[carlosdp]

> Instead they use rigged instruments like common ISOs with liquidation preference and 90 day exercise windows to intentionally screw early employees over.

I'm so tired of this being repeated as if founders choose ISOs to screw over employees, it's flat wrong. ISOs offer the best tax advantages for employees. The 90-day exercise window is a government-imposed thing. If you want it changed, go talk to them.

I'd much rather give an employee an instrument in which they don't have to worry about any taxes at all until they actually want to exercise than have them sign a document they almost certainly don't understand and receive stock they get immediately taxed for and be confused why the IRS taxed them for stock they can't sell and that might end up being worthless.

[emagdnim2100]

There's absolutely no reason companies can't issue options that automatically convert from ISOs to NSOs after the 90-day period, and leave the NSOs on the table for ten years. There is no downside to the employee or, really, to the company – other than that the options, which were pitched to employees as part of comp, aren't clawed back to the company's pool as quickly.

I've observed many startup founders who are disdainful of employees who leave, ever, for any reason, and definitely don't want them to receive proceeds from any of the company's future successes.

[jariel]

One of the reasons is complexity.

Yes, there should be evolution on this front. It's a little lop sided, but not trivially easy to fix either.

These instruments are already very complicated.

[rco8786]

Not gonna sugarcoat it - this is weak. Companies don’t offer this solution that’s better because it’s “complex”.

This is like when engineers say something is going to take a long time because “there’s a lot of moving parts”.

The reality, IMO, is that employees do not have a seat at the table when it comes to negotiating ownership shares. And, predictably, they end up with the worst part of the deal.

[jariel]

Complexity is absolutely a reason.

Every time a company offers something 'non standard' - it's a huge legal expense and risk.

Very few startups can afford such things.

Like complexity in code scales exponentially, so too does potential legal outcomes.

There are a lot of bespoke things each company could do in light of specific situations, but it's just not worth it.