Tech workers want cash, not stock

Founders - here's new data and best practices on issuing refresh equity to your startup employees. First big question: is this common? Turns out, yes! I was pleasantly surprised by this data. About 47% of employees at Carta startups receive some sort of refresh equity grant as they hit year 2 of their tenure. Nearly 70% of employees who make it to the end of their initial equity grant (typically 4 years) will receive a refresh grant. Let's do some quick breakdowns on common refresh grant types. ????????-?????????? ?????????????? ???????????? ? Issued as an employee hits a set length of time at a company, generally to help ensure retention beyond the period of the initial grant. ?? ? Typically after 2-3 years have elapsed from the initial grant date Traditionally, this tenure-based refresh is simply another 4-year grant without a cliff. So the employee sees an immediate reward. However, this does mean that that the total equity issued to that employee actually peaks at the very end of the initial grant (when both equity grants are being vested simultaneously). Some companies, like Carta, employ the "boxcar" grant approach to solve the 4-year drop issue. The employee is still issued the refresh grant 2 or 3 years into the initial one, but the vesting is held until 12 months following the end of the initial grant period. Same equity, different vesting. ?????????????????? ???????????? ? Granted during a promotion (obviously) and generally try to match the midpoint from the new level to ensure the employee gets an equity bump up. ?????????????????????? ???????????? ? Granted to top performers when they hit major milestones. ?? ? Typically 20-30% of the initial grant size Obviously this can all be a major hassle and headache to track for your employee option pool - unless you happen to be on Carta Total Compensation where we help streamline the whole process for you ?? Give me a shout in the comments with specific refresh questions! #cartadata #equityrefresh #startups #founders #compensation ?

Founders - here's new data and best practices on issuing refresh equity to your startup employees. First big question: is this common? Turns out, yes! I was pleasantly surprised by this data. About 47% of employees at Carta startups receive some sort of refresh equity grant as they hit year 2 of their tenure. Nearly 70% of employees who make it to the end of their initial equity grant (typically 4 years) will receive a refresh grant. Let's do some quick breakdowns on common refresh grant types. ????????-?????????? ?????????????? ???????????? ? Issued as an employee hits a set length of time at a company, generally to help ensure retention beyond the period of the initial grant. ?? ? Typically after 2-3 years have elapsed from the initial grant date Traditionally, this tenure-based refresh is simply another 4-year grant without a cliff. So the employee sees an immediate reward. However, this does mean that that the total equity issued to that employee actually peaks at the very end of the initial grant (when both equity grants are being vested simultaneously). Some companies, like Carta, employ the "boxcar" grant approach to solve the 4-year drop issue. The employee is still issued the refresh grant 2 or 3 years into the initial one, but the vesting is held until 12 months following the end of the initial grant period. Same equity, different vesting. ?????????????????? ???????????? ? Granted during a promotion (obviously) and generally try to match the midpoint from the new level to ensure the employee gets an equity bump up. ?????????????????????? ???????????? ? Granted to top performers when they hit major milestones. ?? ? Typically 20-30% of the initial grant size Obviously this can all be a major hassle and headache to track for your employee option pool - unless you happen to be on Carta Total Compensation where we help streamline the whole process for you ?? Give me a shout in the comments with specific refresh questions! #cartadata #equityrefresh #startups #founders #compensation ?

I heard from a former employee of a VC backed company that was acquired, and they didn't get anything for the equity they owned. It's something I hear quite a bit: "I had equity, the company had an exit, but I didn't get anything, how is that possible?" First, early stage equity is a lottery ticket. It's nice to have a ticket, zero should be the expected outcome, but every once in a while you might get some $$ back. Here's how your equity could go to zero when there's an exit (oversimplified): -- Founders raise VC money, and when they raise VC money they negotiate terms -- One key term is called a liquidation preference -- This means that the return they get gets paid back before other shareholders, in particular before common shareholders (which is you). -- It can come in the form of a 1x, 2x, or whatever is negotiated (1x is common but in riskier deals the VCs want higher than 1). -- If the VC negotiates a 2x preference on their $20M investment, this means they are guaranteed to get $40M back before those behind them in line get anything. -- So say a company raises $20M, has a $40M exit with 2x liquidation preference (on the entire $20M) for the investors - those investors are going to essentially get everything! -- If it sells for $45M, the remaining $5M (over $40M) is split among the common shareholders -- Even founders, if they are only holding common shares, could be left without anything! -- You really don't stand a chance in that case. There are a TON of resources and blog posts about this from people that know more than I do, and it's important to educate yourself. Feel free to post any questions in the comments and I'll do my best to answer. Oh, and by the way, make it a point in the next week or two to ask this question of your current organization. Detailed comp / salary information for 1000s of companies (free resource): https://bit.ly/43YydWb ??

