coretan Temanjalan #1 - don’t get overvalued
Beberapa bulan lalu: Nonton SV cuman buat hiburan. Ngakak2 doang kenapa ada orang2 geblek kayak begitu.
Sekarang: Nonton SV ulang buat panduan. Episode yang ditonton tergantung materi yang dibutuhkan. Literally kalo ada kata asing, langsung pause, Google+Quora istilah2nya sampe bener2 paham, baru lanjut lagi. Terus bedanya juga, kita yang sekarang jadi orang2 gebleknya 😂
Hari ini nonton S02E01. Intinya: young companies should not get overvalued. Kita bisa belajar dari kisah Javeed berikut.
Javeed appeared in the first episode as the CEO of some implausibly named tech company. What happened to Javeed was that he reverse-vested in an trigger-lacking way. Which sounds non-nonsensical, but allow me to attempt an explanation.
First, let's do vesting real quick. As part of your compensation package, you might be promised, let's say, 4,000 shares in the company you're joining. Those shares might "vest" over 4 years. Meaning that if you leave the company after 3 years, you only walk away with 3,000 shares. Depending on how the vesting schedule is written, there can be a load of different outcomes and percentages, but let's just simplify it as 25% of your shares "vest", as in are actually yours, per year. It's done that way to try to retain employees, since you can't just hire someone, hand them stock, and pray they stick around long enough to do something useful.
So, let's talk triggers! Triggers are just a fancy way of referring to contract stipulations that are triggered by certain conditions. Let's say you were employee #1 of a start up. You've got your stock that vests over 4 years. The start up does so well that it gets bought 2 years into your employment. Now, you're only 1/2 vested. However, a pretty standard trigger in a startup contract would stipulate that if the company gets bought, you instantly become fully vested. Hurrah, now you have all of your stock, and you get to fully cash out!
Now let's talk about reverse vesting. Reverse vesting sucks. This can be a stipulation of a new investor when the company seems desperate, there are key people the new investor doesn't want to risk losing, and it's a douche move. Can you tell if I'm a tech guy or a VC yet? At any rate, the new investor comes in and their terms include that certain key people reverse vest. That means, they take the stock they've already vested and they put it, essentially, in escrow. Then, they start on a new vesting schedule. The purpose of this is to keep those key people from wandering off with their vested stock, and leaving the investor high and dry. If those key people leave before the vesting period, they don't get their shares...like it's not enough that the new investor is diluting these poor fucks that built the damn thing, they have to....anyway, moving along.
So, let's combine the two. Let's say someone like Javeed the CEO reverse vests as a term of a new round of investment. Ok, so now all of Javeed's stock is locked up, and not his until he re-vests, AKA stays around for another 4 years. Right now, he's holding nothing but a contract.
Now, imagine that the board, investors, stockholders, etc. all agree that it's safer to sell the whole company off to someone. Here's where the combination of reverse vesting and triggers come into play. Let's go to the quote:
Richard: An acquisition of $200 million, right?
Javeed: Yeah, they all made out. I had reverse vest with no triggers. Then I lost all of my shares when they fired me.
What that means is that he gave up all of his shares and had to go through vesting again. He also didn't have a trigger that fully vested his reverse vested stock on acquisition. That last sentence sucked, but let's hope the previous explanation makes it somewhat clear. Then they shit-canned him, and he didn't have a trigger to vest on termination either.
That's all to say, he got fucked. Fucked in a way even the smartest of fuckers could get fucked. I can't wait to see how our lovable, scrappy fuckers get fucked.
TL;DR Contracts are hard, some of your friends might already be this fucked.
Source: https://www.reddit.com/r/SiliconValleyHBO/comments/32ghvs/what_happened_to_javeed/
