[hiringmanager]

You seem to imply that an employee being somewhere for one year is a bad sign. That seems like a prejudice.

Sure, staying somewhere only 6 months can be a lack of fit. Staying somewhere a year, though, doesn't mean anything negative. Especially with startups. The startup could have pivoted. The employee could have felt that it was a good fit, then the startup pivoted and they gave the company an additional 6 months. The employee might have done great, but the statup founders chose to hire form outside rather than promote within (Showing a lack of loyalty to their own employees, and to the ones who took the greater risk by being there earlier.)

Also, you should never look down on an employee who chooses to leave after one year even if you know they are doing it because of the cliff.

The option structure of four years of vesting with a 1 year cliff is employee hostile (And startups should not be doing this because it incentivizes your employees to leave.) The first years and even months of a startup are most critical. Therefore, vesting should start nearly immediately, at most a 90 day cliff.

Secondly, the startup cargo culture is set up in a way that does not have a level playing field for founders and early employees. Founders often get RSUs which are 3X as valuable per share as startup options. An employee on a 4 year option plan should quit every company after that first year cliff.

In that way, after four years they have options in four companies... rather than all their eggs in one basket.

RSUs solve this problem by giving them real skin in the game rather than a lottery ticket that is subject to all kinds of founder shenanigans down the line.

Franky, all employees should be getting series-A preferred as it is silly that a Venture Capitalist an put in $10k of 10k shares and get preferences while an employee who gives up $70k in salary gets $70k options that he has to spend another $20k to exercise and even then only gets common.

Why is a VCs money more valuable, dollar for dollar than an employees? It's not because the VC is really going to help the company execute in any significant way-- yet the employee is.

And the delta between market price and salary you're paying employees is a real financial investment on the employees part (another reason you should not have vesting cliffs.)

Given that we have this cargo culture where things are not thought out from first principles and everyone emulates what other startups did we have not only job titles from the 1950s (eg: 21 year old "CEOs" of 4 person companies) but we have option plans that have not changed since the 1970s!)

The right thing for an employee to do in the market where companies are not giving them real skin in the game is to move every year, so that they diversify their lottery tickets.

It's the only smart move.

And that's just looking at options.

When you consider the only time most engineers ever get a raise is when they leave to go work elsewhere, from a salary perspective they should leave each year too.

[VestingBurn]

I think you nailed the biggest issue with being an engineer in startup land. The interests just aren't aligned.

[sulam]

It sure isn't a positive sign.

Also, I think you are confused about startup options. I've never seen a founder get RSUs, there are strong tax reasons to prefer options -- primarily that you can lower your tax payments from regular income to long term capital gains. You can also convert some portion of them to non-qualified options which can be positive for the founder if they leave.

Regarding preferred vs common, again it is in the employee's interest from a tax perspective to receive common shares. The value of preferred to an investor is that it typically has some incentive structure for the founders to grow the value of the company. It also tends to set a minimum bar for an exit. If these hold true, the value of their shares is the same as common, but common was much cheaper. This is important for things like early exercise and whether or not your shares remain above water. The math in your example which implies preferred shares are somehow cheaper than common must have some unstated elements, perhaps the passage of time? Preferred shares are always more expensive, typically 3X or so, at any given time.

Finally the last point I'd like you to consider wraps up the remaining themes in your response. Founder "games" that dilute employees are typically unpleasant for the founder as well and are the result of having to take investment under less than favorable conditions. When this happens investors and company leadership want to incent people who are still present, not people who put a year in and left. Also your desire to start earning shares right away vs cliffing seems internally consistent with what seems like your desire to use your time the way an investor uses their money -- i.e. spread it around liberally to hedge your bets. That's fine for you to want, but if I'm a founder, I am all-in on this one thing, and I am looking for employees who are also all-in, or as close as I can get to that in the marketplace. Of course the market usually resolves somewhere in between -- I get employees who stay at least a year, preferably more like two or three and (if we are doing really well) sometimes longer. Meanwhile it takes more like 10 years on average to achieve a reasonable exit, so in the time I am slogging away, they can get meaningful exposure to 2-4 other companies. This is worse than what a VC gets in the same amount of time but the VC brings liquid capital to the picture, among other things. The current climate devalues money, but it's still necessary to remain in business in any meaningful way and the value of six months of a new engineer's time is usually far lower than what you are imagining. There are of course exceptions -- you can be a true mercenary and consult to startups in exchange for stock and an hourly rate, but you need very strong experience to make this appealing to the startup and of course your base will generally not be the same as an employee taking the equivalent role. My wife has done this, and it's workable but not awesome long term in my opinion. And then there is the extremely light weight version of this, which is to advise startups in exchange for equity. You have to bring commensurately more to the table for this to be appealing to the startup, and you likely won't see any cash out of it for a long time (in fact the times I have done this I will end up spending money on the company in the form of investing and at least early exercising my shares).

Long story short, feel free to bargain for whatever you want, just realize that achieving alignment on terms will require some give on both sides, and be sure not to over play your hand -- it is hard to hire engineers, but not impossible! And honestly one year cliffs are not the place to negotiate, because the company is unlikely to give on that. Go the consultant route if you really want to be a mercenary -- and if you find a rocket ship you can always sign on as an employee.

One last thing -- being an employee has paid for my house and my kid's education. The stock you get isn't always meaningful, but it can be!

[hiringmanager]

I'd be happy to be at a company for 5-10 years and grow it, that's my preference. I don't want to be a mercenary. The problem is the companies are operating in a way that doesn't incentivize me to do os, by playing games that devalue my contribution. If that's the way they are going to go, then I should hop to diversify my portfolio.

IF you're a founder and you're working for options rather than RSUs, you got screwed.