Startup Stock Options – Why a Good Deal Has Gone Bad - <AUTHOR> https://steveblank.com/2019/04/10/startup-stock-options-why-a-good-deal-has-gone-bad/ <comment><USER2> I was part of a very well know incubator and a very early employee at a flagship company. Founder blew tons of cash and dilutions but that is part of it and I didn't mind.

What was ethically shady was shortly after I left with 4yrs vested they decided to restructure the entire company so they could attract investment. They took all the debt from the original company and put that in a shell company that then owned a portion of the new company. Guess where early employees' stock went? The debt vehicle.

I actually did make some money on the eventual exit, but probably 1 or 2 orders of magnitude off of what it would have been if my stock was in NewCo. Consider the tech we built was a major driver of the acquisition, it was frustrating.

People are greedy, no matter how nice they are to your face.

<comment><USER3> Curious why you don't mention their name? Feels like there's little recourse against this sort of thing other than reputation risk, why not out them publically?

<comment><USER4> While I'm sure it would be quickly sued out of existence, are there sites specializing in this sort of information? I'd love to see names of founders/early investors/board members/... easily associated with these kinds of decisions (i.e. track records of the good and bad). I have to send feelers out into my network to dig up this kind of information but that's not an option for a lot of people new to the industry.

<comment><USER5> Shame we don't have fuckedcompany.com around for this any more.

<comment><USER6> Valleywag was essentially that, but did get sued out of existence.

</comment></comment></comment></comment></comment><comment><USER7> I made a bunch of money from ISOs at large, established companies.

I made _zero_ (well, negative, really) from startup stock options, even before things got really shifty in the 2000s. One startup that I left, that is now a billion dollar company, simply decided to "extinguish" the shares I bought a few years after I resigned. I was probably cheated, but it's not worth the effort to go after them and they know it.

Treat startup options as wastepaper. You might get lucky, but it's really, really unlikely.

<comment><USER8> I would be really curious if someone could shed some light on how a healthy company could simply decide to "extinguish" exercised shares. Like how exactly would they go about doing that, and do you have examples I can read up describing where and how this happened?

I would understand if that happened when the company is in trouble (e.g. valuation dropping below the last preferred valuation, so preferences kick in, or as a result of the company having to honor very high liquidation preferences), but otherwise?

The only couple very shady cases I know about where Facebook with the Brazilian cofounder (with a complicated legal process where they reincorporated the company into a new one or something like that) and Skype with the employees (who naively signed a clawback clause in their agreement stating that the company could repurchase shares in the future at the original grant value even if their price skyrocketed, or something similar).

In all the other cases I know about where employees got screwed, it was because the company saw its valuation plummet and the investors preferences kicked in, in one way or another, so "extinguishing" common shares in that case is "expected" and more similar to a public company declaring bankruptcy and seeing the shareholders being wiped out while the bond holders can generally recoup something, since they have "preferred" terms inherent in the nature of the bonds.

<comment><USER9> This is what startups pay a lawyer to do. It's not that hard: restructure the company ownership in a long document with complicated terms. Get the employee to sign it and voila, early employees are screwed. The only real response is just not signing, but they will tell you the company will die if you don't do it, and you probably will just take it rather than fighting. At least I did.

<comment><USER8> But signing something without not understanding it is too naive.

So, assume I already left the company and exercised a big bag of common options and so I have a decent amount of common shares. If they tell me to sign something that looks shady I just say: "No, it looks shady".

What then, can they do?

<comment><USER10> Send to lawyer's office to pressure you.

It doesn't take a lot of imagination to see that this can happen. People are generally naive, and there are just a few that will resist and fight.

<comment><USER11> Especially if you depend on the money the job pays _now_ and you can't pay a legal battle while searching a new job.

<comment><USER9> This. Stated another way, you need to make a decision in the very small timeframe about the tiny chance of success in the far away future, versus guaranteed success (your next paycheck) in the very close future.

</comment></comment></comment></comment></comment></comment></comment><comment><USER12> He glosses over an important point: it's now typical for founders to take money off the table as part of financing rounds, sometimes as early as the A round. Founders will request it as part of a funding round and, there's so much competition to invest in the top startups, that VCs go along with it. Decades ago, this wasn't the case. Founders waited for the IPO like employees.

If you're an engineer sitting on $5m of vested stock in a decacorn, it makes financial sense to sell some of it. Today, companies make that really hard to do.

If employees could easily sell their stock while the startup is still private, this would solve a lot of the problems.

<comment><USER13> If early liquidity wasn't an option for founders, this massive pre- ipo/private-ipo market wouldn't exist.

Without early liquidity, a pre-ipo zuck/kalanick/etc. would be a paper billionaire with $0 in the bank and >$1bn "invested" in a risky tech startup. That's not financially or mentally sound, even by their risk lovin standards.

If investors demanded every penny go towards growing the business, those CEOs would just IPO earlier to get liquidity.

It's a necessary alignment of interests, if investors' interest is delaying the IPO.

Employee options holders can't just decide to take a company public, so their interests can stay misaligned.

<comment><USER14> > Employee options holders can't just decide to take a company public, so > their interests can stay misaligned.

Not for long, though. The standard HN advice of "value options at $0" came about from a generation of employees conned by this, as you call it, misalignment.

Also, when you trap employees into heavy golden handcuffs, abuses of power in line management thrives (as what happened at Uber).

<comment><USER15> Given tech workers complete inability to form a union or guild I wouldn't bet on it.

<comment><USER16> Tech workers now have a lot of power in negotiations and are using it to demand high salaries. If options were ever offered to me in lieu of salary I would simply say no.

<comment><USER15> Do we?

Having a look at the revenue generated per person in Facebook vs General Electric we seem pretty shit at negotiating. The revenue per employee at GE is 400,000 at Facebook it's ~1,400,000. I'm not hearing FB paying people ~4 times the wages that GE does. Most I've heard is ~1.5 times for similar positions in similar locales, having friends in both.

We have convinced ourselves we're special snowflakes while the lucky and ruthless laugh all the way to the bank.

</comment></comment></comment></comment></comment></comment><comment><USER17> The article is right but misses the biggest problem with options: the need to spend money you may never get back in order to have a chance to be paid anything. There are two ways this happens:

\- You leave the company after 4 years and have 30-90 days to exercise. The exercise will cost you $20,000. The company is nowhere near an exit. Do you do it?

\- When you exercise you are either immediately hit with a tax bill for NSOs or you get screwed on AMT with ISOs. You suddenly owe money to the IRS simply because the company received a very high 409A valuation just before you left. A liquidity event is nowhere in sight.

You've taken a huge gamble by joining a fledgling company that pays little with a low probability of success. You toil for years an overcome tremendous odds to just keep the company alive. But now when you leave the IRS and the company itself wants you to take a final gamble with your hard earned cash.

I used to be an attorney who drafted option agreements. Now I've been at two startups as early employees. The reason why this never comes up is because employees do not know what they are getting themselves into. The options are worth very little BY DESIGN. Unless you are among the first 5 hires, you will have no leverage to negotiate a better deal.

<comment><USER18> A number of startups screw over their employees with options. 90 days is a terribly short exercise window. Kinda like a scam in a way.

But not all startups are like that. Where I work (Mixpanel), that window is 5 years. Which I feel is a much generous and fair offer.

With stock options, I pay no tax. If the company liquidates, then I convert the options to real stock (yeah i'll have to pay money to do that). If things go better, I hold that stock for one year and when I sell, I pay capital gains tax at a much lower rate on the gains.

But. Big BUT, there's a lot of assumptions. Things may not go well, may it doesn't get valued as much, may be it takes longer than 5 years. Lots of may be's. That's part of the startup gamble.

We are hiring btw if anyone is interested in analytics space. DM me.

<comment><USER19> But you have NSOs though, not ISOs right? From what I understand, ISOs are required by law to have a 90 day exercise window, so companies that offer more than 90 days after leaving a company are having ISOs converted to NSOs. When you exercise the NSOs, you still will have a tax bill.

</comment></comment></comment><comment><USER20> Why don't startups offer actual equity grants instead of options? It seemed strange to me when I was starting out in my career that I needed to take a lower salary and options to exercise upon my exit, which wound up costing me thousands of dollars from that lower salary.

Two years later, one founder forced out his two other cofounders, started a new company in the exact same space, and poached his best employees, essentially jettisoning the cap table in the process.

The small frys who exercised their options were totally screwed. That was a real lesson for me on how crazy this stuff can be.

<comment><USER21> Share grants would be seen as income by the IRS and most states and taxed at their Fair Market Value. Options on the other hand usually qualify as Incentive Stock Options that aren't taxed at grant time and "when exercised, it isn't necessary to pay ordinary income tax. Instead, the options are taxed at a capital gains rate." [1]

Options are better up front because there is no outlay for the employee. They are a hassle down the road. However, if you exercise during a liquidation event your tax liability is probably covered.

Stock is a pain upfront unless granted before the first round of funding or any real revenue when the stock value is very little. They are easier down the road, though.

Just my two cents. HackerNews, please correct any errors in logic or how this stuff works.

1\. [https://www.investopedia.com/terms/i/iso.asp](https://www.investopedia.com/terms/i/iso.asp)

<comment><USER22> Companies should either:

\- award RSUs that have a liquidity event as the final vesting requirement and don't expire (so you are not taxed until you can sell, and don't risk losing what you already earned), or

\- pay annual cash bonuses that are "grossed up" so that the after-tax amount of the bonus is enough to cover the taxes levied against the employee's value of actual stock or vested RSUs, etc., and ensure the company bears that tax burden.

