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Value all parts of compensation that you cannot easily sell at zero. Options? Zero. RSUs for a private company? Zero. Promises for future raises? Zero. Actually

Value all parts of compensation that you cannot easily sell at zero. Options? Zero. RSUs for a private company? Zero. Promises for future raises? Zero. Actually: any promises - zero. (Promises on signed paper may sometimes be worth more than zero) Always remember that the place you work at has no (and owes no) loyalty to you. Calculate accordingly.

rinchik 7y ago
Important: same goes for bonuses, which are also practically promises, and are not guaranteed.
- the_watcher 7y ago
  Some bonuses actually are contractually guaranteed. They might be variable by performance, but every company I've worked for with a bonus plan has guaranteed some bonus outside of the absolute worst performance (in which case you should be looking for a new job long before this becomes an issue)
  - vvanders 7y ago
    Hah, may I point you to the fact that MiB writers still haven't been paid royalties[1] because the movie was never "profitable"? [1] https://twitter.com/ed_solomon/status/1139031900931198976 https://twitter.com/ed_solomon/status/1139031900931198976
    - the_watcher 7y ago
      Not really sure how pointing out that Hollywood accounting exists relates at all to my noting that some bonuses are contractually guaranteed. Such as mine, which guarantees an X-Y% of base salary bonus based on my performance.
      - vvanders 7y ago
        Yes, but was the language for your performance gone over by your own lawyer? Is there a clause for when an upstream team decides to stonewall the work you've involved with? What happens when your boss transfers and the new person you report to doesn't have any history to go on? This stuff happens all the time, although mostly at the business level. Zeroing it out is a great way to make sure you aren't in financial position where you're taking a risk on things you don't 100% control.
- southphillyman 7y ago
  Yup I value bonuses at $0 during negotiation. A few times companies have tried to low ball a counter on the base by promising an increase in bonus percentage. No thanks
xvector 7y ago
I’m in this situation right now. Got my first job 17 months ago at a FAANG. Was promised compounding RSUs every year and a bonus every year. They’ve delayed the compensation by 5 months because “I joined late.” They didn’t tell me about this until I asked about 10 months in. Hell I joined this company earlier out of college than most students. 2 weeks of vacation post-college when most students were taking 2-3 months. And now they turn around and tell me my compensation is going to be 30% less than what was promised my first year? Now, 17 months later around the review cycle they are saying that our org has less money or whatever, and compensation will be lower this cycle. I’m expecting maybe a fourth of what I was promised.
- the_watcher 7y ago
  Which FAANG company hasn't been giving you bonuses or refresher grants?
  - opportune 7y ago
    Has to be Amazon or Apple. Probably Amazon due to the skimping on RSUs and bonuses, have heard that they’re upping the PIPs lately
    - singingboyo 7y ago
      You know, it baffles me that Amazon is the only tech giant[1] that consistently sounds absolutely terrible to work at. (In my experience - YMMV) How do they keep finding engineers? [1] Well, except Intel. You don't hear about them much online, but around here the local office (not sure about others) bait-and-switches employee openings for contractor openings. They don't even pay that well, and no extra compensation either.
      - mattnewton 7y ago
        I'm sure a lot of people think the team they are joining will be different, and some of them must be right.
      - 7y ago
alexis_fr 7y ago
I valued my stock options at 0, so I left after 2,5 years in a 4 year vesting. I didn’t believe the company would IPO. It did. The founders were good types, after all. Those 2,5 years are now worth 1,7m$, which after tax is about half. I do wish I had stayed the 4 years, instead of valuing them at 0.
- dieterrams2 7y ago
  Hindsight is 20/20. It’s all about what the right decision was with the information available to you at the time, not what decision would’ve had the best outcome in retrospect.
  - Judgmentality 7y ago
    Making the right decision at the time but later finding out it was the wrong one just seems like a proclamation that it's better to be lucky than smart. I get what you're trying to say, which is finding solace knowing you did what made sense given the scenario at hand, but it ultimately says you can do the right thing and be punished and do the wrong thing and be rewarded. That said, I still agree with OP - it's good advice not to put too much stock in stock (unless it's liquid).
