Great move. Joining a new company always involves a leap of faith, and this reduces the risk somewhat of the fit not being satisfactory. I hope that all companies that offer equity will do the same as DoorDash.
DoorDash removing 1-year cliff for equity grants
131–140 of 283 posts
Re: DoorDash removing 1-year cliff for equity grants
#132Earlier quoted context omitted.
I totally agree with the above, and have commented on it many times before, but note the 90 day standard is because that is the maximum amount of time allowed for ISOs by the IRS. To allow for conversion after that time (e.g. 5-10 years seems to be what a lot of people are pushing for), the ISOs convert into non-qualified options. Still worth it in my opinion. Even better would be for the IRS to change the law (not s…
(Preface: IANAL) Only worth it if you aren’t early. ISOs provide preferential tax treatment, and early on are usually very very cheap, so many companies (mine included) also offer early exercise with ISOs, which is an unbeatable tax win (afaik). The issue occurs when options get expensive (aka the company is doing well) and then you have to do the math between ISOs or NSOs. The longer expiration may be better, but ce…
> a 10-year expiration means your cap table is in flux for 10 years, potentially, which makes calculations, acquisitions, etc, tougher
I don't agree at all. The primary effect of a longer exercise window is in not returning expired options hastily to the pool. Otherwise what's the difference if the employee continues to be an employee and doesn't yet-- ceteris paribus--need to exercise or forfeit.
Why do you suggest unexercised options of any stripe muddy the waters? If the option is worth anything at all it will be exercised at a liquidity event.
Re: DoorDash removing 1-year cliff for equity grants
#133Earlier quoted context omitted.
I think it's common in the industry to see RSU grants shown as say, "$50k" - but that's $50k in stock as of the grant time. Once the grant is finalized, the value of the RSU grant grows with the stock. ie, if the stock is $100, then it's the same as 500 share grant. This Blind post is saying that Instacart/Stripe says you only get $50k no matter the price of stock? How would you even structure that kind of grant? Why…
I work at a smaller company, and here we convert the $ price to a number of shares by taking the 100 day VWAP of the stock from the date of the board meeting where your grant is approved.
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Re: DoorDash removing 1-year cliff for equity grants
#134Earlier quoted context omitted.
Seems like a pro employer move too. Less people hanging around that have already decided to leave...just waiting on a vesting cliff.
Or you get a bunch of ex employees you fired after three months lingering around on the cap table (assuming you’re not a public company).
Not if they haven't passed the cliff. Unvested options forfeit.
Re: DoorDash removing 1-year cliff for equity grants
#135Earlier quoted context omitted.
I think it's common in the industry to see RSU grants shown as say, "$50k" - but that's $50k in stock as of the grant time. Once the grant is finalized, the value of the RSU grant grows with the stock. ie, if the stock is $100, then it's the same as 500 share grant. This Blind post is saying that Instacart/Stripe says you only get $50k no matter the price of stock? How would you even structure that kind of grant? Why…
all of my friends at google say the grant is in dollars and stays in dollars at google. at the end of the quarter you get a variable number of shares based on current stock price. While this reduces upside, it also reduces downside.
Well if the stock tanks you’ll probably be laid off. I don’t see any upside with this model for the employee.
Re: DoorDash removing 1-year cliff for equity grants
#136Good, pro-employee move. Next, I'd like to see pre-IPO startups offer longer periods to exercise shares when you leave. 90 days being standard is way too low.
Seems like a pro employer move too. Less people hanging around that have already decided to leave...just waiting on a vesting cliff.
> people hanging around
But it's only 1 year?
* Bonuses are usually given annually
* Signing bonuses and sabbaticals usually obligate one year employment
A year seems like a very low bar.
Re: DoorDash removing 1-year cliff for equity grants
#137Earlier quoted context omitted.
Browsing /r/cscareerquestions it looks like entry level folks are having a hard time breaking into the industry. Employers are mostly recruiting senior levels it seems.
