Windsurf employee #2: I was given a payout of only 1% what my shares where worth
415 comments
·July 24, 2025stan_kirdey
fusslo
my equity from 2years pre-acquisition: ~$2800. Then the CEO gave out bonuses when everyone threatened to quit. Then after his 3 month vacation to Italy, he came back driving his new Ferrari.
My equity from 4 years ( employee ~60, grew to over 500 ): worthless. No one is able to exercise any options. They also readjusted when the valuation came below the total raised, making the value of my vested shares ~$13k ( down from ~$200,000 ) . They 'made us whole' by giving more shares with a new 4 year vesting schedule.
Startups have found ways to fuck everyone but the investors with equity. It's confederate dollars; funny money. Maybe some people get great deals, I don't know. From my limited experience at very successful startups, the only people who made real money were those able to parley huge bonuses or base salaries.
cornholio
The basic idea is that you either have stock, preferably founder levels from 10% up (which is itself a lottery ticket), or you hold retiree bingo cards. The retirement home provides the cards for your entertainment, but the real owners of the establishment, the founders and early investors, know the only way you can earn the big prize is at their expense, so they have a vested interest to see you fail - and they are the ones printing the bingo cards and setting the rules.
supportengineer
The fun part comes when you put in 20 years doing this, and your dream is to buy a nice house, and you finally get your seven-figure payout, and.... it's not enough to buy a house. Because now a house is 3 million dollars.
kstrauser
What kind of house had you been dreaming of? I live in SF, and even here $3M goes an awfully freaking long way.
dehrmann
At some point, aren't the C Suite and directors failing their fiduciary responsibility? I know they have broad freedoms, but when you're reducing an a minority shareholder's equity by 95%, it's well past "fiduciary responsibility" and looking like fraud.
fusslo
I am convinced every executive and wanna-be executive is on the 'inside joke' of funneling money out of the company into their pockets.
I am also convinced that investors believe it's the C Suite's responsibility to tear away any equity from employees to leave the largest pot for investors.
ojbyrne
Of course. So if you’re the employee, you’re going to sue? If so you’re paying for your lawyer, and the company is paying for theirs. Guess who goes broke first.
lmeyerov
Sorry to hear that =/
Work for good people with a history of moral dealing. A family member just had a life-changing payout because leadership was generous. A friend walked away from a company pre-pivot without equity for what became one of the decade's biggest acquisitions.
This stuff is lottery tickets, but real ones. You need to be smart about who you make your limited bets on.
And agreed, big cautionary note here shows that Windsurf having "founder-friendly" investors does NOT mean employee-friendly ones.
fermentation
I often see job postings here looking for "top <1% engineer talent" paying $100k and <1% equity and I wonder who is actually applying.
ponector
No one will say: we are looking for cheap mediocre talent with no intention to grow, just to process assigned Jira tickets. Even if that is the actual truth in many cases.
ageyfman
they have to say this to safe face. people who're interviewing most of the time can't even tell if it's a 50% engineer
blittle
Not a 1% engineer
Hikikomori
Paid more taxes on RSUs than I'm going to get post IPO. Company took investments on insane COVID valuation and then needed more money posts COVID which tanked it.
roncesvalles
I know this is HN but imo it's rarely ever a good deal to work at startups as an employee instead of a cofounder (with actual cofounder equity not just the title i.e. within the same order of magnitude as the largest-shareholding cofounder), over a bigger established company.
The only good reasons to do so are if you want to learn or make contacts so that you can found your own startup later.
In my pensive moments, one of the things about humans that makes me go "god damn" is how little money it takes for insanely talented people to just come and work for you.
marssaxman
The other good reason is that you might enjoy the experience more than you would enjoy the stultifying, oppressive, slow-moving environment of a big corporation. That's why I keep doing it: I'm not expecting to get rich, I'm just trying to live a good life, and it's proven to be much easier for me to do that when I work for a startup.
I value startup equity at ~$0, but if the salary is enough to live comfortably, that's fine.
