Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Startup Stock Options – Why a Good Deal Has Gone Bad

steveblank.com

Post reply on HN
Print view View original

151–160 of 391 posts

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#151

Post by deanmoriarty »

wolco wrote: post #146
deanmoriarty wrote: post #102

Earlier quoted context omitted.

Unless you mean both spouses should earn around 200k and thus bringing in a FAANG-equivalent income of 400k, I really don't know how you could afford what you are saying on a single 150k-200k salary (and perhaps another 50k for your spouse's salary, since not everybody works in tech). After paying for CA taxes, fed taxes, kids' schools, rent, car expenses, 401k contributions, I really don't know how you would come up…

Why would it matter 20% or 700k as a seller I get the full amount from the bank.

I believe the buyer was also slightly more aggressive, i.e. was willing to let the deal close faster than my friend, who rightfully wanted to take his time before getting into the biggest purchase of his life (inspections and such). That, paired with the massive downpayment the buyer was ready to immediately put in earnest money, was enough to convince the seller. Real estate transactions are not always that rational.

Also, many folks in the Bay Area just go all cash, and that's obviously much better for the seller since it means very fast closing.

But this if off topic, because a person on a 150k startup salary in the Bay Area won't be able to participate in any of these discussions.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#152

Post by ryanSrich »

seibelj wrote: post #3

Valid reasons to work for a startup: - You are a cofounder. - You have little experience and you are using this to break into the industry, and get experience on many different technologies ("wear many hats"). - They are working on a very specific problem or using a specific technology that you strongly desire to work on and it's difficult to do it anywhere else. - You want to work a certain way (remote, on the beach…

> Work / life balance

Disagree here for one specific type of startup...remote (which I know you mentioned).

Here's an example day at BigCorp:

- Rise and shine at 5am to work out early enough

- Leave the house by 7am

- 1+ hour commute into work

- Start work at 8am

- Stay until 8pm

- Get on/in the car, train, bus for a 1+ hour commute home

- Late dinner around 9pm

- Veg out because you're exhausted and go to bed by 11pm

Here's an example day at RemoteStartup:

- Rise at 7am to work out

- Make breakfast at 8am

- Standup at 8:30 while eating breakfast

- Work until 5pm

- Spend some family time and eat dinner until 8pm

- Work another 2 hours before bed around 10pm

The work life balance in scenario #2 is far and away more desirable to most people.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#153

Post by defen »

matthewowen wrote: post #71
dxbydt wrote: post #38

Earlier quoted context omitted.

> “If you want to own a house, have paid-for cars, put your kid through school, put away savings, and otherwise be completely comfortable then you can do just fine.” lol wut ? if you work in a typical SF startup, you can do precisely none of these things. Like, literally zero.

SF startup cash comp for engineers is comfortably in the 150k-200k range, and often higher. This is series A, series B stage companies. If you have a few years of experience and are making less than this then I'm please to be able to inform you that you are underpaid. If you have one of those incomes at the higher end, you can do these things in the bay area. If you have more than one then that stuff is not hard at a…

> Berkeley has pleasant single family homes in a great school district around the $1MM mark. You can absolutely do that on $200k/year.

Let's say you make $200k/year and manage to put together a $300k down payment and get a $700k mortgage at 3.8%. Here is the breakdown of your annual spending (using 2018 numbers):

$18,500 to 401K

$35,930 in federal income tax

$10,593 in FICA (Social security and medicare)

$13,724 in California income tax

Take home after tax + retirement savings: $121,253 Also, remember that the rules have changed and only $10,000 in state, local, and property tax is deductible against federal income.

Remaining payments:

$39,140 in mortgage payments

$10,500 in property tax

$1,000 in homeowners insurance

$10,000 in car ownership costs (gas, maintenance, insurance, financing or depreciation)

$4,000 in utilities (gas, electricity, water, trash, internet)

$1,000 for phone

That leaves you with $55,613 of "real" annual take home, or $4,634 per month, without counting the cost of food, entertainment, other debt servicing, etc. Certainly not poverty wages, and many people get by with far less, but you'll also spend 2+ hours per day commuting and have a significant fraction of your net worth tied up in a house in an earthquake-prone area.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#154

Post by dalbasal »

thesausageking wrote: post #21

He glosses over an important point: it's now typical for founders to take money off the table as part of financing rounds, sometimes as early as the A round. Founders will request it as part of a funding round and, there's so much competition to invest in the top startups, that VCs go along with it. Decades ago, this wasn't the case. Founders waited for the IPO like employees. If you're an engineer sitting on $5m of…

If early liquidity wasn't an option for founders, this massive pre-ipo/private-ipo market wouldn't exist.

Without early liquidity, a pre-ipo zuck/kalanick/etc. would be a paper billionaire with $0 in the bank and >$1bn "invested" in a risky tech startup. That's not financially or mentally sound, even by their risk lovin standards.

