Click here to read HubSpot's response on this topic.
Nasir and Matt discuss the trend in startups to compensate programmers and other early employees with stock options and how the company culture at HubSpot isn't what it seems.
Full Podcast Transcript
NASIR: Welcome to our podcast where we cover business in the news and add our legal twist to that business news.
My name is Nasir Pasha.
MATT: And I’m Matt Staub.
NASIR: Why are you laughing? Is it too formal or what?
MATT: No, it wasn’t too formal. It was just, uh, interesting breaks and peaks in your…
NASIR: Oh, because, well, the reason is because I was starting to think about what the name of our podcast is because, you know, since I never say it in our intro anymore, I almost forgot what it was.
MATT: There’s somebody else that does the intro, says the name, says our names, and then we immediately just repeat it.
NASIR: Well, we don’t say the name of the podcast which, for the life of me, I can’t remember what the name is, but that’s okay.
MATT: I say it at the end, I guess – in a way, I do.
NASIR: Uh, keep it sound and keep it smart?
MATT: Yeah, close enough. I hope you went to that game on…
NASIR: I did watch it. The final?
MATT: Great game, yeah.
NASIR: You know me. It’s surprising that I sat through a game that I have no idea who the teams are or players are but, yeah, it was a great game. I think I just watched the last half.
MATT: Yeah, the whole game was good but the last half was good. Yeah, my wife did the same thing. If she’s able to watch a whole half of basketball, you know it was a good game.
NASIR: Yeah, exactly, and we’re talking about the… uh, what are we talking about exactly? I just want to make sure we’re talking about the same thing.
MATT: College basketball.
NASIR: Oh, yeah, yeah, college.
MATT: Because it was in Houston, that’s why I bring it up.
NASIR: Yeah, we’re talking about the same thing.
Anyway, what have we got today?
MATT: You know, this is a topic that – I’m assuming you do as well – I seem to talk about it all the time with people – mostly with startup companies. We’re going to go through an actual company and kind of the tribulations that they’ve had. So, you have a startup company. Oftentimes, you have multiple people that are involved. Unless you get some sort of investment right away or unless one of the founders has some money from some other source or some money to pump through, they’re pretty handcuffed in terms of money they can pay out to people that are performing services for them which – you know, this is just a complete estimate I should say – over 90 percent of startups – and I use “startups” loosely – probably have this issue.
NASIR: The so-called “tech startups” or kind of dotcom startup.
MATT: Well, I think tech is a classic example because all businesses can probably use some sort of programming or tech person, but the tech ones in particular obviously have this huge need. And so, oftentimes, what happens for these startups, it’ll have the means to pay people. You know, we’re just talking minimum wage. We didn’t even talk about that yet but, in California, it was going to be quite the increase here in the next few years.
NASIR: $15.00 – and New York.
MATT: New York as well, that’s right, but we’ll talk about that at a later time.
NASIR: I think we have a story about it.
MATT: Yeah.
NASIR: Yeah.
MATT: So, in lieu of paying these people at least minimum wage, they pay them nothing but they pay them in equity meaning that – well, only if you stock in this company or membership interest if it’s an LLC – in exchange for your services, the one thing that they often do though is they tie it into some sort of vesting schedule. So, in order for this person to receive this, you know, think about it this way – we’re going to give you five percent of the company which is probably pretty high but we’re going to give you five percent for doing the work you’re going to do as a programmer.
