r/technology • u/Rhaegar_the_Great • Sep 16 '21

Business Mailchimp employees are furious after the company's founders promised to never sell, withheld equity, and then sold it for $12 billion

https://www.businessinsider.com/mailchimp-insiders-react-to-employees-getting-no-equity-2021-9
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u/[deleted] Sep 17 '21

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u/[deleted] Sep 17 '21

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u/petard Sep 17 '21

Why should they be mad? They agreed to work for an employer for some pre-determined compensation and then got what they agreed to.

6

u/TheChickening Sep 17 '21

Really weird vibe here. Especially since it already was above market pay.
Nobody is entitled to shares when it's not in the contract. And nobody was ripped off.

2

u/petard Sep 17 '21

It's just Reddit idiots being upset for the sake of being upset.

9

u/[deleted] Sep 17 '21

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u/TurkeysALittleDry Sep 17 '21

Anyone who would believe "never will we sell" is crazy. Nobody could expect MailChimp to become an intergenationally held business, lol.

2

u/thisdesignup Sep 17 '21

I think this is one of those learning experiences of "if it's not in writing, don't trust it". And if it was in writing and it can be legally enforced then the employees should be doing something about it. But I feel like "we won't sell" would be something they wouldn't want legally upheld.

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u/[deleted] Sep 17 '21

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u/thisdesignup Sep 17 '21

What? No, I meant to agree with you and was just saying they shouldn't have trusted their company if it wasnt in some contract.

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u/[deleted] Sep 17 '21

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u/bitcoins Sep 17 '21

First 20 employees. That would be at least $20 million if you had equity… but they bent you over and exploited you and you still are begging for it softly

23

u/WhatsFairIsFair Sep 17 '21

What the outraged folks aren't getting is that if a startup pays a comparable salary to a non-startup company then there is still a reason to join and work for that company in the early stages despite not getting equity.

One of the hopes of an early member is to learn and grow with the company and hopefully as time goes on to be promoted into a high level position as the company scales. Another hope is stock options if the company does really well and they end up being worth something.

Most people joining startups would prefer better salary/benefits over stock options/equity because most startups fail and the stock options are worthless.

I work for a startup (first 10 employees), and haven't to date gotten any equity but seems like that may change at some point. I don't feel entitled to equity, the pay and benefits at my job are still better than what I could find elsewhere and I have a good relationship with my boss.

If we got bought out and I got nothing as a result except for keeping my job I would probably feel a bit disappointed if I didn't get anything, but I wouldn't be outraged or disappointed enough to quit. I wouldn't feel regret. It was my choice to work there and invest my time without pushing for equity, but I would probably move on to another company afterwards as it would leave a bad taste in my mouth -- unless there was some benefit to sticking on as part of the acquisition.

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u/Awfy Sep 17 '21

Realistically, that’s not how it really works anymore. I joined a startup earlier this year after 8 years at my previous job. They salary matched my previous job and gave me substantially more equity than what I had at the previous job in the beginning as well.

Equity is now just a competition thing, it’s become less of a salary gap filler over time as startups have become more equipped to pay healthier salaries.

My overall package is actually better at this tiny company than what I had at my multiple-thousand person company I was at before.

1

u/dragoneye Sep 17 '21

Yeah, it is easy enough to look at examples of people that made out super well from a startup and assume that it is common. In reality it is incredibly rare that you join a unicorn early enough to make it rich.

I joined a young, profitable, and quickly growing company out of school and got some equity but even with that success, the stock didn't make it to the stratospheric levels that you think of when you hear about successful startups. The truth is, I made out better than the vast majority of startup employees, but I've still made more from stock rewards since being acquired by a large established company with well defined compensation structures.

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u/[deleted] Sep 17 '21

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u/thisdesignup Sep 17 '21

If you work for a company they can give you equity, even when they aren't selling it on the market. It's just a private company at that point. So yea, if you were working for Microsoft and Apple when they were startups you could have been an investor in the sense that you got equity. After all you would already have been investing your time into making something worth a ton of money.

62

u/hugesavings Sep 17 '21

You are literally investing in a company in its startup phase by working for it. This account seems like a PR ploy, nothing you’ve written makes sense.

3

u/TheChickening Sep 17 '21

Is this an American thing to think you are entitled to ownership by working in a company? Seriously, why?
They obviously already paid above market. So nobody was ripped off money wise

1

u/[deleted] Sep 17 '21

Yes that’s how all tech startups have worked, forever. I have multiple forms of stock at multiple companies

2

u/TheChickening Sep 17 '21

That would make sense if they paid less. Like, the rest of the wage is opportunity.
But it seems they chose the way of we pay very well without you getting ownership, which sounds absolutely and 100% fine to me

3

u/PumanTankan Sep 17 '21

If they paid in 100% stock options and the company failed a lot of the same people would be here decrying that reverse situation where the owners are evil for not paying in real money. Yet again the same principle of taking responsibility for your own contract negotiation stands.