If investors demanded every penny go towards growing the business, those CEOs would just IPO earlier to get liquidity.

It's a necessary alignment of interests, if investors' interest is delaying the IPO.

Employee options holders can't just decide to take a company public, so their interests can stay misaligned.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#155

Post by refurb »

goobynight wrote: post #88
brootstrap wrote: post #74

Earlier quoted context omitted.

On the opposite side of this argument. I was there. I was shit in college but managed a degree and self taught programming. I was hustling hard to graduate and convince someone to hire me as a programmer even though I had no degree. I was 23 at the time. If you are in this scenario, just you, no wife kids etc. What is wrong with working really hard on a problem? I loved the startup and it fit my perfect niche. I woul…

It's "pissing in the pool" for the rest of us. I know it feels validated internally because it worked out for you though. Even when I did a startup, I held pretty normal hours. Working on someone else's problem to make them rich is silly to me. I think it's something that you either get or you don't. I don't plan to convince you to change sides, but I'd 100% of the time rather spend hours 8 or 9 through 12 working on…

Sorry, but that's ridiculous. People have different levels of dedication to their work. If you want to do 40 hours a week, that's fine, but don't crap on someone who wants to put in more effort.

Sounds like a union where they'd beat on the new guy who actually tried to be more efficient.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#156

Post by maxxxxx »

CalChris wrote: post #144
maxxxxx wrote: post #140

Earlier quoted context omitted.

How do you diversify as an employee/engineer? work for 10 startups at the same time?

You can't. That is what distinguishes you from a VC. Actually, you can. Serially. Plenty of people work for a startup through its early stage. A year here, a year there. That's diversification.

But how do you determine when it's time to jump ship? A year seems awfully short to make that determination.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#157

Post by rrdharan »

mdorazio wrote: post #43
ohaideredevs wrote: post #11

Earlier quoted context omitted.

Not exactly a unique experience, but my .05 - I started of at a startup with a "lol just do it" attitude to whatever the problem was. Worked 12 hours a day a lot, was stressed out all the time, didn't have a life, got calls at odd hours to deploy...but, if I didn't have that experience, I wouldn't have grown nearly as fast. Got to see all aspects of the products and the consequences of the decisions we made early on.…

FWIW, I've worked with a lot of entry-level people at normal companies over the years and would estimate that noob gainz are 30-50% higher in startup land for the first 1-2 years of career, maybe 10-20% higher the next two, then flat or actually lower than corporate thereafter. I think it comes down to 1) startups pile a lot more responsibility onto their young hires than normal companies are comfortable with + 2) st…

> 2) startups have a lot higher tolerance for failure

I disagree. They have, necessarily, a greater willingness to accept risk since they are already in a risky situation by definition.

If anything the startup is likely less tolerant of failure compared to a big established business, in that it has nothing to fall back on and will simply fail and go out of business.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#158

Post by pnw_hazor »

deanmoriarty wrote: post #120
pnw_hazor wrote: post #107

Earlier quoted context omitted.

Are you happy helping google do what it does? Building a surveillance society and monetizing people? I think that it would get to me after awhile. Though when younger I probably wouldn't have thought too much about it.

I am actually very, incredibly proud and happy of what I do. First of all, selfishly I am learning like crazy. I am able to work on the world's most advanced software defined networking implementation in Google Cloud, and it's just amazing and mind boggling. Second, I create real value for a lot of people: the reliability I help improve has a direct effect on the happiness of the Google Cloud customers that run on ou…

I am curious how reasonable people with many options of where to work turn a blind eye to what their companies do.

You are correct that no company is perfect, but some are less perfect than others. It seems many people like just shrug their shoulders and move on pursing the fun projects they are well-paid to work on. Such is the human condition.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#159

Post by vkou »

seibelj wrote: post #3

Valid reasons to work for a startup: - You are a cofounder. - You have little experience and you are using this to break into the industry, and get experience on many different technologies ("wear many hats"). - They are working on a very specific problem or using a specific technology that you strongly desire to work on and it's difficult to do it anywhere else. - You want to work a certain way (remote, on the beach…

To add another invalid reason for working at a startup:

- get good experience on many different technologies

If you want to learn how to do things quickly, often in a way that barely holds together, then yes, you will get that work experience in a startup.

If you want an opportunity to learn how to do things right, you need to work with experts. Your startup is incredibly unlikely to have experts on many different technologies.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#160

Post by [deleted] »

rmrm wrote: post #133

having worked at a lot of startups with various outcomes, I've come to firmaly believe the net preset value of your options is actually correct. If you take all the shares I've ever had options given on, and multiplied them by the strike price, it isn't far off from the ultimate amount of money they've been worth. The variance is high between each one, but taken together.. If you get a 100,000 shares at 0.10 each...t…

[deleted]
Post reply on HN