Startup Stock Options – Why a Good Deal Has Gone Bad • Hacker News Board

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

#201

Post by wbl » Wed, Apr 10, 2019, 6:01 PM UTC

dalbasal wrote: post #154

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 jus…

Going to IPO doesn't mean investors can't invest.

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

#202

Post by opportune » Wed, Apr 10, 2019, 6:04 PM UTC

defen wrote: post #186

opportune wrote: post #180

Earlier quoted context omitted.

Since we've already accounted for all housing and car payments (btw, your car ownership costs are way too high as a lower bound. I would say an decent $10k car you hold on to for 5 years at a time would have total annual costs closer to $5/year) that doesn't sound bad at all

I was using the numbers here: https://www.nerdwallet.com/blog/loans/total-cost-owning-car/ but you could certainly get it down a bit if you don't mind driving an older car.

15k miles a year is also a lot of miles. I probably drive less than 5k.

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

#203

Post by johnwyles » Wed, Apr 10, 2019, 6:06 PM UTC

kabdib wrote: post #183

I made a bunch of money from ISOs at large, established companies. I made zero (well, negative, really) from startup stock options, even before things got really shifty in the 2000s. One startup that I left, that is now a billion dollar company, simply decided to "extinguish" the shares I bought a few years after I resigned. I was probably cheated, but it's not worth the effort to go after them and they know it. Trea…

I am not sure how you are the top comment when you are complaining about issues that generally are not relevant to the post, you didn't explain your "extinguished" shares, and you do not explain why it would not be worth it to go after them if they have done something to you...

However, your last comment holds up well and I echo that sentiment.

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

#204

Post by CamelCaseName » Wed, Apr 10, 2019, 6:09 PM UTC

opportune wrote: post #202

defen wrote: post #186

Earlier quoted context omitted.

I was using the numbers here: https://www.nerdwallet.com/blog/loans/total-cost-owning-car/ but you could certainly get it down a bit if you don't mind driving an older car.

15k miles a year is also a lot of miles. I probably drive less than 5k.

Well, if you're commuting two hours a day, you'll certainly be driving quite a few miles.

I drive around 40,000km (~25,000 miles) and that's around a 2 hour round trip commute.

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

#205

Post by rrdharan » Wed, Apr 10, 2019, 6:09 PM UTC

pnw_hazor wrote: post #166

jessaustin wrote: post #132

Earlier quoted context omitted.

I'm pretty certain I've heard Amazon described as "evil". Apple are less objectionable, but I'm sure there are some things that some body wouldn't like.

It seems Amazon's evilness mostly stems from their reputation for how they treat their employees - not how they treat their customers. My weak sauce rationalization re Amazon is that I wouldn't work there (I love hearing the big sigh from recruiters when I ask if the client they are hiring for is Amazon.) Others who choose to work there do so voluntarily. They haven choosen their own pain. In my mind this is differen…

Maybe you missed it but Amazon entered the advertising space in a big way, somewhat recently:

https://www.businessinsider.com/amazon-advertising-explained...

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

#206

Post by akoumis » Wed, Apr 10, 2019, 6:09 PM UTC

landryraccoon wrote: post #149

akoumis wrote: post #134

Earlier quoted context omitted.

You are being exploited. Do you get compensated 1.5x your base for all those 12 hour work days?

Making multiples of what the median American household makes, sitting in front of a computer, in an air conditioned office full of free food is being exploited? I'm sure a lot of American workers are being exploited but I'm not.

At most startups (with illiquid equity), TC adjusted for cost of living (assuming Bay Area) is probably not far from median American household. Employers take advantage of youthful zeal which prevents ICs from understanding their true worth to the business. After startup engineers reach the point where 12 hours days become unacceptable from a logistics standpoint (kids, burnout), what do they have to show other than enriching their founders? If they enjoy programming and would do it in their spare time, why not dedicate 8 hours towards their job and 4 hours towards a personal project with potentially much higher personal reward?

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

#207

Post by mavelikara » Wed, Apr 10, 2019, 6:09 PM UTC

dalbasal wrote: post #154

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 jus…

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

Not for long, though. The standard HN advice of "value options at $0" came about from a generation of employees conned by this, as you call it, misalignment.

Also, when you trap employees into heavy golden handcuffs, abuses of power in line management thrives (as what happened at Uber).

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

#208

Post by opportune » Wed, Apr 10, 2019, 6:11 PM UTC

ryanSrich wrote: post #152

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 11p…

Who the fuck works 12hr/day at bigcorp? I work at bigcorp and I think most people are probably working an average of 7 hr/day working generally any hours that have them in the office during core business hours

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

#209

Post by steveklabnik » Wed, Apr 10, 2019, 6:12 PM UTC

dwaltrip wrote: post #200

dalbasal wrote: post #154

Earlier quoted context omitted.

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 jus…

Why do investors want to delay an IPO?

From the article:

Suster points out that the longer the company stays private, the more valuable it becomes. And if during this time VC’s can hold onto their pro-rata (fancy word for what percentage of the startup they own), they can make a ton more money.

The premise of Growth capital is that if that by staying private longer, all the growth upside that went to the public markets (Wall Street) could instead be made by the private investors (the VC’s and Growth Investors.)

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

#210

Post by econner » Wed, Apr 10, 2019, 6:13 PM UTC

ohaideredevs wrote: post #11

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…

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.…

"Seems like the game now is to grind whiteboard before I get too old for Google."

the sad reality of this industry...