4 ms·

Does this change anything? If I don't have $20,000 90 days after I quit, why do you think I'll have $20,000 7 years later?

by jbob2000 11y ago

technotony 11y ago
Well presumably you'd exercise at some kind of liquidity event so you can borrow the money for a short period of time. Lots of people will lend you $20k if more than that is coming back soon. Of course if they haven't excited in 7 years then you still have the problem but at least then you'll have a clearer idea of whether the company is going to be valuable and if it's worth excising.
- djrogers 11y ago
  No need to borrow money if the stock is liquid, you can perform a 'sell to cover' transaction, in which your options are exercised and enough of your stock options are sold to pay for that at the same time. Any broker can handle that without a loan required.
patio11 11y ago
You might have been successful in saving $55 a week as a gainfully employed professional. You might be more willing to risk $20k given that the situation in 7 years is "The company is IPOed and there exists a highly liquid market for its stock" versus "It is entirely possible that I pay $20k and get nothing of value in return." You might, given a similar situation, convince any number of reputable financial institutions to advance you $20k in the anticipation that you'll be able to pay it back with ease (and are shortly going to be the sort of customer that reputable financial institutions try very, very hard to make happy). You might simply benefit from having 7 years to find a few days and mental headspace to figure out what to do with your equity. Silicon Valley is rife with folks who lost exits, some small and some very-not-small, simply because in a stressful situation where they were switching jobs / apartments / marriages / etc day 91 came and went. This is invariably in employees' interest.
bcherry 11y ago
7 years is a long time for the company to IPO, get acquired, or at least demonstrate enough long-term value that convinces you to find a way to exercise those options.
beaner 11y ago
The most likely scenario is that the company would have an exit event in that time, in which case you would purchase your options and have them liquidated in the same moment, meaning you do not actually spend anything, you simply receive what your stock is worth.

Does this change anything? If I don't have $20,000 90 days after I quit, why do you think I'll have $20,000 7 years later?

technotony 11y ago

Well presumably you'd exercise at some kind of liquidity event so you can borrow the money for a short period of time. Lots of people will lend you $20k if more than that is coming back soon. Of course if they haven't excited in 7 years then you still have the problem but at least then you'll have a clearer idea of whether the company is going to be valuable and if it's worth excising.

djrogers 11y ago
No need to borrow money if the stock is liquid, you can perform a 'sell to cover' transaction, in which your options are exercised and enough of your stock options are sold to pay for that at the same time. Any broker can handle that without a loan required.

patio11 11y ago

You might have been successful in saving $55 a week as a gainfully employed professional. You might be more willing to risk $20k given that the situation in 7 years is "The company is IPOed and there exists a highly liquid market for its stock" versus "It is entirely possible that I pay $20k and get nothing of value in return." You might, given a similar situation, convince any number of reputable financial institutions to advance you $20k in the anticipation that you'll be able to pay it back with ease (and are shortly going to be the sort of customer that reputable financial institutions try very, very hard to make happy). You might simply benefit from having 7 years to find a few days and mental headspace to figure out what to do with your equity. Silicon Valley is rife with folks who lost exits, some small and some very-not-small, simply because in a stressful situation where they were switching jobs / apartments / marriages / etc day 91 came and went. This is invariably in employees' interest.

bcherry 11y ago

7 years is a long time for the company to IPO, get acquired, or at least demonstrate enough long-term value that convinces you to find a way to exercise those options.

beaner 11y ago

The most likely scenario is that the company would have an exit event in that time, in which case you would purchase your options and have them liquidated in the same moment, meaning you do not actually spend anything, you simply receive what your stock is worth.