Posted by Chris Zaharias, a resident of the Crescent Park neighborhood, on Oct 24, 2011 at 10:20 pm
At least a third of the 24 survey responses I've had so far are from people who read this PAOnline post, so perhaps you'll be interested with some brief highlights from the survey:
Several key takeaways:
-37.5% of startup employees don't know what % of equity they have. Imagine if 37.5% of stock market investors didn't know how many shares outstanding there were in the publicly-traded companies they were investing in...
-70.8% don't know what preference structure their startup has. That's like not knowing what your insurance deductible is.
-50% of startup employees don't know how their % equity compares to others in similar roles. Given that the same group expects to make $100K-$1M on equity while working at their startup, you'd think know the comps would be important in negotiating, right?
-45.8% don't know what a trigger is, and only one third have one. People - you may as well get down on your hands & knees and pray before signing your offer letter, 'cause that's how much control you'll have over the outcome if you don't understand triggers.
-62.5% of startup employees have had one or more 'exits'
Every week or two I talk with someone who works at a startup that's recently been acquired, and typically they're in various states of realizing that they had less equity than they thought, were going to make less than they thought, and had less control over the outcome than they thought. In many cases, Common share-holding employees find out in the M&A process what they *should* have known *before*, and yet that equity is one of the mean draws of working at startups.
Anyone have any personal anecdotes? Me; in 1995 when I joined Netscape I virtually didn't know the difference between an IPO and a PPO. At another job, I was the only one out of over 100 employees to ask & find out what the exact number of shares outstanding were. More recently, I was told the preferred shareholders had a 1X preference when they actually had significantly more than that.