First employee hired at a startup. Paid for my options before leaving the company. Six months later the company was acquihired by Google. Three months after that I was given paperwork informing me that those shares are now worth exactly $0.00/each. Founders made out well enough from the deal to pick up high-end luxury sports cars though, which is the important part of an exit, right?
Maybe you should let us know what the startup was, as well as the people behind it, so we can avoid working with them.
Poll: How much did you earn from your stock options during exit?
61–70 of 191 posts
Re: Poll: How much did you earn from your stock options during exit?
#62I voted three times...but this is missing a negative entry - you know, the scenario where you pay an obscene amount of taxes on the ridiculously inflated price of your shares when you exercise (and can't sell yet while awaiting a liquidity event), but the shares are later downgraded to 1/10th taxable estimate...so you get to hold on to that loss for years, hoping at some point to be able to be in the position to writ…
Re: Poll: How much did you earn from your stock options during exit?
#63I believe that the exact amount was $112 (net). Unbeknownst to most, our executives screwed everyone over and issued preferred stock to a major investment bank. I, and many others, had thousands of options, but the share price for common shares was too low for most grants to be worth anything. The executives all received bonuses for the sale from the investment bank.
Re: Poll: How much did you earn from your stock options during exit?
#64Earlier quoted context omitted.
Maybe you should let us know what the startup was, as well as the people behind it, so we can avoid working with them.
I'd prefer to be the better person here rather than defame them publicly. If anyone would like more information or to discuss this privately, however, my email is in my profile.
Re: Poll: How much did you earn from your stock options during exit?
#65"None - my stock option vanished and don't own any". What does this mean? How stock options vanish?
Re: Poll: How much did you earn from your stock options during exit?
#66You'd have to be pretty dumb to be an employee at a startup because of the money: bad hours, lots of risk, bad pay and lots of personal confrontation.
If the employees get screwed over, then it doesn't sound like they are valued. I see many startups where the employees are super valued assets, get a decent salary AND they do what they love.
Re: Poll: How much did you earn from your stock options during exit?
#67First employee hired at a startup. Paid for my options before leaving the company. Six months later the company was acquihired by Google. Three months after that I was given paperwork informing me that those shares are now worth exactly $0.00/each. Founders made out well enough from the deal to pick up high-end luxury sports cars though, which is the important part of an exit, right?
Maybe you should let us know what the startup was, as well as the people behind it, so we can avoid working with them.
Having said that, all you need is 2 minutes, google and you can easily deduce yourself what company he is referring to.
Re: Poll: How much did you earn from your stock options during exit?
#68I voted three times...but this is missing a negative entry - you know, the scenario where you pay an obscene amount of taxes on the ridiculously inflated price of your shares when you exercise (and can't sell yet while awaiting a liquidity event), but the shares are later downgraded to 1/10th taxable estimate...so you get to hold on to that loss for years, hoping at some point to be able to be in the position to writ…
Wait. Why would you do this? Can't you hold your options as, well, options until you want to exercise and sell them? I don't get why you would convert options to stock unless you wanted to sell them right away. I'm sure I'm missing something. Thanks.
First is that options come in two flavors ISO and NSO (or Non-Qualified). If you are issues ISO options then you could exercise and hold to qualify for long-term capital gains.
http://www.startupcompanylawyer.com/2008/03/05/whats-the-dif...
2. Your options are going to expire and you need to convert them to shares.
3. You are leaving and want to hold on to your shares. Typically you need to convert them within 3 months.
Re: Poll: How much did you earn from your stock options during exit?
#69Would be more interesting to see values divided by founders, early employees, late employees.
That's not percentage of the company - that's percentage of the equity held by employees. In some cases it might actually turn out a bit better, like 90/5/5 or something like that.
Regardless, the outcome seen by founders is orders of magnitude better than even early employees.
This can be exacerbated by a bunch of games that can be played at an exit to make the disparity larger. For example, you can cancel all unvested options. Founders have likely been around longer than the employees, so they have more stock vested, plus they typically get some acceleration upon change of control.
For example, imagine that a founder has 25%, and employee number 1 (who was hired 6 months after the company started) has 2%. That they sell to Google after the company has been around for 2 years, and that all unvested shares are cancelled. Employee 1 gets .75%, and the founder, who has 1 year acceleration on change of control, has 18.75%. On top of that, the founder probably gets long-term capital gains treatment because he exercised his shares immediately, where the employee didn't exercise any of his shares and treats the gain as income (if he had a 1-year cliff, he probably couldn't exercise for a year, at which point it didn't matter, because he had only held the shares for 6 months when the company was sold). So the employee ends up with 0.5% after taxes, and the founder ends up with 15.63%.
Which means that he ends up doing about 30x as well as the first employee.
Re: Poll: How much did you earn from your stock options during exit?
#70I voted three times...but this is missing a negative entry - you know, the scenario where you pay an obscene amount of taxes on the ridiculously inflated price of your shares when you exercise (and can't sell yet while awaiting a liquidity event), but the shares are later downgraded to 1/10th taxable estimate...so you get to hold on to that loss for years, hoping at some point to be able to be in the position to writ…
Wait. Why would you do this? Can't you hold your options as, well, options until you want to exercise and sell them? I don't get why you would convert options to stock unless you wanted to sell them right away. I'm sure I'm missing something. Thanks.