said them. Probably so, but if not, well, it's unfortunate. That being said, I doubt that anyone worked at MailChimp mainly because they believed it would always be privately held.

> They owned the company, they paid their employees salaries - beyond that they owed them nothing unless otherwise negotiated.

I’m sad to hear that is your experience. Perhaps find an employer who wouldn’t treat you like a slave if legally allowed?

> Perhaps find an employer who wouldn’t treat you like a slave if legally allowed?

Are you wealthy enough to stop working entirely? If not, you (and most of us) are a slave to the system. Yes you can choose to change employers, but you cannot choose to stop working if you want to eat, have a home, electricity, etc.

Employers are not your friend. They don't pay you because they're "nice people".

What I’m trying to say is that it doesn’t have to be this way. There are plenty of companies out there which ARE NOT like this, no matter how much you try to say that employers are not your friend.

I feel you’ve been involved in some exploitative workplaces in the past that have pessimistically shaped your view of business.

With that being said, I’m still youngish and I’m probably naive. Maybe I’ll become a jaded capitalist too when I’m older.

> There are plenty of companies out there which ARE NOT like this, no matter how much you try to say that employers are not your friend.

You misunderstand. These employers/managers/etc can be decent human beings, but at the end of the day you are a resource to be utilized to further their goals in exchange for an agreed-up sum of money. As long as things are going well, everything's great for everyone involved. However, if/when things start going sideways - for example a round of layoffs are needed, they're going to make hard business decisions based on what's best for the company - your personal situation/needs will not be taken into account.

Don't mistake professional behavior and cooperation at work for friendship. They're not your friends.

> Don't mistake professional behavior and cooperation at work for friendship. They're not your friends.

Paying someone to be your friend always makes for an awkward relationship.

> I feel you’ve been involved in some exploitative workplaces in the past that have pessimistically shaped your view of business.

I don't think it's a pessimistic view of business. I've always felt this way.

Businesses view people as resources. When resources are in high demand, companies compete for you and thus must try to make/keep you happy. When supply is high and demand is low they can and will make lowball offers and make unreasonable demands like working long hours/weekends/etc.

I've worked for good companies and bad. The bad ones always tried to make you feel guilty for not putting in the extra effort. The good ones make you feel like family. But they're still companies with one core mission: grow and make someone more money.

I don't think they lied necessarily, they said they had no intent on selling and they actually proved that a few times by turning down offers. A giant offer came and their decision to sell changed.

I think lying in this case would be to say to employees, "We will never sell" while negotiating a sale in the background. Timing is everything.

This. I'd feel furious if I was not offered equity (even with a good comp package) at a company that eventually sold for this much after being told equity is not an effective form of compensation because they're never going to sell. Well, they broke that promise and the hundreds of millions of dollars that would be going to employees is not. This is a great example of why we have no middle class and why upward mobility in the US is so difficult. These employees were lied to that equity would never be worth anything so that their slimey bosses can keep it all for themselves.

It's framed like that because it gets lots of clicks and generates lots of angry discussion. It has nothing to do with presenting an honest assessment of what happened.

I wish in these cases @dang or another moderator could change the title to be less click-baity.

Because while you're strictly right, in a legal and facts-on-the-ground sense, there's an element of trust in these decisions. And the (not-legally-binding) concept of "we're in this together" is part of the startup story, and part of the pitch that company owners use to attract employees away from other high-compensation opportunities.

Employees regularly (as in, basically always) join startups for peanuts in equity compared to the equity held by founders. And they're told "we're in this together, we'll win or lose together"... without realizing that the stock they received was so tiny, that the founders' Win means a private island and trust-fund grandchildren, while their own Win will be one fifth of a down payment on a house, even in the best outcome.

The cap table isn't revealed to job candidates, but they still get vague reassurances that they're being offered a "great package." If they saw how their package compared to the founders' holdings, I think employees would demand a hell of a lot more equity, for the risk they take.

> without realizing that the stock they received was so tiny, that the founders' Win means a private island and trust-fund grandchildren, while their own Win will be one fifth of a down payment on a house, even in the best outcome.

With 1200 employees, your share will inevitably be a tiny fraction.

At that scale, of course. But what I observe is that the inequity (through lack of information) starts at day one: the first employee (often for a startup with zero code written yet) signs up for 1% because this is "industry standard" and because they believe that the investors and option pool is the bulk of the remaining 99% -- not realizing that the two founders might hold 80% of stock. And the inequity keeps propagating: the fifth employee agrees to 1/20th of what the first employee had, and so forth.

I really think non-founding employees (especially early ones) would be shocked if they saw what the cap table really looked like when they signed up.

But this only makes sense. If you're the first employee, then there's zero "social proof" that the startup is going anywhere. If you're the nth employee, the greater n is, the more social proof there is that the company is going places. Hence, the less equity you're going to get.

