| Gaming abounds with stories like this. A friend of mine went to work for a small game studio in Oklahoma that'd gotten some acclaim for their quake mod pack. They took that momentum and started on their own novel IP as a quake licensee. They made a ahem mildly successful game named Medal of Honor. Some time down the road, the owner of the studio didn't want to share the wealth. As a result the top programmers, designers, etc, grouped up and negotiated a deal to become a 2nd party dev studio with a competing publisher. Nearly the entire company left with them. They couldn't take the IP with them so they rebranded their new game franchise as Call of Duty. That studio owner literally made a billion dollar mistake by not simply being fair early on to the team. Never, ever, treat a team that has achieved rare success as replaceable cogs. If they've shipped, they can find more money people any time they want. |
What prevented them from offering bad deals that are common today? Some examples I've seen:
- give lots of equity, but vesting over long timelines
- give no refreshers, if people leave, they lost lots of unvested
- stay private for a long time...equity is almost unsellable and theoretical only
- give lots of equity, but lag on salary and save big
- give lots of equity, but leave people with huge unfunded tax liabilities if they want to leave company
- give "lots" of equity which is worthless if people actually saw the cap table
I dont feel any of the above are good practices, but they are common practices for equity theatre