DSingularity
I don’t think that’s entirely correct.
You need to work with good people. There is no substitute for ethics.
Also you need not go for roles where they offer .3 % and make a big deal about it. Don’t take less than 1% minimum and as soon as two years pass by and you have carried your weight start looking for a new job. If they value you they will bump you up. It they don’t you will bump yourself up by going for a new job. And don’t be afraid to go for competitors if you believe in the value of the space.
freeone3000
The startup I work for keeps my employment because they keep bidding competitively with the investment banks I would otherwise work for.
They have the cash, if you have the leverage. Use it.
ivape
Then after his 3 month vacation to Italy, he came back driving his new Ferrari.
Hey, at least he’s taking his LARPing as a douchebag ceo seriously. Easy vip invite for DND nights.
andy99
Yes - equity should be an incentive to contribute the the company's success, and partial compensation for the risk of going to a startup. One should value it at precisely $0 in terms of life planning.
This becomes truer and truer the more of an employee and the less agency over the company's choices you have, but generally if you're not a co-founder (founding engineer doesn't count) equity traded off against salary is someone scamming you.
neilv
> equity should be an incentive [...] and partial compensation for [...] One should value it at precisely $0 in terms of life planning.*
Not very good incentive or compensation, if you have to value it at $0.
baq
Still better than a lottery ticket.
parpfish
> equity should be an incentive to contribute the the company's success
the much bigger motivation is "keep the company afloat so i can keep drawing my salary", so just boring old non-equity paychecks provide plenty of motivation.
if you're an employee that thinks your contributions are so great that you are single-handedly juicing the stock price or valuation, you're probably wrong but if not... you should probably take those skills and found your own startup.
tlogan
This is a brilliant move by Google: it makes joining any AI startup even less appealing.
Stock options were always a lottery. But this takes the shenanigans to a whole new level.
toomuchtodo
Additional resource:
Ask HN: How to negotiate stock options? - https://news.ycombinator.com/item?id=28401655 - September 2021
djoldman
Indeed. Likewise with non-guaranteed bonuses (gotta love the "plus a discretionary bonus!" commentary during offer discussions).
It's always worth offering to take equity as long as they agree in writing to not ever dilute your shares and vest them immediately. However, it's unlikely that any company will agree.
It's best to imagine compensation as exactly one's salary. Then (virtually) all surprises are good.
tyre
> It's always worth offering to take equity as long as they agree in writing to not ever dilute your shares and vest them immediately. However, it's unlikely that any company will agree.
Well, yes, because that’s insane.
djoldman
I think it makes perfect sense. It's a guaranteed incentive for a potential employee to increase the value of the company and act in its best interest.
Absent those guarantees, it's smoke, nothing, kaput: 1.5% equity or whatever % can become approximately 0% and there's nothing the employee can do about it.
They could structure the agreement in other ways to incentivize the potential employee: if additional shares are issued, pay a dividend to the employee.
baq
And yet they agree to pay salary immediately.
azinman2
I don’t see how a company could promise this. Everyone gets diluted for every funding round, for example.
munksbeer
I don't know how this works, but my question is, on a funding round, couldn't the C suite just allocate themselves additional equity in proportion so that their total value remains the same?
djoldman
They can easily, they just don't.
makk
Yes, maximize cash and use it to acquire a diversified portfolio.
bravesoul2
If you are gonna do that just work for a FAANG really right?
gsibble
I've tried to ask dozens of companies that wanted to hire me just for how many shares were outstanding and/or authorized. They almost always refused to share.
You can almost never get any info on equity until it's too late and you realize it's worth nothing.
drmath
> I've tried to ask dozens of companies that wanted to hire me just for how many shares were outstanding and/or authorized.
"Wanted to hire me" as in they made an offer, or an earlier step? At offer stage, I've never had a company refuse to answer these questions. I don't have "dozens of companies" worth of experience though, maybe one dozen if that.
busterarm
Every time I hear this I think experiences and expectations are vastly different between SV and the rest of the country. 30ish years of working in New York and I haven't encountered a single company that isn't 100% opaque about their equity to employees until time of exit/IPO. And I keep a large network.
