491–500 of 586 posts
When pre-ipo options are granted, is the company required to tell the number of fully diluted shares outstanding? Without the denominator it is impossible to estimate the value. If they refuse to tell it or are secretive, does the employee have any recourse?
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Yeah, that's the calculation that bums me out too. It's one of the reasons I am somewhat loathe to ever put in too much "extra" time anymore. I enjoy being a part of a startup for more than just the lottery ticket aspect, I enjoy creating things from scratch, etc. But the days of burning the candle at midnight are gone.
In startups, man exploits man. At other employers, it's the other way around.
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Most countries have sane tax codes that say you only owe taxes when there's a liquidity event for you. The US is exceptionally bad in this respect of taxing illiquid paper profits, and of onerous lockup periods (SEC rule 144). An investment of mine that yielded 5X exit transaction ended up being 1.3X for those reasons, and I was lucky - if it closed a couple of months earlier, I would end up with 40% loss and a usele…
I Canada I can defer paying the (income) taxes on the options exercise until 'deemed disposition', which unfortunately also includes going bankrupt. And the possibility to count the capital loss against the income is severely restricted.
This has caused me some level of sadness in the past. I worked for a startup (started 6mo after founding with only 20 people and stayed for 8 years to 200+ people and 50million in revenue). During a number of phases, I worked for months at a time giving up weekends, late nights, holidays and even vacation time to get product out the door and beat the competition. I racked up 50k options, mostly all for less than a do…
> None of the thousands of extra hours I worked (I kept track) counted for anything Yep, that's exactly what your management was counting on.
When I came back, they'd moved and I had the best cubicle reserved for my return. They missed me but only because I forced the issue.
This has caused me some level of sadness in the past. I worked for a startup (started 6mo after founding with only 20 people and stayed for 8 years to 200+ people and 50million in revenue). During a number of phases, I worked for months at a time giving up weekends, late nights, holidays and even vacation time to get product out the door and beat the competition. I racked up 50k options, mostly all for less than a do…
However, and I don't know how to put this more kindly, but I can't help but wonder if you understood how options work while employed at the company?
A simple technique to avoid having to quickly come up with a lump sum is to set aside enough money to excercise your options as you accumulate them.
In this case putting aside $4,250/year earmarked for exercising your stock options would have allowed you to save the $34k required.
Time for a Bay Area tea party?
Is there any reason why it might be advantageous to exercise early? My current plan is just to see how the IPO goes and then consider exercising at that point - it means a lower risk for me because I'll know exactly what they're worth and if they're even worth buying.
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The US really does have a lot of problems with their tax system to be honest. For a country whose citizens outwardly hate tax, you'd think they would have one of the best, most straightforward, and fair tax systems in the world. But instead you have one of the most convoluted, loopholey, broken systems in the world. Whereas in countries where taxes aren't as "hated" (Europe, Canada, etc) they don't pay a cent to file…
It's pretty funny. You get the same tax load in most of canada compared to california, yet the tax laws have far less gotchas like these and you get universal health care. The canada gotcha's are: 1. Everything is more expensive. 2. Housing is overpriced in employement metros except alberta. 3. You get paid a lot less than the USA anyway. 4. Canada's stock market is pretty much flat compared to the USA in the past de…
As always the main rule you need to live by is value the equity at zero and you'll be (maybe) happy. Short of being a founder (and thus not really being offered equity) I have never treated these things as anything beyond a minor on paper "bonus". Given you'd be lucky to get anything more than 1% even as a first employee I find them next to worthless as early stage motivators. Which is how everyone seems to play it -…
Assuming equity is worthless the base salary has to be north of 200K to match the market rate (for low level software engineers) for public tech companies. In most Unicorns that's definitely not the case. In fact when I interviewed for Uber they explicitly said that their base salary is low compared to Google/FB but they make it up in equity.