Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

There’s no such thing as “a startup within a big company”

hunterwalk.medium.com

Post reply on HN
Print view View original

281–290 of 326 posts

Re: There’s no such thing as “a startup within a big company”

#281

Post by reissbaker »

ptmcc wrote: post #195
harikb wrote: post #164

Earlier quoted context omitted.

The thing most people forget about options & RSU is that one is taking away a big chunk of the TC and delay it to a future year. Even when you hate your job, you will be hesitant to leave the company because of FOMO and sunk cost fallacy That said, anecdotally, every one of my close circle of friends made decent amount money from equity (one of the many companies they worked at did very well) - far higher than the 10…

Let's be careful here and not conflate options and RSUs, especially comparing between startups and public companies. Options in a startup are extremely likely to be worth nothing, ever. Not only does the company need some sort of liquidity or exit event, but the valuation then also has to be higher than the strike price on your options. And options usually have punishing exercise-or-lose-them requirements if you leav…

RSUs are trickier than that if you work at a non-public company (e.g. a startup). For example, they actually do typically expire if the company doesn't have a liquidity event within a certain timeframe -- and unlike options, if the expiration date comes up you have no recourse; with an option, you can at least exercise it, at which point it becomes common stock and you own it outright.

As a personal example, I previously worked at Airbnb and had a mixture of options and RSUs. Some of my RSUs were only months away from their expiration date when the company went public; if anything had delayed the IPO much longer, they would have disappeared. With the options, I could have bought them and prevented them from disappearing even had the company not gone public. As a result, leading up to the IPO I was moderately worried about my RSUs, but not particularly worried about my options.

FWIW, you're probably thinking about ISOs ("incentive stock options") when you refer to the "punishing exercise-or-lose-them requirements;" companies can also offer NQSOs ("non-qualified stock options"), which are less tax-advantaged but can offer long exercise timeframes even after you leave the company. A lot of the "unicorn" startups, including Airbnb, allowed ISO holders to convert to NQSOs for that reason.

Options vs RSUs is a tricky subject and the ideal choice varies based on circumstance.

Re: There’s no such thing as “a startup within a big company”

#283

Post by Animats »

tcoff91 wrote: post #261
Animats wrote: post #225

Earlier quoted context omitted.

Stocks have dividends. The value of a stock is the present value of all future dividends. Otherwise you're hoping to find a greater fool.

More and more companies are moving away from dividends to buy backs so for many stocks you have to sell to realize profits.

Yes, because stock buybacks reward management with options. Dividends do not. Many countries don't allow a company to buy its own stock.

Re: There’s no such thing as “a startup within a big company”

#284

Post by Animats »

Galanwe wrote: post #271
Animats wrote: post #225

Earlier quoted context omitted.

Stocks have dividends. The value of a stock is the present value of all future dividends. Otherwise you're hoping to find a greater fool.

> The value of a stock is the present value of all future dividend That is an idea from the 70s. Not many people would agree that there is an actual fair value for a stock anymore, much less that it is driven solely by accrued future dividends.

After a while, reality comes back to bite you.

Re: There’s no such thing as “a startup within a big company”

#285

Post by georgeecollins »

Galanwe wrote: post #271
Animats wrote: post #225

Earlier quoted context omitted.

Stocks have dividends. The value of a stock is the present value of all future dividends. Otherwise you're hoping to find a greater fool.

> The value of a stock is the present value of all future dividend That is an idea from the 70s. Not many people would agree that there is an actual fair value for a stock anymore, much less that it is driven solely by accrued future dividends.

>> That is an idea from the 70s.

No, that is an idea from economics predating the 1970s. Did you mean the 1870s? It predates that.

You can value a stock however you like. Good luck, I wish you well.

Re: There’s no such thing as “a startup within a big company”

#286

Post by andresp »

repartix wrote: post #276
andresp wrote: post #269

Earlier quoted context omitted.

Why do you care so much about predictable supply if the price is anything but predictable? How is such high volatility commodity a good storage of value? It might be a good speculation vehicle, but people looking to store value typically look for something more stable. It remains to be seen how resistant Bitcoin is if powerful governments really decide to take it down. Bitcoin and Blockchain is an interesting project…

I applaud you for asking good questions. > Why do you care so much about predictable supply if the price is anything but predictable? Because the price will go higher. When the price goes over $x MM per BTC it will be very predictable. > How is such high volatility commodity a good storage of value? It stores more value than any other commodity. When the stock market started in 1920s it was no less volatile than Bitc…

"Because the price will go higher" isn't really an answer. You can either explain it or you just have faith that it will do what you want. People could use that same argument for everything.

The stock market was never meant to be a way to store value but a public tool to finance and own projects that actually produce economic value. Comparing it to the bitcoin market is a false equivalence.

But best of luck for your investments.

Re: There’s no such thing as “a startup within a big company”

#287

Post by wwtrv »

repartix wrote: post #276
andresp wrote: post #269

Earlier quoted context omitted.