That said, everyone here treats equity of non-public companies as if it's toilet paper. Some of my coworkers got very lucky and very rich when our company went public, but that was also a long time ago now.
georgemcbay
> I've tried to ask dozens of companies that wanted to hire me just for how many shares were outstanding and/or authorized.
Those questions are certainly worth asking but employees should also keep in mind that even if they do share that information your equity can still later be diluted away to worthlessness.
mgfist
There's other gotchas too. Ratchets, liquidation preferences, restructurings (recapitalizations) etc etc
There's many opportunities for VCs and founders to screw you over. And that's assuming things go well enough for that to be an option lol
KaiserPro
I was aquihired by a FAANG.
The headline "startup bought for x million" is almost always a lie, either direct or by omission.
First, when a startup is bought, its generally not bought at the headline rate. So if you see a "bought for $45m" that doesn't mean People who own shares all got a % of 45m.
That number is normally bullshit, but also a "total package" which include share offers for joining the new company.
This means you will get say 1% of the headline buyout now, and then golden handcuffs to get the rest.
Also, it makes no sense to give employees that much money upfront. After all, if I'd been given $1m in one go, I wouldn't be fucking working now.
kentonv
Yeah, I used to hear all the time that "a startup is worth $1 million per engineer in a pure acquihire", but learned the hard way this is a myth.
When we were talking to various companies about acquiring Sandstorm.io (my startup) in 2017, one of the companies told me, essentially: "We aren't interested in your IP, only the employees. We'll give you a set of job offers for them. We will then sum up the salary and equity grants from these offers, and call that the acquisition price. If you want to take some of that money and redirect it to your investors instead, that is up to you."
I was a bit taken aback. Obviously I wasn't about to take a cut of my employees' future comp and give it to investors.
Instead we ended up going to Cloudflare, but not as an acquisition. Cloudflare told us very honestly that they couldn't justify buying the IP, but they would be willing to acquire the company for $0 to wind it down for us. I decided to just take the job offers but keep the company independent as an open source side project, thinking maybe I'd revive it eventually. Turned out to be a mistake as some guy who was mad we didn't hire him sued Sandstorm six months later, and that was then my problem instead of Cloudflare's, oops. Should have sold for $0.
(Once it became clear to the plaintiff('s lawyer) that we weren't going to settle, they stopped pushing the case forward, but didn't drop it, so it just sat in limbo for 5 years before the judge finally threw it out it 2022. Meanwhile I couldn't dissolve the company and had to keep filing taxes for it. Ugh... lessons learned.)
igor47
That sucks. FWIW I had a sandstorm instance back in the day, and I think it was an idea ahead of it's time. The stuff you were trying to do I think got easier as containers became more widely adopted, and as enshittification has made the case for self-hosting more obvious. So... Thanks for trying!
lvl155
So many bitter aholes in this business.
swyx
sorry that happened to you. what taxes do you have to pay on a company making 0? just delaware franchise tax?
kentonv
That and $800 CA franchise tax. But the money wasn't really significant. It was just annoying to have to prepare the returns every year.
kingforaday
Whoa, bummer but interesting. It can be hard to let go. Thanks for sharing.
caseysoftware
Some of the mechanics on this one..
Generally, when a startup is acquired, people get paid in a number of tranches:
- First, debts get cleared in order according to debt types. This could be cloud providers, lawyers, employees who deferred salary, etc, etc. If there's still cash left..
- Then preferred (generally earliest) investors get paid back. Some investors will have liquidation preferences where they get 2-5X their initial investment. If there's still cash left..
- Then execs get their preferred shares cashed out. Depending on how many rounds they'd raised, they may own less than you think. If there's still cash left..
- Finally, general stockholders get paid. This is where most employees may actually get cash.
To further complicate things, some people could be in multiple places here. A founding exec may have lent the company money to get started, have preferred shares, and have common shares so they could get paid out in early levels but not at the end.
