And as for other share transactions, you'll need to find a buyer. Most savvy investors aren't going to be willing to pay huge valuation premiums for common stock. And if they aren't going to pay a premium, then you really haven't gained anything by issuing common shares at a lower strike price.
So basically, common shares have lower strike prices because they are worth less.... It isn't some magic trick that automatically benefits employees.
Their latest quarter they did $73m in sales and lost $50m, with rapidly slowing growth. Even worse, they're bleeding significantly on an operating basis, implying the business may never be capable of making money. They might be lucky if they have four or five quarters of cash left before disaster hits. The near future returns for employees holding stock, is not likely to be pretty.
Even the primary founder didn't get very rich in SV terms, after he had to be diluted down to a sliver of ownership to keep the lights on.
If the company doesn't reach the IPO and get acquired, well check what liquidation preference means. Check this post to understand better how stocks in a startup works: http://heidiroizen.tumblr.com/post/118473647305/how-to-build... (it is focused on founders, but employee get the same treatment).
() Not a founder or executive/director, who'll get up to 5000x that.
I'd be interested a breakdown based on "joined at funding stage X". From what I understand, if you joined Square in 2011, when it was already super hot, you're doing pretty well and could sell your stock on the secondary markets for a handsome windfall even well before this IPO.
Do you have any sense of what the equity numbers would have been like at year 0, 1, 2, 3... based on your general knowledge of startups (not necessarily Square)?
$130K plus 15% bonus plus $70K/yr in stock for a senior engineer isn't that out of the ordinary at big public companies. Total comp ends up around $220k. I don't see too many startups paying over $150k, so the average employee at an exceptional startup like Square makes around the same if not less than at a big company, even with a decent payout.
~$300K is great cash, but it's peanuts relative to $6B. Everyone worked hard, but only the founders and the very top tier actually get rich. The rest get one-thousandth or many-thousandths of what founders get.
People are shitty negotiators, and everyone just accepts that they should get a tiny little slice of the pie. I believe in part it's because they think everyone has a small slice. They don't realize how much the founders kept for themselves (they think it mostly all went to the big VCs), and how huge the drop was from founders to engineer #1, and from #5 to #6, etc.
Everyone just accepts that the leadership (and ONLY the leadership) should become ultra-rich at the end, while the rest move on to the next venture and hope to do a bit better next time.
"But I took the risk!" says the founder. Sure, buddy, you took the risk and everyone else just enjoyed a walk in the park.
You'd expect that for taking on the risk (relatively low as it may be for a unicorn) you'd do better than the extremely low-risk public stock packages being offered by BigCos.
I also know some people at other BigCos getting similar levels (to be clear: $300-400k/yr total comp of cash + public stock) so it's not just a GOOG/FB thing.