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Startup Stock Options – Why a Good Deal Has Gone Bad

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Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#251

Post by deanmoriarty »

everdev wrote: post #248
deanmoriarty wrote: post #215

Earlier quoted context omitted.

But signing something without not understanding it is too naive. So, assume I already left the company and exercised a big bag of common options and so I have a decent amount of common shares. If they tell me to sign something that looks shady I just say: "No, it looks shady". What then, can they do?

Threaten to shut down the company. Then your shares are worth zero.

I believe I am the kind of person who would just say "Go ahead, shut it down if that's the only alternative. If you would like me to sign a deal to restructure the company, then I'll happily do it, but the company needs to pay me a one time cash bonus that reflects the value of the shares that I am forfeiting".

I am not naive enough to believe it would work, as they would probably find a way to screw me regardless, but my stance would be firm.

After my experience with startups I have become completely intolerant to corporate greed and injustice, so these days I am purely in a business transaction with my employer and I know exactly what to expect and when to expect it (which is why I get paid in RSUs rather than stock options). I like to think I wouldn't fall prey to this sort of petty begging.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#252

Post by akoumis »

phamilton wrote: post #192
akoumis wrote: post #134

Earlier quoted context omitted.

You are being exploited. Do you get compensated 1.5x your base for all those 12 hour work days?

On salary (not hourly) this is a useless question. Say they make 100k/yr. With 40hr weeks that's roughly $50/hr. With 60 hour weeks and 1.5x base pay, you could say it's $20/hr. It's all the same. What you seem to be asking for is for companies to pay you the same, just say your base is lower so they can pay you 1.5x you base for appearances sake. Now, optics aside, if you take an offer with an expectation of 40 hrs…

Maybe I can rephrase. Is OP's base 1.5x that of the average (8 hr/day) worker base at comparable companies?

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#253

Post by SkyMarshal »

kabdib wrote: post #183

I made a bunch of money from ISOs at large, established companies. I made zero (well, negative, really) from startup stock options, even before things got really shifty in the 2000s. One startup that I left, that is now a billion dollar company, simply decided to "extinguish" the shares I bought a few years after I resigned. I was probably cheated, but it's not worth the effort to go after them and they know it. Trea…

>One startup that I left, that is now a billion dollar company, simply decided to "extinguish" the shares I bought a few years after I resigned. I was probably cheated, but it's not worth the effort to go after them and they know it.

Sounds like an opportunity for a class action lawsuit. If they did it to you, they probably did it to others.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#254

Post by PeterFBell »

dalbasal wrote: post #225
steveklabnik wrote: post #209

Earlier quoted context omitted.

From the article: Suster points out that the longer the company stays private, the more valuable it becomes. And if during this time VC’s can hold onto their pro-rata (fancy word for what percentage of the startup they own), they can make a ton more money. The premise of Growth capital is that if that by staying private longer, all the growth upside that went to the public markets (Wall Street) could instead be made…

I think the implication of the question may have been "why not just hold the stock after the IPO if you expect. Further down, continuing the Sister quote: three examples Suster uses – Salesforce, Google and Amazon – show how much more valuable the companies were after their IPOs. Before these three went public, they weren’t unicorns – that is their market cap was less than a billion dollars. Twelve years later, Sales…

If it stays private, not only do your existing shares appreciate (which would also happen if it was public), but as an existing investor if you have pro rata rights, you can buy more shares (vs them being sold in a public offering) increasing the number of shares you have that will appreciate.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#255

Post by everdev »

deanmoriarty wrote: post #251
everdev wrote: post #248

Earlier quoted context omitted.

Threaten to shut down the company. Then your shares are worth zero.

I believe I am the kind of person who would just say "Go ahead, shut it down if that's the only alternative. If you would like me to sign a deal to restructure the company, then I'll happily do it, but the company needs to pay me a one time cash bonus that reflects the value of the shares that I am forfeiting". I am not naive enough to believe it would work, as they would probably find a way to screw me regardless, b…

It's better than the alternative of giving in. Shutting down / reopening the company takes $$ and I still think you'd have a decent lawsuit against the new startup.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#256

Post by joshuamorton »

pnw_hazor wrote: post #158
deanmoriarty wrote: post #120

Earlier quoted context omitted.

I am actually very, incredibly proud and happy of what I do. First of all, selfishly I am learning like crazy. I am able to work on the world's most advanced software defined networking implementation in Google Cloud, and it's just amazing and mind boggling. Second, I create real value for a lot of people: the reliability I help improve has a direct effect on the happiness of the Google Cloud customers that run on ou…

I am curious how reasonable people with many options of where to work turn a blind eye to what their companies do. You are correct that no company is perfect, but some are less perfect than others. It seems many people like just shrug their shoulders and move on pursing the fun projects they are well-paid to work on. Such is the human condition.

