Why I will not exercise my GitLab stock options • Hacker News Board

Re: Why I will not exercise my GitLab stock options

#151

Post by prh8 » Wed, Apr 05, 2017, 2:53 AM UTC

ryandrake wrote: post #82

prh8 wrote: post #56

Earlier quoted context omitted.

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.

Would love to know the company :-) $$$

Well they eventually had two rounds of layoffs, 40% and 30% of entire company (respectively)

Re: Why I will not exercise my GitLab stock options

#152

Post by spacelizard » Wed, Apr 05, 2017, 2:57 AM UTC

OhSoHumble wrote: post #89

ryguytilidie wrote: post #81

Earlier quoted context omitted.

I guess at some point we should ask ourselves why "public complaints and these articles are mostly frowned on". I get that we should encourage professionalism, but this code of "don't say anything bad about your former employer" leads to a lot of startups getting away with pretty bad things. I feel like if a company has behaviors exposed and they are ashamed of those behaviors, their reaction should be to fix or elim…

That's why I lack surety over the article. At what point is is it considered tactless to speak about why you were let go from a position? Being fired isn't something unusual and I don't think it's something to be ashamed of. I think it's a similar vein to speaking about your salary in an open way towards your coworkers. Logically, I don't see much wrong with that behavior but it still makes me feel uneasy. Similarly,…

>don't burn bridges

Once you get ejected from the cool kids' table enough times for random reasons, you see how not worth it is to put up with their bad behaviour. In the case of TFA, sometimes it's someone else that burns the bridge and there isn't anything you can do. I doubt this post is going to make him any less hireable, he was just in the wrong place at the wrong time.

However, employers should be uneasy about things like this, and not just because of him. Employees have these things called "opinions" and they will happily voice them if given a platform. If we want to continue having a culture where we can hire inexperienced executives and just let them do whatever, we have to be ready to accept the risks associated with it.

Re: Why I will not exercise my GitLab stock options

#153

Post by smm2000 » Wed, Apr 05, 2017, 2:59 AM UTC

vladimirralev wrote: post #93

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.

I doubt it. The guy got screwed over big time and he doesn't even fully realize it. Apparently he was working against himself for more than a year. They delayed the grant and the vesting date. Perhaps even gave him strike price with his own projected value calculated in the strike price. The whole point of the stock options is to get a strike price without your own value in there. Also it's likely there was dilution…

He was not screwed. He was contractor and contractors typically do not get any options at all. After one year, GitLab offered him options as an incentive or bonus with standard four year vesting - similar to how big companies award you stock options/RSUs annually.

Re: Why I will not exercise my GitLab stock options

#154

Post by winteriscoming » Wed, Apr 05, 2017, 3:04 AM UTC

Reading the article it just feels like the author and the company just drifted apart over time. Something that happens very often in life. When the number of people involved in a certain thing are few, their goals and purpose typically are aligned. Over time, as more and more people get involved, it's practically impossible to have all of them aligned to the same goal and expect their purpose to be the same.

After a while, some of the early passionate team members have to compromise with the situation or move on to something else.

Re: Why I will not exercise my GitLab stock options

#155

Post by will_hughes » Wed, Apr 05, 2017, 3:06 AM UTC

exclusiv wrote: post #85

barrkel wrote: post #68

Earlier quoted context omitted.

CEO rightly advised I don't think it's right at all. What gives him that right? Why is it morally wrong to do otherwise? What kind of right are you talking about?

It was a fair request to have a key member link to GitLab. Employees can be told what to do. You don't have to comply, but when you get a fair request and you make a big deal of it - you have to be prepared for the consequences. Contractors - no you can't do that stuff; you can't tell them when or how to work... they have a lot of protections. The CEO request to change the link wasn't unreasonable. Why would a CEO wa…

> It was a fair request to have a key member link to GitLab.

This leads to situations like what Microsoft used to be (and perhaps still is) - that Everything Had To Be IE And Bing. There could be no acknowledgement of the other brand by name.

> Employees can be told what to do.

On company time, certainly. When representing the company, for sure. Even perhaps if it's sufficiently controversial where you're bringing the company into disrepute by association.

But when none of that applies, then no.

Re: Why I will not exercise my GitLab stock options

#156

Post by pfarnsworth » Wed, Apr 05, 2017, 3:14 AM UTC

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)

I actually have no idea what you're talking about.

0.27 strike price was the 409A valuation at the time that the options were issued. There is usually another 409A valuation after the funding round. But we don't know what that value is. You can speculate, but using the funding round as the amount is wrong.

Re: Why I will not exercise my GitLab stock options

#157

Post by winteriscoming » Wed, Apr 05, 2017, 3:17 AM UTC

The article states he received those options as a contractor. Is this common? I was under the impression that only employees are entitled to stock options. If it's possible to get these options as a contractor, what really differentiates the two practically?

Re: Why I will not exercise my GitLab stock options

#158

Post by atishd » Wed, Apr 05, 2017, 3:18 AM UTC

EpicEng wrote: post #95

cortesoft wrote: post #48

Earlier quoted context omitted.

I would be curious about the legality of working around that restriction - like, what if the option holder creates a contract with someone who wants to buy the options, where they agree to hold onto them and then give them to the buyer once they are allowed to in return for a lump sum payment up front. Or, perhaps, they set up an agreement where they are given a lump sum payment up front, and agree to pay the buyer a…

I've looked into exactly this arrangement before. I couldn't find anything definitive, but I imagine that the second buyer will be in a very risky situation should the shareholder decide to break the contract down the road.

beware: https://www.sec.gov/news/pressrelease/2016-257.html

Re: Why I will not exercise my GitLab stock options

#159

Post by vinceguidry » Wed, Apr 05, 2017, 3:25 AM UTC

barrkel wrote: post #72

vinceguidry wrote: post #19

As companies grow, their politics changes. It's a fact of life. You want to keep working at a startup, quit and go find a job at another startup. If this bitch-fest affects his career at all, it won't be in a good way. I've seen more than one developer lose their jobs over politics. One guy, I've seen sabotage job after job over his idealism. I try to help him but you can't teach political savvy to an unwilling stude…

Identity trumps economics. Idealism is a political position; it's just not an economically rewarding one. It can feed the ego, though, and taking the other road - sacrificing principles for money - may lead to more net unhappiness.

My friend the idealist is way less happy than I am. I submit that he would be happier if he had more say, more money, and more flexibility at his job, but he threw that all away in the name of idealism. I agree, identity trumps economics, but there is such a thing as having more principles than sense.

Re: Why I will not exercise my GitLab stock options

#160

Post by pfarnsworth » Wed, Apr 05, 2017, 3:34 AM UTC

pjschlic wrote: post #101

hkmurakami wrote: post #75

Earlier quoted context omitted.

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…

I don't know what the OP's marginal tax rate was, but if he were a California resident, his taxes would be more around 15k.