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It's not just your friend: a lot of people have given up on options. Obviously they're underrepresented here on HN because this is a startup-focused forum, but

It's not just your friend: a lot of people have given up on options. Obviously they're underrepresented here on HN because this is a startup-focused forum, but I know many, many people who have concluded "options have an EV of zero, startups pay options in lieu of market-rate salary, therefore startups are a raw deal; I will only go to FAANGs". They're sort of a dark matter universe since they are only visible in their absence here, but I do think that startups don't have access to the same talent pool as they used to, and sooner or later this will catch up with the ecosystem.

yieldcrv 3y ago
it looks like bi-modal distribution of compensation in tech, where there are tech startups paying one amount and options, and FAANG paying another amount plus liquid shares but crypto organizations have added another wrench for more than half a decade, leaving the other startups aside, they are startups paying one amount, and skipping the options and paying their employees RSUs of their liquid crypto tokens, competing directly with FAANGs on compensation as employees can sell those tokens just as - or even more easily - than they can sell shares in a brokerage account I'm saying it as if its news because the crowd here relies on people they respect saying the same thing to believe it in the absence of public and common knowledge, and that likely hasn't happened in the topic of anything crypto/web3 industry here
yieldcrv 3y ago
> startups pay options in lieu of market-rate salary this is true but this is largely due to an unworkable tax treatment of giving out illiquid shares to employees that rely on employment for money, and the longstanding tax regime would seek to tax employees that have higher value shares even if they can't get cash to pay for it. so this has left private companies in an uncompetitive situation with options as the poor workaround, analogous to chemotherapy where it hurts everyone in the absence of a better treatment, but you might come out ahead
pfooti 3y ago
This is me. I work at a FAANG, about half of my very good compensation is in RSUs. All the startup companies I've talked to (I don't turn down recruiters out of hand) seem to like my skill set, but cannot really meet my comp requirements without valuing options as if they were 100% guaranteed to convert at the current high valuation. It's a bummer - startups do a lot of really cool stuff, but I'm at a point in my career where I can no longer really gamble that the options will pay out. I need the stability and mortgage paying power of actual comp.
- Xcelerate 3y ago
  I wouldn’t discount startups altogether. I was previously at a FANG company when a startup doing some exciting work in a really interesting space offered to match my total comp in cash, plus the equivalent in options based on their recent valuation. All fully remote. At the time, the company I was at seemed to be going downhill quickly, and they began mass layoffs for the first time shortly after I left. What happened since then? Well, the startup options have very likely gone to zero. And my previous company’s stock price, which had been dropping quickly over the course of my last year there, made a hard U-turn right after I left and has been skyrocketing ever since (my family likes to joke that I caused the change of course at both companies). Was it really a bad decision though? It’s sort of hard to tell. At my previous company, my manager had put together a promotion packet, but this likely would have been cancelled with the layoffs, and there’s a chance I could have been laid off as well (as far as I can tell it was random). And then there’s the fact that for whatever weird reason, compensation for internal promos at this company heavily lagged that of external hires at the same level for many years. So at least up until now, I think I am even with or maybe slightly ahead of the counterfactual situation where I didn’t join a startup. Plus I have had new experiences, greater scope, and different types of challenges than I had previously, and I think it’s valuable to have a variety of novel experiences over a lifetime. Obviously, from this point forward my future (financial) outlook would be better off if I had stayed, but it’s hard to write off my decision to try something new. Other former coworkers also left to join startups, a few of which are likely to go public soon, so it’s not as if going from FANG to a startup always works out unfavorably, and if you join a startup that seems to be doing well at a later stage, the downside risk doesn’t seem that high actually.
- MichaelZuo 3y ago
  No one's even made you an offer at say a 50% chance? That's a bit strange.
- pclmulqdq 3y ago
  This is somewhere the reality distortion field hits hard. I have even heard "we are about to raise at an $X valuation, we'll offer you options at that price." When you sit them down and explain that those investors are getting preferred shares, which have some measure of protection against bankruptcy, and that the common stock is not worth nearly that much without the insurance, it (in my experience) enrages startup people. Many of them won't show their cap table or even discuss their past fundraising terms.
mcmoor 3y ago
I guess this is why worker-coop would never really take off. Most people are not in position to be paid in possible future profit rather than direct compensation. There's also nothing stopping employees at a public company to convert their entire salary into stock but not many do that either.
- meheleventyone 3y ago
  Worker-cooperatives can and do pay salaries.
mil22 3y ago
I'm in this category, except became an invisible solopreneur after deciding startups are a raw deal instead of going back to FAANG. Between the unfavorable tax treatment, long time to IPO, the inherently high risk of options, it's just not worth it. Perhaps a good deal for the VCs, maybe for the founders, but not for even the earliest employees. See you in the next life.
nailer 3y ago
Is ‘EV’ enterprise value or something else? Thanks.
- deleted 3y ago
  [deleted]
- ardacinar 3y ago
  Expected Value
- stoneman24 3y ago
  I was assuming EV was expected value. “For a pocketful of mumbles such are promises” Paul Simon. Seen too many promises forgotten/diluted to really trust anything other than cash.

