What happens if someone is fired? Surely they wouldn't have to exercise their options then, but it also seems ridiculous that they would lose them.
Most companies have a clause that states options expire on termination for cause.
Handcuffed to Uber
141–150 of 211 posts
Re: Handcuffed to Uber
#142Earlier quoted context omitted.
There's no liquid market for Uber shares. The article further states that Uber has taken measures to prevent a secondary market from developing. I wonder what those measures are. I imagine it's straightforward to prevent someone who wants to keep working at Uber from doing a secondary sale, but what sorts of contract terms can Uber put in place to prevent someone from quitting and then selling on the secondary market…
There's no liquid market for Uber shares. I assume that in my wife's case, the company was buying the shares back (privately held firm and we weren't dealing in a secondary market). I guess I'm just surprised Uber doesn't do the same (actually, I'm not, given their C-suite's history of being all-around dicks).
> I guess I'm just surprised Uber doesn't do the same (actually, I'm not, given their C-suite's history of being all-around dicks).
I've never heard of this in the valley, it's standard practice to not allow shares to be traded and provide no option for liquidity until IPO. There can be occasional secondary offerings (Facebook and Square had these) but they are usually a one time deal. Definitely not a concept that Uber invented.
Re: Handcuffed to Uber
#143One thing to keep in mind is that you might not have until next April 15th to pay your taxes after exercise. If the exercise benefit is large enough compared to your typical income, you might owe estimated taxes that quarter.
The IRS will say that you "owe" quarterly, but there's no penalty for not doing so.
Re: Handcuffed to Uber
#144Earlier quoted context omitted.
I previously wrote software at a major market maker. I can't say (NDA) what they use, but most professionals consider Black Scholes to be mickey mouse. If you're using it in the public market, you're not going to fare well on American style options. As for real world proof of Black Scholes being garbage, it doesn't get any better than Long Term Capital Management.
Black-Scholes (and the Merton version) are useful as simple estimates of option prices. Of course it's not going to be accurate (it assumes a lognormal distribution for volatility, JFC) - but the model is public and easy to calculate, providing a stable basis for these kinds of prices. Edit: people buying/selling options are of course performing their own pricing operations. They don't care how the market price is de…
There's not much difference between an American style public equity option and private equity option. Both can be exercised at any time. Perhaps you're thinking of European style options, that can only be exercised on a fixed date (expiry).
While neither are great, binomial is better for American style options than BS.
Re: Handcuffed to Uber
#145Earlier quoted context omitted.
No amount of blockchain technology is going to stop a company from suing you when they find out you sold stock.
Sorry, my fault for not being clear. I didn't mean that digital equity would empower employees to circumvent company policies. Rather digital equity and governance systems [1] that are currently being built around blockchain and decentralized projects simply take a much more egalitarian and healthy approach to distributing ownership in the first place. And, hey, if you want to use equity as an incentive for retaining…
Okay, let's assume that a smart contract with a particular blockchain is going to remain viable and secure for an entire decade.
The issue here is taxation before gains are realized. Are you assuming the government isn't going to tax you, just because it's a smart contract?
Re: Handcuffed to Uber
#146Earlier quoted context omitted.
No amount of blockchain technology is going to stop a company from suing you when they find out you sold stock.
Sorry, my fault for not being clear. I didn't mean that digital equity would empower employees to circumvent company policies. Rather digital equity and governance systems [1] that are currently being built around blockchain and decentralized projects simply take a much more egalitarian and healthy approach to distributing ownership in the first place. And, hey, if you want to use equity as an incentive for retaining…
The existence of a distributed ownership mechanism isn't going to convince companies to use that mechanism.
Honestly, the best way to decentralize ownership is to lead by example and start a hundred-billion dollar company that distributes ownership. If the next Google has decentralized ownership, that would be a model for other companies to follow. Right now, there is no incentive for any company to do anything nontraditional here.
Re: Handcuffed to Uber
#147I draw the line[1] at amending the bylaws to prevent secondary sales. This just seems wrong to me. [1] The line being where your company ceases to be ethical at its core.
The evidence indicates that Uber gleefully jumped over that line a long time ago.
Re: Handcuffed to Uber
#148> Not only does it not allow employees to sell their shares to secondary buyers, it also won’t allow them to use services like those offered by 137 Ventures, which makes loans to founders and early employees using their stock as collateral. (Snapchat, Dropbox, and Airbnb have similar policies.) Does keeping early employees "handcuffed" essentially as indentured servants until IPO align with YC's ethics policy?
Uber pays entry-level software engineers ~$110k [0], experienced engineers closer to $130k. According to Glassdoor this is in the same ballpark as Facebook, Google, Twitter, etc [1]. You are not really making the startup "worse salary but potential equity" trade by working there, when the straight-out-of-college salaries are similar to the averages across all of Google. [0] https://www.glassdoor.com/Salary/Uber-Softw…
130k for experienced engineers is very low by SF standards. That's average for senior positions in Dallas. 150k is the bare minimum for a senior dev unless you're getting a boatload of founders shares in a very early startup.
Google, Apple, and Facebook pay more. A lot more just in salary, more like 180-200k before options/RSUs.
Re: Handcuffed to Uber
#149Earlier quoted context omitted.
There's no liquid market for Uber shares. I assume that in my wife's case, the company was buying the shares back (privately held firm and we weren't dealing in a secondary market). I guess I'm just surprised Uber doesn't do the same (actually, I'm not, given their C-suite's history of being all-around dicks).
> I guess I'm just surprised Uber doesn't do the same (actually, I'm not, given their C-suite's history of being all-around dicks). I've never heard of this in the valley, it's standard practice to not allow shares to be traded and provide no option for liquidity until IPO. There can be occasional secondary offerings (Facebook and Square had these) but they are usually a one time deal. Definitely not a concept that U…
It is a little different when the CEO is on record saying he has no interest in doing an IPO in the foreseeable future.
Re: Handcuffed to Uber
#150Earlier quoted context omitted.
I read the Pinterest policy last year and ask my CEO about doing something similar during a company meeting. He just laughed. Then he apologized the next meeting for misunderstanding the question and still said no. I left the company.
Frankly institutional investors still have leverage over founding teams, and unless the company is a "darling" that has investors fighting for cap space, being "nonstandard" will be a possible liability. Laughing at the question is obviously uncalled for, but there are legitimate cause for concern for adopting such policies. Currently, late stage high growth companies and YC companies are the two segments best positi…
At PlanGrid we (employees) pushed for a longer window. One of the founders explained that this "convert to NQO after X time" is not an IRS-tested policy as of yet. The lawyers are wary of it and the negative tax consequences will hit employees under the AMT line the hardest if the policy is wrong.
That said, they are working on it and intend to implement a similar policy if possible. Reputable founders and investors don't want to force people to stay just to keep their options, nor screw people out of compensation they earned.