A Linux Pre-IPO Cautionary Tale
Date: Mon, 28 Feb 2000 16:25:26 -0800
From: Rick Moen <email@example.com>
To: Brad Smith <firstname.lastname@example.org>
X-Mailer: Mutt 1.0i
Subject: [SlugLUG] Re: Next month's meeting
Names of sundry firms, individuals, and places (below) are abstracted
out, since they don't matter: The important thing is the cautionary
Quoting Brad Smith (email@example.com):
> The plan I had had for a friend of mine to come in and talk about his
> experiences as a Linux IT admin at a pre-IPO startup company is going
> to have to be delayed, if not cancelled.
The funny thing is that I could actually step into his shoes, and tell
you stories about what it was like to be a Linux IT admin at a pre-IPO
startup company: I was chief sysadmin (and de-facto head of MIS, for
lack of an MIS department) at $COMPANY1 in $WEST_COAST_CITY, until I
resigned in disgust.
But, instead, you can read this e-mail.
$COMPANY1 was founded by several guys who didn't really know how to manage
a company, and funded by $VC, one of the big venture-capital firms. I
was an early hire, brought aboard because the founders knew me from the
Linux community. As managers, they made the classic mistake of failing
to delegate, and then, when growth forced them to delegate, made a
series of disasterous executive-staff hires, culminating with the one
who was my last straw, one $MORON of $EAST_COAST_CITY. I had been
promoted to manager after an earlier flameout by a moron executive named
$PRIOR_MORON (who had been dismissed just before the EEOC complaint he
inspired would have come up for public hearing), and I was then promised
a raise in salary and stock options that never quite materialised,
The company was (and is) burning up cash like crazy, and earning (at
best) slender revenues, much of it from supporting the MS Windows version
of $OFFICE_SUITE, under their technical support contract for $COMPANY2.
They had the problem of uncontrolled deployment of MS Windows within the
firm by the stream of Windows-addicted hires they brought on-board. As
de-facto MIS head, I warned them of this trend, and proposed several
ways to control it, all of which were ignored. This meant that I was
(by default) going to need massively more staff to deal with large
amounts of MS Windows on the desktop (at a Linux company!), so I set
about trying to hire more staff -- only to find my hires unofficially
and silently blocked with a variety of delays and evasions, at the HR
When $MORON came aboard, the deployment of proprietary software in key
parts of the infrastructure accelerated -- including servers -- and his
network to date is largely based on Solaris rather than Linux, for no
good reason. He hired a squadron of his friends, including his nubile
secretary, and $COMPANY1 paid gobs of money to fly them from
$EAST_COAST_CITY to $WEST_COAST_CITY every Monday, and back home to
$EAST_COAST_CITY every Thursday. Their main goal was to spend twenty
million dollars in second-round VC capital to repeat the job of building
system of global scope, which they had done previously at $COMPANY3.
(The $COMPANY3 network they built was defective, and has since then been
largely scrapped. $MORON was not much respected or liked when he was
there, either.) I never heard any reasonable justification for
$COMPANY1 building a twenty-million-dollar e-commerce system.
As head sysadmin under $MORON, I received copies of his budgetary
figures for additional sysadmins and MIS hires, and with his approval
shared those with my staff. I was then being paid $65,000 per year, and
$MORON's spreadsheet (in Excel, naturally) listed me as supervisor of
quite a few additional new-hire sysadmins, who would be signed on at
$80,000 per year. I reminded him of the founders' promises to me from
when they promoted me, and he said I had a point and that he would fix
My entire staff plus a senior programmer and her manager felt that their
being grossly underpaid had just gotten intolerable, and we scheduled a
discussion with $MORON on the matter, for the following Friday.
On the matter of underpayment: [Begin flashback.] Several months
earlier, one of my system administration staff reminded me of a
lingering problem I had inherited when I became her manager: She was
still being paid as an hourly, part-time employee, and neither the
founders nor $PRIOR_MORON (who had just been fired, whereupon I became a
manager) had brought her on full-time on salary, as had been promised.
I said she had an excellent point, apologised to her on behalf of the
firm, for the delay, and said I would fix the problem. I brought it to
the attention of one of the founders, who was then my immediate boss,
and he blew off my request several times. I persisted, and he said
"Make her an offer of $35,000." This left me stunned, but I repeated it
to my staffer, who quite rightly pointed out that this would amount to a
cut in pay compared to her hourly rate, and would preclude the
possibility of overtime pay, to boot. I told her she was clearly right,
and that I would try again to fix the situation.
