Anyone who just cares about the numbers: he was given options of 45,000 shares, of which 15,000 had vested. These 15,000, or 0.0833% of the company, were available to him at $0.27/share, or $4,050 total. So he had the opportunity to buy 0.0833% of the company at a $4.8MM valuation. Given that they recently raised $20MM at an undefined valuation it really says something that he chose not to exercise the options. I really recommend you all read the post.
Also, damn, that email from the CEO about his private Twitter. That's completely out of line.
For those of you that didn't read the article, the CEO called him out about a specific tweet (on a personal account with only 146 followers) where he linked to GitLab's page on Github for crying out loud.
(also, curious note: this comment went from 4 points to zero in less than five minutes. Hmmmm.)
I think it's completely appropriate that he link instead to GitLab for such a thing, and I think it's remarkable that he didn't think the same. This isn't like the ad world, where if your customer is Coke you can't be seen drinking a Pepsi in public (which I agree is crazy): he was posting about GitLab itself, linking to their GitHub mirror instead of to their own site, which completely undermines the GitLab position.
Not commenting on whether or not this was "right/wrong", but it's worth noting that the GitHub contributor page is showing something different than the GitLab contributor page (adds vs. commits). If adds is what he wanted to show, GitHub may have been the only place to show that.
It's also worth noting that if you search Google for GitLab source code, GitHub is the first thing that comes up. To an uninformed outsider, it looks like GitHub is where GitLab development happens.
It may not have been the best thing to do, but I don't think this tweet "completely undermines the GitLab position".
There doesn't appear to be a GitLab equivalent. And that still doesn't change that it was his personal Twitter with 146 followers. The Tweet got one single like. "Undermining the GitLab position" with a Tweet that has one like seems ridiculous.
"Even GitLab employees use GitHub to track project progress and contributions - look at this senior GitLab employee twitter post. GitHub is clearly superior product" - magazine article or competitor to potential client.
CEO ask to link to GitLab was completely legitimate. CEO could have phrased it more politely but even as it is it's ok and nothing to complain about.
I started to refute this, but as I reviewed my post, I came to the realization that I have less confidence in the platform today than I did 12 months ago. Don't get me wrong, I like the Gitlab team, if you could call it that, for their transparency under duress, and how they kept us abreast of the troubles. However, the 'people' is not to be confused with the 'product', and if you're one of the users affected by recent events, then you may be justified in not giving a positive review of their service.
This is not about how many followers see this or if it undermines the company's position. It's about culture. If the CEO of the company lets things like this go, it will keep happening. And it will only get worse.
From my experience, I would rather not have this kind of employee around than trying to play nice with him personally because this kind of attitude spills over and eventually affects the entire team morale.
Wow, you guys are totally off base. Do you realize it's his private twitter account and not company's? How does it matter if it's about his job? If I work for Google and I made a comment on how Bing was funny or DDG respects privacy, I don't expect Sundar to send me a mail.
What if your CEO followed all your social media and day to day life and commented on things? But yeah, from my experience, I would rather not have commenters like you around as this attitude of overseeing my shoulders in my personal twitter account spills over everywhere and affects the entire team morale.
You're comparing one of the largest companies in the world with a startup with just over hundred employees. Of course the CEO of Google has more important things to do.
Also I'm not saying the CEO was absolutely right. I wouldn't follow my employee on Twitter at all personally for the same reason. And I would definitely not enjoy if my CEO told me to change my tweet either.
But that's not what I'm talking about, I'm talking about this guy. Aside from what the CEO did, this guy is a toxic guy, even after reading his own post that's obviously biased towards himself. He was not mistreated. I would understand if he's writing about how the company fucked him over by not letting him take his stock options. But no, this guy came to medium and wrote about how he's NOT going to take the stock options that were offered to him. If you really think this guy is the purely innocent guy and the company fucked him over, then I really have nothing more to talk about.
> Also, damn, that email from the CEO about his private Twitter. That's completely out of line.
It was a tweet regarding his company's platform, but using a competitor's. The e-mail really was not that bad, and that is what he should have linked. It would have been one thing if the e-mail was a massive rant-fest, and did nothing but berate him. I saw it more of "hey, do this instead next time" kind of thing.
> (also, curious note: this comment went from 4 points to zero in less than five minutes. Hmmmm.)
Please resist commenting about being downvoted. It never does any good, and it makes boring reading.
> These 15,000, or 0.0833% of the company, were available to him at $0.27/share, or $4,050 total. So he had the opportunity to buy 0.0833% of the company at a $4.8MM valuation. Given that they recently raised $20MM at an undefined valuation it really says something that he chose not to exercise the options.
I normally don't comment on HN without having read TFA, but this one is way too long and I just skimmed over it. I think OP not exercising their options is more about getting feelings in the way of a financial decision. A 4.8MM valuation is really cheap. And it's not like exercising would incur a huge amount of taxes.
A $20MM raise suggests a $100M valuation or so. That's a 20x increase in the stock price. OP's outlay would be something like $4000 + $35000 (state tax + short term capital gains. Less depending on how he hits AMT.). I don't think that's trivial, even if I'm off by a factor of 2.
