"Many of these founders have only "made it" in a paper sense. It's at best ungracious to be living large while your employees and investors are still sweating it out and/or losing money."

Is it only in a paper sense until what? The IPO? Many companies are staying private much longer, because it's better for them. Can you really say that a company that has a valuation in the billions, that, let's be clear, has been paying thousands of employees, suppliers, etc. for years, and that is choosing to stay private because it's the smarter move for all its shareholders, is not considered a success warranting of the founders taking some money off the table?

Not to mention the fact that lots of companies simply remain private always, that's a perfectly legit option although not as often used in the startup world for various reasons. Nor to mention the fact that the founders who are "taking money off the table" are quite literally doing it by investors buying shares from them, meaning the investors themselves necessarily have to agree to this arrangement. (Although admittedly, those are later stage investors, and this could be against the interests of earlier shareholders, but then they made a business deal with a company, it's on them to do it in a smart way).

I don't get why suddenly when it comes to tech startups and founders, the normal rules of business are suspect. People start companies and sell off parts of them to outsiders all the time, and it's mostly up to the parties involved to agree on the details that seem right to their situation. If they are willing to do a deal with a company that isn't currently making a profit, fine! That's their business.

Yes, until the IPO for companies that are on the going-public track. Until sustained profitability for companies that intend to stay private.

> Can you really say that a company that has a valuation in the billions [...] is not considered a success warranting of the founders taking some money off the table?

I can definitely say that. Are the employees and investors getting rich at the same time? If not, then there may be pragmatic arguments for paying off founders (e.g., they will have an incentive for selling the company too soon), but I don't think there's much of a moral one. And if it happens, I think there is still zero excuse for the founders living large while the people actually doing the work and providing the capital have not received the same rewards.

> Not to mention the fact that lots of companies simply remain private always

This is just muddying the waters. This article is clearly about VC-backed companies, which are all about the exit. For truly private companies, founders get their dough when the company is in the black long enough that they start paying dividends or partner draws.

> I don't get why suddenly when it comes to tech startups and founders, the normal rules of business are suspect.

They aren't. Money-losing companies giving their founders tens or hundreds of millions of real cash dollars is not within the normal rules of business.

What is your point here? People can spend their money however they want. Are you trying to say that someone who has become financially successful should not spend it because someone somewhere is not at the same level?

That's not the basic theory at all. Startups are a narrow niche of new businesses that are exploring new business models and/or designed for scaling quickly. Building wealth is for the founders of the business, the others are employees doing their jobs, in exchange for a salary.

Equity is a type of compensation designed to help lower costs, mitigate risk and improve motivation for both sides, but it is neither necessary nor required and there are plenty of businesses that have grown without it. There is absolutely no "get rich together" scheme in place outside of some unfortunate silicon valley cult/culture attitudes.

Founders are the business owners so they get the proceeds commensurate to their ownership. There's nothing wrong with that and employees are free to start their own business if they want more control (and work and risk). This is how corporations have worked since the beginning.

I'm not sure why you think startups are different, what they worked like "before" and most worryingly why you think founders are "getting away with" creating wealth for themselves by building a business.

I still don't see your point or what this has to do with founders not being justified in spending their wealth. What is the "startup model"? Corporations and equity have been around for a long time, there's nothing special about silicon valley other than some cultural differences.

How do you know what my personal take is? Was that meant to be an ad hominem slight? I'm stating that "get rich together" isn't some formal or even commonly accepted concept of any business (for anyone not a founder). Equity is a common way to share wealth and motivation but that has nothing to do with the founders being owners and owners gaining wealth through their ownership - but that makes me greedy because you think that owners shouldn't spend their money because someone somewhere (in the same company) doesn't have as much?

You can have exactly what you want by starting a company and giving everyone (including employees and investors) equal shares so why not do that?

There is nothing special about Silicon Valley except for cultural differences and being one of the greatest value-creation centers in human history, one that people around the world keep trying to replicate. And, mostly, failing.

You're also basically wrong about the history of business. Your theory of "I get to take it all" is relatively new in the scheme of things, an artifact of high financial liquidity, rising inequality, and a shift in political power from labor to capital.

Again, feel free to do something different than the Silicon Valley model. But please stop pretending like it's just a weird coincidence that it has been enormously successful and is different than how business is done elsewhere.

Your comments are continually tangential, don't answer the questions posed, and are now contradictory.

What I'm actually saying is that SV is NOT different than anywhere else. Corporations and ownership are universally practiced, and China for example is just as big. Business wealth (outside of wages) is proportional to ownership, founders are the biggest owners so they gain the most wealth from an exit. They've earned their money and can spend it freely. This is the fundamental way corporations work.

However giving away equity more often actually is a relatively new thing. I have no issue with this but am merely asking you what this has to do with a majority owner not being able to spend proceeds because there exists a minority owner? I'm asking you to backup the statements you made regarding the "startup/SV/get rich together" model which seems to be your theory - I see 0 examples of this pact outside of the founders circle. If you feel that everyone in a company should share equal ownership then that's certainly not the case in SV, which you seem to be praising.

> What I'm actually saying is that SV is NOT different than anywhere else.

And I'm saying you're wrong. SV is different in the extent to which people pursue joint success rewarded by equity. (Go look at the AngelList job listings versus job listings anywhere else if you don't believe me.) It is also different in the extent of its economic success. This is not coincidental, and neither is the SV bias against ostentatious displays of wealth.

> what this has to do with a majority owner not being able to spend proceeds because there exists a minority owner

Because in the cases mentioned a founder (who is often not the majority owner by the time you get to later rounds) is cashing out ahead of everybody else. It's not like the employees and investors are getting buckets of cash. Just high-living founders.

Especially when the company is not even profitable, this sends a terrible signal. If someone has built a profitable company and rewarded investors and employees proportionally to how they've helped the founder, that's one thing. But when the founder is just pocketing cash that could be instead used to help the company succeed, that's different. It makes it very clear that the founder is looking out for himself first.

> Also, I find the "years of struggle" trope irritating. Many of people live on beans while working 70-hour weeks and don't end up rich. Plenty of those people work at companies whose executives do get rich.

Your logic is flawed. When I start a company I will be leaving my cushy job that pays damn well and living low in hopes of making it big one day. A founder making a deliberate choice here is very different from unskilled/unlucky/not-qualified (in whatever sense) people living on the beans. They don't have a choice. They are not part of the game.