*There are WAY MORE nuances in this but the point is: You don't just say "total price divided by shares times number of shares = the cash you get"
sokoloff
$1M in one shot leaves you with around $600K after taxes in most states. That’s enough to pay you around $24-30k/yr.
Unless you already had several other million saved already, I bet you’d be working again.
para_parolu
$25k/yr can be decent living in some places.
azinman2
In no place where you’re getting a 1M pretax offer.
chollida1
Sure but not in North America, where i assume most readers of this site are from.
jahewson
Not in any decent places.
bagels
1m isn't enough to really retire in in silicon valley
loire280
Sure, but if you're 10+ years into your career and have been financially conservative (i.e. have a positive net worth), a lump sum of $1m could be enough to retire to a lower-cost location.
null
andrewmcwatters
Hell, roughly $600,000-800,000 is enough to lean FIRE, the last time I checked.
KaiserPro
probably right, but I'm not in SV. So its enough to pay off the mortgage and provide enough monthly income to not care what job I'm doing
baq
Don’t retire in Silicon Valley then
ohdeargodno
Take a million, go live literally anywhere that isn't Silicon Valley, remote work for a company that interests you, or your own project.
There's very few currencies in the world in which 1M isn't enough to retire. USD isn't one of them.
occz
>There's very few currencies in the world in which 1M isn't enough to retire. USD isn't one of them.
Unless you're planning on retiring as cheaply as humanly possible, 1M is not enough to retire for the large majority of the currencies in the world.
_DeadFred_
When I was a kid (early 80s) the receptionist at my mom's company drove a Porsche and didn't need to work anymore because of a past company hitting it big. This woman wasn't a financial genius and didn't hardball negotiate with the previous company for her receptionist job, it was just Silicon Valley didn't used to be so gross and actually paid out to people.
null
BhavdeepSethi
I went through an acquisition very early in my career, and for the longest time I believed it was the best outcome for everyone. Over time, I realized that my naive belief was purely due to the founders going way above and beyond to make sure each and every employee (including folks doing just data entry) got a good outcome (accelerated vesting, significant equity in new company, top of the band pay, etc.). It made me realize that if you ever want to work at a start up, bet on the founder, rather the company. Even with mediocre outcomes, you'll end up ahead in the long run compared to folks who're just looking out for themselves.
rhyperior
They must have had a strong position from which to negotiate those favorable terms, in addition to the experience to know to do so, and the integrity to actually do it. The type of people you should follow.
BhavdeepSethi
I don't believe they did. This acquisition was by Flipkart, the poster child startup in India, who had a very high bar for hiring. They wanted to interview the non-founders to make sure they met the standard. The founders said you get all or you get none. To be fair, it was a small team of 6-8 employees, so I doubt Flipkart cared. :)
hiAndrewQuinn
Wait, what are the employee protections like in India that such a deal is enforceable? Why couldn't Flipkart just take them and then fire them a few weeks/months later?
neilv
> due to the founders going way above and beyond to make sure each and every employee (including folks doing just data entry) got a good outcome (accelerated vesting, significant equity in new company, top of the band pay, etc.)
Commendable of them. That should be normal decency by leaders. I wonder how common it is.
highfrequency
Directly contradicts Garry Tan's post saying that all forty founding engineers got seven figure payouts from the Google acquisition: https://x.com/garrytan/status/1947072583092052406
Even if the OP considers the full headline number of $2.4b to be the value of the company, and taking his "1% of fair" number as truth, seven figure payouts would imply all 40 founding engineers had >4% equity which is nonsensical.
karmasimida
Not contracting.
Let’s do a simple math. Assume this employee gets 5% of the company (which is super unlikely, but let’s go with it), that is 150m for what could be worth if OpenAI deal went through. 1% of that would be 1.5m.
That is still 7 figure. But this person spent 3 years in a startup, which turned out to be a unicorn and super highly successful, and he bagged a FAANG salary man pay at the end of the deal.
