This doesn't sound like shenanigans. Reading between the lines:
> While it hasn’t ended up becoming the unicorn I was hoping for
it sounds like the company wasn't a success. It could be the preference overhang, or it could be a difficult acquisition.
Fundamentally, if the company isn't a success relative to the funding, employees aren't going to get paid. Employees can get paid quite well on a $100m exit if eg the funding structure was correct for the exit size.
Right, but my guess is people start talking about being a unicorn probably means they did a unicorn-sized funding round. So total raised is comfortably north of $0.1B.
I don't mean shenanigans as a cutesy word for fraud (and to be completely fair, the author touched on how this is something the industry needs to improve at), but I merely mean that the explanation provided to most workers is "you own X number of shares in the company that are currently valued at Y", and anything missing from that summary that makes it untrue is, well, shenanigans to me.
I totally agree that founders/hiring managers should be very clear on how employees are comped. However, in this specific case, I think a >= 1x preference is so utterly standard that employees of a startup need to do 5 minutes of due diligence and understand how their comp works.
For everyone reading this, there are 3 outcomes:
company failure, company success, middling
In the middling outcomes, people need to know the negotiated rules re: who gets what
> While it hasn’t ended up becoming the unicorn I was hoping for
it sounds like the company wasn't a success. It could be the preference overhang, or it could be a difficult acquisition.
Fundamentally, if the company isn't a success relative to the funding, employees aren't going to get paid. Employees can get paid quite well on a $100m exit if eg the funding structure was correct for the exit size.