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I took a job as employee #5 of a startup, in 2002. $50k per year and 1% of the company. I thought cool all we need to do is sell for like $100 and something mil
by psyc 5y ago
I took a job as employee #5 of a startup, in 2002. $50k per year and 1% of the company. I thought cool all we need to do is sell for like $100 and something million and I’ll be a millionaire, as we all agree is my birthright as a software developer.
3 years later I’m totally burned out and the company seems to be going nowhere. I agonize over giving up my 1% ticket if I quit. I quit.
They did sell the company. 10 years later. For $28 mil. So I would have made an extra $28k per year on top of the $50k. To be clear, I came out way ahead by leaving.
- break_the_bank 5y agoAssuming a standard vesting schedule of 4 years. Wouldn’t you have left with 0.75% of equity? I wonder if any money would have been left after dilution and preferred shares.
- psyc 5y agoThere was no vesting in this case. The shares were explicitly conditional on current employment when they became eligible to be exercised. Mind you I'm next to clueless about options, but I remember that language being in whatever I signed.
- pengaru 5y agoUsually there's a 1-year 25% cliff, then the remaining 75% vests monthly over the remaining 3-years, at least that was commonplace a decade ago. So at 3 years on such a schedule you would have been able to exercise 75% of the initial grant.
- psyc 5y agoBased on what valuation? Sell them to who? It was a privately owned company. I doubt I'd have been able to persuade the founder to buy my stake considering I'd signed a thing that said I get nothing if I quit before they exit.
- pengaru 5y agoNothing remotely resembling a standard 4-year vesting schedule... But being guaranteed 1% stake on exit in writing is in some ways better. Most folks w/options are getting heavily dilluted with every round of funding, but at least they can exercise and move on for more lotto tickets after 1 year.
- b112 5y agoEvery time I visit the valley I buy lottery tickets. Seems appropriate to me, and more viable.
- konschubert 5y agoI can confirm that the kind of option plans as psyc describes them exist. At least in Germany.
- pengaru 5y agoUnless your options grants included some antidillution clause (unlikely) you didn't have anywhere near 1% 10 years later.
- psyc 5y agoIt was stated in writing as 1% of shares at exit time, not as a number of shares. Again, I'm clueless about options. But this was way outside of silicon valley and among people who couldn't care less how things are done there. For example, there was no VC involvement.
- TameAntelope 5y agoThat's just... very abnormal. I've never heard of "percentage at exit". I assume it'd work mechanically by setting aside 1% of total shares for you, and keeping that leveled out at 1% after each dilution event or something. Honestly not that bad, good for them, bad for you I think, for exactly why it ended up not working out.