Basically this just proved startup model for normies are completely broken, if your goal is money, don’t join a startup
xvector
It's bizarre to see tech bros, YC, and megacorporations kill the startup talent pipeline that they rely on so much.
Who is gonna want to work at a startup in a non-founder role after this and Scale AI?
This continuing degradation of, and flagrant disregard for social norms is destructive for society.
karmasimida
I think we would be back to historical norm, that startup will start falling behind in attracting talents.
The founders of Windsurf had already gotten their bags, they won't have to work a single day later in their life if they don't want to. The consequences will be bared by the ecosystem.
For the time being I think they are going to be OK, the labor market is employer friendly.
baq
the market doing what the market does: price discovery. yes, this is a cynical take, but so is the money in this market.
notimetorelax
Young engineers who don’t know how this works yet.
lotsofpulp
This is not a new dynamic. This situation has existed for 10+ years, you can even read the same comments in the same HN threads from 10 years ago.
Equity is only to be valued at greater than $0 if the business is publicly traded.
b_be_building
No, what Garry is saying DIRECTLY correlates with the outlined opportunity.
For his assertion to be right, 40 people need to get paid out at least 1 million. That's 1.67% of the company or 0.04% evenly. Its not hard for me to image that up to 10% of this cap table was distributed among the 40 people.
recursivecaveat
Why would you believe extremely motivated hearsay from Garry Tan? The man is already very untrustworthy before we get into the "I heard" and conflict of interest.
WatchDog
Garry Tan allegedly replied to this tweet, but later deleted it
reducesuffering
Hilarious that the best case positive spin highlighted is 40 people cleared at least $1m, so $40m out of $2.4 billion and $240m funding. He's praising "look 2% of the payout went to people in the company".
Nevermind that $1m over ~4 years is approximately the same as the differential other public tech co's pay. ($150k + equity at YC co, $350k TC at G/Amzn/FB/Uber/etc.) So when they tell everyone they should work at YC co's, they're saying they're proud when in the absolute best case scenario you make just as much as at the public co's they rail against working for.
If you want to come across as genuine, directly say how much % of the payout went to employees that weren't the founders. They won't, because it's likely 3%, which correctly sounds horrible
umeshunni
> the absolute best case scenario you make just as much as at the public co's they rail against working for
that matches my experience working at 2 non-public venture funded companies.
ohdeargodno
Garry Tan's job is bullshitting. Lying isn't very far from it, and he even covers his ass with "I heard".
Who did you hear it from Garry, the founder that made out with all the money ? Or the other VC that made a few hundred million from the sale and stands to gain even more if the lie of "founding engineers get rewarded" is perpetuated?
michaelt
> 40 founding engineers
Forty founding engineers? Seriously?
They must have a very expansive definition of founder.
bloodyplonker22
"Founder" and "founding engineer" are two entirely different things. One of those phrases is a glorified substitute for "early engineer". Kind of like when you buy a "founders edition" Nvidia GPU. You are certainly not a founder of anything.
chambers
https://x.com/ahmaurya/status/1948491614160122308 Garry Tan posted "sounds like a tweet that cost $20M" which he later deleted.
Smells like a strong bias against employees in favor of management and founders.
barrkel
Tan is someone who can't handle disagreement or criticism. It likely leads him to live in an information bubble.
Lionga
That is YCombinator & Garry Tan for you. Disrupting the screwing over employees (and founders if they can but its just much harder) as a sport.
JumpCrisscross
Could you expand what's going on there?
chambers
My read was that Garry Tan implied "you sacrificed a lot of money in order to grandstand". I felt that was a knee-jerk dismissal of a founding employee's legitimate concern.
WatchDog
I'm not sure, but my interpretation is that Gary is implying that Prem Qu Nair received $20 million from the deal, and that by posting this tweet, he has violated the terms of the agreement, which generally have non disparagement clauses, and Gary will see to it that he won't receive anything.
ls-a
Don't upset pac
gsibble
That was really shady.