That night, I sent e-mail to the founders, citing in detail three
industry-standard salary surveys, to prove to them that a $35,000
sysadmin salary would be horribly inadequate for $WEST_COAST_CITY. I
said that the situation was an embarrassment to me as a manager. I
reminded them of their promise of more salary and options to me when
they made me manager (which they did in front of witnesses), but said
that I'd gladly forego some of that, if necessary in order to get my
employee a decent salary offer.
They called me in, the next morning, and said it was not necessary for
me to forego my promised raise, that I was right, and that they'd offer
her something in line with the salary-survey numbers for junior
sysadmins. And so they did: $42,000, which wasn't great, but at least
not a gross insult. She accepted. [End flashback.]
So, some months later, with $MORON's princely figures in hand for
the new staff he intended to hire, the generally low pay levels for us
existing employees were a bit galling. ($MORON was already hiring
additional friends of his at very high rates of pay, plus he intended to
hire premium-priced contractors to build his boondoggle e-commerce
system.) Thus our appointment with $MORON for the Friday meeting.
On Friday, we assembled at the conference table at the arranged time,
and then found that $MORON had flown away to $EAST_COAST_CITY the
previous day. (Tee-hee! Wasn't that cute?) The logical remedy was to
hold the meeting as scheduled without him, and come up with suggested
salary adjustments per his spreadsheet. $COLLEAGUE, the senior
programmer, volunteered to take notes: She wrote down what each of us
felt would be fair and (more importantly) in line with $MORON's own
budgetary figures for our job categories. Afterwards, she e-mailed
those meeting notes to $MORON since he had been unable to attend, and
also cc'ing two of the founders because she had cited in passing their
long-standing salary promises to me (and to her manager). My portion of
her notes said I just needed to not earn less than my soon-to-be-hired
staffers, and would be glad to take the difference in stock options if
the company preferred, since I knew it was in a cash crunch while trying
to arrange its second round of funding.
$FOUNDER1 immediately came bounding over from executiveland, angry,
claiming $COLLEAGUE was severely out of line in sending her e-mail, and
implying that all five of us technical employees (who participated in
the meeting) had colluded to shake down the firm for more money.
Overhearing this, I rushed over and clarified that (1) we were using
$MORON's own salary figures that he had voluntarily shared with us, and
(2) the meeting was one that $MORON himself had arranged but had been
unfortunately unable to attend.
Over the weekend, I talked with $COLLEAGUE and said I was very disturbed
by all these developments, and was reasonably sure that, if I continued
to feel likewise, I would be submitting my resignation next Friday.
I would make a point of staying on until then, because I
would be the only sysadmin on-premises that week, since I'd approved my
staff attending the LISA conference. (I strongly feel that
one of a manager's main tasks is to help his staff's professional
development. So, I stayed to hold down the fort, and let them attend.)
On Monday, $FOUNDER1 told $COLLEAGUE and me that
$FOUNDER2 had urged over the weekend that all five of us be summarily
fired, but that he, $FOUNDER1, had intervened on our behalf.
Nonetheless, he spent several hours yelling at $COLLEAGUE in a private
conference room. Encountering this, I again stressed to $FOUNDER1 that
$COLLEAGUE had done nothing wrong, but just had just taken notes and
correctly conveyed to $MORON the salary suggestions from the four of us
that $MORON had, in effect, invited from us.
$FOUNDER1 told me, with a straight face, that the only promise ever made
to me as a manager was that I'd get increased compensation if I met
certain milestone measurements, notably the hiring of additional staff.
(As I mentioned, my attempts to hire had been systematically blocked by
$FOUNDER1's own HR Department.) I mildly replied to $FOUNDER1 that such
was not my recollection -- and that there had been witnesses.
Tuesday, there were supposed to be meetings, but nothing happened. In
light of not just the current debacle but also numerous prior
ones, I made up my mind that I would definitely be resigning on Friday.
Those prior debacles will be omitted here, but include such highlights
as $FOUNDER1 firing the head of the pathbreaking, prestigious $FAMOUSNAME
Project from $COMPANY1 for referring to his supervisor, $PRIOR_MORON, as
an asshole. (Said asshole at the time was sabotaging company hiring
policies in a particularly asshole-ish way -- and was soon thereafter
himself dismissed, averting a Federal EEOC investigation of $COMPANY1.
