I have a bridge to sell you
Ask HN: Company is firing all employees – should I still exercise my options?
81–90 of 94 posts
Re: Ask HN: Company is firing all employees – should I still exercise my options?
#82As someone who has invested in over 100 startups, I can absolutely guarantee that every single penny you would spend buying those options would be lost.
You are buying common. The investors have preferred. You won't get a cent from a sale of the company.
Additionally, the founders will not be able to raise money in this situation even though VCs coffers are overflowing right now.
Re: Ask HN: Company is firing all employees – should I still exercise my options?
#83Earlier quoted context omitted.
Yeah. "Promising" and "Blockchain" won't work in one sentence in this context.
Yes, at some point over 90% of blockchain companies had lots of talk and less to show for it. Without getting into too much details, this company is not one of them (according to many articles and observations of other people..not my subjective thinking alone).
Well yeah, I've read that so often now, it has just become part of the bubble.
Re: Ask HN: Company is firing all employees – should I still exercise my options?
#84Earlier quoted context omitted.
> It's a loss you can write off on your taxes Investment loses aren't tax credits. You don't magically get all the money back. You'll only "get back" whatever your marginal tax rate is. You'll still be out the remainder of the cash you forked over.
Losses from investments may be used as tax deductions if the conditions in the tax law are met.
Tax deductions aren’t tax credits. Investment losses are deductions not credits. It is a huge difference.
“Writing off” a investment loss only reduced your bill by the marginal tax rate of your loss. If it was a credit, you’d be marking down the tax bill by the entire amount of the loss, which isn’t what happens for investments.
To many people think that something being deductible makes it “free”. No. They basically give you a discount for the item equal to your marginal tax rate.
Note: I am not a CPA. Please see one before doing your tax if you are confusing credits and deductions.
Re: Ask HN: Company is firing all employees – should I still exercise my options?
#85No one's mentioned this yet, but if you do exercise it may cost you more than $20 a share. In the US at least you need to pay taxes on the difference between the exercise price and the fair market value of each share. If FMV > $20, the difference is counted as income by the IRS.
Not correct for ISOs.
Re: Ask HN: Company is firing all employees – should I still exercise my options?
#86No
Re: Ask HN: Company is firing all employees – should I still exercise my options?
#871. Setting the exercise window to 90 days instead of a more reasonable window (measured in years) should be a strong indicator that whoever is structuring their deals is not at all interested in the welfare of your equity. 2. You no longer have a seat in the company (much less at the deal table). 3. Their desperation will be apparent, and they will accept very bad terms in the round (firing your staff = no leverage).…
A 90 day exercise window after leaving a company is the most common situation I've seen
yea this is just standard
Re: Ask HN: Company is firing all employees – should I still exercise my options?
#881. Setting the exercise window to 90 days instead of a more reasonable window (measured in years) should be a strong indicator that whoever is structuring their deals is not at all interested in the welfare of your equity. 2. You no longer have a seat in the company (much less at the deal table). 3. Their desperation will be apparent, and they will accept very bad terms in the round (firing your staff = no leverage).…
A 90 day exercise window after leaving a company is the most common situation I've seen
The trend is to move to 10-year exercise windows. Plenty of arguments to both sides, I suppose.
Re: Ask HN: Company is firing all employees – should I still exercise my options?
#89I don't know your financial situation. Maybe $13K isn't much to you. However, I probably wouldn't buy these shares for the following reasons: 1) The company just fired all of its employees 2) The company just fired all of its employees 3) The company just fired all of its employees That's a really bad sign. Even if they raise additional money, it likely won't be on good terms. With the price of bitcoin way down from…
Thanks for your answer! You hit the spot with some things. I am definitely emotionally involved with the company and considered the option of exercising only some of the options - that might be the best option at the moment. One thing to point out is that there is still a month worth of raising time (with all employees still in the company), which is significant in startup terms.
I would say "not really". Trying to raise with such terrible optics is not going to be a fast process.
Re: Ask HN: Company is firing all employees – should I still exercise my options?
#90are your hopes the company will sell to a larger business, and you will receive a large payout? sorry for the question, just don't know a huge amount about this stuff.
Yes, at this point I believe the company might sell the product or manage to raise sufficiently to rehire employees and exit at a later stage. In the first scenario the payout will not be as big, but it might still be significant.
Or the payout might be less significant than the amount you paid for your options
Consider that (i) based on what you've told us the original VCs have declined to put any further money in to keep the company alive and have therefore probably written off the entire investment and (ii) any buyer probably needs to hire the founders for a couple of years to actually be able to use the IP, and therefore wants to apportion a sizeable proportion of any money they're willing to pay for the IP to their earnout package rather than compensating shareholders and creditors of the dead company.
And the product apparently doesn't generate non-trivial revenue and was built in 18 months for ~$3m by a team who are all available for hire, so it's not like there's an obvious reason for another party interested in the space to pay massive amounts for the IP - remarkable or otherwise - even if there wasn't pressure to conclude a deal asap...