"Silicon Valley" Offer Letters: Key Terms Explained

This article from Venture Hacks explains some seemingly scary but common terms found in Silicon Valley employment offer letters. It aims to demystify these terms for new hires, stating that they are ubiquitous in the region and usually "no big deal."

• The author reviews an actual offer letter from a major law firm to illustrate the terms.
• While conflicts or lawsuits over these terms are possible, they are not common occurrences.
• Major Silicon Valley law firms tend to use very consistent offer letter templates.

Stock Options in Silicon Valley Offers

The article discusses the common language around stock options included in most Silicon Valley offer letters:

• Options are typically granted at the next board meeting after the hire date.
• The strike price is set at the fair market value on the grant date.
• Options are subject to the company's stock option plan and agreement, which new hires rarely negotiate.

Avoiding Conflicts of Interest in Silicon Valley

Many offer letters include language restricting employees from engaging in conflicting business activities during employment. However, the author notes:

• This does not necessarily forbid working on your own side business.
• Consulting a lawyer is recommended for properly separating side projects from the company's IP.

IP Assignment Agreements in Silicon Valley

Invention Assignment Agreements, requiring assignment of patents for inventions during employment, are standard practice but can seem overreaching. The author advises:

• These agreements are rarely negotiated, especially from major law firms.
• Employees should list any pre-existing IP to carve it out from the agreement.

At-Will Employment and Other Terms

The article also touches on other common "scary" terms in Silicon Valley offer letters:

• At-will employment, allowing either party to terminate at any time
• Ability for the company to modify job titles, salaries, and benefits
• Expiration dates for accepting the offer
• Provisions that the offer letter supersedes any prior representations

Negotiating Offer Letters

While negotiation of standard legal terms is rare, the author provides some advice for negotiating the compensation package in a separate "Getting a Job Offer" article linked at the end.