    - dieterrams2 7y ago
      If you play poker, you know that, for any given hand, you can make the right play but still lose. But you’ll come out net positive by repeatedly making the right play. You don’t get to play as many hands in your career as you do in a session of poker, so if you’re optimizing for income, generally speaking you should go for a job that gives you the highest guaranteed income rather than work for startups with, say, 1% odds of netting you significantly more than you would get at FAANG, for example.
      - Judgmentality 7y ago
        I agree with you - you're optimizing for the most likely scenario. My point is even if you play your cards right, you still might lose. In other words, it's better to be lucky than good.
undefined3840 7y ago
Honestly this is bad advice. Sure, you shouldn’t plan your life around striking it rich but if you’re going to take a job thinking the equity comp is worthless then you are probably choosing the wrong company and/or going to negotiate poorly. Late stage growth companies that offer RSUs can be sold on secondary markets, so even though it’s not as easy to sell it is probably not worth 0 unless something is very wrong, which again is something you should assess before accepting any offer.
- tempguy9999 7y ago
  Maybe you've had good experiences; mine are that this is excellent advice - companies are there for themselves and not (repeat: not) for you.
- adrianpike 7y ago
  Strong disagree - you absolutely need to factor in liquidity effort alongside vesting schedule and face value for equity comp, and in general for most non-public companies that liquidity capability is zero. - RSU's that I can only dump on a secondary market are worth a fraction of their face value. - Grants in a company that'll never have a liquidity event are worth a fraction of their face value. - Options in a public company are definitely worthwhile, but I shouldn't be negotiating their face value one-to-one with cash. It's possible you've had a great outcome liquidating some equity from a private company, in which case I'm super stoked for you and that's a great outcome - but it's not the norm.
  - undefined3840 7y ago
    Yes, which is why you should be negotiating for more RSUs to compensate for the additional risk and illiquidity. My point is that if you join a startup thinking your equity is and will forever be worthless, then why do you care if you get 10 or 10000 shares? To not care is bad advice for anyone joining a company that has a path toward IPO or acquisition. And if you don’t think a startup has any path then why are you joining a company that is offering you equity comp in the first place?
- nostrademons 7y ago
jdright 7y ago
This. Seriously, if you're young or new to the domain and is reading and may get yourself justifying things, STOP. This is the best advice you'll ever have.
watno382 7y ago
Cool, I have $1500 to wire for free. Do you want it? You just agree I'm now the owner of everything you mentioned. (All your stock options etc). No other obligation on your part. $1500 for free. What's your email? Oh wait. Turns out you aren't going to agree with what I just proposed as you don't actually value them at $0 hence not interested in trading $0 for $1500. Basically you're full of shit. (Lying.) If you weren't lying you would take me (or anyone) up on that offer - but obviously it's not true. For comparison if I happened to have a scratch off ticket I found on the ground that wasn't scratched off yet, I'd be thrilled to instantly trade it for $1500 to anyone, since I value it lower than the time it would take to scratch off. (I personally wouldn't spend 24/7 scratching off and trying to interpret/redeem tickets, even if I had a free supply.) So you see it is easy to see if you're lying or not.
- dmitrygr 7y ago
  You can have all the options i still own on startups i worked at for $1500 email is me@dmitry.gr Let me know when you want the wire transfer info
- soVeryTired 7y ago
  This is such a wierd response. Like, you can disagree without calling the GP a liar. He's not literally saying they're valued at zero. He's saying you shouldn't let RSUs (which are not wealth, but contractual promises of future wealth) or options (which are lottery tickets) affect your career decisions. If the difference between vesting vs. not vesting is a month or two, stick around. But most of the time you shouldn't take promises of future wealth in lieu of hard cash. Read between the lines. You don't need to take everything literally.
yohannparis 7y ago
Also, everything is negotiable! Can't negotiate the salary, negotiate on more vacations, transportation/lunch compensation, and window office, an office, laptop of your choice, etc.