CPLX
When you were younger and learned about history did you form a mental image of what kind of people the famous financiers, capitalists, and robber barons were?
These are those people. Oil and railroads were high technology too.
They want you to think they’re Lazlo Hollyfield, but they’re Daniel Plainview.
czbond
I believe Tan's words were mis-represented. I believe he is saying that it cost Prim $20M and he then wrote that post. I don't think he is insinuating anything else.
Invictus0
He's misrepresenting his own words when he writes a vague tweet like that. Tan is a serial shitposter and is known for blocking thousands of people that even slightly disagree with him.
crazygringo
This is one of the most confusing things I've ever read.
Cognition acquired Windsurf. So how has he "joined Cognition"?
"I had a place at Google DeepMind as part of the deal." What does that mean? DeepMind doesn't have anything to do with Cognition or Windsurf, right?
Why would an offer at Google require forfeiting vested shares in Windsurf? Is that Windsurf policy or Cognition policy or Google policy?
"I was ultimately given a payout of only 1% of what my shares would have been worth at the time of the deal." So he took the payout and forfeited the shares? "In going to Cognition, I’ve chosen a different direction." Or not, he rejected the payout and kept the shares? I can't even tell what's hypothetical versus what actually happened.
I literally don't understand a single thing about this tweet. I've read all the comments here so far and my confusion seems to be shared. Can anyone who has context please help explain what's actually going on? And particularly how any company could force you to forfeit vested shares in a company?
shawabawa3
You have to know some of the background
Google poached windsurf employees and licensed their tech, paying out billions to upper management but apparently offering a fraction of the value of shares
This employee chose to stick with windsurf instead of moving to Google
Windsurf was then acquired by cognition for an unspecified but probably quite low amount
So this employee is now at cognition
crazygringo
Thank you, that helps!
But so did he keep the shares or take the payout? Is the 1% payout an accurate reflection of Windsurf's value after having lost so many valuable employees? And why didn't he take the Google job? Was the 1% contingent on taking the Google job? But how could it be, since Google doesn't own Windsurf/Cognition? But if it did somehow, did it have a higher paycheck to compensate? Or was it contingent on staying at Windsurf/Cognition?
This thing needs an in-depth blog post analysis. The tweet by itself isn't providing even close to the information necessary to understand what's actually going on.
cyanydeez
the board strokes is: Google should have bought the company. They didnt. They basically bought the employees. They call it a "acquihire". Without these employees, the real value of the company fell, allowing cognition to buy the company. Had the employee taken employement with Google, it's likely their shares in windsurf would have been voided, or otherwise not vested. Who knows, these private corporations are often doing a bunch of shady things to dilute share ownership.
In a private company, there's no "real" public valuation of a share, so an employee who has some kind of stake really only has two real options to dump their shares, either through a company buying it (cognition) or the company going public. Without either of these events, it's really difficult, even if there's no contract about it, to sell the shares.
So the value of the company took a nose dive in the private market through the hiring of windsurfs principals, and the employee either kept his shares and went with the company, or took a job with google. So the two values are:
1. Stay with Cognition and retain the private market shares of Windsurf and salary
2. Leave cognition, forfeit(?) the shares, get whatever salary google offered
So those are the payouts being compared.
bryanrasmussen
Writing for LinkedIn metrics means never having to make an understandable statement that someone could take exception to.
mawadev
I'm waking up personally to the unethical side of Software development as well. You can either do little and get paid pocket change or you can provide a ton of value for pocket change next to some promises lulling you in, where the value of your work exponentially increases, but you will see nothing of it and whatever you do: you are still a replaceable cell in excel to them and there will be ways where you get dragged over the table. If the money isn't directly in your bank account, it might as well not exist or was a lie. Sooner or later you are the horse behind the barn anyway.
bjackman
As an engineer if you are gonna be a rank and file employee you need to do it for your own reasons. I think the main good reasons to do it are:
1. It's relatively chill and you value the stability. You deliver competence from 9-5 then go home to your family or some other thing that's more important to you than work.
