<story><title>Golden Handcuffs</title><url>https://avc.com/2021/05/golden-handcuffs-2/</url></story><parent_chain><item><author>heavyset_go</author><text>&amp;gt; &lt;i&gt;Employees deserve high-quality equity on par with investors.&lt;/i&gt;&lt;p&gt;There is no reason that labor and time couldn&amp;#x27;t build equity, it&amp;#x27;s just that our current system favors those who use capital to build wealth over those who need to sell their time and labor to build wealth.&lt;p&gt;A common reason I hear for the fact that investors get more equity is because of the &amp;quot;risk&amp;quot; they take on, as if losing some money is the only risk on the table should a business go under. What is ignored, or outright dismissed, is the risk borne by those who invest their time and labor in a business for little to no equity.&lt;p&gt;When a business goes under, the employees have just lost their abilities to feed themselves, keep a roof over their heads, see doctors, buy medicine and provide for their families.&lt;p&gt;Workers sacrifice time that they can never get back working for one business when they could have spent that time working at another. While money invested can be earned back, employees can never earn their time back. Sometimes, those workers are paid below market rate while they help make a business successful, but don&amp;#x27;t see much or any equity as a result.&lt;p&gt;It seems to me that there is more risk on the shoulders of employees than those of investors, and they should be compensated accordingly.</text></item><item><author>choppaface</author><text>The C-level to IC comp ratio is still way too astronomical.  If a VC is telling you he feels there’s a better way to comp, he has a financial interest in ensuring your loss.&lt;p&gt;Do not support investor-focused comp models like backweighted vesting (Amazon) or outright fraud like a start-up giving you a stock offer with no percentage or no 409A.&lt;p&gt;Employees deserve high-quality equity on par with investors.  The OP’s suggestion is a major step back in one of the greediest economies in history. Complete non-starter.  Don’t let this guy live in your thoughts rent-free.</text></item></parent_chain><comment><author>nonameiguess</author><text>The more amusing (or disturbing thing) is that we have created an environment where, practically speaking, investors have less risk than everyone else. We were just hit with one of the largest global disasters of the past century last year and the immediate reaction was flood equity markets with $3 trillion to prop up financial markets. Owners of capital cannot lose.&lt;p&gt;Even before these last few years of craziness, what I will never be able to get out of my mind is the story of Frank McCourt. I&amp;#x27;m a lifelong Los Angeles Dodgers fan. He bought the team from Fox in 2004 and proceeded to treat a storied franchise in the nation&amp;#x27;s second largest city like it was his personal credit card. He didn&amp;#x27;t even use his own money to make the purchase. It was entirely with loans. He then proceeded to spend 8 years gradually bankrupting the organization until the league kicked him out and forced him to sell.&lt;p&gt;What was his loss? Nothing. The team sold for 8 times what he originally paid, not because of anything he had done, but just because television contracts for the entire league had become so much more lucrative over that time. The man put up $0 of his own money and made $2 billion by being one of the worst team owners of all time and making the organization he owned literally bankrupt.&lt;p&gt;I will never again in my life accept these econ theory gibberish about all the &amp;quot;risk&amp;quot; faced by business owners. If you own a salon or a restaurant or something, fine, I accept you might actually be out on the street. But if you&amp;#x27;re the right class of person that the banking system has accepted into the club, you can get infinite loans to buy whatever you want with no collateral, drive a business into the ground while spending the bulk of your time with hookers and blow, and make out with billions anyway.</text></comment>
<story><title>Golden Handcuffs</title><url>https://avc.com/2021/05/golden-handcuffs-2/</url></story><parent_chain><item><author>heavyset_go</author><text>&amp;gt; &lt;i&gt;Employees deserve high-quality equity on par with investors.&lt;/i&gt;&lt;p&gt;There is no reason that labor and time couldn&amp;#x27;t build equity, it&amp;#x27;s just that our current system favors those who use capital to build wealth over those who need to sell their time and labor to build wealth.&lt;p&gt;A common reason I hear for the fact that investors get more equity is because of the &amp;quot;risk&amp;quot; they take on, as if losing some money is the only risk on the table should a business go under. What is ignored, or outright dismissed, is the risk borne by those who invest their time and labor in a business for little to no equity.&lt;p&gt;When a business goes under, the employees have just lost their abilities to feed themselves, keep a roof over their heads, see doctors, buy medicine and provide for their families.&lt;p&gt;Workers sacrifice time that they can never get back working for one business when they could have spent that time working at another. While money invested can be earned back, employees can never earn their time back. Sometimes, those workers are paid below market rate while they help make a business successful, but don&amp;#x27;t see much or any equity as a result.&lt;p&gt;It seems to me that there is more risk on the shoulders of employees than those of investors, and they should be compensated accordingly.</text></item><item><author>choppaface</author><text>The C-level to IC comp ratio is still way too astronomical.  If a VC is telling you he feels there’s a better way to comp, he has a financial interest in ensuring your loss.&lt;p&gt;Do not support investor-focused comp models like backweighted vesting (Amazon) or outright fraud like a start-up giving you a stock offer with no percentage or no 409A.&lt;p&gt;Employees deserve high-quality equity on par with investors.  The OP’s suggestion is a major step back in one of the greediest economies in history. Complete non-starter.  Don’t let this guy live in your thoughts rent-free.</text></item></parent_chain><comment><author>daveidol</author><text>&amp;gt; &lt;i&gt;When a business goes under, the employees have just lost their abilities to feed themselves, keep a roof over their heads, see doctors, buy medicine and provide for their families.&lt;/i&gt;&lt;p&gt;Yes, but that&amp;#x27;s always the risk of working at any company (and it&amp;#x27;s a risk the investor may also have if the company goes under). You can typically just get a new job and get these things back.&lt;p&gt;I think an even more compelling argument here is the one of opportunity cost when working for a startup vs big FAANG company.&lt;p&gt;Early startup tech employees not only invest their time but also lose out on &lt;i&gt;real&lt;/i&gt; money they would have earned at another (bigger) company.</text></comment>