Comment by echelon | Hacker News Reader

Comment by echelon | Hacker News Reader

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It's in Atlanta. There wasn't much else at the time, unless you counted Pindrop and AirWatch.

Nowadays there are plenty of alternatives in Atlanta and no excuse for subpar comp. There are giant regional Microsoft [1], Google [2], and Facebook [3] offices, and a ton of good startups that offer equity at ATDC [4] and beyond.

After it was obvious Mailchimp wasn't the best place to work, I tried to get my Atlanta mailchimp friends to join the then-pre-IPO unicorn I worked at. My equity is now worth eight figures (well, high seven, but I sold some along the way).

I worked with someone even luckier who wound up as high C-suite of Greenlight, pre-unicorn status. Again, by not drinking the kool aid and taking charge of their career.

Mailchimp underpaid these folks. And all for a shitty PHP stack that spams people. It's a job that's one notch above working at Home Depot or The Weather Channel.

Unless you're really happy with what you do (and even if you are), shop around. You owe it to yourself. Microsoft is literally a mile away and will pay so much more.

Mailchimp is going to be scraping the bottom of the barrel for talent after these offices come online. There are $300-400k jobs in the city if you look.

A good lesson for the Atlanta tech scene.

[1] https://www.fox5atlanta.com/news/microsoft-announces-major-e...

[2] https://www.bizjournals.com/atlanta/news/2021/03/23/google-c...

[3] https://atlanta.curbed.com/2020/3/19/21186363/facebook-atlan...

[4] https://atdc.org/

I think that's missing the point?

Coca Cola weren't and still aren't offering equity. Nobody describes that as "withholding equity".

Most places in the world, most jobs do not offer equity as part of compensation. And everybody understands that and chooses too apply or not based on what they are offering for compensation.

"pre-IPO unicorns" are very much the exception, very rarely actually pay off, and people who have the opportunity to shop around in that lottery should be grateful but aware that for every guy with an eight figure success story, they're are tens of thousands with some worthless option paperwork that never even made enough money to buy them a meal, let alone a house...

The Coca-Cola Company actually does offer RSUs to employees.

I would be surprised if any large publicly traded corporation doesn’t offer some form of equity compensation to basically all employees with a six figure or higher salary.

The only lesson here is it is another data point in being very skeptical of someone claiming “we’ll never sell” in a compensation negotiation — if the founder(s) never plan to raise outside money or sell the company there’s very little downside to establishing an employee stock pool and awarding options to folks that may never be exercised.

It is in fact not the practice of most publicly traded companies to award equity outside the tech company, even to highly-compensated employees.

I don’t get a desire for stock - why would I want all my eggs in one basket. If my savings and my income are from the same company, and it does well, that’s great and I make a fortune

But if it doesn’t do well, I lose my job and have nothing to fall back on.

Surely it’s better to have a diverse portfolio?

One benefit is that stock is typically awarded in the form of a multi-year grant, where the number of shares is priced at the time the grant starts. So if the original grant says you get $X worth of stock per year for the next 4 years, and then the stock price goes up 40% in Year 1, you’re now effectively getting $1.4X worth of stock per year for the remaining 3 years.

To illustrate this, imagine at offer time, you're given $150k + $80k worth of stock over 4 years. That works out to $170k per year. Nice, but not even doctor money. The stock is currently $100/share, so that's 800 shares. Now imagine the stock 4xes (not unusual in tech). By year 4, you're making $230k, without having had to beg for a raise or anything. This is how people end up with ludicrous total comp in tech.

But if the company goes down in value you’re screwed.

Wouldn’t it be more sensible to buy options in your competitor and hedge your bets?

The taxes on equity are substantially lower than on salary. Also equity compensation can be an order of magnitude higher than any market-based salary would ever be.

The taxes on RSUs at vesting are identical to taxes on other income.

RSUs are equity.

If you get stock options, there are (very limited) circumstances where those options have favorable taxation relative to income, but it’s a gamble, if you follow the strategies that might yield tax advantages.

It's fairly common for execs (both in the US and EU), it's just framed as LTIs via phantom shares. Comparable to RSUs in philosophy, outcomes, and vesting schedules. Source: we sell software to run these programs.

When I worked at Cisco years ago fresh out of college, they offered an Employee Stock Purchase Program -- you could put up to X$ towards purchasing Cisco stock over the quarter, and the stock was issued at the end of the quarter at min(start_price, end_price) * 0.85.

