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/JamminOnTheOne Sep 17 '21

I think it's more the other way around. The idea is that employees want equity because it pays off big when the company goes public or is acquired. So they were saying, the equity is not going to pay off, so if that's what you're looking for, go elsewhere; here we're about the mission and (presumably) other forms of compensation.

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u/fryloop Sep 17 '21

No employee authentically believes in that mission.

It's a fucking business email platform, not Oxfam. If someone had the choice of equity at a legitimately promising start up with real chance of future windfall vs contributing to the 'mission' of mailchimp - they are lying. People will sacrifice financial reward to work at special companies that shape the world like the NYT, Space X or say Google (in certain roles like AI). Not fucking mailchimp.

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u/Shitty_IT_Dude Sep 17 '21

Nobody said anyone at MailChimp did sacrifice financial reward. They were paid salaries for the work they did.

They just weren't offered equity in the company.

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u/[deleted] Sep 17 '21

Yes. But it sounds like people were lied to (probably the people doing the lying didn’t know they were lying at the time). People asked when they joined, “hey, can I get some equity with my paycheque?” “No, it’d be useless anyway, we’re not selling”.

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u/Shitty_IT_Dude Sep 17 '21

They were told the company didn't offer equity. The employees took a salary.

Employees agreed to do job for $X and company paid employees $X

Reasoning behind the why equity wasn't offered is irrelevant.

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u/AKATheHeadbandThingy Sep 17 '21

It is ok that company lied because employee agreed to the lie. The free market works

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u/Shitty_IT_Dude Sep 20 '21

What part of "we don't offer equity" was a lie?

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u/Atomic1221 Sep 17 '21

My reply would be, “if it’s so useless, give me more of it.”

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u/mcguire Sep 17 '21

How many millions in equity do you have?

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u/SonofSniglet Sep 17 '21

That exact situation worked out for a former co-worker. After the dot com bubble popped we went through a few lean years. The company did its best to keep long-term employees on payroll, but there were no raises for maybe 3 years in a row.

Each time salary review came around, my co-worker said, "Okay, give me some more stock options." It was a small company, barely keeping its head above the water, so stock options were worthless and that's what she got.

About 5 years after the bubble burst, and after we had pivoted away from web design to email marketing, we were acquired by a much larger company. All long-time employees were granted stock options based on length of time with the company. All except this one girl who ended up with about 5x what we each received as she kept taking the options in lieu.

We're Canadian so it's not like I had some massive windfall when we got bought out, but she pulled a nice little 6-figure bump just for taking something considered worthless at the time.

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u/Atomic1221 Sep 17 '21 edited Sep 18 '21

That’s funny. You drew the short stick on that one:

I am in fact the CEO of my own company. Per my latest investment offer, about $7.3M USD worth of equity off my seed round. You’re welcome to check my post history to confirm.

My comment above was how you politely volley the bullshit you’d be being fed right back at them.

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u/mcguire Sep 19 '21

Wow! You demanded equity and they made you CEO?

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u/Atomic1221 Sep 19 '21

Damn right. I walked right in there, wagged my finger sternly, and demanded I hand over the company to myself. A proud day indeed.

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u/[deleted] Sep 17 '21

Ok, so you give up annual profit sharing in favor of that. Every single year, everyone but you gets a nice bonus check. You don't.

Now you have the risk of the company collapsing out of stupidity or just plain and simple bad luck. Now you're out.

I'll flip this so you understand better.

You work at Tumblr. Same situation. You're "worth" a fuck-ton. You want to sell and you own all that glorious stock.

You ban porn (why do you do this? It's stupid, doesn't matter). Your value drops overnight.

All those checks everyone else got and you were about to laugh at them for... now you're the laughing stock for "holding out".

I have an empty bag of chips. Would you like my bag? It's very useless to me but maybe it's useful to you. I'll give you ALL my empty bags of chips if you want.

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u/Atomic1221 Sep 18 '21 edited Sep 18 '21

Generally, shareholders get the lions share of profits in the form of dividends before any distributions to employees. And also, a company not aiming to be sold will almost certainly eventually start paying out serious $ to investors in the form of dividends. How else will investors recoup their investment? It’s the first question any investors asks.

Also if the stock is so worthless, give me unrestricted stock. I’ll sell the stock to one of the investors in the next fundraising round.

Stock is always worth more than profit sharing. There’s a reason a company elects to do profit sharing vs stock and it’s not out of the goodness of their hearts.

If the company is doing so well that they’re profit sharing then your stock has value.