261–270 of 396 posts
Hindsight is ofc 20/20, those contracts have long since been set in stone, but I can't help but think Stripe (and maybe other future companies) could have saved themselves a $6bn headache by not having the expiry in the first place.
> Winning Competitions > In the presentation, Stripe said it generated $14.3 billion in revenue as it processed $816 billion in payments volume last year. The company’s so-called transaction margin before losses — a measure of net revenue — rose to $3.17 billion, or 0.38% of total volume. That compares with 17 basis points for rival Adyen NV, according to the presentation. Does anyone else feel these numbers aren't a…
For example; stripe charges 1.5%+20p for UK cards. Revolut charges 1%+20p for online transactions, 0.8%+2p for in person. I'm sure other providers charge even less than this but they don't make the pricing public easily.
Ayden is perceived to be a lot cheaper than stripe too, so I am surprised they are only getting 20bps more.
What am I missing here? Are margins a lot tighter in the US market, and stripe is extremely US focussed (one possibility?), or are Stripe giving really heavy discounts for volume which really drags down their marigns?
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I think I misread your comment, so I deleted my earlier one. Sorry. You’re right: if you’re going to work hard, you may as well choose the path with the highest rewards. If Stripe can’t make it worthwhile, is there a good reason to trade away what you’d get at FAANG? So the hard workers have a lucrative path (FAANG), and the ones who want to spend more time away from work have a more lucrative path (BigCo). That does…
As a European I feel like both those concepts (big money jobs or big money startups) are a USA only concept. Anywhere else in the world that has those kinds of options? China maybe?
The article title is mixing up two different problems, and I think that's what is causing all the confusion in this thread. 1. Stripe has to pay $3.5B in taxes. This is unrelated to employee stock. 2. Lots of long term employees have expiring options, and if they exercised them they would face a massive tax bill. To solve both 1 & 2 Strips is doing an additional raise of $2.3B from private investors which will (1) gi…
> 1. Stripe has to pay $3.5B in taxes. This is unrelated to employee stock.
According to the company that $3.5b withholding tax ($2.3b this quarter, $500m in Q2-Q4, $700m next year) is very much related to RSUs.
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Based on internal data I have from similar companies my guess would be the first 50 employees average about $15-20m each and the next 100 average about $5-10m each just from their initial 4 year grants, with a lot of variation based on team and seniority. Stripe options have probably grown about 100x in value since the Series B so if you were an engineer who joined around that time, received $100k in RSUs, and left u…
Stripe employee #130 made $5m (after taxes) from 4 years of options? Is there any data to support that? It sounds mistaken, but exponential curves are hard to reason about. 50 x $15m + 100 x $5m = 1.25B post-tax, so probably north of $1.7B pre tax. Stripe had a post-money valuation of $10B+ in March 2021, so that’s around 15% of the company. I guess that’s in the right ballpark. Hmm. Thank you for the concrete number…
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They certainly can let the old RSUs expire worthless, but holding up the "social contract" (as opposed to the strict legal contract) with their employees (and former employees!) while also not drawing the ire of the IRS may be a challenge. If you give new RSU grants, what time period do they vest over? What happens to current employees who leave before then, if they are required to re-earn-out their comp? What can yo…
I don't think the company would be in trouble with the IRS if the rsu's are not exercised. I also don't think it would be breaking the social contract if the employees were granted new replacement rsu's with term limits that aren't contingent on employment. It's not that different then unemployed sitting on vested stock waiting for an IPO or liquidity event. Maybe I don't understand something in the tax law, which is…
But the company and employees would definitely be in trouble with the IRS if they were granted new replacement rsu's with term limits that aren't contingent on employment.
I'm not following why there is a tax bill. If the stocks are founder stock or RSU, then the employee should have done an 83b election to avoid paying tax as they vest. If they are options, then the employee is under no obligation to exercise them, and owes no tax until they are exercised. What am I missing?
First of all, the issue here is with options, not RSUs. The reason employees of early stage companies don’t take 83b elections for RSUs or exercise their options early is because that dramatically ups the risk: they have to front the money for exercise (strike price * number of options) or pay the tax bill on the RSUs as income. If the company then goes belly up, the IRS doesn’t give the money back, so the employee i…
Where is "here"?
The headline "Stripe faces $3.5B tax bill as employees' shares expire" is about RSUs. The subheadline "Firm also expects to use $600 million to exercise some options" is about options.
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Some people love that kind of stress though. Like some people like working hard so they can up front all their work and retire earlier. And others like coasting so they can live their 20s before it’s gone. Different strokes.
True, but group A has a 1% (5%?) chance of achieving their goal while group B has a 80% (100%?) chance of achieving theirs. Always include the odds in these calculations :-)
If Stripe didn’t do that, could the affected employees theoretically borrow money themselves to exercise the options and pay the taxes?
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Because the system is crazy, but it only affects early employees of successful startups so there's no political will to fix it.
Crazy isn't an explanation.