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This reflects one of the more notable changes of late in the basic SV startup template. More companies are going with so-called "extended" exercise windows, con

This reflects one of the more notable changes of late in the basic SV startup template. More companies are going with so-called "extended" exercise windows, converting from 90-day-window ISOs to multi-year-window NSOs upon exit. Zach Holman (ex-Github) wrote a short, fun post on this a couple years ago.[1] Y Combinator has made it their standard around when Pinterest did it as well.[2] It was fun to watch Andreessen Horowitz criticize[3] ten year windows and then backtrack[4] after a public flogging. That was when the power balance shifted towards more employee-friendly terms. The part of this I'm still trying to figure out is when does it makes sense to offer RSUs over ISO/NSOs. My general sense is it works better for bigger companies than tiny startups, but I forget the details. [1] https://zachholman.com/posts/fuck-your-90-day-exercise-window/ https://zachholman.com/posts/fuck-your-90-day-exercise-windo... [2] https://news.ycombinator.com/item?id=11198991 https://news.ycombinator.com/item?id=11198991 [3] "A 10-year exercise window is really a direct wealth transfer from the employees who choose to remain at the company" https://a16z.com/2016/06/23/options-timing/ https://a16z.com/2016/06/23/options-timing/ [4] "the 90-day exercise essentially pits cash-rich employees against cash-poor ones. And that isn’t right." https://a16z.com/2016/07/26/options-plan/ https://a16z.com/2016/07/26/options-plan/

hkmurakami 9y ago
RSUs vs ISOs > before a priced round (83b is cheap at this point), and after you're a massive company, say $2-5B range (option upside is too small so you put a double trigger vest clause in to protect employees from taxes on illiquid shares)
- jalonso510 9y ago
  Early stage would be plain Restricted Stock, as opposed to Restricted Stock Units, which are what is typically granted later on once the company gets large. RSUs are "units" not actual shares of stock with associated ownership rights. The recipient gets an award calculated based on the value of the stock, without actually owning stock.
look_lookatme 9y ago
> A 10-year exercise window is really a direct wealth transfer from the employees who choose to remain at the company and build future shareholder value, to former employees who are no longer contributing to building the business/ its ultimate value. This is an investor bias toward recency that is ugly to see laid out so clearly. Work, foundational work even, only has intrinsic value if it happens between board meetings. On top of that, it's presented as a kind of wage-earner on wage-earner theft. Incredible.
mrep 9y ago
Here is the discussion where a16z gets flogged: https://news.ycombinator.com/item?id=11963551 https://news.ycombinator.com/item?id=11963551

hkmurakami 9y ago

RSUs vs ISOs > before a priced round (83b is cheap at this point), and after you're a massive company, say $2-5B range (option upside is too small so you put a double trigger vest clause in to protect employees from taxes on illiquid shares)

jalonso510 9y ago
Early stage would be plain Restricted Stock, as opposed to Restricted Stock Units, which are what is typically granted later on once the company gets large. RSUs are "units" not actual shares of stock with associated ownership rights. The recipient gets an award calculated based on the value of the stock, without actually owning stock.

look_lookatme 9y ago

> A 10-year exercise window is really a direct wealth transfer from the employees who choose to remain at the company and build future shareholder value, to former employees who are no longer contributing to building the business/ its ultimate value. This is an investor bias toward recency that is ugly to see laid out so clearly. Work, foundational work even, only has intrinsic value if it happens between board meetings. On top of that, it's presented as a kind of wage-earner on wage-earner theft. Incredible.

mrep 9y ago

Here is the discussion where a16z gets flogged: https://news.ycombinator.com/item?id=11963551 https://news.ycombinator.com/item?id=11963551