Can I just clarify, the selling of secondary stock and locking in a million, is that actually having cash in the founders personal bank account, or is that some cash on some future funding event?
I seem to remember this as a discussion some years ago - where YC was set against the "keep them hungry" mentality. I am assuming it has not changed?
Secondary stock sales means the founder sells a portion of their stock in the company in exchange for cash today.
There used to be a widespread belief in the VC world that you wanted to prevent founders from seeing any cash until the ultimate exit. As negotiating leverage has shifted towards founders this has gone away.
It's stupid anyway, since allowing founders to see a little cash up front actually aligns incentives much better once the company is somewhat successful.
Founders who have a successful company but aren't personally well-off are much more likely to sell early rather than pushing on to create a super-valuable company.
I seem to remember this as a discussion some years ago - where YC was set against the "keep them hungry" mentality. I am assuming it has not changed?