Thanks for the illustration. Andrew or whoever is interested in propagating this concept should consider throwing together a few examples and a calculator on a website so people can play around with the numbers.
This is super innovative and cool - provided it holds up legally and with the IRS. (I gather it's meant to be a tax-efficient approach.) I sympathize with Andrew's motivation because as a founder, if my company made it big, I would want all the employees to do well. I always figured in that case I would just pay them out of pocket and take a huge tax hit to make it happen.
On the other hand, as a founder who has not yet "made it", an extra 50% hit on top of the 50% the taxman will take, is way more than I can stomach. The potential for outlandish wealth is part of what motivates me, even though I would be fine with much less. But the percentage and threshold can be adjusted to find numbers that should be suitable for anyone.
One thing that I'm not clear on and I didn't read through all the legalese is on what basis the "taxed" amount is redistributed to the remaining employees. If it's based on share vesting like a normal system, it sounds like it wouldn't change the distribution much. If it's an even split it sounds potentially unreasonable, for instance, to give 2.5 million an employee who joined 2 weeks ago.
Either way cool stuff and I'd expect something like this to become standard in Silicon Valley.
This is super innovative and cool - provided it holds up legally and with the IRS. (I gather it's meant to be a tax-efficient approach.) I sympathize with Andrew's motivation because as a founder, if my company made it big, I would want all the employees to do well. I always figured in that case I would just pay them out of pocket and take a huge tax hit to make it happen.
On the other hand, as a founder who has not yet "made it", an extra 50% hit on top of the 50% the taxman will take, is way more than I can stomach. The potential for outlandish wealth is part of what motivates me, even though I would be fine with much less. But the percentage and threshold can be adjusted to find numbers that should be suitable for anyone.
One thing that I'm not clear on and I didn't read through all the legalese is on what basis the "taxed" amount is redistributed to the remaining employees. If it's based on share vesting like a normal system, it sounds like it wouldn't change the distribution much. If it's an even split it sounds potentially unreasonable, for instance, to give 2.5 million an employee who joined 2 weeks ago.
Either way cool stuff and I'd expect something like this to become standard in Silicon Valley.