A startup is an idea, and then it’s an machine for making the idea and a machine for getting people to use the idea. A huge amount of what people mean by ‘a great entrepreneur’ comes in 2 and 3. Especially 3.
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The way you describe employees being treated and the cynicism about VC influence are outliers, not the norm. And it’s not like enterprises give equity or treat employees well on average.
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I view it as emergent corporate behaviors due to the structural position the startup finds itself inside of global capitalism. It's not that there are bad actors intentionally trying to exploit the employees. It's just a fxn of the market pressures facing a startup.
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Um... quite a few are definitely bad/unethical; here’s one:https://twitter.com/jordantsack/status/1050816351982342144?s=21 …
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Both the VC and the startup are incentivized to dole out as little equity as possible. Additionally, when you have middle managers who don't understand anything about option execution explaining comp to lower level employees, you get a large % of employees who are ignorant of it.
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That’s really not true. VCs force founders to allocate employee equity pools. (I know; it’s been a requirement of every term sheet I’ve gotten). And that pool gets allocated—there’s very little incentive not to allocate it, and it’s critical in recruiting employees.
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Allocation is critical in recruiting high level employees. But high level employees are not the majority of employees. All you have to do is a quick search on angelist and you will see that the vast majority of positions do not offer equity or option grants.
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The vast majority of positions are not high-skill, so this makes sense. But positions that get profit-sharing and high variable bonuses in enterprises get equity in startups. Given that that’s the primary choice, there’s no real disadvantage to the startup here.
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I'm attempting to dispel the myth that startup life is this grass is greener situation. For the vast majority of employees, it isn't. They miss out on key structural benefits of big company corporate development. If you're a high skill employee, it could be a great situation.
End of conversation
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