4 ms·

I think what you mean to say is that the modal payout of stock options is $0, which could be true (source?). But even something that could typically return 0 i

I think what you mean to say is that the modal payout of stock options is $0, which could be true (source?). But even something that could typically return 0 is valuable to own.

scarface_74 3y ago
It’s a well known statistic that only one out of ten startups “succeed” and by “success” it just means investors got their money back. It doesn’t mean that employees got anything meaningful. https://www.failory.com/blog/startup-failure-rate https://www.failory.com/blog/startup-failure-rate Stock options are also mostly illiquid and you don’t know the value of what you’re holding. My RSUs in a public company are vested every six months. I know the potential value of those options just by looking at my spreadsheet and I can see the value updated almost real time (the GoogleFinance function). How long have Stripe employees been waiting on their company to go public?
- hgsgm 3y ago
  Do you you think most employees are at brand new startups, or at larger near-liquidity companies?
  - scarface_74 3y ago
    How is that “near liquidity” working out for Stripe employees? And a lot of companies thought they were “near liquidity” until the bottom fell out of the IPO market and the public got wise to thought that it might not be a good idea to invest in a money losing company where all of the upside had already been captured by the private investors. And then the other out use to be getting acquired. But that’s not happening as much now because of the combination of high interest rates and more aggressive anti trust enforcement (I’m not saying whether that is good or bad). Every startup I’ve ever spoken to has promised that they are near an exit. But when I was on the corp dev side of compensation, I valued that at $0 and made sure I was at market - which wasn’t hard as a journeyman CRUD developer living in metro Atlanta. Now that I’m on the other side and have BigTech on my resume (cloud consulting department), startups are always trying to pull me in as an “architect” and occasionally a “CTO” (really just an overinflated title) and dangling “equity” at me. I would much rather have RSUs deposited in my brokerage account every six months.
- georgeecollins 3y ago
  Yeah but again, if you have those options that usually are worthless, I will still buy them off of you because I understand that something that has a lifetime value between 0 and X is not valued at 0. Anecdotally, I have worked at companies that had ESOPs (does anyone do that anymore?), options in public companies, stock in a private start up and RSUs. Often they were worthless but at the end of the day they were also worth more than all the salary I got. You can't assume an option will be worth anything, but I think you should take them.
  - scarface_74 3y ago
    But I could basically assume that my four year initial stock grant would be worth something when they vested and I knew I could sell them on the day they vested and diversify. The longer you work at a private company with illiquid “equity”, the less diversified you are, waiting, hoping and praying that an exit event would happen and you aren’t able to sell when you need cash.

I think what you mean to say is that the modal payout of stock options is $0, which could be true (source?). But even something that could typically return 0 is valuable to own.

scarface_74 3y ago

It’s a well known statistic that only one out of ten startups “succeed” and by “success” it just means investors got their money back. It doesn’t mean that employees got anything meaningful. https://www.failory.com/blog/startup-failure-rate https://www.failory.com/blog/startup-failure-rate Stock options are also mostly illiquid and you don’t know the value of what you’re holding. My RSUs in a public company are vested every six months. I know the potential value of those options just by looking at my spreadsheet and I can see the value updated almost real time (the GoogleFinance function). How long have Stripe employees been waiting on their company to go public?

hgsgm 3y ago
Do you you think most employees are at brand new startups, or at larger near-liquidity companies?
- scarface_74 3y ago
  How is that “near liquidity” working out for Stripe employees? And a lot of companies thought they were “near liquidity” until the bottom fell out of the IPO market and the public got wise to thought that it might not be a good idea to invest in a money losing company where all of the upside had already been captured by the private investors. And then the other out use to be getting acquired. But that’s not happening as much now because of the combination of high interest rates and more aggressive anti trust enforcement (I’m not saying whether that is good or bad). Every startup I’ve ever spoken to has promised that they are near an exit. But when I was on the corp dev side of compensation, I valued that at $0 and made sure I was at market - which wasn’t hard as a journeyman CRUD developer living in metro Atlanta. Now that I’m on the other side and have BigTech on my resume (cloud consulting department), startups are always trying to pull me in as an “architect” and occasionally a “CTO” (really just an overinflated title) and dangling “equity” at me. I would much rather have RSUs deposited in my brokerage account every six months.
georgeecollins 3y ago
Yeah but again, if you have those options that usually are worthless, I will still buy them off of you because I understand that something that has a lifetime value between 0 and X is not valued at 0. Anecdotally, I have worked at companies that had ESOPs (does anyone do that anymore?), options in public companies, stock in a private start up and RSUs. Often they were worthless but at the end of the day they were also worth more than all the salary I got. You can't assume an option will be worth anything, but I think you should take them.
- scarface_74 3y ago
  But I could basically assume that my four year initial stock grant would be worth something when they vested and I knew I could sell them on the day they vested and diversify. The longer you work at a private company with illiquid “equity”, the less diversified you are, waiting, hoping and praying that an exit event would happen and you aren’t able to sell when you need cash.