rinchik 7y ago

Important: same goes for bonuses, which are also practically promises, and are not guaranteed.

the_watcher 7y ago
Some bonuses actually are contractually guaranteed. They might be variable by performance, but every company I've worked for with a bonus plan has guaranteed some bonus outside of the absolute worst performance (in which case you should be looking for a new job long before this becomes an issue)
- vvanders 7y ago
  Hah, may I point you to the fact that MiB writers still haven't been paid royalties[1] because the movie was never "profitable"? [1] https://twitter.com/ed_solomon/status/1139031900931198976 https://twitter.com/ed_solomon/status/1139031900931198976
  - the_watcher 7y ago
    Not really sure how pointing out that Hollywood accounting exists relates at all to my noting that some bonuses are contractually guaranteed. Such as mine, which guarantees an X-Y% of base salary bonus based on my performance.
    - vvanders 7y ago
      Yes, but was the language for your performance gone over by your own lawyer? Is there a clause for when an upstream team decides to stonewall the work you've involved with? What happens when your boss transfers and the new person you report to doesn't have any history to go on? This stuff happens all the time, although mostly at the business level. Zeroing it out is a great way to make sure you aren't in financial position where you're taking a risk on things you don't 100% control.
southphillyman 7y ago
Yup I value bonuses at $0 during negotiation. A few times companies have tried to low ball a counter on the base by promising an increase in bonus percentage. No thanks

xvector 7y ago

I’m in this situation right now. Got my first job 17 months ago at a FAANG. Was promised compounding RSUs every year and a bonus every year. They’ve delayed the compensation by 5 months because “I joined late.” They didn’t tell me about this until I asked about 10 months in. Hell I joined this company earlier out of college than most students. 2 weeks of vacation post-college when most students were taking 2-3 months. And now they turn around and tell me my compensation is going to be 30% less than what was promised my first year? Now, 17 months later around the review cycle they are saying that our org has less money or whatever, and compensation will be lower this cycle. I’m expecting maybe a fourth of what I was promised.

the_watcher 7y ago
Which FAANG company hasn't been giving you bonuses or refresher grants?
- opportune 7y ago
  Has to be Amazon or Apple. Probably Amazon due to the skimping on RSUs and bonuses, have heard that they’re upping the PIPs lately
  - singingboyo 7y ago
    You know, it baffles me that Amazon is the only tech giant[1] that consistently sounds absolutely terrible to work at. (In my experience - YMMV) How do they keep finding engineers? [1] Well, except Intel. You don't hear about them much online, but around here the local office (not sure about others) bait-and-switches employee openings for contractor openings. They don't even pay that well, and no extra compensation either.
    - mattnewton 7y ago
      I'm sure a lot of people think the team they are joining will be different, and some of them must be right.
    - 7y ago

alexis_fr 7y ago

I valued my stock options at 0, so I left after 2,5 years in a 4 year vesting. I didn’t believe the company would IPO. It did. The founders were good types, after all. Those 2,5 years are now worth 1,7m$, which after tax is about half. I do wish I had stayed the 4 years, instead of valuing them at 0.

