4 ms·
The Uber/Airbnb/Dropbox/(Facebook X years before IPO) type company give RSUs. They have the typical 4 year vesting schedule and an IPO condition. If you leav
by mahyarm 10y ago
The Uber/Airbnb/Dropbox/(Facebook X years before IPO) type company give RSUs. They have the typical 4 year vesting schedule and an IPO condition. If you leave the company before IPO but have stayed long enough to meet the 1yr mark, then you will get that 1yr vested stock units when the IPO occurs.
They are like option grants that last about 7-10 years, that exercise on IPO/acquisition and don't let you exercise before then.
So with these companies, all of the tax complexity goes away, and you don't have the 'if I leave after 2 years, all of my stock options go away after 90 days' dilemmas. You don't have the rich man option of pre-exercising to potentially get some long term capitol gains tax savings although. If the trump administration gets rid of the AMT stock option trap, then you will also not have that advantage with ISO-type stock options.
Since IPO is the realistic condition for these companies, you also will have the 6 month SEC lockup period. The company might add their own additional lockup period afterwards too.
----
The attraction about joining these companies a few years before probable IPO is you have not insignificant potential to increase your income above the average tech worker income level. Facebook is the success example, twitter, fitbit, etc are the not as successful example. You can also get similar effects by joining apple before the iPhone was released or during the early iPhone years.
It's definitely a risk, but isn't as risky as joining a startup where you can't see an IPO in it's future any time soon.
- hkmurakami 10y ago> So with these companies, all of the tax complexity goes away, and you don't have the 'if I leave after 2 years, all of my stock options go away after 90 days' dilemmas. One Caveat: if your RSU terms are that you "vest" your vested RSUs when you leave the company before IPO, you'll have a substantial tax burden on a grant of illiquid equity. This will be effectively the same as the option lock in scenario we've been discussing here for several years now. I know that some companies don't have such a clause, but it's entirely conceivable that some do. So yeah, read your RSU contract! :)
- home_boi 10y ago> The attraction about joining these companies a few years before probable IPO is you have not insignificant potential to increase your income above the average tech worker income level. I would argue that it is more about having the power to make a big difference (however cliche that sounds) and working on new projects (as opposed to maintaining code)
- quanticle 10y agoExcept that it's still totally possible to make a big difference working at Facebook, Google, Amazon, Microsoft, etc, if you choose the right team. And it's entirely possible to be marginalized or sidelined at a late-stage startup. The two concerns, to me, are almost orthogonal.
- dagw 10y agoI would argue that it is more about having the power to make a big difference The biggest difference I ever made was while working for a big established 10k+ employee firm. The smallest was while working for 10-15 employee startup.