I'd be more forgiving to fully bootstrapped companies, which are often fairer to employees anyway.

Not willing to compromise at all for VC-backed companies, period. They also should be paying full market wages and the equity portion is solely meant to be competitive with the equity compensation or bonuses at public companies.

<comment><USER23> The IRS considers RSUs that don't have an expiration date as being close enough to actual shares to be taxable income. There has to be a "substantial risk of forfeiture" to qualify for deferred taxation.

<comment><USER22> In that case, then only the second suggestion.

<comment><USER24> That's usually referred to as Phantom Stock, and is a thing.

</comment></comment></comment></comment></comment></comment><comment><USER25> Valid reasons to work for a startup:

\- You are a cofounder.

\- You have little experience and you are using this to break into the industry, and get experience on many different technologies ("wear many hats").

\- They are working on a very specific problem or using a specific technology that you strongly desire to work on and it's difficult to do it anywhere else.

\- You want to work a certain way (remote, on the beach, whatever) and they are willing to go this route.

Invalid reasons for working at a startup:

\- Getting rich off stock options.

\- Making a lot of money in salary.

\- Work / life balance.

\- Stability.

<comment><USER26> Not exactly a unique experience, but my .05 - I started of at a startup with a "lol just do it" attitude to whatever the problem was. Worked 12 hours a day a lot, was stressed out all the time, didn't have a life, got calls at odd hours to deploy...but, if I didn't have that experience, I wouldn't have grown nearly as fast. Got to see all aspects of the products and the consequences of the decisions we made early on. Learned more in a year than in the last 3 at corp/consulting jobs. Then again, maybe it was noob gainz and I made at least a third less than I would have at a corp job.

Not sure if going back to a startup would be nearly as beneficial in terms of "levelling up." Seems like the game now is to grind whiteboard before I get too old for Google.

A friend grew from junior developer to director of IT at that startup, so there's that aspect as well, though I have also seen a number of startups hire leadership outside.

<comment><USER27> FWIW, I've worked with a lot of entry-level people at normal companies over the years and would estimate that noob gainz are 30-50% higher in startup land for the first 1-2 years of career, maybe 10-20% higher the next two, then flat or actually lower than corporate thereafter. I think it comes down to 1) startups pile a lot more responsibility onto their young hires than normal companies are comfortable with + 2) startups have a lot higher tolerance for failure + 3) small companies in general don't have headcount for specialized roles, so everyone has to level up in multiple areas.

<comment><USER28> I've worked at two startups, then a BigCo, and now another startup. The wearing of many hats was definitely a leveling-up experience, but I felt that I plateaued in just the way you describe. Equity from both of those first two startups is now worth zero.

In my years at BigCo I worked with engineers who have 10-20 years more experience than I do. Often felt like the dumbest guy in the room. I learned a ton. No comparison. But I would never have gotten the job there without my previous startup experience. And without that experience I'm not sure I would even have been able to learn from my BigCo co-workers so successfully.

I got tired of corporate politics and a high traffic commute, so now I'm happily back in startup land.

<comment><USER29> I think there's a similar dynamic with consulting - ThoughtWorks / Pivotal Labs type places. You get shunted around between many different projects, there are never enough people, so there are opportunities to take more responsibilities, and things are often a bit fluid, because a consultancy coming in tends to (should!) crack the organisation a bit. There are downsides to all of that, but it's also a way of getting wider faster, if not getting a lot deeper.

<comment><USER30> I worked in Pivotal Labs for about two years. It is an _amazing_ place to learn the craft.

</comment></comment></comment></comment></comment></comment><comment><USER31> To his suggestions, I have another.

Offer internal Dutch auctions on a regular basis to provide an opportunity for investors/the company/etc to buy stock from employees at a reasonable price. This makes the value of the company, from the point of view of the employee, not "funny money" but something very tangible. With an opportunity to cash out long before it is public.

<comment><USER32> I'd be very careful with that... there are all sorts of internal/external events that can influence the perceived value of the company and information about them is not evenly distributed. Creating an environment where individuals in some groups can profit from this disparity (or even misinformation) is asking for ugly office politics.

<comment><USER31> All possible solutions come with downsides. It is still an option to consider.

</comment></comment></comment><comment><USER33> IPOs are increasingly turning into an exercise of the Greater Fool Theory [1]. I'm not sure if it's investors or employees who are the bigger fool. Investors can fall back on ratchets [2]. Lyft may sue a bank for helping pre-IPO investors short sell [3]. What does seem to be clear is the widening gap between smart money (investors) and dumb money (employees).

[1] [https://en.wikipedia.org/wiki/Greater_fool_theory](https://en.wikipedia.org/wiki/Greater_fool_theory)

[2] [https://www.investopedia.com/terms/f/fullratchet.asp](https://www.investopedia.com/terms/f/fullratchet.asp)

[3] [https://www.cnbc.com/2019/04/06/lyft-is-threatening- litigati...](https://www.cnbc.com/2019/04/06/lyft-is-threatening-litigation- against-morgan-stanley-accusing-the-firm-of-supporting-short-selling.html)

</comment><comment><USER34> It's bad for most people, but when it's good it's really good.

I was lucky to join a now unicorn as one of the first few dozen employees a few years ago. I forward exercised with a few thousand out of pocket (section 83b) an equity grant now worth around $1.5m. Because I forward exercised my options at a low valuation I didn't have to worry about paying taxes if I exercised at a later time when the company's valuation grew. It also meant that my gains became long-term capital gains, and thus taxed lower, as soon as possible after I vested each month.

<comment><USER22> Your story still leaves a lot of room for skepticism. For one, 1.5MM is not actually a very good deal for an engineer in your situation, and likely the company gave you very unfavorable terms. Electing 83b is a fairly irrelevant detail in your story as it only affects taxes, not the outcome of the company.

Your shares are likely going to get hugely diluted exactly because of growth investing like in the article. Investors and founders will essentially trade away your share of the company in new rounds, while they get huge payouts for it, your shares may grow a small amount, again realized over some long time horizon.

Let's take an extreme example and say your shares double in value (not likely) through the remaining funding rounds, and eventually in another ~7 years you can actually sell them in some liquidity event.

So that's $3 MM (gross) over 10 years. That works out to be $300,000 / yr in equity compensation.

Certainly very high. But not any kind of crazy number. Definitely there are rank and file engineers in FAANG companies, Wall Street, and other industries getting annual RSUs or bonuses well beyond that without having to wait 10 years to realize it or have the risk that it folds or you get laid off and lose a bunch of future value, and have a high base salary, good benefits, and good work/life balance the whole time.

Given that even a crazy outcome like $3 MM annualized over 10 years isn't _significantly_ better than other reasonable total comp opportunities, this overall paints a really bad picture for start-ups.

Your case, which is nearly about the best lottery ticket someone could get, is only slightly better than a competitive position at many public companies, finance shops, etc.

Meanwhile, almost all start-up outcomes would be far worse.

<comment><USER34> There's a myth that you can't realize gains if a company doesn't IPO...I've already sold some shares in a tender offer. There is an active secondary market for shares if I chose to sell more.

Not sure what your point is about $3MM over 10 years. Why would you divide it over anything other than the number of years you actually worked at the company?

You've assumed I was a senior engineering hire. I was in a junior non- technical role a year out of college.

<comment><USER22> Early selling for employees is exceedingly rare and also often on bad terms, this was mentioned in the OP article. Again, it's lucky that you were able to, but is such a wildly unlikely outcome that functionally everyone else has to ignore that aspect of your story. To boot, being able to sell in a secondary market transaction only after about 3 years is even more ridiculously rare (to the point that it makes me question if your whole story is even true, or just some trolling). The few companies I've heard of allowing that type of thing (late pre-IPO Spotify, Squarespace), only allowed it after early employees like yourself would have waited 7-10 years before getting any payout.

> "Not sure what your point is about $3MM over 10 years."

Please re-read my comment to help understand.

> "You've assumed I was a senior engineering hire. I was in a junior non- > technical role a year out of college."

Where did I make an assumption about junior vs senior level?

As for your claim you were given this grant for a non-technical role 1 year out of college, I think it's more likely you're just lying to troll this comment thread. Just in a Bayesian sense, the conditional probability that you're lying is higher than that this is a true story.

It's not impossible that this could have happened for a non-tech hire with no experience, but that mere possibility also is irrelevant compared with the far greater probability that this is just made up.

<comment><USER34> I never said how many years ago I joined...by a "few years" I meant 5. I said I sold some shares via a tender offer, which are company sponsored, and last year was the first time I was offered that opportunity. Companies can't block you from selling on a secondary market unless you've specifically agreed to that as part of the initial grant. It's far more common that they have the "right of first refusal" clause which means they get the chance to buy back your shares before selling to a third party.

I don't think there's anything particularly special about my situation other than I was fortunate to join a now unicorn early on.

</comment></comment></comment></comment></comment><comment><USER35> It's sad that VC/founder's greed and throwing early employees under the bus became the norm :-( I guess that's a sign of maturity of our field and an indication for bright people to move on to take risks directly, offer their services to companies as legal persons and ignore startups as employers.

