How do you value equity in a public company like Netflix or Shopify? I don't think you're wrong, taking it further it's really hard to value anything but AAMG (not FAANG lol) at face value.

Netflix was always a nothing burger when it came to BigTech. It was the 50th most valuable company before the stock crash. It’s an accident of history (and CNBC) that it was ever included as a FANG stop. Notice the missing “A”? Cramer didn’t include Apple even though Apple was already the most valuable company by then or Microsoft that had been in the top 5 since 2000.

Fortunately for employees of Netflix, all of their compensation is cash.

> Fortunately for employees of Netflix, all of their compensation is cash.

No, but they can choose the mix of stock and cash as they please, from 100% stock to 100% cash.

Is that a recent change? At least to me, Netflix was known to pay the most base salary b/c they didn't believe in giving out RSUs or other stock based comp.

Yup and that's your prerogative, but practically speaking there are many people in the market who do put the expected value of their equity above $0, and they're going to present a retention risk if their total compensation inclusive of equity gets too low. Fwiw this problem exists for public companies too.

And those people don’t know the statistics of how rare it is for any company “succeeding” well enough for their equity be meaningful, how long it takes a company to have an exit (on average 7 years) or how brutal the IPO market can be during a bear market.

The majority of employees at startups have never experienced a bear market.

I hear you, although for better or worse teams somewhat need to manage to their employees' expectations and perceptions as well as the statistics on startup survival and liquidity. There's also a wide spectrum for the probability of a profitable liquidity event based upon scale, market, stability, etc...

Parent is presumably referring to public companies. Many of us have a sizable chunk of our compensation coming from RSUs.

How can you “presume” that when they explicitly said…

> Employees have equity grants worth $100k/year in equity, with the value based on a fundraise from last summer?

Yes I have RSUs from FAANG that are down 30% YTD. But when they vest in the next two months, at least I can sell them and diversify and use them for something.

If it were a private company, not so much.

This issue impacts both private and public companies, although indeed my comment did reference a private company scenario. However, you could just as easily replace that language with something like "with RSUs granted last summer" or similar. The issue is going to impact anyone who has a major equity grant set during prior_market_conditions who is now vesting that equity during current_very_different_market_conditions.

Also as you called out the problem is largely worse for private companies.

It’s much much worse. At least with all of the BigTech companies (FAANG - Netflix + Microsoft), they have huge profit generating business and they can pivot to offering more cash (like Amazon did before the crash) or even more stock. No one believes that those five companies will have worthless stock during their vesting periods.

Private non profitable companies are stuck in a catch-22. If they offer more cash they increase their burn rate. If they don’t, their best employees leave and they lessen their chances to ever go public. On top of that, how many VCs will just cut bait and let the business fail? What are the chances that they can get another round of funding and if so, it’s not a down round making it even worse for existing employees?

Yeah I'm with you. A lot of companies are unfortunately going to have a very rough time going forward.