If one wants founder equity, found a company!

I'm not arguing against decreasing equity as a startup matures, though. I'm saying that equity decreases at a much faster rate (by an order of magnitude, sometimes two) than the risk. Again, the common real-world example (in SF) of founders having 50-80x versus Employee #1, in the case when there's zero code and zero product, just a napkin sketch and founders who convinced investors of a vision (which will anyway change once development starts). Or employee #8 who is an order of magnitude lower than emp #1, when the product hasn't launched yet.

It is my opinion that one reason people sign up for such low equity, is because they lack information about how equity is divided overall. Employee #1 is OK with 1% because he mistakenly believes that investors hold 40%, founders have 10%, and the option pool is the remaining 49% -- when really the option pool was 8% total until the next round of funding, and the lion's share overall sits with the founders.

The founder organized capital more productively than it sitting earning 3% is thus able to command a large ownership level.

Regardless of one's knowledge or feelings, the math doesn't work to keep giving out 1% shares to new employees. You've got to drop it by an order of magnitude, quickly followed by 2 orders, etc.

It's in Atlanta. There wasn't much else at the time, unless you counted Pindrop and AirWatch.

Nowadays there are plenty of alternatives in Atlanta and no excuse for subpar comp. There are giant regional Microsoft [1], Google [2], and Facebook [3] offices, and a ton of good startups that offer equity at ATDC [4] and beyond.

After it was obvious Mailchimp wasn't the best place to work, I tried to get my Atlanta mailchimp friends to join the then-pre-IPO unicorn I worked at. My equity is now worth eight figures (well, high seven, but I sold some along the way).

I worked with someone even luckier who wound up as high C-suite of Greenlight, pre-unicorn status. Again, by not drinking the kool aid and taking charge of their career.

Mailchimp underpaid these folks. And all for a shitty PHP stack that spams people. It's a job that's one notch above working at Home Depot or The Weather Channel.

Unless you're really happy with what you do (and even if you are), shop around. You owe it to yourself. Microsoft is literally a mile away and will pay so much more.

Mailchimp is going to be scraping the bottom of the barrel for talent after these offices come online. There are $300-400k jobs in the city if you look.

A good lesson for the Atlanta tech scene.

[1] https://www.fox5atlanta.com/news/microsoft-announces-major-e...

[2] https://www.bizjournals.com/atlanta/news/2021/03/23/google-c...

[3] https://atlanta.curbed.com/2020/3/19/21186363/facebook-atlan...

[4] https://atdc.org/

I think that's missing the point?

Coca Cola weren't and still aren't offering equity. Nobody describes that as "withholding equity".

Most places in the world, most jobs do not offer equity as part of compensation. And everybody understands that and chooses too apply or not based on what they are offering for compensation.

"pre-IPO unicorns" are very much the exception, very rarely actually pay off, and people who have the opportunity to shop around in that lottery should be grateful but aware that for every guy with an eight figure success story, they're are tens of thousands with some worthless option paperwork that never even made enough money to buy them a meal, let alone a house...

I think the issue here though is the MC founders repeatedly used "we will never sell" as their justification for not offering equity.

People are allowed to change their minds. They did negotiate a pretty big employee compensation package as part of the deal. So I think OP was just trying to get a clickbait title and ride on the backs of those founders.

> People are allowed to change their minds.

But that doesn't make it ok when you specifically say you won't and use that as a justification for your actions many, many times in public. Title doesn't seem sensationalist at all.

> People are allowed to change their minds.

This is absolutely right, though sometimes it pisses people off when you do it.

I'm sure when they were coming up with that statement, they had never in their wildest dreams imagined that a 12 billion dollar offer would ever be on the table. There is not a single human being on earth who can turn down that kind of money.

> There is not a single human being on earth who can turn down that kind of money

Unfortunately for all of us there are a handful of people who, due to their own wealth, certainly can.

Sure it was the justification, but it makes zero sense as a justification. I’m not saying they should have offered equity, but I think logic is completely flawed and am surprised people bought into that logic.

No idea what KO’s employee comp plans look like, but since it’s public wouldn’t you rather get your comp in cash, and then decide whether to buy stock on the open market? Rather than the company make that decision for you?

The Coca-Cola Company actually does offer RSUs to employees.

I mean, they give out <$300mn a year vs. Market Cap of $240bn[0]. Assume most of that flows to the top and it's basically 0.


Slight tangent, but RSU's are "sudo equity" IMO. I'm not sure how the tax liability of RSU's works in the US, but in the UK they are treated as "income" and taxed as income, not taxed as "capital" as most other types of equity are.

As a result, I loose just over 50% of my RSU value to income tax when they vest.


"sudo" means "super-user do", is pronounced "soodoo"


Yep, gotcha. I actually meant "pseudo", but I spend a lot of my day typing sudo so...

and whilst we're nitpicking, I also meant "lose" and not "loose" in the sentence below.

