5 ms·

Well, first off is not even hard to spend 800k Second, many smart people like to work.

tmikaeld 3y ago
> Well, first off is not even hard to spend 800k If you're buying a house, sure, but that's just the 1st year. > ..many smart people like to work. I do too, but life outside of work, being financially independent - that's tempting.
- arcticbull 3y ago
  You're not going to net anywhere close to 800K. As the article notes, they're talking 300K base + 500K equity (which is illiquid) at the 'highest end.' (In reality the highest end is likely quite a bit higher, but with a wide and thinly distributed band). - ... the 300K base is 177K after tax. - ... the 500K equity is ~250K after tax. Financial independence assuming the stock doesn't massively appreciate by the time you see liquidity is 5-10 years away. I mean this is good do not misunderstand me. There's a big difference between making 800K gross where 62.5% is illiquid and 800K net you can spend any time. [edit] This isn't much different than getting a staff+ role at a MAANG, which includes liquidity, but of course upside depends in your view of the relative stock performance in the coming years. Also, this is well above median, we're probably talking top 5-10% of talent.
  - j0hnyl 3y ago
    You don't think there's a market for this so called illiquid openai stock?
    - arcticbull 3y ago
      Potentially, of course, depending on a ton of factors. Stock agreements generally forbid transfers to third parties outside of like, death and divorce. Also, they're probably RSUs at this point which these secondary market companies don't like because unlike options, they can't be exercised at the holder's discretion, or shares, which the employee owns outright, they don't vest until all conditions are met (which often means until liquidity event). If the conditions aren't met within 7 years the RSUs evaporate even if the company continues to do well. So yeah you may be able to get a no-recourse loan or a forward sale, on bad terms, for the stock/cash to exercise the options. For RSUs you're either going to get even worse terms or politely told to come back once they vest. Let me know if that's not the case though.
- flashgordon 3y ago
  So. Couple of things. That is 800k tc and not base. Id say 250-300k based. But let us go with this being fully liquid and ignore vesting, exit event etc. Half of that is tax - so 400k. A (crappy?) house in the bay area is 2-3M (sam I thought was pretty adamant about RTO). Property tax is 1.25% (so about 40k a year?). Currently at 5% we are looking at 150k a year on mortgage interest alone. Private schooling is around 2-4k per kid (after tax). But let us say you are public schooling. Assume you already have a car and no desire for fancy cars. Assume you hardly eat out and don't go on vacations. Assuming you have no other expenses id say yeah it is pretty easy to spend 800k!
sillysaurusx 3y ago
I’ve lived the last year off of $120k post-tax dollars, and I’m only down to $65k. Saying that $800k is not hard to spend is unfathomable to me. The exception is if you’re buying a house. That was a big kick in the teeth to the tune of $45k or so, after closing, due to house repairs and miscellaneous life stuff. But as far as starting a family goes, it’s worth it.
- selcuka 3y ago
  I don't get it. Did you buy a house for $45K, or was that the down payment and repairs?
  - sillysaurusx 3y ago
    The latter. The house was $260k. I doubt we’ll pay it off any time soon, and it always felt silly saying you "own a house" when the bank owns it. I once asked what happens if you miss a payment after paying off 98%, and the closing lady said that the bank will repossess it.
    - cgio 3y ago
      Don't know how it works with local laws, but as far as I know, they could ,(doubt they would) repossess. Nevertheless, they would auction, take the 2% remaining, plus their admittedly ridiculous fees, and pay you back the rest. Not that it would end up a good deal, but it's not as disastrous as one would infer.
      - jacquesm 3y ago
        It would be a very bad deal because houses at auction don't fetch anywhere near their normal market value. They fetch their real value which is much lower than the value that the banks will happily allow you to borrow against (and the realtors charge their commission on). Those very same banks who quite often happen to be close buddies with the parties that happen to have the winning bid at the auction. It's a very crooked game, make sure you know the rules and who the other players are.
Tommstein 3y ago
People who say "I couldn't even spend X amount of money" (where X is some large number) suffer from a lack of imagination. I could easily find ways to blow the world's entire GDP on bullshit if I somehow had the world's GDP to play with.

