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Stripe faces $3.5B tax bill as employees' shares expire

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Re: Stripe faces $3.5B tax bill as employees' shares expire

#351

Post by thrashh »

WJW wrote: post #268
oblio wrote: post #244

Earlier quoted context omitted.

True, but group A has a 1% (5%?) chance of achieving their goal while group B has a 80% (100%?) chance of achieving theirs. Always include the odds in these calculations :-)

Indeed. Apart from option A (work hard at startup, get rich if startup exits successfully) and option B (work less hard FAANG, get paid with very high likelihood), there are also at least option C (work hard at startup, get almost nothing because the startup fails) and option D (work less hard at FAANG, don't get paid). Option C is much more likely than option A, but option D is much less likely than option B (unless…

There's also many other options. My buddy works 15 hrs/week at a non-FAANG and non-startup tech company making 200k base. It's not FAANG money but it's still very good and he has a lot of free time.

Re: Stripe faces $3.5B tax bill as employees' shares expire

#353

Post by rcme »

Retric wrote: post #328
matthewowen wrote: post #309

Earlier quoted context omitted.

I don’t really buy this, but that’s largely based on own fairly positive experience of stock compensation at private companies. I will say that I think these conversations tend to be a little distorted because people who have had positive experiences feel awkward about saying “i made $xxMM from employee stock” but people who haven’t seem comfortable saying “stock based compensation was worthless”. Also tbh a lot of p…

Sure people may not want to talk about it, but a big part of this is so few people make $xxMM from employee stock. Yes, if you where one of the first 50 employees at Google you probably made low $xxMM, but it’s a long wait until IPO and the overwhelming majority of people at Google didn’t get anything close to that much. Worse the overwhelming majority of companies aren’t Google style success stories. Also, don’t for…

I think Google employees did alright. Let's say you joined in Sep. 2013 (random date). 4 years later, the stock was up 200%. So if you got a $500K grant over 4 years, you'd have 1.5 million. After taxes, that'd be around $1 mm.

Re: Stripe faces $3.5B tax bill as employees' shares expire

#354

Post by orenbarzilai »

sopooneo wrote: post #197
throw3823423 wrote: post #48

Earlier quoted context omitted.

It's pretty accurate: Employees don't have a few million in change, each, to turn the RSUs into plain stock. I don't think the issue is making employees wealthy or not: It's 10 year old RSUs, so most of them are owned by former employees. But consider the size: If the tax bill is 3.5B, the full size of the grants we are talking about here is over 10B! last valuations in the press are at something like 60b. So 1 in 6…

One thing I've never understood about this: why on earth aren't there financial products specifically for people in this situation? Especially around Silicon Valley? Bankish Corp floats you the tax bill at some mutually beneficial interest rate, and in return gets a signed repayment guarantee for when you can actually cash out?

[flagged]

Re: Stripe faces $3.5B tax bill as employees' shares expire

#355

Post by [deleted] »

rcme wrote: post #353
Retric wrote: post #328

Earlier quoted context omitted.

Sure people may not want to talk about it, but a big part of this is so few people make $xxMM from employee stock. Yes, if you where one of the first 50 employees at Google you probably made low $xxMM, but it’s a long wait until IPO and the overwhelming majority of people at Google didn’t get anything close to that much. Worse the overwhelming majority of companies aren’t Google style success stories. Also, don’t for…

I think Google employees did alright. Let's say you joined in Sep. 2013 (random date). 4 years later, the stock was up 200%. So if you got a $500K grant over 4 years, you'd have 1.5 million. After taxes, that'd be around $1 mm.

[deleted]

Re: Stripe faces $3.5B tax bill as employees' shares expire

#356

Post by matthewowen »

Retric wrote: post #328
matthewowen wrote: post #309

Earlier quoted context omitted.

I don’t really buy this, but that’s largely based on own fairly positive experience of stock compensation at private companies. I will say that I think these conversations tend to be a little distorted because people who have had positive experiences feel awkward about saying “i made $xxMM from employee stock” but people who haven’t seem comfortable saying “stock based compensation was worthless”. Also tbh a lot of p…

Sure people may not want to talk about it, but a big part of this is so few people make $xxMM from employee stock. Yes, if you where one of the first 50 employees at Google you probably made low $xxMM, but it’s a long wait until IPO and the overwhelming majority of people at Google didn’t get anything close to that much. Worse the overwhelming majority of companies aren’t Google style success stories. Also, don’t for…

If you take a look at some of the examples in https://blog.pragmaticengineer.com/equity-for-software-engin... you see that you really don't have to be at a "first 50 at google" level of success to see 8 digit equity values. Bear in mind that even private companies have some level of liquidity for option holders via secondary sales.

Re: Stripe faces $3.5B tax bill as employees' shares expire

#357

Post by matthewowen »

marcus_holmes wrote: post #330
matthewowen wrote: post #309

Earlier quoted context omitted.

