📈 Stock-based comp and Evergreen dilution get repriced

“it seems to me that a lot of the big portfolio managers of big institutional funds are starting to pay really close attention to this quote unquote standard in Silicon Valley that stock based comp expense has become so high and Evergreens have become kind of a standard. ... And I don't think it would be too surprising, number one, to see cash salaries go up. And number two, as a result of that, to see salaries become rationalized in Silicon Valley, where engineers may start to get challenged on the standard 400k per year that everyone's become used to”

“when people talk about free cash flow, they tout it a lot, tech companies tout it a lot, because you're allowed to add back in stock-based comp as if it didn't exist. ... So when the only source of free cash is stock-based comp, that free cash flow doesn't reflect the company's true profitability. This is what I mean by people play these shell games with these numbers”

“This stock-based compensation is going to go away, because they're going to get rid of all the high-price engineers. They're going to get rid of a lot of the high-price executives.”

“So this is one of the things that's broken in Silicon Valley is that the comp in the stock-based comp is not tied to performance. It's like just giving people guaranteed salaries.”

“So when you take this big tech put out of the market, you will get true price discovery and you will find out what the real price should be for this kind of an engineer, that kind of a product manager.”

“And the compensation bands get tighter and the option value gets tighter and the free stuff gets tighter. So, it's the end of an era and I think it's a new world for tech and Silicon Valley.”

“And those crazy, unrealistic out of school deals are going to be gone. And this means massive consolidation of talent.”

“And we're going to dilute the stock 2 or 3% a year. So that's another 20% dilution.”

“Because if you look at these compensation plans, all of these professional stock owners, they complain all the time about stock based comp, right? And these companies have budgets between 2 and 5% a year that they give away.”

“So if you take out the stock-based comp, these guys are actually break even or losing money, roughly.”

“One hundred percent. This has been the greatest grift in the history of Silicon Valley for sure.”

“Can you imagine the totality of stock based comp that's been given out by all these companies since two thousand and fifteen when they were cagering their employee bases by twenty five percent a year? I bet you it's a trillion and a half dollars at least.”