I thought it was pronounced pseudo, thinking it's a joke. You're not actually the super user, you're a "pseudo" super user.

Typically in the US public companies sell RSUs to employees with a discount to the market price, so there is compensation for income tax.

No. That is ESPP. RSUs are, indeed, just taxable income linked to share price.

The fact that RSUs are taxed as income in no way means “they aren’t equity”, though, so this whole thread is just filled with bizarre inaccuracies.

I don't disagree with this. They are indeed a form of equity.

My issue relates to how they're treated with respect to taxation by the various revenue authorities. In the UK, the tax paid on RSU's vesting is related to the personal income tax bracket the individual falls into. Which means for anyone in the UK's higher tax bracket, you end up losing ~50% of the amount vesting as tax.

If these behaved like other forms of equity, ordinary shares, preference shares for instance, they'd be taxed as capital, the gains of which would be taxed 'when you sell them' and at a much lower rate of tax - ~50% lower for a UK higher rate tax payer.

I'd rather a company just pay me a higher basic salary than award RSU's. At least then it's both pensionable and often used as a multiplier at bonus/salary raise calculation time.

Agreed! If you can guarantee that you're going to get the same total compensation, compensation-as-salary is always better than compensation-as-RSUs.

Of course there's upside to exposing yourself to your company's stock performance, but there's also downside risk, which people looking at equity compensation tend to downplay.

Turns out its worked out well for big tech employees, as big tech has gone up 10x over not very many years.

But that's not a reliable state of affairs into the indefinite future for big tech, and it was never reliable for smaller companies.

Nitpick: "If these behaved like other forms of equity" I don't know what "behaved like" means in this context. You start out without equity. Then your company pays you equity. That's always going to be taxed as income, because it's transparently just income, just paid in a different liquid market.

> "If these behaved like other forms of equity" I don't know what "behaved like" means in this context.

By behaved like, I actually mean't "taxed like".

You nailed it in your post. The employee is taking on increased risk with RSU's. Risk that is not rewarded with a more favourable tax rate, as other forms of stock (baring the same risk) are.

Yet, you're taxed as if the risk were the same as your salary. Which it isn't. (you'll probably still get paid even if the share price goes down, particularly in large companies).

I'm always wary of companies that try to explain away the relatively low basic salary with "look how many RSU's you're getting instead". Especially so, when they've already been though their initial growth phase. Amazon (AWS) is particularly bad for this in the UK.

Presumably the advantage of equity is also the ability to exercise some control over the business (the degree to which depends on the shareholder's agreements)

Yeah I'm wrong, I was thinking of ESPP, not RSUs.

It is the same in the US.

I would be surprised if any large publicly traded corporation doesn’t offer some form of equity compensation to basically all employees with a six figure or higher salary.

The only lesson here is it is another data point in being very skeptical of someone claiming “we’ll never sell” in a compensation negotiation — if the founder(s) never plan to raise outside money or sell the company there’s very little downside to establishing an employee stock pool and awarding options to folks that may never be exercised.

It is in fact not the practice of most publicly traded companies to award equity outside the tech company, even to highly-compensated employees.

When I worked at Cisco years ago fresh out of college, they offered an Employee Stock Purchase Program -- you could put up to X$ towards purchasing Cisco stock over the quarter, and the stock was issued at the end of the quarter at min(start_price, end_price) * 0.85.

I haven't worked at another large corporation since then but I thought that was fairly generous and I still have quite a bit of CSCO from that program.

It's fairly common for execs (both in the US and EU), it's just framed as LTIs via phantom shares. Comparable to RSUs in philosophy, outcomes, and vesting schedules. Source: we sell software to run these programs.

Almost 50% of the s&p 500 offer ESPP and ~40% of the Russel 3000 do[0].

Given that, 401k stock contributions, ESOP & RSU I think we are right at the line of “expecting” equity as part of your comp for most public companies. It’s close enough that we can presume it’s a standard benefit anyway.

[0] https://rewards.aon.com/en-us/insights/articles/2020/how-com...

I don’t get a desire for stock - why would I want all my eggs in one basket. If my savings and my income are from the same company, and it does well, that’s great and I make a fortune

But if it doesn’t do well, I lose my job and have nothing to fall back on.

Surely it’s better to have a diverse portfolio?

One benefit is that stock is typically awarded in the form of a multi-year grant, where the number of shares is priced at the time the grant starts. So if the original grant says you get $X worth of stock per year for the next 4 years, and then the stock price goes up 40% in Year 1, you’re now effectively getting $1.4X worth of stock per year for the remaining 3 years.