</comment><comment><USER22> It's not just that the structure of option grants has worsened (also, expiration practices still are pretty bad for employees), but also that the valuation of the option grants is often way too low.

If, as in the article, a start-up is effectively offering a low salary + a lottery ticket and expecting candidates to see it as at least equally as valuable as a high total comp figure from a competitor, then the lottery ticket has to be priced very highly, to drag up the expected value after accounting for all the high likelihood outcomes that have poor payoffs.

Add to this the fact that, despite false promises, you won't get more freedom, career opportunities, cutting edge work, etc., at most start-ups than you would at even average-case public companies, and it's a bleak picture. No aspects of the work experience will create additional forms of "payoff" that help offset the low salary and poor lottery ticket equity, and in many cases the work environment will be toxic, full of immature behavior, unprofessional, etc., and candidates should really be requiring _higher_ compensation than at a big company, to deal with the start-up dysfunction.

When the option valuation (even assuming a hilariously unlikely high value exit or IPO) is eventually diluted and spread out across ~10 years that you have to delay getting that money you earned (or even lose it all because of a layoff + poor expiration policy), and at best it turns out to be the annualized equivalent of a pretty modest bonus, it's just deeply not worth it.

You will not have gotten anything else out of it (specialized experience, leadership or business skills, networking, oddball perks) that offsets the income you could have been earning almost anywhere else.

<comment><USER36> I was awarded RSU's at my last company (a perpetual startup) - not millions, but maybe tens of thousands of dollars. I had a signed contract that guaranteed them. But then the company merged/consolidated/de-consolidated/re- merged and shuffled around so that when they finally got rid of all of us, they said that those stock options were worth nothing, too bad, so sad. And what am I going to do, spend $100K on a lawyer to maybe recover a quarter of that ten years from now? And they know we won't, that's why they get away with what they get away with.

<comment><USER37> I don't know but you may have been the victim of 'liquidation preference' (and participation). Your perpetual startup never went public. Each of the investors, seed, A, ... has a preference in case of a liquidity event (exit) over earlier investors and a participation (multiple) as well. Your RSU was just at the bottom of the heap and there was nothing left.

The founders would have had something equivalent to your RSUs but ... they were doing the negotiation. For example, IIRC, Anthony Levandowski cut his employees out when he sold 510 to Google. (So it shouldn't have surprised anyone at Google when he later screwed them as well.)

[https://www.invigorlaw.com/key-term-sheet-provisions- liquida...](https://www.invigorlaw.com/key-term-sheet-provisions-liquidation- preference/)

Edit: the article even says it:

      Today, if you're an employee you're now are at the bottom of the stock preference pile.

In this case, I'd only work for a startup if my preference seniority was equal to that of the founders. And the article says that too:

      If you're one of the early senior hires, there's no downside of asking for the same Restricted Stock Agreements (RSAs) as the founders.

</comment></comment></comment><comment><USER13> The weird thing is that this state of affairs (a) doesn't save investors very much dilution.

Meanwhile, (b) options do a much poorer job of motivating/recruiting employees, (c) an even worse job of aligning interests and (d) the risk/downsides aren't reduced at all.

If stock "values" start to drop, it can really make a company feel like a sinking ship. That's the risk of equity sharing. They can make bad times worse. This happens no matter how distant/unlikely a liquidity event is.

The solution has been mentioned all over this thread: make them liquid somehow.

Alternatively, stop doing options and do something else instead. Aren't startups supposed to be breaking conventions and being creative?

I agree this Steve B's implication, the average stock option scheme is a vestigial artefact. Unless you're in a position (and of a mind) to negotiate terms, it's a checkbox.

</comment><comment><USER38> having worked at a lot of startups with various outcomes, I've come to firmaly believe the net preset value of your options is actually correct. If you take all the shares I've ever had options given on, and multiplied them by the strike price, it isn't far off from the ultimate amount of money they've been worth. The variance is high between each one, but taken together..

If you get a 100,000 shares at 0.10 each...they are likely over multiple trials going to be worth around 10K. Act accordingly.

</comment><comment><USER39> I joined a company where my offer letter had two salary options: A higher salary with less stock, or a lower salary with higher stock. (It wasn't a very large difference.)

About a year later, we were sold, and the payout from the stock did not justify the salary difference. In order to justify the difference, the payout needed to be about 20x.

When I confronted the CEO she just changed the subject, and didn't understand why I stopped keeping it a secret that I was looking for another job.

<comment><USER40> To clarify, were you expecting a 20x payout on your stock, or was the payout was 20x less than what you were expecting? Either way, sounds like you got bamboozled when you signed the offer letter. I'd almost always take a higher salary at a startup. The vast majority of startups aren't anywhere near Facebook or Google.

<comment><USER39> I didn't expect anything with regard to stock value. I know that most startups are fly-by-night, and if the sale didn't happen when it happened, I was going to go somewhere else and leave behind my options.

The reason why I confronted her had less to do with the payout from the sale, and more to do with her general attitude towards compensation.

To put it bluntly, she continued to pay well below market rate, and if she didn't pay up, everyone was going to trickle out the door as we got market rate jobs elsewhere. No one works in an aqui-hire situation below market rate. Her views on compensation were so bad that she had me at the same starting salary that I had when I worked under the same parent company, 5 years prior.

Needless to say, shortly after my conversation with our CEO, she was fired by the parent company, and the new owners promptly fixed the compensation problem.

</comment></comment></comment><comment><USER41> > As Venture Capital emerged as an industry in the mid 1970's, investors in > venture-funded startups began to give stock options to all their employees.

I don't understand this part of the post. When do "investors" grant stock options? When I did a startup back in the 90's the founders owned all the equity the day after the company was incorporated and a stockholder agreement signed specifying what each of us owned. We then sold equity to angel and venture investors by carving out a piece of the common in the former case, and issuing new preferred shares in the latter. Later the company granted ISOs to employees by an act of management, ratified by the board which did of course include investors. But at no time would I have said that the investors "shared their ownership" with employees. All current owners were diluted by the issuance of new shares or rights to new shares, but it was never a flat-out decision by the investors to share what they owned. It was a management decision.

<comment><USER42> I imagine that was just a shorthand or maybe he misspoke. It would be a management decision, but they would most likely need to clear it with the investors. Frequently the funding deal between investors and management will even carve out a chunk of equity for incentives.

</comment></comment><comment><USER43> A super trivial and tangental point but Fairchild was funded to make discrete semiconductors -- specifically transistors. In those days they were all assembled by hand! The chip (IC) was invented a year or so later.

</comment><comment><USER44> I think an important point was missed: Steve writes:

> _The first big idea is that unlike in the 20th century when there were two > phases of funding startups–Seed capital and Venture capital–today there is a > new, third phase. It's called Growth capital._

It used to be that The Public would provide the "Growth capital" via an IPO; Now the public is providing, I suppose, post-Growth capital via the IPO. In an current era where the market believes P/E ratios of 24 make sense [1], that has so far been viable.

If more historically normal valuations return to public companies, or if the latest crop of unicorns fail to provide great returns for the IPO investors, I strongly suspect this new division of funding phases will come to an end.

[1] [https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to- ea...](https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-earnings- chart)

</comment><comment><USER45> I've never really considered stock options to be a good deal, really. There's a reason they're widely referred to as "wallpaper".

Options are a bit like lottery tickets. All other things being equal, it's marginally better to have them than not, but their existence has never affected my decisions about where to work.

</comment><comment><USER46> Check out the Employee Stock Option Fund (www.esofund.com), we help employees fund the cost of exercise and any taxes. Our funding is on a non-recourse basis so we can help alleviate any risk (especially given the long time to exit that is mentioned here).

</comment><comment><USER47> > Better yet, offer restricted stock units (RSUs). Restricted Stock Units are > a company's promise to give you shares of the company's stock

Do startups commonly offer RSUs? I suppose my follow-up is whether it's easy to do, using Carta or something similar.

</comment><comment><USER48> I think another correction to the diminishing value of stock options and longer IPO horizon is that insane hours are less common now, even at the peril of the success of the median startup. It's also a result of the tight tech labor market and the wealth divide between new startup comp and FAANG comp. Why should I would disproportionate hours if there's another job with a more certain outcome that does not require this.

Curious if others have seen a drop in hours expected from your average startup (separate discussion if longer hours is a key ingredient and overall a good thing).

<comment><USER49> If anything, I have only seen an increase in work hours in my peer circle. Which startups are cutting hours?

</comment></comment><comment><USER50> I've made money on my ISOs at every startup I was an early employee of. The secondary markets are fairly liquid if you know how to navigate them. None of the companies were in the Bay Area either.

</comment><comment><USER51> From my experience most startup stock are common so they dont get paid until the preferred get settled up.

You can have 20k shares of stock and walk away with nothing even in an a successful IPO

</comment><comment><USER52> This is exactly the point I have been making: the equity grant structure for startup employees is not (or no longer?) compensates risk for employees

</comment><comment><USER53> It never was a "good deal", it was always a lottery. And one that you're set up to lose if you're not a co-founder.

</comment><comment><USER54> >VC's typically have pro-rata rights to keep their percentage of ownership intact, but employees don't

Either all shares must be diluted, or none. When someone's shares are diluted but someone's not, it's a scam. The concept of privileged shareholders is just wrong.

The whole system looks overly complicated and corrupted.