>I am curious how reasonable people with many options of where to work turn a blind eye to what their companies do.

In my case a lot of it comes down to me, as an insider, knowing that you're wrong. "Monetizing people" is sort of meaningless. That's an objection to capitalism, if anything, not Google. Google no more monetizes people than a bank, or a rideshare company or even a university. Short of maybe fundamental research, you're not going to find a job that doesn't monetize people under some interpretation.

As for a "surveillance society", I don't really think that's true. The care my coworkers take with user data is, in a word, significant.

There are certainly things that Google has done that I think aren't ethical, but I'm much better positioned to be aware of and change those things as an insider than an outsider.

And then of course there's the multitude of selfish reasons: compensation, interesting technical work, intelligent coworkers, etc.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#257

Post by matthewowen »

defen wrote: post #153
matthewowen wrote: post #71

Earlier quoted context omitted.

SF startup cash comp for engineers is comfortably in the 150k-200k range, and often higher. This is series A, series B stage companies. If you have a few years of experience and are making less than this then I'm please to be able to inform you that you are underpaid. If you have one of those incomes at the higher end, you can do these things in the bay area. If you have more than one then that stuff is not hard at a…

> Berkeley has pleasant single family homes in a great school district around the $1MM mark. You can absolutely do that on $200k/year. Let's say you make $200k/year and manage to put together a $300k down payment and get a $700k mortgage at 3.8%. Here is the breakdown of your annual spending (using 2018 numbers): $18,500 to 401K $35,930 in federal income tax $10,593 in FICA (Social security and medicare) $13,724 in C…

2+ hours per day commuting? BART from Berkeley to Powell St station is 30 minutes. You have last mile for sure, but this totally works for most SF based startup jobs.

But either way... doesn't this prove my point? This does not sound like a difficult way to live, _and_ it factors in luxuries (I for one definitely do not spend $10k/year on car ownership).

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#258

Post by matthewowen »

geggam wrote: post #82
matthewowen wrote: post #71

Earlier quoted context omitted.

SF startup cash comp for engineers is comfortably in the 150k-200k range, and often higher. This is series A, series B stage companies. If you have a few years of experience and are making less than this then I'm please to be able to inform you that you are underpaid. If you have one of those incomes at the higher end, you can do these things in the bay area. If you have more than one then that stuff is not hard at a…

You mean people have quit coming in full cash 10-15% over ask for houses in the bay area ? 2 years ago people with standard financing didnt have a chance in hell of buying a house in the Bay

I know a bunch of people who have bought in this price range with standard financing, and I based the numbers on sale prices.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#259

Post by eanzenberg »

deanmoriarty wrote: post #85
neilv wrote: post #78

Earlier quoted context omitted.

I hear conflicting ideas about who's getting the most capable people, and I don't know what's true. Maybe a decade ago, a knowledgeable colleague, speaking of one of the better-regarded FAANGs, told me, "First they hired the A students, then they hired the B students, now they're hiring the C students." More recently, the sentiment I heard among CS-ish PhD students at one big university was that FAANGs (or, at least,…

In my 10 year career, I've done 2 startups in the Bay Area (both early, one I left after Series A, another one I left after Series C) and more recently Google, and I can say the level of talent doesn't even compare in my opinion: from my experience, the engineers were so bad quality that I was feeling depressed and wasting my time most of the time (and constantly saying to myself "am I just a jerk in thinking of ever…

Right.. at Google, you have immense numbers of people work on entirely useless products that get canceled a year later.

Re: Startup Stock Options – Why a Good Deal Has Gone Bad

#260

Post by eanzenberg »

deanmoriarty wrote: post #102
matthewowen wrote: post #71

Earlier quoted context omitted.

SF startup cash comp for engineers is comfortably in the 150k-200k range, and often higher. This is series A, series B stage companies. If you have a few years of experience and are making less than this then I'm please to be able to inform you that you are underpaid. If you have one of those incomes at the higher end, you can do these things in the bay area. If you have more than one then that stuff is not hard at a…

Unless you mean both spouses should earn around 200k and thus bringing in a FAANG-equivalent income of 400k, I really don't know how you could afford what you are saying on a single 150k-200k salary (and perhaps another 50k for your spouse's salary, since not everybody works in tech). After paying for CA taxes, fed taxes, kids' schools, rent, car expenses, 401k contributions, I really don't know how you would come up…

>>FAANG-equivalent income of 400k

LUL dude, I hear this shit being parroted ad-nauseum. The amount of FAANG people that hit this level or more is like, 5-10%. Take a look at the top 5-10% of non-FAANG companies and you'll see those employees are also hitting this mark. There's nothing special about FAANG. I understand lots of FAANG employees parrot this around to make themselves feel better about their life choices.

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