Why do you care so much about predictable supply if the price is anything but predictable? How is such high volatility commodity a good storage of value? It might be a good speculation vehicle, but people looking to store value typically look for something more stable. It remains to be seen how resistant Bitcoin is if powerful governments really decide to take it down. Bitcoin and Blockchain is an interesting project…

I applaud you for asking good questions. > Why do you care so much about predictable supply if the price is anything but predictable? Because the price will go higher. When the price goes over $x MM per BTC it will be very predictable. > How is such high volatility commodity a good storage of value? It stores more value than any other commodity. When the stock market started in 1920s it was no less volatile than Bitc…

The NYSE was opened in the 1790’s and even in the 20’s stock volatility was significantly smaller compared to bitcoin, DJIA “only” grew around 5 times between 1920 and 1929 (so comparable to the decade between 2009 and 2020).

To find something on a similiar scale to bitcoin you might actually need to go back to the 18th or 17th centuries (see the “South Sea Bubble” or the “Tulip Mania”).

Re: There’s no such thing as “a startup within a big company”

#288

Post by hef19898 »

harikb wrote: post #164
DebtDeflation wrote: post #103

Earlier quoted context omitted.

>The ultimate realization was in a startup you have equity, a decent amount in a good startup. At Microsoft it was a base salary and set amount of stock. I joined a startup in 1999. There were 3 founders and I was employee #2 after that. I received a ton of options (this was before RSUs became popular). We had a great product and a great team, but 18 months later ran out of money and unfortunately it was right after…

The thing most people forget about options & RSU is that one is taking away a big chunk of the TC and delay it to a future year. Even when you hate your job, you will be hesitant to leave the company because of FOMO and sunk cost fallacy That said, anecdotally, every one of my close circle of friends made decent amount money from equity (one of the many companies they worked at did very well) - far higher than the 10…

Say what you want about Amazon, but at least they offset the fact that their RSUs vest somewhere between year 3 and 5 with stock price based (or whatever they estimate the stock price will be for next years) sign cash bonuses. Pretty fair solution, if you aks me.

Re: There’s no such thing as “a startup within a big company”

#289

Post by kragen »

np- wrote: post #215
tcoff91 wrote: post #198

Earlier quoted context omitted.

Bitcoin slowly loses value? Even those who bought the very top in 2017 have more than doubled their money if they didn't sell. Bitcoin, when it does lose value, loses it very quickly but on longer time horizons nobody has ever lost money by holding bitcoin for 3+ years. That being said, buying at current levels is extraordinarily risky and more equivalent to gambling than anything else. The expected ROI of the lotter…

People doubled their money on paper in unrealized gains. But since Bitcoin is being sold as a store of value and not as a medium of exchange nowadays, if you want to realize that value you need to sell. Where's that cash coming from? Other buyers, i.e. the next layer of suckers as indicated in OP's post. And if enough people decide to sell, then those doubled/tripled/etc values aren't going to last very long. Note I'…

Same's true of gold, silver, or cash-settled fresh bacon index futures. Consequently such commodities tend to have long-run zero returns, or returns that just equal the per-capita GDP growth rate, depending on how you look at it. I've watched people lose fortunes at that poker table.

The fresh bacon index is maybe less exposed to this kind of thing because, unless the world mass-converts to Judaism or something, someone will pay to eat bacon, so there's a floor on how low the value can go. But gold? Industrial use of gold is minuscule compared to speculative gold trading. Today GC trades at US$1773 per troy ounce, which is 10% down from a few months ago, late 02020, and 100% up from 02008. In 02001 it was barely above US$200. It could drop to US$200 again, and everyone who bought today and held will have lost 80% of what they invested.

That can happen with fresh bacon, too. What's different with gold is that, if enough people decide to sell, it could drop to US$20. It could drop to US$2. Or it could rise to US$20000. We have more history about gold: it's been a precious metal for many millennia and a widespread currency for the last three. So it's a lot less likely for it to lose 99% or 99.9% of its value like that, or go up 100× (though, as I said, it's gone up very close to 10× in a mere score of years.)

People — and, especially, central banks and governments — invest in gold because they dont think it's likely for that to happen, and because it doesn't have the secular inflationary tendency that fiat currencies do. It may bounce up and down by a factor of 10 in a couple of decades, but in 01687 it was probably also within that same factor-of-10 band.

They're not looking for an expectation of profit when they seek a "store of value".

They're just looking to reduce the risk of indigency.

Re: There’s no such thing as “a startup within a big company”

#290

Post by sytelus »

nojvek wrote: post #77

When I was at PowerBI in Microsoft, all the execs hailed it as Startup within Microsoft. Come work here instead of Uber. I worked like a dog, sometimes till 2am in morning. My manager would routinely ask us to come on weekends. I was naive, I thought we are growing customer base, this is what a startup looks like. The ultimate realization was in a startup you have equity, a decent amount in a good startup. At Microso…

This is quite one sides view. There are many many examples such as Word, Excel, Google Maps, Gmail, FB Messanger etc started as “startup within big co”. Initially they were small, people worked hard and then they become very big. When they were small (I don’t agree with thesis in this article. Yes, most startup efforts in big co fails but failure rate is probably not worse than usual startups. For successful startups within big co, rewards are pretty huge as well. For Waze case, I had argue that they were already running out of steam when they joined Google even though they continued growth. It wouldn’t be feasible for them to compete effectively while growing exponentially with strong and free product like Google Maps as their competition. I am doubtful if Waze employees would have faired vastly better as independent startup.
Post reply on HN