If founders treated their investors the same way they treated their employees

I’ve worked for 5 startups now and my equity payout has been 0, 0, 0, 0, and now I stand I make low 7 figures from the equity on this last company (publicly traded now).

During those startups the following happened: - I saw my nieces and nephews so little they forgot my name. They were young, sure, but it still stung when they look at you like a stranger

- Messed up a 8+ year relationship with my significant other and we haven’t talked in years

- Let my student debt pile up to take on more equity than salary (dumbass idea for the record)

- Lost friends along the way because I could never do anything

- Missed many family/friends birthdays as I was working

- Worked 80 hour weeks for a long time

What did I feel after I saw my equity/stock rise to above 7 figures? Stupidity. I gave up a lot on my journey and money can’t get it back, in fact, the money I stand to earn doesn’t enable me to do much more than what my salary already does. I can travel, eat well, have luxury goods if I want (I’m not that type of person but anyways), and so forth.

My point being that this was a.) self-inflicted and b.) not worth the combined opportunity cost of all of those years.

So for every “friend” who made lots of money at Uber or other places, there’s a story like me or a story where someone’s never made anything from equity because profitable exits are fucking hard

I switched to working remotely for a San Francisco-based startup because they offered me a 30% raise over what my current employer was willing to pay.

Two years later, when working for the startup became less palatable, I went back to my old company. My manager there struggled with the HR dept as hard as they could and got them to just match my startup salary in order for me to come back.

Which I guess is just to say the parent comment is not universally correct.

The way some companies get around it is that, after 90 days, they replace the expired ISOs with nonstatutory stock options which, as their name implies, are not recognized by the tax code. Tax code is complicated but NSOs are ultimately worth maybe 10%-20% less than "equivalent" ISOs.

But, at least until recently, there wasn't standard paperwork for doing this, so the only companies that did it were those willing to innovate on their stock plan. I think a lot of founders weren't trying to screw their employees, but their lawyers weren't comfortable going off the beaten path.

But I think that excuse is fading now. Enough companies have done it to provide precedent.

My circa-2015 startup looked at this and fretted a bit but ultimately sidestepped the problem by giving everyone restricted stock instead of options. That's only really possible at the very early stages when the 409(a) valuation is nearly zero. But for anyone joining a seed-stage startup today, that's what I strongly recommend: Ask for restricted stock, and if the purchase cost is non-zero, ask them to comp you for it as a signing bonus (which is "free" for them since they're buying the stock from themselves). You'll have to pay income tax on the value but that should be pretty small (maybe you can even get the company to "gross it up", but that's real dollars for them). Then you'll never have to worry about exercising stock options or paying AMT. Don't forget to file your 83(b) election within 30 days.

I did not mean to upset you.