iykwimthrowaway

Basically what would be a 65 at bigco2 (MSFT)

Note that options have turned out to be pretty mediocre on average for me. $400k over 9 years at MSFT was a significant chunk of compensation, but they weren't life-changing. It's possible that startup2 can still make me a bunch of money, because I own the stock and they're profitable, but I basically count the probability as 0. Get RSUs.

more data

  1990 - 7.50/hr software testing @ bigco1
  1992 - $24/hr software testing @ bigco1
  1994 - $40/hr developer @ bigco1
  1996 - $54k developer @ bigco1
  1997 - $58k developer @ bigco2, options-heavy comp (worth ~$400k over 9 years)
  2006 - $120k developer @ startup1, options-heavy (worthless)
  2008 - $120k developer @ startup2, options-heavy (worthless)
  2016 - $290k developer @ bigco3
  2017 - $360k developer @ bigco3
  2018 - $405k developer @ bigco3

verdict: bigco

second verdict: perusing the timelines, I am old AF

Yeah, that seems good, but I'm suggesting the plan for "some other form of liquidity" be a little more explicitly stated. I know this isn't what plays well with the HN crowd, but there are other paths to success besides the explosive exit, and one of those is spending a long time building a good solid business, which can take more than 10 years.

If there's a good path to the employee owning their shares (or some fraction thereof) outright, that is more desirable in some ways than an outstanding option agreement with a ticking clock.

I would ask the OP to consider going even further and figuring out a way to facilitate some liquidity so the employees could sell enough to cover their taxes even if they don't do early exercise.

You have employees who own shares but need a nontrivial amount of cash to cover taxes. You have investors who may be interested in acquiring more shares (or the company may want to buy them itself). You have a notion of a current valuation of the shares. Broker a sale at a price that's beneficial to both parties.

What is the company's incentive to block such a transaction?

I'd love to see this become standard.

Another alternative could be what my company did for me: they gave me special permission to sell some number of my shares to one of their investors, who were always hungry for more shares. This allowed me to exercise all of my options, then sell off just enough to cover my tax consequences.

This seemed like an extremely good-faith maneuver on my company's part: they acknowledged that my options were a reward for past work, and they didn't want me to miss out on the benefit of those just due to some tax-related time pressure. They also knew it was really no skin off their nose if the investors got to acquire more shares at a price they deemed fair.

Raises have of course been requested and granted. My salary isn't really what's at stake here and any raise I could ask for is dwarfed by the potential value of shares sitting on the table that I simply don't know how to get money out of. What are you imagining I'd ask for when you say "help with the stock option problem?" Ask them to buy me out?

> considering yourself a "potential owner" when you're not invited to the meetings where owners decide things means you are very confused about things

Well gosh, I don't think there's any need to get nasty about it. I may be naive but give me a break. When I refer to ownership I'm obviously simply referring to being a shareholder. No, I am not invited to board meetings, but as far as I know, neither is anybody else who's not exec staff. Is this unusual?

The options are on common shares. Can you elaborate on schemes in which common shares are made to become worthless? I have been explicitly told that there are no liquidation preference multipliers on the preferred shares, and the valuation is well above where that would matter. So what sorts of shenanigans would make my shares worth less? Please be specific if you don't mind. It may be a dumb question, but just telling me I'm dumb isn't really getting the point across.

Regarding going to {GOOG,FB,AMZN,MSFT}, I've actually already been through a couple of those and experienced the "real compensation packages and stock plans" and got a couple pretty respectable windfalls out of them, but I've decided the tradeoffs aren't worth it. Job satisfaction absolutely can't be beat where I am, and that's worth a lot to me. That doesn't mean I don't wonder what my n% is actually worth and how specifically that works.

I'm very curious about the middle part of this spectrum, since I'm currently in it: I'm an early employee with a significant chunk of options (high single-digit %), and the company is profitable and valued at (to my understanding) somewhere well over 10x the total amount of funding we took (I've heard talk of 40-50x). Management is explicitly not looking for an exit: they just want to keep building this company for the long term. My salary started on the low side for my career, but was reasonable, and it has slowly ratcheted up over time to the point where I think it's certainly fair but I could be making more elsewhere. On the whole, it feels like I have a large chunk of (potential) ownership in something very successful.

My question is: how does this actually benefit me in the big picture? I'm approaching the 10 year date when my options agreement is going to EXPIRE, and it's still unclear to me whether I should exercise them, because as far as I can tell, they're just very expensive (when you consider the tax implications) paper. What's the endgame for this success story putting cash in my pocket? Profit-sharing? Other than the usual big-bang exits you read about, I have no clue.