That'll apply to the strike price as well as the current "valutation", so the multiple factor between the two valuations should be around the same regardless (a strike price of a non trivial number like $0.27 suggests that a 409a valuation was already in place to price the options)
The original 4.8M valuation (which is his strike price - extrapolating from his share price and ownership %) has now increased to ~40M (extrapolated from 20M raise, estimating ~100M preferred shares valuation and 40% of that for 409A valuation[1]). This means 4k outlay for initial stock, but they are now valued at ~33.2k, incurring some short term capital gains of ~5.6k. This still seems like a steal, as is the value dropped on that valuation of 33k I think it can be recognized as a loss to offset other earnings, so generally I don't think the tax is that bad a deal (if the person has the cash on hand).
Capital losses also carry forward for your entire life. Either 3k a year of offset ordinary income until you die, offset any future capital gains, or have written off your entire loss.
I actually have no idea what you're talking about.
0.27 strike price was the 409A valuation at the time that the options were issued. There is usually another 409A valuation after the funding round. But we don't know what that value is. You can speculate, but using the funding round as the amount is wrong.
There's typically a lower bound of 1/10 the paper valuation, otherwise you risk the IRS coming after you at some future date. That relative lower bound ratio should be consistent across rounds, hence I'm approximating with a paper valuation ratio with a fudge factor of 2.
The company doesn't control the 409A valuation. That's done by an independent company who determines the 409A. So it's not something that is in the control of the company.
Sure, just like a house appraiser is an independent entity who determines the value of the house... Except that they always take the contract price in mind and basically attempt to not rock the boat. If they can make a case for a valuation close to the contract price, that's what they'll use. If they go too high or low, they risk killing the deal -- and their continuing business with the involved parties. Same problem as with legal arbiters and binding arbitration contracts.
You can't control them, but you can definitely "provide guidance" to the independent company as to what your desires are. They obviously won't give you something egregious but it's you who's paying them and will continue to pay them every year (a 409a valuation needs to be within 1 year to be valid for options). If a firm doesn't do something you like, you'll move onto the next one.
I think you're on the mark here. the capital gains tax liability from buying those shares would be significant, and possibly unaffordable since the shares are not liquid at the moment.
OP mentions that he received NSOs, not ISOs, so he would not be subject to AMT. He also wouldn't be taxed at capital gains rates on exercise but rather the spread would be taxed as regular compensation income. More info is available here: https://www.nceo.org/articles/stock-options-alternative-mini...
Don't some banks let you take out a loan for the amount of the capital gains taxes using the shares as collateral? I'm not sure but I could've sworn I heard about this.
I know what margin is, and it's definitely possible to collateralize a loan with private shares. If you had options for 0.1% of Facebook before the IPO I guarantee somebody would write you a loan.
The question I was asking was: does any lender do this as a matter of policy as opposed to one-offs? The answer appears to be yes - Silicon Valley Bank appears to have let customers collateralize loans with private shares.
Yes, but before they're liquid they're close to worthless. A bank can't pay their bill with collateral that they can't liquidate after they repossess it. If the company is already scheduled to IPO, that huge risk mostly disappears, so of course someone would write that loan.
As for Silicon Valley Bank... They're serving the needs of the individuals around them. It's definitely not a common thing, and you're probably not getting anything close to a car or mortgage interest rate. (But still probably better than an unsecured loan.)
From their own copy: [0]
> Our tailored lending solutions can help you unlock the value of your private assets and simplify your financial life—in a way many traditional banks can't or won't.
Agree. It is dirt cheap. I would have exercised the options anyway given the bad feelings. Bad feelings are the sunk cost. Don't let that affect your future investments.
But we don't know their private valuation as of right now. So OP isn't just out $4k+, he's also going to pay taxes on the private valuation of his shares.
Given the numbers above, if the company is valued at $100m and not adding shares, the valuation could be ~$5.60 per share.
When buying ISO's you need to pay for the shares and pay the taxes on the difference between the strike price ($0.27) and the fair market value on the date of purchase. Therefore, in this example, tax would be owed on ($5.60 - $0.27) * 15000 or $79k in paper gain. Depending on other income and a variety of factors, tax due may be greater than $28k.
Total cash out of pocket to exercise these options would then be the amount paid for the options plus the tax.
$4050 + $28k for a total of $32k on a valuation of 15000 * $5.65 or $84750.
If Gitlab does not decrease in value, he could benefit about $50k on an investment of $32k. If Gitlab increases in value, the benefit could be larger.
Not a tax guy here so corrections are gladly accepted and appreciated to increase the clarity of the situation.
After reading the article, I think author is not very confident that Gitlab will go for a big IPO. $4k is not a lot of money, but the taxes can really get you. And it gets even worse if GitLab dies before going to IPO or their IPO is nowhere near the current valuation. He can lose a lot of money in the process.
I also feel OP not investing in a company that he feels doesn't have the best interest of employees in mind is a good stance. Gitlab's reputation is tainted in my mind.
you don't actually need 5 grand to buy the options, you just sell 5 grand worth and keep the difference. Sounds like he may have walked away from a lot of money.. he would have had a 34,000 dollar check.. paid out ~25% in taxes and been ahead.. oh well
I didnt really see anything here of any real substance, other than OP strangely thinks that twitter is private, and that the CEO rightly advised him to link to their own product instead of their competitors. I cant really see how thats a "run in" with the CEO.
All the other cultural issues he seems to bemoaning are all consequences of growth in a startup. Information flow gets harder with more people.
As far as the CMO moving on to github, that certainly doesn't seem to be all that sinister of an indictment. If you have experience in marketing a developer tool to developers and software businesses, you're probably going to leverage that experience getting a job marketing a developer tool to developers and software businesses.