dieterrams2 7y ago
Hindsight is 20/20. It’s all about what the right decision was with the information available to you at the time, not what decision would’ve had the best outcome in retrospect.
- Judgmentality 7y ago
  Making the right decision at the time but later finding out it was the wrong one just seems like a proclamation that it's better to be lucky than smart. I get what you're trying to say, which is finding solace knowing you did what made sense given the scenario at hand, but it ultimately says you can do the right thing and be punished and do the wrong thing and be rewarded. That said, I still agree with OP - it's good advice not to put too much stock in stock (unless it's liquid).
  - dieterrams2 7y ago
    If you play poker, you know that, for any given hand, you can make the right play but still lose. But you’ll come out net positive by repeatedly making the right play. You don’t get to play as many hands in your career as you do in a session of poker, so if you’re optimizing for income, generally speaking you should go for a job that gives you the highest guaranteed income rather than work for startups with, say, 1% odds of netting you significantly more than you would get at FAANG, for example.
    - Judgmentality 7y ago
      I agree with you - you're optimizing for the most likely scenario. My point is even if you play your cards right, you still might lose. In other words, it's better to be lucky than good.

undefined3840 7y ago

Honestly this is bad advice. Sure, you shouldn’t plan your life around striking it rich but if you’re going to take a job thinking the equity comp is worthless then you are probably choosing the wrong company and/or going to negotiate poorly. Late stage growth companies that offer RSUs can be sold on secondary markets, so even though it’s not as easy to sell it is probably not worth 0 unless something is very wrong, which again is something you should assess before accepting any offer.

tempguy9999 7y ago
Maybe you've had good experiences; mine are that this is excellent advice - companies are there for themselves and not (repeat: not) for you.
adrianpike 7y ago
Strong disagree - you absolutely need to factor in liquidity effort alongside vesting schedule and face value for equity comp, and in general for most non-public companies that liquidity capability is zero. - RSU's that I can only dump on a secondary market are worth a fraction of their face value. - Grants in a company that'll never have a liquidity event are worth a fraction of their face value. - Options in a public company are definitely worthwhile, but I shouldn't be negotiating their face value one-to-one with cash. It's possible you've had a great outcome liquidating some equity from a private company, in which case I'm super stoked for you and that's a great outcome - but it's not the norm.
- undefined3840 7y ago
  Yes, which is why you should be negotiating for more RSUs to compensate for the additional risk and illiquidity. My point is that if you join a startup thinking your equity is and will forever be worthless, then why do you care if you get 10 or 10000 shares? To not care is bad advice for anyone joining a company that has a path toward IPO or acquisition. And if you don’t think a startup has any path then why are you joining a company that is offering you equity comp in the first place?
nostrademons 7y ago

jdright 7y ago

This. Seriously, if you're young or new to the domain and is reading and may get yourself justifying things, STOP. This is the best advice you'll ever have.

watno382 7y ago

Cool, I have $1500 to wire for free. Do you want it? You just agree I'm now the owner of everything you mentioned. (All your stock options etc). No other obligation on your part. $1500 for free. What's your email? Oh wait. Turns out you aren't going to agree with what I just proposed as you don't actually value them at $0 hence not interested in trading $0 for $1500. Basically you're full of shit. (Lying.) If you weren't lying you would take me (or anyone) up on that offer - but obviously it's not true. For comparison if I happened to have a scratch off ticket I found on the ground that wasn't scratched off yet, I'd be thrilled to instantly trade it for $1500 to anyone, since I value it lower than the time it would take to scratch off. (I personally wouldn't spend 24/7 scratching off and trying to interpret/redeem tickets, even if I had a free supply.) So you see it is easy to see if you're lying or not.

dmitrygr 7y ago
You can have all the options i still own on startups i worked at for $1500 email is me@dmitry.gr Let me know when you want the wire transfer info
soVeryTired 7y ago
This is such a wierd response. Like, you can disagree without calling the GP a liar. He's not literally saying they're valued at zero. He's saying you shouldn't let RSUs (which are not wealth, but contractual promises of future wealth) or options (which are lottery tickets) affect your career decisions. If the difference between vesting vs. not vesting is a month or two, stick around. But most of the time you shouldn't take promises of future wealth in lieu of hard cash. Read between the lines. You don't need to take everything literally.

yohannparis 7y ago

Also, everything is negotiable! Can't negotiate the salary, negotiate on more vacations, transportation/lunch compensation, and window office, an office, laptop of your choice, etc.