I heard from a former employee of a VC backed company that was acquired, and they didn't get anything for the equity they owned. It's something I hear quite a bit: "I had equity, the company had an exit, but I didn't get anything, how is that possible?" First, early stage equity is a lottery ticket. It's nice to have a ticket, zero should be the expected outcome, but every once in a while you might get some $$ back. Here's how your equity could go to zero when there's an exit (oversimplified): -- Founders raise VC money, and when they raise VC money they negotiate terms -- One key term is called a liquidation preference -- This means that the return they get gets paid back before other shareholders, in particular before common shareholders (which is you). -- It can come in the form of a 1x, 2x, or whatever is negotiated (1x is common but in riskier deals the VCs want higher than 1). -- If the VC negotiates a 2x preference on their $20M investment, this means they are guaranteed to get $40M back before those behind them in line get anything. -- So say a company raises $20M, has a $40M exit with 2x liquidation preference (on the entire $20M) for the investors - those investors are going to essentially get everything! -- If it sells for $45M, the remaining $5M (over $40M) is split among the common shareholders -- Even founders, if they are only holding common shares, could be left without anything! -- You really don't stand a chance in that case. There are a TON of resources and blog posts about this from people that know more than I do, and it's important to educate yourself. Feel free to post any questions in the comments and I'll do my best to answer. Oh, and by the way, make it a point in the next week or two to ask this question of your current organization. Detailed comp / salary information for 1000s of companies (free resource): https://bit.ly/43YydWb ??

I heard from a former employee of a VC backed company that was acquired, and they didn't get anything for the equity they owned. It's something I hear quite a bit: "I had equity, the company had an exit, but I didn't get anything, how is that possible?" First, early stage equity is a lottery ticket. It's nice to have a ticket, zero should be the expected outcome, but every once in a while you might get some $$ back. Here's how your equity could go to zero when there's an exit (oversimplified): -- Founders raise VC money, and when they raise VC money they negotiate terms -- One key term is called a liquidation preference -- This means that the return they get gets paid back before other shareholders, in particular before common shareholders (which is you). -- It can come in the form of a 1x, 2x, or whatever is negotiated (1x is common but in riskier deals the VCs want higher than 1). -- If the VC negotiates a 2x preference on their $20M investment, this means they are guaranteed to get $40M back before those behind them in line get anything. -- So say a company raises $20M, has a $40M exit with 2x liquidation preference (on the entire $20M) for the investors - those investors are going to essentially get everything! -- If it sells for $45M, the remaining $5M (over $40M) is split among the common shareholders -- Even founders, if they are only holding common shares, could be left without anything! -- You really don't stand a chance in that case. There are a TON of resources and blog posts about this from people that know more than I do, and it's important to educate yourself. Feel free to post any questions in the comments and I'll do my best to answer. Oh, and by the way, make it a point in the next week or two to ask this question of your current organization. Detailed comp / salary information for 1000s of companies (free resource): https://bit.ly/43YydWb ??