The one thing he's likely right about is that there probably isnt enough market to actually chase, github has a huge piece of it already and hasn't been able to liquidate, so its not obvious where their growth is going to come from besides eating away githubs marketshare. But thats probably why they seem to be pivoting more towards a holistic tool set that is bigger than version control (like the atlassian example). But only time, execution, and a whole lot of luck with show how it all pans out.
I've been in a company that repeatedly snapped up employees from a competitor, including the CMO at one point. Often times, it's about the hiring company wanting to steal employees because they think it will bring success (despite not being in a good position for it). It leads to bringing on a lot of people that shouldn't have been, for more money than they are worth.
I think the run-in referred to something different than the tweet.
> After the run-in happened, I decided to lay low and focus on the job. I even stopped posting on Twitter, because the CEO already had questioned me about what I was writing.
From my reading of it, it was referring to OP's disagreement about the Service Engineer team taking on correcting the internet whenever someone is wrong about GitLab with a staff of five people.
I still think they should have just taken the options... the idea that with a current $100M valuation they won't end up being worth at least $5M doesn't seem justified based only on just these anecdotes. I assume the contract didn't allow resale of the options to a third party.
It's not the final valuation though, there are other factors. Time value of money, dilution through failed attempts to raise more money, etc.
From OP's perspective, he could go to Japan with his wife now, or maybe get his money back years from now.
I know many people who have bought stock at companies valued higher than $100M, only to either lose their money or make 0% return during the recent S&P500 boom. Complete waste of time.
It was a fair request to have a key member link to GitLab. Employees can be told what to do. You don't have to comply, but when you get a fair request and you make a big deal of it - you have to be prepared for the consequences. Contractors - no you can't do that stuff; you can't tell them when or how to work... they have a lot of protections.
The CEO request to change the link wasn't unreasonable. Why would a CEO want employees that aren't going to be champions of their own company they work for? However, I do think the author made fair requests to the CEO (like hiring Community Managers) and he might have been booted for not "falling in line". That's messed up.
At the same time - he should probably disconnect himself from the emotions regarding the stock options and ask himself if it's a good deal financially. Seems like it to me.
I think this is a cultural misunderstanding. An employer might tell me what to do while I'm at work, working on something that creates value for the company. Communicating with third parties out of work, when I'm not speaking for the company - I don't agree, unless it's actually illegal or harassing etc.
> It was a fair request to have a key member link to GitLab.
This leads to situations like what Microsoft used to be (and perhaps still is) - that Everything Had To Be IE And Bing. There could be no acknowledgement of the other brand by name.
> Employees can be told what to do.
On company time, certainly. When representing the company, for sure. Even perhaps if it's sufficiently controversial where you're bringing the company into disrepute by association.
It was a fair request. If you're CEO you try to rally your people. It wasn't a demand. The author had no reason to be stubborn about it. There were obviously other areas to be concerned about as I sided with the author on, but this wasn't one of them and it derails from the other arguments.
If I was the CEO of Pepsi and saw my employee tweet how he likes Coke I would be pissed.
Morality is subjective so nobody can say what's truly "right" or "wrong", but it is true that what this guy did was not a cool thing to do. And I can imagine just reading through his post what other things he probably may have done to result in him getting fired.
> If I was the CEO of Pepsi and saw my employee tweet how he likes Coke I would be pissed.
I would assume the CEO of Pepsi has more things to do than to track employees on social media. If Pepsi employed people to track other employees on social media, that would be more than a little creepy (and I would leave the company).
"Expressing opinions is not allowed here."
Not to mention that OP apparently posted the GitHub stats because the GitLab stats don't show the same information.
My father worked for Chrysler and has only bought Chrysler cars. The lot at the HQ was filled with over 95%+ Chrysler cars.
It's not a requirement, but it hints at not believing in the company you work for. Imagine the drama if Uber's CEO preferred to use Lyft.
If you don't have confidence in the product, it implies that you are just there to collect a paycheck. The optics from an outsider is that you have no confidence in Gitlab and the work that you do. It looks especially bad considering Github is your direct competitor. Its like a member of the LA Lakers wearing a Boston Celtics jersey to warmups
i've worked on lots of things where the internals presented interesting technical challenges, but where the product itself was nothing i would personally use. there's nothing wrong with that. sports teams are not a fair analogy; they're about loyalty and tribal affiliation, whereas work is about getting stuff done.
> the internals presented interesting technical challenges
Most jobs are not like that and a lot of them are about loyalty and tribal affiliation, especially jobs with auto companies. It's a relic of the previous generation, but for a number of people the company they work for becomes a large part of their identity.
> The one thing he's likely right about is that there probably isnt enough market to actually chase ...
I agree completely with your last paragraph. Of course Atlassian's market is very lucrative and they execute poorly (Jira is simply awful), so this seems like a viable business strategy to me.
It became ok when emotionally frail tech CEO's needed to cope with nagging existential fears of _not_ actually making the world a better place, while at the same time frantically trying to succeed so that they won't be left with the horrific ignominy of not being successful _and_ making the world worse.
One of the major takeaways for me from this article was about how sincere feedback and contributions to the company can be so quickly brushed aside. Making improvements aren't always easy, but espousing a "two-way street" then acting very "top down" is dishonest. A cultural issue.
Then I saw the communication about performance and then the firing, and I don't feel a reason to doubt the author. It's not a new story or situation. I've witnessed first-hand how some employees can be 'set up' by management to pretty much ensure a Termination channel. I'm not claiming the employee in my example was a Saint, but I watched the machine work and HR is not your friend.