<comment><USER55> I believe pro-rata rights are rights to invest in further rounds. They can keep their percent ownership only if they contribute more money. This is like employees on vesting schedules, who can continue to get more options by continuing to work. Startup shares are a shitty deal, but this doesn't strike me as one of the reasons.

<comment><USER56> Correct, you don't just "gift" them more equity, you have to pay more (usually a much higher per-share price) to keep that equity.

</comment></comment></comment><comment><USER57> There are so many absolutely horrifying stories in this thread about startups deliberately restructuring to take money away from rank and file employees. Of all the reasons I've been told not to take startup stock, this one is new to me.

What can be done about this? At the very least can we name and shame?

</comment><comment><USER58> Sure companies are worth more in 10-12 years. But when VCs are managing 7 year funds, their LPs may require returns sooner.

I'm surprised this article didn't mention Investors ability to simply hold shares post-IPO. Leave it to the LP pension managers to decide how much upside they want to risk.

</comment><comment><USER59> If options are busted how should a startup compensate and align employees?

</comment><comment><USER60> I feel like you almost need a business degree as a work-seeking technologist to understand all the financial structures and future implications at play, here

</comment><comment><USER61> IMO, startup options should be treated like lottery tickets: some people might win big, but the EV is ~0.

Negotiate compensation accordingly.

</comment><comment><USER62> Other employees can liquidate shares in the secondary market too, fairly easily.

</comment><comment><USER63> this is a contorted, misguided, wrong argument. as evidenced by the lack of a proposed solution.

i could refute his arguments point-by-point but i'll just highlight a few.

1\. in a couple of places, he notes that "employees" put in as much hard work as "founders" but don't receive equivalent compensation. this is an absurd comparison. the amount of hard work is irrelevant, it's the value you bring to the table. part of that value is via hard work, and part is via the unique (or not) skill set. the unskilled janitor or maintenance man might put in hard work, but is an easily replaceable skill. if in fact you think you are bringing as much value as the founders, but aren't getting rewarded, the solution is very, very, _very_ simple: become a founder.

2\. _So while the VCs gain the upside from keeping a startup private, employees get the downside._ What? Given the very well known, no excuses for not knowing this, fact that the large majority of startups fail, VCs take 100% of the risk, by virtue of laying out 100% of the capital. The employees get a salary during this time (no "downside"), and any upside is _free money_ to them. Now this isn't a perfect rebuttal, but steve's argument is also lacking in nuance so i'll leave it there.

3\. _VCs have moved the liquidity goal posts _but_ haven 't moved the vesting goal posts._ Is he suggesting the vesting schedule needs to be _longer_?? To match liquidity??? this is nonsensical.

the overriding problem, he suggests, is this new "growth capital" phase. i don't agree this has made the stock option deal "bad". yes, it changes the nature of it, but not to as negative a degree as he implies. if he wants companies to IPO earlier, well what happens is that your 1 basis point of options will be worth 10x less than if you stick it out. it's like people complaining about dilution: dilution isn't a problem ... your net cash value increases with each round. it's not really feasible to have the hoi polloi be able to liquidate options at each round.

</comment><comment><USER64> Thank you for writing this! This discussion is long overdue.</comment>


Slackware, the Longest Active Linux Distro, Finally Has a Patreon Page - <AUTHOR> https://linux.slashdot.org/story/19/08/16/238254/slackware-the-longest-active-linux-distro-finally-has-a-patreon-page <comment><AUTHOR> Last release was 2016, and I think Patrick Volkerding also had health problems.

Let's hope for a fantastic new release! Slackware is idiosyncratic (if only because it stood still where all other distros moved on long ago (PAM, systemd)), but it is really nice to use.

<comment><USER2> Notice that, even if there have not been new releases, there's always the "current" version which is a rolling release which is really up to date with modern packages. I checked mine just now and it sports linux 5.4.38, gcc 9.3 and git 2.26.2, as examples.</comment></comment>


GitHub Integrations Directory - <AUTHOR> https://github.com/integrations <comment><USER2> I expected a lot more there. Our page for GitLab has more [https://about.gitlab.com/applications/](https://about.gitlab.com/applications/) Maybe GitHub will add more or they want to be selective. I hope the former, it makes sense to list them all I think. We certainly list every one that sends a merge request and has explicit support for GitLab.

</comment><comment><USER3> How is this curated? There's quite a few missing integrations.

</comment><comment><USER4> Come on... integration pages have don't have a link to the company home page.

<comment><USER5> Indeed, our GitHub integration ([https://commando.io](https://commando.io)) is not listed. :-(</comment></comment>


What's better than Wi-Fi? Super Wi-Fi - <AUTHOR> http://www.slate.com/id/2269268/pagenum/all/ <comment><USER2> Another generic, thin-on-facts hype article about the "whitespace". I'm disappointed in Slate. With all the vacuous pieces around, it's difficult to even find out which frequencies are being made available.

Here's an article from 2007 with some facts:

<http://arstechnica.com/hardware/news/2007/04/white-space.ars>

Basically new mobile devices will be allowed if they can actively dodge TV channels, in the 50-700 MHz range, and use the spaces in between.

Truly the only advantage of these lower-than-wifi frequencies, as far as I can tell, is less signal attenuation (over distances and through walls). That means more potential for crowding, too. Plus I assume you need a longer antenna for the longer wavelength. I haven't been able to find any good info about potential data rates.

In North America, 900-930 MHz is already unlicensed and used for some cordless phones and wireless transmitters. Remember that big antenna sticking out of your first cordless phone? (Before the fancier 2.4 GHz ones that interfered with your home wifi.)

Anyway, new unlicensed bands is exciting, even if no single frequency is unused everywhere in the country, but I just don't get the "super wifi" / "wifi on drugs/steroids" angle without more facts.

</comment><comment><USER3> I'm excited for the possibility that wifi will be able to serve a much larger area, perhaps 100-1000 times the area of current wifi points. I've been trying to figure out how to make micro-ISP businesses super convenient (just buy a router, set it up, and get paid) -- this might just be what that idea needs to get started. Maybe we can simultaneously disrupt the major cellphone providers and the major ISPs... wifi everywhere!

<comment><USER4> A few years ago I was in Athens and some tech guys introduced me to the idea of wireless community networks. I was amazed at what a few people had achieved with just directional antennas and a few ADSL lines, back when broadband was almost non-existant in Greece. They called it the Athens Wireless Metropolitan Network: [http://en.wikipedia.org/wiki/Athens_Wireless_Metropolitan_Ne...](http://en.wikipedia.org/wiki/Athens_Wireless_Metropolitan_Network)

Today they have 1120 backbone nodes, 2900 client nodes and another 9000+ people that have expressed interest in joining the network.

Apparently this is happening all over the world. Wikipedia has an extensive list: [http://en.wikipedia.org/wiki/List_of_wireless_community_netw...](http://en.wikipedia.org/wiki/List_of_wireless_community_networks_by_region)

We need this super wifi thing in the hands of those people.</comment></comment>


The Shrinking of the American Lawn - <AUTHOR> http://www.citylab.com/navigator/2016/07/the-shrinking-of-the-american-lawn/490157/ <comment><USER2> This seems like a letter from a bygone generation, struggling to understand something that has been obvious for a long time: lawns consume a lot of space and require a lot of work to maintain, while offering pretty much nothing in return unless you're really into the whole '50s-60s retro suburban thing. The question is not "why are lawns shrinking," the question is "how long will it take before people stop putting up with this silliness."

<comment><USER3> Lawns offer a lot in return... unless you just don't like being outside. Since moving to a big city, one of the biggest things I've missed has been a back yard to run around in and hang out with my friends. At some point, I might get too old for that, but I suspect I'll enjoy reading outside for decades to come.

The reason lawns are disappearing is because people don't like being outdoors as much as they used to. They don't want to play badminton with their friends outside or read on a lawn chair by a tree. They want to stay indoors and play Clash of Clans. After a while anything not covered by a roof and closed in by four walls starts to look like "silliness".

<comment><USER2> I love being outdoors, but a lawn hardly counts. If I want to go outside, I'll go _outside_ \- to a park, the arboretum, the beach, up to the mountains, across the mountains to the desert - somewhere interesting. I'll never be wealthy enough to own enough of the outdoors to make it matter.

I have a nice back porch with a grill and a picnic table, and there's a deck way out back with a firepit and some benches and some garden beds, but most of the back yard is gravel and I use it as a parking lot. It's really useful, living in a big city, to have a place off the street to store vehicles.

I also have a front yard, which is a total waste of space. It looks ugly unless I waste lots of time doing repetitive maintenance work, and nobody ever spends any time there because it's all exposed on a busy street. I'd rather rip it all out and have some kind of native plants jungle, but that takes time and money I haven't been able to spend on it yet. I'd be just as happy if the front yard didn't exist and my house fronted directly on the sidewalk.

If I wanted to play badminton or read on a lawn chair I would just go to one of the parks within a few blocks' walk. There's no reason for me to _own_ that land.

<comment><USER3> I will say I've probably spent at least a hundred times as much time in back yards as front yards and it is great to live right next to a park (which I've managed to do twice).

> _" If I wanted to play badminton or read on a lawn chair I would just go to > one of the parks within a few blocks' walk."_

I think maybe this is like the difference between having a computer with internet in your pocket vs having one in your basement (or a few blocks away!). In theory, you can go use it whenever you want. In practice, immediate availability changes habits and ways of life.

