4 ms·

Stock option questions startup employees should ask

15 points by gasull 10y ago

bsaul 10y ago
The effect this complexity in option and stock rules had on me is that i simply don't care about options anymore. First, you don't know if the company's going to make it, then you don't know for sure how much tax you're going to have to pay, and finaly you may still need to read the fine prints on the option and make some computations on the company's financial structure... Do people actually realize options used to be an incentive to recruit high profiles ? Bringing wall street complexity into the deal isn't going to make it more attractive...
- YuriNiyazov 10y ago
  I've heard sentiments similar to yours be expressed many times, and I find them difficult to understand. You are a software engineer, or at least, your comment history seems to suggest that strongly. That means that you are comfortable with complexity, you are capable with assimilating incredibly abstruse information about how computers work, are comfortable with using abstractions, and also are capable of prying the abstractions open and looking inside when the situation calls for it. You are also comfortable with, when encountering some arcane shit like Unix signals, saying "well, that's what they came up with back then, and it could've been done better, but now we are just dealing with it". Understanding the fine print of stock options and understanding how financing works has all of those components, but is much simpler than large-scale software engineering. Why wouldn't you spend a weekend getting as deeply into equity as possible, and understanding the complexity? It will have a higher ROI than spending a weekend learning the new language or framework du jour. edit: minor clarifications.
  - victorhooi 10y ago
    My undergrad was in comp. engineering and finance - and yes I did work in finance, although I'm now in tech. I find it hard to understand how to price many options grants, and I would still say I regard it as a gamble. To think you can become an expert in options theory, or how to price them in a weekend is a bit ambitious (if not outright hubris). There are people's who entire jobs is to try and figure out whether a particular option is priced correctly or not (or whether it will even make money or not). And even they get it wrong fairly often. And that's just the pricing. Then there's all the legal mumbo-jumbo around them. Sure, we nerds might think we're smart, but we can't become an expert in any subject just like that =). Of course, if you happen to have a CS or engineering background, combined with a law degree and a finance degree, you might stand a chance...haha.
    - YuriNiyazov 10y ago
      Did I say "expert"? I certainly don't expect one to become an expert. But basic understanding, enough not to get screwed? Yes, I expect one to understand the basics in a weekend.

15 points by gasull 10y ago

bsaul 10y ago

The effect this complexity in option and stock rules had on me is that i simply don't care about options anymore. First, you don't know if the company's going to make it, then you don't know for sure how much tax you're going to have to pay, and finaly you may still need to read the fine prints on the option and make some computations on the company's financial structure... Do people actually realize options used to be an incentive to recruit high profiles ? Bringing wall street complexity into the deal isn't going to make it more attractive...

YuriNiyazov 10y ago
I've heard sentiments similar to yours be expressed many times, and I find them difficult to understand. You are a software engineer, or at least, your comment history seems to suggest that strongly. That means that you are comfortable with complexity, you are capable with assimilating incredibly abstruse information about how computers work, are comfortable with using abstractions, and also are capable of prying the abstractions open and looking inside when the situation calls for it. You are also comfortable with, when encountering some arcane shit like Unix signals, saying "well, that's what they came up with back then, and it could've been done better, but now we are just dealing with it". Understanding the fine print of stock options and understanding how financing works has all of those components, but is much simpler than large-scale software engineering. Why wouldn't you spend a weekend getting as deeply into equity as possible, and understanding the complexity? It will have a higher ROI than spending a weekend learning the new language or framework du jour. edit: minor clarifications.
- victorhooi 10y ago
  My undergrad was in comp. engineering and finance - and yes I did work in finance, although I'm now in tech. I find it hard to understand how to price many options grants, and I would still say I regard it as a gamble. To think you can become an expert in options theory, or how to price them in a weekend is a bit ambitious (if not outright hubris). There are people's who entire jobs is to try and figure out whether a particular option is priced correctly or not (or whether it will even make money or not). And even they get it wrong fairly often. And that's just the pricing. Then there's all the legal mumbo-jumbo around them. Sure, we nerds might think we're smart, but we can't become an expert in any subject just like that =). Of course, if you happen to have a CS or engineering background, combined with a law degree and a finance degree, you might stand a chance...haha.
  - YuriNiyazov 10y ago
    Did I say "expert"? I certainly don't expect one to become an expert. But basic understanding, enough not to get screwed? Yes, I expect one to understand the basics in a weekend.