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Any stories of employees with equity successfully taking home over $1m? $500k?

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Re: Any stories of employees with equity successfully taking home over $1m? $500k?

#81

Worth pointing out that when people throw numbers around the stock value alone may sound impressive but that has to be compared against the opportunity cost that's usually associated with that route. Usually those options are handed out because the employee is accepting less cash or other compensation than another employer might pay then for similar work. Walking away with $750k after 5 years might sound fantastic, b…

I would argue there is value in the bubble payout itself. Even if you're good at saving & investing over the course of many years the assets and liquidity you have when you cash in your equity gives you a chance to take risks and meet potential business partners that you don't have as a salaryman who's good with his money.

That might be true as a rule of thumb for the general population. Although historically people who get large payouts (eg, lottery winners) tend to do very poorly with them. And for someone who is truly "good with money" to the extent of avoiding all lifestyle inflation and investing as much as possible, the periodic payouts are definitely better.

For the sake of argument, let's say that you have two positions which will pay the same total cash compensation. BigCorp's job will pay it out in equal amounts over 5 years, whereas NewCo's job will pay out 10% each year for 4 years, and then 60% in year 5.

BigCorp will almost certainly result in a lower overall tax bill because much of each year's income is taxed at lower rates. NewCo will result in a lower tax bill for 4 years due to the lower income, but year 5 will probably put a large amount of compensation in the top marginal tax bracket.

Also, the BigCorp job will afford more opportunities for outside investing (stock market, real estate, whatever) and possibly more free time to do it in. So with BigCo you'll have had four years of compounding investment growth before NewCo really gets started on it.

Re: Any stories of employees with equity successfully taking home over $1m? $500k?

#83

I joined a company in the summer of 2011 that IPOed in the spring of 2012. Company was under 400 employees at the time (I was around #~380). The company is not Facebook or Twitter. My pre-IPO grants alone were worth over 1.5M, and my subsequent RSU grants probably added another 1M on top of that. I'm using a throwaway account for obvious reasons, but happy to answer any questions. I definitely was not an outlier in t…

What types of positions offer large pre-IPO grants? How were you hired? (referral from friend already working there or were you headhunted or what?) Were you aware of the IPO plans before applying, and is this the sort of strategy that is repeatable?

Re: Any stories of employees with equity successfully taking home over $1m? $500k?

#84

I've been in the valley for ~20 years, and I've only made money on my options once, about $250k on a company that had already ipo'ed a year before I joined. That said, my wife and I earn a combined salary of just over $500k/yr, and I much prefer this to stiking it rich via equity.

Do you mind if I ask what types of jobs you and your wife have? I don't think many software jobs pay $250k unless you're upper management. Physician or legal partner maybe? Even with dual incomes $500k seems like an outlier but maybe I'm wrong.

[deleted]

Re: Any stories of employees with equity successfully taking home over $1m? $500k?

#85
post #78
post #16

Yes, my first startup job got me into the high end of that range, as employee #5, with a relatively small acquisition. I know several people who took home much more from employee roles (albeit in larger acquisitions) in the recent past. A lot of it has to do with who you work with. In every case I can think of, windfall money for employees came from founders with a track record of accomplishing that (or, in my case,…

I'm new here. Can you summarize "Paul Graham's hacker startup thesis?" for me? (Or point me to an appropriate manifesto, whatever). Would like to read your last sentence in context... thanks

See generally: http://www.paulgraham.com/wealth.html

(My favorite pg essay, mostly because the bit about measurement and leverage is wildly instrumentally useful even if you agree with no other conclusion of the essay.)

Re: Any stories of employees with equity successfully taking home over $1m? $500k?

#86

I know of a couple, but it's rare. You're much more likely to make money in a hedge fund. Year-end bonuses (profit-sharing) are a much better model, at least for employees, than startup equity, which is usually a retention carrot for after the company is bought and dies. Unless you become an executive, you have to get very lucky to have that kind of outcome. The million-dollar houses are mostly being bought by invest…

I disagree on the houses bit. Literally speaking, the million dollar houses in the Bay Area are being purchased by a wide range of individuals, many of whom are young professionals earning a decent amount and stretching themselves very thin or relying on family gifts to purchase what amounts to a shitty starter home.

Certainly investors and execs in the mix as well, but I think you are painting with an overly broad brush on the housing front.

Re: Any stories of employees with equity successfully taking home over $1m? $500k?

#87
post #83

I joined a company in the summer of 2011 that IPOed in the spring of 2012. Company was under 400 employees at the time (I was around #~380). The company is not Facebook or Twitter. My pre-IPO grants alone were worth over 1.5M, and my subsequent RSU grants probably added another 1M on top of that. I'm using a throwaway account for obvious reasons, but happy to answer any questions. I definitely was not an outlier in t…

What types of positions offer large pre-IPO grants? How were you hired? (referral from friend already working there or were you headhunted or what?) Were you aware of the IPO plans before applying, and is this the sort of strategy that is repeatable?

I was just an individual contributor dev. I was hired as a referral, though other folks we hired, even after me but before the IPO made out well.

I was aware of the IPO plans, though the price I was given was about 3x less than what it ended up getting to after the IPO, and it's now 6x less. In that sense, I was extremely lucky - if it had been at the original price and stayed there, I don't think it would have been more than 500K.

Repeatable? Probably not, just given the luck involved. However, I think the payout I was likely to get (200k-500k) was much more likely than getting the same payout from a real startup.

Re: Any stories of employees with equity successfully taking home over $1m? $500k?

#88

I joined a company in the summer of 2011 that IPOed in the spring of 2012. Company was under 400 employees at the time (I was around #~380). The company is not Facebook or Twitter. My pre-IPO grants alone were worth over 1.5M, and my subsequent RSU grants probably added another 1M on top of that. I'm using a throwaway account for obvious reasons, but happy to answer any questions. I definitely was not an outlier in t…

What level did you join? IC (Dev, Prod), Management, Sr Management?

IC in Development, not a "senior" at that point.

I'll also add that I was given a competitive salary as well (120K/year with around 15% bonus target) for my location.

Re: Any stories of employees with equity successfully taking home over $1m? $500k?

#89

I've been in the valley for ~20 years, and I've only made money on my options once, about $250k on a company that had already ipo'ed a year before I joined. That said, my wife and I earn a combined salary of just over $500k/yr, and I much prefer this to stiking it rich via equity.

Do you mind if I ask what types of jobs you and your wife have? I don't think many software jobs pay $250k unless you're upper management. Physician or legal partner maybe? Even with dual incomes $500k seems like an outlier but maybe I'm wrong.

Recalibrate your expectations of Valley pay in engineering positions upward. $250k is not outlandish in total comp (base + bonus + RSUs) for a 30ish engineer at AmaGooFaceSoft.

If anyone wants to take bets on when that's a reasonably achievable starting salary for a new Stanford CS grad my money is on 2020.

Re: Any stories of employees with equity successfully taking home over $1m? $500k?

#90
post #16

Yes, my first startup job got me into the high end of that range, as employee #5, with a relatively small acquisition. I know several people who took home much more from employee roles (albeit in larger acquisitions) in the recent past. A lot of it has to do with who you work with. In every case I can think of, windfall money for employees came from founders with a track record of accomplishing that (or, in my case,…

I'm not really following.

What's the contradiction between the PG startup thesis and your experience with employee equity?

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