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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?

#211

Post by scarface74 »

skinnymuch wrote: post #207
scarface74 wrote: post #189

Earlier quoted context omitted.

I would say until the last three months, it seems like with a few years of experience and “grinding leetcode” anyone could get into one of the BigTech public companies. I got in by doing a slight pivot from software engineering. But I definitely tell a couple of younger relatives who just graduated to do the monkey dance.

What is diff about last few months? I’m going to be doing the monkey dance too. I don’t get satisfied from doing more enjoyable coding work compared to salary increases. Even if I don’t get to big tech until after a recession possibly hits.

Companies are slowing down hiring and the startups and recently public companies are laying off people and freezing hiring.

I’m older (48) and fell into BigTech via the cloud consulting division - cloud application development. I never had to go through the leetcode grind. But my path was very narrow and I recommend that people go through the leetcode grind.

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

#212

Post by scarface74 »

zwily wrote: post #205
scarface74 wrote: post #187

Earlier quoted context omitted.

VCs are not able to “pick good startups”. They diversify and don’t care if nine out of 10 fail. For every one person who got lucky and think it was because they chose well, there are nine you never hear about.

One out of ten odds are also much, much better than the lottery though.

“Success” means that the VCs get their money back and maybe make a decent profit and even the founders might make some money. It says nothing about you as an employee making money.

I wouldn’t want to spend years of my life on a 1 out of 10 chance.

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

#213

Post by tdumitrescu »

peter422 wrote: post #155
indecisive_user wrote: post #141

Earlier quoted context omitted.

Even if you magically knew which startups could be viable 8 years down the road, there's tons of factors completely outside your control that could tank a startup in an instant; e.g. covid, a world war, regulation, etc. That "carpool as a service" startup might have had a great business strategy up until a pandemic showed up. And if you're spending 8-10 years waiting for a payoff, you only get ~3 shots to pick correc…

There is no reason to work anywhere for more than 4 years. Vest the options, which have a 7-10 year exercise window because you’d only take a job at a company that had them, then quit and get another job and take another shot. Your lottery ticket remains whether you are working there or not. The only reason not to leave after 4 years is if you are a founder or the company is giving you extremely generous compensation…

Every company gives refresher grants. If you only got 1 grant over 4 years, then the company doesn't care about retaining you.

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

#214

Post by skinnymuch »

scarface74 wrote: post #211
skinnymuch wrote: post #207

Earlier quoted context omitted.

What is diff about last few months? I’m going to be doing the monkey dance too. I don’t get satisfied from doing more enjoyable coding work compared to salary increases. Even if I don’t get to big tech until after a recession possibly hits.

Companies are slowing down hiring and the startups and recently public companies are laying off people and freezing hiring. I’m older (48) and fell into BigTech via the cloud consulting division - cloud application development. I never had to go through the leetcode grind. But my path was very narrow and I recommend that people go through the leetcode grind.

Ah yeah I was not sure if that’s what you meant. I’m older relative to college grads or graduate students.

I’m switching to programming as a full time career now after coding on my own for a long time.

I’m now trying to pivot to getting any meh job and then grind through leetcode in spare time. Vs do the grinding and possibly find myself unable to get a decent job.

Of course I’m not necessarily going for big tech for either first career job. Just as close as possible with the leetcode and hope to be in there after the 1st.

—

Will you have to do the leetcode grind if you switch job and want to “level up” as it were to an even better job and company?

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

#215

Post by psanford »

buck4roo wrote: post #168
psanford wrote: post #97

Earlier quoted context omitted.

You can claim the AMT credit in the future tax years.

Correct me if I'm wrong, but I recall this AMT overpayment credit could only be used up at rate of $3k/year and only in years where you also owed AMT?

Here's the relevant code. It sounds like your understanding doesn't match the current rules (consult a tax professional): https://www.law.cornell.edu/uscode/text/26/53

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

#216

Post by maerF0x0 »

8note wrote: post #125
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.

That sounds like either they didn't need you or you made a poor choice? Or you were paid in cash instead?

or possibly it's an extremely capital intensive startup and sunsunsunsunsunsunsuns didnt put up any money.

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

#217

Post by spookthesunset »

ggm wrote: post #136
lumost wrote: post #62

Earlier quoted context omitted.

I only had options at one firm which was Series D and had ~300 employees. The company issued them at a price which was rich, then steadily issued new options at lower price points. The management made it a practice to have periodic calls which would talk about how they were 12-18 months away from IPO and the price target was going to be ~5x the rich price. Then there would be talks where engineering management would…

long-term average is 6-7% in the big picture. 12% is good, even if it not S&P good.

Yes but remember to think in terms of expected value. Which is kind of the “average” value of all the different return values you might get.

12% is the high end, but what are the probabilities of smaller results? 12% might be the outlier and the expected value might be hovering around zero or less.

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

#218

Post by [deleted] »

bergenty wrote: post #109
maerF0x0 wrote: post #55

> If you leave the company, your options will expire if you don’t exercise them. Let me repeat that: if you leave the company, your options will expire if you don’t exercise them. The exact timeline of how quickly they expire depends on option type and company policy, but the termination window is commonly as short as 90 days. So, exercising your options enables you to actually own what you helped build. This is why…

Can someone explain to me why stock options are better than RSUs?

[deleted]

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

#219

Post by sbf501 »

skinnymuch wrote: post #208
sbf501 wrote: post #139

Earlier quoted context omitted.

One step further: Options are just a way for companies to get out of paying you a salary. (I got them from Microsoft, and from Intel before they were offered to all employees.) Options = salary In other words: exercise them as SOON as they vest. I had two financial planners tell me that over 15 years (I fired the first one), and both were 100% correct in hindsight.

Why did you fire the first?

"Fire" is the wrong word, "stop seeing" is more accurate. Because he kept pitching his friend who sold annuities, who was one of those awkward guys that starts his pitch with 15 minutes of "this is how to invest, and 90% of americans don't .... now buy my life insurance annuities." Really didn't like that.

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

#220

Post by bradstewart »

barrkel wrote: post #185
bergenty wrote: post #109

Earlier quoted context omitted.

Can someone explain to me why stock options are better than RSUs?

RSUs are better but you can't get them before a company goes public. RSUs will have non-zero value. Options might never be exercisable but they're the normal way you get a stake of ownership at a startup (you don't get stock). So if you want to own part of a company before it goes public and you're not an investor, options are usually the only way on offer.

You can certainly get RSUs in a company before it goes public. You won't (generally) be able to sell them very easily, but being a publicly traded is not a requirement for issuing stock to employees.
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