Congrats to the founders for not taking much funding but for employees... this has to suck unless they get to sell their shares to Sequoia as well. (If they even got any options...) Maybe they don't compete for SV talent and most employees aren't used to even getting options as part of compensation.
Is there a specific reason a company would have IPO in mind but wouldn't say they are looking to do an IPO eventually? Is there a particular reason to say that?
Most people would prefer to be paid a good salary for doing good work, rather than uncertain lottery tickets and an obligation to understand how they work.
I think most companies would prefer to operate this way, too.
Sure but this company is headquartered and (mostly) founded in San Francisco. So... stock options from such a company would be standard as far as location go.
It’s a very powerful way to align incentives. It results in a major reduction in political arguments and a major increase in productivity. It’s a long-term incentive, so it causes employees to take good risks for the customer even if they won’t be apparent today.
Stock is literal ownership and it eases “ownership problems” proportionate to the meaningfulness of the expected value of the stock to the employeee-owner. It’s a powerful tool for increasing teamwork.
To be fair to them, they do a pretty decent profit share every year. It is compensation based, so it's nothing life-changing (only say, 5-10% of your total compensation) but it was nice!
First and only place I've ever participated in profit sharing.
I don't know what qualifies as "massive base salaries" but most folks in Support (the team I worked on) were on around $70k+ USD base compensation.
Profit sharing happened twice a year, but I don't remember it ever going above 10% of your six-monthly compensation rate (so effectively, you got 20% at most).
It's a remote first company so i don't think most people in the support team live in San Francisco.
I don't think 70k for a support position is that bad.
I've always thought profit sharing was more fair overall than shares/options for most employees. I'm really glad to hear that this happens at relatively larger companies too.
Strongly disagree for tech companies. At tech companies there is almost always significant lag between when value is created and when profits on that value are realized. The employees who worked for Amazon for the first 10 years generated incredible value but little profit. The value of equity takes into account all of the future profits of the company, not just what is left over in any particular year. The engineers who created Windows are still being compensated for it today if they held their shares, even if they stopped working for Microsoft 20 years ago. That is fairness. The company benefits from your work even after you leave, you benefit from the company's growth due to your work.
If it was hiring locally in San Fran, maybe,but it's a fully remote company with many devs in places where things like stock options sound are as distant dream as $100K salary being on the low end of things. Europe is full of successful companies,albeit not necessarily with such valuations, where any stock distribution is unheard of.
Well yes, if you remove the "unicorn" qualifier you can find lots of companies that don't give employees equity. In many European countries the tax treatment of stock-based compensation is quite unfavorable. Which is one of the reasons Europe doesn't have as many unicorns in the first place.
I think employee comp is pretty low on the list of contributing factors. It's more like because:
1) US is huge market. Any company starting there has a huge headstart compared to one in Netherlands or Poland.
2) European VC sector is almost 20 years behind to the one in the US.
3) American VCs are more like to throw more money at you in general. Many European startups don't even consider seeking capital in Europe, because why get 500K if you can get 2M across the pond for the same thing?
4) Europe doesn't have such a shortage of tech talent as the US, primarily because of the differences in educational systems/funding model, etc. So companies don't need to pay 300K/year to get someone who can do magic.
I'm in the UK where options as part of job compensation are relatively rare. I joined as a contractor originally so wouldn't have been entitled to them regardless, but also they're a US company and only recently (1 year ago) set up a UK entity (I don't have options in that either) so I wasn't surprised to not get any.
I don't fully understand options, admittedly. I joined because I love their product, and I needed a better paying job than the one I had originally. Plus, the culture was pretty amazing at the time I joined! I left because they didn't pay me enough in the end plus cultural issues :P so I've got a new job paying more with a culture I prefer.
Is there a specific reason a company would have IPO in mind but wouldn't say they are looking to do an IPO eventually? Is there a particular reason to say that?