<comment><USER4> This absolutely changes habits and the ways of life. When my significant other and I lived in Texas we were 40lbs overweight with a huge lawn that was a PITA to maintain. Now in the city I bike 12-15 miles a day and we use the nearest Park a few blocks off.

I'd argue the green space is immediately available and better than a backyard I have to maintain.

</comment></comment></comment></comment></comment><comment><USER5> Fields and parks > lawns.

Admittedly, there's a desire for me to be able to have sizable lawn to continue to foster and adopt abused and/or neglected dogs (fostered 5 and counting, one adopted he's a 50kg cuddly play thing... Seriously. Get a big dog and surprise yourself).

But, even I don't need a large lawn for that. I need something large enough that it isn't required to clean daily to prevent my furbabies rolling around in their own filth.

The urban sprawl, two tier property system in Australia is terrible for this. Houses have huge lawns or none. And the areas neglected more so than most for lack of shared greenspace have huge homes and huge lawns with less and less dedicated public spaces.

Atypical of wealthy suburbs actually (I'm looking at you, Tarragindi) there's little public recreational area because when the suburbs were designed in the 60's, home owners put fences up and declared it mine.

Edit: too many words or too little.

<comment><USER6> A great deal of places in the states have little-to-no shared (or public) greenspace within walking distance. It isn't just wealthy suburbs, but nearly entire cities. Small towns might have one such space. Larger cities (30-50k) had a few more, most were just small patches with playground equipment. Some towns I lived in actually had public green areas with playgrounds... that had no sidewalks or safe places to walk that led to them. The houses in the areas all had nice-sized yards, but I still found this curious.

<comment><USER7> I think whats missing is greenspace with a commercial element. If you attach a beergarden or cafe to a greenspace people will spend much more time there

<comment><USER6> That is an excellent idea. SOmething better than a concession stand at least. Some places wouldn't go for the beergarden, but a coffee & sandwich & store combo would probably work out nicely, especially if the local folks actually went there. Probably perfect in the area between the greenspace and the road.

<comment><USER7> Beergardens were common until WWII, at which point they were associated with Germanism. Most parks I see get very little use, one empty baseball field after another, it wouldn't take much to liven them up.

<comment><USER6> Agreed - most do get little use. Most the ones I see with different uses have different sorts of things for different ages and sorts of people. You are correct, it doesn't need to take much to liven them up. Most of the costs are upfront.

Heh. If only I were closer in location and had time and money... It'd be a fun project in areas.

</comment></comment></comment></comment></comment></comment><comment><USER8> Lawns are also not eco friendly as they suck up huge amounts of energy to regularly cut grass.

<comment><USER9> About 10 liters of gas will see me through the mowing season in a moderately sized lot. Now, I could probably manage that decently with a push mower, and the folks out in Great Falls or Potomac on quarter-acre lots must be burning more.

Lots are eco friendly in the sense that they make very good ground cover: the dirt under my lawn is running out to silt up the Chesapeake Bay. And they are permeable: most of the rain that falls on the lawn goes into the water table rather than running off into storm sewers.

<comment><USER10> I tend to agree with you that lawns aren't _necessarily_ a bad thing. There are also more eco-friendly varieties of grass (though in my experience, they don't tend to be the nice soft grass). If _all_ you're looking for is ground cover to provide soil filter and avoid erosion, there may be better choices than lawn.

I thought this was a good summary:

[http://www.latimes.com/opinion/op-ed/la-oe-hodel- pittenger-w...](http://www.latimes.com/opinion/op-ed/la-oe-hodel-pittenger- water-lawn-20150917-story.html)

</comment></comment></comment><comment><USER11> In the town I grew up in (South Africa), there was a planning law that prevented the footprint of a house from being larger than a certain size. It had been that percentage for years and I'm hoping that it doesn't change because it's helped the area stay green and lovely without becoming overly built up.

Do similar planning laws exist in other countries?

<comment><USER9> In Washington, DC, at least in some parts this is the rule. The builder of the McMansion next door had to jackhammer up part of the garage pad when he discovered he was going over the ratio. Neighbors down the street bought part of a neighboring lot not for use, but to offset an expansion they anticipated into their original lot.</comment></comment>


On Learning to Code. Or Not. - <AUTHOR> http://www.deadprogrammer.com/on-learning-to-code-or-not/ <comment><USER2> What I don't get about all this fuss is: Who is forcing anybody to learn about anything?

Free learning resources are huge empowering forces that are just starting to get a decent scale (see coursera.org, udacity.com.) It doesn't matter at all about what, few exceptions aside. If some person wants to learn something why should you discourage them?

In fact, to Jeff's phrase "I would no more urge everyone to learn programming than I would urge everyone to learn plumbing. That'd be ridiculous, right?"

Wrong, that wouldn't be ridiculous. People who'd care to learn how to plumb would do so of their own accord, not just because they saw an encouragement on a website. Just like people learning to program.</comment>


CBC are blocking podcast apps - <AUTHOR> https://www.reddit.com/r/podcasts/comments/5bmzuj/cbc_are_blocking_podcast_apps/ <comment><AUTHOR> (Author here) The title should more correctly be "CBC are shaking down podcast application developers for licence fees", but I've only be sorting out what the situation over the past few hours, in discussion with the application dev (who prefers to not be named) over email.

I've also requested clarification from both the CBC generally, and Paul Kennedy's _Ideas_ programme, which was the specific podcast I found to be blocked. Neither have replied at present.</comment>


Integration Testing Against Real Databases - <AUTHOR> https://www.compose.com/articles/integration-testing-against-real-databases/ <comment><USER2> if only someone would invent docker-compose as a generic solution to this problem. alas</comment>


Airbus proposes new drop-in airplane "cabin modules" to speed up boarding - <AUTHOR> http://arstechnica.co.uk/cars/2015/11/airbus-proposes-new-drop-in-airplane-cabin-modules-to-speed-up-boarding/ <comment><USER3> As a frequent business traveler, I've long thought that slow boarding could be fixed by two things: 1) Standardized luggage 2) Not letting passengers handle their own bags

If you watch while boarding to see what slows the process down, it almost always seems to be related to people trying to cram oversized bags in the overhead bin, or being unable to effectively manage their own bags in the aisles. If you remove that from the equation entirely, the passenger responsibility becomes solely to get into their seat quickly.

<comment><USER4> Yes, and this also eliminates the need to have "priority boarding", which is really just a way of ensuring that the frequent traveller customers don't end up without overhead space for their bags.

<comment><USER5> What flights are you on that priority boarding fills all the bins?

<comment><USER6> I think brk was just saying that everyone in priority will have room for their bags. Without priority boarding, they would have to fight with everyone else.

</comment></comment></comment></comment><comment><USER7> I don't get it. People would still need to board into this pod thing and then they'd have to move the pod onto the plane and check to make sure it's secure and such. That seems like it would take even longer.

I suppose one could argue they can limit downtime for the rest of the aiplane by just popping in a new module and going, but there are lots of things going on that mean the aircraft needs some downtime on the ground: refueling, loading cargo, simple maintenance, preflight checks...

Not really clear what problem is being solved and seems to create lots of new problems (airports will also freak out... They hated the A380 and changes required to accommodate that bloated thing). Seems like the sort of thing companies patent because they have lots of lawyers sitting around looking for something to do rather that this actually being a meaningful innovation.

<comment><USER8> I've had a similar idea for a while. In my version, the passenger module includes the seats and floor but _not the walls_ , which remain part of the plane. If you could do it this way (I'm sure it would be a great engineering challenge to make it work) then you could load and unload the modules virtually instantaneously because people could just go out the sides. Each row would basically be independent.

<comment><USER9> Good idea. One practical challenge: you have to make sure nobody (including small children who don't listen to directions like "don't stick your arms out") gets hurt when getting moved next to the walls.

Also, if you don't have the walls attached to the module, then you'll have a challenge including the ceiling, and the overhead luggage racks.

</comment></comment></comment><comment><USER10> This patent is not going far enough, and as mentioned, the tech isn't designed yet.

What you want is to open the nose of the plane, dock to the terminal, and slide out all the seats right into a controlled access room in the terminal waiting area, expanding the row to row distance by an extra foot. Flush those passengers out.

New passengers enter the enclosed room, and can all get to their comfortably spaced rows and seats from the outside at the same time, no center isle queuing needed. Once seated, slide all the seats back into the plane, undock, close the nose, and depart.

Between Boeing's existing nose design and the roller coaster industry, this is all existing tech.

[https://commons.m.wikimedia.org/wiki/File:Cargolux_B747-400F...](https://commons.m.wikimedia.org/wiki/File:Cargolux_B747-400F.jpg)

<comment><USER11> That's a better idea than the patent, although still debatably practical.

The whole point of plane design is to keep weight down while maximising strength.

The patent does the opposite for both. You're going to have dangerous weak points all around the fuselage, especially around the doors and the pod locks.

A front loader could work better, but you'd still have to add some weight to handle the overheads and other support structure.

The bigger problem is that either idea would mean massively expensive retooling for airports around the world, and it would - at best - <USER2> flights to specific upgraded destinations.

This seems more like a blue sky (...) patent filed because - why not? Not so much a practical design.