I don’t really buy this, but that’s largely based on own fairly positive experience of stock compensation at private companies. I will say that I think these conversations tend to be a little distorted because people who have had positive experiences feel awkward about saying “i made $xxMM from employee stock” but people who haven’t seem comfortable saying “stock based compensation was worthless”. Also tbh a lot of p…

> Also tbh a lot of people are just really bad at judging companies and wind up working at startups that are obviously going to fail. You really do have to make an honest assessment of if you are good at picking winners. It's luck, not good judgement. No-one knows how to accurately assess whether an early-stage startup is going to succeed or fail. If it was possible, accelerators would have better-than-background rat…

You don't need to join an early-stage startup – as a mid-to-senior engineer, even if you only join places that are series-B or later you can still get equity packages that ultimately end up netting to >1MM/year with the kind of valuation growth that the successful companies in that profile see.

I think luck is a big part of it absolutely, I just don't think it's the only piece. But I also know that IME some engineers looking at new roles think about likelihood of company success way less than they should relative to "do I like the technology/culture/whatever" and so it is not surprising if they don't end up at successful companies.

Re: Stripe faces $3.5B tax bill as employees' shares expire

#358

Post by Retric »

rcme wrote: post #353
Retric wrote: post #328

Earlier quoted context omitted.

Sure people may not want to talk about it, but a big part of this is so few people make $xxMM from employee stock. Yes, if you where one of the first 50 employees at Google you probably made low $xxMM, but it’s a long wait until IPO and the overwhelming majority of people at Google didn’t get anything close to that much. Worse the overwhelming majority of companies aren’t Google style success stories. Also, don’t for…

I think Google employees did alright. Let's say you joined in Sep. 2013 (random date). 4 years later, the stock was up 200%. So if you got a $500K grant over 4 years, you'd have 1.5 million. After taxes, that'd be around $1 mm.

People getting 500k grants in 2013 from Google were just making a lot of money in general. Remember a grant isn’t an option you’re getting actual stock even the company stayed roughly flat they could have sold the 500k worth of stock.

Grants that size don’t represent a typical employee either. It’s closer to a 2-30% annual bonus that happened to appreciate rather than some life changing payday.

Re: Stripe faces $3.5B tax bill as employees' shares expire

#359

Post by Retric »

matthewowen wrote: post #356
Retric wrote: post #328

Earlier quoted context omitted.

Sure people may not want to talk about it, but a big part of this is so few people make $xxMM from employee stock. Yes, if you where one of the first 50 employees at Google you probably made low $xxMM, but it’s a long wait until IPO and the overwhelming majority of people at Google didn’t get anything close to that much. Worse the overwhelming majority of companies aren’t Google style success stories. Also, don’t for…

If you take a look at some of the examples in https://blog.pragmaticengineer.com/equity-for-software-engin... you see that you really don't have to be at a "first 50 at google" level of success to see 8 digit equity values. Bear in mind that even private companies have some level of liquidity for option holders via secondary sales.

Highly compensated employees handed grants aren’t startup employees taking risks they are well compensated employees getting deferred compensation. Even if the stock stays flat they still get the face value of the grant.

That said, the double digit examples were 12M “software engineer 2” and 10M “first 10 employees”.

Re: Stripe faces $3.5B tax bill as employees' shares expire

#360

Post by marcus_holmes »

matthewowen wrote: post #357
marcus_holmes wrote: post #330

Earlier quoted context omitted.

> Also tbh a lot of people are just really bad at judging companies and wind up working at startups that are obviously going to fail. You really do have to make an honest assessment of if you are good at picking winners. It's luck, not good judgement. No-one knows how to accurately assess whether an early-stage startup is going to succeed or fail. If it was possible, accelerators would have better-than-background rat…

You don't need to join an early-stage startup – as a mid-to-senior engineer, even if you only join places that are series-B or later you can still get equity packages that ultimately end up netting to >1MM/year with the kind of valuation growth that the successful companies in that profile see. I think luck is a big part of it absolutely, I just don't think it's the only piece. But I also know that IME some engineers…

I think the reverse: that entering a company based on "am I going to enjoy it here?" is a better bet.

If you hate it there, you'll probably leave and never vest your equity. Even if you hang on and suffer through it to get your equity, it'll damage you in ways that money won't help with.

If you hate it, chances are that everyone else does too, which means the good people will leave and the startup is less likely to succeed even if everything else is good.

Most engineers enjoy interesting challenges, and this can be a big factor in choosing a role. If the startup is providing interesting challenges then it's doing interesting/difficult stuff. This is a factor in success - startups that aren't doing interesting/difficult stuff are easier to copy and have less barriers to entry for competitors.

Even if you don't get lucky and win the equity lottery, you had a good job and probably learned some interesting things.

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