A distant relative I got to meet was a career HR professional, eventually becoming the Top Dog at a company with 20k+ employees. He had one phrase for me that has been and continues to be invaluable: Guard Your Words & Actions.
This article should be appreciated for digging into the personal elements of reflecting on 'warning signs' that maybe there wouldn't be a happy ending. Wisdom is not always easily earned. What this author did is share some very personal experiences in their own perspective and I think, in many ways, it's like therapy.
We sometimes question our own choices and intentions in hindsight because in the moment clarity isn't possible. We're human. This piece felt very liberating to me, because I know I've been in similar situations and wondered if I was the one out of line or if maybe there was a bigger picture.
Sometimes talking dollars is the way we get down to what we value. This author is essentially putting his money where his mouth is. That, to me, is important and impressive.
My bad for not being more clear - there's a specific part in the article (I highlighted on Medium) that stated this:
>I was in charge of hiring them, so I went to great lengths to make sure my team consisted of the best possible people, with great engineering skills. You would imagine my concern and indignation when the CEO decided that the Service Engineers were to handle not just our increasingly demanding enterprise customers, but also every single GitLab related question posted on the internet, not just Twitter and/or Facebook, the entire internet!
I, of course, opposed this measure and went on to make my point as to why that was the case. I also suggested hiring specialized people, like Community Managers, to handle this task, which to me sounded reasonable, but management saw this as me going against the company’s best interests. To me, this clearly meant that it was no longer OK to voice your opinions, like it was in the past. In hindsight, this should have been the second clue.
That is the point I was getting at in I can see the value being added in multiple sectors! First, trying to cultivate talent and feeling responsible for that. Second, recognizing out-of-scope "Mission Creep" and speaking up. Third, not just complaining but offering a viable solution to the dispute. Fourth, being able to reflect that when good ideas are shot down without clarity and respect for the person and responsibilities being brought forward, is very important to the soul.
That's what I was referencing and I hope to have brought more context to my reasoning.
It's hard to really understand what was going on from this. How exactly did he voice his opinions, and how did the company respond? From the only evidence given (the gitlab comments), he seems to be overblowing things somewhat.
Counter-Point, never having a voice until "The Bobs" show up and do some "consulting" a la Office Space.
>...So that means that when I make a mistake, I have eight different people coming by to tell me about it. That's my only real motivation is not to be hassled, that and the fear of losing my job. But you know, Bob, that will only make someone work just hard enough not to get fired.
Post Script: Not Everybody Can Afford to Jerry McGuire Out A Gig. This essay? Closer and more real than most claim to be.
Being publicly critical of a former employer like this, unless you're talking about major ethical issues, seems like a bad move. There's just no way to do it without it coming across as sour grapes.
If you have constructive criticism because you believe in a company and want them to do better, give it directly to the people involved. Otherwise I just have to wonder what the real motive is behind making a public statement like this.
On the flip-side, never let one of your staff leave your company so unhappy they write a hit-piece.
As a CEO you'll know if your company has been a less-than-great manager to a member of staff. (If don't have lots of written evidence that you've been managing them well ... you've probably been managing them badly.)
This guy is pained he wasn't able to contribute as Gitlab grew. You can't always bring someone round as a company changes shape, but you can be kind & generous if you need to fire them.
On the flip-side, never let one of your staff leave your company so unhappy they write a hit-piece.
In a world where everyone is reasonable, that's good advice. There are some people you can't reason with. What I'd look for here, if I were working at Gitlab (I'm not): is there a pattern? If not, then don't worry about it. If there is, then worry.
I've seen bad exits that were the fault of the company, and ones that weren't.
> The cherry on top of this disastrous situation was that throughout the entire process I only heard good things from my manager. In total I had 3 1-on-1's with him, and even though we discussed the situation and what was wrong multiple times, he never, for one moment, gave me the impression that my job could be in jeopardy. A few weeks later I was fired.
This doesn't look like a company that takes direct criticism seriously enough.
I disagree, I am more likely to hier the guy after reeding this post as I want someone to know when they need help. And more importantly be willing to speak up.
I can't imagine anyone having run a company say they'll hire this person. Whether this guy was right or wrong is subjective, and people have opinions, but this type of attitude is so obviously toxic that this is almost a pattern.
There's a huge difference in someone who tell the truth to the one who needs to hear, and someone who posts it on one of these medium posts hoping that they can hurt them somehow.
As a development manager, I agree. Even assuming everything he says is 100% true, his main goal still just feels like venting. Which is fine, but you should vent to friends, not in a public forum like this. It would make me question his maturity.
>Otherwise I just have to wonder what the real motive is behind making a public statement like this.
What is the motivation for blogging about anything? I am extremely disappointed that we are still stuck culturally in this situation where we can't have healthy public discourse about these things, where private businesses can get away with whatever they want and then proceed to threaten people for even trying to talk about it. Maybe it is sour grapes, so what? The emotional highs and lows are part of the package when it comes to startups, and hiding them doesn't do any good.
Yet, at the same time I would think twice before working at gitlab now. I feel the CEO or HR should have had an NDA in place with a generous severance. Also, I would be hesitant about hiring the engineer. He was given a great challenge, but instead of rising to it, he made up excuses about needing mentorship. At the very least, he could've generalized the problem, and made an open source library as leverage for finding an even better job. Yes, he still might've gotten fired, but at least he'd have a tool he could call his own.
> He was given a great challenge, but instead of rising to it, he made excuses...
