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Poll: How much did you earn from your stock options during exit?

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161–170 of 191 posts

Re: Poll: How much did you earn from your stock options during exit?

#161

Post by danshapiro »

dlss wrote: post #156
Timothee wrote: post #108

Earlier quoted context omitted.

Why would it be sleazy? What if the investors got their money back and nothing more? Even if they got more based on preference, I don't see the problem. That TechCrunch article doesn't really present the event as a great exit, but more that the founders were hired to move on from a startup that wasn't really going anywhere. (the post specifically says that Google didn't technically acquire the company)

You don't see anything sleezy about an employee who put in both sweat equity and money getting nothing for his stock, while other shareholders are reimbursed for theirs? Seems both sleezy and a cautionary tale for those thinking of working at a startup from where I'm sitting...

The general definition of preferred shares is that they are treated preferentially to common shares. In the most typical case, they get their money back before the remaining funds, if any, are disbursed.

So no. There's nothing sleazy about a preferred shareholder being treated preferentially, necessarily.

Re: Poll: How much did you earn from your stock options during exit?

#162

Post by bradhe »

landonhowell wrote: post #41
davidjhall wrote: post #12

How about "Company folded; options worthless and owe $4000 in taxes" This was during the last Tech Bubble.

"But... the movie The Social Network told me and showed me that..." -The thoughts of too many HN folks

pretty sure there is logic in place that automatically grays out any post with the words "The Social Network" in them.

Re: Poll: How much did you earn from your stock options during exit?

#163

Post by mjs00 »

timr wrote: post #155
pfarrell wrote: post #76

Earlier quoted context omitted.

I am having to get ramped up on this right now as my company is filing. I'm not 100% positive, but, I believe if you exercise and sell in a single transaction, you're going to get hit with ~40% short term capital gains tax. Holding the exercised stock for a year will reduce the tax hit at sell time to ~22% long term gains.

long-term cap gains are 15%, not 22% -- until 2013. unless congress intervenes before then.

pfarrell may be combining the federal 15% long-term rate with whatever his state tax rate may be?

Re: Poll: How much did you earn from your stock options during exit?

#164

Post by danmaz74 »

forensic wrote: post #159
ynd wrote: post #130

Earlier quoted context omitted.

He is a victim here, why blame the victim over the perpetrators? Makes little sense to me. As well as saying "evil flourishes"...

Victims do have the responsibility to report their crimes.

You mean "the crimes they were subject to" I guess..

Re: Poll: How much did you earn from your stock options during exit?

#165

Post by _yobq »

kinkora wrote: post #67
cloudhead wrote: post #56

Earlier 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.

No, James is doing the right thing taking a more noble path and not publicy defaming the company. There is a time and place for that and these sort of discussions will not be conducive for the HN community. Talking about his experience will be what most of us be interested in. Having said that, all you need is 2 minutes, google and you can easily deduce yourself what company he is referring to.

An easier way to publish the info without defaming the company is to encrypt it with ROT13.

Re: Poll: How much did you earn from your stock options during exit?

#166

Post by mjs00 »

jen_h wrote: post #149
pfarrell wrote: post #76

Earlier quoted context omitted.

I am having to get ramped up on this right now as my company is filing. I'm not 100% positive, but, I believe if you exercise and sell in a single transaction, you're going to get hit with ~40% short term capital gains tax. Holding the exercised stock for a year will reduce the tax hit at sell time to ~22% long term gains.

Yeah. The right time to exercise when a company is filing is like...a few years before, when the shares were pretty much imaginary and you weren't standing to be taxed for imaginary wealth (why I once agonized over buying 25 cent shares for 700 bucks in a company 4 years away from an IPO, I have no idea--it's either lost money or free cash. Assume it's lost money and you're either right or happily surprised a few yea…

You may net less (or much less) a year from now waiting for long term federal tax rates vs selling now - if the stock price falls rather than remaining flat/rising.

Re: Poll: How much did you earn from your stock options during exit?

#167

Post by georgemcbay »

malbs wrote: post #122
jpdoctor wrote: post #104

Earlier quoted context omitted.

> (I can't remember the exact jargon) And this is how most people are screwed. Most folks receive options and never even see the financing docs or stock plan, so they don't have a shred of knowledge about the capital structure. (Not picking on you, except by way of example. Your situation is all-too-common.)

yeah I definitely walked into it with my eyes closed. My wife was telling me it was a bad idea, and I still didn't listen, but hey, who listens to their wife right? haha

Poor bastard.

I'm sure every time you disagree with her about something you get to hear about how she was right about the stock options.

Re: Poll: How much did you earn from your stock options during exit?

#169

Post by tankenmate »

jaxn wrote: post #88
tptacek wrote: post #30

Earlier quoted context omitted.

You're suggesting that having classes of shares is unconscionable? If the idea of preferred shares shocks your conscience, you should spend a lot more time studying how startup financing works (at a nuts and bolts level) before taking the plunge and working at one.

There have been several comments on here lately that make me realize how few people actually understand how equity works in startups. I mean, if people are shocked to learn about preferred stock, what would they think about participating preferred?!? I guess this is really something you only learn when you are the one signing the financing docs.

It's not so much the fact that they are preferred stock but that you could argue that the stock is re-purchased at what could be considered to be less than market value.

Imagine if you will a publicly traded company that repurchases preferred shares, right before the company agrees to be acquired, for substantially less than the post acquisition valuation. You bet there'd be law suits....

Nonetheless your point stands, if you are considering acquiring preferred stock (whether purchased with cash, other equity, or hard work) you should do so with your eyes wide open.

Re: Poll: How much did you earn from your stock options during exit?

#170

Post by sambeau »

I have had options in three startups and have never seen a penny. I am now convinced that options are a con trick.

Founders would make far better hiring choices if they had to give real stock. Employees, too, would make far better hiring choices if each new employee diluted their stock (especially if all employee stock came from one significant pool,say, 25%): do you dilute to complete or work even harder to keep your share?

This question would motivate staff as much as it would motivate founders not only to create a successful company but to hire the kind of people who would see it through. It would also show a level of trust that, generally, would be repaid.

If people did leave, keeping the stock, you may have made a hiring mistake (or some bad luck) but you will still have a champion who will help bring goodwill, customers and new staff.

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