</comment></comment><comment><USER12> This can possibly lower costs, but it doesnt really do anything to improve airport throughput. That's runway limited. Can anyone estimate how much of the ticket price could be saved if this all worked perfectly?

Seems to me that devices for moving people quickly around airports and take them directly to their gate would be much higher value for much less cost and complexity. Sensible or not, safety restrictions make fast moving walkways unworkable. I'd like to know why personal rapid transit is so darn difficult to make cost effective. They seem ideal for airports.

[https://en.m.wikipedia.org/wiki/Personal_rapid_transit](https://en.m.wikipedia.org/wiki/Personal_rapid_transit)

</comment><comment><USER13> Reminds me of this concept for boarding trains in China where the train wouldn't even need to stop at the stations:

[http://www.theatlantic.com/china/archive/2013/12/this- propos...](http://www.theatlantic.com/china/archive/2013/12/this-proposed- chinese-train-picks-up-passengers-without-stopping/282598/)

<comment><USER14> I seem to remember seeing this idea before (even before the 2013 date of this article and not being designed by the Chinese). Regardless of that, it's a really good idea: As well as making boarding somewhat more efficient, it really helps with energy consumption as there's no waste from slowing down and accelerating, because the train just loops round a course at constant speed.

</comment></comment><comment><USER15> the problem with boarding is that very few people actually optimize their behavior to board quickly. they just take their sweet ass time because they feel they're entitled to it. like, why would anyone bother to take off their coat and put it in a bag, or transfer the crap they need during the flight from their overhead bag to their handbag _before_ the boarding process? that's just way too obvious. better do it in the aisle and hold everyone up for 30 seconds.

it would probably be cheaper and more effective just to hire marine drill instructors to scream at people as they're boarding.

</comment><comment><USER16> I've actually thought of this but for a different reason, my plan was to have the pod "ejectable" (if that's a word). In the event of a bomb in the belly of the plane the pod or pods could be ejected with parachutes and maybe some sort of auto-guidance land and picked up later.

<comment><USER5> Wouldn't help with a bomb in the pod, which would be the obvious place to put one.

<comment><USER17> Well, if the main plane was still air-worthy, the crew at the front probably wouldn't think that.

</comment></comment></comment><comment><USER18> I don't know about one huge pod, but it shouldn't be much of a stretch to do something similar using "unit load devices" (containers) similar to those used on freighter aircraft.

[https://en.wikipedia.org/wiki/Unit_load_device](https://en.wikipedia.org/wiki/Unit_load_device)

One could imagine each of these containing about half a dozen rows of seats. Board them from each end, and you have almost eliminated the bottlenecks of people standing in aisles loading overhead bins. They are then loaded out to the aircraft.

This would greatly simplify terminal architecture as well since you don't need complicated articulated jetways or parking aprons for a lot of planes close to the building.

</comment><comment><USER19> This would also do a lot to solve the problem of filthy, unhygenic cabins- the cleaning crew would have a lot more time to go through the "pod" than the're currently able to spend in the plane between flights.

</comment><comment><USER20> Swapping the entire cabin in and out seems excessive - why not use seats like those on an amusement park ride. Sit down and strap-in at the gate and then be moved in batches into the aircraft... :-)

</comment><comment><USER21> Yesterday's discussion on that subject: [https://news.ycombinator.com/item?id=10627873](https://news.ycombinator.com/item?id=10627873)

</comment><comment><USER22> >dehumanizing, dropped, squeezed

It's great how with the right words you can make something sound very evil and awful. I don't believe there would be any dropping of airplane components or people.

</comment><comment><USER23> They could make great strides with less cost by ordering the boarding order. It seems some pattern of boarding window seats first, starting from the back and moving up, would be most efficient. Of course that breaks all the rules on frequent flier statuses, overhead space and such.

Once heard an anecdote about a marching band chartering an aircraft. Flight attendants were floored at the speed everyone was settled.

<comment><USER10> Most airlines do some form of this. They're up to 6 zones, outside in and back to front, not counting premiums.

</comment></comment><comment><USER24> I always thought they should make planes out of vertical tubes, drop people out the bottom, drop new ones into the top, and go. Then again I hate flying.

</comment><comment><USER25> Like Thunderbird 2 but with passenger modules?

Edit: that will teach me about not reading the article first. It already had a picture of Thunderbird 2. Doh.

</comment><comment><USER26> Two problems that I have with that - 1st there is no inventive step. Second - how viable will be the airframe?

</comment><comment><AUTHOR> My apologies, the previous submission had a wrong link, I deleted it and re- submitted.</comment>


Noam Chomsky Has 'Never Seen Anything Like This' (2010) - <AUTHOR> http://www.truthdig.com/report/item/noam_chomsky_has_never_seen_anything_like_this_20100419 <comment><AUTHOR> This article seems prophetic in hindsight. Especially this quote:

"The United States is extremely lucky that no honest, charismatic figure has arisen," Chomsky went on. "Every charismatic figure is such an obvious crook that he destroys himself, like McCarthy or Nixon or the evangelist preachers. If somebody comes along who is charismatic and honest this country is in real trouble because of the frustration, disillusionment, the justified anger and the absence of any coherent response. What are people supposed to think if someone says 'I have got an answer, we have an enemy'? There it was the Jews. Here it will be the illegal immigrants and the blacks. We will be told that white males are a persecuted minority. We will be told we have to defend ourselves and the honor of the nation. Military force will be exalted. People will be beaten up. This could become an overwhelming force. And if it happens it will be more dangerous than Germany. The United States is the world power. Germany was powerful but had more powerful antagonists. I don't think all this is very far away. If the polls are accurate it is not the Republicans but the right-wing Republicans, the crazed Republicans, who will sweep the next election."

<comment><USER2> more than prophetic, was this actually published in 2010? it almost seems like a blueprint!

<comment><USER3> It was. Corresponding reddit thread: [https://www.reddit.com/r/politics/comments/bt4ox/chomsky_the...](https://www.reddit.com/r/politics/comments/bt4ox/chomsky_the_united_states_is_extremely_lucky_that/)</comment></comment></comment>


Apple is not "recording your moves" - <AUTHOR> http://www.willclarke.net/?p=247 <comment><USER4> The conclusion about a "general place at a general time" seems entirely true when you're on a highway, moving quickly and hopping infrequently to large distant cell towers. No wifi points anywhere close. Just like the chosen example.

I bet its entirely different when you're in any kind of built-up area. Wifi points every few hundred meters, small cell towers every kilometer or two. I bet in those situations, someone could derive a pretty close record of "your moves". Even if the individual points jump around, you're presumably hopping cells and seeing new Wifi APs every few minutes - even when you're just walking around your house or your office - and that data can be triangulated.

I think the OP is right inasmuch as Apple probably didn't set out to track users as much as keep track of connected wifi & cell APs. That doesn't mean the data won't be enough to track movements in urbanised areas.

<comment><AUTHOR> I'm not the author. But I believe the O'Reilly researchers claim that the co- ordinates logged are of the device itself. It is not clear at all that this is true and the author of this post presents some evidence that would suggest otherwise.

<comment><USER4> Sure, the article is a reasonable refutation to that part of the O'Reilly claim, and that is an important fact to clarify.

The article goes further though, and claims it's "not 'recording your moves'" and is just a "general place at a general time". I don't you can say that point-blank. As stated, I think that it's going to be entirely location- dependent as to whether the database can be treated as a "record of your moves" or not.

<comment><USER5> The author says he was using his phone and the GPS often.

If they wanted to track your moves and you have turned on the GPS, why doesn't it just, y'know, use the GPS data? Instead Apple tries to track your moves using cell towers?

Seems like the only way this would be a record of your moves would be by coincidence.

<comment><USER6> My understanding is hte iPhone doens't actually have a GPS receiver in it at all. It only uses a fuzzily defined "assisted GPS" which is basically based completely on 3g towers.

They don't use the GPS satellites at all.

<comment><USER4> AGPS is GPS satellites assisted by cell towers, and is in the iPhone 3G onwards. <http://en.wikipedia.org/wiki/Assisted_GPS>

The original iPhone had no GPS and always used cell tower triangulation. This varied a lot - I remember in Manhattan, NY it could track me almost to the street number; on the other hand I once turned it on in a moving car in rural NSW, Australia and it drew a circle approximately 500km in diameter.

</comment></comment></comment></comment></comment></comment><comment><USER7> The piece is specifically positioned as a retort to a somewhat sensationalist O'Reilly piece, and in that context it's perhaps decent. But this headline alone on HN is at least as sensationalist - redefining "your phone is tracking your movements between cell towers with a general accuracy of 2km or less" to "your phone is not recording your moves" is just newspeak.

Argue that the accuracy makes the data less usable for nefarious purposes, or argue the (much more pertinent to my mind) point that your carrier already has high-accuracy historical info and this really just puts similar historical info in your hands as well, point out that law enforcement can easily get the carrier info without ever even touching your iDevice, but don't try to claim that this is not recording location info attached to you.

<comment><USER8> How about this headline: "Your iPhone is caching cell tower coordinates for faster location lookups".

Is that sensationalist? Or, does it represent the most logical explanation of this story from a technical and engineering background?

<comment><USER9> It's a long time since I worked on mobile phones but in GSM the phone has to keep an internal of the tower it's connected to and the nearest neighbours in order to manage handover smoothly (ie. With dropping calls). I suspect 3G is similar.

