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Startup Stock Options – Why A Good Deal Has Gone Bad (2019)

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Re: Startup Stock Options – Why A Good Deal Has Gone Bad (2019)

#251

Post by [deleted] »

lisper wrote: post #246
HALtheWise wrote: post #231

Earlier quoted context omitted.

I wouldn't dismiss so quickly that it's impossible for some people to create orders of magnitude more value than others, or for that distribution to change dramatically with time. In farming, for example, increased mechanization has allowed a ~100x increase in per-worker production, and unless literally every other occupation had the same change over the same time period, that should lead to dramatic productivity dif…

> The real difficulty is in deciding who "gets credit" for producing a given thing. Exactly. The situation we currently have is that the people who are getting the most "credit" as you put it are by and large the same small group of people who make the rules for who gets the credit. "Bankers" is a convenient popular label for those people even though most of them don't actually work at banks.

[deleted]

Re: Startup Stock Options – Why A Good Deal Has Gone Bad (2019)

#252

Post by taude »

PragmaticPulp wrote: post #168

Another big difference in modern startups that wasn't mentioned in the article: It now takes more employees than ever before to get a startup company off the ground. It's basic math: You can give more equity to early employees when you have fewer of them. We have more services, frameworks, and technologies available to quickly build companies than ever before. Ironically, it somehow takes more engineers than ever to…

All my engineering teams are vastly smaller these days than earlier in my career. By a long shot. And we get way more done with fewer resources due to the fact that there's cloud computing, modern DevOps practices, etc. And then you take into account how many companies are using offshore resources (which typically are just expenses without options) at even lower prices.

However, I'm curious if the other side of the business has grown with all the growth hacking marketing, sales floors that now seem like boiler rooms, etc...

Re: Startup Stock Options – Why A Good Deal Has Gone Bad (2019)

#253

Post by sjg007 »

ditonal wrote: post #161
BowBun wrote: post #112

Earlier quoted context omitted.

> if you have taken a below-market salary as many startup employees have I think this is part of the startup mythos. At the three startups I've worked at (~10 people), none of us had to sacrifice competitive salaries for stock options. The options were on top to incentivize staying at the company longer. I wonder how common it actually is for people to take significant paycuts in 2020 for a startup opportunity (found…

The confusing part is that salary and stock get mixed up, but in a public company the stocks effectively cash and can basically be considered salary, unlike illiquid equity. I don’t know where you’re from, but in SF amongst my circles, senior engineer market rate is about 300-500k but most startups will only pay 150-225k salary so that’s a huge pay cut. However, the base salaries are same, but you can pay your rent,…

Reasons to work at a startup.

1. Level up your career / role flexibility. 2. Big companies suck (but [big] startups can suck too). 3. Burning idea you want to get done / tech is interesting. 4. Lottery tickets (options).

Re: Startup Stock Options – Why A Good Deal Has Gone Bad (2019)

#254

Post by dudeman13 »

fennecfoxen wrote: post #218
dudeman13 wrote: post #179

Earlier quoted context omitted.

I wished people had decided Software Engineers made 125k Could achieve financial independence in 2 years

I made $125k total by year 3 of my career. If you need $125k, look elsewhere (and specifically look in California and maybe possibly New York.) The unfortunate consequence of the taboo of salary discussions is young software engineers not knowing how much they can actually make.

I am not American.

Re: Startup Stock Options – Why A Good Deal Has Gone Bad (2019)

#255

Post by throwaway09223 »

lisper wrote: post #219
PragmaticPulp wrote: post #147

Earlier quoted context omitted.

Blaming bankers and proposing revolution is one of those explanations that sounds satisfying but doesn’t really match the evidence. In some ways, as markets have become more efficient and transparent it becomes harder, not easier, for finance people to simply squeeze money out of the systems through financial tricks. We’re also living in a world where interest rates are at historical lows, making the cost of capital…

> doesn’t really match the evidence Here's some data: https://www.pewsocialtrends.org/2020/01/09/trends-in-income-... Something is driving down wealth at the low end while driving it up at the high end. It seems unlikely in the extreme that this a reflection of actual value produced by people at the high end relative to those at the low end. Much more likely is that this is a reflection of some kind of structural pro…

I think it is more accurate to say that wealth growth at the low end is not as rapid as wealth growth at the high end.

Nothing is driving wealth down. Wealth is increasing for everyone, generally speaking. This observation is important because it recognizes that wealth is created, not allocated. This is not a zero-sum game.