> Well, first off is not even hard to spend 800k If you're buying a house, sure, but that's just the 1st year. > ..many smart people like to work. I do too, but life outside of work, being financially independent - that's tempting.

arcticbull 3y ago
You're not going to net anywhere close to 800K. As the article notes, they're talking 300K base + 500K equity (which is illiquid) at the 'highest end.' (In reality the highest end is likely quite a bit higher, but with a wide and thinly distributed band). - ... the 300K base is 177K after tax. - ... the 500K equity is ~250K after tax. Financial independence assuming the stock doesn't massively appreciate by the time you see liquidity is 5-10 years away. I mean this is good do not misunderstand me. There's a big difference between making 800K gross where 62.5% is illiquid and 800K net you can spend any time. [edit] This isn't much different than getting a staff+ role at a MAANG, which includes liquidity, but of course upside depends in your view of the relative stock performance in the coming years. Also, this is well above median, we're probably talking top 5-10% of talent.
- j0hnyl 3y ago
  You don't think there's a market for this so called illiquid openai stock?
  - arcticbull 3y ago
    Potentially, of course, depending on a ton of factors. Stock agreements generally forbid transfers to third parties outside of like, death and divorce. Also, they're probably RSUs at this point which these secondary market companies don't like because unlike options, they can't be exercised at the holder's discretion, or shares, which the employee owns outright, they don't vest until all conditions are met (which often means until liquidity event). If the conditions aren't met within 7 years the RSUs evaporate even if the company continues to do well. So yeah you may be able to get a no-recourse loan or a forward sale, on bad terms, for the stock/cash to exercise the options. For RSUs you're either going to get even worse terms or politely told to come back once they vest. Let me know if that's not the case though.
flashgordon 3y ago
So. Couple of things. That is 800k tc and not base. Id say 250-300k based. But let us go with this being fully liquid and ignore vesting, exit event etc. Half of that is tax - so 400k. A (crappy?) house in the bay area is 2-3M (sam I thought was pretty adamant about RTO). Property tax is 1.25% (so about 40k a year?). Currently at 5% we are looking at 150k a year on mortgage interest alone. Private schooling is around 2-4k per kid (after tax). But let us say you are public schooling. Assume you already have a car and no desire for fancy cars. Assume you hardly eat out and don't go on vacations. Assuming you have no other expenses id say yeah it is pretty easy to spend 800k!

sillysaurusx 3y ago

I’ve lived the last year off of $120k post-tax dollars, and I’m only down to $65k. Saying that $800k is not hard to spend is unfathomable to me. The exception is if you’re buying a house. That was a big kick in the teeth to the tune of $45k or so, after closing, due to house repairs and miscellaneous life stuff. But as far as starting a family goes, it’s worth it.

selcuka 3y ago
I don't get it. Did you buy a house for $45K, or was that the down payment and repairs?
- sillysaurusx 3y ago
  The latter. The house was $260k. I doubt we’ll pay it off any time soon, and it always felt silly saying you "own a house" when the bank owns it. I once asked what happens if you miss a payment after paying off 98%, and the closing lady said that the bank will repossess it.
  - cgio 3y ago
    Don't know how it works with local laws, but as far as I know, they could ,(doubt they would) repossess. Nevertheless, they would auction, take the 2% remaining, plus their admittedly ridiculous fees, and pay you back the rest. Not that it would end up a good deal, but it's not as disastrous as one would infer.
    - jacquesm 3y ago
      It would be a very bad deal because houses at auction don't fetch anywhere near their normal market value. They fetch their real value which is much lower than the value that the banks will happily allow you to borrow against (and the realtors charge their commission on). Those very same banks who quite often happen to be close buddies with the parties that happen to have the winning bid at the auction. It's a very crooked game, make sure you know the rules and who the other players are.

Tommstein 3y ago

People who say "I couldn't even spend X amount of money" (where X is some large number) suffer from a lack of imagination. I could easily find ways to blow the world's entire GDP on bullshit if I somehow had the world's GDP to play with.