In GSM the phone also had to know the distances to each tower +/-500m in order to adjust the timings for communication with the tower.

(It's 8 years since I did is stuff so memory might be off on the numbers a bit :-)

</comment></comment></comment><comment><USER10> A better statement is: "Apple is not _intentionally_ recording your moves."

What they're instead doing is, when possible, retrieving cell network / SkyHook (wifi) data about Lat./Long. for towers/APs that your device can see and when it last saw them.

This is for the Location service that an iOS device offers, so that if you choose to provide your location information to an app and it can't get a good GPS lock - this cached information is used to provide a "best guess".

In addition, it's used to provide an accelerated guess as GPS gets a lock (it's the "+" in GPS+).

The timestamp is to provide "last best location". I'm sure the rest (MACs, tower IDs, etc.) can be used to triangulate a better fix based on what's visible and what signal strength to each location is like.

The device caches this information locally because the Lat./Long. of a cell tower / AP will not change - but the timestamp for the last time your phone has "seen" it could be updated, without having to re-hit Apple's servers for the details.

It's being done because: storage is cheap, the amount of data doesn't take much space for thousands of points, it reduces server talk, and it speeds up your GPS/location acquisition for apps that you wish to use it with.

Apple's only mistake is that they didn't encrypt this information. Outside of that, the only other thing they could have done would be to store it purely in RAM - but RAM is at more of a premium (in MB) than flash storage (in GB).

<comment><USER6> Does the iphone even have real GPS? I believe it uses the cell tower info only.

<comment><USER11> The iPhone 3G and later have real GPS.

They use an A-GPS chip. The "A" in A-GPS stands for assisted, which means it can be assisted by the cell towers to help find the GPS satellites more quickly. Because of the connection with the cell network, some confuse its capabilities with plain triangulation. It will continue to function as a plain GPS device in the absence of cell service, however.

Most of the points on my map correspond exactly with known locations of my carrier's towers, so the explanation makes sense. However, there are dots in locations where there are no towers. I don't think it is WiFi locations because I do not see any of the places I commonly use WiFi.

<comment><USER10> You don't need to connect to the network for it to be recorded.

The Skyhook-alike ( Apple rolled its own: [http://blogs.wsj.com/digits/2010/07/30/skyhook-loses-a- big-f...](http://blogs.wsj.com/digits/2010/07/30/skyhook-loses-a-big-fish- apple/) ) tech works because your device is able to poll available wireless AP MACs, even if you don't sign into them or know the password. 802.11 headers have a MAC frame that's always broadcast in the clear.

</comment></comment></comment></comment><comment><USER12> Interesting analysis that strongly suggests the coordinates are for cell towers, not the iOS device.[1]

Personally, the fact that the file is in a cache directory path, and that some people don't have much data, or any, suggests to me that some programmer forgot to trim his cache or picked a ridiculously large size before he decides to trim.

"locationd" wants to know the coordinates of the cell towers you communicate with in order to triangulate your position without turning on the GPS, and it doesn't want to eat the battery by querying servers all the time. That argues for a cache of the towers you frequent. It's only one bug or poorly chosen constant from there to the situation people are reporting.

[1] That still reports your travels in gross terms and is a problem in need of a fix.

<comment><USER13> You do realize that the towers themselves have had that information about you forever, so AT&T (or now Verizon) can plot your every move.

<comment><USER12> Does AT&T retain the data for a year? Do they give it to the ass hat that stole my laptop?

<comment><USER14> The iPhone only maintains the last time a given cell tower was "seen". It does not have your complete movement data for the entire year.

(Exception would be someone that has been traveling the entire year and has never been back to the same place twice.)

</comment></comment></comment></comment><comment><USER15> I'm getting a 509, bandwidth limit exceeded. Here's the Google Cache: [http://webcache.googleusercontent.com/search?q=cache%3Ahttp%...](http://webcache.googleusercontent.com/search?q=cache%3Ahttp%3A%2F%2Fwww.willclarke.net%2F%3Fp%3D247)

</comment><comment><USER16> The only way this could be more hair-splitty is to argue "Apple isn't tracking you, it's tracking your device". Yes, there are valid reasons for this to exist. Doesn't change my user perspective that this is an electronic trail I do not want readily accessible.

<comment><USER17> Is it really "readily accessible"? It's on your phone, and in backups on your computer if you've synced your phone.

So to access it, a person needs access to either your phone or computer. But if they have access to your phone or computer, is a cache of cell towers you've connected to really a significant concern compared to the other things the accessor could get ahold of from either of these devices?

<comment><USER16> I've had phones stolen enough that I'd say "yes, too accessible" - <USER2> mileage may vary.

Timestamped travel information generally equates to "hey, this guy returns home between 7 and 8:30 most nights, works in the office five days a week, and here's where his home is". It's no great stretch to equate that to "he will not be home during this time frame" and suddenly a lost phone turns into a much larger burglary.

There's also plenty of larger privacy concerns, but even just the out-and-out- crook scenarios should be concerning enough.

<comment><USER14> The iPhone is not storing travel history information. It's only storing a "last seen" timestamp for each cell tower. And again, the most accurate they'd be able to get was "this guy was within 500 meters of these dozens of cell towers at 5PM, and with 500 meters of these dozens of other cell towers at 7PM." They'd in no way be able to get your physical address, unless you lived alone in the countryside.

Please read my previous comment for more details:

<http://news.ycombinator.com/item?id=2467895>

<comment><USER18> >They'd in no way be able to get your physical address, unless you lived alone in the countryside.

You seem to be using this claim to dismiss the importance of the data, but I lived in a very secluded area, do I not matter?

<comment><USER14> But the data is not that important, relatively. The assumption is that some "Bad Guy" has gotten a hold of your phone. Here's a list of other vectors that this person could use to identify you, your residence, etc.

1) Your cell number is going to be readily available from the device itself. Using this, he'll be able to look up your address information in the Address Book.

2) Unless you notice the missing device right away and change your passwords, this guy also has access to your email accounts. Ever order anything online? Your address is most likely in your emails.

3) Ever use Google Maps? They can look at your recent searches. "3 different searches originating at 123 Main St? Might be his home address"

4) Phone app. Recent calls/favorites. With a little social engineering, your address is known. "Hi, I found this phone on the ground, can you tell me where they live so I can drop it off?"

5) SMS. Ever text someone your address?

</comment></comment></comment></comment></comment></comment><comment><USER19> There is a bit of a logical fallacy here. He says "the data is not extremely accurate", "metadata indicates apple intended to store locations of access points", "therefore the phone is not traking your location".

That's simply false. It is tracking your location, regardless of how accurately it's doing it, and irrespective of Apple's intentions.

That means someone reading the data can know roughly where you where when, the direction you where traviling in, and how fast you going.

Does that mean Apple set out to track you? No! But it does mean that your phone is tracking your position, all the time, everywhere you go, and is storing that data in a way that is not protected from exploration by any third party that happens to acquire access to it.

That's a serious bug, and is worth a little sensationalism.

</comment><comment><USER4> I actually think my honest opinion on this fiasco is "someone can derive a user's movements from this database, but how big a deal is it really?"

I still think this should be fixed, Apple should explain it and release an update that pares it down to the bare minimum data for whatever function it serves.

However, let's honestly go through the implications of this:

\- The user's cell provider already knows this. [1]

\- If someone "owns" the user's phone then they can get their movement history. But that's at a point where they can track the user's current movements anyhow, so that's lose-lose there - the only difference is the historical angle.

\- If someone steals the user's computer/phone they can get their previous history up until then. That's bad, but I bet nearly everyone has more sensitive private information available on their computer hard disk or their iPhone's internals - stuff that would be more exploitable than historical location data.

\- Someone could maybe sneak private API calls into a legit app that sent this database somewhere else. No idea how feasible that is. However, if they can do that then it's pretty close to the "ownage" scenario described above - <USER3> can probably do anything anyhow.

If it comes out that Apple is sending this data back to Cupertino for some nefarious purpose then that is very bad as well, but I bet that's not the case.

[1] [http://www.zeit.de/digital/datenschutz/2011-03/data- protecti...](http://www.zeit.de/digital/datenschutz/2011-03/data-protection- malte-spitz)

<comment><USER20> The point I made in another thread on this: <http://news.ycombinator.com/item?id=2468950>

Basically by having it stored locally, it lowers the barriers to accessing data, so that it is no longer restricted to law enforcement people seeking telco data.

That changes a lot of things.

For instance imagine you're a police informant or undercover cop: a technically savvy mob would be silly not to hoover up the location data of everyone in their org, which could lead to some interesting discussions.

<comment><USER4> _For instance imagine you're a police informant or undercover cop: a technically savvy mob would be silly not to hoover up the location data of everyone in their org,_

Sure, but if they have root or physical access to the phone (which they need) they can install a realtime tracking snooper to follow you around instead.

I agree this lowers the barrier, but fundamentally it seems to come down to - if you don't want people knowing where you are, don't carry around a GPS- enabled always-on computer in your pocket!

<comment><USER20> The point to be made here is that Apple's provided almost universal, historical snooping capabilities without any individual actors having to get James Bond on the situation. Every iOS device has the potential to reveal someone made a trip to a police station, or spent a lot of time in a suburb that doesn't match with a particular story.

The fact that people of sufficient technical capability and motivation can always install traffic snoopers with greater resolution / utility doesn't change any of the above?