I heard from a former employee of a VC backed company that was acquired, and they didn't get anything for the equity they owned. It's something I hear quite a bit: "I had equity, the company had an exit, but I didn't get anything, how is that possible?" First, early stage equity is a lottery ticket. It's nice to have a ticket, zero should be the expected outcome, but every once in a while you might get some $$ back. Here's how your equity could go to zero when there's an exit (oversimplified): -- Founders raise VC money, and when they raise VC money they negotiate terms -- One key term is called a liquidation preference -- This means that the return they get gets paid back before other shareholders, in particular before common shareholders (which is you). -- It can come in the form of a 1x, 2x, or whatever is negotiated (1x is common but in riskier deals the VCs want higher than 1). -- If the VC negotiates a 2x preference on their $20M investment, this means they are guaranteed to get $40M back before those behind them in line get anything. -- So say a company raises $20M, has a $40M exit with 2x liquidation preference (on the entire $20M) for the investors - those investors are going to essentially get everything! -- If it sells for $45M, the remaining $5M (over $40M) is split among the common shareholders -- Even founders, if they are only holding common shares, could be left without anything! -- You really don't stand a chance in that case. There are a TON of resources and blog posts about this from people that know more than I do, and it's important to educate yourself. Feel free to post any questions in the comments and I'll do my best to answer. Oh, and by the way, make it a point in the next week or two to ask this question of your current organization. Detailed comp / salary information for 1000s of companies (free resource): https://bit.ly/43YydWb ??

Matt Levine is "The ?? of financial Newsletter" We (Cache) just got covered in his latest Money stuff newsletter. TLDR: If you held on to a stock that ?? , exchange funds help you diversify it without incurring huge taxes.

Curious timing on the memo Theo Wayt reports Amazon has distributed to its employees. The Information claims Wayt's story is an exclusive. The memo, Wayt reports, announces a new option for Amazon employees - take cash in lieu of stock options. No big deal, right? Well, yes and no. Wayt is correct Amazon, the stock, has plateaued, but analyst chatter over the last couple of trading days (chattering on CNBC shows) depict Amazon, the stock, as having turned a big corner with, perhaps, a lot of blue sky ahead. Might employees taking Amazon, the business, up on its offer end up leaving a lot more cash on the table than would be the case if they declined? Might Amazon be using this offer as a cost-reduction tool? #amazon #stockoptions #compensation https://lnkd.in/e3dQWWKU

Founders - here's new data and best practices on issuing refresh equity to your startup employees. First big question: is this common? Turns out, yes! I was pleasantly surprised by this data. About 47% of employees at Carta startups receive some sort of refresh equity grant as they hit year 2 of their tenure. Nearly 70% of employees who make it to the end of their initial equity grant (typically 4 years) will receive a refresh grant. Let's do some quick breakdowns on common refresh grant types. ????????-?????????? ?????????????? ???????????? ? Issued as an employee hits a set length of time at a company, generally to help ensure retention beyond the period of the initial grant. ?? ? Typically after 2-3 years have elapsed from the initial grant date Traditionally, this tenure-based refresh is simply another 4-year grant without a cliff. So the employee sees an immediate reward. However, this does mean that that the total equity issued to that employee actually peaks at the very end of the initial grant (when both equity grants are being vested simultaneously). Some companies, like Carta, employ the "boxcar" grant approach to solve the 4-year drop issue. The employee is still issued the refresh grant 2 or 3 years into the initial one, but the vesting is held until 12 months following the end of the initial grant period. Same equity, different vesting. ?????????????????? ???????????? ? Granted during a promotion (obviously) and generally try to match the midpoint from the new level to ensure the employee gets an equity bump up. ?????????????????????? ???????????? ? Granted to top performers when they hit major milestones. ?? ? Typically 20-30% of the initial grant size Obviously this can all be a major hassle and headache to track for your employee option pool - unless you happen to be on Carta Total Compensation where we help streamline the whole process for you ?? Give me a shout in the comments with specific refresh questions! #cartadata #equityrefresh #startups #founders #compensation ?

The era of massive equity growth is likely over for Big Tech. I find it hard to believe we will see the types of YOY growth many of these tech companies saw from 2014 to 2020. During that era, a job at Amazon et al came with a great RSU lottery ticket that easily would 2x almost every year for over 1/2 a decade. I suspect the move to a heavier cash comp structure is the realization of this. The way Amazon did their comp was unusual among all tech companies - heavily backloaded. In year 1 you got 5% of the RSUs, in year 2 you got 15%, and then 20% every 6-mo after year 2. Since tenure at Amazon was so short - many, many people left in year 1 and many in year 2, they'd leave with almost no RSUs, which is why Amazon would backload the vesting schedule. They only wanted "committed believers" who made it through the Amazon cultural gauntlet. #news #amazon #comp