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What should you do with stock options during a recession?

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Re: What should you do with stock options during a recession?

#171

Post by staplers »

unicorn_eng wrote: post #163

I'm currently at a unicorn SaaS startup. I have 11,500 ISOs, about 7000 of which I've vested and exercised (I've got about 1.5 years left till I'm fully vested). My strike price is $1.50, which to me is a bargain, especially since there was a tender offer last year of around $14. There are ~70M outstanding shares. Other stats: $60M ARR, 120% NRR last year, almost 100% YoY growth during 2021, raised $110M at 40x reven…

You can do a lot more with liquid capital than options. Guaranteed money is worth more than maybe money, especially if you have a family.

If you truly believe they're valuable, then invest when they ipo.

Re: What should you do with stock options during a recession?

#172

Post by Firmwarrior »

shshshd wrote: post #60
johnchristopher wrote: post #2

I'd like to know what to do with ~10 000 euros, right now. Where should I put it so it doesn't lose its value and keep a bit with inflation ? edit for a bit of context: Western Europe, renting, unlikely to be able to buy/invest into a house/flat, looking at gold ingots, not the nerve for crypto.

10k is not that much money. I know it takes a lot of effort to save, but its small change. If you have somewhere to store it, buy consumable goods. - Several hundred dollars each of tuna, prosciutto, a wheel of Parmesan, jerky, rice, flour. - If you have an oil/wood heater fill up the tank. If gas buy plenty of wool sweaters. - If you have to drive to work, get a scooter. - If you live in Czechia, or Finland, (you're…

Probably not a bad idea to have a few weeks' worth of non-perishable food around just in case there's a big power outage/earthquake/whatever

If this whole societal house of cards comes tumbling down, though, I think most of the people posting on HackerNews are going to be screwed (relevant: https://ext.penny-arcade.com/comic/2019/03/15/deer-diary )

Re: What should you do with stock options during a recession?

#173

Post by astrange »

shshshd wrote: post #64
ericmay wrote: post #48

Earlier quoted context omitted.

(This is not financial advice) Ignore the "be greedy"* part of the person you are replying to (although your hesitation is kind of proving their point a bit) but follow the advice of the Intelligent Investor. When markets go up, everyone is happy to continue to invest. When they go down? People stop investing. That's precisely what you shouldn't be doing. Staying the course and continuing to invest regularly is key.…

This is great advice that bets that the system is a going concern. If the system collapses, then the bet goes sour. Of course, if the system collapses green pieces of paper will be just as valuable as any stock certificate.

The "system" is doing fine - in fact the US economy is doing great. The stock market is not the economy.

Re: What should you do with stock options during a recession?

#174

Post by astrange »

phendrenad2 wrote: post #156
dqpb wrote: post #108

If the answer isn’t “exercise them” why are you working at the company?

Dinosaurs won't hire me because I don't have a college degree. MAANGA won't hire me because I'm not good at leetcoding. That leaves startups.

Fairly sure maybe half of MANGA knows what leetcode even is. I for one don't know what it is.

Re: What should you do with stock options during a recession?

#175

Post by danachow »

anonymousiam wrote: post #112
danachow wrote: post #76

Earlier quoted context omitted.

> I gave my Wife money to exercise her ISO's Did you miss this part?

I did not miss it. My reply was to the parent post by s1artibartfast (nice HHGTTG reference), who said; "They are talking about the shares, which are already fully owned and liquid. The question is to sell them and invest the cash somewhere better(??) or HODL."

I still do not understand your objection, since the whole thread has been about shares, not options. The options were already exercised so what they are holding onto are these now likely worthless shares.

Re: What should you do with stock options during a recession?

#176

Post by goralph »

DeathArrow wrote: post #154

I don't care about options. Let me see the money. Then I can buy shares in whatever company I want or invest in an index fund, managed fund or ETF.

Options give us 'regular folk' exposure to private equity, which comes with potential for very high (& improbable) returns. As a salaried employee there's really no better vehicle for this kind of exposure. You'd need to start your own business, or play with leverage - which is dangerous.

That said, the common adage of 'winning the startup lottery' is very true. The likelihood of actually (i) joining early enough, (ii) getting a reasonable grant, (iii) having market conditions work in your favour, (iv) the company growing exponentially for years, (v) you actually being able to stay the 3-4 years to vest enough options, and (vi) a liquidation event happening .... is quite low. Most, if not all, of these factors need to happen together.

Re: What should you do with stock options during a recession?

#177

Post by molsongolden »

unicorn_eng wrote: post #163

I'm currently at a unicorn SaaS startup. I have 11,500 ISOs, about 7000 of which I've vested and exercised (I've got about 1.5 years left till I'm fully vested). My strike price is $1.50, which to me is a bargain, especially since there was a tender offer last year of around $14. There are ~70M outstanding shares. Other stats: $60M ARR, 120% NRR last year, almost 100% YoY growth during 2021, raised $110M at 40x reven…

Extremely simplified thought exercise with very rough possible #’s:

Vesting 2,875 shares per year

2,875 @ $(14-1.50)= $36k/yr

Assuming IPO @ $200MM ARR, public cloud SaaS benchmark rev multiple was roughly 20x last year before the crash.

That’s a $4B valuation, ignoring dilution from here to there:

$4B/70M shares = $57/share

2,875 @ $(57-1.5) = $160k/yr

That’s assuming the market recovers to a similar level, ignoring further dilution, assuming the company continues executing and doesn’t hit unforeseen difficulties, etc.

Can you make that much with less risk by changing jobs?

- Another consideration might be diversification if your vested options represent a large % of your portfolio.

- Another consideration, “work environment is great” isn’t something that everybody can say and this might be worth more than the raise.

Re: What should you do with stock options during a recession?

#178

Post by subroutine »

subroutine wrote: post #142
sunsunsunsun wrote: post #116

Earlier quoted context omitted.

That first article sure is funny. 10% to the first 10 employees... my current employer gave me roughly 0.001% in stock options and I'm employee #5.

Was that like 100 shares?

Downvoted, but I'm genuinely curious. At that point (5 employees) the company probably had the standard 10 mil authorized stock.

10 mil * .001% = 100 shares

Re: What should you do with stock options during a recession?

#179

Post by victor9000 »

Startup equity will always be worthless for 99.9% of people, and the second it's worth something more, it will be lawyered away from you. So from a business perspective, you should never work at a startup if you're not a founder.

dvs: please convince me otherwise

Re: What should you do with stock options during a recession?

#180

Post by highwaylights »

bradlys wrote: post #115
justin_oaks wrote: post #87

Earlier quoted context omitted.

Any options a company offers me, I'll value at $0. That doesn't preclude my working for them if they have an otherwise compelling offer.

This is a bad take. If you truly value options at $0 then you’re often getting a garbage deal wherever you go. If you’re only negotiating over salary - you’re screwing yourself. Options is how you actually make money at startups. The salary is only enough to make sure you can afford to exercise your options regularly and not starve to death in an extremely HCOL area. If you value options at $0 - just join FAANG and n…

I love the way your advice to people is just join FAANG like everyone gets to.

Why not just become The Rock? Dude makes way better money than Google pays.

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