I think this is a problem across the industry. Companies don't want to give engineers adequate raises so they get trained as juniors and walk out and get 20-30k raises. So then everyone is only interested in seniors. Senior has all but lost its meaning too... It describes how long you've been in the industry, not if you have the skills to be a technical leader, etc. At larger corps when a senior leaves, you're often…
> A lot of companies don't even have pathways from internships to entry-level positions. They just let them finish their internship and say "good luck"
This is so crazy to me. IME if you break even on an intern, not including pay, you’re very lucky. In other words if the code or whatever you get out of an intern equals in value the amount of time your regular staff invests in the intern. In most cases it’s negative and you have to pay them on top of that—-plus events and so on.
If you aren’t using internships as a recruiting tool I have no idea why you’d bother.
Re: DoorDash removing 1-year cliff for equity grants
#138Earlier quoted context omitted.
I think the larger the company the longer it takes to ramp up, but at a small startup you can have a big impact in month one. I've always found the one year cliff funny, since investors don't have a cliff. I've been hoping startups would start doing this for a while, and think DD is really a pioneer here and think this will become a trend. I know personally I turned down a few opportunities at promising startups simp…
> I know personally I turned down a few opportunities at promising startups simply because I was young, in my twenties, and a year felt like a long time. I found the probability of a life changing event that would require me to move and leave a company too high, and didn't want to bust my butt for 10 months with a salary cut, then have to leave and get no equity. So I said "no" to a few opportunities that otherwise w…
> I'm curious: Did you try to negotiate?
Not back then. Was not bright enough. That would have been smart. I think if I had phrased it as "I'm very excited about your potential, but I'm young and black swan events may happen and I might have to leave early, how about a 6 month cliff?". Probably would have worked.
> If someone is so unmotivated at a job that they're not making an impact
I didn't phrase it well. What I'm getting at is that risk taking is disincentivized your first year. You might have an idea that could have an upside of 100, but might also lead to a loss of -10, and in year one it's best to sit on that idea because if it were to fail you'd take a big personal loss. I think you have misaligned incentives that first year where the number one goal is not to risk rocking the boat, and number two goal is impact.
Re: DoorDash removing 1-year cliff for equity grants
#139Earlier quoted context omitted.
(Preface: IANAL) Only worth it if you aren’t early. ISOs provide preferential tax treatment, and early on are usually very very cheap, so many companies (mine included) also offer early exercise with ISOs, which is an unbeatable tax win (afaik). The issue occurs when options get expensive (aka the company is doing well) and then you have to do the math between ISOs or NSOs. The longer expiration may be better, but ce…
Wouldn't that only be an issue if a company offers NSOs instead of ISOs? What I've seen in the past is "here's some ISOs, they automatically convert to NSOs 90 days after you leave." That way you get all the benefits of an ISO (tax on sale) while you work there, then all the benefits of an NSO (doesn't disappear in a puff of smoke at day 90). Seems like strictly a win, regardless of company phase.
It not a win for a company that hires people who would not understand enough to value this rather obscure treatment.
In the current system a lot of options get clawed back to the company's benefit from an inability or unwillingness to take the risk of exercising.
It is no coincidence that this very simple modification is not too widespread.
Re: DoorDash removing 1-year cliff for equity grants
#140Earlier quoted context omitted.
Browsing /r/cscareerquestions it looks like entry level folks are having a hard time breaking into the industry. Employers are mostly recruiting senior levels it seems.
> Employers are mostly recruiting senior levels it seems. Because no one is going to hire a junior developer to work remote. The job market isn't especially hot, it's just temporarily distorted in a way that favors more experienced developers.
Not sure sure this "distortion" is temporary though. There's going to continue to be a shortage of more senior engineers for years to come because of their relative scarcity. Fact is... if you're senior/staff/principal now assuming you stay competitive you're in luck.