To illustrate this, imagine at offer time, you're given $150k + $80k worth of stock over 4 years. That works out to $170k per year. Nice, but not even doctor money. The stock is currently $100/share, so that's 800 shares. Now imagine the stock 4xes (not unusual in tech). By year 4, you're making $230k, without having had to beg for a raise or anything. This is how people end up with ludicrous total comp in tech.

But if the company goes down in value you’re screwed.

Wouldn’t it be more sensible to buy options in your competitor and hedge your bets?

The taxes on equity are substantially lower than on salary. Also equity compensation can be an order of magnitude higher than any market-based salary would ever be.

The taxes on RSUs at vesting are identical to taxes on other income.

RSUs are equity.

If you get stock options, there are (very limited) circumstances where those options have favorable taxation relative to income, but it’s a gamble, if you follow the strategies that might yield tax advantages.

> Most places in the world, most jobs do not offer equity as part of compensation.

That's not the issue. Most jobs at companies that matter do.

If you offered your friends an opportunity at your company, which based on your comment ostensibly would have paid them more and granted them equity, why did they stay at Mailchimp?

I don't think my friends thought my job was better, despite my regularly selling it. I failed to get them over for a happy hour or tech talk, which would have been a better sell than just talking about comp.

Mailchimp was also super "artsy" (they hire artists to do murals), and my friends talked about how cool the founders were. This played the biggest role, I think. They had a mythos.

Well it sounds like comp wasn't as important to your friends at that time. If that's changed following Mailchimp's acquisition, that's on them, not Mailchimp.

Agreed. While the comp situation at MailChimp was subpar due to no-equity component, it isn’t fair to blame them for the outcome of this story here.

There were no lies. The employees werent offered equity that ended up being worth nothing. They got job offers that stipulated X cash with no equity, and they willingly and knowingly accepted those offers, and they got compensated as promised. I fail to see how MailChimp is at fault here.

The fact that there is Microsoft/Google/etc. and tons of other companies in the vicinity that pay way more, and grandparent poster’s friends still were staying there despite the poster’s urging and advertising, tells more about those friends than Mailchimp.

I don't get it. One of the biggest memes around the startup scene is that equity is essentially a lottery ticket, and most lottery tickets don't win.

Taking a known cash component with no equity, especially since this is already known and in the open is well established as the safe, "smart" move.

Then you see this hullaballoo about not winning the lottery.

Well you’re not distinguishing between two situations:

1. Someone chooses not to have equity because they want more cash now, don’t want to risk part of their compensation on equity, etc.

2. The company says their equity will never be liquid so you definitely don’t want it. You accept a cash offer with profit sharing instead. Then they sell the shares for $12 billion leaving you unknown job security and low expected future compensation while they profit off their lies

> despite my regularly selling it.

This usually is a huge red flag. If one of my friends would try to regularly recruit me into their startup I would be very suspicious if the company was on solid ground or if my friend is just desperate and trying to get someone else into the bad deal they found themselves in so they don't have to deal with it alone.

I regularly wonder what definition of "friend" some people operate with. If I found myself in a losing position, I'd do my best to keep my friends out of it, not to drag them in.

Yeah, I've been at a few companies in the last few years, and would never try to recruit anyone unless I was sure that they'd enjoy the new company.

There are 'tiers' of people I would consider a 'friend', who'se pitches to me I would also be skeptical off, for suspicion they are self-interested.

Now, this tier of friend is very close to 'acquaintance' but I think there are plenty of people for whom the boundary of 'being a friend' includes these kinds of acquaintance.

What resources do you use to better understand the lay of the land in the Atlanta job market? I've been somewhat relying on levels.fyi and blind. I knew about companies like MS, VMware, square, etc. I thought the google office was just for networking stuff. I didn't even know FB had an office here.

I'm at that awkward level where I'm paid enough that I'm at the high end of 'normal' comp for local companies. I didn't think there were jobs at the $300k level for ICs in this city though. It appears the market has changed while I wasn't looking.

Whilst this is totally fair as an assessment, it would still be just as true if mailchimp founders had not sold at all.

The current new, at best, puts a fine point on this argument, but it doesn't change anything.

Wow 7-9 million dollars worth of unsellable Pokemon cards.

And to keep them you just have to keep working?

Maybe I should work as a unicorn as well!! Oh wait I'd rather rest on my actual cashm

I'm confused.. it fits the literal definition of withholding:

> To refrain from giving or granting: synonym: keep.

Words have both connotations and denotations.

The denotation is the literal dictionary definition. The connotation is the associated meaning that comes to people’s minds.

The connotation of “withholding“ is to prevent someone from getting something they are owed. Business Insider wants to imply that MC employees were owed equity, despite MC being clear and upfront about the fact this was not offered.

This way, many thousands of aggrieved employees who are unsatisfied with their career decisions and seeking someone to blame will click on the article and feel like they are victims of an unjust system. This will generate many pageviews and therefore revenue for Business Insider.

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