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Information asymetry is the way people get screwed over in financial transactions. Most potential startup employees have no idea what common or preferred share

by nissimk 11y ago

Information asymetry is the way people get screwed over in financial transactions. Most potential startup employees have no idea what common or preferred shares are. Let alone all of the other details like dilution, liquidation preference, tax implications of employee stock options and lack of liquidity in private securities. Potential startup employees should learn about these things and understand how to protect themselves. I'm sure the startups prefer to hire sheeple.

Xcelerate 11y ago
Where can one learn about these?
- nissimk 11y ago
  Search for those terms in google and see what type of explanation makes the most sense to you. There are textbook definitions, legal explanations and more business oriented explanations. Read through threads like these specifically for people's anecdotes about how they got screwed over. There's this scene in "the big short" where Eisman is talking to the credit default swap sales guys from one of the big banks. He's never traded credit default swaps before so he knows that he is at a disadvantage. He asks the sales guys, "How do I get f*cked in this deal?" And then he sticks around until they explain the scenarios to him. That's a really good lesson about financial securities. There are so many embedded options that each have a different payout scenario. You need to understand what are the potential future scenarios and how do they impact your position.
- prostoalex 11y ago
  "Consider Your Options" was recommended at one private company I worked for that was nearing exit http://fairmark.com/books-fairmark-press/consider-your-options/ http://fairmark.com/books-fairmark-press/consider-your-optio...
cubano 11y ago
Of course they should...on top of all the new tech stacks and modern dev paradigms because, of course, engineers have an infinite ability to learn. I'm not disagreeing with you, per se, but I do marvel at the sheer volume of information young engineers are expected to grok these days...
- antoinevg 11y ago
  The beauty is that any engineer who masters this information will come to realise that they hold all the keys to the kingdom.

by nissimk 11y ago

Xcelerate 11y ago

Where can one learn about these?

nissimk 11y ago
Search for those terms in google and see what type of explanation makes the most sense to you. There are textbook definitions, legal explanations and more business oriented explanations. Read through threads like these specifically for people's anecdotes about how they got screwed over. There's this scene in "the big short" where Eisman is talking to the credit default swap sales guys from one of the big banks. He's never traded credit default swaps before so he knows that he is at a disadvantage. He asks the sales guys, "How do I get f*cked in this deal?" And then he sticks around until they explain the scenarios to him. That's a really good lesson about financial securities. There are so many embedded options that each have a different payout scenario. You need to understand what are the potential future scenarios and how do they impact your position.
prostoalex 11y ago
"Consider Your Options" was recommended at one private company I worked for that was nearing exit http://fairmark.com/books-fairmark-press/consider-your-options/ http://fairmark.com/books-fairmark-press/consider-your-optio...

cubano 11y ago

Of course they should...on top of all the new tech stacks and modern dev paradigms because, of course, engineers have an infinite ability to learn. I'm not disagreeing with you, per se, but I do marvel at the sheer volume of information young engineers are expected to grok these days...

antoinevg 11y ago
The beauty is that any engineer who masters this information will come to realise that they hold all the keys to the kingdom.