[harryh]

What do you think fair terms look like for, say, the first 100 people at a tech company where you have 50 engineers, 20 product people, 20 sales people, and 10 business people? All roles will of course have varying levels of seniority and experience.

[ditonal]

Preferred shares and invitations to board meetings. If I'm taking a pay cut, I'm an investor and want to be treated like one. If you're so big that you can't offer real equity, you're not a startup, youre an established business, so you should start paying competitive salaries and not use the "We're a startup" excuse to distort the market to your benefit. And competitive means it actually competes, not "competitive".

[harryh]

I don't think you understand the purpose of preferred shares or board meetings.

[ditonal]

I assure you I do, and if I didn't you would be able to elaborate.

[harryh]

If investors were buying common stock instead of preferred stock what would happen to valuations?

[ditonal]

You don't need to explain to me why the current 'standard' arrangement is designed to please and protect VCs at the expense of engineers. But that's exactly why we have a proliferation of VCs and startups and a 'shortage' of engineers willing to work for them. The classic argument for liquidation preference is because VCs are putting up money, but so is the engineer if he's taking a salary cut, and the only reason you find it ridiculous that I suggest engineers get preferred stock is because you are stuck in an old school mindset where financial professionals are in charge, and they loop in a few chosen engineers (founders) to bamboozle the rest into bad deals, and "work hard because we're a startup and have ping-pong tables". Not surprisingly, you are VP of engineering and trying to hire, so you're invested in the status quo that rewards founders and VCs. I think the echo chamber has made startups so 'cool' that I decided to bet against the herd mentality and get a good deal from a big tech company. I'd love to re-enter the startup industry at some point in the distant future, I just want to challenge the status quo and see an arrangement where engineers are actually partners and true, first-class owners. If this scares away some VC money, good, there are a lot of questionable startups out there already, it would be better for the industry as a whole if some of these startup engineers started collaborating instead of every single one needing to be founder or at least VP of engineering, because the only engineers willing to work for less than that are naive or inexperienced.

[lawnchair_larry]

This is probably my favorite comment in a while. Most engineers don't understand this stuff, as you know, so it's important to make this broadly known. I don't know of a good way to do that, maybe one of those hot new blog startups like medium.