Silicon Valley's Stock Funk
Sliding shares of newly public Internet companies are depressing employees—and their finances—after years of long hours and high expectations. — Rank-and-file workers at four of the highest profile Internet companies that began selling shares in the past 16 months …
Context & Ripple Effects
Silicon Valley entered 2012 after a period of abundant startup funding, following a renewed influx of startup capital, and with workers already showing caution: a 2011 report documented employees selling shares over bubble fears. The weaker trading performance of recently public Internet companies turns that valuation anxiety into an immediate employee-compensation issue.
First-order effects
- Rank-and-file employees at the four recently public Internet companies see the value of their equity compensation fall, depressing both personal finances and morale.
- Those companies face a less compelling stock-compensation proposition precisely as their public share prices become a visible measure of employee wealth.
Second-order effects
- Silicon Valley startups competing with public Internet companies for talent face a sharper comparison between illiquid private-company equity and publicly priced shares, raising the importance of credible liquidity expectations.
- Employees' earlier willingness to sell shares suggests that weaker public prices can reinforce caution around equity-heavy compensation across the Valley.
Third-order effects
- If public-market volatility persists, Silicon Valley's funding-and-hiring model becomes less able to treat equity as a dependable retention tool, tying workforce sentiment more closely to market pricing.
The trend: Silicon Valley is confronting the gap between startup-era equity expectations and the discipline imposed when employee wealth is priced in public markets.