I haven't worked at another large corporation since then but I thought that was fairly generous and I still have quite a bit of CSCO from that program.

Almost 50% of the s&p 500 offer ESPP and ~40% of the Russel 3000 do[0].

Given that, 401k stock contributions, ESOP & RSU I think we are right at the line of “expecting” equity as part of your comp for most public companies. It’s close enough that we can presume it’s a standard benefit anyway.

[0] https://rewards.aon.com/en-us/insights/articles/2020/how-com...

I mean, they give out <$300mn a year vs. Market Cap of $240bn[0]. Assume most of that flows to the top and it's basically 0.

[0]https://www.macrotrends.net/stocks/charts/KO/cocacola/stock-...

Slight tangent, but RSU's are "sudo equity" IMO. I'm not sure how the tax liability of RSU's works in the US, but in the UK they are treated as "income" and taxed as income, not taxed as "capital" as most other types of equity are.

As a result, I loose just over 50% of my RSU value to income tax when they vest.

It is the same in the US.

pseudo.

"sudo" means "super-user do", is pronounced "soodoo"

https://en.wikipedia.org/wiki/Sudo

Yep, gotcha. I actually meant "pseudo", but I spend a lot of my day typing sudo so...

and whilst we're nitpicking, I also meant "lose" and not "loose" in the sentence below.

I thought it was pronounced pseudo, thinking it's a joke. You're not actually the super user, you're a "pseudo" super user.

Typically in the US public companies sell RSUs to employees with a discount to the market price, so there is compensation for income tax.

No. That is ESPP. RSUs are, indeed, just taxable income linked to share price.

The fact that RSUs are taxed as income in no way means “they aren’t equity”, though, so this whole thread is just filled with bizarre inaccuracies.

I don't disagree with this. They are indeed a form of equity.

My issue relates to how they're treated with respect to taxation by the various revenue authorities. In the UK, the tax paid on RSU's vesting is related to the personal income tax bracket the individual falls into. Which means for anyone in the UK's higher tax bracket, you end up losing ~50% of the amount vesting as tax.

If these behaved like other forms of equity, ordinary shares, preference shares for instance, they'd be taxed as capital, the gains of which would be taxed 'when you sell them' and at a much lower rate of tax - ~50% lower for a UK higher rate tax payer.

I'd rather a company just pay me a higher basic salary than award RSU's. At least then it's both pensionable and often used as a multiplier at bonus/salary raise calculation time.

Agreed! If you can guarantee that you're going to get the same total compensation, compensation-as-salary is always better than compensation-as-RSUs.

Of course there's upside to exposing yourself to your company's stock performance, but there's also downside risk, which people looking at equity compensation tend to downplay.

Turns out its worked out well for big tech employees, as big tech has gone up 10x over not very many years.

But that's not a reliable state of affairs into the indefinite future for big tech, and it was never reliable for smaller companies.

Nitpick: "If these behaved like other forms of equity" I don't know what "behaved like" means in this context. You start out without equity. Then your company pays you equity. That's always going to be taxed as income, because it's transparently just income, just paid in a different liquid market.

Presumably the advantage of equity is also the ability to exercise some control over the business (the degree to which depends on the shareholder's agreements)

> "If these behaved like other forms of equity" I don't know what "behaved like" means in this context.

By behaved like, I actually mean't "taxed like".

You nailed it in your post. The employee is taking on increased risk with RSU's. Risk that is not rewarded with a more favourable tax rate, as other forms of stock (baring the same risk) are.

Yet, you're taxed as if the risk were the same as your salary. Which it isn't. (you'll probably still get paid even if the share price goes down, particularly in large companies).

I'm always wary of companies that try to explain away the relatively low basic salary with "look how many RSU's you're getting instead". Especially so, when they've already been though their initial growth phase. Amazon (AWS) is particularly bad for this in the UK.

Yeah I'm wrong, I was thinking of ESPP, not RSUs.

I think the issue here though is the MC founders repeatedly used "we will never sell" as their justification for not offering equity.

People are allowed to change their minds. They did negotiate a pretty big employee compensation package as part of the deal. So I think OP was just trying to get a clickbait title and ride on the backs of those founders.

> People are allowed to change their minds.

