[aedron]

But the dilution happened because your company had to sell out a lot more of its equity in order to succeed. You were not cheated. You could argue that you should have been offered to buy into the additional financing rounds in order to retain your share, but in all honesty, would you have taken them up on such an offer?

[cmdrfred]

I think the issue is they probably offered lower than market pay and "half a percent of the company" but what he ended up with was lower pay and .00025% of the company. Sure it's all legal and his fault for not understanding the fine print but I understand why he would feel cheated.

[aedron]

The company could have shut down, and he would have gotten nothing. Would he have felt cheated then?

Instead they sold a part of the company (out of everybody's share) and with the money that brought in, they eventually succeeded. I don't see anything unfair in it.

[wastedhours]

But also, the company succeeded due to the people who worked there working for less than market rate. Obviously dilution and all of the (fairly numerous) ways your share can be reduced are a risk factor and need to be taken into account, but still valid to feel hard-done by. Just because it's fair doesn't mean it's an easy pill to swallow.

[hubb]

it shouldn't be hard to understand that being mislead about the actual value of your options is unfair. pointing out that things could have gone worse doesn't change that.

[danielweber]

> (out of everybody's share)

Except that every dilution I've witnessed has come with re-upping the people who really Matter. Current employees we want to keep, and people sitting the board room.

Not everyone takes an equal hit from dilution. Some don't get hit at all. Some can get hit but handle it. (A founder diluted from 10% to 5% still is sitting on a huge nest-egg. An employee diluted from 0.01% to 0.005% may see her 200K payout changed to 100K.)

[cmdrfred]

I think the moral of the story is rate equity like that as worthless and refuse to work at a discount for it. These contracts are complicated and as a programmer you likely won't completely understand them unless you get a lawyer involved.

[wcummings]

Tech workers need an organization to provide legal services, most people I know aren't empowered to have a lawyer review their employment terms. More accessible legal help would create pressure on employers to stop bad practices.

People on HN sometimes talk a big game about negotiating job offers, but in my experience, most software engineers are terrible at it, and are not equipped to go up against enormous companies with a lot of resources dedicated to paying them as little as possible.

[HeyLaughingBoy]

In my experience, most software engineers simply don't ask.

Forget negotiation. Just saying "I want $XXX" when interviewing for a position is a simple thing to do. What's the worst thing they can do? Not hire you! What's the best thing they can do? Give you what you asked for.

Is it really that hard to say "I really like the position you're offering, but unless you can meet my salary requirements, it's a non-starter?"

[danielweber]

How long has it been since someone linked 'patio11's guide to getting more money? If more than a week, too long, so:

http://www.kalzumeus.com/2012/01/23/salary-negotiation/

We should all read this once a year. Even if you can't take it all to heart, whatever you read will help, and getting your colleagues to negotiate better will raise your rate, too.

[acjohnson55]

Lots of companies don't have the cash to pay market rate, in the early stages. Our even the mid stages. In those cases, it's best to make sure you're advocating for your stake on the business. But you're not going to get much unless you're indispensable to the company's success.

[logfromblammo]

From a perfectly rational standpoint, the companies that cannot pay market rates for those employees required for their success should either raise more capital from qualified investors or fail immediately.

Don't defecate where you eat; don't invest where you work.

[acjohnson55]

One does not simply "raise more capital" to pay employees market wages in cash. That might very well be the morally superior approach, but it simply doesn't match reality. Most startups can't get that kind of capital at all, let alone on terms that would be worthwhile to the founders. Besides, the labor market is largely clearing, so you're not going to shame founders and investors to put more cash into comp. The much better bet is to educate employees so they can advocate for themselves.

> "Don't defecate where you eat; don't invest where you work."

That sounds pithy, but I don't see why that's good advice. If you work in a role where you can have a significant impact on the success of your employer, that can be a very advantageous situation compared to being a random investor in a venture you have no agency within. You also potentially have a lot more visibility than a silent investor. These are reasons one might choose to take equity over cash.

Had you argued that it might not be a universally great idea, from a portfolio management standpoint, to trade a lot of upfront cash for illiquid, volatile stock option, I'm with you.

[st3v3r]

Really? How much of the founders share got sold? And how much of a say did he have in this happening?

I see nothing but unfairness in this.

[anthay]

You may well be right and to be honest I don't really understand exactly what happened. But I do know I thought I'd get more than I did.

[jackgavigan]

What was the company? We may be able to analyze what happened by looking at the documents published at beta.companieshouse.gov.uk

[briffle]

Seems like as a shareholder (well, I guess potential share holder, since they are options) you should have some say in that.. Is it okay to dilute my shares by x%, in order to continue functioning as an employee..

Of course that kind of insight would lead to employees jumping ship when there is trouble...

[pjlegato]

You do have some say in that as a shareholder -- most companies are goverend by shareholder vote. However, as a startup employee, your total number of shares is insignificant compared to the number of shares held by the founders and the investors.