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Ask HN: Employees who exersised stock options: how did it go?

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Re: Ask HN: Employees who exersised stock options: how did it go?

#61

Post by lostdog »

compsciphd wrote: post #60
fatnoah wrote: post #57

_Startup 1_ Joined in 2000 as employee #35 and left in 2004. Exercised options for ~$300. Company acquired in 2014 and options worth $0. Reported a long term capital loss that year. _Startup 2_ Joined in 2005 as employee #3 and left in 2011. Never exercised options. Company still going today w/no plans to grow or sell. _Startup 3_ Joined in 2011 as a Principal Eng and promoted to VP Eng in 2014 and had option for a l…

I've repeated this many many many times. You don't work at a startup to maximize your net worth. You'd be better off working almost anywhere else and come out on average with a higher net worth. you work at a startup because the salary is sufficient for your needs/goals and its work you want to be doing and dont think you would be able to do elsewhere (at least with the same ease). If either of those 2 choices aren't…

I don't mind working for less on something I'm passionate about. But, if we do get lucky and the startup goes to the moon, I expect to do well!

And that's why I can't work at startups anymore. It's fundamentally unfair that VC's capture all the upside. I'm can no longer bring myself to donate half my compensation as funding and only get the measliest of common stock options in return.

Re: Ask HN: Employees who exersised stock options: how did it go?

#62

Post by compsciphd »

lostdog wrote: post #61
compsciphd wrote: post #60

Earlier quoted context omitted.

I've repeated this many many many times. You don't work at a startup to maximize your net worth. You'd be better off working almost anywhere else and come out on average with a higher net worth. you work at a startup because the salary is sufficient for your needs/goals and its work you want to be doing and dont think you would be able to do elsewhere (at least with the same ease). If either of those 2 choices aren't…

I don't mind working for less on something I'm passionate about. But, if we do get lucky and the startup goes to the moon, I expect to do well! And that's why I can't work at startups anymore. It's fundamentally unfair that VC's capture all the upside. I'm can no longer bring myself to donate half my compensation as funding and only get the measliest of common stock options in return.

if the salary you are getting sufficient, then they are taking a lot more risk than you are. most startups fail, as long as you are getting paid an amount that is sufficient for goals and are working on what you want to work on, you are taking on minimal risk. And most startups that do well, the employees do also do well (not necessarily as well, but they also took on less risk).

A startup that sells for 250 million after raising 300 million, did not do well.

A startup that basically went bankrupt and had to be recapitalized after you left, did not do well.

Re: Ask HN: Employees who exersised stock options: how did it go?

#64

Post by fatnoah »

compsciphd wrote: post #60
fatnoah wrote: post #57

_Startup 1_ Joined in 2000 as employee #35 and left in 2004. Exercised options for ~$300. Company acquired in 2014 and options worth $0. Reported a long term capital loss that year. _Startup 2_ Joined in 2005 as employee #3 and left in 2011. Never exercised options. Company still going today w/no plans to grow or sell. _Startup 3_ Joined in 2011 as a Principal Eng and promoted to VP Eng in 2014 and had option for a l…

I've repeated this many many many times. You don't work at a startup to maximize your net worth. You'd be better off working almost anywhere else and come out on average with a higher net worth. you work at a startup because the salary is sufficient for your needs/goals and its work you want to be doing and dont think you would be able to do elsewhere (at least with the same ease). If either of those 2 choices aren't…

>I've repeated this many many many times. You don't work at a startup to maximize your net worth. You'd be better off working almost anywhere else and come out on average with a higher net worth.

100% agree. The experience gained was the invaluable part of working at a startup. That said, every startup I've talked to pitches the equity as the big thing, and not the experience. I.e. "...and these options would be worth X at our current valuation."

Re: Ask HN: Employees who exersised stock options: how did it go?

#65

Post by anonym123 »

Bought shares for about $2k (1 penny strike price) 2 years before IPO, now worth $20M. Later joined another startup, bought shares just after 1 year cliff, got acquired 6 months later. Made about $80k.

Taxes can be tricky. For each stock, you have:

* strike price: your cost

* fair market value: the "value" of your stock when you buy, usually set by a 3rd party

When you buy your stocks, you pay taxes on your virtual gain (fair market value - strike price). So you may have a huge tax bill to pay years before you can make any real profit.

On the other side, in the US, if your stocks qualify as small business stocks (you bought your stock when company had If you buy your share early, less taxes to pay, possible QSBS, but might be a loss. If you wait longer, your options might expire (typically after 10 years), higher tax bill (as FMV increases) but less uncertainty about the value of your stocks.

Re: Ask HN: Employees who exersised stock options: how did it go?

#66

Post by anonym123 »

Fire-Dragon-DoL wrote: post #24
kabdib wrote: post #19

Bought $10K of options before I quit. 20 years later the company has gone public and has a market cap of several billion. My options? "Extinguished" in some "event" 18 years ago. My guess is that's the event where they screwed as many employees as they could.

Is it even legal? You spent money on your options, if they get extinguished, you should be compensated in some way

Some companies do a reverse split just before liquidity event to wipe out former employees and lock-in current employees, like a 10:1 reverse split.
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