What I Wish I'd Known About Equity Before Joining a Unicorn

Post by superqd » Thu, Jan 19, 2017, 1:22 PM UTC

zimzam wrote: post #496

superqd wrote: post #412

This has caused me some level of sadness in the past. I worked for a startup (started 6mo after founding with only 20 people and stayed for 8 years to 200+ people and 50million in revenue). During a number of phases, I worked for months at a time giving up weekends, late nights, holidays and even vacation time to get product out the door and beat the competition. I racked up 50k options, mostly all for less than a do…

This is a sad story: 90-day exercise windows are employee hostile, they should be much longer, especially when the company isn't public. However, and I don't know how to put this more kindly, but I can't help but wonder if you understood how options work while employed at the company? A simple technique to avoid having to quickly come up with a lump sum is to set aside enough money to excercise your options as you ac…

Post by Anderkent » Thu, Jan 19, 2017, 1:59 PM UTC

djb_hackernews wrote: post #144

econner wrote: post #24

Earlier quoted context omitted.

This advice is often given but it's easier said than done. Let's say you work at a unicorn for 3 years and in that time it goes up 10x in VC fantasy land valuation. On paper you have a lot of money and the company reasonably might go public a couple years after you leave. Let's say you're granted about a year's salary in shares when you first join so you've vested $100K for a round number. When you leave that equity…

The whole premise of a startup in any stage hiring a technical employee and granting them $100k worth of stock options will never happen. Typically you are granted X number of options. You are never told what the outstanding # of shares are and typically the shares themselves are valued in pennies. The idea is you think to yourself "well, it's 10k shares worth about $5k at the current valuation, but if they IPO and i…

Post by Anderkent » Thu, Jan 19, 2017, 2:00 PM UTC

ronald_raygun wrote: post #146

econner wrote: post #24

Earlier quoted context omitted.

This advice is often given but it's easier said than done. Let's say you work at a unicorn for 3 years and in that time it goes up 10x in VC fantasy land valuation. On paper you have a lot of money and the company reasonably might go public a couple years after you leave. Let's say you're granted about a year's salary in shares when you first join so you've vested $100K for a round number. When you leave that equity…

So I never understood - it seems like it would cost you 200k to buy something worth a million. Arent there people/institutions out there that would cover the 200k cost in exchange for maybe 300k worth of stock?

Post by Anderkent » Thu, Jan 19, 2017, 2:07 PM UTC

_yosefk wrote: post #516

Twirrim wrote: post #426

Earlier quoted context omitted.

Given how few startup companies actually make it, treating it as zero is the only sane and rational thing to do.

Right, because it's better to be paid $X/year and have 0 stock options than it is to be paid $X/year and have Y stock options, and no sane person would prefer the latter or negotiate for a Y large enough to be worth something even if the startup doesn't "make it" but is sold for 5x less than they tell you the IPO is going to be. And a company that has already got $200M invested into it is just as likely to fail to gr…

Post by snambi » Thu, Jan 19, 2017, 2:36 PM UTC

superqd wrote: post #412

This has caused me some level of sadness in the past. I worked for a startup (started 6mo after founding with only 20 people and stayed for 8 years to 200+ people and 50million in revenue). During a number of phases, I worked for months at a time giving up weekends, late nights, holidays and even vacation time to get product out the door and beat the competition. I racked up 50k options, mostly all for less than a do…