You say it seems unlikely that actual value is increasing at the high end but I do not think this opinion holds up to scrutiny. I think it is very likely that value at the high end has increased by multiples -- white collar jobs have become vastly more productive with the introduction of technology. Correspondingly, low value work has not. In fact, many of our most common low value jobs (retail, driving) risk going the way of the switchboard operator. There was no conspiracy to devalue the work of the switchboard operator; rather, so called "high value" tech jobs made this type of lower value work entirely obsolete.

I think it is unsurprising that high end work is rising in relative value while low end work is falling. I don't see any basis for imagining political or economic conspiracies: What we see in terms of value is exactly what we ought to expect.

Re: Startup Stock Options – Why A Good Deal Has Gone Bad (2019)

#256

Post by 0xEFF »

s17n wrote: post #239
cushychicken wrote: post #181

Earlier quoted context omitted.

Are you still susceptible to this if they are ISOs? My understanding is that ISOs are only ever taxed at the time of sale. Sounds like you're dealing in an ISO quantity beyond the limits my mind can comprehend though.

As others have said, AMT doesn't respect ISOs, which makes ISOs pretty useless.

Not entirely, if you don't owe AMT in subsequent tax years then you get the money back as a tax credit.

https://www.kiplinger.com/article/taxes/t055-c000-s001-the-a...

Re: Startup Stock Options – Why A Good Deal Has Gone Bad (2019)

#257

Post by swiftcoder »

fennecfoxen wrote: post #217
BowBun wrote: post #112

Earlier quoted context omitted.

> if you have taken a below-market salary as many startup employees have I think this is part of the startup mythos. At the three startups I've worked at (~10 people), none of us had to sacrifice competitive salaries for stock options. The options were on top to incentivize staying at the company longer. I wonder how common it actually is for people to take significant paycuts in 2020 for a startup opportunity (found…

Maybe at super early stage startups where you get at least one percent of the company (if not more). At older startups you should see base salaries that are reasonably competitive with public company salaries: not everyone makes Google money, but you shouldn’t have much trouble getting what you’re worth elsewhere until you cross $200k or so. The big difference is that the publicly traded companies can pay RSUs worth…

At this moment in time, $200k total comp at a Bay Area FAANG is roughly... an engineer 1-2 year out of university.

Given that so many of the hot startups are in the Bay, I'd say only fresh college grads are looking at remotely similar comp between the two. Everyone else is playing the options lottery.

Re: Startup Stock Options – Why A Good Deal Has Gone Bad (2019)

#258

Post by danans »

mensetmanusman wrote: post #241
danans wrote: post #123

Earlier quoted context omitted.

> productivity started decoupling massively from productivity gains. I think you meant "wages started decoupling ...", right?

Yes, brain autocorrect. Can’t edit now that people have replied though :)

No problem. I don't usually like to engage in pedantry, but I think that the point you were trying to make is not obvious to many, so worth clarifying.

Re: Startup Stock Options – Why A Good Deal Has Gone Bad (2019)

#259

Post by lisper »

throwaway09223 wrote: post #255
lisper wrote: post #219

Earlier quoted context omitted.

> doesn’t really match the evidence Here's some data: https://www.pewsocialtrends.org/2020/01/09/trends-in-income-... Something is driving down wealth at the low end while driving it up at the high end. It seems unlikely in the extreme that this a reflection of actual value produced by people at the high end relative to those at the low end. Much more likely is that this is a reflection of some kind of structural pro…

I think it is more accurate to say that wealth growth at the low end is not as rapid as wealth growth at the high end. Nothing is driving wealth down . Wealth is increasing for everyone, generally speaking. This observation is important because it recognizes that wealth is created, not allocated. This is not a zero-sum game. You say it seems unlikely that actual value is increasing at the high end but I do not think…

> Wealth is increasing for everyone, generally speaking

That depends a lot on how you count. See:

https://fred.stlouisfed.org/series/WFRBLB50107

The average net worth of the bottom 50% over the last 30 years is about the same as it was 30 years ago.

Compare to:

https://fred.stlouisfed.org/series/WFRBLT01026

and note that the net worth of the top 1% has been increasing more or less monotonically for the last 30 years, with only a very small dip in 2008-2012.

The bottom 50% take a much bigger share of the losses and a much smaller share of the gains. Over the last 30 years the bottom 50% has barely broken even.

Re: Startup Stock Options – Why A Good Deal Has Gone Bad (2019)

#260

Post by silentsea90 »

Slightly related, Stripe now gives fixed $ amount of RSUs per year to new hires, which limits both upside and downside significantly. Not to act cynical, but to me it seems that this is another way of screwing employees by denying them stock appreciation on their initial grant. I understand that new hires would be signing off on this while joining so the rug isn't pulled beneath their feet, but this does seem like a start of a bad trend which if it catches on, will further the gap between employees and founders
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