Clawbacks and Startups Dont Mix

The story emanating from the Zynga is a wake-up call for startups.
Reports allege the company threatened to reclaim stock options originally granted to employees who, in the eyes of the company, were not performing to levels on par with their equity holdings. I don’t know what’s true and what’s not about the Zynga news. Therefore, I’m not going to comment on the particulars of those specific allegations in this post. That said, however, something is clearly going on and spreading around the developer community, and if the Hacker News community is any indicator, this earthquake could have powerful, plate-shifting aftershocks.
Last year, one of our family friends was let go from a job at a small but successful hedge fund in New York City. His path to the fund was not rosy. He struggled to get into and out of college. He scraped by to get his accounting license. He worked at a big accounting company for a decade and, it turns out, happened to be so good at his craft that he randomly caught the eye of one of New York’s most powerful financiers. He was recruited, offered a plum gig (with grueling hours), jumped ship, let go of his consistent paychecks, and took on considerable risk with a small team to help build a new hedge fund in the middle of the 2008 collapse. Then, a few weeks before his carry in the fund was to be paid out, he was approached by Mr. Number Two, plainly told he’d be fired with a year’s severance, and told to grab his belongings. “It’s just business.”
He was crushed. The dollar amount aside, he couldn’t understand why this would happen. He sought the advice of all of his mentors, most of whom shook their head in disbelief, dismay, and disgust, all saying some variation of, “it’s just business.” The opening scene in The Dark Knight depicts a bank robbery pulled off by a group of men, each of whom kill each other, one-by-one during the heist, until the only person standing is the Joker, the mastermind of the scheme. As one of the robbers says, “One less share.”