yieldcrv 3y ago

it looks like bi-modal distribution of compensation in tech, where there are tech startups paying one amount and options, and FAANG paying another amount plus liquid shares but crypto organizations have added another wrench for more than half a decade, leaving the other startups aside, they are startups paying one amount, and skipping the options and paying their employees RSUs of their liquid crypto tokens, competing directly with FAANGs on compensation as employees can sell those tokens just as - or even more easily - than they can sell shares in a brokerage account I'm saying it as if its news because the crowd here relies on people they respect saying the same thing to believe it in the absence of public and common knowledge, and that likely hasn't happened in the topic of anything crypto/web3 industry here

yieldcrv 3y ago

> startups pay options in lieu of market-rate salary this is true but this is largely due to an unworkable tax treatment of giving out illiquid shares to employees that rely on employment for money, and the longstanding tax regime would seek to tax employees that have higher value shares even if they can't get cash to pay for it. so this has left private companies in an uncompetitive situation with options as the poor workaround, analogous to chemotherapy where it hurts everyone in the absence of a better treatment, but you might come out ahead

pfooti 3y ago

This is me. I work at a FAANG, about half of my very good compensation is in RSUs. All the startup companies I've talked to (I don't turn down recruiters out of hand) seem to like my skill set, but cannot really meet my comp requirements without valuing options as if they were 100% guaranteed to convert at the current high valuation. It's a bummer - startups do a lot of really cool stuff, but I'm at a point in my career where I can no longer really gamble that the options will pay out. I need the stability and mortgage paying power of actual comp.

Xcelerate 3y ago
I wouldn’t discount startups altogether. I was previously at a FANG company when a startup doing some exciting work in a really interesting space offered to match my total comp in cash, plus the equivalent in options based on their recent valuation. All fully remote. At the time, the company I was at seemed to be going downhill quickly, and they began mass layoffs for the first time shortly after I left. What happened since then? Well, the startup options have very likely gone to zero. And my previous company’s stock price, which had been dropping quickly over the course of my last year there, made a hard U-turn right after I left and has been skyrocketing ever since (my family likes to joke that I caused the change of course at both companies). Was it really a bad decision though? It’s sort of hard to tell. At my previous company, my manager had put together a promotion packet, but this likely would have been cancelled with the layoffs, and there’s a chance I could have been laid off as well (as far as I can tell it was random). And then there’s the fact that for whatever weird reason, compensation for internal promos at this company heavily lagged that of external hires at the same level for many years. So at least up until now, I think I am even with or maybe slightly ahead of the counterfactual situation where I didn’t join a startup. Plus I have had new experiences, greater scope, and different types of challenges than I had previously, and I think it’s valuable to have a variety of novel experiences over a lifetime. Obviously, from this point forward my future (financial) outlook would be better off if I had stayed, but it’s hard to write off my decision to try something new. Other former coworkers also left to join startups, a few of which are likely to go public soon, so it’s not as if going from FANG to a startup always works out unfavorably, and if you join a startup that seems to be doing well at a later stage, the downside risk doesn’t seem that high actually.
MichaelZuo 3y ago
No one's even made you an offer at say a 50% chance? That's a bit strange.
pclmulqdq 3y ago
This is somewhere the reality distortion field hits hard. I have even heard "we are about to raise at an $X valuation, we'll offer you options at that price." When you sit them down and explain that those investors are getting preferred shares, which have some measure of protection against bankruptcy, and that the common stock is not worth nearly that much without the insurance, it (in my experience) enrages startup people. Many of them won't show their cap table or even discuss their past fundraising terms.

mcmoor 3y ago

I guess this is why worker-coop would never really take off. Most people are not in position to be paid in possible future profit rather than direct compensation. There's also nothing stopping employees at a public company to convert their entire salary into stock but not many do that either.

meheleventyone 3y ago
Worker-cooperatives can and do pay salaries.

mil22 3y ago

I'm in this category, except became an invisible solopreneur after deciding startups are a raw deal instead of going back to FAANG. Between the unfavorable tax treatment, long time to IPO, the inherently high risk of options, it's just not worth it. Perhaps a good deal for the VCs, maybe for the founders, but not for even the earliest employees. See you in the next life.

nailer 3y ago

Is ‘EV’ enterprise value or something else? Thanks.

deleted 3y ago
[deleted]
ardacinar 3y ago
Expected Value
stoneman24 3y ago
I was assuming EV was expected value. “For a pocketful of mumbles such are promises” Paul Simon. Seen too many promises forgotten/diluted to really trust anything other than cash.