I think it's better that the founders have a sizable equity but at the same time it's probably a lot harder to grow a company without other investors. But I don't think it would matter in its actual day-to-day business. Dishing out profits as bonuses instead of equity is just a personal preference to them.
Maybe they won't get as dedicated personnel but at the same time if they have kept the company owned by themselves to this point I guess it's a valid choice in continuing doing so.
Is it greedy or not, well to me it shows that the founders are shrewd for sure but.. Are they doing this for the benefit of the company or just to maximize their own profits? Hard to tell. I feel giving up equity isn't such a big deal and it would make me more satisfied having my best employees part of the company. Paying only bonuses sounds a bit cheapskate.
Really cash bonuses sounds a cheapstake? There are many many companies who will gladly give you a percent of there business provided you are vested for 4 years and they are successful and there is a window opportunity to cash out.
Stock options are the cheapskate way to go. Lotto tickets for the newbies.
Many rapidly growing companies that already generate profits? Even if the price of the stock would stay the same it would still make sense to get the extra profits as stock as you would pay much less taxes. Granted you'd have to have a way to sell them when you want out.
And vesting isn't always a bad option, don't you agree? In the case of many successful start-ups like Facebook and Google you'd have earned and probably still will earn a lot more from the stock than from any bonuses they could have given you.
The chances of finding the next google and getting in the ground floor is about 0.
Vesting is bad for everyone. The company buying yours gets to keep you around but you are the least motivated employee. You get to waste a few years as they figure out how to replace you. That's the best case.
Usually you leave and are given the option to buy the shares within 30 days at some price without a way to cash out.
Will these shares go up? perhaps but not really. What happens is new investors money will reduce your percentage. Your shares will be put in a non-protected group while the founders/investors take preferred shares with 10x the voting power.
If they gave you cash you buy google shares you sell when you want and you have the choice to put the money anywhere.
Fair enough. There's no clear-cut answer which is better. You're painting vesting in more darker light than I assume it's but you made your point across. =)
If the founders and investors want to screw you over I'm sure they can and will do so, nothing much you can do with that. If they're concerned with their employee happiness I doubt they'd do it just for pure greed. However as you said the lottery-ticket will probably keep the best employees around much longer than they'd otherwise so it's probably not all bad? Not everything can be valued by its monetary value only.
And also I'd argue that the hottest start-ups aren't for sale in stock markets or at least they are already highly priced when they enter them. It's a lottery-ticket for sure but as with all companies you can never be 100% sure how they're going to end up.
Maybe they won't get as dedicated personnel but at the same time if they have kept the company owned by themselves to this point I guess it's a valid choice in continuing doing so.
Is it greedy or not, well to me it shows that the founders are shrewd for sure but.. Are they doing this for the benefit of the company or just to maximize their own profits? Hard to tell. I feel giving up equity isn't such a big deal and it would make me more satisfied having my best employees part of the company. Paying only bonuses sounds a bit cheapskate.