I suppose this situation is a little like the Firesheep release. Things could already be exploited, but by reducing the effort and skill required it significantly changed the security / privacy situation.

Your final point is a bit of a false dilemma, because Apple can just fix the issue to remove that particular security concern. Of course the device is still tracked by networks, but as discussed the barrier to access that information is probably high enough for many people.

<comment><USER14> >Every iOS device has the potential to reveal someone made a trip to a police station, or spent a lot of time in a suburb that doesn't match with a particular story.

Sure, it has the potential. But only if the idiot was dumb enough to check into jail from Foursquare (or otherwise use a Location Service).

</comment></comment></comment></comment></comment><comment><USER21> My guess is that this is just an implementation optimization. Probably analogous to lookupd caching DNS lookups. The developers probably didn't think anything of it.

Even lookupd caches could be represented in similar light: "Your Mac secretly records the websites you visit in a hidden file." It's just that we're all used to (and understand) DNS lookup caches, and locationd and location lookups are relatively young.

</comment><comment><USER22> It remains unclear what Apple's motives were in collecting this information and regardless of how accurate the collected information is, I think the larger concern is that the database is unencrypted (although it does require root access) and is uploaded to a users computer upon backup.

</comment><comment><USER23> How can the iPhone determine the location of a cell tower (or WiFi access point) just by receiving its signal?

While it seems obvious from that analysis that it is indeed logging the locations of the towers rather than the phone, I am more interested in how it derives the locations for those towers.

It could simply have a lookup table, but that would mean every iPhone has a lookup table of every cell tower (GSM and CDMA) as well as WiFi point in the world - with a globally unique identifier and location - as part of the OS. Which seems pretty implausible.

If it's doing a remote lookup, then it must be polling some service to determine the location of every CellID it seems. Something like OpenCellID (<http://www.opencellid.org/>) or Navizon <http://www.navizon.com/>) is what I mean. If so, it _would_ effectively be broadcasting your location in real- time. This is equally implausible, as it just seems like the kind of thing we'd have heard about by now through OS investigation, or even just "why is my battery draining so quick".

It could conceivably triangulate the tower itself, but that's implausible as a) the phone's GPS would have to be active (see battery issue above) and b) it couldn't possibly be accurate unless you were effectively spiralling around the emitter.

It can't be getting it from the signal itself, as "emitter location" sure isn't part of the WiFi spec and I'd be amazed if it was in GSM or CDMA.

How else can the iPhone know (or estimate) the GPS coordinate of cell towers?

<comment><USER11> I'm not entirely familiar with the protocols in use, but I assume the cell towers publish their GPS coordinates.

When my carrier installed a new tower in my area, Google Maps would start with my location hundreds of miles away until the GPS locked on. It eventually corrected itself, but I assumed at the time that they had the wrong GPS coordinates entered for that cell location.

There are dots on my map for places I have never been, so I don't think it is coming from the on-board GPS receiver.

</comment></comment><comment><USER24> I can't comment on the website itself somehow. But here is my comment.

While you may be correct (and I think you are, because Apple has previously mentioned that they use such data to map tower locations) but I have a few counter points to your article (may not refute your main conclusion): 1\. Even Cell Triangulation can be way off depending on a lot of factors. I use it regularly on my Android phone with Tasker for some profile purposes and it gives me worse results most of the times than actually working with exact tower ID that I am seeing. I've seen it being as off as upto 5 kms

2\. The location data is collected for other countries as well, not just for the parent network within US. Out of the various articles from various people, they have seen data from all places where they used cell services, including abroad like Japan, India, etc. The data only seems to be missing when they don't have a cell service.

3\. What irks me is that why they need to store this data on the device and PC? Even if they were building their own cell tower database, it should be done and done once apple gets the data. Why would they keep a whole history about it on the phone and PC? Maybe it is an oversight? But I can't find any reasonable explanation for this.

</comment><comment><USER25> An aside: it's independent thought and experimentation like this makes hackers so important.

</comment><comment><USER26> I've been playing around with the source today (planning to take a closer look at the file itself tomorrow). While there are definitely a fair amount of anomalie, even without removing the intended obfuscation in iPhoneTracker it still tells a good story. After adjusting the accuracy of the GPS grid and changing the animation to daily, it was easy to track where I had been.

It would probably be hard to track to any specific address (that's what I am looking into now) but by matching date with the coordinates it was trivial to see where I went for: 4th of July, my friends bachelor party and wedding, Halloween, Thanksgiving and New Year's Eve... among other events.

<comment> X-Istence I looked at my data, and it didn't know that I had spent a whole lot of time at the office last week, but it did know the cell towers along the way to my friends house when I used Google Maps.

It is only updated when you use a location based service. Google Maps, Places on Facebook, Twitter, Foursquare and the like. I don't use anything besides Google Maps and only to get information on how to get to certain locations. Honestly I am not to worried about it.

</comment></comment><comment><USER27> I'm going to file this under "come on, are you kidding me, read the FAQ before you write a blog post."

The FAQ: <http://petewarden.github.com/iPhoneTracker/#9>

The wonders of following links.

</comment><comment><USER28> By the way, this same information is already tracked and stored by the mobile networks themselves, and can be obtained by the government with a warrant (or likely by organizations like the NSA or CIA without one, given recent precedents).

See [http://nce.fd.org/PDF%20Cellular%20Tower%20Location%20Inform...](http://nce.fd.org/PDF%20Cellular%20Tower%20Location%20Information.pdf) :

"Cellular service providers generally retain information about phones' contacts with towers, including which tower(s) each phone contacted during any given check-in, and which "face" of the tower(s) the phone contacted."

<comment><USER29> _with a warrant_ being the three magic words which totally changes the context. Oversight is important. There is no oversight to this data collection.

</comment></comment><comment><USER30> It looks like the original O'Reilly post was a bit imprecise.

On one hand, it says _"your iPhone, and your 3G iPad, is regularly recording the position of your device into a hidden file."_

Later on, it mentions a _"a list of hundreds of thousands of wireless access points that my iPhone has been in range of"_. This suggests that the list is one of cell towers (and perhaps Wi-Fi routers ?), but not actual device locations.

</comment><comment><USER31> F-secure noticed tha the data gets sent out twice a day... Cannot provide the link because I'm on my phone which is not an iPhone...

</comment><comment><USER32> Not many people seem to be noting this, but I think it bears noting that it seems very much true that _Apple_ isn't tracking anything; your iPhone is.

There are legitimate potential worries about that, but "ZOMG Apple is Big Brother" is the kind of rhetoric that keeps people confused and afraid about security to the point that they _do_ screw themselves over.

</comment><comment><USER33> I agree. This is the cell tower data you get back from the significant change API (the low battery use location mechanism).

<http://www.cannonade.net/blog.php?id=1482>

I am not really surprised Apple doesn't throw this data away. I think they could have been a little more transparent about it though.

</comment><comment><USER34> tl;dr... All it's showing is cell tower location heatmap, which is anywhere within a 2 to 3 mile radius. (Basically what city you are in.)

Cue false outrage... Endless CNN coverage.

Trolling rant: Meanwhile, US phone carriers, advertisers, and the government have known your location within 9 feet, ever since the warrentless wiretapping scandal. To the point that NSA, has a direct fiber split of all AT&T customer internet traffic. [http://webcache.googleusercontent.com/search?q=cache:Rm4GQZm...](http://webcache.googleusercontent.com/search?q=cache:Rm4GQZmj5aAJ:www.eff.org/nsa/hepting+eff+nsa+att&cd=4&hl=en&ct=clnk&gl=us&source=www.google.com) America, choose your battles and get a grip on reality.

</comment><comment><USER35> "Apple is not storing the device's location, it's storing the location of the towers that the device is communicating with."

Oh come on. That's like saying, "I'm not laughing AT you, I'm laughing NEAR you."

</comment><comment><USER36> Secret Apple undercover propaganda blog!

<comment><USER37> and he shameless deactivated the comment-function in his blog.

<comment><USER38> What an asshole! But seriously, I don't know why it isn't allowing comments. It used to. I promise I'm not an Apple propagandist though!

</comment></comment></comment><comment><USER4> Has anyone looked at the coordinates in the Wifilocation table?

For cell towers, iOS has access to coordinates from the tower's signal itself. For Wifi, the best approximation would be the GPS location of the device. Unless it associates Wifi APs with nearby cell towers, or "fuzzes" that location.

<comment><USER39> iOS uses skyhook (or a workalike) to turn wifi MAC addresses into geospatial locations.

</comment></comment><comment><USER40> mirror

[http://google.com/search?strip=1&q=cache:http%3A%2F%2Fww...](http://google.com/search?strip=1&q=cache:http%3A%2F%2Fwww.willclarke.net%2F%3Fp%3D247)

</comment><comment><USER41> Site down, google cache not available!

<comment><USER38> Sorry about that. I'm the author. Should be back up now. I'll try to keep it going as long as I can!</comment></comment>


Ask HN: How to get hired in a hardware startup? - <AUTHOR> How can I showcase my interest, skill set, projects, research interests so as to work in a hardware startup. Normal resume just doesn't work for me <comment><USER2> When you say it doesn't work for you, what do you mean? You've tried applying for jobs and not getting interviews?

<comment><AUTHOR> Yup, it didn't work for me. I have lots of projects under me. Buy still no luck</comment></comment>