It sounds like he worked his butt off, what more do you expect? I don't scale mountains for my employer, I do what is reasonably asked of me - and it sounds like he did just that. Sounds like a typical chaotic startup culture growing too fast for its own good, not paying attention or supporting its employees' needs.
> It sounds like he worked his butt off, what more do you expect?
And where did you learn that? From this blog post? You use awful lot of "sounds like" in your comment. "Sounds like" is not enough of certainty to criticize someone.
- criticize them publicly
- "give feedback directly"
- whistleblowing
There's a bad ending to all those cases ranging from them blowing you off as a guy who got fired to lawsuits. I've always politely declined exit interviews as they offer me zero value and while I may have complained about a company over a beer, I've not blogged about it.
I think this is great for the rest of the developer community getting first hand feedback like this. Why would another developer want to work for GitLab? Same with Uber.
I don't know how I feel about this blog post but I think it reflects poorly on both the author and GitLab.
I feel that a company should always give feedback to an employee who is let go. Whether it's a simple letter or an exit interview, individuals should have closure when they're leaving a company and it doesn't sound like the author received that feedback. Furthermore, if nobody - a manager, for example - explicitly says "your job performance is not up to par for your position and we need to improve that" before an employee is let go then that shows a lack of organizational maturity.
I think the gripes he had were somewhat fair; if a mid-level engineer is given a task outside his comfort zone and he communicates that he's having trouble then a good senior engineer should be able to provide design and implementation advice to the less skilled employee. In my opinion, that's a huge portion of being a senior engineer - if one employee is floundering in his technical task then you need to be there as a patient, understanding, and willing mentor. Heck, even senior engineers aren't immutable bastions of knowledge and should rely on their fellow senior engineers to be a mesh network of interlinking skill sets.
The email about the tweet seemed justified if a little petty. The author was expressing pride over contributing to the product his company was putting forth. While it could be argued that he should have linked to GitLab itself, it is a gray area and I feel that stark admonishment isn't a fair or correct response.
In the end, it's still a very public complaint and these articles are mostly frowned on. That being said, I appreciate that this Medium post exists. It's a point of view to take into consideration if I ever plan to interview at GitLab - even if the author is enacting the definition of 'burning bridges.' To conclude, whenever I read articles like this I always have to think "well, what other points of view are there to consider?"
I guess at some point we should ask ourselves why "public complaints and these articles are mostly frowned on". I get that we should encourage professionalism, but this code of "don't say anything bad about your former employer" leads to a lot of startups getting away with pretty bad things. I feel like if a company has behaviors exposed and they are ashamed of those behaviors, their reaction should be to fix or eliminate those behaviors, not admonish the person who exposed them.
...unless it is Uber, then you can say whatever you want, apparently. The general perception of what is right or wrong is always so situational, and that is weird to me.
I agree with your comments, and I can see the other side as well (keep ones mouth shut because opening it likely hurts the individual the most), it just seems like the arguments are used so situationally, and I don't understand why. Maybe it is in our nature to be inconsistent?
That's why I lack surety over the article. At what point is is it considered tactless to speak about why you were let go from a position? Being fired isn't something unusual and I don't think it's something to be ashamed of.
I think it's a similar vein to speaking about your salary in an open way towards your coworkers. Logically, I don't see much wrong with that behavior but it still makes me feel uneasy. Similarly, I can't really say that I have many reasons against speaking against a company post-firing. If my manager held a large meeting so that my firing was a spectacle, then I would create a blog post detailing my experiences because that would be a very cruel way to let someone go.
I didn't feel like the author was whiny or overly nitpicky but something about the article made me uneasy. It could be because I have the wisdom of the aforementioned phrase "don't burn bridges" in the back of my mind. The author is now less hireable because he made his opinion public. A blog post isn't a Glassdoor comment; a future employer knows that they're hiring a liability that may 'squeal' at a perceived, and possibly valid, slight against him.
Once you get ejected from the cool kids' table enough times for random reasons, you see how not worth it is to put up with their bad behaviour. In the case of TFA, sometimes it's someone else that burns the bridge and there isn't anything you can do. I doubt this post is going to make him any less hireable, he was just in the wrong place at the wrong time.
However, employers should be uneasy about things like this, and not just because of him. Employees have these things called "opinions" and they will happily voice them if given a platform. If we want to continue having a culture where we can hire inexperienced executives and just let them do whatever, we have to be ready to accept the risks associated with it.
Just wanted to comment that I totally admire the bravery behind this post. GitLab definitely grows too fast (it was 200 last I checked).
It amazes me that far too many here are afraid of repercussions and retaliation by future employers (just see the "warnings" about bad blood in the comments here). That too on HN (who are supposedly the idealists who want to changes the world and all that)! Seriously guys, all this person has done is detail his experiences in what he thinks is the truth. And believes it enough to let go of a good chunk of money.
"Unfortunately, as a contractor, you do not have these protections. Given that the entire company is remote, only a tiny percentage of the people that work at GitLab are actually employees, and they take full advantage of that. "
Whether the substance of this is true or not, it seems unwise to have posted it. It probably felt good to write, but now there's a real risk that future employers will perceive it as a negative signal. ("If we hire this guy, will he air all our dirty laundry in public if it doesn't work out?")
I have thoughts about whether his perceptions are accurate, but I mostly just want to say: kids, if you're thinking of writing something like this, probably don't. Go out for drinks with a friend and vent one on one instead.
As companies grow, their politics changes. It's a fact of life. You want to keep working at a startup, quit and go find a job at another startup.
