This is an area that YC has the oppotunity to step up and lead founders to be transparent but chooses not to. I wish i understood why.
information asymmetry is part of the secret to business success
TLDR Stock Options
41–50 of 213 posts
Re: TLDR Stock Options
#42I have a bunch of options in my company, but I don't know what the total number outstanding are, so I have no idea what percentage of the company I own. 1) Is this a common scenario? 2) Is there a way I can find out what the total number outstanding are?
Send an email to the people who manage the options. Say that you are trying to figure out your finances, and would like to know how many options are outstanding.
Note that there are complicated ways that that more options might appear, depending on the company (e.g. sometimes debt can convert to equity) that they might be a bit more hesitant to talk about, but they should be pretty open about the total number of shares currently outstanding.
Re: TLDR Stock Options
#43I have a bunch of options in my company, but I don't know what the total number outstanding are, so I have no idea what percentage of the company I own. 1) Is this a common scenario? 2) Is there a way I can find out what the total number outstanding are?
Not telling you the total number of shares is a little bit like saying I'm going to pay you 1000, but not telling you which currency it is in.
Re: TLDR Stock Options
#44+ Most new sparkly eyed employees who sacrificed cash pay for options are blissfully unaware of preferred shared. This could keep slider at $0.00 for a longer (further on the right side).
Thanks for the feedback!
Preferred shares are reflected in the current payoffs; that's what's responsible for the "low exit" portion of the slider not paying off at all. Are you talking about participation preferences that let VCs double-dip? Those are a whole different kettle of fish, but also not as standard as preferred shares.
Re: TLDR Stock Options
#45Yep, IMO unless you are a founder, if your company isn't one of the top companies of the decade your 4-6 years of pay-cut toil as an early employee will likely just not be worth it, at all. The expected value of working at an early startup gets overestimated, by a lot. If you're optimizing your career, either make the most you can at an established company, or start a startup. Or... work at an enlightened startup, th…
I would add to that that if your startup pays enough for you to live your lifestyle in the area you choose, then it's okay to leave money on the table so to speak.
You can always go retire at a big company later. The younger you are, the easier it is to take these sorts of risks.
But also think like an investor. Don't put your $x00,000 investment in a startup just because it's cool. Do it because you believe you'll make a positive ROI.
Re: TLDR Stock Options
#46This is an area that YC has the oppotunity to step up and lead founders to be transparent but chooses not to. I wish i understood why.
information asymmetry is part of the secret to business success
I assume you are not being sarcastic. It is true, but in this case its a limiting to early stage companies. I know, I personally will not join one that doesn't disclose liquidation preference, type of shares I had etc. unless they were offering more base comp than big corp to offset my risk of joining a company with a 65%+ chance of failure.
By disclosing terms of the shares, great companies could attract better people. You are not going to trick good people with shares, only fools.
Re: TLDR Stock Options
#47Does this include dilution?
Re: TLDR Stock Options
#48From a purely monetary and risk-based viewpoint, whether to join a start-up depends on how much money you already have. Suppose you regard tldroptions.io's probability distributions and outcomes as correct, and the only thing you care about is maximizing the long-term rate of goal of your capital. Then the Kelly Criterion ( https://en.wikipedia.org/wiki/Kelly_criterion , a.k.a. Fortune's Formula) says that you should…
1% equity in a series C startup sounds wildly optimistic. You would most likely not get that much equity as a senior software engineer. It's interesting that your first calculation still favours the other choice.
Yeah, I agree. There's no way that an engineer is getting integer percentages of equity after seed round. Maybe if they're highly recruited, in which case Google et al. would pay more.
Re: TLDR Stock Options
#49I have a bunch of options in my company, but I don't know what the total number outstanding are, so I have no idea what percentage of the company I own. 1) Is this a common scenario? 2) Is there a way I can find out what the total number outstanding are?
This type of smoke and mirrors bs is common in tech startups in my experience. The good news is even if the company is unwilling to disclose, Delaware law requires companies incorporated there (most tech startups, even in the Valley) to disclose key cap table numbers to share holders. You can exercise even 1 option to own a share and send the company a letter asking/demanding the info you seek.
https://calcounselgroup.com/business-stockholder/
"As a Delaware corporation, all of the company’s stockholders (including minority stockholders) have the right to inspect and make copies of the company’s stock ledger and its books and records upon a written demand to the company. The stockholder’s inspection rights also apply to the company’s subsidiaries. Although Delaware corporate law does not specify the types of books and records that the stockholders may inspect, these rights extend, at a minimum, to the company’s financial records and corporate minute book."
Re: TLDR Stock Options
#50I have a bunch of options in my company, but I don't know what the total number outstanding are, so I have no idea what percentage of the company I own. 1) Is this a common scenario? 2) Is there a way I can find out what the total number outstanding are?
Would knowing the fair market price be a proxy for percent ownership (assuming you know the current valuation of the company)?