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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

#101

Post by pjschlic »

hkmurakami wrote: post #75
pfarnsworth wrote: post #66

Earlier quoted context omitted.

It's the 409A valuation, not the funding amount, that matters. 409A value is usually much much less than the funding round.

That'll apply to the strike price as well as the current "valutation", so the multiple factor between the two valuations should be around the same regardless (a strike price of a non trivial number like $0.27 suggests that a 409a valuation was already in place to price the options)

The original 4.8M valuation (which is his strike price - extrapolating from his share price and ownership %) has now increased to ~40M (extrapolated from 20M raise, estimating ~100M preferred shares valuation and 40% of that for 409A valuation[1]). This means 4k outlay for initial stock, but they are now valued at ~33.2k, incurring some short term capital gains of ~5.6k. This still seems like a steal, as is the value dropped on that valuation of 33k I think it can be recognized as a loss to offset other earnings, so generally I don't think the tax is that bad a deal (if the person has the cash on hand).

[1] 41% is average ratio from here: https://www.capshare.com/blog/409a-valuation-guide/

Re: Why I will not exercise my GitLab stock options

#102

Post by Rylinks »

majormajor wrote: post #98
owenversteeg wrote: post #52

Earlier quoted context omitted.

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.

If you never get a chance to sell that stock at a high enough price to cover that 35K loan, are you still personally liable for it?

Generally if a loan is collateralized, you are not liable for it beyond the collateral.

Re: Why I will not exercise my GitLab stock options

#104

Post by 6stringmerc »

One of the major takeaways for me from this article was about how sincere feedback and contributions to the company can be so quickly brushed aside. Making improvements aren't always easy, but espousing a "two-way street" then acting very "top down" is dishonest. A cultural issue.

Then I saw the communication about performance and then the firing, and I don't feel a reason to doubt the author. It's not a new story or situation. I've witnessed first-hand how some employees can be 'set up' by management to pretty much ensure a Termination channel. I'm not claiming the employee in my example was a Saint, but I watched the machine work and HR is not your friend.

A distant relative I got to meet was a career HR professional, eventually becoming the Top Dog at a company with 20k+ employees. He had one phrase for me that has been and continues to be invaluable: Guard Your Words & Actions.

This article should be appreciated for digging into the personal elements of reflecting on 'warning signs' that maybe there wouldn't be a happy ending. Wisdom is not always easily earned. What this author did is share some very personal experiences in their own perspective and I think, in many ways, it's like therapy.

We sometimes question our own choices and intentions in hindsight because in the moment clarity isn't possible. We're human. This piece felt very liberating to me, because I know I've been in similar situations and wondered if I was the one out of line or if maybe there was a bigger picture.

Sometimes talking dollars is the way we get down to what we value. This author is essentially putting his money where his mouth is. That, to me, is important and impressive.

Re: Why I will not exercise my GitLab stock options

#105

Post by MegaButts »

owenversteeg wrote: post #5

Anyone who just cares about the numbers: he was given options of 45,000 shares, of which 15,000 had vested. 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 rea…

> (also, curious note: this comment went from 4 points to zero in less than five minutes. Hmmmm.)

When I have a comment on top of a thread that isn't exceedingly positive, I've seen much wilder swings than that. I wouldn't read too much into it.

Re: Why I will not exercise my GitLab stock options

#106

Post by nandemo »

marcosdumay wrote: post #12

So, Japan also collects taxes on the price of stock you don't sell. Do most countries do this? I always thought it was a US only thing.

There's nothing particular unusual about Japan's taxation here.

If you buy stock at the stock exchange at $100 and its price increases to $150 but you don't sell it, you don't pay any taxes.

If a company pays you with stock that's worth $100 then you pay income taxes on it (even if you don't sell it), just as if it were salary. It makes sense to me. (If the company bought you a car you'd have to pay taxes on it, even if you didn't sell it; otherwise it would be a great tax loophole.)

With stock options it's similar. You don't pay any taxes when the company grants you options or when they vest. If the strike price is $10 and you exercise it when the market price is $100, you pay income taxes on $90 (basically your company paid you $90).

Re: Why I will not exercise my GitLab stock options

#108

Post by educar »

praneshp wrote: post #55
KingMob wrote: post #43

Earlier quoted context omitted.

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.

So every time a gitlab openness post comes up, you can be sure this link will be pasted here.

Re: Why I will not exercise my GitLab stock options

#109

Post by striking »

angry-hacker wrote: post #70

Off topic but I hope this medium.com trend starts to fade. I can't read the damn thing on my mobile when there are social sharing icons AND green open in app icon floating, taking room on my small screen. Why would I want your app or open it on app? It's s damn simple blog not some kind of webapp. Svbtl.com was also a thing here time ago, why did that platform become uncool?

1) it's hard to spell (you just misspelled it)

2) the UX isn't all that great

3) their homepage offers zero discoverability, meaning there's no organic blog growth, you have to import users from other sites

4) every blog post written on svbtle looks the same, especially with the lack of any sort of header image

Medium is a (slightly) better platform. That's why people use it.

Re: Why I will not exercise my GitLab stock options

#110

Post by sjg007 »

jkmcf wrote: post #57
owenversteeg wrote: post #52

Earlier quoted context omitted.

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.

It's basically impossible with a private company.
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