If this bitch-fest affects his career at all, it won't be in a good way.
I've seen more than one developer lose their jobs over politics. One guy, I've seen sabotage job after job over his idealism. I try to help him but you can't teach political savvy to an unwilling student. He hears and understands me, then goes and does the exact opposite of what I tell him to do. And it has exactly the effect I predicted.
I maintain that the biggest reason developers can't get ahead is because they don't have the stomach for politics.
Identity trumps economics. Idealism is a political position; it's just not an economically rewarding one. It can feed the ego, though, and taking the other road - sacrificing principles for money - may lead to more net unhappiness.
My friend the idealist is way less happy than I am. I submit that he would be happier if he had more say, more money, and more flexibility at his job, but he threw that all away in the name of idealism. I agree, identity trumps economics, but there is such a thing as having more principles than sense.
For many, Happiness is not a goal of life. Rightful living is. See Buddha, Gandhi, MLK etc. Sure, You might be happier than them but that hardly means anything
These people you are holding up as paragons were way more political than you probably remember reading about. Particularly Gandhi. The only difference between their politics and your politics is that they actually accomplished things.
Not being willing to get political dooms you to a life of both mediocrity and misery.
The GitLab exec team is probably pretty happy to be reading this blog post. Because Patricio isn't exercising his stock options they will return to the option pool, where they are available for re-allocation to new hires.
0.1% of a Series B company is the entire four-year grant for a new engineer, or several sales / operations folks.
I doubt it. The guy got screwed over big time and he doesn't even fully realize it. Apparently he was working against himself for more than a year. They delayed the grant and the vesting date. Perhaps even gave him strike price with his own projected value calculated in the strike price. The whole point of the stock options is to get a strike price without your own value in there. Also it's likely there was dilution so the numbers don't add up like people say, hard to hire 150 people and take 20M without dilution. If that's the case you need 10 lawyers to watch your back working with gitlab.
He was not screwed. He was contractor and contractors typically do not get any options at all. After one year, GitLab offered him options as an incentive or bonus with standard four year vesting - similar to how big companies award you stock options/RSUs annually.
Well, he is under the impression he was a 9th employee and the grant was delayed. So if this is a bonus for time served then it wasn't made clear to him what's his standing. It doesn't even make sense to award options at that point unless they are backdated maybe [1]. And I am willing to bet money that the nature of the options was misrepresented. Foreign contractors are particularly vulnerable since they wouldn't have experience with US law and finance.
I don't know of any companies that award options yearly/bonus, it would be an incredibly stupid thing to do, must always do RSUs [1]. Options may be adjusted for dilution or promotions yearly, but that's different. Options are designed as a tool to get a % proportional to what you add as value. If you get options with your own work valued in the strike price, those options are orders of magnitude less valuable than the options you get at sign up. If gitlab made that clear and he agreed, then I agree gitlab are in the right, otherwise yes he got screwed over big time.
[1] The problem with delayed or yearly options grants is that workers have a huge incentive now to lower the strike price for the next valuation. Why would you work hard against yourself if you are really just increasing the price you buy at? You'd be much better off to work against the company at this point and score a lower strike price. Further how can you trust a company that makes you work against your own interest. Perfect example of lose-lose.
Except that the negative PR from the post may well deter qualified applicants in the future, which could easily be worth more than <.1% of the company.
Back in 2003, after i had given my two weeks notice but had not left yet, I posted on Yahoo finance that i thought the company i worked for "underpaid employees". That was it. And who is reading Yahoo finance anyway? I was asked to leave prior to the two weeks ending, and at least one person at where i was being hired had read it. I deleted it, pronto, and nothing bad happened to me, but it was definitely a learning experience. people that know you read the most obscure corners of the internet, and it should never be taken for granted. i suspect this person will have a hard time finding employment.
Well...yes. For the most part. The ugly reality is that if a company doesn't hire a known troublemaker, they are less likely to be subject to troublemaking. If you think companies, startup or otherwise, are going to act in some altruistic compassionate way toward employees at their own risk, well, you will probably be disappointed. Like 99% of the time. Especially when most of the whining sounds very subjective to opinion, as it is here.
I'm shocked GitLab mustered the courage to tell an employee they "do not have the company's best interests in mind" after said employee moved to a new city, with its coworkers, and agrees to put in +10h/day of work. That's all assuming it is true, which honestly sounds like it is. I have seen that happen.
I don't remember who told me this but if you are gonna write an angry letter then write it but let it sit there for at least a day. If the next day you come back and still think it is good idea to send it then do it, otherwise just hit delete.
GitLab is much younger (and at the time smaller) than I thought. I contracted for a major bank in 2015, and they were in the process of switching from Stash to GitLab. This sounds like GitLab only just existed at that time. Sounds crazy for a major bank to switch at such an early stage.
This presents a question I've had for a while. Suppose I want a small number of units (say the 15000 he has here) in a company that's pre-IPO, is there a standardized agreement for me to buy it from him?
While his past employer probably has right of first refusal on the units, wouldn't he still come out ahead if I wanted to pay him, say, $10000 for the 15000 units?
Could they have legally pre-emptively blocked the sale? Are there standard agreements where I could take ownership of the value behind those units without having full ownership or voting rights?
Disclosure: I work at EquityZen, a marketplace for pre-IPO shares
Every company has different transfer restrictions on their shares/options. Yes they could legally block the sale if their by-laws or the share grant agreement allows it. We have somewhat standardized agreements for transferring shares at EquityZen, and we get company approval for all deals.
