In 24 Hours, The Valley Made DC Listen on Stock Options


Money Quote Weds Nov. 15

The Senate drops ill-conceived stock option language after Valley uproar. We should roar some more.

The Senate version of the tax bill, already groaning under the weight of an entire government’s failure to function, just got a bit lighter. According to a post by a prominent San Francisco VC, the bill’s proposal to change how option compensation is taxed has been scrapped. This may seem like an obscure issue for most, but to anyone involved in the world of high-risk startups, it’s existential. Startup compensation is for the most part terrible, many analysts put CEO pay, for example, at below minimum wage if you actually count the number of hours a founder puts in trying to win the entrepreneurial lottery. I’ve actually won that lottery a few times, and honestly, as much as I’d like to claim it’s because I’m a genius, it’s really because I got lucky, found a great team, then closed my eyes and worked like a madman. And why? Because I held equity, and that equity just might be worth a lot some day.

Some claim it’s time to rethink the way the Valley’s ecosystem compensates its workers — stock options allow wealthy VCs to keep cash burn low by dangling mostly worthless paper in front of poorly compensated startup teams. And there’s certainly some merit to that argument. I got lucky in my startup career, but the truth is, most don’t, and cash compensation is almost always well below market. But that’s the trade off of a high risk venture, and without it, you don’t have a culture that pushes the edge of what’s possible in business. And that edge deserves to be pushed. I’m glad the Senate has come to its senses.

Now, how it came to its senses is a fascinating question. Just 24 hours ago, the Senate’s option taxing proposal was not even on most Valley folks’ radar. Within one day, the alarm was raised, the Valley political machine sprang into action, and the language was removed. That’s extraordinary. And it makes me wonder what else this industry could accomplish, should it put its mind to it.

A clever framing of Slack as anthropological artifact, and the conclusions are not encouraging. Money quote: “I noticed that some people seemed untroubled by any such self-doubt — the ones who posted blunt statements, or dropped in links with no context. They responded to others’ statements with sharp critiques, “no,” or radio silence. This behavior — standoffish at best, boorish at worst — conveyed power. Many of these people, I noticed, were men.”

Quartz gets two links today — this story is utterly true, I’ve found. Money quote: “But founders’ poor success rate as CEOs also has to do with the kind of personality that’s compelled to start a company in the first place. People often start companies precisely because they want the freedom to run things as they wish — which sometimes includes poor managerial decisions.”

In short, it’s hard to be a mission-driven company all the time. Airbnb will probably have to walk this one back. Money quote: “ What would have been a routine cost-cutting move at many companies caused an outcry among Airbnb employees, who saw the food team as emblematic of the company’s culture.”

Who’d have thunk we’d have a situation where sitting Senators of both parties question the Commander in Chief’s nuclear authority? We live in strange, strange times. Money quote: “We are concerned that the president of the United States is so unstable, is so volatile, has a decision-making process that is so quixotic, that he might order a nuclear strike that is wildly out of step with U.S. interests,” said Sen. Chris Murphy (D-Conn.), one of several senators exploring how to prevent the president from launching a first nuclear strike without the permission of Congress.”

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