But that doesn't make it ok when you specifically say you won't and use that as a justification for your actions many, many times in public. Title doesn't seem sensationalist at all.

> People are allowed to change their minds.

This is absolutely right, though sometimes it pisses people off when you do it.

I'm sure when they were coming up with that statement, they had never in their wildest dreams imagined that a 12 billion dollar offer would ever be on the table. There is not a single human being on earth who can turn down that kind of money.

> There is not a single human being on earth who can turn down that kind of money

Unfortunately for all of us there are a handful of people who, due to their own wealth, certainly can.

Sure it was the justification, but it makes zero sense as a justification. I’m not saying they should have offered equity, but I think logic is completely flawed and am surprised people bought into that logic.

No idea what KO’s employee comp plans look like, but since it’s public wouldn’t you rather get your comp in cash, and then decide whether to buy stock on the open market? Rather than the company make that decision for you?

> Most places in the world, most jobs do not offer equity as part of compensation.

That's not the issue. Most jobs at companies that matter do.

If you offered your friends an opportunity at your company, which based on your comment ostensibly would have paid them more and granted them equity, why did they stay at Mailchimp?

I don't think my friends thought my job was better, despite my regularly selling it. I failed to get them over for a happy hour or tech talk, which would have been a better sell than just talking about comp.

Mailchimp was also super "artsy" (they hire artists to do murals), and my friends talked about how cool the founders were. This played the biggest role, I think. They had a mythos.

Well it sounds like comp wasn't as important to your friends at that time. If that's changed following Mailchimp's acquisition, that's on them, not Mailchimp.

Agreed. While the comp situation at MailChimp was subpar due to no-equity component, it isn’t fair to blame them for the outcome of this story here.

There were no lies. The employees werent offered equity that ended up being worth nothing. They got job offers that stipulated X cash with no equity, and they willingly and knowingly accepted those offers, and they got compensated as promised. I fail to see how MailChimp is at fault here.

The fact that there is Microsoft/Google/etc. and tons of other companies in the vicinity that pay way more, and grandparent poster’s friends still were staying there despite the poster’s urging and advertising, tells more about those friends than Mailchimp.

I don't get it. One of the biggest memes around the startup scene is that equity is essentially a lottery ticket, and most lottery tickets don't win.

Taking a known cash component with no equity, especially since this is already known and in the open is well established as the safe, "smart" move.

Then you see this hullaballoo about not winning the lottery.

Well you’re not distinguishing between two situations:

1. Someone chooses not to have equity because they want more cash now, don’t want to risk part of their compensation on equity, etc.

2. The company says their equity will never be liquid so you definitely don’t want it. You accept a cash offer with profit sharing instead. Then they sell the shares for $12 billion leaving you unknown job security and low expected future compensation while they profit off their lies

> despite my regularly selling it.

This usually is a huge red flag. If one of my friends would try to regularly recruit me into their startup I would be very suspicious if the company was on solid ground or if my friend is just desperate and trying to get someone else into the bad deal they found themselves in so they don't have to deal with it alone.

I regularly wonder what definition of "friend" some people operate with. If I found myself in a losing position, I'd do my best to keep my friends out of it, not to drag them in.

Yeah, I've been at a few companies in the last few years, and would never try to recruit anyone unless I was sure that they'd enjoy the new company.

There are 'tiers' of people I would consider a 'friend', who'se pitches to me I would also be skeptical off, for suspicion they are self-interested.

Now, this tier of friend is very close to 'acquaintance' but I think there are plenty of people for whom the boundary of 'being a friend' includes these kinds of acquaintance.

What resources do you use to better understand the lay of the land in the Atlanta job market? I've been somewhat relying on levels.fyi and blind. I knew about companies like MS, VMware, square, etc. I thought the google office was just for networking stuff. I didn't even know FB had an office here.

I'm at that awkward level where I'm paid enough that I'm at the high end of 'normal' comp for local companies. I didn't think there were jobs at the $300k level for ICs in this city though. It appears the market has changed while I wasn't looking.

Whilst this is totally fair as an assessment, it would still be just as true if mailchimp founders had not sold at all.

The current new, at best, puts a fine point on this argument, but it doesn't change anything.

Wow 7-9 million dollars worth of unsellable Pokemon cards.

And to keep them you just have to keep working?

Maybe I should work as a unicorn as well!! Oh wait I'd rather rest on my actual cashm

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