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Can anyone who's been though an IPO comment on what happened to the early employees with their 0.1% stake (of the original 10 million shares)? Everyone understa
by 100k 11y ago
Can anyone who's been though an IPO comment on what happened to the early employees with their 0.1% stake (of the original 10 million shares)? Everyone understands that they'll get diluted with new rounds, but when I read that Dorsey's giving away 40,000,000 shares I wonder what happened to the poor sap who started with 10,000. Do companies typically issue more options or RSUs to existing employees? How many?
- ChuckMcM 11y agoVaries from company to company. But every startup I've been in, and a couple of larger companies, gave "refresher" grants to folks annually. That keeps employees from being fully vested and helps skew equity toward the employees who are contributing the most.
- transitorykris 11y agoDilution isn't the only possibility here. Stock splits also happen.
- 100k 11y agoThanks. I was wondering about that, but had never heard of a split in a private company.
- tyre 11y agoIt's more common than you think. I was an early engineer at ZenPayroll (now Gusto) and they split the stock 10-to-1 in their last round. As the company grows and the value of the stock goes up, it becomes difficult to give granular stock options. Rarely publicized because it doesn't mean anything. Owning 5/1000 shares or 50/10000 is the same.
- hkmurakami 11y agoThe split definitely helps nudge a new hire to be happier with the offer, all things, being equal, because many hires are still unknowledgeable about the fact that the number of options is irrelevant (like you say), and there is also the subconscious satisfaction of seeing big numbers next to our names that is hard to fight.
- koberstein 11y agoMcDonalds has done it 12 times.