But not before $PRIOR_MORON attempted to undermine all female managers
at $COMPANY1 -- and largely succeeded.)
That's not to mention the numerous open-source programmers being hired
and then told they were expected to produce proprietary software for
$COMPANY1. Or the CEO of IPO-bound $COMPANY1, when asked if there would
be a Red Hat-style "friends & family" stock plan for open-source
notables, saying "We don't have any friends or family." But I
I also showed signs, Tuesday, of coming down with the 'flu, but felt I
had to remain at work, in my staff's absence.
By Wednesday, I had a galloping case of the 'flu.
Around 4 PM, $MORON, one of his cronies who was flown in every week
from $EAST_COAST_CITY, and the HR Director took $COLLEAGUE into a
conference room and told her that they had investigated claims of salary
promises, and that such could not be verified. She correctly
interpreted this as meaning that they were saying we all were liars, and
walked out of the meeting rather than possibly saying something she
would later regret. (Note that, if $MORON really had "investigated", the
most probable inference is that the founders had thereupon denied
the promises that they in fact had made.)
Some while later, they called her back into the conference room, and
said "We need to know that you'll be willing to work with us." $MORON
claimed that $COLLEAGUE's walking out had been insubordination, and
that, if she were ever insubordinate again, she would be fired. Ignoring
the bait, she asked when something would be done about the compensation
issue. They hemmed & hawed, and then said that "There will be no salary
reviews for at least six months". She replied "I find that
unacceptable." $MORON said "In what way?" She said, "I simply find
that unacceptable." $MORON told her they would accept her resignation.
Puzzled, she said "I wouldn't resign just because I'm not happy with a
lack of salary reviews!" $MORON then informed her that she was fired.
$COLLEAGUE was escorted back to her desk, with a rent-a-cop already
waiting nearby. She was allowed to put her things into boxes. I assisted.
Then, she was escorted off the premises.
As planned, I stayed late, ignoring a fever and sneezing fits, to
complete an after-hours server migration. It was successful.
Thursday, $MORON took me for a walk, and I told him that my personal
style was to work through channels when there's an administrative
problem. I said that I do not attempt to change people, but rather
act to change the underlying situations. I stressed that when I find
myself in untenable situations, I change the situation in whatever
manner is required. He expressed ritual regret over the prior day's
events. I made no comment.
$FOUNDER2 came by, and said he'd lobbied hard on behalf of all five of
us, but hadn't been able to save $COLLEAGUE. (This is the same person
who, according to $FOUNDER1, had pushed to fire all five of us, the
prior weekend!) I thanked $FOUNDER2 for his concern.
On Thursday afternoon, for the first time ever in my employment at the
firm, I submitted a claim for reimbursement of expenses, totalling over
$4,000. $FOUNDER1 signed it, looking thoughtful. Early that evening, he
came by my cubicle, possibly noticing that I had just vacated most of
its contents. He asked how my talk with $MORON had gone. I summarised
it. He asked if I felt $MORON had dealt with us fairly. I said "I
think he did what he could, considering the information he had been fed"
(thinking of $MORON's wording about having "investigated claims of salary
promises"). $FOUNDER1 thought for a moment, and said "I don't think I
withheld any information from him." I said "Hmm." [long pause] "I'll
tell you, $FOUNDER1, every word I've said to you here is true, but there
are definitely things I'm not saying." He left.
Friday, my last major task was to ram through the hire of an excellent
junior sysadmin. I confronted the HR Director, brandishing a
top-management memo confirming my hiring authority, and finally got the
offer letter signed and approved. The salary amount was, of course,
$MORON's budgetary $80,000 amount.
At lunchtime, I called my immediate boss (who was in $EAST_COAST_CITY, of
course), and told him I had wrapped up or handed off all pending
projects and coordinated that with my staff at the LISA conference, but
that I was resigning effective immediately. He was startled and wanted
to know why. I cited bad faith from upper management, and warned him
that he might be getting deliberately incorrect information from them,
himself. I advised that the company immediately change all root
passwords, and refer any sudden emergencies to $FOUNDER2 until my staff
returned from Seattle. (In fact, I hear that an emergency did
come up during the afternoon. $FOUNDER2, the Chief Technology Officer,
couldn't handle it. Oh well.)
