> that the purpose of building a business is just the exit
The majority of those affected negatively by this are not the founders, but the employees. Many of them may have turned down FAANG positions that come with predictable liquid RSUs. Some may have kids (in fact, I know someone at Figma who had a kid in the past year).
Liquidity's not necessarily about opportunistically passing on risk...sometimes it's just about making a competitive living relative to being at a public company.
I don't disagree with what you're saying, at all, but the implication is still basically "And employees want someone else to be a bag holder, too!"
And having been in that position several times, I definitely don't blame them! Employees also have the much tougher constraints that they can't diversify their employment like VCs can diversify their investments.
But still, it's the same dynamic that people want to get rich, and the downstream consequences be damned.
In practice, employee shares in a private company are not an "investment" because they can't be traded in an open market. So no, employees don't want someone else to hold the bag. Employees want a return on their investment, and the most viable way of doing that is through an exit.
Yep, shares are part of the comp package, it's entirely natural that employees want to turn the fruits of their labour into liquid cash at some point.
There is a valid argument that that's a perverse incentive, and that companies should just pay employees better to begin with, or have various longevity/performance-associated bonuses, but if the company isn't profitable, share value is perhaps the best way to represent that.
And on top of that, employee share schemes tend to get very favourable tax treatment. So overall "skin in the game" is no bad thing, the problem is that, in many/most cases, an exit is the only way you're going to get your skin back out of the game.
That seems like an odd way to frame it, imo. "Holding the bag" usually implies something negative, as in someone will be "caught" with something bad. As in the employees are looking to dupe someone into buying what they are selling. But employees, outside of company officers, do not control what information investors get about what they are buying. They can't trick anyone into buying something, although they could theoretically benefit if someone else did trick buyers.
But it's a weird take, because employees are already the ones "holding the bag". Office space, cloud compute, etc. are all sold as COGS. VCs usually have some ability to sell their shares on the private market since they can negotiate to get their capital. Employees are often the only ones which are taking an IOU for their time and effort compared to what they could get elsewhere in the market. Employees are often the lowest class of shares which get paid out last and often reliant on the board to be able to sell on the private market. Yes, the employees decided to take this offer, on good faith, that their management would look after them. They are adults who made a, theoretically, informed decision. But structurally, they are set up to be the ones "holding the bag" if things were to go wrong with an exit.
So of course they want an exit. They literally have no other choice to get a return on their time/effort than for that to happen. (or some odd third thing like private dividends, but again, they have practically no control over that happening)
Sure they have (had) another choice: they could have taken employment at a more stable (possibly public) company, where compensation would have been more predictable.
But they chose to work at a smaller, private company, and accepted private-company equity as part of their compensation, which 9 times out of 10 ends up being worth zero dollars. This idea that they're somehow entitled to a payout is ridiculous.
The situation that the VCs and founders are in is often enviable, but isn't really relevant here. Regular employees need to be financially responsible about accepting jobs with private-company equity comp, and not expect miracles. That's the bottom line.
(I agree that "holding the bag" is a weird way to frame this, though.)
> The situation that the VCs and founders are in is often enviable, but isn't really relevant here.
Respectfully disagree. It's relevant to the extent the parent comment was talking about employees wanting to have someone else "hold the bag".
> Regular employees need to be financially responsible about accepting jobs with private-company equity comp, and not expect miracles.
Agree that it's their responsibility and no one should be starting a kickstarter for them or anything. But that doesn't mean you can't sympathize with them. They are often fairly young people who aren't experts on contract law. It's not unreasonable to say that at least some of them have been exploited with excessive promises. The industry would be a better place if rather than say "they should have known better", we instead said "employers shouldn't exploit people". A precedent of bad behavior shouldn't excuse it.
Employees have much higher risk profiles, even if they hold no shares at all, than”bag holders” because they tend to have 100% of their families financial well being invested in a single company. Virtually no investors have even close to such a big bag holders
And that's the risk/bargain those employees accepted when they took the job at Figma rather than some public company with predictable equity comp.
Look, it sucks, I get that. I was an employee at a successful startup that did end up going public and made me a bunch of money. But I also worked at three other startups that didn't go anywhere and my options/stock ended up being worthless. I also worked at a "boring" public company with equity comp that amounted to a pretty small (but helpful!) quarterly bonus.
I accepted each of those jobs knowing what I was getting into, and knowing that I probably wouldn't see any kind of big payday (the one where I did was life-changing, but if that hadn't happened, I'd still be fine, financially). That's the nature of the beast. It's disappointing when it doesn't work out, but don't play the "some of them have kids" card: people need to plan their finances based on normal, expected outcomes, not on the moonshot.
And regardless, Figma still seems like a great company, with great products. Employees will still likely do really well, whether through a different acquisition or by going public. They'll just have to wait longer.
> The majority of those affected negatively by this are not the founders, but the employees.
Well yes there are typically many more employees than there are founders. Despite this, founders probably missed out on orders of magnitude more money than all of the employees combined.
The majority of those affected negatively by this are not the founders, but the employees. Many of them may have turned down FAANG positions that come with predictable liquid RSUs. Some may have kids (in fact, I know someone at Figma who had a kid in the past year).
Liquidity's not necessarily about opportunistically passing on risk...sometimes it's just about making a competitive living relative to being at a public company.