[fragsworth]

It looks like the average employee at Facebook would have received $4.5 million.

Once the IPO happens and you pay your employees $4.5 million, their $100-$200k salary doesn't seem worth much anymore. What actually would have happened to Facebook, if they did this? Is it possible that the company collapses, while too many employees quit so they can do their own thing, or retire? Would they have had to double or triple everyone's salaries to keep them on board?

I could see it being a disaster. It could also significantly de-value a company's IPO (or sale) because the investors would see this as a massive risk. At least until it's been tested with a company that IPOs.

[vidarh]

I remember working at a large company years back, where I was told the story of some pre-IPO ops guy that was still hanging around despite clearly not needing the money.

Some more recently hired SVP brought him with her on a trip to various offices as her go-to guy to make sure she wasn't bullshitted when discussing a specific project with the local teams. He had often brought along on trips like this in the past because of years of experience he had with the company infrastructure.

To be nice, each time she would offer to get her PA to book the flights and hotels, so he could benefit from her ability to get them booked into better rooms than the standard policy would allow for his role. Each time he'd politely declined.

Finally she pressed the issue and asked why he didn't want the better rooms.

Turned out he'd done well enough out of the IPO that he soon afterwards had decided to buy apartments near the local offices in the 5-6 cities across Europe where the main subsidiaries were, so he'd not have to stress with packing etc. when travelling there.

[rajacombinator]

Presumably this already happens to a large extent. It hasn't seemed to had much effect on the trajectory of companies like Facebook and Google. Someone doing a PhD in Econ should write a paper about the effects of people leaving post IPO.

Good point about adding risk to the IPO.

edit: BTW working at companies like Facebook and Google is pretty good from a lifestyle perspective so I'm guessing most wouldn't leave.

[venomsnake]

> Is it possible that the company collapses, while too many employees quit so they can do their own thing, or retire?

The excruciating burden of going to work is almost non existent if you can say fuck off at any moment. A lot of folks there do lots of interesting and fun stuff.

While you could see some run away I would suppose that the numbers will be small if you have good corporate culture and policies.

[vladimirralev]

These are well known risks and investors can simply demand a commitment. It is a very easy conversation to have with your employees. "Hey, if you sign this 2 year commitment we get like 10% more valuation". Everybody decides for themselves if it's worth it and the more people sign the better the valuation. And since everybody has more stock they have more interest to do it; You can also legally provision stock lock ups after IPO for 2 years or so, everybody does it. Also you can dilute the stock to allocate the 10% which represents the expected valuation hop. Then award the extra stock to those who sign. This is legal, but it's a lot of paperwork to make sure nobody can dispute the true value of the retention policy.

[sukilot]

The employees get free prepared food etc, a consistent routine that suits their engineer mind, lots of vacation, flexibility to choose their own hours, leadership roles (and unlimited mobility) to choose their own work, until they retire and become angel investors. And they get a little greedy, so they need a few more years income before they retire at 40 and the hot startup becomes and over the hill bicgo.

[vincentperes]

You don't cash in straight after an IPO, most of the time the current owners of shares have to wait X amount of time before they can sell shares. I guess this help keeping the company stable.

[blazespin]

The flip side is that you can attract a heluva lot of superstars this way pre iPo