I walked into Friday's all-company meeting, waited until the end, and
handed the HR Director a clasp envelope with my formal resignation
letter and all my company property. I handed $FOUNDER1 a sheet on which
I had printed "I QUIT!" on it in 142-point bold type, picked up my
remaining belongings, and walked out.
When he realised what I'd just done, he followed me out to the street
and tried to get me to not quit. I told him that, twenty years from
now, we would still be friends, but there was no way in Hell I was going
to work for his firm, ever again.
I had worked there almost exactly nine months, and therefore walked away
from 8,000 pre-IPO options on company stock. With absolutely no
Later, they hired another one of $MORON's cronies to do half of
my job (Director of MIS -- but not lead sysadmin). They agreed to pay
him $325,000/year plus 2,500 fully-vested shares (not
options) of company stock. I hear that he's not doing a very good job.
And, by the way, they reneged on the sysadmin's offer
letter that I had gotten approved by upper management on my last day.
They simply refused to honour it, and then offered her the same job at a
considerably lower salary -- which she eventually accepted.
But at least I can say I did my best for her.
And $COLLEAGUE? Some delicate checking with contacts at other Linux
firms where she interviewed suggest pretty conclusively that upper
management at $COMPANY1 attempted to get her blackballed throughout
the Linux industry. However, she quickly found an excellent job, at a
fine company, with much higher pay -- despite that.
What I didn't really know in all this, at the time, was that the
founders had actually pretty much lost control of the firm to $VC, early
in the history of the company, because they had missed all of $VC's
performance targets for them, and may have had little option
but to renege on their earlier commitments to employees, since
they were no longer in charge. $VC bills itself as a "keiretsu" (a
Japanese-style family of companies), and possibly uses $COMPANY1 as a
holding area for its personnel while it finds long-term places for them.
But it clearly has little or no understanding of the Linux market.
And that, folks, is what it's like working as a Linux admin at the
wrong sort of pre-IPO Linux startup. If you find yourself in such a
situation, do what I did: Cut your losses, and walk away. There are
many, many good Linux firms you can work for.
Cheers, My pid is Inigo Montoya. You kill -9
Rick Moen my parent process. Prepare to vi.
rick (at) linuxmafia.com
(speaking for himself, alone)
Sluglug maillist - Sluglug@sluglug.ucsc.edu
Why This Piece?
Ordinarily, I would never have written the above, let alone making
it available to others. I had successfully left on good terms (which
should be one's goal, when departure is necessary). All that was
well and good -- cleanly done, and amicable.
And that should have been the end of it.
But then, I found out, and verified, that upper management had
contacted at least several other Linux firms and told them stories about
$COLLEAGUE, resulting in her being effectively blacklisted around the
Linux industry. (Her new job, with a greater than $20,000 increase in
salary, was at a non-Linux software firm.) At least some of this
whispering campaign was carried out personally by $FOUNDER1.
People under stress make mistakes: Newly minted corporate executives
are human, like the rest of us. But this was a heck of a big
In this case, management were stressed because they knew they had
violated Federal labour laws in their treatment of $COLLEAGUE (since
she was a de-facto labour representative for four other workers),
and thus $COLLEAGUE could have halted their already-shaky IPO
plans by starting an NLRB inquiry. (Fortunately for them, she did
But, however panicked they were, one of the fundamentals of corporate
management is that you never attempt character assassination on
former employees: You say, at most, "Yes, she worked here from $DATE1
to $DATE2." And then you shut up, because doing
otherwise can result in defamation (and other business-tort) lawsuits
against your firm, a PR nightmare, your own dismissal, and your gaining
a lasting reputation as a dangerous amateur who cannot be entrusted with
a company's well-being.
Which brings me to my point: Readers deserve to know that
working at a firm like the one described can result in not just
unpleasant and Kafka-esque episodes but also -- if you're unlucky --
vindictive, behind-your-back damage to your professional reputation.
Employees at $COMPANY1 deserve to know that they risk
experiencing the same treatment, themselves. Executives
everywhere deserve to know that the fleeting satisfaction of such
actions isn't worth the consequences that may descend upon them later.
$VC deserves to know what has been done with its investment.
And the open-source community deserves to know what has been
done with its trust and hopes.
$MORON won't learn, because he's a moron. But the founders -- or
those who come after them -- just might, which alone might make this
Copyright (C) 2000 by Rick Moen,
Verbatim copying, distribution, and display of this entire article
are permitted in any medium, provided this notice is preserved.