2. You really enjoy the pure engineering side and find meaning in the technical artifact you're creating. Probably it's open source and has some value/community outside of your employer.
3. You're gaining valuable experience that you can later leverage into something else. Probably you're in the first 5 years of your career.
If the main thing driving you is growing a business, and you don't directly own (not options or RSUs or whatever, actual real equity) a significant slice of it, you are very likely misdirecting your energy.
(I guess there are also cases where the mission of your organisation is not profit and you care about that. I don't know any engineers in this position but I might be quite happy working in the public sector).
pembrook
Okay, but how much do you think you deserve as an employee who has invested none of your money in the company and decided to join on a 6-figure salary only after the company is already through YC, is funded by top investors and looks attractive?
If you’re instantly replaceable by any dime-a-dozen engineer than can install packages on npm and use react components and add a thumbs up to slack messages…to not get accidentally rich because you just took a high paid tech job a year ago…seems fair?
I just fail to see why everyone in the comments here believes they deserve to be compensated at the level of the top 0.01% of all people without starting their own business.
Start your own company if you think it’s so easy to be a founder instead of an employee. Nobody is stopping you.
I also think it’s some crazy cognitive dissonance to assume you’d be able to walk right into a FAANG sr. eng gig instead. As if most startup employees haven’t tried before joining [insert startup].
saagarjha
Do you think founders deserve 100x more money because six weeks ago they sat in a few meetings with Y Combinator that went well?
bravesoul2
Take the moralising out it.
If I join a lottery syndicate and it wins 100m but I only put in 1% of the syndicate amount say $100 do I not deserve $1m because I'm just a "whatever I am just"???
baq
Being a founder is a job as much as being an engineer is and being an investor is - especially if you get investors early and don’t take debt to capitalize the company (which you shouldn’t if you like your life.) If you did take debt as a founder, don’t brag about your bad decisions as if they make you special.
mawadev
Thank you for your comment, it proves my point!
xvector
> I just fail to see why everyone in the comments here believes they deserve to be compensated at the level of the top 0.01% of all people without starting their own business.
No one is saying this.
There is no question that the Windsurf and Scale AI ploys effectively left employees with ownership in the company high and dry.
> but how much do you think you deserve as an employee
You deserve what you are promised. If a founder says you will get rich if the company goes to the moon, and they instead do some strange maneuver so only they cash out, the founder is a scumbag.
You are acting like early startup employees risk nothing working for a startup, and invest nothing of their own. Again, that is a weird assumption.
istjohn
To state the obvious, software developers are doing just fine.
Muromec
You do sometimes get the 0.31% of a relatively big number under a promise you tag along for two years and some more pocket change on top. Still better than just pocket change zo
GuinansEyebrows
how much change fits in your pockets?
siliconc0w
These stories really kill the golden goose because it means a lot of talent just won't work at a startup.
YC isn't particularly great here either, they are pro founder but not pro startup employee. Most YC companies offer pretty paltry equity to even the first few hires - and that is even assuming you aren't going to get screwed down the line.
bwfan123
The risk-reward equation for startups vs boring-big-tech has turned completely upside-down. Back in the day, startups were the only lottery ticket to riches, not to mention do interesting work. But now, the tables are turned. For experienced engineers big-tech comps are attractive enough to put up with the office politics, and if you lucky do some interesting work.
Yeul
The people who go to work for start-ups are usually young. There comes a certain time in life when you have a family that relies on you and you get old enough that you start to make plans for retirement.
That's when you get a real job at a very boring stable company and stop being delusional.
pimeys
Well, that depends. I'm working in a startup and I'm in my 40's. Although it's a bit different than a typical startup, because it pays quite well compared to 95% of other offers in EU to live a very comfortable life in a not too expensive European city.
Yeah, the hours can be crazy but not too often. Yes, you're expected to give your best all the time but that's part of the fun. And the best part is the challenges are always interesting.