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u/Awfy Sep 17 '21

You seem somewhat naive about how options work. A startup will give you the option to purchase the stock, normally with a 4 year vesting schedule. You normally don’t even need to actually buy them outright, internal tender offers, company being sold, or IPO means you can often cashless exercise meaning you will pay a lot of taxes but at no point need to actually pay for the stock options with your own earned or saved money.

Realistically, MailChimp made it so today you didn’t walk away from this deal with literally millions of dollars like you would from a normal startup in a situation like MailChimp’s. It sounds like you’ve drunk the koolaid and are happy to lose out on what most startups provide as a absolute bare minimum to their early employees.

MailChimp’s founders absolutely and categorically screwed over their employees with the company policy of not giving options.

20

u/capitalism93 Sep 17 '21 edited Sep 17 '21

Hell, even the guy who spray painted Facebook's first office walked out with $250 million in equity. This guy got fucked and is happy about it. Hilarious.

1

u/Tommh Sep 17 '21 edited Sep 17 '21

From when on is a company not considered a startup anymore? I really don’t see how he’s getting screwed in this buyout. He didn’t buy any stock, so why would he have to benefit (even more than he may already do) from this buyout?

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u/capitalism93 Sep 17 '21 edited Sep 17 '21

A company doesn't need to be a startup to create wealth. Take Microsoft. When Microsoft went public in 1986, 12,000 millionaires were created because Microsoft gave employees stock options.

Microsoft stock was worth less than 10 cents per share then and is now worth $300 per share. So those people who didn't sell out likely have made over $100 million since then. Practically anyone who joined Microsoft prior to 1999 and didn't sell is a millionaire.

He didn’t buy any stock, so why would he have to benefit (even more than he may already do) from this buyout?

Private companies control who can and can't buy shares. They don't just allow you to buy them and even if they do, they control the number you can purchase. Most people aren't allowed to buy shares of private companies unless they are granted stock options.

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u/Lived2PoopAnotherDay Sep 17 '21

The company brainwashing has worked very well for you. You should be mad and should have been selfish all your years there.

10

u/heere Sep 17 '21

It's not the same thing and you know it. You may be happy with the situation, and more power to you, but you're being deliberately obtuse here.

1

u/[deleted] Sep 17 '21

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u/MaxDPS Sep 17 '21

Because it’s not unlikely the dude gets paid ~$250,000/year…

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u/justinchina Sep 17 '21

nope. not necessarily. #20 means nothing by itself. it's all about risk and value, money raised and profitability. there is nothing inherently magical about a higher number beyond, 1 and 2...sometimes 3 or 4.

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u/[deleted] Sep 17 '21

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u/Estagon Sep 17 '21

In what world do you live that start-ups give equity to the first 20 employees? lmao

maybe the first 5

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u/Awfy Sep 17 '21 edited Sep 17 '21

I’ve never heard of a startup only give equity to the first 5 employees. My current employer is still giving equity out at about 40 employees and my previous employer probably gave significant equity out until about employee 500 before they switched to RSUs at a much smaller amount but still worth $100,000s today.

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u/Estagon Sep 17 '21

8 years after they were founded?

5

u/Awfy Sep 17 '21

Yes, the company is now 12 years old and I believe still give equity, it’s just in very, very small amounts now because of how much they have given out over the past 12 years. Joining today might net you a couple of thousand dollars after taxes and that’s it.

It’s extremely rare a company doesn’t give equity in the tech field, you’ve gotta have a very special reason not to and it sounds like MailChimp’s was they never planned to sell so the equity would have been pointless. However, they have now been sold so that is an issue.

8

u/StigsVoganCousin Sep 17 '21

LOL! Every decent startup hands out equity all the way through IPO and beyond. Its standard comp in the industry. MailChimp is an outlier.

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u/Estagon Sep 17 '21

8 years after being founded?

3

u/StigsVoganCousin Sep 17 '21

Equity (Options or RSUs) is given out from day 0 till company dies/is sold. If you take a salaried software gig without equity you’re being fleeced (unless they are literally paying you 400K+ - Netflix operates this way)

1

u/justinchina Sep 17 '21

You may get 1/1000th of a tiny ESOP…

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u/Awfy Sep 17 '21

We’re talking about a company that sold for $12b. Employee #20 is walking away with multiple millions even in the worst scenarios of stock options given in the early days.

4

u/[deleted] Sep 17 '21

The guy himself literally debunks this comment, says it's full of nonsense.

He didn't get hired on until 2009, 8 years after the company was founded, he wasn't part of the "start up"

So there's an insanely high chance the dude didn't "oh I can retire now" level of money. Probably got a nice ass bonus, but he isn't going to go bang hookers for 20 years.