Usually companies have a clause where they have the first right to buy the stock options back before you offer them for sale to anyone else. Employee stock options are sort of intended to be NODROP, and if they want to make shares available on like second market, they need to create a pool of shares specifically for that.
I would be curious about the legality of working around that restriction - like, what if the option holder creates a contract with someone who wants to buy the options, where they agree to hold onto them and then give them to the buyer once they are allowed to in return for a lump sum payment up front. Or, perhaps, they set up an agreement where they are given a lump sum payment up front, and agree to pay the buyer an amount equal to the current value of the stock once it becomes publicly available.
I've looked into exactly this arrangement before. I couldn't find anything definitive, but I imagine that the second buyer will be in a very risky situation should the shareholder decide to break the contract down the road.
Oh, so secondary markets are still beneficial to participate in if permitted. So this guy should participate if he can. But you work with the original company, etc., I suppose. Makes sense.
Make sure you look at Phabricator, too. It's great and the dev team is highly professional.
Has a Trello-like work board, good project management and - most importantly - a sane and highly optimized workflow that works very well for a number of large companies and open source projects.
One of the biggest weaknesses of gitlab, that becomes glaring as you add more and more projects, is that a code repository and a project are considered one and the same thing. It's quite common to want two or more separate repositories for an actual development project (e.g. frontend/backend or client/server etc.).
Of course gitlab's problems arise from the fact that their whole reason for existence is being an open-source copy of github. (And github is designed first and foremost as a public facing opensource management tool... which forces a lot of their product design choices).
Does phabricator work on a different paradigm that's more conducive as an internal tool to manage dev projects for a single organization?
One thing objectively wrong on this post -- you do not pay tax on the preferred price unless you got preferred shares (exceptionally unlikely). Common is worth less so you pay less tax.
"Whenever a company takes on VC investment, there are certain expectations attached to it. It depends a lot on which fund invests on the company, but more often than not, with this investment comes the expectation that you have to spend the money as quickly as possible in order to grow, and once you have spent it, you’ll have to ask for more money again so that you can keep on spending it, and so on and so forth. All this is necessary to create this illusion of value, importance, and relevance needed to maintain outrageous valuations."
This is something all entrepreneurs who are looking for investments should really understand. VC money dictates huge growth and this is not suitable for all business opportunities. For some viable businesses taking VC money is akin to signing their own death sentence.
For the less seasoned, we should all learn from this. There are 2 sides to every story and I am almost sure that management has a dramatically different view of what transpired. Not because either is right or wrong, but they seem to be viewing things through lenses.
That being said, working at a startup is like a marriage, you have to find the right fit. When he joined Gitlab, it may have been the right fit, but companies and founders much like everyone else who suddenly comes into money, often change. Sometimes even thought you love the company, priorities shift and change. When you start noticing that, it may be time to move on.
Kudos to him on not choosing to cash in his options. Definitely putting his money where his mind is.
sytse is very active on HN whenever GitLab comes up, but not at all active on this thread.
That's almost certainly wise on his part. I know I endeavor never to discuss (someone other than my personal) employment issues publicly, for myriad legal and ethical reasons.
I feel for this guy. I was an extremely early employee at a startup, and when I left I was faced with the decision of whether or not to buy exercise my stock options. Eventually I declined to exercise them.
Telling your friends that you don't value the thing you've all been pouring your life into is tough. It feels like you're insulting them. Esp when there's still money in the bank and the investors don't know what you know about the company. But I saw the writing on the wall. The ship was sinking and I couldn't get them to plug the leak.
Ultimately I decided that I'd rather give up my lottery ticket and be happy. Turned out I ended up happy and much better off financially and emotionally. As always there's a relevant xkcd: https://xkcd.com/1768/
As elastic_church mentioned below, the firm I work for (The Employee Stock Option Fund: https://employeestockoptions.com) could help fund the exercise and help cover potential taxes. We aim to give employees upside in the startup without them having to invest their own money.
Each deal is custom tailored to the optionee. As you can imagine, some people have higher strike prices than others and as a result, the economics of the deal would change. We typically aim to take a minority position because we want our counterparty to have a vested interest in the shares.
What is your firm's angle in this? Do you take a cut of sales if\when the stock sells? I've some options that I have to act on within a month or two, but I don't think they qualify (company is kind of in the twilight zone - founded >10 years ago, but not publically traded).
We take a percentage of the future proceeds (which gives us upside in the startup). You may be surprised, a lot of companies are taking >10 years to IPO including Mulesoft. Feel free to send me an email at chris@esofund.com and we can chat!
OP is sabotaging his future employment prospects by taking the firing so personally.
For whatever reason it wasn't a good fit. It's not professional at all and speaks badly on your character and appears immature. It shouldnt be a revelation that culture changes when you go from 10 to 100 employees.
He doubles down on this by making financial decisions based upon his hurt feelings, like he still holds a grudge and isn't over it. Who wants to employ someone like that?
This is not the case. When firing somebody there are two options you have as an employer:
1. Fire them the usual way, in this case there is a termination period (usually 1 month).
2. Fire them on the spot. This is possible, but usually only done if an employee violated a contract agreement, harassed somebody, or basically committed some kind of serious offence.
This only applies to those employed in The Netherlands, other countries may have other rules.
Although someone else already commented that he's a contractor and not an employee, I still wanted to explain this a bit more.
