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Windsurf employee #2: I was given a payout of only 1% what my shares where worth

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Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth

#41

Post by phendrenad2 »

marssaxman wrote: post #20
TrackerFF wrote: post #7

Financially speaking, is it even worth joining a startup anymore? Compared to just going to any of the big companies. The latter will likely pay you more, with less risk involved. Seems like the best shot is to strive toward becoming financially independent, and then just go for the startup route and follow your passion. If you it doesn't work out, no big deal - if things turn out great, you'll just be even better of…

Was there ever a time when you could reasonably expect to make more money by joining a startup? That has never been the case so far as I am aware, and I'm currently on my seventh tour through startup-land...

It was always a bad deal. It was supported by urban legends of janitors and cafeteria workers getting seven-figure payouts because they negotiated a few shares of a company that went IPO and went "unicorn". But the reality was, most startup companies failed, and most shares became worthless. In 1995, 2005, 2015, etc. it was the same story.

The only thing that changed recently is the "unicorns" stopped happening altogether.

Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth

#42

Post by klooney »

givemeethekeys wrote: post #33
marssaxman wrote: post #20

Earlier quoted context omitted.

Was there ever a time when you could reasonably expect to make more money by joining a startup? That has never been the case so far as I am aware, and I'm currently on my seventh tour through startup-land...

It feels like it is worse now than it used to be. Back in 2010, you would be giving up a nice salary but not a much nicer salary by working at a startup. So, startup base compensation hasn't kept up, and the career and financial risk of working for one has gone up due to higher interest rate and higher open-market asset prices.

Base salaries aren't terrible at startups, it's the RSUs and ESPP they can't match. I can deal with a terrible IT department preventing progress for double the money, it's fine.

Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth

#43

Post by crazygringo »

stouset wrote: post #40
crazygringo wrote: post #39

Earlier quoted context omitted.

Thank you very much! So it seems like the crux of the issue still isn't clear, because: > Had the employee taken employement with Google, it's likely their shares in windsurf would have been voided, or otherwise not vested. That doesn't make any sense. The shares are already vested, they legally own them. How could they have been voided? The idea of joining Google resulting in a "1% payout" doesn't seem to make any s…

Vested is not exercised. Options vest, but you have to exercise them to purchase the underlying shares. This is nominally cheap, but from the IRS’ perspective you have just spent $1 to purchase a share worth $100, so that’s $99 of income. Multiply by a large number of options and you can easily have a real multimillion dollar tax bill even though you have no way to sell the shares to recoup their value. Worse, if the…

Sure, but I'm not really clear on what that has to do with the situation described?

And he calls them vested shares though, not vested options, though maybe he's incorrect.

And it's not like you forfeit them instantly after leaving anyways. You usually have at least 90 days. And the fact that the value of the company is so much lower now is favorable, if you think the value will recover.

But again, none of this has anything to do with the "1% payout" here that is still totally unexplained.

Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth

#44

Post by pjmlp »

TrackerFF wrote: post #7

Financially speaking, is it even worth joining a startup anymore? Compared to just going to any of the big companies. The latter will likely pay you more, with less risk involved. Seems like the best shot is to strive toward becoming financially independent, and then just go for the startup route and follow your passion. If you it doesn't work out, no big deal - if things turn out great, you'll just be even better of…

Outside US hardly, unless being one of the founders, because stuff like being given shares is not common.

You will get a regular salary, with occasional performance bonus, just like any regular company, with all the action a startup requires.

Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth

#45

Post by marssaxman »

klooney wrote: post #42
givemeethekeys wrote: post #33

Earlier quoted context omitted.

It feels like it is worse now than it used to be. Back in 2010, you would be giving up a nice salary but not a much nicer salary by working at a startup. So, startup base compensation hasn't kept up, and the career and financial risk of working for one has gone up due to higher interest rate and higher open-market asset prices.

Base salaries aren't terrible at startups, it's the RSUs and ESPP they can't match. I can deal with a terrible IT department preventing progress for double the money, it's fine.

I really cannot, so - good for you! It takes all kinds.

There is nothing I could do for pleasure, even with double my salary, which would compensate for the misery I would feel working a job I hated. But that's who I am, and we're not all the same!

Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth

#46

Post by masterjack »

crazygringo wrote: post #43
stouset wrote: post #40

Earlier quoted context omitted.

Vested is not exercised. Options vest, but you have to exercise them to purchase the underlying shares. This is nominally cheap, but from the IRS’ perspective you have just spent $1 to purchase a share worth $100, so that’s $99 of income. Multiply by a large number of options and you can easily have a real multimillion dollar tax bill even though you have no way to sell the shares to recoup their value. Worse, if the…

Sure, but I'm not really clear on what that has to do with the situation described? And he calls them vested shares though, not vested options, though maybe he's incorrect. And it's not like you forfeit them instantly after leaving anyways. You usually have at least 90 days. And the fact that the value of the company is so much lower now is favorable, if you think the value will recover. But again, none of this has a…

It’s possible that in the Google deal you had to agree to sell back the shares (at a low value like par or original strike price) and the 1% refers to either those proceeds or the size of the Google employment package. If you didn’t agree then you would be left holding your shares of a company that is now gutted.

Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth

#47

Post by wqaatwt »

nocoiner wrote: post #28
fragmede wrote: post #14

Earlier quoted context omitted.

Whichever entity ended up buying Windsurf, the corporation. They get to declare the exchange rate, and for what. Sometimes it's cash, sometimes it's stock, usually it's some mix of both.

Where would the 99% haircut have come into play?

Nobody willing to pay as much as OpenAI was offering initially? Of course that valuation was about as absurd as it gets…

Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth

#48

Post by naveen99 »

stouset wrote: post #40
crazygringo wrote: post #39

Earlier quoted context omitted.

Thank you very much! So it seems like the crux of the issue still isn't clear, because: > Had the employee taken employement with Google, it's likely their shares in windsurf would have been voided, or otherwise not vested. That doesn't make any sense. The shares are already vested, they legally own them. How could they have been voided? The idea of joining Google resulting in a "1% payout" doesn't seem to make any s…

Vested is not exercised. Options vest, but you have to exercise them to purchase the underlying shares. This is nominally cheap, but from the IRS’ perspective you have just spent $1 to purchase a share worth $100, so that’s $99 of income. Multiply by a large number of options and you can easily have a real multimillion dollar tax bill even though you have no way to sell the shares to recoup their value. Worse, if the…

Doesn’t income happen when you sell the shares ? What is the cost basis of the shares you purchase if not the strike price of the option ?

Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth

#49

Post by cyanydeez »

naveen99 wrote: post #48
stouset wrote: post #40

Earlier quoted context omitted.

Vested is not exercised. Options vest, but you have to exercise them to purchase the underlying shares. This is nominally cheap, but from the IRS’ perspective you have just spent $1 to purchase a share worth $100, so that’s $99 of income. Multiply by a large number of options and you can easily have a real multimillion dollar tax bill even though you have no way to sell the shares to recoup their value. Worse, if the…

Doesn’t income happen when you sell the shares ? What is the cost basis of the shares you purchase if not the strike price of the option ?

https://taxsharkinc.com/when-are-vested-shares-taxable/

Its different for vesting. Othrrwise even more toxic greed and tax avoidance would occur.

Re: Windsurf employee #2: I was given a payout of only 1% what my shares where worth

#50

Post by crazygringo »

masterjack wrote: post #46
crazygringo wrote: post #43

Earlier quoted context omitted.

Sure, but I'm not really clear on what that has to do with the situation described? And he calls them vested shares though, not vested options, though maybe he's incorrect. And it's not like you forfeit them instantly after leaving anyways. You usually have at least 90 days. And the fact that the value of the company is so much lower now is favorable, if you think the value will recover. But again, none of this has a…

It’s possible that in the Google deal you had to agree to sell back the shares (at a low value like par or original strike price) and the 1% refers to either those proceeds or the size of the Google employment package. If you didn’t agree then you would be left holding your shares of a company that is now gutted.

> It’s possible that in the Google deal you had to agree to sell back the shares

But how could Google require that?

> If you didn’t agree then you would be left holding your shares of a company that is now gutted.

Which is what is sounds like he wound up doing anyways? Which I don't even understand why.

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