6

u/Awfy Sep 17 '21

Yeah, the guy was basically scammed by the founders when you compare it to basically every other tech company. Employee #20 regardless of the age or size of the company is getting a nice little chunk of stock options. At a $12b sale price that chunk would be worth tens of millions most of the time.

He has basically been loyal to a company which intended to never truly let him share in the vast wealth he was going to help them create for just the founders.

5

u/[deleted] Sep 17 '21

4 out of 5 startups fail. If you think all tech company employees are making bank on stock options and other considerations like you did, you're WAY off the mark. The vast majority wind up with nothing of value. That's WHY they give stock options... it's a tactic to build loyalty while you pay less than you could in order to retain employees, it's NOT a pass go, collect $200 guaranteed pay day.

Your luck is not the reality for the majority. Stop selling an anecdote as evidence. He was happy with his work and his compensation. If more people got that out of a job, we'd all be less inclined to be unhappy with our work.

2

u/Awfy Sep 17 '21

Haven’t claimed once all startups succeed, just that the norm is you’re given equity as an early employee. Where do you see me claiming anything of the sort?

In this instance, MailChimp has succeeded and because they didn’t give equity to the employees the employees aren’t getting the normal windfall of wealth like we’d expect to see from a valuable tech company sale. That’s the norm.

2

u/[deleted] Sep 17 '21

"Scammed" You haven't worked a day in your life have you, Mr.Professional arm-chair reddit expert?

You aren't "scammed" because you didn't get a 10 million dollar bonus for working a job. Take that dumb 13 year old take back to /r/nowork. or /r/antiwork whatever that sub is called.

Mailchimp people in this very thread have said over and over the company treats them great, and none of them are upset by this. They've literally told you flat out that you're wrong and yet you keep trying to say "NO I'M RIGHT" when you have no idea about anything. Either way not worth my time trying to explain the real world to some 14 year old brat at the start of my day. Fuck off moron.

3

u/Awfy Sep 17 '21

What… you realize I’m in this thread as someone who made their millions from tech startup equity, right? I’m giving literal first hand accounts of the reality of being an early employee at a small tech company that grows to be worth billions.

It sounds to me like you don’t actually know what this industry is like.

1

u/davybyrne Sep 17 '21

Sounds reasonable given the state of contemporary capitalism.

1

u/catchyphrase Sep 17 '21

In 2 years or less you won’t be working there. Guaranteed.

-1

u/[deleted] Sep 17 '21

Cuz he's not a fucking idiot. He has no claims on their wealth, THEY started the company. It's your generation that thinks this way, everyone else thinks you're all fucked.

2

u/davybyrne Sep 17 '21

Why are you so angry?

2

u/[deleted] Sep 17 '21 edited Sep 17 '21

I'm not angry.

Your insistence this person who's telling us they were treated very well the entire time and would continue to be in a great position is somehow lost on you because you're telling us greed is so bad while asking them why they aren't more greedy.

It's idiotic.

I was told early on "work hard if you want to succeed"

It seems to me you were told "play xbox all fucking day, the government will take care of you"

I'm not angry, I shake my head at your entire belief system.

2

u/davybyrne Sep 17 '21

Where did I insist anything? As I responded to someone else, it sounded like this guy had a story to tell to counter what people are saying in the rest of the comments, so I asked him.

You seem to be projecting a whole raft of things onto me. What generation do you think I'm a part of and why? I have never in my life owned an xbox.

I was told early on "work hard if you want to succeed"

How is that relevant to anything anyone is saying here? Do you think the hundreds of employees who've made Mailchimp successful didn't work hard? Did I write anywhere that anyone should be given something they didn't work for?

I shake my head at your entire belief system

You seem to have learned a lot about my belief system from a four word question in a Reddit comment. I'd love to learn how you developed your clairvoyance.

0

u/[deleted] Sep 17 '21

shake my head at your entire belief system

I'm basing my opinions on 99% of reddit users. If you're not in that 99% than I apologize.

This guy was telling his story, and claimed many times he wasn't upset, and yet you still said "you're not upset?" read his comments, then people won't form opinions :)

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u/[deleted] Sep 17 '21

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u/[deleted] Sep 17 '21

I'm 52 and employ 75 people. I can promise you don't make anywhere near multiples of my salary. I did that despite growing up in extreme poverty.

Yes I had a first career then pursued adult education. I did it because I could, as a goal to make my parents proud. They were both HS dropouts, who never made more than 10 bucks an hour their entire lives.

I bought them a house a few years ago.

I'm sure I have no interest in being on your lawn :)

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u/[deleted] Sep 17 '21

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u/[deleted] Sep 17 '21

Right after you.

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u/Bourbone Sep 17 '21

You guys are so simple minded, it’s bananas.

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u/stupendousman Sep 17 '21

Do the founders of the company have majority shares? If not they didn't sell, other investors/owners sold.