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TLDR Stock Options

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Re: TLDR Stock Options

#161

Post by JumpCrisscross »

AlexandrB wrote: post #98
JumpCrisscross wrote: post #71

Earlier quoted context omitted.

There is a developed secondary market for venture-backed companies' stock. (Source: I do this.)

I thought private stock transactions were subject to board approval, or is that just Canada?

It depends on the company. Some companies are quite liberal with transfers. If you have a bona fide offer, they'll amend the cap table. For others, my having a relationship with the founder or Board is critical. A good starting point for American companies is is their Certificate of Incorporation. If you exercised options, the Restricted Stock Purchase Agreement should also contain terms, e.g. the company's transfer policy or right of first refusal.

I have never heard of a Canadian company looking to raise capital structuring itself under Canadian law. Commonly, you'd have a Canadian law subsidiary wholly owned by a Delaware corporation.

Disclaimer: I am not a lawyer. Hire a lawyer before selling private stock. Do not take investment or legal advice from my Internet comments; they are neither.

Re: TLDR Stock Options

#162

Post by mikekij »

startupempl0ye wrote: post #123
mikekij wrote: post #9

Earlier quoted context omitted.

Tools like this are really helpful for startup employees. Thanks for sharing! Looks like there are some hidden assumptions about liquidation presence etc. Might be good to add a slider for that. (My employees would do pretty well at a $25M exit!)

Really? And you sure, once money is on the table, magically the priorities onto who is getting the money wouldn't change?

It didn't during our last exit.

Re: TLDR Stock Options

#163

Post by dllthomas »

jacquesm wrote: post #86
hibikir wrote: post #28

Earlier quoted context omitted.

This is especially true in this time where even successful companies drag their feet when it comes to IPO. If you don't think you can't afford to buy the options and pay the taxes (yes, there's taxes when exercising illiquid options), then you have to discount the chances of still being with the company at the time of a liquidity event. This means you can find yourself valuing stock options very little, even in cases…

> This is especially true in this time where even successful companies drag their feet when it comes to IPO. That's a very weird statement. Companies are under no obligation at all to ever offer stock to the public. An IPO comes with all kinds of downsides and many companies simply do not feel the benefits weigh heavier than the downsides. Such as: transparency, SOX, all kinds of restrictions and demands regarding co…

Though if they're hiring people with the enticement of stock, they're arguably under some obligation to somehow allow some liquidity ever.

Re: TLDR Stock Options

#164

Post by ardoi »

AlexandrB wrote: post #98
JumpCrisscross wrote: post #71

Earlier quoted context omitted.

There is a developed secondary market for venture-backed companies' stock. (Source: I do this.)

I thought private stock transactions were subject to board approval, or is that just Canada?

There's an EU startup that's trying to create a blockchain based market for shares of pre IPO startups: https://markets.funderbeam.com/market

Re: TLDR Stock Options

#166

Post by blackflame7000 »

morgante wrote: post #153
blackflame7000 wrote: post #119

Earlier quoted context omitted.

Were any of you guys able to negotiate a better offer? I am in a similar position where I have been offered comparable salary but only 3% equity as the 4th member. Not sure it's worth giving up the job security without a higher stake.

I've negotiated with multiple founders and gotten several good offers, including $150k+ salary and single digit equity. The important part is not to fall in love with a company before an offer—a significant number of founders think engineers should work for under-market, and it's not worth talking with them.

If you have the time, Id appreciate advice. I was offered low 6 figures base salary plus 3% equity for a CTO role at a startup. I would be the 4th member Joining. As I know, there is a CEO bankrolling most of it, an expert in the field of the business who is taking little pay, and a marketing guy who is unknown but most likely taking some payment. Prior to the offer letter I built a prototype (out of contract) as a sort of demonstration I could do the job. However, I wish to be compensated for the rights to the prototype upon joining as it is about 50k lines of code. What would you do in my shoes?

Re: TLDR Stock Options

#167

Post by robomc »

limelight wrote: post #154
johnny99 wrote: post #14

This is fantastically useful both as a side-of-the-barn estimator, and a teaching tool. Thanks! Two things a lot of startup employees are unaware of that are worth highlighting: they actually have to buy their options, which eats into returns, and that if they leave the company they have a limited window (30 days, typically) in which to do so. In would behoove them to save/plan for this fact.

> they actually have to buy their options Yup. It honestly astounds me how many people don't factor this into their decision-making. Your only equity compensation on joining is the delta between your strike price and the current market value of your stock. This is often very little, far less than you give up in salary at many companies.

How does this tool help you work that out though.

Re: TLDR Stock Options

#168

Post by [deleted] »

Pyxl101 wrote: post #90
xxSparkleSxx wrote: post #74

Earlier quoted context omitted.

I'm at a startup now. When I was looking for a job last year, I had 3 offers and this startup was the lowest in terms of compensation and while the other two offers were higher they were with large corporations. While I'm a little disappointed in my pay, I get a ridiculously flexible schedule, work from home whenever I feel like it, I put in some extra work last weekend so my boss just told me to take tomorrow off (w…

One thing to be aware of is that titles given by small and medium-sized companies are viewed differently than titles at large and well-respected, well-known companies. For example, someone who is a VP at a startup might equate to a typical Manager at a larger company. Someone who is a CTO or Chief Architect at a startup might be a Senior Engineer at a larger company. Large companies have an approximate scale in mind…

[deleted]

Re: TLDR Stock Options

#170

Post by lawrenceyan »

orthoganol wrote: post #39

Yep, 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…

Did you just delete your comment or was it somebody else?
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