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Why I will not exercise my GitLab stock options

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Re: Why I will not exercise my GitLab stock options

#51

Post by hn_throwaway_99 »

danaliv wrote: post #36

Being publicly critical of a former employer like this, unless you're talking about major ethical issues, seems like a bad move. There's just no way to do it without it coming across as sour grapes. If you have constructive criticism because you believe in a company and want them to do better, give it directly to the people involved. Otherwise I just have to wonder what the real motive is behind making a public state…

As a development manager, I agree. Even assuming everything he says is 100% true, his main goal still just feels like venting. Which is fine, but you should vent to friends, not in a public forum like this. It would make me question his maturity.

Re: Why I will not exercise my GitLab stock options

#52

Post by owenversteeg »

hkmurakami wrote: post #47
nandemo wrote: post #38

Earlier quoted context omitted.

> These 15,000, or 0.0833% of the company, were available to him at $0.27/share, or $4,050 total. So he had the opportunity to buy 0.0833% of the company at a $4.8MM valuation. Given that they recently raised $20MM at an undefined valuation it really says something that he chose not to exercise the options. I normally don't comment on HN without having read TFA, but this one is way too long and I just skimmed over it…

A $20MM raise suggests a $100M valuation or so. That's a 20x increase in the stock price. OP's outlay would be something like $4000 + $35000 (state tax + short term capital gains. Less depending on how he hits AMT.). I don't think that's trivial, even if I'm off by a factor of 2.

Don't some banks let you take out a loan for the amount of the capital gains taxes using the shares as collateral? I'm not sure but I could've sworn I heard about this.

Re: Why I will not exercise my GitLab stock options

#54

Post by arjie »

bofia wrote: post #23
arjie wrote: post #17

Earlier quoted context omitted.

And when they exercise that right, they'd be able to buy them back at the strike price?

No, they would buy it back at the price that the buyer had offered. In your example, $10000 for the 15000 units.

Oh, so secondary markets are still beneficial to participate in if permitted. So this guy should participate if he can. But you work with the original company, etc., I suppose. Makes sense.

Re: Why I will not exercise my GitLab stock options

#55

Post by praneshp »

KingMob wrote: post #43
calcsam wrote: post #26

The GitLab exec team is probably pretty happy to be reading this blog post. Because Patricio isn't exercising his stock options they will return to the option pool, where they are available for re-allocation to new hires. 0.1% of a Series B company is the entire four-year grant for a new engineer, or several sales / operations folks.

Except that the negative PR from the post may well deter qualified applicants in the future, which could easily be worth more than <.1% of the company.

They counter that with their openness, remote-only propaganda on HN and other places.

Re: Why I will not exercise my GitLab stock options

#56

Post by prh8 »

twinkletwinkle wrote: post #10
mixologic wrote: post #9

I didnt really see anything here of any real substance, other than OP strangely thinks that twitter is private, and that the CEO rightly advised him to link to their own product instead of their competitors. I cant really see how thats a "run in" with the CEO. All the other cultural issues he seems to bemoaning are all consequences of growth in a startup. Information flow gets harder with more people. As far as the C…

>As far as the CMO moving on to github I think the implication was the CMO was fired and that was a poor decision, highlighted by her being snapped up by their competitor.

I've been in a company that repeatedly snapped up employees from a competitor, including the CMO at one point. Often times, it's about the hiring company wanting to steal employees because they think it will bring success (despite not being in a good position for it). It leads to bringing on a lot of people that shouldn't have been, for more money than they are worth.

Re: Why I will not exercise my GitLab stock options

#57

Post by jkmcf »

owenversteeg wrote: post #52
hkmurakami wrote: post #47

Earlier quoted context omitted.

A $20MM raise suggests a $100M valuation or so. That's a 20x increase in the stock price. OP's outlay would be something like $4000 + $35000 (state tax + short term capital gains. Less depending on how he hits AMT.). I don't think that's trivial, even if I'm off by a factor of 2.

Don't some banks let you take out a loan for the amount of the capital gains taxes using the shares as collateral? I'm not sure but I could've sworn I heard about this.

For public companies, I know it's true. I'm not sure about private companies.

Re: Why I will not exercise my GitLab stock options

#58

Post by mcv »

GitLab is much younger (and at the time smaller) than I thought. I contracted for a major bank in 2015, and they were in the process of switching from Stash to GitLab. This sounds like GitLab only just existed at that time. Sounds crazy for a major bank to switch at such an early stage.

Of course it being open source does help a lot.

Re: Why I will not exercise my GitLab stock options

#59

Post by [deleted] »

hkmurakami wrote: post #47
nandemo wrote: post #38

Earlier quoted context omitted.

> These 15,000, or 0.0833% of the company, were available to him at $0.27/share, or $4,050 total. So he had the opportunity to buy 0.0833% of the company at a $4.8MM valuation. Given that they recently raised $20MM at an undefined valuation it really says something that he chose not to exercise the options. I normally don't comment on HN without having read TFA, but this one is way too long and I just skimmed over it…

A $20MM raise suggests a $100M valuation or so. That's a 20x increase in the stock price. OP's outlay would be something like $4000 + $35000 (state tax + short term capital gains. Less depending on how he hits AMT.). I don't think that's trivial, even if I'm off by a factor of 2.

[deleted]

Re: Why I will not exercise my GitLab stock options

#60

Post by chrdlu »

sh_throwaway wrote: post #30

I feel for this guy. I was an extremely early employee at a startup, and when I left I was faced with the decision of whether or not to buy exercise my stock options. Eventually I declined to exercise them. Telling your friends that you don't value the thing you've all been pouring your life into is tough. It feels like you're insulting them. Esp when there's still money in the bank and the investors don't know what…

As elastic_church mentioned below, the firm I work for (The Employee Stock Option Fund: https://employeestockoptions.com) could help fund the exercise and help cover potential taxes. We aim to give employees upside in the startup without them having to invest their own money.
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