To me, the most outrageous part was this:
> The cherry on top of this disastrous situation was that throughout the entire process I only heard good things from my manager. In total I had 3 1-on-1's with him, and even though we discussed the situation and what was wrong multiple times, he never, for one moment, gave me the impression that my job could be in jeopardy. A few weeks later I was fired.
I'm not a lawyer, but there's no way that would be acceptable under Dutch law (if he was an employee).
You can definitely fire someone if hey are not performing. But you'd at least need to warn them about their performance, and allow them time to improve.
> You should be protected by the dutch law. If you are an employee, you basically cannot be fired if you didn't do anything outrageous.
Unfortunately, as a contractor, you do not have these protections. Given that the entire company is remote, only a tiny percentage of the people that work at GitLab are actually employees, and they take full advantage of that.
There's nothing particular unusual about Japan's taxation here.
If you buy stock at the stock exchange at $100 and its price increases to $150 but you don't sell it, you don't pay any taxes.
If a company pays you with stock that's worth $100 then you pay income taxes on it (even if you don't sell it), just as if it were salary. It makes sense to me. (If the company bought you a car you'd have to pay taxes on it, even if you didn't sell it; otherwise it would be a great tax loophole.)
With stock options it's similar. You don't pay any taxes when the company grants you options or when they vest. If the strike price is $10 and you exercise it when the market price is $100, you pay income taxes on $90 (basically your company paid you $90).
Australia does this as well. Tax systems are inherently complicated, I know there are numerous efforts underway to change this aspect but nothing has happened here in Australia nor anywhere else to my knowledge. It is a pretty sucky aspect of taxation law.
Doesn't apply here. 83(b) Election only applies to restricted stock. Because he was fired He can only exercise the part that vested, which is not restricted anymore.
With stock options you only file 83(b) Election when you do an early exercise.
How difficult would it be for him to exercise his options and sell the shares to a 3rd party? Are there any examples of startup employees doing that in the past?
Give them to ESO fund so someone can take the risk to make a buck off of the options!
Its a good deal and nobody cares about your emotions. (ESO fund just fronts the capital for you to buy the shares you are entitled to, and makes a separate contract entitling them to some profits, risk free for you)
Silly to spend that much of your life just to weigh $4000 or so and write a blog post the circumstances leading up to that decision, when there's infrastructure to remove the decision making process out of it.
Off topic but I hope this medium.com trend starts to fade. I can't read the damn thing on my mobile when there are social sharing icons AND green open in app icon floating, taking room on my small screen.
Why would I want your app or open it on app? It's s damn simple blog not some kind of webapp.
Svbtl.com was also a thing here time ago, why did that platform become uncool?
Continuing the off topic nature....I am still at a loss as to why people want to read websites on a mobile device, even if you have a 10in tablet is terrible experience IMO...
I will take my 3 27in monitors over tiny phone display all day long... Medium looks fine for me...
Reading the article it just feels like the author and the company just drifted apart over time. Something that happens very often in life. When the number of people involved in a certain thing are few, their goals and purpose typically are aligned. Over time, as more and more people get involved, it's practically impossible to have all of them aligned to the same goal and expect their purpose to be the same.
After a while, some of the early passionate team members have to compromise with the situation or move on to something else.
> Didn't know remote work would play a role in this matter. Is that true?
Not sure about acquisitions but in my uninformed opinion, I assume remote first made an acquihire somewhat less likely what I saw as a feature as gitlab tries to get enterprise customers.
The article states he received those options as a contractor. Is this common? I was under the impression that only employees are entitled to stock options. If it's possible to get these options as a contractor, what really differentiates the two practically?
Using what information one can gather from their salary calculator [1, 2], the distinction seems to be mostly related to the staffer's location. Staff from US, UK, NL, IN, CN, BE are hired as employees (with a salary multiple ranging from 0.66 to 1.00) of Gitlab Inc., while staff from all other locations is hired as contractors of Gitlab B.V., using a multiple of 1.17 (probably to make up for the lack of employee benefits).
I have no relation to Gitlab other than having had a look at some of their job postings, so please do take this information with a grain of salt. Happy to have someone more familiar with the details correct any mistakes.
I disagree. I appreciate his courage in posting this. As an employer, this won't stop me at all from hiring him. I would definitely think about hiring you though, specially being so condescending as if you have seen it all.
If GitLab now posts about their side of the story and continues this shit show, will you think highly of GitLab too? Are you more likely to swtich from GitHub/BitBucket?
As someone who knows the CEO of GitLab, I can say nothing but amazing things about him. (Even reading through this article, you'll find nothing in it that casts a negative light on the CEO.)
I'm sure there's a ton left out, and this seems like a bitter hit piece rather than a well-thought-out, balanced critique of a company.
I follow GitLab's CEO posts with attention when he comes on HN. However, this post reflects terribly on GitLab's culture. I don't think anyone would want to dedicate time and energy into a company that squeeze their employees' creative energy just to leave them behind, dry, and without nothing but their eyes to cry. Loyalty must go both ways.
Obviously, this only tells one side of the story, I'll be curious to hear what GitLab has to say about this. Or maybe they'll refuse to comment. Who knows. Right now, taking this story at face-value, this is sickening.
Also, damn, that email from the CEO about his private Twitter. That's completely out of line.
For those of you that didn't read the article, the CEO called him out about a specific tweet (on a personal account with only 146 followers) where he linked to GitLab's page on Github for crying out loud.
(also, curious note: this comment went from 4 points to zero in less than five minutes. Hmmmm.)