Maybe it makes it easier for me that I'm not at all interested in normal family life and never want to have kids.
dom96
Not everyone decides to have a family. For some getting that boring and stable job is the only way to get to take some risks later in life.
lemax
This is a fair cautionary tale but it's worth understanding the specifics of the situation – Windsurf maintained a relatively easy to replicate product with no moat, and employed a bunch of attractive talent. The company got gutted of these employees and lost its valuation because no suitable buyer thought their IP was exceptionally valuable on its own. Just because this was the outcome for Windsurf does not mean there are no longer opportunities to join startups building sticky customer bases with valuable IP and walk away wealthier when they exit – yes there is a liquidity problem[1] but let'a be honest with ourselves about the specifics of the case for Windsurf.
[1] https://techcrunch.com/2024/01/11/us-startups-have-a-liquidi...
Voloskaya
I don’t understand why the specifics of the situation matters here. We know the company got acquihired for $2.4B, the problem is, why did all of it go to investors and founders and nothing for employees?
I’m not sure customer churn rate has any impact on liquidation preference.
gsibble
Actually, their recent acquirer is now raising at a $10B valuation from Founder's Fund.
They had plenty of value left even after getting gutted.
Oras
The comments here taught me about startup acquisitions more than any article/video I have watched in the last 5 years.
Deep appreciation to everyone who shared their story, thank you!
CalChris
This was just a preference cliff, plain+simple. Windsurf got paid maybe $3B for itself. But the investors and senior management got their cut first. How? Well, the preferences they negotiated.
No one really knows how the game is played
The art of the trade
How the sausage gets made
We just assume that it happens
But no one else is in the room where it happens
highfrequency
Doesn't seem that simple. They raised a total of ~$250m and acquisition price was almost 10x that. The preference cliff means that employees get nothing before investors get an X% return on their investment (100%, 150%, maybe 200%). After that, the payout should be proportional to common stock ownership. Surely the preference guarantee was not 10x?
Would be curious to see the breakdown of the $2.4b:
1. How much to the founders in Google employment incentives
2. How much in licensing fee to the company itself
3. How of the licensing fee went to immediate payout to VC investors (+ employees)
4. How much got left on the balance sheet of the remaining company
I don't understand how #3 can be so large and common stock holders walk away with almost nothing without breaching fiduciary duty?
CalChris
The August 2024 Series C round (last of 4 rounds) for $150M could dilute+smoke the preference stack for any earlier investors of which #2 nominally was basically the earliest class member of. C gets preferences+participation. B+A get preferences+participation+anti-dilution. Common gets what's left which apparently wasn't much.
Fiduciary duty is very low bar. Management has to act in the best interests of The Company, as in, as a whole. The company != #2. Lawyers are not taking this case.
I'm certain the accounting was done properly, maybe even by a Perl script, and this is how it penciled out. The question for us stiffs is what can we learn from it?
scns
> in the room where it happens
Great song from Hamilton. Sorry for being off topic.
aspenmayer
Lin Manuel Miranda is a poet and a scholar. Original cast video of the song in question:
bravoetch
Since others are sharing their doom and gloom stories - Mine is the opposite. I was hired at a startup, and I didn't even know what a startup was. I just liked the industry they were in and applied to join.
In negotiations I tried to get more salary, by taking less equity. It kinda worked, but later they doubled my equity to match other hires of the same era (but with a new vesting schedule for the new options). Then at some point I was fired without reason. The company went on to become worth a lot, and I was able to get out with enough to never work again and live pretty luxuriously. AFAIK others that were in my era at this startup did equally well, or many times better. It can happen, but I didn't ever think it was even possible because I didn't understand what 'options' even were when I was hired.
Engineers: always negotiate for higher base salaries. In the vast majority of cases—especially during acquihires—your equity will be worth little or nothing. Founders and VCs still get paid; employees rarely do.
Don't just accept promises. Ask for the 409A valuation, liquidation preferences, and pay bands. If a company won’t provide transparency, that’s your signal.
Equity is a lottery ticket. Salary is money in the bank.