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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?

#191

Post by outsidetheparty »

The first startup I worked for, back in the Ancient Days Of The Web, gave me (employee #4, 5, or 6, depending on which of the three of us walked in the door first) options that would have netted me low seven figures when the company was gobbled up in the first bubble. Would have, had I exercised those options before I quit the place and let them expire. So it goes.

The second time I had equity was a few years later, joining a much larger company shortly before a terribly botched IPO. The next morning the CEO parked his new Ferrari right next to the employee entrance; the rest of us were stuck with a strike price well above the current valuation. My options eventually peaked out at ~$300K value, but were underwater for years; in theory I could have made far more just buying the stock like any old yutz off the street, if I'd had any expectation that the company would recover, which I didn't.

The third time, well, ask me again in a couple years and we'll see how it turns out. It'd be nice, of course, but I'm not counting on it.

My advice: * Be an early employee, preferably during a bubble. (Now is probably good.) * Exercise your options. * Never park your shiny new sports car where your employees can see it.

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

#192

Post by FD3SA »

tptacek wrote: post #154
FD3SA wrote: post #152

Earlier quoted context omitted.

A complete ad hominem. You did not address his point at all, which was quite valid. Have a read over this [1], one of countless studies which supports the original commenter's assertion that wealth and status accumulation tend to the be prime directive of every individual who has even a modicum of either asset. If PG and YC truly cared about entrepreneurship in spite of their own best interests, they would be working…

I don't think we're working from the same definition of "ad hominem".

https://yourlogicalfallacyis.com/ad-hominem

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

#193

Post by lingua_franca »

bigcothrowaway wrote: post #145

Posting this under a throwaway for obvious reasons. Employees at Facebook and Google who are high achievers (top 2-5% generally) make hundreds of thousands of dollars a year in equity. I am one such lucky son of a bitch and know many others. I'm well over 500k in cash after taxes at this point.

pls, throwaway for what?

http://www.quora.com/Im-28-and-making-450-000-a-year-at-Goog...

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

#194

Post by breischl »

ritchiea wrote: post #166
breischl wrote: post #81

Earlier quoted context omitted.

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 w…

Realistically do you think a lottery winner is comparable to a successful startup employee? Lottery winners are entirely random while startup successes comes after years of working in a structured business environment with a built in community of successful business people. A lottery winner could be a guy in small town Tennessee who got lucky while he worked at the local corner store and has a group of friends & fami…

>>Realistically do you think a lottery winner is comparable to a successful startup employee?

In some ways, yes. Certainly there are difference, but people are people. How many college grads get their first job that pays real money and immediately throw themselves into debt for new cars and nice condos? How many people cash out of a startup and plow the proceeds into another one, effectively doubling down on that particular lottery?

Clearly there are differences between the groups, so the average outcomes could definitely be different. But I don't think it's obviously true.

It would be interesting to see a longitudinal study of people who cashed out significant amounts from startups. I'm sure they do better than the average lottery winner - but then they were probably doing better before the windfall as well. The interesting question would be whether the windfall changed their trajectory, or was just a blip.

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

#195

Post by aetherson »

quietone1 wrote: post #165

I was an mid-seniority employee and netted in the low eight figures when I sold my equity stake after our IPO. A couple important points I didn't see others mention: 1. When I got an offer, I asked if I could take a lower salary to get more equity. They said yes. 2. I pre-exercised all my options. So as far as the IRS was concerned, there was no tax liability when I exercised the shares. This meant by the time I sold…

It is absolutely not true that there is no tax liability when you exercise your shares, at least for commonly granted ISO stock options.

Here's a site on it: http://fairmark.com/execcomp/isoexer.htm

Basically, there's no "regular" tax liability, but the difference between the exercise price and the market price at time of exercise counts as income for AMT, and so have a great day, you're gonna pay AMT that year if you do this for any significant quantity of stock.

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

#196

Post by shostack »

slantedview wrote: post #178
michaelochurch wrote: post #76

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…

Not all engineers are renters, and not all renters want to rent forever. The current median price for a 3 bedroom single family home in Mountain View (just picked a random valley town) is 1.275 million. Aside from the fact that this is INSANE, this is what the average engineer might spend on a decent starter home. It's not just executives (though it's still insane).

Making it more insane is that the price you quoted could very well be for a not-so-nice home east of Central that has quite a bit of section 1 to address, not great schools, etc. Anything further west that is big enough for 3br in Mountain View will quite likely be north of $1.3.

FML.

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

#197

Post by slantedview »

TheMagicHorsey wrote: post #64

Graduated from an Ivy League engineering program in the late nineties. Worked in four different start ups. Never made any money. Of those four startups I only count two as being valid data points as they were funded by "good" VCs. The others were funded by rich people who in retrospect did not know what they were doing. Now on my fifth startup as employee number 15-20 (not sure which since we are growing so fast). We…

Good luck on your 5th startup. I always wonder for people in your situation how long one can stick it out before decamping to somewhere more affordable to start a normal life (house, kids, etc.)

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

#198

Post by SeoxyS »

pythoncloner wrote: post #190

I'm 24 now and made $900 pretax in FB (no college loans). I think i'm lucky that i joined Facebook after IPO but when the stock was very low. My new grad offer was $280k (negotiated like a VC with tons of counter offers from GOOG, DropBox, etc...) and stock was $19 the day i had joined around Sep 2012. So, i got ~14000 FB shares. I sold all my vested shares(~11000 [9500 vested on my base offer and 1500 out of my refr…

I'm actually very curious what startups gives you a $1M offer, and in what position. The most I've seen is grants that are worth up to $500k at day 1 valuation.

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

#199

Post by tpudlik »

mark-r wrote: post #156
angelbob wrote: post #149

Earlier quoted context omitted.

It's a standard figure. Suspiciously round, basically unsupportable. It's really hard to measure what percentage of companies fail because so little of the data is public.

But the figure wasn't companies that didn't fail, it was companies that made it big. Surely that's an easier number to come up with, depending on your definition of "big".

tl;dr: 1 in 20 would be a better estimate than 1 in 10, but even this underestimates the skew.

Across all VC-funded startups which received first-round funding between 1985 and 2009, 55% were terminated at a loss, and only 6% returned more than 5 times the original investment. But this 6% group generated more than 50% of the gross return across all ventures.

At a "single large and successful" (but, for obvious reasons, anonymous) VC firm which invested about 1 billion over the last decade, about 5% of the total money invested generated a return of 10x or more; almost 60% of the money was invested into companies that terminated at loss.

Source for both assertions: Kerr et al., 2014 (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2473226)

You may also want to take a look at Figure 2 in Hall and Woodward (2008), which shows the distribution of exit values over 22,000 VC-backed startups founded between 1987 and 2008. About 5% of these startups had exit values of $50 million or more. (http://www.nber.org/papers/w14219)

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

#200

Post by VictorF1962 »

ryan-c wrote: post #29

I worked at Palantir from 2009 to 2014 (started as SysEng, pivoted to Infosec). I have only "taken home" enough to recoup the cost of exercising my options and paying taxes (ugh, AMT), but my stock is worth something in that range. A friend who started around the same time I did recently sold a little less than half of his stock for about $500k to a private equity fund. I also know of a few other non-executives who s…

Please call me in Arizona @ 602-418-4542 anytime Friday, March 20th to discuss Pre-IPO Stock sales info. Thanks Victor..
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