The four year vesting schedule doesn't make sense
In the Valley

	
	
	
		
	
		
			
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				January 17, 2013
			
			on the road … when you are not jack kerouac
		
		
			Impressions:After ten hours of driving, I arrived on the wrong side of Joshua Tree: Cottonwood campgrounds. This became clear to me in the daylight, when I realized everyone around me had an RV and (probably) an AARP membership. Nonetheless, I had an enjoyable night. I pissed in complete darkness and counted all the stars I could see inside of Orion. It was incredibly cold and dark and I imagined myself inside a submarine, my silver asian mom submarine. Not bad. Lessons learned: 1. National Parks do not have diners
2. Cliff Bars taste like some sort of mildly toxic chemical, maybe nail polish, or lint roller. 
3. Not all plants are friendly
4. Most plants in the desert are not friendly
5. A short cut is only that if you do not encounter any unfriendly plants.
6. First aid kids are good purchases. Also: anti-itching cream. Q & A:What is a suspicious type of person in a national park?
a) suicidal hobos
b) Leah
c) retirees
d) a & b(hint: I was mistaken for a) while napping)
			
		
		
		
				 
		
	
	
	
	
	
	
	
	
	
	
	
		
	
		
			
				3 notes
				December 25, 2012
			
			The four year vesting schedule doesn’t make sense.
		
		
			For most silicon valleys companies today, the standard vesting package for entry level engineers is a 4 year vesting schedule with a one year cliff. Usually, a certain number of RSU/grants is assigned at the time of the offer and distributed over the course of four years such that – a) at the end of 1 year, you get ¼ of the initial number of RSUsb) for every quarter/6months/month after, you get a proportional amount of the remaining. I don’t know what the origins of this system are, but it seems maladjusted to the current hiring climate, where there are at least several different demographics of engineers. From my observations in the valley in the last year, it’s possible to make a few major distinctionsa) new gradsb) young engineersc) old dudes that have been here since before the dot com. Or if you don’t agree with my categories, you might consider the engineering levels system they have at places like Facebook or Google. Level 3 engineers need tasks handed to them, and sense of direction. Level 4-5 have their shit together but maybe don’t know how to architect things so well. Level 6+ guys are driving the company. Of course, the demographic/age based categories don’t correspond 100% with engineering proficiency, but I think there’s probably high correlation.It seems ill advised to me that the 4 year vesting schedule is uniformly given to members of all three groups, especially to new grads. Someone who is just out of college has only experienced adulthood for 4 years, and for many who come from top schools, even less, as the tendency to coddle undergrads is stronger at more prestigious universities. A year in the life of a new grad is a LONG time. It might be argued that that’s precisely what the 1 year vesting cliff is for – to incentivize a new grad to commit a significant portion of the adult life he has experienced to the company, but I think it may have the opposite effect. For someone who sees 1 year as a long time, the one year vesting cliff may be a reason to discount the equity portion of the compensation package altogether, especially at a small startup where the chances of cashing out are low anyway. After a couple of months at a company, a new grad may think “hey, this isn’t THAT great’, and not stick out the next 9, 10, 11 months, because that seems to them, an insanely long time. On the other hand, for someone who has been working for a few years, 8,9, or 11 months might seem to be a much shorter period of time, and proportionally it is. They might stick it out, get equity, and become much more committed to the enterprise. Hell, they might stick around long enough to discover that the job is fun after all. So in the case of new grads, I think a more variable vesting schedule would be a better fit. To incentivize staying longer, one might keep the fractional vesting for years 2,3,4, but have an exponential vesting schedule for the first year. E.g., if a new grad ought to get 2^12 rsus (a lot) by the end of 12 months. Given them 1 unit on sign up, 2 at the completion of the first month, 4 the next and so on, until you’ve handed out all they are worth at the end of the year. Psychologically, the kid will want to stick around for the next month and the higher pay off, and in the process, learn the value of pulling through that the one year vesting cliff was suppose to teach anyway.—-That said, if you know a) this history of the 4 year vesting scheduleb) varieties of vesting schedules presented in the valley,I’d love to hear your thoughts!
			
		
		
		
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