[IronKettle]

Ehhh. A few interesting thoughts though not necessarily original, the "your equity is worth 0" mantra has been repeated enough that it's not ground-breaking.

It maybe makes sense for huge, publicly traded companies like Apple (who could easily afford to just pay their employees enough to offset the equity loss and then some), but of course there's the whole idea that equity compensation aligns incentives for employees and the business.

> “You people in tech are crazy. I pay my employees handsomely in cash and I keep all of the equity for myself.”

This would be catastrophic for the startup industry:

* Why would I ever work for a company that has huge downsides (chance of failure, lack of resources, etc.) when I don't get to enjoy any of the potential upside

* How many startups can afford to pay their employees "handsomely" (relative to what they could be earning elsewhere)?

The only way I imagine a 0-equity world working is one where VCs cough up a ton more money to compensate startup employees handsomely. And to be fair to Fred, maybe that's what he's suggesting (spending more money now to retain more equity later). But I didn't see that stated anywhere.

[sunir]

I don't understand one point you raised. What downside risk is there to the employee if a company fails? The only risk is the cost of finding a new job which is offset by latitude in experience gained.

Why would you work for money instead of equity at a high risk venture? Because paying in equity pushes the risk onto the employee. Paying in cash takes the risk out. You are paid in full up front for your work. You'd take the job because it is paying you.

Startups pay in equity because they don't have cash.

Since then the lottery ticket aspect had taken grip with the labor market. However those people who view options as lottery tickets I find are subpar. Trend followers mostly. Those chasing Klondike gold.

[IronKettle]

> What downside risk is there to the employee if a company fails?

Sorry to be snippy, but: Come on man, do I really need to explain this one? Sudden loss of employment is incredibly disruptive at best, and for many it's a significant financial hardship.

> You'd take the job because it is paying you.

So is Amazon. And they're offering Amazon equity, which is killing it recently. So, again, why would I take a job at a high risk venture if there's no potential lottery ticket?

> Startups pay in equity because they don't have cash.

Yeah, exactly. Startups can't afford to compete with Amazon on salary.

> Those chasing Klondike gold.

Come on, as opposed to most startup founders? Anyone who has taken even a seed round is chasing klondike gold as well.

[ghaff]

>Sudden loss of employment is incredibly disruptive at best, and for many it's a significant financial hardship.

It's a standard meme here that if you quit/are fired/company shuts down, you send a few emails and walk into a new job the following Monday. Good for you but that's just not the norm for most people in most roles.

[mrgriscom]

> Sorry to be snippy, but: Come on man, do I really need to explain this one? Sudden loss of employment is incredibly disruptive at best, and for many it's a significant financial hardship.

If you're getting paid handsomely in cash, you should be able to weather that interruption.

> So is Amazon. And they're offering Amazon equity, which is killing it recently. So, again, why would I take a job at a high risk venture if there's no potential lottery ticket?

Amazon equity is publicly traded; you can buy as much of it as you want with any salary.

[IronKettle]

> If you're getting paid handsomely in cash, you should be able to weather that interruption.

Two glaring issues:

1) What people should do and what they actually do are two different things. People should eat sensible portions of healthful food. And yet, we have an obesity epidemic.

Saying people (even among those with high salaries) should be able to weather an interruption isn't very helpful when in practice many can't [1].

2) Which startups can afford to pay people handsomely in cash? (early) Startups offer equity to employees in large part because they can't afford to compete on salary.

> Amazon equity is publicly traded; you can buy as much of it as you want with any salary.

It's on top of Amazon's fairly generous salaries. The comparison was between being given Amazon equity, which is obviously worth something, vs. a private company's equity which is almost always worthless.

Which non-unicorn startup is offering $250K+ a year in salary and bonus for a plain old software engineer?

1: https://qz.com/520414/the-high-earning-poor/

[qaq]

You don't really have an upside that's the sad reality of it.